A-29.1 - Act respecting farm-loan insurance and forestry-loan insurance

Updated to 1 April 1999

This document has official status.

chapter A-29.1

Act respecting farm-loan insurance and forestry-loan insurance

DIVISION I DEFINITIONS

1. In this Act, unless the context indicates a different meaning,

(a)  “Fonds” means the Fonds d’assurance-prêts agricoles et forestiers established by section 2;

(b)  “Société” means the Société de financement agricole;

(c)  “farm loan” means a financial commitment or part of a financial commitment which, under an assistance program established under the Act respecting the Société de financement agricole (chapter S-11.0101), has a right to the insurance provided for in section 4 of this Act, a loan, line of credit or special loan granted under the Act respecting farm financing (chapter F-1.2), a loan granted from 1 August 1978 under an Act replaced thereby (Act to promote farm improvement (chapter A-18), Farm Credit Act (chapter C-75), Act to promote long term farm credit by private institutions (chapter C-75.1), Act to promote credit to farm producers (chapter C-77), Act to promote special credit to agricultural producers during critical periods (chapter C-79)), or a loan or special loan assumed after 11 August 1988;

(d)  “forest loan” means a financial commitment or portion thereof which, under the forest management funding program established under section 124.37 of the Forest Act (chapter F-4.1), gives entitlement to the insurance provided for in section 4 of this Act, or a loan granted under the Forestry Credit Act (chapter C-78) or the Act to promote credit by private institutions (chapter C-78.1);

(e)  “lender” means any person who grants a farm loan or a forestry loan;

(f)  “regulation” means a regulation made by the Government under this Act.

1978, c. 49, s. 1; 1983, c. 16, s. 66; 1988, c. 3, s. 1; 1992, c. 32, s. 35, s. 43; 1996, c. 14, s. 22.

DIVISION II ESTABLISHMENT AND POWERS OF THE FONDS

2. A fund called the “Fonds d’assurance-prêts agricoles et forestiers” is established by this Act.

1978, c. 49, s. 2.

3. The Fonds is a corporation within the meaning of the Civil Code of Lower Canada and has the general powers of such a corporation, and such special powers as are assigned to it by this act.

1978, c. 49, s. 3.

4. Subject to section 25 and unless an assistance program adopted under the Act respecting the Société de financement agricole (chapter S-11.0101) or the forest management funding program established under section 124.37 of the Forest Act (chapter F-4.1) provides otherwise, the Fonds guarantees to a lender the repayment of losses in principal and interest resulting from a farm loan or a forestry loan granted from 1 August 1978, and of expenses allowable by regulation that are incurred by the lender to protect his securities or to claim or obtain from the debtor in default the sums owing to him or that have become payable on the loan.

The Fonds may also repay out of its assets, to a lender or to the Société, the principal of and interest on unrecovered disbursements relating to or connected with judicial proceedings instituted by a borrower against the lender or the Société with respect to a farm loan or a forestry loan.

For the purposes of this Act, the losses in principal and interest contemplated in the first paragraph include

(a)  the unpaid amount in principal of the loan in the absence of security for the latter, or the amount of the net loss in principal sustained by a lender following realization upon his movable and immovable securities; or

(b)  the amount, computed in the manner provided by regulation, of the net loss in principal sustained by a lender following the disposition by him, by onerous title, of the immovable having secured a loan, the ownership of which was acquired by the lender by the exercise of a right to take in payment; and

(c)  the uncollected interest accrued, to the date of authorization of payment of the loss by the Fonds, on any amount contemplated in subparagraph a or b and, if the borrower has so undertaken under the terms of the document evidencing the loan, on any unpaid amount or payment of interest and on any sum disbursed by the lender for the preservation, protection and recovery of his debt, at the rate stipulated in the said document and, as the case may be, adjustable in the manner provided for therein.

The Société may, with respect to a farm loan or a forestry loan granted by a lender other than the Société, refuse or cancel the right to the insurance contemplated in the first paragraph, when such lender fails to comply with this Act or the regulations thereunder or with the Act under which such loan is granted or the regulations respecting the said Act.

1978, c. 49, s. 4; 1988, c. 3, s. 2; 1991, c. 11, s. 1; 1992, c. 32, s. 36, s. 43; 1992, c. 57, s. 436; 1996, c. 14, s. 23.

5. Each fiscal year, the Government shall pay a sum of money to the Fonds as insurance charge for farm loans and forestry loans.

The sum shall be established and paid in the manner prescribed by regulation.

1978, c. 49, s. 5; 1988, c. 3, s. 3; 1991, c. 11, s. 2.

5.1. (Repealed).

