Facts: A promissory
note, dated April 25, 2008, was executed in favour of 2148251
Ontario Incorporated ("Keystone") as payee by Catan as
payor and Duscio as guarantor. Interest payable both before and
after maturity was never paid and an unsuccessful demand for
payment was made on May 31, 2010. Catan and Duscio argued that the
claim, issued on April 20, 2011, was time-barred because the
limitation period began to run when Catan failed to make the first
interest payment, due on June 25, 2008.
The motion judge sided with Keystone,
finding that the limitation period did not begin to run until the
date of the demand, since the note provided that it was payable
"on demand after maturity date or at the discretion of the
payee on the occurrence of any of the following events: (a) if the
Payor does not pay when due any of its obligations to the Payee...
Held: The Court upheld
the motion judge's finding that the limitation period did not
begin to run, at the earliest, until maturity. The express terms of
the promissory note gave the Payee the right, but not the
obligation, to demand payment of the full amount of the note on the
Payor's default. The Payee had no obligation to demand
repayment of the principal when an interest payment was missed.
Parole evidence, to alter or vary the terms of the promissory note,
was not considered by the Court.
The editor wishes to acknowledge the valuable
contributions of Elka Dadmand to this case note.
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