ORIGINALLY PUBLISHED | OCTOBER 1934 | THE FARMER
Important among the several new laws and regulations affecting the farmer, which were passed at this year’s session of the Dominion Parliament, is the Farmers’ Creditors Arrangement Act which provides for a simple and inexpensive legal procedure by which a farmer over-burdened with debt may arrange a compromise with his creditors and so get off to a new start, financially speaking. It is essentially an Act to provide for the farmer at little expense, an opportunity to make an arrangement for liquidation of his debts similar to that obtaining in other business undertakings through a receivership under the Bankruptcy Act.
The Act, while it has received Royal Assent so far as the Dominion is concerned, does not take effect in any province until proclaimed by the Governor in council Council to be in force in such provinces. It has been proclaimed in Manitoba, Saskatchewan and Alberta where the need for it was felt to be greatest. Announcement has been made that it will be proclaimed in Ontario on October first.
Details and procedure of the Farmers; Creditors Arrangement Act are summarized as follows:
The farmer who is unable to meet his liabilities as they become due may, by the Act, file with the Official Receiver in his county or judicial district a proposal for a composition of his debts among his creditors or for an extension of time in which to pay them. Should it be that the farmer and his creditors are unable to agree on the proposal so filed, a Board of Review appointed for the province may, upon the request of either the farmer or any one of his creditors, formulate a plan or an arrangement for payment of the former’s debts, having regard to his present and prospective abilities to pay and the productive value of his farm. Power is given the Board of Review to confirm its own arrangement and to make this binding upon both the farmer and his creditors, even though they do not consent to it. In this case the Board’s arrangement must finally be approved by the Court. The Board is also empowered to refuse to make any arrangement where it is considered impossible to put into effect one that can be considered fair to both the farmer and his creditors.
After the arrangement has been confirmed by the Board and approved by the Court, failure on the part of the farmer to carry out its terms will constitute an act of bankruptcy, unless in the opinion of the Court the failure to do so is due to causes beyond the farmer’s control. (For purposes of the Act a “farmer” is defined as “a person whose principal occupation is the farming or the tilling of the soil”.) Further in this connection, whenever an arrangement has been officially confirmed and approved, the Court may order the farmer to execute any mortgage, conveyance, etc., necessary to carry out the arrangement.
Section seventeen of the Act deals with interest on farm loans and states that whenever a rate of interest exceeding seven per cent. is called for in a farm mortgage and the mortgagor pays the amount owing on the mortgage and all interest to the time of payment, together with three months further interest in lieu of notice, the interest rate payable thereafter shall not be in excess of five per cent. per annum. Section seventeen, unlike the rest of the Act, has been proclaimed as being now in force in all the provinces. However, it cannot have much material effect in Ontario, Quebec and the Maritimes, as interest rates on farm mortgages in those provinces, unlike in the West, have rarely exceeded five per cent. in any case.
By R.B. Hamilton