C-77 - Act to promote credit to farm producers

Replaced on 11 August 1988

This document has official status.

chapter C-77

Act to promote credit to farm producers

Chapter C-77 is replaced by the Act respecting farm financing (chapter F-1.2). (1987, c. 86, s. 153).

1987, c. 86, s. 153.

1. In this act, unless the context indicates a different meaning, the following words and expressions mean or designate:

(a)  “agriculture” : the cultivation of the soil or the raising of livestock;

(b)  “farm operator” : any physical person whose principal occupation is agriculture;

(c)  “farmer” : any physical person who is the owner or the tenant of a farm and whose principal occupation is agriculture; it also designates, in the case of undivided ownership of a farm, several physical persons provided that among them there are one or more farm operators holding at least sixty per cent of the rights of ownership in such farm;

(d)  “aspiring farmer” : any physical person not less than eighteen nor more than forty years of age who, being the owner or lessee of a farm, practises farming without making it his principal occupation and undertakes to make it his principal occupation within the delays and according to the conditions fixed by regulation;

(e)  “farm” : any immoveable operated or to be operated within a reasonable delay for agricultural purposes;

(f)  “economic farm” : a farm which, taking into account all of its resources, is capable of producing a revenue which enables the operator thereof to pay the operating costs thereof, including maintenance and depreciation, to fulfil his obligations and to support his family adequately;

(g)  “agricultural operations corporation” : a corporation constituted under the Companies Act (chapter C-38) whose principal object and principal activity are the operation of an economic farm which it owns or leases, provided that all of its shareholders are physical persons and that not less than sixty per cent of the issued shares of each class are owned by farm operators among whom the principal occupation of the majority is the operation of such farm;

(h)  “agricultural operations cooperative” : a cooperative governed by the Cooperatives Act (chapter C-67.2) whose main object and principal activity is the operation of an economic farm of which it is the owner or lessee, provided that all its members are natural persons, that at least sixty per cent of the common shares are owned by farm operators and that the majority of its members are farm operators among whom the principal occupation of the majority is the operation of such farm;

(i)  “agricultural operations partnership” : a partnership within the meaning of the Civil Code whose principal object is the joint operation of an economic farm, of which it is the owner or lessee, constituted by a written contract complying with the regulations, composed of physical persons and in which at least sixty per cent of the interests are owned by farm operators among whom the principal occupation of the majority is the operation of such farm;

(j)  “joint borrowers” : several physical persons to whom a loan is granted jointly, who jointly operate an economic farm constituted of the aggregate of the farms of which they are the owners or lessees while sharing, according to the proportions determined among them, the income from the aggregate of such farms, provided that not less than sixty per cent of the aggregate of the interests in such farm are owned by one or several farmers;

(k)  “loan” : any loan contracted under section 4;

(l)  “borrower” : a farmer, aspiring farmer, agricultural operations corporation, agricultural operations cooperative or agricultural operations partnership to whom a loan is granted, and joint borrowers;

(m)  “union” : any savings and credit union governed by the Savings and Credit Unions Act (chapter C-4);

(n)  “bank” : any bank within the meaning of the Bank Act (Statutes of Canada) or the Quebec Savings Banks Act (Statutes of Canada);

(o)  “lender” : any union or bank from which a loan has been obtained;

(p)  “regulation” : any regulation made by the Government under this act;

(q)  “Bureau” : the Office du crédit agricole du Québec;

(r)  “loan” : any loan contemplated in section 4, including the opening of credit.

1972, c. 38, s. 1; 1974, c. 33, s. 1; 1975, c. 34, s. 19; 1977, c. 5, s. 14; 1982, c. 26, s. 298.

2. A borrower who is the lessee of a farm, including a lessee under an emphyteutic lease, shall qualify for the benefits under this act if his lease complies with the standards provided by regulation.

1972, c. 38, s. 2; 1974, c. 33, s. 2.

3. An occupant of a farm under a location ticket or under a contract of sale made with a veteran under the Veterans’ Land Act (Statutes of Canada), is deemed an owner for the purposes of this act.

1972, c. 38, s. 3.

4. Any bank or credit union may grant to a borrower, for one or more of the purposes mentioned in section 8, a loan or a line of credit which, except in the cases contemplated in section 4.1, must not exceed $100 000.

1974, c. 33, s. 3; 1978, c. 46, s. 1; 1983, c. 8, s. 1.

4.1. Where a borrower is engaged in the production of cereals or feeder cattle or of both cereals and feeder cattle and he fulfils the conditions prescribed in section 5, a bank or credit union may grant to him, for one or more of the purposes mentioned in section 8, a loan or a line of credit of up to $500 000.

