Farm Loans Act

FARM LOANS THE FARM LOANS ACT ARRANGEMENT OF SECTIONS Preliminary 1. Short title. 2. Interpretation. Guarantee 3. Payment of bank losses. 4. Limitation of liability. 5. Guarantee charged upon Consolidated Fund. 6. Effect of payment of bank losses. Security 7. Security for guaranteed farm loans. 8. Memoranda of charges. 9. Release of charges. 10. Application of certain provisions of Agricultural Credit Board Act I I. Additional security. Miscellaneous 12. Regulations. 13. Offences. 14. Penalty. 15. Discharge of Government from liability. 16. Variation of tenns of repayment of guaranteed farm loans. 17. Exemption from stamp duty and other fees. SClJEDVLES fl'he inclusion of this page is authorized by L.N. 480/ 1973] FARM LOANS 3 THE FARM LOANS ACT Actl llof 196!, 47 oflffl. !l of 1974. [15th November, 1965.] Preliminary I. This Act may be cited as the Farm Loans Act. Short tide. 2.--(1) In this Act- Interpre b nk . d B k' tation. •• a " means a company licensed un er the an mg Act, to carry on banking business; "borrower" means a person to whom a farm loan has been made; "crop" means any crop other than a crop for the time s111974 being excluded by the Minister by order having 8· 2 Ca). effect prior to the date of the loan; "establishment", in relation to any crop, includes the clearing, breaking or reclaiming of land for the production of such crop; ••farm" means land used or intended to be used for the purpose of farming by the person in posses­ sion thereof; "farm electric system'' includes all machinery, apparatus and appliances for the generation or distribution of electricity on a farm; "farm equipment" means implements, apparatus, appliances or machinery of any kind usually affixed to real property, for the purpose of farm­ ing, but does not include a farm electric system or any works for the drainage or supply of water; [The inclusion of this page is authorized by L.N. 248/ 19751 4 First Schedule. Second Schedule. 51/1974 S. 2 (c). FARM LOANS "farm implements" means tools, implements, appJratus~ appliances or machines for the purpose of farming and, without prejudice to the generality of the foregoing, includes vehicles for transportjng supplies for farming or products from a farm, but does not include farm equipment or any part of a farm electric system or any works for the drainage or supply of water; "farm loan" means a loan made by a bank to a farmer for the purpose of financing any project specified in the First Schedule and related to the farm of which the borrower is in possession; "farmer" means a person who is in possession of a farm; ,:farming" means any activities involved in producing crops, or in dairy or poultry farming, or in breed­ ing, rearing or keeping beef cattle or pigs; "guaranteed farm loan'' means a farm loan made in conformity with the provisions of the Second Schedule and not excluded under subsection (2) of section 12~ "livestock" means dairy or beef cattle, pigs or poultry; "loan period" means a period of three years the com­ mencement of which is fixed as provided by sub­ section (2) of section 4; "maintenance", in relation to crops, includes the cultivation and harvesting thereof; "Minister" means the Minister responsible for finance; "principal amount", in relation to any farm loan, includes any amount advanced to the borrower by the bank for the insurance of property which is subject to any security given for the loan. (2) The Minister may from time to time by order amend the First Schedule. [The inclusion of this page is authorized by l..N. 248/1975] FARM LOANS 5 Guarantee 3. Subject to the provisions of subsection (l) of section 4 and section 15, the Government shaU be liable to pay to a bank the amount of loss sustained by it as a result of a guaranteed farm loan if the manager of the bank or any branch thereof has, in the prescribed manner, certified that he complied with the requirements of sub~paragraph (b) of paragraph 2 of the Second Schedule in relation to that loan. Payment of bank. losses. Second Schedule. 4.-{1) The Government shall not be liable under this Limitation Act to pay to any bank, in respect of losses sustained by of liability. such bank as a result of guaranteed farm loans made by it during any loan period, an amount in excess of twenty per 51/1974 centum of the aggregate principal amount of all guaranteed s. 3· farm loans made by the bank during such loan period. (2) The first loan period shall commence upon the 15th November, 1965, and, upon the expiration of each loan p~riod, another loan period shall commence. (3) The aggregate principal amount of all farm loans made pursuant to this Act shall not exceed the sum of ten million dollars : Provided that the House of Representatives may from time to time, by resolution, increase the sum which the said amount is not to exceed. 5. Where the Minister is satisfied that the Government Guarantee . 1· bl d h' A h charged 1s 1a e un er t 1s ct to pay any amount to a bank, sue upon amount shall be a charge on the Consolidated Fund and, ~~~:s.°~~nd. [Ibe inclusion of this page is authorized by L.N. 24S/ 19751 6 Effect of payment of bank losses. FARM LOANS at the direction of the Minister, shall be paJd from that Fund upon a claim being made by the bank. 6.