1998 Legislative Session: 3rd Session, 36th Parliament
THIRD READING
Certified correct as passed Third Reading on the 30th day of April, 1998
Ian D. Izard, Law Clerk
HONOURABLE ANDREW PETTER
MINISTER OF FINANCE AND
CORPORATE RELATIONS
HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province of British Columbia, enacts as follows:
Mortgage Brokers Act
1 Section 1 of the Mortgage Brokers Act, R.S.B.C. 1996, c. 313, is amended by repealing the definition of "mortgage" and substituting the following:
"mortgage" includes every instrument by which land in British Columbia or, for the purposes only of paragraph (c) of the definition of "mortgage broker", sections 14.1 and 17.5 and Division 3 of Part 2, land, whether or not in British Columbia, is, in any manner, conveyed, assigned, pledged or charged as security for the payment of money or money's worth to be reconveyed, reassigned or released on satisfaction of the debt, but does not include an agreement for sale of or a right to purchase land or an interest in land; .
2 Section 6 is amended
(a) by repealing subsection (1),
(b) by adding the following subsection:
(2.1) The registrar, by order may
(a) appoint a person to conduct an investigation, examination and inquiry referred to in subsection (2) or to assist the registrar in conducting the investigation, examination and inquiry, and
(b) specify terms of reference to be followed by the person appointed. ,
(c) in subsections (3) and (4) by striking out "documents, records and things" and substituting "records, property, assets or things",
(d) by repealing subsection (7) and substituting the following:
(7) On an inquiry under this Act and on being satisfied that it is necessary and in the public interest, the registrar, or a person appointed under subsection (2.1), may
(a) enter the business premises of a person registered or required to be registered under this Act as a mortgage broker or submortgage broker during business hours for the purpose of carrying out an inspection, examination or analysis of records, property, assets or things that are used in the business of the mortgage broker or of the mortgage broker by whom the submortgage broker is employed and that may reasonably relate to the subject matter of the inquiry,
(b) require the production of the records, property, assets or things referred to in paragraph (a) and to inspect, examine or analyze them, and
(c) on giving a receipt, remove the records, property, assets or things inspected, examined or analyzed under paragraph (a) or (b) for the purpose of further inspection, examination or analysis.
(7.1) On application by the registrar and on being satisfied by information on oath that there are reasonable and probable grounds to believe that there may be anything that may reasonably relate to the subject matter of an inquiry under this Act
(a) in a business premise, or
(b) in a building, receptacle or place,
a justice may make an order authorizing the registrar or a person designated by the registrar and named in the order
(c) to enter into that business premise, building, receptacle or place at any reasonable time, for the purpose of carrying out an inspection, examination or analysis of records, property, assets or things that may reasonably relate to the subject matter of the inquiry,
(d) to require the production of the records, property, assets or things referred to in paragraph (c) and to inspect, examine or analyze them, and
(e) on giving a receipt, to remove the records, property, assets or things referred to in paragraph (c) for the purpose of further inspection, examination or analysis.
(7.2) An application for an order under subsection (7.1) must be made in the prescribed manner and, unless a justice otherwise directs, may be
(a) made without notice, and
(b) heard in the absence of the public.
(7.3) Inspection, examination or analysis under this section must be completed as soon as practicable and the records, property, assets or things must be returned promptly to the person who produced them.
(7.4) On an inspection, examination or analysis under this section, the registrar, a person appointed under subsection (2.1) or named in an order under subsection (7.1) or a person acting under the direction of any of them may
(a) mark the records, property, assets or things for identification, or
(b) use or alter the records, property, assets or things to the extent reasonably necessary to facilitate the inspection, examination or analysis,
and does not incur any liability because of doing so.
(7.5) A person must not
(a) withhold, destroy, conceal or refuse to give any information, or
(b) withhold, destroy, conceal or refuse to produce any record, property, asset or thing
reasonably required under subsection (7) or (7.1) by the registrar, a person appointed under subsection (2.1) or a person authorized under subsection (7.1). , and
(e) in subsection (8) by striking out "documents, records, properties and matters" and substituting "records, property, assets or things".
3 Section 8 (1) is repealed and the following substituted:
(1) After giving a person registered under this Act an opportunity to be heard, the registrar may suspend or cancel the person's registration if, in the opinion of the registrar, any of the following paragraphs apply:
(a) the person would be disentitled to registration if the person were an applicant under section 4;
(b) the person is in breach of this Act, the regulations or a condition of registration;
(c) the person is a party to a mortgage transaction which is harsh and unconscionable or otherwise inequitable;
(d) the person has made a statement in a record filed or provided under this Act that, at the time and in the light of the circumstances under which the statement was made, was false or misleading with respect to a material fact or that omitted to state a material fact, the omission of which made the statement false or misleading;
(e) the person has conducted or is conducting business in a manner that is otherwise prejudicial to the public interest.
(1.1) After giving a person registered under this Act an opportunity to be heard, the registrar may order the person to pay an administrative penalty of not more than $50 000 if, in the opinion of the registrar any of paragraphs (b) to (e) of subsection (1) apply.