1988, c. 3, s. 4; 1991, c. 11, s. 3.

5.2. The manner of establishing the sum of money payable to the Fonds by the Government as insurance charge must be revised at least once every four years following an actuarial analysis of the losses refunded by the Fonds and taking account of market fluctuations, having regard to prevailing conditions and to the type of production engaged in by the persons who obtain a farm loan or a forest loan or by the persons who assume payment of the loan.

1988, c. 3, s. 4; 1991, c. 11, s. 4.

5.3. (Repealed).

1988, c. 3, s. 4; 1991, c. 11, s. 5.

6. The Fonds shall have the rights and privileges of a mandatary of the Government.

The amounts paid into the Fonds under sections 5, 19, 23.2, 23.3 and 23.4 and the revenues they produce form part of the assets of the Fonds.

The property of the Fonds forms part of the public domain, but the performance of its obligations may be levied against its property.

The Fonds binds none but itself when it acts in its own name.

1978, c. 49, s. 6; 1988, c. 3, s. 5.

7. The Fonds is administered by a board of directors composed of all the members of the Société. Each member of the board remains so throughout his term as a member of the Société.

1978, c. 49, s. 7; 1988, c. 3, s. 6; 1992, c. 32, s. 43.

8. The chairman, the vice-chairman and the secretary of the Société are respectively the chairman, the vice-chairman and the secretary of the board of directors of the Fonds.

If the chairman is absent or unable to act, he shall be replaced by the vice-chairman, who shall then exercise his powers and functions.

1978, c. 49, s. 8; 1992, c. 32, s. 43.

9. The Fonds has its head office at the same place as the Société.

The board of directors of the Fonds shall hold its meetings at its head office or at any other place it may choose.

Two members constitute a quorum.

In the case of a tie-vote, the chairman or, in the case contemplated in the second paragraph of section 8, the vice-chairman has a casting vote.

1978, c. 49, s. 9; 1992, c. 32, s. 43.

10. The minutes of the meetings of the board of directors, certified by the secretary or by any person authorized to do so under the terms of a resolution or an internal management by-law, are authentic; the same rule applies to documents and copies emanating from the Fonds or forming part of its records.

1978, c. 49, s. 10.

11. The members of the board of directors and the officers and employees of the Fonds cannot be sued for official acts done in good faith in the exercise of their functions.

1978, c. 49, s. 11.

12. The officers and employees of the Fonds are appointed and remunerated in accordance with the Public Service Act (chapter F-3.1.1).

The chairman of the Société shall exercise in that respect the powers vested by the said Act in the chief executive officer of an agency.

1978, c. 49, s. 12; 1978, c. 15, s. 133, s. 140; 1983, c. 55, s. 161; 1992, c. 32, s. 43.

13. No extraordinary recourse provided for in articles 834 to 850 of the Code of Civil Procedure may be exercised nor any injunction granted against the Fonds or against the members of its board of directors acting in their official capacity.

1978, c. 49, s. 1.

14. A judge of the Court of Appeal may, upon motion, annul summarily any writ, order or injunction issued or granted contrary to section 13.

1978, c. 49, s. 14; 1979, c. 37, s. 43.

15. The fiscal year of the Fonds ends on the last day of March each year.

1978, c. 49, s. 15.

16. The Fonds may, in conformity with the law, make any agreement with any government or body and with any person, association, partnership or corporation, to facilitate the carrying out of this act.

1978, c. 49, s. 16; 1988, c. 41, s. 43.

DIVISION III OPERATION OF THE FONDS

17. Where a lender other than the Société sustains a loss with respect to a farm loan or a forestry loan, he may, provided that he complies with the conditions prescribed by regulation, file with the Société a claim for repayment by the Fonds of the losses and expenses contemplated in section 4, and the Fonds, upon the recommendation of the Société, shall make payment thereof.

Before making the recommendation contemplated in the first paragraph, the Société shall examine the said claim and assess its merits. The Société may, for such purposes, require from the lender any other document or information it considers necessary in addition to the documents prescribed by regulation.

Notwithstanding any inconsistent legislative provision and subject to section 19, where the Fonds makes a payment in accordance with the first paragraph, the Société is subrogated plenojure in the rights of the lender to whom such payment is made, up to the amount of such payment.

This section also applies, adapted as required, to disbursements referred to in the second paragraph of section 4.

1978, c. 49, s. 17; 1991, c. 11, s. 6; 1992, c. 32, s. 43.

17.1. Where a lender proves to the Société that it may not be possible for over a year to realize on the security for a loan in respect of which losses or expenses have been or may be incurred, he may, before filing a claim under section 17, file a provisional claim with the Société for repayment by the Fonds of those losses and expenses.