-( l) Where any payment is made under section 5 to a bank in respect of loss sustained by it as a result of a guaranteed farm loan, the bank shall execute a receipt in favour of the Minister in the prescribed form and the Crown shall thereupon be subrogated in and to all the rights of the bank in respect of the loan, and (without limiting the generality of the foregoing) all the rights and powers of the bank in respect of any unrealized security for the loan and the right to take, institute or continue any legal proceedings for the enforcement of any such rights as aforesaid sha11 vest in the Crown; and all documents for exercising, transferring, realizing, or otherwise disposing of any of the saJd rights on behalf of Her Majesty may, unless otherwise provided by law, be executed by the Minister or any public officer authorized by him in that behalf. (2) Reference in subsection (1) to any rights or powers does not include reference to any rights or powers in respect of any security other than security taken in pursuance of section 7. (3) Where any payment has been made as aforesaid, it shall be lawful for the bank acting on behalf of the Crown to take such steps as the Minister may request for the collection of any amount owed by the borrower in respect of the loan, and any actual expenses of compliance with this subsection shall be borne by the Government. [The inclusion of this page is authorized by L.N. 248/ 1975] FARM LOANS (4) Any document purporting to be a receipt in the prescribed form and purporting to be signed on behalf of the bank shall be prima facie evidence that payment was made as aforesaid ,vith reference to the loan mentioned in such document and that the same was duly executed on behalf of the bank. Security 7 7.-(1) A farm loan shall not be a guaranteed farm loan Securityfor n1 guaranteed U ess- farm loans. (a) it was granted upon the security of a charge on one t fd.974 or more of the following, that is to say (i) on land in which a legal estate in fee simple is owned by the borrower; or (ii) on movable property of the borrower; or (iii) on any crops to be established or main­ tained by way of expenditure defrayed out of the proceeds of the loan; or (b) it was granted upon some security other than any such charge as is referred to in paragraph (a), and pursuant to a certificate issued by or under the authority of the Minister stating that such other security (the nature of which shall be specified in the certificate) is acceptable to the Minister. (2) Every such charge for the purpose of securing a guaranteed farm loan shall be created by an instrument in the prescribed form, in which there shall be inserted a sufficient description of the property or crops affected by the charge. 8.-( 1) As soon as practicable after a charge is created Memoranda in accordance with the provisions of subsection (2) of of charges. section 7, a memorandum of the charge shall be prepared in the prescribed form and transmitted by the bank to the Deputy Keeper of the Records. (2) The Deputy Keeper of the Records shall keep a record of every memorandum received by him under this section, and such record shall be sufficient notice to all the world of the existence of the charge to which the memoran [The inclusion of this page i, authorized by LN. 248/ 1975] n 1 8 Release of charges. FARM LOANS dum refers and may be inspected by any person without payment of a fee. (3} Where any such charge as aforesaid affects land, or crops growing on land, which is under the operation of the Registration of Titles Act, the bank sha11, at the time of transmission of the memorandum of such charge to the Deputy Keeper of the Records, transmit a copy of such memorandum to the Registrar of Titles who shall, upon receipt thereof, cause a caveat to be entered against the title to the land described in the memorandum. (4) Every charge of which a memorandum is recorded under the provisions of this section shall have the same force and effect as if the charge had been fully recorded. (5) Every person interested in any property, real or personal affected by any such charge shall be entitled to have access to the instrument creating the charge for all proper purposes and at all reasonable times. 9.-(1) A release of property or crops from any charg..=: thereon taken in accordance with section 7 shall be pre­ pared by the bank in the prescribed form upon payment by the borrower of all moneys secured by the charge. (2) Every release prepared under subsection (1) shall be transmitted to the Deputy Keeper of the Records who shall upon receipt thereof, make the appropriate entry in his records to show that the property or crop described in the memorandum of the charge to which the release relates has been released from the charge. (3) Where a copy of the memorandum of a charge to which any release relates was transmitted to the Registrar of Titles under subsection (3) of section 8, a copy of such release shall be transmitted to the Registrar of Titles, who shall, upon receipt thereof, remove the caveat entered under that subsection against the title to the land described in the memorandum. [The inclusion of this page is authorized by L.N, 248/19751 FARM WANS 9 (4) Notwithstanding anything to the contrary con­ tained in any law, every release transmitted to the Deputy Keeper of the Records in accordance with the provisions of subsection (2) shall operate as a full and effectual release of the charge in respect of which it was made. 10. Where any charge on crops or movable property ·is Applica.tion created in accordance '1-Vith subsection (2) of section 7, the ~!itfsti~~s provisions of sections 29, 30 and 31 of the Agricultural ~~gE~jit Credit Board Act, shall, mutatis mutandis, apply in relation Board Act. to such charge as they apply in relation to a charge created under section 27 of that Act: Provided that, for the purposes of this section) sub-para­ graph (iii) of paragraph (b) of subsection (1) of section 30 of the Agricultural Credit Board Act, shall have effect as if for the reference therein to the doing of any act prohibited by that Act there were substituted a reference to the breach of any term or condition for the observance or performance of \vhich security has been given by way of the charge. 