4 The following section is added:
Administrative penalties -- enforcement
8.1 (1) The registrar may file in a Supreme Court registry an order under section 8 (1), imposing an administrative penalty, by filing in the registry a copy of the order certified as a true copy by the registrar.
(2) An order of the registrar filed under subsection (1) imposing an administrative penalty has the same force and effect, and all proceedings may be taken on the order, as if it were a judgment of the Supreme Court.
5 Section 12 is repealed.
6 Section 14 (3) is amended by striking out ", in addition to any proceedings that may be instituted under section 22,".
7 The following section is added to Part 1:
Requirements for administration agreements
14.1 A mortgage broker must not administer, or arrange for a person to administer, a mortgage on behalf of one or more persons who have an interest in the mortgage unless the mortgage broker has a written agreement with them that
(a) contains the full agreement of the parties respecting
(i) the remuneration of the mortgage broker or any other person for all services relating to the administration of the mortgage, and
(ii) other expenses and costs that are related to the mortgage,
(b) specifies the extent of the responsibilities of the mortgage broker, of any other person receiving remuneration for services relating to administration of the mortgage and of each of the other parties to the agreement for decisions respecting
(i) the collection of money under the mortgage,
(ii) prepayment of principal under the mortgage,
(iii) discharges and partial discharges of the mortgage on satisfaction of indebtedness under it, and
(iv) the commencement or continuation of enforcement proceedings in the event of default under the mortgage, and
(c) makes provision for any other prescribed matters.
8 Part 2 is amended by adding the following heading immediately before section 15:
Division 1 -- Application and Interpretation .
9 Section 15 is repealed and the following substituted:
Application
15 (1) In this Part, "additional amount", in relation to a mortgage or mortgage transaction, means an amount by way of bonus, commission, discount, finder's fee, brokerage fee or amount of a similar kind, by whatever name called, required to be paid by the borrower, in addition to interest and reasonable appraisal, survey and legal fees and other prescribed costs, as part of the cost of obtaining the amount paid to the borrower or on the borrower's account.
(2) Division 2 applies only to a mortgage or mortgage transaction in which the borrower is to pay an additional amount.
10 The following sections are added:
Persons responsible for disclosure statements
15.1 (1) In Division 2, "responsible person" in relation to a mortgage to which that Division applies means
(a) if there is only one lender under the mortgage and there is no registered mortgage broker who receives or is to receive an additional amount in the mortgage transaction, that lender,
(b) if there is more than one lender under the mortgage and there is no registered mortgage broker who receives or is to receive an additional amount in the mortgage transaction, the person designated under subsection (2) as the responsible person,
(c) if one or more person receives or is to receive an additional amount in the mortgage transaction and only one of them is a registered mortgage broker, the registered mortgage broker, or
(d) if one or more person receives or is to receive an additional amount in the mortgage transaction and more than one of them is a registered mortgage broker, the registered mortgage broker designated under subsection (3) as the responsible person.
(2) In the circumstances described in subsection (1) (b) the lenders under the mortgage, by written agreement signed by each of them, must designate one of them as the responsible person.
(3) In the circumstances described in subsection (1) (d) the registered mortgage brokers, by written agreement signed by each of them, must designate one of them as the responsible person.
Disclosure statement not provided or defective
15.2 Except as otherwise provided in this Part, a mortgage is not rendered void, voidable or unenforceable, because of
(a) a failure to provide a disclosure statement under section 16, 17.4 or 17.5 or an information statement under section 17.1 or 17.2, or
(b) a defect, omission or irregularity in a disclosure statement or information statement.
Exclusion agreement of no effect
15.3 An agreement excluding or purporting to exclude one or more provisions of this Part has no effect.
11 Part 2 is amended by adding the following heading immediately before section 16:
Division 2 -- Disclosure to Borrowers .
12 Section 16 is amended
(a) by repealing subsections (1) and (3) and substituting the following:
(1) On or before the date the borrower in a mortgage transaction signs the mortgage or signs or does anything to commit the borrower to that transaction, and soon enough to afford the borrower a reasonable time to understand the documents, the responsible person must provide to the borrower a separate written disclosure statement that
(a) is in the prescribed form and has the prescribed content,
(b) is designated as a disclosure statement, and
(c) has been completed and signed by the responsible person.
(3) A borrower entitled under subsection (1) to receive a disclosure statement is relieved of any obligation to enter into the mortgage and may rescind the signed mortgage, if any, and any ancillary agreement with the mortgage broker or lender in relation to the mortgage transaction, including but not limited to an agency agreement with a mortgage broker, if the borrower
(a) at any time after receiving the disclosure statement without first having signed the mortgage, or
(b) within 2 days after the date the borrower receives the disclosure statement after having signed the mortgage,
delivers or posts by prepaid mail to the responsible person and, if the borrower has signed the mortgage, to the registrar of titles in whose office the land comprised in the mortgage is registered, a notice that the borrower withdraws from or rescinds the mortgage.
(3.1) A notice under subsection (3) is sufficiently given for the purposes of that subsection if delivered to the responsible person or posted by prepaid mail addressed to the responsible person at his or her place of business or at the address given for the lender or lenders, as the case may be, in the disclosure statement.
