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Administration of the property of others (articles 1299 à 1370)

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Administration of the property of others (articles 1299 à 1370)

Written by Me Sébastien Fiset , LL.B., B.A.A.
Friday, 11 June 2010 07:34

TITLE SEVEN

ADMINISTRATION OF THE PROPERTY OF OTHERS

CHAPTER I

GENERAL PROVISIONS

(Last update June 3, 2010)

1299. Any person who is charged with the administration of property or a patrimony that is not his own assumes the office of administrator of the property of others. The rules of this Title apply to every administration unless another form of administration applies under the law or the constituting act, or due to circumstances.

1300. Unless the administration is gratuitous according to law, the act or the circumstances, the administrator is entitled to the remuneration fixed in the act, by usage or by law, or to the remuneration established according to the value of the services rendered.

A person acting without right or authorization is not entitled to any remuneration.

CHAPTER II
KINDS OF ADMINISTRATION

DIVISION I
SIMPLE ADMINISTRATION OF THE PROPERTY OF OTHERS

1301. A person charged with simple administration shall perform all the acts necessary for the preservation of the property or useful for the maintenance of the use for which the property is ordinarily destined.

1302. An administrator charged with simple administration is bound to collect the fruits and revenues of the property under his administration and to exercise the rights pertaining to the property.

He collects the debts under his administration and gives valid acquittance for them; he exercises the rights pertaining to the securities administered by him, such as voting, conversion or redemption rights.

1303. An administrator shall continue the use or operation of the property which produces fruits and revenues without changing its destination, unless he is authorized to make such a change by the beneficiary or, if that is prevented, by the court.

1304. An administrator is bound to invest the sums of money under his administration in accordance with the rules of this Title relating to presumed sound investments.

He may likewise change any investment made before he took office or that he has made himself.

1305. An administrator, with the authorization of the beneficiary or, if the beneficiary is prevented from acting, of the court, may alienate the property by onerous title or charge it with a hypothec where that is necessary for the payment of the debts, maintenance of the use for which the property is ordinarily destined, or the preservation of its value.

He may, however, alienate alone any property that is perishable or likely to depreciate rapidly.

DIVISION II
FULL ADMINISTRATION OF THE PROPERTY OF OTHERS

1306. A person charged with full administration shall preserve the property and make it productive, increase the patrimony or appropriate it to a purpose, where the interest of the beneficiary or the pursuit of the purpose of the trust requires it.

1307. An administrator may, to perform his obligations, alienate the property by onerous title, charge it with a real right or change its destination and perform any other necessary or useful act, including any form of investment.

CHAPTER III
RULES OF ADMINISTRATION

DIVISION I
OBLIGATIONS OF THE ADMINISTRATOR TOWARDS THE BENEFICIARY

1308. The administrator of the property of others shall, in carrying out his duties, comply with the obligations imposed on him by law or by the constituting act. He shall act within the powers conferred on him.

He is not liable for loss of the property resulting from a superior force or from its age, its perishable nature or its normal and authorized use.

1309. An administrator shall act with prudence and diligence.

He shall also act honestly and faithfully in the best interest of the beneficiary or of the object pursued.

1310. No administrator may exercise his powers in his own interest or that of a third person or place himself in a position where his personal interest is in conflict with his obligations as administrator.

If the administrator himself is a beneficiary, he shall exercise his powers in the common interest, giving the same consideration to his own interest as to that of the other beneficiaries.

1311. An administrator shall, without delay, declare to the beneficiary any interest he has in an enterprise that could place him in a position of conflict of interest and of the rights he may invoke against the beneficiary or in the property administered indicating, where that is the case, the nature and value of the rights. He is not bound to declare to him the interest or rights deriving from the act having given rise to the administration.

Any interest or right pertaining to the property of a trust under the supervision of a person or body designated by law is disclosed to that person or body.

1312. No administrator may, in the course of his administration, become a party to a contract affecting the administered property or acquire otherwise than by succession any right in the property or against the beneficiary.

He may, nevertheless, be expressly authorized to do so by the beneficiary or, in case of impediment or if there is no determinate beneficiary, by the court.

1313. No administrator may mingle the administered property with his own property.

1314. No administrator may use for his benefit the property he administers or information he obtains by reason of his administration except with the consent of the beneficiary or unless it results from the law or the act constituting the administration.