11. Nothing in this Act shall be construed to preclude a Additional guaranteed farm loan, which is secured in any one or more security. of the ways sanctioned by subsection (1) of section 7, from being secured in such additional manner as the bank con siders advisable. Miscellaneous 12.-(1) The Minister may make regulations generally for Regulations. giving effect to the provisions of this Act and without pre judice to such general power may make regulations (a) prescribing anything which may be prescribed under any provisions of this Act; (b) requiring reports to be made to the Minister by a bank in respect of guaranteed farm loans made by it; {The inclusion of this page is authorized by L.N. 248/1975] 10 Second Schedule. FARM LOANS (c) prescribing measures or procedure which may be adopted by a bank in the case of any default in repayment of a guaranteed farm loan, or payment of any interest thereon, or observance or perform­ ance of any conditions or other terms thereof to the benefit of which the bank is entitled; (d) prohibiting the submission to the Minister of a claim under this Act by a bank while it is prac­ ticable for the bank to mitigate or recover its loss by recourse to any measures or procedure pre­ scribed as aforesaid; and for determining whether or not it is practicable for the bank so to do; (e) for determining the amount of loss sustained by a bank in respect of a guaranteed farm loan; (f) prescribing the time and procedure for the sub­ mission of a claim to the Minister by a bank in respect of loss sustained by it as a result of a guaranteed farm loan. (2) Where the Minister is satisfied that a bank has contravened any regulation made under paragraph (b) of subsection (1), he may, by notice published in the Gazette, exclude from the guarantee provided by this Act all farm loans made by that bank after such publication. (3) Subject to the provisions of subsection (1} of section 16 with respect to regulations made pursuant to the Second Schedule, nothing contained in any regulations made pursuant to any provisions of this Act, other than paragraph (bl of subsection (I) of this section, shall apply in relation to any guaranteed farm loan in respect of which application under paragraph 1 of the Second Schedule was made, and agreement betvleen the bank and the borrower was entered into as a result of such application, prior to the coming into operation of such regulations. [The inclu~ion of this page is authorized by L.N. 248/ 1975) FARM LOANS (4) Regulations made under this section shall be 51/1974 subject to negative resolution of the House of Repre- s. s. sentatives. 13.-(1) Every person who- Offences. (a) in an application for a guaranteed farm loan makes a statement which he knows to be false in any material particular; or (b) for the purposes of any of the provisions of this Act or any regulations made thereunder, signs a certificate in the form prescribed for such pur­ poses, being a certificate which he knows to be false in any material respect; or (c) wilfully uses any proceeds of a guaranteed farm loan for a purpose for which they were not advanced; or (d) becomes indebted to an amount exceeding one 5111974 hundred thousand dollars, such amount being the s. 6· aggregate of the outstanding principal amounts of loans made on any applications by him for guaran teed fa rm loans, shall be guilty of an offence against this Act. (2) No prosecution for any offence under this Act shall be begun without the sanction of the Director of Public Prosecutions. (3) The commission of any such offence by a borrower shall not discharge the Government's liability under this Act in respect of the loan. 14. Every person guilty of an offence against this Act Penalty. shall be liable on summary conviction before a Resident Magistrate to a fine not exceeding two hundred dollars or in default of payment thereof to imprisonment with or without hard labour for a term not exceeding three months. [The inclusion of this page is authorized by LN. 248/ 197S] 11 12 Discharge of Govern­ ment from liability, Second Schedule, Variation of terms of repayment of guaran­ teed farm loam. Second Schedule. Exemption from stamp duty and other fees. FARlvl LOANS 15. Where a bank waives any breach of a condition to which a guaranteed farm loan is made subject as required by paragraph 8 of the Second Schedule, the Government shall not be liable to make any payment in respect of any loss sustained by the bank as a result of the loan unless the Minister is satisfied that (a) such breach was not substantial; or (b) the payment required by such condition to be evidenced has been made. 16.