However, if the borrower is also engaged in some other production, the amount of any part of the loan or of the line of credit that is applicable to purposes related to such other production, added to the amount of any part of the balance of a loan owing by the same borrower or of a line of credit previously granted to him and still in effect, obtained for purposes related to any production other than the production of cereals or feeder cattle, must not exceed $100 000.

1983, c. 8, s. 1.

4.2. A borrower who has obtained one or more loans which have not been completely repaid shall not obtain any other loan except from the same lender.

1983, c. 8, s. 1.

4.3. Subject to section 4.2, one and the same borrower may obtain more than one loan, provided that the amount of the last loan obtained by him, added to the balance owing by him in principal, by succession or otherwise and determined as provided in section 6, on any other loan, does not exceed $100 000 or $500 000, as the case may be.

1983, c. 8, s. 1.

5. In the cases and within the limits established by regulation, the authorization of the Bureau must be obtained previously to the granting of a loan.

The authorization required for the purposes of the first paragraph is given by any person designated therefor by the Bureau.

Where the Bureau grants the authorization, it may also prescribe the conditions that the borrower must fulfil before a loan or a line of credit may be granted to him or paid out; the conditions may, in particular, contemplate the proportion of the expenses related to his agricultural operations that he must assume or must have already assumed with his own resources and without the aid of a loan, the allocation of his liquid assets to the payment of those expenses or the protection of the debt or the guarantees and other similar matters.

1974, c. 33, s. 3; 1978, c. 46, s. 2; 1983, c. 8, s. 2.

5.1. Subject to the first and third paragraphs of section 5, a person who borrows with a view to using the whole or part of the loan or of the line of credit for purposes provided for in section 8 and related to the production of cereals or feeder cattle in which he is engaged must, in order that the loan or the line of credit may be granted to him, fulfil the special conditions prescribed by regulation.

1983, c. 8, s. 3.

6. The total amount owing in principal by a borrower under this Act must at no time exceed $100 000 or, in the cases contemplated in section 4.1, $500 000, except where the excess is the result of debts devolved to him by succession subsequently to the last loan contracted by him that he has not repaid in full.

1974, c. 33, s. 3; 1978, c. 46, s. 3; 1983, c. 8, s. 4.

6.1. Where the borrower is a farmer or an aspiring farmer, the maximum amounts contemplated in section 6 are established by taking into account

(1)  the balance owing by him personally on any other loan he has obtained or of which he has assumed payment; and

(2)  his relative share in the balance of any other loan he has obtained jointly with any other person or of which he has assumed payment in the same manner.

1983, c. 8, s. 4.

6.2. In the case of joint borrowers or undivided owners considered as one farmer, the maximum amounts contemplated in section 6 are established by taking into account

(1)  the balance owing by them on any other loan they have obtained in that capacity or of which they have assumed payment;

(2)  the balance owing by each of them on every other loan he has obtained personally or of which he has assumed payment in the same manner; and

(3)  the relative share in the balance of any other loan obtained by each of them jointly with any other person or of which he has assumed payment in the same manner.

1983, c. 8, s. 4.

6.3. For the purposes of sections 6, 6.1 and 6.2, the amount of a line of credit, as long as it remains in effect, is deemed owing by the borrower even if it exceeds the amount of the balance owing on any advance of money made pursuant to that line of credit.

1983, c. 8, s. 4.

7. The Gouvernement du Québec shall guarantee to the lender the repayment of losses in principal and interest resulting from a loan granted for one or several of the purposes provided in section 8, and of expenses allowable by regulation that are incurred to claim or obtain payment thereof.

The guarantee contemplated in the first paragraph applies only to loans contracted before 1 August 1978.

The Fonds d’assurance-prêts agricoles et forestiers established under the Act respecting farm-loan insurance and forestry-loan insurance (chapter A-29.1) guarantees to the lender, in conformity with that act, the repayment of losses in principal and interest resulting from loans contracted from the date mentioned in the second paragraph, and of the expenses allowable by regulation under the said act that are incurred to claim or obtain the payment thereof.

A lender may benefit by the guarantee provided for in the first paragraph or, as the case may be, the guarantee contemplated in the third paragraph for several loans granted to a single borrower, provided the amount owing in principal on such loans never exceeds the maximum amount provided for in section 4.

1972, c. 38, s. 4; 1974, c. 33, s. 4; 1977, c. 5, s. 14; 1978, c. 49, s. 34.