1315. Unless it is of the very nature of his administration to do so, no administrator may dispose gratuitously of the property entrusted to him, except property of little value disposed of in the interest of the beneficiary or of the object pursued.

No administrator may, except for valuable consideration, renounce any right belonging to the beneficiary or forming part of the patrimony administered.

1316. An administrator may sue and be sued in respect of anything connected with his administration; he may also intervene in any action respecting the administered property.

1317. If there are several beneficiaries of the administration, concurrently or successively, the administrator is bound to act impartially in their regard, taking account of their respective rights.

1318. The court, in appreciating the extent of the liability of an administrator and fixing the resulting damages, may reduce them in view of the circumstances in which the administration is assumed or of the fact that the administrator acts gratuitously or that he is a minor or a protected person of full age.

DIVISION II

OBLIGATIONS OF THE ADMINISTRATOR AND THE BENEFICIARY TOWARDS THIRD PERSONS

1319. Where an administrator binds himself, within the limits of his powers, in the name of the beneficiary or the trust patrimony, he is not personally liable towards third persons with whom he contracts.

He is liable towards them if he binds himself in his own name, subject to any rights they have against the beneficiary or the trust patrimony.

1320. Where an administrator exceeds his powers, he is liable towards third persons with whom he contracts unless the third persons were sufficiently aware of that fact or unless the obligations contracted were expressly or tacitly ratified by the beneficiary.

1321. An administrator who exercises alone powers that he is required to exercise jointly with another person exceeds his powers.

He does not exceed his powers if he exercises them more advantageously than he is required to do.

1322. The beneficiary is liable towards third persons for the damage caused by the fault of the administrator in carrying out his duties only up to the amount of the benefit he has derived from the act. In the case of a trust, these obligations fall back upon the trust patrimony.

1323. Where a person fully capable of exercising his civil rights has given reason to believe that another person was the administrator of his property, he is liable towards third persons who in good faith have contracted with that other person, as though the property had been under administration.

DIVISION III

INVENTORY, SECURITY AND INSURANCE

1324. An administrator is not bound to make an inventory, to take out insurance or to furnish other security to guarantee the performance of his obligations unless required to do so by law or by the act, or, again, by the court on the application of the beneficiary or any interested person.

Where the act creates these obligations, the administrator may apply for an exemption if circumstances warrant it.

1325. In making its decision upon an application, the court takes account of the value of the property administered, the situation of the parties and the other circumstances.

It may not grant the application if that would, in effect, call into question the terms of the initial agreement between the administrator and the beneficiary.

1326. An administrator bound to make an inventory shall include in it a faithful and exact enumeration of all the property entrusted to his administration or constituting the administered patrimony.

Such an inventory contains the following in particular:

(1) the description of the immovables, and a description of the movables, with indication of their value and, in the case of a universality of movable property, sufficient identification of the universality;

(2) a description of the currency in cash and other securities;

(3) a listing of valuable documents.

It also contains a statement of liabilities and concludes with a recapitulation of assets and liabilities.

1327. The inventory is made by notarial act en minute. It may also be made by a private writing before two witnesses. In the latter case, the author and the witnesses sign it, indicating the date and place of execution.

1328. Where the administered patrimony contains personal effects of the holder of the patrimony or, as the case may be, of the deceased, a general reference to them in the inventory is sufficient, describing only clothing, personal papers, jewelry or ordinary personal things worth over $100 each.

1329. The property described in the inventory is presumed to be in good condition on the date of preparation of the inventory, unless the administrator appends a document attesting the contrary.

1330. The administrator shall furnish a copy of the inventory to the person who entrusted him with the administration and to the beneficiary of the administration, and also to every other person he knows to have an interest. He shall also, where required by law, file the inventory or notice of the closure of the inventory in the indicated place, specifying in the latter case where the inventory may be consulted.

Any interested person may contest the inventory or any item therein; he may also demand that a new inventory be prepared.

1331. An administrator may insure the property entrusted to him against ordinary risks such as fire and theft at the expense of the beneficiary or trust.

He may also take out insurance guaranteeing the performance of his obligations; he does so at the expense of the beneficiary or trust if his administration is gratuitous.

DIVISION IV

JOINT ADMINISTRATION AND DELEGATION

1332. Where several administrators are charged with the administration, a majority of them may act unless the act or the law requires them to act jointly or in a determinate proportion.

