We recently blogged about the current framework governing electronic signatures in Ontario (here). In a May 2021 case, the Divisional Court recognized text messages as a valid digital signature in a dispute between parties over a debt for leasehold improvements and the application of the Limitation Act, 2002.
Civil claims in Ontario must generally be started within two years of an “act or omission” giving right to the claim. The “limitations clock” starts to run on the date of the act or omission but can be extended in certain circumstances such as where a debtor acknowledges the debt to the creditor. The acknowledgment must be in writing and signed. The clock starts to run on the date of the acknowledgment.
In this case, there was a dispute over money owing to a contractor. Some invoices were paid but the last was partially outstanding. The parties exchanged text messages on June 2, 2016, where the debtor recognized the debt but refused to make payment until the project was completed to his satisfaction. The contractor brought a claim in the Small Claims Court for the balance owing and successfully argued that the text exchange was an acknowledgment of debt under s.13 the Limitation Act, 2002 and the claim was brought in time of the two-year limitation period (with the clock starting from the date of that text exchange). The text exchange was within 2 years of the start of the claim. The last payment made to the contractor was outside of 2 years of the start of the claim.
The trial judge found that the text exchange was an acknowledgment of the debt based on the plain wording of the texts and the boarder context of the exchanges between the parties. Even though the texts were not signed, the trial judge concluded that there was no dispute about their authenticity. The debtor appealed.
The Divisional Court agreed that the text exchange was sufficiently an acknowledgement to extend the limitation period. The court recognized that s.13 does not require any particular type of signature and accepted the text exchange as a valid acknowledgement even though it was not “signed” in the traditional sense, and because of the other unique identifiers such as the International Mobile Equipment Identifier (IMEI) number that supply a digital signature on every message sent by the user of that device.
The court acknowledged that,
“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.”
The court’s recognition of text messages as a modern form of a signature reflects the realities of our world, particularly post COVID-19. It is also a reminder that digital signatures may be binding in new and different scenarios.
In the condo context, it might be applicable against a unit owner who promises to bring their common expense account into good standing or to emails between directors of neighbouring condo corporations acknowledging shared costs that are owing. Your text is your bond.