The Fonds must pay the claim so far as the Société recommends after examining it and assessing its merits.

The payment is made subject to the lender’s right to file a final claim for the full amount of unpaid losses and expenses and subject to the right of the Fonds to require the lender to remit any overpayment by the Fonds, as soon as the actual amount of such losses and expenses is determined, with interest on the overpayment at the rate fixed in the deed or document evidencing the loan and adjustable as provided therein, where such is the case.

The amount paid to a lender in accordance with the third paragraph shall be allocated by the lender in the manner indicated by the Société.

Notwithstanding any legislative provision inconsistent herewith and subject to section 19, where the Fonds makes a payment pursuant to the first paragraph, the Société is subrogated by operation of law to the rights of the lender to whom the payment is made, up to the amount thereof.

1988, c. 3, s. 7; 1992, c. 32, s. 43.

17.2. The Société may request the lender to file with it a claim for repayment of losses and expenses or a provisional claim where a loss resulting from a farm loan or a forestry loan appears inevitable to the Société.

1991, c. 11, s. 7; 1992, c. 32, s. 43.

17.3. The Société may cancel the right to obtain insurance under the first paragraph of section 4 with respect to interest accrued on any amount claimed if, within 60 days from the date of a request in writing by the Société to that effect, the lender fails to file

(1)  a claim for repayment of losses and expenses;

(2)  a provisional claim;

(3)  any other document or information necessary for assessing the merits of a claim.

Accrued interest is computed from the date of expiry of the period of 60 days to the date of filing, in accordance with the conditions prescribed by this Act, of the claim for repayment, the provisional claim or any other document or information requested.

1991, c. 11, s. 7; 1992, c. 32, s. 43.

17.4. The recovery of any sum paid by the Fonds under sections 17 and 17.1 is prescribed by five years from the date of the final payment.

1991, c. 11, s. 7.

18. Where the Société sustains a loss, with respect to a farm loan or a forestry loan which it has granted or for which it has been subrogated in the rights of the lender in conformity with section 17 or 17.1, or following the disposition of an immovable having secured a loan granted by a lender other than the Société, of which the Société acquired ownership either at a sheriff’s sale or directly from the said lender, the Fonds shall, at the request of the Société, repay to the Société the amount of the losses and expenses contemplated in section 4.

Notwithstanding any inconsistent legislative provision and subject to section 19, the repayment contemplated in the first paragraph does not constitute a subrogation in favour of the Fonds.

The first and second paragraphs apply, adapted as required, where the corporation sustains a loss after having been subrogated in the rights of a lender in conformity with the second paragraph of section 16 of the Act respecting the Société de financement agricole (chapter S-11.0101).

1978, c. 49, s. 18; 1988, c. 3, s. 8; 1992, c. 32, s. 37, s. 43.

19. Subject to the second paragraph, the sums recovered by the Société relating to a loan for which the Fonds has paid a claim made in conformity with sections 17, 17.1 and 18 must be paid into the Fonds as they are recovered.

Out of the sums contemplated in the first paragraph, the Société shall withhold the sums it must remit to any working-capital fund, up to such amount as it has drawn on that working-capital fund and has used to protect any debt in respect of which it has been subrogated in the rights of the lender under the third paragraph of section 17 or the fifth paragraph of section 17.1.

Where a lender acquires, by the exercise of a right to take in payment, an immovable securing a loan following the default of the borrower or of the debtor of the lender, any amount by which the net revenue earned or deficit incurred by the lender in connection with such immovable during the time he remains the owner thereof, increased by the sale price of that immovable where he disposes of it or, as the case may be, decreased by the said price, whatever the mode of payment, exceeds the total of the sums owing to him on the loan in principal, interest, costs and accessory expenses at the time of the said acquisition, the expenses allowable by regulation and the interest accrued on the said sums and expenses, at a rate not exceeding that fixed for the said loan and adjustable as prescribed in the deed evidencing such loan, must be paid into the Fonds.

1978, c. 49, s. 19; 1988, c. 3, s. 9; 1992, c. 32, s. 43; 1992, c. 57, s. 437.

DIVISION IV FINANCIAL PROVISIONS

20. (Repealed).

1978, c. 49, s. 20; 1988, c. 3, s. 10.

21. (Repealed).

1978, c. 49, s. 21; 1988, c. 3, s. 10.

22. (Repealed).

1978, c. 49, s. 22; 1988, c. 3, s. 10.

23. (Repealed).

1978, c. 49, s. 23; 1988, c. 3, s. 10.