(3.2) On receipt of a notice under subsection (3), the responsible person, if not also the lender or one of the lenders in the mortgage transaction, must give the lender a copy of the notice, and the copy is sufficiently given to the lender if delivered to the lender, or posted by prepaid mail addressed to the lender,
(a) at the lender's place of business or at the place of business of any of the lenders, if more than one, or
(b) at the address given for the lender or lenders, as the case may be, in the disclosure statement.
(3.3) Subject to this section, a notice under subsection (3) operates
(a) to relieve the borrower from any obligation under, or to enter into or proceed with,
(i) the mortgage that is the subject of the notice, or
(ii) any ancillary agreement referred to in subsection (3), and
(b) to rescind the mortgage and any ancillary agreement referred to in subsection (3). , and
(b) by repealing subsection (7) and substituting the following:
(7) If a borrower gives notice under subsection (3), the borrower must
(a) promptly repay to the lender the full amount, if any, actually advanced on the mortgage,
(b) within 10 days after receipt of a statement of expenses, if any, reasonably and necessarily incurred by the lender, pay those expenses, and
(c) within 10 days after receipt of a statement of expenses, if any, reasonably and necessarily incurred by the mortgage broker, if a person other than the lender, pay those expenses.
(7.1) For the purposes of subsection (7), any expense that is an additional amount as defined in section 15 is not an expense reasonably and necessarily incurred.
13 The following section is added:
Retention and filing of disclosure statements
16.1 The responsible person required to provide a disclosure statement under section 16 to the borrower under a mortgage must retain for at least 7 years a copy of
(a) the disclosure statement, and
(b) the written agreement, if any, required under section 15.1 for the mortgage.
14 Section 17 (1) is amended
(a) by striking out "lender" in the first 2 places in which it appears and substituting "responsible person", and
(b) by striking out "lender" in the third place it appears and substituting "mortgagee".
15 Part 2 is amended by adding the following after section 17:
Division 3 -- Disclosure to Investors and Lenders
Prior disclosure
17.1 (1) A mortgage broker who
(a) arranges a mortgage in which another person is to be the mortgagee,
(b) arranges the sale of a mortgagee's interest in a mortgage from one person to another, or
(c) sells the mortgage broker's own interest as mortgagee under a mortgage to another person,
must provide to the other person, as soon as practicable before completion of the mortgage or sale transaction and soon enough to afford the other person a reasonable time to understand the transaction, a written information statement that meets the requirements of subsection (2).
(2) The information statement referred to in subsection (1) must
(a) be in the prescribed form, include the prescribed contents and be accompanied by any documents that are prescribed,
(b) be dated and signed by the mortgage broker,
(c) contain full, true and plain disclosure of the matters in the prescribed contents referred to in paragraph (a), and
(d) have printed or stamped in conspicuous type on its first page the following words:
"Neither the Registrar of Mortgage Brokers nor any other authority of the government of the Province of British Columbia has in any way passed on the merits of the matters dealt with in this information statement. This information statement has not been filed with the Registrar of Mortgage Brokers and the registrar has not determined whether or not it complies with Part 2 of the Mortgage Brokers Act."
(3) Despite any applicable agreement, the person who in a transaction referred to in subsection (1) is the intended mortgagee or purchaser of the mortgage, as the case may be, is not obligated to complete that transaction unless the mortgage broker complies with subsection (1).
Disclosure following completion of transaction
17.2 (1) A mortgage broker who
(a) arranges a mortgage in which another person is to be the mortgagee,
(b) arranges the sale of a mortgagee's interest in a mortgage from one person to another, or
(c) sells the mortgage broker's own interest as mortgagee under a mortgage to another person
must provide to the other person, as soon as practicable following completion of the mortgage transaction or sale transaction, a written information statement that meets the requirements of subsection (2).
(2) The information statement referred to in subsection (1) must
(a) be in the prescribed form, include the prescribed contents and be accompanied by any documents that are prescribed,
(b) be dated and signed by the mortgage broker, and
(c) contain full, true and plain disclosure of the matters in the prescribed contents referred to in paragraph (a).
Retention and filing of information statements
17.3 A mortgage broker required to provide an information statement under section 17.1 or 17.2 must retain a copy of the information statement for a period of at least 7 years.
Division 4 -- Conflict of Interest
Conflict of interest -- disclosure to borrowers for
mortgages on land in B.C.
17.4 (1) Every mortgage broker who acts in a mortgage transaction must provide to every person who is a borrower under a mortgage in that transaction, a written disclosure statement that meets the requirements of subsection (2).
(2) The disclosure statement referred to in subsection (1) must
(a) disclose any direct or indirect interest the mortgage broker or any associate, connected party or related party of the mortgage broker has or may acquire in the transaction,
(b) include the prescribed contents and be accompanied by any documents that are prescribed,
(c) be dated and signed by the mortgage broker, and
(d) contain full, true and plain disclosure of the matters in the prescribed contents referred to in paragraph (b).
