One of the reasons it’s important to get advice from a lawyer early in the development of a legal problem is because in many areas of law there are important formalities and timelines that must be followed, particularly for a plaintiff to bring a claim. Matters of contractual litigation, including those related to construction, are no exemption. In a recent decision from the Ontario Superior Court of Justice, a defendant tried to rely on a limitation period in order to prevent the plaintiff from bringing a claim against them. The court’s task was to determine when the clock started ticking on that limitation period. In this case, the question was about whether the clock started ticking when the invoice was provided to the defendant, or if a text message exchange months later constituted a “restarting” of the clock, giving the plaintiff more time to file their claim.

Dentist hires contractor to perform renovations

The defendant in the action is a dentist. He hired the plaintiff to perform some improvements at his dental practice in January 2015. The value of the contract, including taxes, was about $245,000. The dentist received three invoices throughout the duration of the project. The first was in the amount of $79,100, which was issued on April 28, 2015. This invoice was paid in full. The second was for an identical amount and was issued on August 31, 2015. It was also paid in full. The final invoice was issued on January 19, 2016. It was for $87,010, but only $62,489 was paid, leaving a balance of $24, 521.

The plaintiff and defendant exchanged some text messages between March 2016 (when the partial payment was made) and June of that same year. In an exchange of messages on June 2, 2016, the plaintiff expressed frustration that there was still money owing on the contract and asked the defendant to have a cheque ready for pick up. The defendant replied that the balance would be paid after a third-party inspector assessed the job. There were no payments made on the balance following that conversation, though the decision did not mention the reason for this.

Defendant says it is too late for plaintiff to recoup money

The plaintiff brought an action against the defendant, seeking payment of $25,000. However, the defendant claimed the plaintiff was out of time because the time period set out in the Limitations Act had expired.

At the original trial, the trial judge looked at the Act and its sections relevant to the dispute between the parties. A two-year limitation period applies to these types of issues, with the Act stating a proceeding shall not be allowed to commence after two years pass from the day on which the claim was discovered. The section dealing with when the claim was discovered is very important.

The Act goes on to state that a claim is considered to be discovered on the date “the act or omission giving rise to the claim took place.” The defendant argued the limitation period began on March 11, 2016, when the last partial payment was received, leaving a balance on the contract. However, the plaintiff said the clock should have started ticking on June 2, 2016, when the defendant texted that payment would only be made following an inspection.

The trial judge agreed with the plaintiff, holding that the text messages exchanged on June 2, 2016 constituted an acknowledgement of the debt by the defendant.

The defendant appealed, arguing that the trial judge misinterpreted the Act.

Did the trial judge correctly conclude the plaintiff acted within the allowable timeframe?

The defendant’s position relied on a section of the Act outlining what constitutes acknowledgement of debt. The three elements are:

  1. Clear and unequivocal language;
  2. The absence of a dispute regarding the amount owing; and
  3.  A signature.

The defendant says that the text messages exchanged between him and the plaintiff did not satisfy the elements required under the Act. In fact, the defendant said none of the elements laid out in the Act were contained in the text message exchange. The plaintiff said that the entire context of the relationship between the parties and the conversation should satisfy the requirements and that no signature is required for a text exchange, adding the authenticity of the text message is not in dispute.

The court agreed with the plaintiff, stating that it is sufficient for a debtor to acknowledge that there is a debt, even if the precise amount owing is in question or if there is a dispute over whether they will pay it.

In turning to the question about the requirement for a signature, the court agreed with the trial judge’s decision that this condition had been met, but took the opportunity to provide its own analysis, stating that the defendant’s phone has a unique, identifiable number. In addition to his phone number, there is no dispute the user of the device was the defendant and that the defendant’s phone sent the message. The acceptance of such “digital signatures” is essential for resolving disputes in the modern world.

Having found no errors in the trial judge’s decision, the court upheld the decision and ordered the defendant to pay the plaintiff for the damages sought as well as costs.

Allow Campbell Litigation to assist you in matters related to contract disputes

At Campbell Litigation we understand that the construction business involves many moving parts, people, and stages. Disputes can be incredibly disruptive and expensive to everyone involved in a construction project. Our team, led by Richard Campbell, has extensive experience assisting clients involved in many different roles and stages of construction. We have represented planners, builders, developers, property owners, and financial institutions. Files we have worked on have dealt with issues such as financing disputes, liens, property remediation claims, contract disputes, and more. To speak with a member of our team, please reach us online or call us by phone at 519-886-1204 today.