In June 2018, we wrote on the British Columbia Court of Appeal decision in Leatherman v 0969708 BC Ltd, 2018 BCCA 33, where the court considered sections 14 and 15 of the "new" Limitation Act, SBC 2012, c. 13 in the context of a loan and related security.
The Court held that the limitation period to realize on the security and some interest had expired, unless postponed as the limitation period commenced on default (the trigger for realization) not demand of the related loan. However, the ability to sue on the debt (and some interest) was not limitations barred as the limitation period for an action to recover the mortgage principal began to run the first day after the formal demand. The matter of postponement was remitted to the British Columbia Supreme Court for reconsideration.
On October 4, 2018, the Supreme Court of Canada dismissed the leave to appeal of the British Columbia Court of Appeal's decision.
While any case is fact-specific, lenders should carefully consider the type of loan they have advanced (demand v. term) and when realization on any security is permitted when assessing limitation periods.
At Bennett Jones, we have considerable experience with credit and security agreements and the enforcement thereof and would be pleased to assist in the drafting of loan and security documents and the enforcement thereof.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.