Conflict of interest -- disclosure to lenders for mortgages
on land in B.C. or elsewhere
17.5 (1) Every mortgage broker who acts in a mortgage transaction must provide to every person who is a lender under a mortgage in that transaction, a written disclosure statement that meets the requirements of subsection (2).
(2) The disclosure statement referred to in subsection (1) must
(a) disclose any direct or indirect interest the mortgage broker or any associate, connected party or related party of the mortgage broker has or may acquire in the transaction,
(b) include the prescribed contents and be accompanied by any documents that are prescribed,
(c) be dated and signed by the mortgage broker, and
(d) contain full, true and plain disclosure of the matters in the prescribed contents referred to in paragraph (b).
Retention and filing of disclosure statements
17.6 A mortgage broker required to provide a disclosure statement under section 17.4 or 17.5 must retain a copy of the disclosure statement for a period of at least 7 years.
16 Sections 18 and 19 are repealed.
17 Section 22 is amended
(a) by repealing subsections (1) to (4) and substituting the following:
(1) A person commits an offence who
(a) contravenes section 6 (7.5), 14 (1) or (2), 16 (1), 17.1 (1), 17.2 (1), 17.4 (1), 17.5 (1) or 21 (1) (a) or (d),
(b) contravenes section 15.1 (2) or (3), 16 (3.2), 16.1, 17.3, 17.6 or 21 (1) (b) or (c) or (2),
(c) contravenes a direction of the registrar under section 7 (1) or an order of the registrar under section 14 (3), or
(d) makes a statement in a record filed or provided under this Act that, at the time and in the light of the circumstances under which the statement is made, is false or misleading with respect to a material fact or that omits to state a material fact, the omission of which makes the statement false or misleading.
(2) A person who commits an offence under subsection (1) (a), (c) or (d) is liable
(a) in the case of a corporation, on a first conviction to a fine of not more than $100 000 and on each subsequent conviction to a fine of not more than $200 000, and
(b) in the case of an individual
(i) on a first conviction, to a fine of not more than $100 000 or to imprisonment for not more than 2 years or to both, and
(ii) on each subsequent conviction, to a fine of not more than $200 000 or to imprisonment for not more than 2 years or to both.
(3) A person who commits an offence under subsection (1) (b) is liable
(a) in the case of a corporation, to a fine of not more than $5 000, and
(b) in the case of an individual, to a fine of not more than $2 000.
(4) If a corporation commits an offence under this Act, an officer or director of the corporation who authorizes, permits or acquiesces in the offence commits the same offence whether or not the corporation is convicted of the offence. ,
(b) in subsection (6) by striking out "by himself or herself or any person under his or her control." and substituting "by himself, herself or itself or any person under his, her or its control.", and
(c) by adding the following subsection:
(8) Section 5 of the Offence Act does not apply to this Act or to the regulations.
18 Section 23 (2) is amended
(a) by repealing paragraphs (a) to (d) and substituting the following:
(a) for each category of registration, respecting applications for registration and renewal of registration;
(b) prescribing the fees payable, in each category, for registration and renewal of registration;
(c) respecting registration and renewal of registration under this Act including, but not limited to, prescribing
(i) categories for persons for purposes of registration and otherwise,
(ii) the duration of registration in each category and determining different periods of duration of registration for different categories of registrants,
(iii) the manner of allocating persons to categories, and permitting the registrar to make the allocations,
(iv) requirements for, and limitations and conditions of, registration, renewal of registration and continuing registration of mortgage brokers, that may differ according to the categories of registration, including but not limited to requirements and conditions respecting bonding of registrants, errors and omissions insurance to be maintained by registrants, the establishment and maintenance of trust accounts and capital and liquidity requirements, and
(v) standards of conduct to be met by registrants or registrants in categories of registrants and practices to be carried out by registrants or registrants in categories of registrants; ,
(b) by repealing paragraph (h) and substituting the following:
(h) prescribing the form and content of disclosure statements under sections 16, 17.4 and 17.5, notices under section 16, and information statements under sections 17.1 and 17.2;
(h.1) prescribing the time within which disclosure statements under sections 17.4 and 17.5 must be provided; , and
(c) by adding the following paragraph:
(h.2) exempting prescribed classes of mortgages from the application of section 14.1 or one or more provisions of Part 2; .
Real Estate Act
19 Section 5 of the Real Estate Act, R.S.B.C. 1996, c. 397, is amended
(a) in paragraph (b) by striking out "must require" and substituting "may require", and
(b) in paragraph (c) by adding "or 29.3" after "section 26".
20 The following sections are added:
Definitions
29.1 In sections 29.2 to 31:
"compensation fund" means the Real Estate Special Compensation Fund established under section 29.3 (1);
"special compensation corporation" means the Real Estate Special Compensation Corporation established under section 29.2;
"wrongful or dishonest dealing" in relation to a licensee or former licensee means wrongful or dishonest dealing by the licensee or former licensee in a real estate transaction in which the licensee or former licensee acted in the capacity of licensed agent, licensed nominee or licensed salesperson, and includes
(a) misappropriation or wrongful conversion of money or other property entrusted to or received by the licensee or former licensee,
(b) an intentional failure, within a reasonable time, to account for or to pay over any money received as agent or salesperson and that belongs to one or more parties to the real estate transaction,
(c) an intentional misrepresentation, by word or conduct, or in any manner, of a material fact, either present or past, and an intentional omission to disclose a material fact,
(d) a promise or representation about the future that is beyond reasonable expectation and not made in good faith,
(e) any course of conduct or business that is intended to deceive a party to a transaction in real estate or a business venture about the nature of the transaction or the value of the real estate or the business venture, and
(f) an artifice, agreement, device or scheme to obtain money, profit or property by any of the means described in paragraphs (a) to (e) or by other illegal means.