1333. Where the administrators are prevented from acting by a majority or in the specified proportion, owing to an impediment or the systematic opposition of some of them, the others may act alone for conservatory acts; they may also, with the authorization of the court, act alone for acts requiring immediate action.

Where the situation persists and the administration is seriously impaired by it, the court, on the application of an interested person, may exempt the administrators from acting in the specified proportion, divide their duties, give a casting vote to one of them or make any order it sees fit in the circumstances.

1334. Joint administrators are solidarily liable for their administration.

However, where the duties of joint administrators have been divided by law, the act or the court, and the division has been respected, each administrator is liable for his own administration only.

1335. An administrator is presumed to have approved any decision made by his co-administrators. He is liable with them for the decision unless he immediately indicates his dissent to them and notifies it to the beneficiary within a reasonable time.

The administrator may be relieved of liability, however, if he proves that he was unable for serious reasons to make his dissent known to the beneficiary in due time.

1336. An administrator is presumed to have approved a decision made in his absence unless he makes his dissent known to the other administrators and to the beneficiary within a reasonable time after becoming aware of the decision.

1337. An administrator may delegate his duties or be represented by a third person for specific acts; however, he may not delegate generally the conduct of the administration or the exercise of a discretionary power, except to his co-administrators.

He is accountable for the person selected by him if, among other things, he was not authorized to make the selection. If he was so authorized, he is accountable only for the care with which he selected the person and gave him instructions.

1338. A beneficiary who suffers prejudice may repudiate the acts of the person mandated by the administrator if they are done contrary to the constituting act or to usage.

The beneficiary may also exercise his judicial recourses against the mandated person even where the administrator was duly empowered to give the mandate.

DIVISION V

PRESUMED SOUND INVESTMENTS

1339. Investments in the following are presumed sound:

(1) titles of ownership in an immovable;

(2) bonds or other evidences of indebtedness issued or guaranteed by Québec, Canada or a province of Canada, the United States of America or any of its member states, the International Bank for Reconstruction and Development, a municipality or a school board in Canada, or a fabrique in Québec;

(3) bonds or other evidences of indebtedness issued by a legal person which operates a public service in Canada and which is entitled to impose a tariff for such service;

(4) bonds or other evidences of indebtedness secured by an undertaking, towards a trustee, of Québec, Canada or a province of Canada, to pay sufficient subsidies to meet the interest and the capital on the maturity of each;

(5) bonds or other evidences of indebtedness of a company in the following cases:

(a) they are secured by a hypothec ranking first on an immovable, or by securities presumed to be sound investments;

(b) they are secured by a hypothec ranking first on equipment and the company has regularly serviced the interest on its borrowings during the last 10 financial years;

(c) they are issued by a company whose common or preferred shares are presumed sound investments;

(6) bonds or other evidences of indebtedness issued by a loan society incorporated by a statute of Québec or authorized to do business in Québec under the Loan and Investment Societies Act, provided it has been specially approved by the Government and its ordinary operations in Québec consist in making loans to municipalities or school boards and to fabriques or loans secured by hypothec ranking first on immovables situated in Québec;

(7) debts secured by hypothec on immovables in Québec:

(a) if payment of the capital and interest is guaranteed or secured by Québec, Canada or a province of Canada;

(b) if the amount of the debt is not more than 80% of the value of the immovable property securing payment of the debt after deduction of the other debts secured by the same immovable and ranking equally with or before the debt;

(c) if the amount of the debt that exceeds 80% of the value of the immovable by which it is secured, after deduction of the other debts secured by the same immovable and ranking equally with or before the debt, is guaranteed or secured by Québec, Canada or a province of Canada, the Central Mortgage and Housing Corporation, the Société d’habitation du Québec or a hypothec insurance policy issued by a company holding a permit under the Act respecting insurance;

(8) fully paid preferred shares issued by a company whose common shares are presumed sound investments or which, during the last five financial years, has distributed the stipulated dividend on all its preferred shares;

(9) common shares issued by a company that for three years has been meeting the timely disclosure requirements defined in the Securities Act to such extent as they are listed by a stock exchange recognized for that purpose by the Government on the recommendation of the Autorité des marchés financiers, and when the market capitalization of the company, not considering preferred shares or blocks of shares of 10% or more, is higher than the amount so fixed by the Government;

(10) securities of an investment fund or of a private trust, provided that 60% of its portfolio consists of investments presumed sound and that the fund or trust has fulfilled in the last three years the continuous disclosure requirements specified in the Securities Act.