-(1) Where a borrower defaults, or advises the bank that he is about to default, in the repayment of any amount loaned upon the security of a charge taken in accordance with section 7, the terms of repayment of such amount may, by agreement in writing between the bank and the borrower, be varied in any manner not inconsistent with the provisions of the Second Schedule and any regulations pursuant thereto for the time being in force without the Government's liability under this Act in respect of such loan being dis~ charged by reason of any such variation. (2) \Vhere variation of any terms of repayment is agreed under this section, any such terms embodied in the charge shall be deemed to be duly amended as so agreed and the charge shall have effect and be enforceable accordingly. 17.-(1) Notwithstanding anything to the contrary con­ tained in any law, any deed, instrument (other than a cheque), writing or receipt relating to any guaranteed farm loan shall be exempt from stamp duty, recording and registration fees. (2) The operation of any deed, instrument, writing or receipt in respect of which exemption from stamp duty, recording or registration fees is made by this section shall not be prejudiced or affected by such exemption. [The inclusion of this page is authorized by LN. 248 / 1975] FARM LOANS FIRST SCHEDULE (Section 2) Farm Loan Projects 1. The purchase of livestock. 2. The purchase of faml implements. 3. The establishment or maintenance of crops. 4. The purchase, installation, alteration or improvement of a farm electric system. 5. The construction, purchase, insta11alion, excavation, a1leration, repair or improvement of works for the drainage or supply of water for the purpose of farming, 6. The clearing, breaking, reclaiming or other development of land for livestock. 7. The purchase, or the purchase and installation, of farm equip­ ment. 8. The construction, painting or repairing of, or the making of any structural alterations or additions to, any building on a farm, other than a building used or to be used mainly as a dweUing. 9. The clearing, breaking, reclaiming, or other preparation of land, being land not then or immediately previously under sugar cane cultivation, for the p1anting of sugar cane thereon. 10. The restructuring of the capital financing of any fanning enter- LN. prise. 18/ 1975. 11. The purchase of land for farming, and the development of such land by the construction of farm roads on such land. 12. The purchase of seeds or other material for the planting of new crops or the replanting of old crops. SECOND SCHEDULE (Sections 2, 3, 12 (3), 15 and 16) Conditions of Guarantee of Farm Loans 13 I. A fann loan shall not be guaranteed under this Act unless made Application on the borrower's application to the bank for a guaranteed fann loan for loan, and every such application shall (a) be in the fonn prescribed by regulations in force when the application is made~ (b) be signed by the applicant; and (c) contain statements as to the purposes for which the proceeds of the loan are to be expended and as to the cost or estimated cost (as the prescribed form may require) of carrying out such purposes, [The inclusion of this p:1.ge is authorized by L.N. 60/ 1976] 14 Making of loan upon application. Principal amount. 47(1968 s. 3. SI /1974 s. 7. Prescribed limitations. Interest. No bank charge other than interest. Security. Evidence of due ex.penditure. Period of repayment. FARM LOANS and any principal amount owing by the applicant in respect of guaranteed farm loans previously made to him shall be disclosed in the appJication. 2. The bank shall not make a loan on any such application (a) if it would be inconsistent with subsection (3) of section 4 so to do; (b) unless the application has been checked and scrutinized by the manager of the bank or any branch thereof with the care required of him by the bank in the conduct of its ordinary business. 3. The principal amount loaned on any such application, together with any amount disclosed therein as required by paragraph 1, shall not be less than $6,000 or more than Sl00,000. 4. The amount loaned to any borrower for a purpose stated in his application aml belonging to any prescribed category of purposes (a) shall not exceed such sum; (h) shall not exceed such percentage of the cost or estimated cost of carrying out that purpose; (c) shall. under the terms of the loan, be repayable in full within a period not exceeding such time, as may be prescribed in relation to that category. 5. The rate of interest charged by the bank on a guaranteed farm loan shall not exceed such rate as shall be prescribed. 6. No fee or charge of any kind other than interest shall, by the terms of the loan, be payable to the bank in respect of the loan as Jong as the borrower is not in default. 7. The provisions o( subsection (1) and (where applicable) sub­ section (3) of section 8 shall be complied with in respect of such security as shall, in accordance with section 7, be taken for the loan. 8. Where the cost or estimated cost of carrying out any purpose stated in any application as required hr paragraph l includes the purchase price of any livestock, farm eqwpment, farm electric system, machinery or fann implements, any loan made for that purpose on such application shall be subject to a condition requiring the borrower to deliver to the bank receipts or paid cheques evidencing that such purchase price. exclusive of small amounts arising out of casual or miscellaneous purchases, has been paid by him. 9. The principal amount of a guaranteed farm loan sha11, under the terms thereof. be repayable within. a period not exceeding ten years after the bank made the loan to the borrower. [Tile inclu~ion of this pag.! is authorized by L.N. 60/ 1976]