Special compensation corporation established
29.2 (1) The Real Estate Special Compensation Corporation is established as a corporation consisting of the members of the board of directors appointed under subsection (3).
(2) The special compensation corporation may acquire and dispose of real and personal property for its purposes.
(3) The special compensation corporation is to be administered by a board of directors consisting of
(a) 3 directors appointed by the British Columbia Real Estate Association, and
(b) 4 directors appointed by the council.
(4) A director of the special compensation corporation holds office for a term of 2 years, or until a successor is appointed, and may be reappointed.
(5) Each of the British Columbia Real Estate Association and the council may revoke the appointment of a director of the special compensation corporation appointed by it.
(6) The directors of the special compensation corporation must elect one of them to be chair.
(7) A director of the special compensation corporation ceases to hold office if the director
(a) becomes a mentally disordered person,
(b) becomes bankrupt, or
(c) contravenes a provision of this Act or the regulations and a majority of the other directors considers that the contravention is sufficiently serious to justify the director's removal from the board of directors.
(8) For the purposes of the administration of the compensation fund, the special compensation corporation is entitled to access to licensing records kept under this Act.
(9) The Real Estate Errors and Omissions Insurance Corporation, at any time within 2 years after this section comes into force, may
(a) grant money, not exceeding $2 million, to the special compensation corporation,
(b) pledge assets of the Real Estate Errors and Omissions Insurance Corporation to secure a line of credit, not exceeding $2 million, for the special compensation corporation, or
(c) grant money to the special compensation corporation or pledge assets of the Real Estate Errors and Omissions Insurance Corporation to secure a line of credit for the special compensation corporation, if the amount of money granted together with the amount secured under the line of credit does not exceed $2 million.
(10) Money granted to the special compensation corporation under subsection (9) or received by it under a line of credit referred to in that subsection must be treated by the special compensation corporation as part of the compensation fund.
Compensation fund
29.3 (1) The special compensation corporation must establish a fund, to be known as the "Real Estate Special Compensation Fund", for the purpose of paying, in whole or in part, pecuniary losses sustained by persons as a result of wrongful or dishonest dealings by licensees who, at the times when the wrongful or dishonest dealings occur, are within the prescribed classes referred to in subsection (2).
(2) Subject to the regulations, the special compensation corporation
(a) may collect money for the purposes of the compensation fund by the levy of assessments on licensees within prescribed classes of licensed agents, licensed nominees or licensed salespersons under this Act,
(b) may establish terms and conditions in relation to payments under subsection (1), and
(c) in levying the assessments, may levy different assessments against the different prescribed classes referred to in paragraph (a).
(3) The money collected under subsection (2) and any income from the investment of that money must be deposited to the credit of the compensation fund in a savings institution in British Columbia.
(4) The compensation fund is
(a) the property of the special compensation corporation and is not subject to a trust in favour of a person who claims damages, or has obtained judgment, against a licensee, and
(b) not subject to any process of seizure or attachment by a creditor of the special compensation corporation.
(5) Every licensee must pay to the special compensation corporation, on or before the date fixed by the special compensation corporation, any assessment levied against the licensee under subsection (2).
(6) If a licensee, on or before the date fixed for payment, has not paid an assessment payable under subsection (5), the licensee's licence is suspended by this subsection, as of the next day after the date fixed for payment.
(7) A licence suspension under subsection (6) is ended, and the licence is reinstated, as soon as the licensee pays to the special compensation corporation the full amount due by the licensee, together with interest on that amount at a rate the special compensation corporation may determine.
Investment and insurance
29.4 (1) The special compensation corporation may invest any part of the compensation fund, not presently required for disposition, in any security or class of securities in which trustees are permitted to invest trust funds under the Trustee Act.
(2) The special compensation corporation, in a manner and on terms and conditions it considers advisable, may enter into contracts with insurers by which the compensation fund may be protected in whole or in part against any claim or loss to the compensation fund, and the costs incurred by the special compensation corporation under those contracts may be paid from the fund.
(3) The special compensation corporation has an insurable interest in the compensation fund and in the protection of the compensation fund against loss.
Payment from compensation fund
29.5 (1) A person who obtains a judgment against a licensee or former licensee may apply to the special compensation corporation, in the form and manner specified by it, for compensation from the compensation fund if the judgment
(a) is based on a finding of wrongful or dishonest dealing by the licensee or former licensee that occurred at a time when the licensee or former licensee was within any of the prescribed classes referred to in section 29.3 (2), and
(b) has become final because of lapse of time for appeal or of being confirmed by the highest court to which that judgment may be appealed.
