Shaw v Anderson, 2010 ONSC 1164

Mr. Shaw sold 20% of the shares in the capital of his roofing company business to Mr. Anderson’s holding company. Part of the price was loaned by Mr. Shaw to Mr. Anderson and documented by a promissory note for $41,000 dated Sept. 30, 2002 and payable in 84 monthly payments commencing Oct. 30, 2002 and ending in Sept. 2009. Regardless of the payment schedule, the parties expected payments to come when the roofing company declared dividends. Nothing was paid until a dividend was declared in 2007 and the roofing company made a payment to Mr. Shaw of about $2,200 under the Anderson note.

Mr. Shaw made demand for payment on the balance of the note by a demand letter dated July 10, 2009. Demand was dishonoured and an action for payment was started on Aug. 4, 2009.

Mr. Anderson defended on the basis that the action was out of time under limitations legislation, and that the dividend payment had not restarted the clock as the payment came from the corporation and not from Mr. Anderson personally.

The Court granted judgment to the plaintiff for the debt and held that:

  • this was not a demand note and was clearly a note where time for payment is expressed, being the 84 monthly payments. Not being a demand note, the decision in Hare v. Hare, (2006), 83 O.R. (3d) 766 (OCA) did not apply;
  • the note contains a waiver of defences based upon an indulgence and expressly stated as follows:
    • The undersigned hereby waives presentment for payment, demand, notice of dishonour, protect and notice of protest of this promissory note and waives any defences based upon indulgences which may be granted by the Lender to any party liable hereon. Any default in payment on an instalment due hereunder shall, at the option of the Lender, accelerate the balance of the note, which in such event shall become immediately due and payable in full.
  • the Lender accelerated payment by making demand in July 2009 and was then entitled to payment.