23.1. For the purposes of this Act, the Fonds may, with the prior authorization of the Government, borrow sums of money by notes, bonds or other securities in such amounts, at such rates of interest and on such other conditions as may be fixed by the Government.

1988, c. 3, s. 11.

23.2. The endowment of $10,000,000 established in favour of the Fonds by section 20 of chapter 49 of the statutes of 1978 shall be converted by the Minister of Finance into an advance of an equivalent amount in principal, at the rates of interest for the term and on the other terms and conditions fixed by the Government.

1988, c. 3, s. 11.

23.3. The Government may, on such conditions as it may determine,

(a)  guarantee payment in principal and interest of any sums borrowed by the Fonds for the purposes prescribed in this Act and the execution of any obligation of the Fonds;

(b)  authorize the Minister of Finance to advance to the Fonds any amount deemed necessary for the carrying out of this Act, at such rate of interest, for such period of time and on such conditions as are determined by the Government.

The sums that the Government may be called upon to pay in virtue of the guarantees or to advance to the Fonds are taken out of the consolidated revenue fund.

1988, c. 3, s. 11.

23.4. Until 1 April 1992, the sums necessary for the payment of the obligations of the Fonds pursuant to section 4 shall be paid out of the net income from the sum of $10,000,000 contemplated in section 23.2 and, where such income is insufficient, the Minister of Finance, at the request of the Fonds, may pay to it, out of the consolidated revenue fund, the sums required to make up the payment of those obligations.

1988, c. 3, s. 11.

23.5. From 1 April 1992, the sums collected by the Fonds under sections 5 and 19 and the income from such sums and from the other assets of the Fonds shall be allocated as follows and in the following order of priority:

(a)  to the payment of obligations of the Fonds under section 4;

(b)  to the payment of interest on sums borrowed by the Fonds under section 23.1;

(c)  to the repayment when due of the principal of the sums borrowed under section 23.1;

(d)  to the payment of interest owing on advances made by the Minister of Finance under sections 23.2 and 23.3;

(e)  to the repayment when due of advances made by the Minister of Finance under sections 23.2 and 23.3, or, if there is no fixed due date, at the intervals fixed by the Minister of Finance.

Where the sums and income mentioned in the first paragraph are insufficient for full discharge of the payments thereunder, these shall be made, in the same order, out of the other assets of the Fonds.

1988, c. 3, s. 11; 1991, c. 11, s. 8.

23.6. The sums for which the Fonds foresees no need on a short term basis for the payments under section 23.5 shall be deposited without delay with the Caisse de dépôt et placement du Québec.

1988, c. 3, s. 11; 1991, c. 11, s. 9.

DIVISION V MISCELLANEOUS AND FINAL PROVISIONS

24. The Government may make any regulation

(a)  prescribing the manner in which it establishes and pays to the Fonds, for each of its fiscal years, the sum of money payable as insurance charge;

(a.1)  (subparagraph repealed);

(a.2)  (subparagraph repealed);

(b)  determining the expenses the repayment of which is guaranteed by section 4 and the mode of computation of the net loss contemplated in the said section and prescribing the conditions with which a lender other than the Société must comply to file with the latter a claim under section 17 or 17.1;

(c)  prescribing the documents, reports and information to be filed with the Société or the Fonds and the delay for their production; and

(d)  generally prescribing any other measure necessary or advisable for the carrying out and proper operation of this Act.

1978, c. 49, s. 24; 1988, c. 3, s. 12; 1991, c. 11, s. 10; 1992, c. 32, s. 43.

25. Notwithstanding the fact that the lender gave his approval to the granting of a farm loan or forestry loan before 1 August 1978, such loan is, for the purposes of this Act, deemed to be granted from 1 August 1978 if the deed of loan, the note or the evidence of indebtedness evidencing the loan or, in the case of a credit opening granted under section 4 of the Act to promote credit to farm producers, the note or the evidence of indebtedness evidencing the first advance granted to the borrower, is signed on or after 1 August 1978.

1978, c. 49, s. 25.

25.1. Notwithstanding any legislative provision inconsistent herewith, a lender contemplated in paragraph 1 of section 5 and any other person designated by the Government under section 6 of the Act respecting farm financing (chapter F-1.2) who is subrogated to the rights of another lender in accordance with articles 1653 and 1654 of the Civil Code of Québec (Statutes of Québec, 1991, chapter 64) in respect of a loan granted under that Act is entitled to the insurance described in the first paragraph of section 4, but the powers of the Société under the third paragraph of that section, where the original lender fails to observe the provisions of the Act by virtue of which the loan was granted, or the regulations thereunder, are not hereby restricted.