(2) The special compensation corporation must pay to an applicant who applies under subsection (1) in respect of a judgment that meets the criteria set out in subsection (1) the amount owing on the judgment at the date of payment, unless a maximum entitlement is prescribed for the purpose of this subsection, in which case the special compensation corporation must pay to the applicant the lesser of
(a) the amount owing on the judgment at the date of payment, and
(b) the maximum entitlement prescribed for the purpose of this subsection.
(3) A person who sustained a pecuniary loss as a result of conduct described in paragraph (a) or (b) of the definition of "wrongful or dishonest dealing" in section 29.1 by a licensee or former licensee, and whose pecuniary loss has been assessed by the council under section 31 (3.1), may apply to the special compensation corporation, in the form and manner specified by it, for compensation from the compensation fund if the assessment
(a) is based on a finding of such conduct by the licensee or former licensee that occurred at a time when the licensee or former licensee was within any of the prescribed classes referred to in section 29.3 (2), and
(b) has become final because of lapse of time for appeal to the Commercial Appeals Commission or further appeals to the courts or because of being confirmed by the highest court to which the council's decision making the assessment may be appealed.
(4) The special compensation corporation must pay to an applicant who applies under subsection (3) in respect of a pecuniary loss assessment that meets the criteria set out in that subsection the assessed amount of the pecuniary loss as at the date of payment, less any portion of that amount that has been recovered by the applicant since the date of assessment, unless a maximum entitlement is prescribed for the purpose of this subsection, in which case the special compensation corporation must pay to the applicant the lesser of
(a) the assessed amount of the pecuniary loss as at the date of payment, less any portion of that amount that has been recovered by the applicant since the date of assessment, and
(b) the maximum entitlement prescribed for the purpose of this subsection.
(5) On making a payment under subsection (2) or (4), the special compensation corporation is subrogated for the amount paid to all the rights and interests of the applicant to whom the payment was made as against the licensee or former licensee against whom the judgment or assessment was made.
(6) Despite subsections (1) and (3), the special compensation corporation must not make payment out of the compensation fund in respect of
(a) any wrongful or dishonest dealing that occurred before the coming into force of this section,
(b) any application made under subsection (1) that is made more than 2 years after the applicant becomes entitled to apply under subsection (1), or
(c) any application made under subsection (3) that is made more than 2 years after the applicant becomes entitled to apply under subsection (3).
Special compensation corporation to receive notice
29.6 (1) When a licensee or former licensee receives notice of commencement of any action or other proceeding against the licensee or former licensee that the licensee or former licensee knows, or reasonably ought to know, could result in an application being made under section 29.5, the licensee or former licensee immediately must deliver written notice to the special compensation corporation of
(a) the commencement of the action or proceeding, and
(b) the particulars of the action or proceeding.
(2) Within 30 days after the special compensation corporation receives an application made under section 29.5 (1) in respect of an action or other proceeding for which the corporation did not receive the notice required by subsection (1) of this section, the special compensation corporation may apply to the court for an order under subsection (3) of this section.
(3) On application under subsection (2) by the special compensation corporation, the court may
(a) relieve the special compensation corporation from the requirement to make payment under section 29.5 (2) if the court considers that the judgment does not meet the criteria set out in section 29.5 (1), or
(b) direct the special compensation corporation to make payment under section 29.5 (2) if the court considers that the judgment meets the criteria set out in section 29.5 (1),
and the court may make any further order it considers appropriate.
Corporation may apply to be party to proceedings
29.7 The special compensation corporation, for the purpose of protecting its interest and fulfilling its duties under this Act, may apply
(a) to the court to become a party to an action or other proceeding that may result in a judgment described in section 29.5 (1) (a), or
(b) to the council to become a party to a proceeding under section 31 (1) (a) that may result in an assessment of pecuniary loss described in section 31 (3.1).
Administrative expenses, etc.
29.8 The special compensation corporation may authorize payment out of the compensation fund for expenses incurred
(a) to administer the compensation fund,
(b) to investigate claims against the compensation fund, and
(c) for any other matter relating to the protection and maintenance of the compensation fund.
Reporting
29.9 (1) Not later than March 31 in each year, the special compensation corporation
(a) must cause a report to be prepared as to the compensation fund and all dispositions made from it during the previous calendar year,
(b) must cause a copy of the report to be delivered to each of the superintendent, the council, the Real Estate Association of British Columbia and each licensee, and
(c) must provide a copy of the report to any person who requests one.
(2) In addition to the report under subsection (1), the special compensation corporation must provide the superintendent with audited financial statements or other information concerning the compensation fund when required to do so by the superintendent.
Compensation fund minimum capital requirement
29.91 (1) If the capital of the compensation fund at any time falls below the minimum amount of capital prescribed for the purpose of this section, the special compensation corporation immediately must advise the superintendent.
(2) If the capital of the compensation fund is less than the minimum amount of capital referred to in subsection (1) or the superintendent considers it in the public interest to do so, the superintendent may order that every licensed agent, on or before the date fixed by the superintendent, must furnish security under the Bonding Act against liability for claims arising out of wrongful or dishonest dealing by licensees.
