Written By: Jason Martin, Associate lawyer with the Marshall Law Group
December 6, 2022

In Ontario, the Limitations Act has one major deadline to which a significant majority of legal claims are beholden – that is the classic 2 years from the date of “discoverability” rule.

However, there is an oft-forgotten consideration in applying this rule as Courts and lawmakers have acknowledged individuals shouldn’t be penalized, nor taken advantage of, for being reasonable or lenient in granting extensions to debtors.
The Act states in S. 13(1) that if a person acknowledges liability in respect of a claim for:

• payment of a liquidated 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 limitation period will start to run as of the date of acknowledgment of the debt.

In the past few years, Ontario Courts have recognized that a debtor’s acknowledgement has evolved to include digital correspondence, which can effectively restart the limitation period.

The personal nature of an email account or smartphone acts as a form of “signature” that is now accepted as a signed acknowledgement of a debt.

Acknowledgement via Email

For instance, in Environmental Building Solution Corp. v 2420124 Ontario Ltd. 2018 ONSC 3112 (Environmental), a business debtor was sued on the basis of unpaid invoices. The Plaintiff was hired by the Defendant to provide remediation services for its hotel properties, which involved extensive mould removal and prevention work. A dispute arose when the Defendant refused to pay money owed to the Plaintiff, citing a lack of expedient progress.

The Court was required to determine whether an email acknowledgement of the oral agreement would invoke S.13 of the Limitations Act, or whether the Plaintiff was out of time to bring a Claim.

While the decision ultimately relied upon the proof of “clear and unequivocal acknowledgment” of the debt, in reviewing S. 13, the Court stated the following:

E-mails are capable of constituting an acknowledgement in writing and signed by the person making it or the person’s agent within the meaning of s. 13(11). Mr. Ellis’ name on the e-mail was sufficient for this purpose.

Environmental at para. 5

Text Message Acknowledgements (S. 13(10))

In 1475182 Ontario Inc. o/a Edges Contracting v Ghotbi et al. 2021 ONSC 3477 (Ghotbi) a contractor had completed various projects for the defendant at his dental practice when a dispute arose surrounding the payment of a third invoice.

The third invoice was rendered in January 2016, and the parties had a text exchange concerning the amount in June, 2016. The Defendant refused to pay for services rendered and an action was brought in May, 2018. Due to the delay in bringing the claim by the Plaintiff, the Defendant argued that the Plaintiff was statute barred.

The Court, in interpreting S.13(1) & (10), took a similar approach to the Court in Environmental. It was accepted that a text message, with its unique digital IDs and signature, met the requirement for a debt to be acknowledged, per S. 13.

The Court concluded its finding, stating:

On the facts of the case at bar, Dr. Ghotbi’s texts were obviously not “signed”; in the traditional sense. But s. 13(10) does not prescribe any particular type of signature.

The world is changing. Everyone knows that. We live in a digital world now, much more than was the case when the Act came into force in 2002. It is incumbent upon the court to consider not just traditional means of affixing one’s signature to a document, but other, more modern means, including digital signatures.

In this instance, there is no question about the authenticity of the text messages. There is no question that Dr. Ghotbi was the author of the June 2, 2016, texts in issue. From that perspective, the underlying purpose of s. 13(10) has been satisfied.

Ghotbi, paras. 47-49

Recent changes in technology and digital security have tied our devices and communication to fingerprints, 2-tier security checks, and facial identification software. As a result, it has become vital that the definition of the signature adapt to the realities of digital correspondence and communication – thankfully, the Courts seem to be on board with this already.