General Electric Capital Equipment Finance Inc. v. Canada, 2002 DTC 6734, 2001 FCA 392 -- summary under Subparagraph 212(1)(b)(vii)

By services, 28 November, 2015

Amendments to the terms of promissory notes that decreased the principal owing, increased the interest rate, changed the maturity date and changed the identity of the payee were found to give rise to new obligations, with the result that their maturity date occurred within five years of the date of (new) issue. After stating (at para. 10) that "I ... do not think that a novation is required before there can be a new obligation" and (at para. 12) "because novation is an issue of fact, whether or not a new obligation has been created is also, by analogy, a question of fact," and noting (at para. 13) that in Wiebe "this Court held that fundamental changes to a stock option agreement which substantially affected the basic elements of the agreement were inconsistent with the continued existence of that agreement," Sexton J.A. stated (at para. 16) that:

"When it can be said that substantial changes have been made to the fundamental terms of an obligation which materially alter the terms of that obligation, then a new obligation is created ... ."

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material changes produced new obligation
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