(3) If the superintendent makes an order under subsection (2), every licensed agent must continue to furnish the security under the Bonding Act for the period specified by the superintendent, pending replenishment of the compensation fund to at least the minimum amount of capital referred to in subsection (1).
(4) If the superintendent makes an order under subsection (2), the licence of every licensed agent who does not, on or before the date fixed for payment, provide evidence to the satisfaction of the superintendent of bonding as required under subsection (2), is suspended by this subsection, as of the day after the date fixed for payment.
(5) An agent whose licence is suspended under subsection (4) and every licensee employed in the agency
(a) immediately must cease to act or hold himself, herself or itself out as an agent, nominee or salesperson, and
(b) must not act or hold himself, herself or itself out as an agent, nominee or salesperson until the agent's licence is reinstated.
(6) If an agent's licence has been suspended under subsection (4), the superintendent, on application by the agent, may reinstate the licence if
(a) the agent provides evidence satisfactory to the superintendent of the bonding required under subsection (2), or
(b) the compensation fund has been replenished to at least the minimum amount of capital referred to in subsection (1).
21 Section 31 is amended
(a) in subsection (1) by striking out everything before paragraph (b) and substituting the following:
(1) Whether a complaint is made or not, the council may inquire and, when directed by the superintendent, must inquire whether a licensee or former licensee has done any of the following:
(a) anything that constitutes wrongful or dishonest dealing, ,
(b) in subsections (2) (a) and (22) by adding "or former licensee" after "licensee",
(c) in subsection (3) by striking out "If the inquiry indicates that the licensee may be guilty of wrong doing under subsection (1), the council may and when directed by the superintendent must, after due notice to the licensee," and substituting "If the inquiry indicates that the licensee or former licensee may have done anything referred to in subsection (1) (a) to (c), the council may and when directed by the superintendent must, after due notice to the licensee or former licensee,", and
(d) by adding the following subsections:
(3.1) If the council finds at a hearing conducted under subsection (3) that a person sustained a pecuniary loss as a result of the conduct described in paragraph (a) or (b) of the definition of "wrongful or dishonest dealing" in section 29.1 by a licensee or former licensee, the council
(a) on application by the person who sustained the pecuniary loss, may assess the amount of the pecuniary loss against the licensee or former licensee, and
(b) must include the assessment with the council's findings and recommendations reported to the superintendent under subsection (3) of this section.
(9.1) For a hearing under this section in which the council finds that a licensee or former licensee has done anything referred to in subsection (1) (a) to (c), the council may order the licensee or former licensee to pay the costs, within prescribed limits, or part of the costs, within those limits, incurred by or on behalf of the council or a hearing committee for or in relation to the hearing.
22 Section 55 (3) is amended by adding the following paragraphs:
(i) prescribing the classes of licensed agents, licensed nominees and licensed salespersons referred to in section 29.3 (2);
(j) prescribing the maximum entitlement for the purpose of section 29.5 (2) and prescribing the same or a different maximum entitlement for the purpose of section 29.5 (4);
(k) prescribing limits on the amounts that may be paid out of the fund established under section 29.3;
(l) prescribing the minimum amount of capital for the purpose of section 29.91;
(m) prescribing the limits referred to in section 31 (9.1).
23 Section 79 is amended
(a) in subsection (1) by adding "or by the council under section 31 (3.1) (a) or (9.1)" after "under this Act", and
(b) in subsection (2) by adding "or of the council under section 31 (3.1) (a) or (9.1)" after "or 74".
Securities Act
24 Section 1 (1) of the Securities Act, R.S.B.C. 1996, c. 418, is amended by repealing paragraph (e) of the definition of "security" and substituting the following:
(e) an agreement under which the interest of the purchaser is valued, for the purposes of conversion or surrender, by reference to the value of a proportionate interest in a specified portfolio of assets, .
25 Section 46 is amended by repealing paragraph (l) and substituting the following:
(l) variable insurance contracts issued by an insurer if the variable insurance contract
(i) is a contract of group insurance,
(ii) is a whole life insurance contract providing for the payment at maturity of an amount not less than 3/4 of the premiums paid up to the age of 75 for a benefit payable at maturity,
(iii) is an arrangement for the investment of policy dividends and policy proceeds in a separate and distinct fund to which contributions are made only from policy dividends and policy proceeds,
(iv) is a variable life annuity, or
(v) provides for payment at maturity of an amount not less than 3/4 of the premiums paid by the purchaser for a benefit payable at maturity; .
26 Section 87 is amended
(a) in subsection (2) by striking out "within 10 days of becoming an insider," and substituting "within a prescribed period of time after becoming an insider,",
(b) by repealing subsection (4) and substituting the following:
(4) If, while a person is an insider of a reporting issuer, the person's direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer changes from that shown or required to be shown in the latest insider report filed by the person, the person must, within the prescribed period after the change takes place, file an insider report in the required form disclosing
(a) the person's direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer, and
(b) the change in the person's direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer. , and
(c) in subsection (5) by striking out "within 10 days after the date on which that deeming occurs," and substituting "within a prescribed period of time after the date on which that deeming occurs,".
