Fisheries Improvement Loans Regulations (C.R.C., c. 864)

Development or Improvement of a Primary Fishing Enterprise Loan

16 Subject to the Act and these Regulations, a development or improvement of a primary fishing enterprise loan is a guaranteed loan if

• (a) the amount of the loan is

  • (i) not greater than 90 per cent of the estimated cost of the development or improvement as set out in the application referred to in section 11, or

  • (ii) not greater than the cash expenditure incurred in the development or improvement where the development or improvement is carried out, in whole or in part by the borrower;

• (b) the lender has required, in accordance with normal lending practices, and the borrower has provided evidence that the funds advanced in respect of the loan were expended for the purpose set out in the application for the loan.

• (c) [Revoked, SOR/78-139, s. 6]

Loan Terms and Revision of Loan Terms

• 17 (1) Repayment of a loan shall be made in instalments that are payable at least annually but at the option of the lender repayments may be scheduled more frequently than annually.

• (2) Subject to paragraph 3(e) of the Act, the terms for repayment of the loan shall be set out in the agreement in connection with the loan and the repayment period and the amount and frequency of instalment payments shall conform to the probable ability of the borrower to pay, having regard to the type of fishing enterprise carried on by him, the relevant marketing conditions, the repayment of other obligations and to any other relevant circumstances.

• (3) Where a borrower is in default in respect of the repayment of a loan or advises the lender that some of the terms of the agreement in connection with the loan are such that he may have to default, or where a borrower wishes to take out additional loans, and the lender is of the opinion that it would be appropriate in the light of the borrower’s total repayment obligations to alter or revise the terms of the loan or any agreement in connection therewith, the lender may, with the approval of the borrower alter or revise the terms of the loan or agreement by

  • (a) extending the term for repayment of the loan within the maximum terms specified in the Act;

  • (b) changing the amount of the periodic instalments; or

  • (c) changing the periods between instalments, but in no case shall instalments be due less frequently than annually.

• (4) [Revoked, SOR/78-139, s. 7]

• (5) The terms of a loan or any agreement in connection therewith may not be altered or revised in a manner that would result in longer terms for repayment of the loan than the terms prescribed by paragraph 3(e) of the Act or paragraph 13(d) of the Regulations unless the Minister approves the alteration or revision.

• (6) Where the Minister approves the alteration or revision of the terms of a loan or any agreement in connection therewith in accordance with subsection (5), the alteration or revision shall not discharge the liability of the Minister to the lender under the Act.

Rate of Interest

• 18 (1) Subject to subsection (4), the maximum rate of interest per annum payable to a bank incorporated by or under the provisions of the Bank Act in respect of a loan is the aggregate of one per cent per annum and the prime lending rate in effect at that bank on the date the agreement in connection with the loan was signed.

• (2) Subject to subsection (4), the maximum rate of interest per annum payable to a bank other than a bank incorporated by or under the provisions of the Bank Act in respect of a loan shall be determined by the Minister for each month prior to the first day of that month and shall be the aggregate of one per cent per annum and the average of the prime lending rates in effect at the following chartered banks on the third Wednesday of the month preceding the month for which the rate is determined:

  • (a) the Bank of Montreal,

  • (b) the Bank of Nova Scotia,

  • (c) the Royal Bank of Canada,

  • (d) the Toronto-Dominion Bank,

  • (e) the Banque Canadienne Nationale,

  • (f) the Banque Provinciale, and

  • (g) the Canadian Imperial Bank of Commerce

  rounded to the nearest one-eighth of one per cent or, if the result would be equidistant from two multiples of one-eighth of one per cent, to that multiple thereof that is the lower.

• (3) When the rate of interest determined by the Minister for a month pursuant to subsection (2) is a different rate from the rate in effect for the previous month, the Minister shall forthwith advise the banks to which subsection (2) applies of the new rate by such means as he sees fit.

• (4) The rate of interest payable to a bank in respect of a loan shall be revised

  • (a) in the case of a bank incorporated by or under the provisions of the Bank Act, whenever the prime lending rate of that bank changes; and

  • (b) in the case of a bank other than a bank incorporated by or under the provisions of the Bank Act, on the first day of each month.

Security

• 19 (1) A lender shall, at the time of making a loan, take security for the repayment thereof

  • (a) under section 88 of the Bank Act;

  • (b) by way of a chattel mortgage or commercial pledge;

  • (c) by way of a mortgage or hypothec on real property;

  • (d) by way of an assignment of any rights and interest of the borrower under an agreement for sale; or

  • (e) by way of a written undertaking by the borrower to give security as required under paragraph (a), (b), (c) or (d) as the case may be.

• (2) A responsible officer of a lender may, whenever he deems it appropriate, release any security taken pursuant to subsection (1), but every lender shall, throughout the term of a loan, maintain adequate security in accordance with normal banking practice in a manner prescribed by subsection (1) for the repayment of the balance of the loan outstanding at any time.

• (3) Where, in the opinion of a responsible officer of a lender, security additional to the security taken pursuant to subsection (1) or (2) is deemed necessary, the lender may take such additional security for the repayment of a loan as the responsible officer considers appropriate.

• (4) Every lender shall, at the time of making a loan, require the borrower to give to the lender, in addition to any security taken pursuant to subsection (1) or (2), a written promise to repay the loan signed by the borrower and setting forth the principal amount of the loan, the basis for establishing the rate of interest and the repayment terms.

