Your Text is Your Signature: Understanding the Implications of the Edges Contracting v Ghtobi Judicial Decision

By Allan Dick and Don Houston 

Overview:

In our rapidly expanding technological era, important questions arise on how to properly interpret statutes to accurately reflect technological advancements. We have witnessed the allowance of virtual court hearings, the adoption of the virtual commissioning of affidavits, and the use of e-signatures to name a few adaptions to past practices. Recently, the Ontario Superior Court of Justice was asked to interpret The Limitations Act, 2002 (“Act“), and more specifically Section 13, regarding when the “limitations clock” begins on a claim. Section 13 provides for an extension of the 2-year commencement of an action claiming liquidated damages where a signed acknowledgement of indebtedness in writing is made. That is, normally a person has two years to sue after a debt becomes due. However, if the debtor signs an acknowledgement of the indebtedness in writing, the time to sue is extended to two years after the acknowledgment.  The “commencement date” for the claim then moves to that day of acknowledgement. The court’s decision in Edges Contracting v Ghotbi (“Edges“) expanded the scope for when extensions will be granted to circumstances where that acknowledgement was contained in a text. This post will explore the previous application of Section 13, and how Edges has expanded the interpretation of this Section.

Section 13 of the Act:

Section 13 of the Act sets out the applicable extensions as follows:

13(1): If a person acknowledges liability in respect of a claim for payment of a liquated sum, the recovery of personal property, the enforcement of a charge on personal property or relief from enforcement of a charge on personal property, the act or omission on which the claim is based shall be deemed to have taken place on the day on which the acknowledgement is made.”[1]

13(8): Subject to subsections (9) and (10), this section applies to an acknowledgement of liability in respect of a claim for payment of a liquated sum even though the person making the acknowledgement refuses or does not promise to pay the sum or the balance of the sum still owning.[2]

13(10): Subsections (1), (2), (3), (6) and (7) do not apply unless the acknowledgement is in writing and signed by the person making it or the person’s agent.[3]

These provisions were considered and expanded in Edges.

Edges Contracting v Ghotbi:

This case concerned the general requirement that a civil claim for a debt owed in Ontario must be commenced within two years of the act or omission giving rise to a claim. The “limitations clock” normally begins to tick on the date of the act or omission that gives rise to a claim. Based on Section 13 of the Act, the Court held that this date can be extended, specifically in a situation where a debtor signs an acknowledgement of the debt to a creditor in writing. In this situation, the clock begins to tick on the date of this acknowledgement. In Edges, the acknowledgment was not “signed” as it was contained in a text. The Judge ruled that a text message satisfied this requirement, the decision was appealed.

The appeal judge agreed with the trial judge’s decision. The court held that Section 13(10) does not prescribe any particular type of signature and said that it is “incumbent upon the court to consider not just the traditional means of affixing one’s signature to a document, but other, more modern means including digital signatures.” All cells phones have a unique phone number linked to the phone, along with other unique identifiers to specific phones. These unique identifiers provide a digital signature of sorts on every message, and the court therefore concluded that this digital signature was sufficient to meet the requirements of Section 13(10) of the Act. [4]

This creative interpretation of signatures is important not just to Section 13 of the Act but to any requirement that something requires a “signature” to be effective. Contracts, for instance, commonly require that they can only be amended by a document in writing signed by the parties. An exchange of text messages may well be found to satisfy that request.  Businesses and individuals are advised to assess how they use technology in their communications and to seek legal advice on what the implications may be of such usage. It can be expected that the courts, like the courts in Edges will continue to recognize the reality of such communications when interpreting statutes created in different times.

At Sotos LLP, our team provides advice in the development of best practices that respond to and address issues arising from the ever-evolving legal landscape. If you would like to discuss how our firm can help your business, please contact us.

Allan D.J. Dick, Sotos LLP

Allan is a partner at Sotos LLP and sector leader of the firm’s Restaurants practice area. Allan is a trusted primary advisor to many top franchisors, with more than three decades practising law in the franchising, licensing and distribution industry. Allan has been recognized by Chambers Canada, Canadian Legal LEXPERT Directory, Who’s Who Legal, and Best Lawyers in Canada as a leading Canadian franchise law practitioner.

Don Houston, Sotos LLP

Don is a summer student with Sotos LLP, Canada’s largest franchise law firm.