Emails can satisfy the acknowledgement requirement and Forbearance can postpone discoverability of a claim

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In University Plumbing v Solstice Two Limited, 2019 ONSC 4276, the Superior Court addressed two questions: (i) whether an email can satisfy the acknowledgement requirement under s. 13(1) of the Limitations Act; and (ii) whether a promise to forbear commencing an action affects discoverability of a claim under s. 5(1)(a)(iv) of the Act. The answer to both questions is yes.

The plaintiff contractor alleged that the defendant project owner owed it money and was in breach of trust under the Construction Lien Act. The plaintiff commenced the action in 2015. The defendant argued that the cause of action accrued on August 30, 2012, the date the invoice was issued and that the action was statute-barred. However, a series of emails were exchanged between the parties in 2013 and 2014 whereby the defendant acknowledged the debt owed to the plaintiff. The emails contained the defendant’s electronic signature.

Acknowledging debt by email can satisfy the requirement under section 13

Section 13(1) of the Act provides that “if a person acknowledges liability in respect of a claim for payment of a liquidated sum…the act or omission on which the claim is based shall be deemed to have taken place on the day on which the acknowledgment was made.”

The defendant argued that the email correspondence between the parties did not satisfy the acknowledgement requirement under s. 13(1) of the Act because the “written acknowledgements were digitally transmitted and were not signed by hand.” The court disagreed and held that emails can satisfy the acknowledgement requirement under s. 13(1), provided that the communication between the parties is clear. The court noted that, in this case, the debt was not a contentious issue since the emails contained the defendant’s electronic signature and were intended by the parties to form “unequivocal” acknowledgements of the debt.

Forbearance from commencing an action can affect the discoverability of a claim

The rule for discoverability, under s. 5(1)(a)(iv) of the Act requires a need to know that “a [court] proceeding would be an appropriate means to seek [a] remedy.” The plaintiff claimed that the defendant’s promises to repay the debt induced the plaintiff to forbear from commencing the action, and it was only when the defendants advised on June 26, 2015, that they were ceasing to try to satisfy the debt, that it became appropriate for the plaintiff to commence litigation. The court agreed and held that had the plaintiff commenced the action before the defendant reneged on its promise, the plaintiff’s action would not have been an appropriate means to seek a remedy under s. 5(1)(a)(iv) of the Act. Instead, the court would have interpreted the plaintiff’s act as a “[rush] to litigation.”

Co-authored by Nour Chehab Eddine