When Entire Amount Becomes Due and Payable

• 20 (1) Where a borrower is in default in respect of any payment on a loan, the entire amount of the balance outstanding on the loan shall, at the option of the lender, become due and payable.

• (2) Where a borrower is convicted of an offence under the Act, the entire amount of the balance outstanding on a loan shall become due and payable.

Misrepresentation

21 Where a lender discovers that any statement in an application for a loan is false in any material respect or that a borrower has used or is using the proceeds of a loan otherwise than for a purpose specified in the application for the loan, the lender may take any action it considers proper in the circumstances and shall immediately make a full report thereon to the Minister who may request the lender to take such action or further action as the Minister may require.

Procedure on Default

• 22 (1) Where a borrower is in default in respect of any payment on a loan and the entire amount of the balance outstanding on the loan becomes due and payable in accordance with section 20, the lender may take such action, whether by legal proceedings or otherwise, as it considers advisable in the circumstances to

  • (a) effect collection of the loan;

  • (b) obtain additional security;

  • (c) realize upon any or all of the security it has taken; or

  • (d) effect any compromise with or grant any concession to any person other than the borrower.

• (2) Any action taken by the lender pursuant to subsection (1) shall not discharge the liability of the Minister to the lender under the Act.

Procedure for Claims

• 23 (1) A claim for loss by a lender in respect of a loan shall not be made to the Minister until 90 days have elapsed after the entire amount of the loan becomes due and payable.

• (1.1) Where a loan has been in default for a period of 18 months, a lender shall forthwith submit a claim for loss unless the lender has corresponded with the Minister in respect of the loan prior to the expiration of that period.

• (2) A claim for loss submitted by a lender in respect of a loan shall include

  • (a) the unpaid principal amount of the loan;

  • (b) the uncollected earned interest outstanding at the time the claim is approved for payment by the Minister at the full rate of interest specified in the written promise to repay the loan for a maximum period of 180 days unless a longer period is justified for reasons beyond the control of the lender, and thereafter at one-half the rate of interest specified in the written promise to repay the loan;

  • (c) any uncollected charge for insurance prescribed by these Regulations;

  • (d) any uncollected taxed costs for or incidental to legal proceedings in respect of the loan;

  • (e) legal fees, legal costs and legal disbursements, whether taxable or not, actually incurred by the lender, with or without litigation, in collecting or endeavouring to collect the loan or in protecting the interests of the Minister but only to the extent that the Deputy Minister of Justice taxes or allows; and

  • (f) any other disbursement actually incurred by the lender in collecting or endeavouring to collect the loan or in protecting the interests of the Minister but only to the extent that the Minister allows.

• (3) A claim for loss by a lender in respect of a loan shall be submitted to the Minister by the lender together with a copy of the borrower’s application form.

• (4) A claim for loss by a lender in respect of a loan shall be approved for payments by the Minister within 60 days after receipt by the Minister of the claim and shall thereupon be paid forthwith.

• (5) Where a claim for loss by a lender has been paid pursuant to subsection (4), the lender shall

  • (a) execute a receipt in the form set out in Schedule II;

  • (b) send the receipt and the written promise to repay the loan by post to the Minister; and

  • (c) deal with any security held by it for the loan in such manner as the Minister may direct.

• (6) Any expense incurred by the lender in dealing with any security pursuant to paragraph (5)(c) shall be paid by the Minister to the lender.

• (7) [Revoked, SOR/78-139, s. 10]

• 24 (1) When acting on behalf of the Minister, a lender shall, notwithstanding that its claim for loss in respect of a loan has been paid, take such reasonable steps as the Minister considers necessary to

  • (a) collect payments of principal and interest due by the borrower under the terms of the loan; and

  • (b) realize upon any security taken under these Regulations.

• (2) Any amount that is collected or realized pursuant to subsection (1) shall be remitted forthwith to the Minister.

• (3) Any actual expenses of the lender incurred under subsection (1) shall be paid by the Minister to the lender.

Reports to Minister

25 Any lender that has made a loan under these Regulations shall furnish to the Minister such reports or information as the Minister may from time to time require.

Registry

26 The registry established by the Minister pursuant to the Fisheries Improvement Loans Regulations, made by Order in Council P.C. 1969-1266 June 25, 1969, for the purpose of recording loans under the Act is hereby continued.

General

• 27 (1) Any provision of these Regulations requiring security to be taken under section 88 of the Bank Act shall be deemed to have been satisfied if a document purporting to give such security is signed and delivered, notwithstanding that the security is not effective in respect of some or all of the property to which the document relates by reason of any statute exempting property from seizure under writs of execution that was in force on September 1, 1944.

• (2) Where a borrower

  • (a) has made a false material statement in any application that has been scrutinized and checked by a responsible officer of the lender with the care required of him by the lender in the conduct of its ordinary business, or

  • (b) has used the proceeds of any loan otherwise than for the purpose specified in the application for the loan,

  the liability of the Minister to the lender under the Act shall not for such reason be discharged to any extent.

• (3) A lender may require a borrower to insure the fishing equipment referred to in paragraph 13(c) or the personal or immovable property referred to in paragraph 15(c) or 16(c) and assign the insurance to the lender.

• (4) Where a lender, under the terms of a loan or any agreement in connection therewith, pays the premiums under a policy of insurance on property under which any amount is or may become payable to the lender, the lender may charge the amount of the premiums to the borrower.