Burrows (John) Ltd. v. Subsurface Surveys Ltd. et al., [1968] N.B. Law News No. 61 (SCC)

• Judge: Cartwright, C.J.C., Judson, Ritchie, Spence and Pigeon, JJ.
• Court: Supreme Court (Canada)
• Case Date: May 13, 1968
• Jurisdiction: Canada (Federal)
• Citations: [1968] N.B. Law News No. 61 (SCC);1968 CanLII 81 (SCC);[1968] SCR 645;68 DLR (2d) 707;[1968] SCJ No 42 (QL);[1968] SCR 607;1968 CanLII 83 (SCC);1968 CanLII 763 (SCC);68 DLR (2d) 537;1968 CanLII 16 (SCC);68 DLR (2d) 354;64 WWR (ns) 502;[1968] SCR 626;[1968] SCR 617;64 WWR 524

Burrows Ltd. v. Subsurface Surveys, [1968] N.B. Law News No. 61 (SCC)

MLB Law News

John Burrows Limited v. Subsurface Surveys Ltd. and G. Murdock Whitcomb

Indexed As: Burrows (John) Ltd. v. Subsurface Surveys Ltd. et al.

Supreme Court of Canada

Cartwright, C.J.C., Judson, Ritchie, Spence and Pigeon, JJ.

May 13, 1968.

Summary:

Bills of Exchange Act, sec. 176 - Promissory Note - Estoppel - Supreme Court of Canada allowed the appeal and restored the judgment of the trial judge who granted judgment to the Plaintiff/Appellant, John Burrows Limited for $42,000. plus interest under a Promissory Note.

The New Brunswick Court of Appeal held that a purported Promissory Note with a "whole or any portion" prepayment privilege was not a promissory note within the meaning of the Bills of Exchange Act. N.B. Court of Appeal also applied equitable principle of promissory estoppel stating that the position of defendants/respondents were prejudiced when the plaintiff/appellant granted indulgences with respect to interest payments, which the Court of Appeal said lulled or mislead the defendants into a belief that the right to payment of the principal immediately upon a default would be held in abeyance until the Df. was informed otherwise.

The Supreme Court of Canada followed Dagger v. Shepherd, 1946 1 All E.R. 133, and held that the instrument in question was a promissory note as defined in section 176 of the Bills of Exchange Act and that a privilege of making payments on account of principal from time to time does not alter the nature of a unconditional promise to pay at the time fixed by the instrument but merely gives the maker an option to make earlier payments.

The Supreme Court of Canada referred to London Property Trust Ltd. v. High Trees House Ltd., 1947 K.B. 130; Conwest Exploration Company Ltd. et al. v. Letain, 1964 S.C.R. 20; Hughes v. Metropolitan Railway Co., 1877, 2 A.C. 439; Combe v. Combe, 1951 1 All E.R. 767; Tool Metal Co. v. Tungsten Electric Co., 1955 2 All E.R. 657; and concluded that this was not a case to which the defence of equitable estoppel or estoppel by representation applied. The Supreme Court of Canada stated,

"It seems clear to me that this type of equitable defence cannot be invoked unless there is some evidence that one of the parties entered into a course of negotiation which had the effect of leading the other to suppose that the strict rights under the contract would not be enforced, and I think that this implies that there must be evidence from which it can be inferred that the first party intended that the legal relations created by the contract would be altered as a result of the negotiations.

"It is not enough to show that one party has taken advantage of indulgences granted to him by the other for if this were so in relation to commercial transactions, such as promissory notes, it would mean that the holders of such notes would be required to insist on the very letter being enforced in all cases for fear that any indulgences granted and acted upon could be translated into a waiver of their rights to enforce the contract according to its terms.

"I do not think that the evidence warrants the inference that the appellant entered into any negotiations with the respondents which had the effect of leading them to suppose that the appellant had agreed to disregard or hold in suspense or abeyance that part of the contract which provided that:

'. . on default being made by both Subsurface Surveys Ltd. and the Debtor in paying any principle or interest due at any time according to the terms of the said note the Company may forthwith cause the pledged shares to be transferred to the name of the Company on the share register of Subsurface Surveys Ltd. and the pledged shares shall thereupon become the absolute property of the Company.'

". . . the behaviour of Mr. Burrows is much more consistent with his having granted friendly indulgences to an old associate while retaining his right to insist on the letter of the obligation, which he did when he and Whitcomb became estranged and when the respondents were in default in payment of an interest payment for a period of 36 days."

For Summary of Judgment of N.B. Court of Appeal, see N.B. Law News #67-64.

For Summary of Trial Court Judgment, see N.B. Law News #66-23.

Counsel:

William L. Hoyt, for the appellant;

E. Neil McKelvey, Q.C., and J. Ian M. Whitcomb, for the respondents.

This case was heard before Cartwright, C.J.C., Judson, Ritchie, Spence and Pigeon, JJ., of the Supreme Court of Canada, who delivered the following decision on May 13, 1968.