Federal Security Interests Research Study and Report 2000

APPENDIX C

Summary of legislative and regulatory provisions

relating to Agricultural and Agri-Food enterprises

Advance Payment for Crops Act, R.S.C. 1985, c. C-49, ss. 5-6.

Sections 5 and 6 provide that for the Minister to make an effective guarantee under the Act, the producer organization must meet a number of criteria, including: signing a written agreement with the producer under which the producer agrees to repay the advance; agreeing to terms in event of default; and arranging liability where crop has been damaged.; As well, where the Minister has given a guarantee, the producer organization has a lien on the crop in respect of which the advance was made.

Agricultural Marketing Programs Act, 1997, c.20, s. 12.

Section 12 provides that an administrator that makes a guaranteed advance to a producer has a security interest in the crop for which the advance was made, and in any crop subsequently grown by the producer, for the amount of the producer's liability under sections 22 and 23.

Animal Pedigree Act, R.S.C. 1985, c. 8 (4th Supp.), ss. 12 (c) and 38(c).

Section 12(c) provides that any association established by the Act may mortgage or create any security interest in, all or any property of the association to secure any obligation of the association.; As well, the Act permits the Canadian Livestock Records Corporation to mortgage, or create any security interests in, all or any property of the Corporation to secure any of the Corporation’s obligations.

Canada Grain Act, R.S.C. 1985, c. G-10, s. 45, 46, 48, 49, 95 and 116.

Section 45 of the Act permits the Commission to fix security to a person who proposes to operate an elevator, act as a grain dealer, or operate a terminal.; Failure to give satisfactory security is a ground for refusal by the Commission to issue an elevator license or a grain dealer’s license.; Section 49 gives the Commission power to require the licensee to give further additional security.;; As well, only the Commission or a license holder who has suffered loss or damage may realize or enforce security pursuant to section 45.; Furthermore, a failure to give additional security as required by an order obtained under section 49 may be cause for revocation of the elevator or grain dealer’s license.; Section 116 empowers the Commission to make regulations respecting the security to be given by applicants for licenses and by licensees.

Farm Credit Corporation Act, 1993, c. 14, s. 4(2).

Section 4(2) of the Act permits the Farm Credit Corporation to acquire and hold security interests of any kind and in any form for loans made, guarantees given, or agreements entered into, as well as to acquire security interests by judicial proceedings and to exchange, lease, sell or dispose of those interests.

Farm Debt Mediation Act, 1997, c. 21, ss. 2, 5, 6, 9, 13, 14, 16, 21, 22.

Section 2 defines a “secured creditor” as anyone holding a mortgage, charge, hypothec or other secured interest against the property of a farmer. Section 5 enables an insolvent farmer to apply to an administrator for either a stay of proceedings against the farmer by all the farmer's creditors, a review of the farmer's financial affairs, and mediation between the farmer and all the farmer's creditors for the purpose of assisting them to reach a mutually acceptable arrangement; or a review of the farmer's financial affairs, and mediation between the farmer and all the farmer's secured creditors for the purpose of assisting them to reach a mutually acceptable arrangement.; Section 21 requires every secured creditor who intends to enforce any remedy against the property of a farmer, or commence any proceedings or any action, execution or other proceedings, judicial or extra-judicial, for the recovery of a debt, the realization of any security or the taking of any property of a farmer to give the farmer written notice of the creditor's intention to do so.

Section 5 provides that a farmer may apply for a stay of proceedings against the farmer by all the farmer's creditors or for a review of the farmer's financial affairs.

Section 6 provides that in order to make an application under s. 5, the farmer must be insolvent.

Section 9 directs the administrator to undertake a detailed review of the farmer's financial affairs.

Section 13 provides that the stay of proceedings mentioned in s. 5 can be extended for a maximum of three further periods of thirty days.

Section 14 gives the administrator discretion to end the stay of proceedings where the administrator is of the opinion that the farmer has, by any act or omission, jeopardized his or her assets or obstructed the guardian in the performance of the guardian's duties.

Section 16 provides that where a stay of proceedings is issued a guardian is to be appointed to watch over the farmer's assets.

Section 21 requires secured creditors who intend to enforce their security to provide the farmer written notice of their intent to do so.

Section 22 provides that any act done by a creditor in contravention of s. 21 is null and void.

Farm Improvement and Marketing Cooperatives Loans Act, 1985, c. 25 (3rd Supp.), s. 4.

Section 4 provides that the Minister is liable to pay to a lender ninety-five percent of any loss it sustanis as a result of a loan made to a farmer for, among other things, the purchase of tools, livestock and additional land.

Farm Improvement and Marketing Cooperatives Loans and Fees Regulations, 1998, SOR/99-122, s. 15.

Section 15 of the Regulations permit a lender to take security in any of the following ways:; under s. 427 of the Bank Act, by registering the security with personal property legislation in each province; by commercial pledge; by a mortgage or hypothec on property and by the assignment of rights or interest of the borrower under an agreement for sale.

Farm Improvement Loans Act, R.S.C. 1985, c. F-3, s. 10.

Section 10 of the Act enables the Bank to take a mortgage or hypothec on a farm, as well as an assignment of the rights and interests of a purchaser of a farm, as security for a guaranteed farm improvement loan.; Section 10(2) also provides that the Bank’s security is equivalent to security taken under the Bank Act.

Farm Product Agencies Act, s. 22(1) and 42(1).

Sections 22(1) and 42(1) permit an agency established under the Act to purchase, lease or otherwise acquire and hold, pledge, mortgage, hypothecate, sell or otherwise deal with any real property.

Licensing and Arbitration Regulations, SOR/84-432, s. 9-11.

Sections 9 to 11 permit the Minister to require a dealer to provide security as a gurantee that the dealer will comply with the terms and conditions of any license issued pursuant to the Regulations.; Failure to provide security may be cause for a dealer to lose the license and forfeiture of security previously provided may occur.

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