1340. The administrator decides on the investments to make according to the yield and the anticipated capital gain; so far as possible, he works toward a diversified portfolio producing fixed income and variable revenues in the proportion suggested by the prevailing economic conditions.

He may not, however, acquire more than 5% of the shares of the same company nor acquire shares, bonds or other evidences of indebtedness of a legal person or limited partnership which has failed to pay the prescribed dividends on its shares or interest on its bonds or other securities, nor grant a loan to that legal person or partnership.

1341. An administrator may deposit the sums of money entrusted to him in or with a bank, a savings and credit union or any other financial institution, if the deposit is repayable on demand or on 30 days’ notice.

He may also deposit the sums of money for a longer term if repayment of the deposit is fully guaranteed by the Autorité des marchés financiers; otherwise, he may not do so except with the authorization of the court and on the conditions it determines.

1342. An administrator may maintain the existing investments upon his taking office even if they are not presumed sound investments.

The administrator may also hold securities which, following the reorganization, winding-up or amalgamation of a legal person, replace securities he held.

1343. An administrator who acts in accordance with this section is presumed to act prudently.

An administrator who makes an investment he is not authorized to make is, by that very fact and without further proof of fault, liable for any loss resulting from it.

1344. Investments made in the course of administration shall be made in the name of the administrator acting in that quality.

Such investments may also be made in the name of the beneficiary, if it is also indicated that they are made by the administrator acting in that quality.

DIVISION VI

APPORTIONMENT OF PROFIT AND EXPENDITURE

1345. Apportionment of profit and expenditure between the beneficiary of the fruits and revenues and the beneficiary of the capital is made in accordance with the stipulations and clear intention of the constituting act.

Failing sufficient indication in the act, apportionment is made as equitably as possible, taking into account the object of the administration, the circumstances that gave rise to it and generally recognized accounting practices.

1346. The revenue account is generally debited for the following expenditures and other expenditures of the same kind:

(1) insurance premiums, the cost of minor repairs and other ordinary expenses of administration;

(2) 1/2 of the remuneration of the administrator and his reasonable expenses for joint administration of the capital and fruits and revenues;

(3) taxes payable on the administered property;

(4) unless the court orders otherwise, costs paid to safeguard the rights of the beneficiary of the fruits and revenues and 1/2 of the cost of the judicial rendering of account;

(5) amortization of the property, except property used by the beneficiary for personal purposes.

The administrator may, to maintain revenue at a regular level, spread substantial expenses over a reasonable period.

1347. The capital account is generally debited for expenditures that are not debited from the revenues, including expenses pertaining to capital investment, alienation of property, and safeguard of the rights of the capital beneficiary or the right of ownership of the administered property.

Taxes on gains and other amounts attributable to capital, even where the law governing such taxes considers them to be income taxes, are also generally debited from the capital account.

1348. The beneficiary of the fruits and revenues is entitled to the net income of the administered property from the date determined in the act giving rise to the administration or, if no date is determined, from the date of the beginning of the administration or that of the death which gave rise to it.

1349. Fruits and revenues payable periodically are counted day by day.

Dividends and distributions of a legal person are due from the date indicated in the declaration of distribution or, failing that, from the date of the declaration.

1350. At the extinction of his right, the beneficiary of the fruits and revenues is entitled to the fruits and revenues that have not been paid to him and to the portion earned but not yet collected by the administrator.

He is not entitled, however, to the dividends of a legal person that were not declared during the period his right existed.

DIVISION VII

ANNUAL ACCOUNT

1351. An administrator renders a summary account of his administration to the beneficiary at least once a year.

1352. The account shall be made sufficiently detailed to allow verification of its accuracy.

Any interested person may, on a rendering of account, apply to the court for an order that the account be audited by an expert.

1353. Where there are several administrators, they shall render one and the same account unless their duties have been divided by law, the act or the court, and these have been divided accordingly.

1354. An administrator shall at all times allow the beneficiary to examine the books and vouchers relating to the administration.

