Legal Blog

Demand

The decision in Hare v. Hare (2006), 83 O.R. (3d) 766 (C.A.) (i.e. the limitation period on a demand note runs from the date of the loan rather than the date of the demand) has been ameliorated by the 2008 amendment to the Limitations Act, 2002 (sections 5(3) and 5(4)). How does this affect a demand note whose limitation period had expired under the old rules? This question was answered in Berry v. IPC Securities Corp. [2009] O.J. No. 1598 (SCJ).

Facts

The creditor advanced $250,000 on December 24, 2003. The note was due June 24, 2004, but was payable on demand if there was a default. The debtor defaulted in 2004, but the creditor did not demand payment until August 2007 and only commenced his action in September 2007.

The debtor argued that the action was statute barred two years after May 2005, the last day that the debtor made some catch up payments. The creditor argued that the limitation period did not start to run until August 2007, the date of demand.

Decision

The motions judge dismissed the creditor’s action on two grounds:

1.   The note was not a demand note. It was a note that was due on a particular day. The note simply allowed the creditor to accelerate payment if there was default.

2.   Even if it were a demand note, the November 2008 amendments to the Act were not retrospective beyond their words. Section 5(3) states that the limitation period runs from the date of demand. Section 5(4) states that section 5(3) applies in respect of demand obligations created on or after January 1, 2004. It does not revive an action that has already died. Under the Act, the cause of action under the pre-2004 note was barred after May 2007.

ANNOUNCEMENT

Jeffrey Tighe has joined our litigation and construction department.

Jeff  has a B.Sc. from Queen’s University, an MBA from Wilfrid Laurier University, and a law degree from University of Manitoba. He was called to the Bar in Ontario in 1999. Since then, he has practised in commercial litigation and construction law.

In his spare time, of which there may be little, he is currently researching and writing a book in the field of military history.