Financial Institutions Depositors Compensation Act

An Act respecting the provision of compensation to depositors of Canadian Commercial Bank, CCB Mortgage Investment Corporation and Northland Bank in respect of uninsured deposits Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows: Short title This Act may be cited as the Financial Institutions Depositors Compensation Act. Definitions In this Act, deposit means the unpaid balance of the aggregate of moneys received or held by a financial institution, from or on behalf of a person in the usual course of business, including any interest accrued or payable to the person, for which the financial institution has given or is obligated to give credit to that person’s account or has issued or is obligated to issue a receipt, certificate, debenture (other than a debenture issued by a chartered bank), transferable instrument, draft, certified draft or cheque, traveller’s cheque, prepaid letter of credit, money order or other instrument in respect of which the financial institution is primarily liable, and is obligated to repay the moneys on a fixed day, on demand or within a specified period of time following demand; (dépôt) depositor means, in respect of a financial institution, a person whose account in the financial institution has been or is to be credited in respect of moneys constituting a deposit or part of a deposit or a person to whom the financial institution is liable in respect of an instrument issued for moneys constituting a deposit or part of a deposit, and includes a person who has rights or interests in law or equity in respect of a deposit or part of a deposit; (déposant) financial institution means Canadian Commercial Bank, CCB Mortgage Investment Corporation or Northland Bank; (institution financière) liquidator means a person appointed or appointed provisionally as a liquidator under the Winding-up Act or appointed as a curator under the Bank Act; (liquidateur) Minister means the Minister of Finance; (ministre) person includes an association of persons and a government; (personne) prescribed means prescribed by regulation; (Version anglaise seulement) security interest means a right to or an interest in a deposit in a financial institution that secures payment or performance of an obligation to the financial institution. (sûreté) Payment to depositor Subject to this Act and the regulations, on application therefor to the Minister by a depositor in the prescribed form and manner, the Minister may make payment to the depositor of an amount equal to so much of the deposit of the depositor held by a financial institution immediately prior to September 2, 1985, including any interest thereon accrued or payable as of that time, as, in the opinion of the Minister or an agent thereof appointed under subsection 12(1), the depositor is entitled to and as was not insured by the Canada Deposit Insurance Corporation under the Canada Deposit Insurance Corporation Act. Payment to liquidator Subject to section 5, where a depositor has applied for a payment under this Act in respect of a deposit in a financial institution and the depositor is indebted or otherwise obligated to the financial institution, the Minister may, on application to the Minister in the prescribed form and manner by a liquidator appointed in respect of the financial institution, where the depositor has been notified of the application of the liquidator in the manner prescribed, and a right of set-off could be asserted by the depositor or the liquidator in respect of the deposit and the obligation, make payment to the liquidator of any amount that the Minister could otherwise have paid to the depositor under section 3, to the extent of the amount of the set-off, in lieu of making a payment of that amount to the depositor. Debt discharged Any payment to a liquidator under this section discharges the obligation to the financial institution of the depositor in respect of whose deposit the payment is made to the extent of the amount paid. Where deposit subject to a security interest Where a depositor has applied for a payment under this Act and the deposit in respect of which the application is made or any part thereof was, immediately prior to October 3, 1985, subject to a security interest in favour of the financial institution in which the deposit is held in respect of an obligation to the financial institution, and no payment may be made under this Act to any depositor or liquidator in respect of the deposit or part thereof unless the Minister, or an agent thereof appointed under subsection 12(1), is satisfied that the deposit or part thereof has been applied, to the extent of the lesser of the amount of the deposit or part thereof that is subject to the security interest and the amount of the set-off that could be asserted, to reduce or extinguish the obligation, and the amount of the deposit or part thereof has been reduced accordingly. Determination by court Where a depositor has applied for a payment under this Act in respect of a deposit, or any part thereof, in a financial institution and there is any doubt or controversy as to whether subsection (1) applies in respect of the deposit or part thereof, or if subsection (1) applies, the amount of the deposit or part thereof that is subject to a security interest, or the amount of a set-off that could be asserted in respect of the deposit or part thereof, the Minister, the depositor or a liquidator appointed in respect of the financial institution may apply to a court of competent jurisdiction within Canada for a determination of the matter. Court order Where, pursuant to subsection (1), a payment may not be made to a depositor who has applied for a payment under this Act in respect of a deposit, or any part thereof, in a financial institution, a depositor or a liquidator appointed in respect of the financial institution may apply to a court of competent jurisdiction within Canada for an order that the deposit or part thereof be applied to reduce or extinguish the obligation in respect of which the deposit or part thereof is subject to a security interest, and that the amount of the deposit or part thereof be reduce accordingly. Payment