{"id":247,"date":"2015-06-08T22:18:46","date_gmt":"2015-06-09T02:18:46","guid":{"rendered":"http:\/\/limitations.ca\/?p=247"},"modified":"2015-06-08T22:23:38","modified_gmt":"2015-06-09T02:23:38","slug":"bc-demand-loans-v-contingent-loans","status":"publish","type":"post","link":"http:\/\/limitations.ca\/?p=247","title":{"rendered":"BC: demand loans v. contingent loans"},"content":{"rendered":"

Kong v. Saunders<\/em>\u00a0<\/a>provides a helpful overview of the limitation periods applicable to demand loans and contingent loans under the previous Limitations Act<\/a>.\u00a0 While the new Limitations Act<\/a> recently turned two years old, it will be some time before it applies to all new actions, so there remains value in reviewing these concepts.\u00a0 These are relevant paragraphs:<\/p>\n

\n

[17]\u00a0\u00a0 \u00a0\u00a0 \u00a0 The previous Limitation Act<\/a><\/i> applies to this case because it was still in effect at all materials times prior to the commencement of the underlying action.\u00a0 Under s.\u00a03(5) of that Act, the residual six-year limitation period, which applies in this case, began to run on the date on which the right to bring the action arose.<\/p>\n

[18]\u00a0\u00a0 \u00a0\u00a0 \u00a0 The jurisprudence has established a distinction between demand loans and contingent loans in respect of the commencement of the running of the limitation period.\u00a0 Demand loans are, of course, loans payable on demand.\u00a0 Contingent loans are loans that are payable on a future date or upon the occurrence of a specified event.<\/p>\n

[19]\u00a0\u00a0 \u00a0\u00a0 \u00a0 The limitation period in respect of contingent loans begins to run on the repayment date or the occurrence of the contingency.\u00a0 This is because an action for repayment of the loan cannot be brought prior to the repayment date or the occurrence of the contingency, as the case may be.<\/p>\n

[20]\u00a0\u00a0 \u00a0\u00a0 \u00a0 It may seem intuitive that the limitation period in respect of demand loans begins to run on the date of the demand for repayment, but this is not so.\u00a0 The reason is that the law has developed in a manner that it is not necessary for demand to be made before action can be brought for repayment of the loan.\u00a0 This means that an action may be brought at any time after the demand loan is made.\u00a0 As a result, the limitation period begins to run on the day the loan is made.<\/p>\n

[21]\u00a0\u00a0 \u00a0\u00a0 \u00a0 The above principles have been previously accepted by this Court in one of the cases relied upon by Mr.\u00a0and Mrs.\u00a0Kong, Berry v. Page<\/i>, where Mr.\u00a0Justice Wallace said the following at 247 (B.C.L.R.):<\/p>\n

\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 The characterization of the loan as either a contingent loan or a demand loan determines whether or not the action is statute barred under theLimitation Act<\/a>. It is well established that the cause of action accrues, and the statute of limitations runs, from the earliest time at which repayment can be required (Chitty on Contracts, 25th ed. (1983), vol.\u00a0I, para.\u00a01843, p.\u00a01024). For a demand loan, the statute of limitations runs as of the date of the advancement of the funds, and not from the date of the demand. No demand is necessary in order for the cause of action to arise: Barclay Const. Corp. v. Bank of Montreal<\/i> (1988), 1988 CanLII 2898 (BC SC)<\/a>, 28 B.C.L.R. (2d) 376<\/span> at 381, [1988] 6 W.W.R. 707<\/span>, 40 B.L.R. 150 (S.C.)<\/span><\/span>; Heubach v. Sprague<\/i>, 41 Man.\u00a0R. 292<\/span>, [1933] 2 W.W.R. 99<\/span>, [1933] 3 D.L.R. 647 (C.A.)<\/span><\/span>.<\/p>\n

\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 Case law supports the proposition that if money is lent to be repaid at a particular time in the future, or upon the happening of a specified contingency, then the cause of action arises at the time specified or upon the happening of the contingency: Ingrebretsen v. Christensen<\/i>, 37 Man.\u00a0R. 93<\/span>,[1927] 3 W.W.R. 135 (C.A.)<\/span><\/span>; Re Gould; Ex parte Garvey<\/i>, 1940 CanLII 89 (ON CA)<\/a>, [1940] O.R. 250<\/span>, [1940] 3 D.L.R. 12 (C.A.)<\/span><\/span>. In these circumstances, the cause of action does not arise, and the statute of limitations does not run until the contingency is satisfied.<\/p>\n

[22]\u00a0\u00a0 \u00a0\u00a0 \u00a0 \u00a0A more recent decision of this Court, Ewachniuk Estate v. Ewachniuk<\/i>, 2011 BCCA 510 (CanLII)<\/span><\/a><\/span>, has also acknowledged these principles.\u00a0 In that case, the Court held that a loan payable one year after demand fell within the category of a contingent loan, with the result that the limitation period did not begin running on the day the loan was made.\u00a0 The reason is that an action could not have been brought for repayment of the loan on the day the loan was made because the demand and the lapse of time after the demand were conditions precedent to the bringing of an action.<\/p>\n

[23]\u00a0\u00a0 \u00a0\u00a0 \u00a0 The common law is the same in other provinces: see, for example, Johnson v. Johnson<\/i>, 2012 SKCA 87 (CanLII)<\/span><\/a><\/span>.\u00a0 Interestingly, with the new\u00a0Limitation Act<\/a><\/i>, British Columbia has joined Alberta and Ontario in specifically addressing the limitation period for a demand obligation.\u00a0 Section 14 of the newAct<\/i> effectively provides that the limitation period does not begin running until demand is made.<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Kong v. Saunders\u00a0provides a helpful overview of the limitation periods applicable to demand loans and contingent loans under the previous Limitations Act.\u00a0 While the new Limitations Act recently turned two years old, it will be some time before it applies to all new actions, so there remains value in reviewing these concepts.\u00a0 These are relevant … Continue reading BC: demand loans v. contingent loans<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[42,107,106,63,108],"class_list":["post-247","post","type-post","status-publish","format-standard","hentry","category-british-columbia","tag-bc-court-of-appeal","tag-contingent-loans","tag-demand-loans","tag-demand-obligations","tag-spot-prawns"],"_links":{"self":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/247","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=247"}],"version-history":[{"count":1,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/247\/revisions"}],"predecessor-version":[{"id":248,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/247\/revisions\/248"}],"wp:attachment":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=247"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=247"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=247"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}