8. The guarantee contemplated in the first paragraph of section 7 or, as the case may be, the guarantee contemplated in the third paragraph of the said section may be granted with respect to any loan made for one or more of the following purposes:

(1)  to defray current operating expenses relating to the production of crops, and particularly, but without restricting the generality of the foregoing:

(a)  work of preparing and seeding the soil;

(b)  purchase and application of amelioraters and fertilizers;

(c)  purchase of seeds;

(d)  purchase and application of pesticides and herbicides;

(e)  harvesting, drying, transportation and warehousing;

(f)  crop insurance premiums;

(g)  (subparagraph repealed).

(2)  to purchase livestock intended exclusively to produce meat or eggs;

(3)  to defray current operating expenses relating to the raising of livestock, and particularly, but without restricting the generality of the foregoing:

(a)  food, medication and litter;

(b)  costs of veterinarians;

(c)  costs of artificial insemination;

(d)  insurance premiums.

(4)  to purchase standing crops;

(5)  to defray, in the cases, on the conditions or within the limits provided for by regulation, the expenses relating to the wages or living expenses:

(a)  of the borrower when he is a farmer or an aspiring farmer;

(b)  of any shareholder, any producer, whether a shareholder or a member, or any partner of the borrower, whose principal occupation is operating the farm qualifying the borrower for the loan, where the borrower is an agricultural operations corporation, an agricultural operations cooperative or an agricultural operations partnership;

(c)  of any farm operator whose principal occupation is the operation of the farm qualifying the borrower for the loan, where that loan is contracted by joint borrowers or several natural persons being the undivided owners of a farm;

(6)  to defray all other expenses related to the farming operations of the borrower, and particularly, but without restricting the generality of the foregoing:

(a)  assessments payable under the Act respecting farm income stabilization insurance (chapter A-31);

(b)  expenses for the maintenance of farm equipment and buildings;

(c)  the purchase of fuel, oil, grease, tires and all other materials necessary for the operation of tractors, trucks and other vehicles used for the farming operations of the borrower;

(d)  expenses for the transportation of farm products;

(e)  the rent or the annual rent for a farm of which the borrower is the lessee or the emphyteutic lessee;

(f)  municipal and school taxes as well as all other real estate taxes;

(g)  premiums or assessments for fire insurance, loan-life insurance or public liability insurance;

(h)  heating expenses for farm buildings;

(i)  the purchase of bags or other containers used in production or marketing;

(j)  salaries payable to any person other than the persons mentioned in paragraph 5;

(7)  to repay, in the cases and on the conditions provided by regulation, the balance owing in principal under the terms and conditions of a loan granted in the form of an opening of credit.

1972, c. 38, s. 5; 1974, c. 33, s. 5; 1975, c. 34, s. 19; 1978, c. 49, s. 35; 1978, c. 46, s. 4.

9. Every advance of money to a borrower through an opening of credit must be evidenced by a note or an acknowledgement of debt in the tenor prescribed by regulation. Similar provision must be made for every loan granted otherwise than under the form of an opening of credit.

1972, c. 38, s. 6; 1974, c. 33, s. 6.

10. Repayment of a loan must be effected within the delays provided by regulation, which must in no case exceed thirty months from the date of the loan.

1972, c. 38, s. 7; 1974, c. 33, s. 7.

11. The interest rate on any loan shall be the current rate charged by lenders in the ordinary course of their operations, unless the Government, by regulation, fixes a maximum interest rate.

1972, c. 38, s. 8; 1983, c. 8, s. 5.

12. The payment of interest on any loan must be made at the same time as the payments of principal unless the lender and the borrower have agreed otherwise.

1972, c. 38, s. 9.

13. In the cases provided for by regulation, the borrower shall furnish to the lender the security specified therein.

1972, c. 38, s. 10; 1974, c. 33, s. 8.

14. Notwithstanding any inconsistent stipulation, the borrower always has the right to repay by anticipation, in whole or in part, the principal of his loan.

1972, c. 38, s. 11.

15. No issue, allotment or transfer of shares in an agricultural operations corporation which is a borrower is valid without the authorization of the Bureau.

No change to the contract constituting an agricultural operations partnership which is a borrower is valid without the authorization of the Bureau.

No issue or allotment, transfer or repayment of ordinary shares or common shares, as the case may be, in an agricultural operations cooperative to which a loan is granted is valid without the authorization of the Bureau.

1972, c. 38, s. 12; 1974, c. 33, s. 9; 1975, c. 34, s. 19.

16. The repayment of a loan or of the balance of a loan by means of a new loan contracted by the same borrower shall annul, with respect to such new loan, the right to the guarantee of the Government provided for in the first paragraph of section 7 or, as the case may be, the guarantee contemplated in the third paragraph of the said section.