27 Section 105 is amended
(a) by repealing paragraph (d) and substituting the following:
(d) Withdrawal. -- Securities deposited pursuant to the bid may be withdrawn by or on behalf of a depositing security holder
(i) at any time before the securities have been taken up by the offeror,
(ii) at any time before the expiration of the prescribed period from the date of a notice of change or variation under section 108, and
(iii) if the securities have not been paid for by the offeror within the prescribed period after having been taken up; ,
(b) in paragraph (j) by striking out "and in any event not more than 3 days," and substituting "and in any event not later than the prescribed period,",
(c) in paragraph (k) by striking out "within 10 days of" and substituting "not later than the prescribed period after",
(d) in paragraph (l) by striking out "and pays for", and
(e) by adding the following paragraph:
(l.1) Further regarding bid extensions. -- Despite paragraph (l), if the offeror waives any terms or conditions of a bid and extends the bid in circumstances where the rights of withdrawal conferred by paragraph (d) (ii) are applicable, the bid must be extended without the offeror first taking up the securities which are subject to those rights of withdrawal; .
28 Section 110 is repealed and the following substituted:
Commencement of bid and delivery
110 (1) A take over bid may be commenced in accordance with either subsection (2) or (7).
(2) A take over bid may, and an issuer bid must, be commenced by delivering the bid to the holders of securities referred to in section 105 (a) in accordance with subsection (6) of this section.
(3) If a bid is commenced under subsection (2), the bid must be filed and, in the case of a take over bid, delivered to the offeree issuer's principal office, on the day the bid is delivered under subsection (2) or as soon as practicable after that.
(4) A notice of change or variation in respect of a bid must be filed and, in the case of a take over bid, delivered to the offeree issuer's principal office, on the day the notice of change or variation is delivered to holders of securities of the offeree issuer or as soon as practicable after that.
(5) Every directors' circular and every individual director's or officer's circular or any notice of change in relation to it that is delivered to holders of securities of an offeree issuer must be filed, and must be delivered to the offeror's principal office, on the day the directors' circular or individual director's or officer's circular or the notice of change is delivered to the holders of securities of the offeree issuer, or as soon as practicable after that.
(6) A take over bid or issuer bid, a take over bid circular, an issuer bid circular, a directors' circular, an individual director's or officer's circular and every notice of change or variation in the bid or circular must be
(a) mailed by prepaid first class mail to the intended recipient, or
(b) delivered to the intended recipient by personal delivery or in such other manner as the executive director may approve,
and any bid, circular or notice so mailed or delivered is deemed to have been delivered and, subject to subsections (8) and (9), is deemed conclusively for the purposes of this Part and the regulations to have been dated as of the date on which it was so mailed or delivered to all or substantially all of the persons entitled to receive it.
(7) An offeror may commence a take over bid by publishing an advertisement containing a brief summary of the bid in at least one major daily newspaper of general and regular paid circulation in British Columbia, or by disseminating the advertisement in a prescribed manner, if
(a) concurrently with, or before, the earlier of the date of first publication or first dissemination of the advertisement, the offeror, or a person acting on its behalf, files and delivers the bid to the offeree issuer's principal office and files the advertisement,
(b) concurrently with, or before, the earlier of the date of first publication or first dissemination of the advertisement, the offeror, or a person acting on its behalf, requests from the offeree issuer a list of the holders of securities referred to in section 105 (a), and
(c) not later than the prescribed period after the offeror's receipt of the list of the holders of securities referred to in section 105 (a), the bid is delivered to those holders of securities in accordance with subsection (6) of this section.
(8) If a take over bid is commenced in accordance with subsection (7), the bid is deemed conclusively for the purposes of this Part and the regulations to have been dated as of the earlier of the date of first publication or first dissemination of the advertisement referred to in subsection (7).
(9) If a take over bid has been advertised in accordance with subsection (7), and the offeror, or a person acting on its behalf, has complied with paragraphs (a) and (b) of that subsection but has not yet delivered the bid under paragraph (c) of that subsection, a change or variation to it that is advertised in at least one major daily newspaper of general and regular paid circulation in British Columbia, or disseminated in a manner prescribed under subsection (7), is deemed conclusively for the purposes of this Part and the regulations to have been dated as of the earlier of the date of first publication or first dissemination of the advertisement if
(a) the advertisement contains a brief summary of the change or variation,
(b) concurrently with, or before, the earlier of the date of first publication or first dissemination of the advertisement, the offeror, or a person acting on its behalf, files and delivers the notice of change or variation to the offeree issuer's principal office and files the advertisement, and
(c) the offeror, or a person acting on its behalf, subsequently delivers the bid, and delivers the notice of change or variation, in accordance with subsection (6) and before the expiration of the period prescribed under subsection (7) (c).
(10) If an offeror, or a person acting on its behalf, satisfies the requirements of subsection (9), the notice of change or variation is not required to be filed and delivered under subsection (4).
Commencement
29 This Act comes into force by regulation of the Lieutenant Governor in Council.
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