CHAPTER IV

TERMINATION OF ADMINISTRATION

DIVISION I

CAUSES TERMINATING ADMINISTRATION

1355. The duties of an administrator terminate upon his death, resignation or replacement or his becoming bankrupt or being placed under protective supervision.

The duties of an administrator are also terminated where the beneficiary becomes bankrupt or is placed under protective supervision, if that affects the administered property.

1356. Administration is terminated

(1) by extinction of the right of the beneficiary in the administered property;

(2) by expiry of the term or fulfilment of the condition stipulated in the act giving rise to the administration;

(3) by achievement of the object of the administration or disappearance of the cause that gave rise to it.

1357. An administrator may resign by giving written notice to the beneficiary and, where such is the case, his co-administrators or the person empowered to appoint an administrator in his place. Where there are no such persons or where it is impossible to give notice to them, the notice is given to the Minister of Revenue who, if necessary, assumes the provisional administration of the property and causes a new administrator to be appointed in place of the administrator who has resigned.

The administrator of a private trust or social trust shall also notify his resignation to the person or body designated by law to supervise his administration.

1358. The resignation of the administrator takes effect on the date the notice is received or on any later date indicated in the notice.

1359. An administrator is bound to repair any prejudice caused by his resignation where it is submitted without a serious reason and at an inopportune moment or where it amounts to failure of duty.

1360. A beneficiary who has entrusted the administration of property to another person may replace the administrator or terminate the administration, particularly by exercising his right to require that the property be returned to him on demand.

Any interested person may apply for the replacement of an administrator who is unable to discharge his duties or does not fulfil his obligations.

1361. Upon the death of the administrator or his being placed under protective supervision, the liquidator of his succession, or his tutor or curator, if aware of the administration, is bound to give notice of the death or of the institution of protective supervision to the beneficiary and to the co-administrators, if any, or, in the case of a private trust or social trust, to the person or body designated by law to supervise the administration.

The liquidator, tutor or curator is also bound, in respect of any matter already begun, to do all that is immediately necessary to prevent a loss; he shall also render account and deliver over the property to those entitled to it.

1362. Obligations contracted towards third persons in good faith by an administrator who is unaware that his administration has terminated are valid and bind the beneficiary or the trust patrimony; the same rule applies to obligations contracted by the administrator after the end of the administration that are its necessary consequence or are required to prevent a loss.

The beneficiary or the trust patrimony is also bound by the obligations contracted towards third persons who were unaware that the administration had terminated.

DIVISION II

RENDERING OF ACCOUNT AND DELIVERY OF PROPERTY

1363. On the termination of his administration, an administrator shall render a final account of his administration to the beneficiary and, where that is the case, to the administrator replacing him or to his co-administrators. Where there are several administrators and their duties are terminated simultaneously, they shall render one and the same account, except where their duties are divided.

The account shall be made sufficiently detailed to allow verification of its accuracy; the books and other vouchers pertaining to the administration may be consulted by interested persons.

The acceptance of the account by the beneficiary closes the account.

1364. An administrator may at any time and with the consent of all the beneficiaries render account by agreement.

If there is no agreement, the rendering of account is made judicially.

1365. An administrator shall deliver over the administered property at the place agreed upon or, failing that, where it is.

1366. An administrator shall deliver over all that he has received in the performance of his duties, even if what he has received was not due to the beneficiary or to the trust patrimony; he is also accountable for any personal profit or benefit he has realized by using, without authorization, information he had obtained by reason of his administration.

Where an administrator has used property without authorization, he is bound to compensate the beneficiary or the trust patrimony for his use by paying an appropriate rent or the interest on the money.

1367. Administration expenses, including the cost of rendering account and delivering the property, are borne by the beneficiary or the trust patrimony.

The resignation or replacement of the administrator binds the beneficiary or the trust patrimony to pay him, apart from the administration expenses, any remuneration he has earned.

1368. An administrator owes interest on the balance from the close of the final account or the formal notice to produce it; the beneficiary or the trust patrimony owes interest only from the formal notice.

1369. An administrator is entitled to deduct from the sums he is required to remit anything the beneficiary or the trust patrimony owes him by reason of the administration.

An administrator may retain the administered property until payment of what is owed to him.

1370. Where there are several beneficiaries, their obligation towards the administrator is solidary.

Last Updated on Friday, 11 June 2010 07:40

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