The first paragraph does not apply in respect of a loan contracted for the purpose contemplated in paragraph 7 of section 8.

1972, c. 38, s. 13; 1974, c. 33, s. 10; 1977, c. 5, s. 14; 1978, c. 49, s. 36; 1978, c. 46, s. 5.

17. The Government may, by regulation, fix the accessory or secondary conditions of loans, particularly in regard to the protection of security and to other matters of the same kind and prescribe the documents and information to be filed with the lender and the Bureau.

1974, c. 33, s. 11.

18. The Bureau may refuse or annul the guarantee of a loan contemplated in section 7 on failure by the lender to comply with this act or the regulations.

1972, c. 38, s. 14.

19. A borrower who obtains a loan by false statements or false pretences or uses the proceeds of the loan or any part thereof for purposes other than those for which the loan was obtained, shall ipsofacto forfeit the benefit of the term and is guilty of an offence and is liable, on summary proceeding, in addition to payment of the costs, to a fine of not more than $500.

Part II of the Summary Convictions Act (chapter P-15) shall apply to proceedings instituted under this section.

1972, c. 38, s. 15.

20. When the Bureau repays on behalf of the Government a loss resulting from a loan contracted under this act, it is plenojure subrogated in the rights, interests and privileges of the lender.

The borrower whose default entails the repayment contemplated in the first paragraph or, as the case may be, that contemplated in section 17 of the Act respecting farm-loan insurance and forestry-loan insurance shall not benefit by another loan without the prior consent of the Bureau.

1972, c. 38, s. 16; 1977, c. 5, s. 14; 1978, c. 49, s. 37.

21. The Bureau or the lender may conduct any inquiry in connection with an application for a loan or with a loan and may, at any reasonable time, or at any time if it is required, in the circumstances, to protect a claim or the property securing a loan or to ensure that a borrower’s operation is carried on, visit or inspect the property serving as security for a loan.

The representative or the employee designated by the Bureau or by the lender shall, on request, identify himself and produce a certificate of his capacity issued by the Bureau or by the lender.

1974, c. 33, s. 12; 1986, c. 95, s. 124.

22. The Government may make any regulation to:

(a)  define any expression used in sections 1 and 8;

(a.1)  clarify any expression used in sections 4.1 and 5;

(b)  determine the particulars which must be contained in, and the formalities which must be observed in regard to, the lease of a borrower who is the lessee of a farm and the emphyteutic lease of a borrower who is the emphyteutic lessee of a farm, and determine the particulars which must be contained in a partnership contract if the partnership it regards is to be such within the meaning of paragrah i of section 1;

(c)  fix the delays and conditions within and under which a physical person must undertake to make agriculture his principal occupation in order to be considered an aspiring farmer;

(d)  establish the cases where and the maximum amount beyond which a loan shall not be granted without previously obtaining the authorization of the Bureau;

(e)  fix the delays for repayment of loans, prescribe the tenor of notes or acknowledgements of debt evidencing loans, fix, where necessary, the maximum interest rate contemplated in section 11 and determine the cases where the lender must require security, the amounts of loans beyond which such security must be required and the nature of such security;

(f)  establish in which cases and on which conditions or within which limits the expenses contemplated in paragraph 5 of section 8 may be paid out of the proceeds of the loan;

(g)  determine in which cases and on which conditions a loan may be granted to repay the balance owing on a loan granted in the form of an opening of credit;

(g.1)  establish the special conditions a borrower must fulfil in order that the amount of a loan or of a line of credit may be granted to him for purposes related to any production contemplated in section 5.1;

(h)  determine the expenses of which repayment is guaranteed under section 7 and the conditions to be fulfilled by the lender in order to obtain repayment of the losses and expenses contemplated in the said section and enact any other necessary or useful measure for the execution and orderly administration of this act.

Every regulation made by virtue of this act shall come into force from its publication in the Gazette officielle du Québec or on any later date fixed therein.

1972, c. 38, s. 17; 1974, c. 33, s. 13; 1978, c. 46, s. 6; 1983, c. 8, s. 6.

23. The sums owing in consequence of the guarantee provided for in the first paragraph of section 7 shall be paid out of the consolidated revenue fund.

1972, c. 38, s. 18 (part); 1978, c. 49, s. 38.

24. The Bureau shall be entrusted with the application of this act.

1972, c. 38, s. 19.

25. (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 (chapter R-3), chapter 38 of the statutes of 1972, in force on 31 December 1977, is repealed, except sections 18 (part) and 20, effective from the coming into force of chapter C-77 of the Revised Statutes.