into court Where an application has been made under this Act in respect of a deposit in a financial institution and there is any dispute between two or more persons claiming to be eligible for a payment under this Act in respect of the deposit with respect to their eligibility or the amount of the payment for which each is eligible, the Minister may pay or cause to be paid into a court of competent jurisdiction an amount in respect of the deposit pending a determination of the matter. Time of payment Sixty per cent of the amount payable under this Act in respect of a deposit in a financial institution shall be paid forthwith, and the remaining forty per cent shall be paid on April 1, 1986. Extension of time Notwithstanding subsection (1), where there is not sufficient information to determine whether a person is eligible for a payment under this Act or the amount of a payment, payment may be made at such time as the necessary information is available. Limit for applications No payment may be made under this Act unless the application therefor is received prior to April 1, 1986. Discharge of liability Any payment under this Act in respect of a deposit discharges the Minister and any agent thereof appointed under subsection 12(1) from all liability in respect of that deposit, and in no case is the Minister or any agent under any obligation to see to the proper application in any way of the payment so made. Rights of Her Majesty On the payment of any amount under this Act in respect of a deposit to a depositor, to a liquidator or into court, all the rights and interests of the depositor with respect to whom the payment is made in respect of the deposit, including any claim, action or cause of action and any charge or right of priority of payment under subsection 277(1) of the Bank Act or section 85 of the Canadian Payments Association Act, are assigned to and vest in Her Majesty in right of Canada, and Her Majesty may maintain an action in respect of those rights and interests in the name of the depositor or in the name of Her Majesty. Not a first charge under the Bank Act For greater certainty, the assignment to and vesting in Her Majesty of rights and interests under subsection (1) does not, by virtue only of that assignment and vesting, create a first charge on the assets of a financial institution for the purposes of paragraph 277(1)(a) of the Bank Act. Section 13 of the Canada Deposit Insurance Corporation Act For greater certainty, the assignment to and vesting in Her Majesty of rights and interests under subsection (1) does not affect any subrogation or assignment of rights and interests of the depositor in respect of the deposit pursuant to section 13 of the Canada Deposit Insurance Corporation Act. Right of set-off removed Notwithstanding any other law, no right of set-off may be asserted with respect to a deposit in respect of which a payment has been made under this Act. Subsection 137.1(10) does not apply Subsection 137.1(10) of the Income Tax Act does not apply in respect of any payment made under this Act. Powers The Minister may do such things and perform such acts as are necessary to carry out the purposes and provisions of this Act and may enter into any agreement or arrangement necessary or incidental thereto including, without restricting the generality of the foregoing, any agreement or arrangement relating to the appointment of an agent for the purposes of this Act and the making of payments to the agent in respect of any costs incurred by the agent. Agreements or arrangements Where the Minister enters into an agreement or arrangement under subsection (1), the Minister may do such things and perform such acts as may be necessary for or incidental to carrying out the agreement or arrangement. Canada Deposit Insurance Corporation The Canada Deposit Insurance Corporation may enter into an agreement or arrangement under subsection 12(1) to act as agent of Her Majesty for the purposes of this Act and, in the event that such an agreement or arrangement is entered into, the Corporation is, for the purposes of this Act, an agent of Her Majesty; the Corporation may do all things necessary or incidental to the carrying out of the purposes and provisions of this Act; and the Board of Directors of the Corporation may make by-laws governing the making of payments under this Act. Powers of liquidator For the purposes of this Act and notwithstanding any other Act of Parliament, a liquidator appointed in respect of a financial institution has the power, without being required to obtain the approval of any court, to assert a right of set-off, to effect a set-off and to do such other things and perform such other acts as may be necessary in respect thereof. Regulations The Governor in Council may make regulations prescribing the form and manner in which a person who makes an application under section 3 shall establish that he is a depositor with the financial institution in respect of which the application is made and that he is eligible for a payment under this Act, and the amount of the payment that may be made to him; prescribing the form and manner in which a liquidator who makes an application under section 4 shall establish the amount of the payment that may be made to him; respecting the provision of any information that may be required for the purposes of the administration of this Act from a depositor or a liquidator appointed in respect of a financial institution; prescribing requirements that may be imposed as a condition for a payment under this Act; prescribing the manner and currency in which a payment may be made under this Act; prescribing anything that is by this Act to be prescribed; and generally for carrying out the purposes and provisions of this Act. Moneys There is hereby appropriated for the purposes of this Act eight hundred and seventy-five million dollars to be paid out of the Consolidated Revenue Fund from time to time as required. Commencement This Act shall come into force with respect to the CCB Mortgage Investment Corporation on a day to be fixed by proclamation. [Note: Act, except with respect to the CCB Mortgage Investment Corporation, in force on assent December 20, 1985.]