The first paragraph, adapted as required, also applies in the case of a hypothec or sale referred to in section 60 of the Act respecting farm financing or section 52 of the Act to promote forest credit by private institutions (chapter C-78.1), made in accordance with such section 60 or 52, as the case may be.

Any person who is subrogated in the rights of a lender who has granted a loan under an assistance program established under the Act respecting the Société de financement agricole (chapter S-11.0101) or under the forest management funding program established under section 124.37 of the Forest Act (chapter F-4.1) or to whom the debt resulting from such a loan has been transferred, is entitled to the insurance described in the first paragraph of section 4 to the same extent as the original lender, if the person is himself a lender accredited to make loans under this program. Such subrogation or transfer does not, however, restrict the power granted to the Société by the fourth paragraph of section 4 to cancel or refuse the right to the insurance, when the original lender fails to comply with the provisions of this Act or of the program under which the loan was granted.

1988, c. 3, s. 13; 1992, c. 32, s. 38, s. 43; 1992, c. 57, s. 438; 1996, c. 14, s. 24.

26. For the purposes of this Act, the Fonds, the members of its board of directors and its officers and employees are not subject to the Act respecting insurance (chapter A-32).

1978, c. 49, s. 26.

27. The members and the secretary of the Société and the officers and employees thereof who may be called upon to provide services to the Fonds are not entitled to any additional salary.

1978, c. 49, s. 27; 1991, c. 11, s. 11; 1992, c. 32, s. 43.

28. Not later than 30 June each year, the Fonds shall submit to the Minister of Agriculture, Fisheries and Food a report of its administration of this act for the previous fiscal year. Such report must be detailed and contain all the information required by the Minister.

The Minister shall table such report before the National Assembly if he receives it during a session; if not, or if he receives it after an adjournment, he shall table it within thirty days after the opening of the next session or after resumption.

Furthermore, the Fonds shall at all times furnish to the Minister of Agriculture, Fisheries and Food any information required by him on its activities under this act.

The books and accounts of the Fonds for the administration of this act shall be audited by the Auditor General.

1978, c. 49, s. 28; 1979, c. 77, s. 21.

29. (Amendment integrated into c. A-18, s. 16).

1978, c. 49, s. 29.

30. (Amendment integrated into c. A-18, title of Division IV).

1978, c. 49, s. 30.

31. (Amendment integrated into c. A-18, s. 19).

1978, c. 49, s. 31.

32. (Amendment integrated into c. A-18, s. 20).

1978, c. 49, s. 32.

33. (Amendment integrated into c. A-18, s. 22).

1978, c. 49, s. 33.

34. (Amendment integrated into c. C-77, s. 7).

1978, c. 49, s. 34.

35. (Amendment integrated into c. C-77, s. 8).

1978, c. 49, s. 35.

36. (Amendment integrated into c. C-77, s. 16).

1978, c. 49, s. 36.

37. (Amendment integrated into c. C-77, s. 20).

1978, c. 49, s. 37.

38. (Amendment integrated into c. C-77, s. 23).

1978, c. 49, s. 38.

39. (Amendment integrated into c. C-79, s. 6).

1978, c. 49, s. 39.

40. (Amendment integrated into c. C-79, s. 11).

1978, c. 49, s. 40.

41. (Amendment integrated into c. C-79, s. 13).

1978, c. 49, s. 41.

42. (Amendment integrated into c. C-79, s. 19).

1978, c. 49, s. 42.

43. (Amendment integrated into c. C-79, s. 22).

1978, c. 49, s. 43.

44. (Amendment integrated into c. C-78, s. 27).

1978, c. 49, s. 44.

45. (Amendment integrated into c. C-78, s. 28).

1978, c. 49, s. 45.

46. (Amendment integrated into c. C-78, s. 29).

1978, c. 49, s. 46.

47. (Amendment integrated into c. C-78, s. 49).

1978, c. 49, s. 47.

48. The Minister of Agriculture, Fisheries and Food is entrusted with the carrying out of this Act.

1978, c. 49, s. 48; 1979, c. 77, s. 21.

49. (Omitted).

1978, c. 49, s. 49.

50. (This section ceased to have effect on 17 April 1987).

1982, c. 21, s. 1; U. K., 1982, c. 11, Sch. B, Part I, s. 33.

REPEAL SCHEDULE

In accordance with section 17 of the Act respecting the consolidation of the statutes and regulations (chapter R-3), chapter 49 of the statutes of 1978, in force on 1 June 1979, is repealed effective from the coming into force of chapter A-29.1 of the Revised Statutes.