Ewachniuk Estate v. Ewachniuk, 2011 BCCA 510

In this case, the B.C. Court of Appeal considered the appropriate limitation period under the Limitation Act, RSBC 1996, c 266, for bringing an action to enforce payment on a “delayed demand” promissory note. The promissory note stated that a specified sum was “payable one year after demand” and the note had been created 28 years prior to the issuance of a demand for payment. The defendant had failed to make payment within a year of the demand and contended that the note was unenforceable under section 3(5) of the Limitation Act, which provided that an action could not be brought following “6 years after the date on which the right to do so arose.”

After an extensive inquiry into the soundness of authorities relating to limitation periods for delayed-demand notes, Chief Justice Finch upheld the trial judge’s decision that enforcement of such a promissory note was not barred by the Limitation Act, holding that the date on which the right of action arose was one year after the demand for payment. Finch, J. upheld Zeitler v. The Estate of Alfons Zeitler, 2008 BCSC 775, which held that: 1) the demand in a delayed- demand promissory note may properly be characterized as a contingent future event and the end of the designated period following the demand marks the moment when the cause of action arises; and 2) there is no merit to the argument that the “demand” in a delayed-demand note may never be made and is not due at a “determinable future time” (as required by the Bills of Exchange Act, RSC 1985, c B-4, s 23(b)). Accordingly, the limitation period did not begin to run until the expiry of the one-year period following demand.

 Justice Ryan concurred in the result but stated that she would not have overruled earlier authorities regardless of whether these were wrongly decided, asserting that the maxim communis error facit jus (“common error makes law”) applied since this construction of the limitation period for delayed-demand notes had long been accepted in commercial practice.

December 14, 2011
Link to Decision

Grant Bishop
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