I Didn’t Sign up for This: When an Email Can Extend a Limitation Period for a Debt Claim

In British Columbia, the right to sue on a debtor’s failure to repay a loan is generally limited to a two year period following the date the debtor defaults on that loan, thanks to the provisions of the Limitation Act, S.B.C. 2012, c. 13 (the “ Limitation Act”). However, section 24(6) of the Limitation Act also provides that if the debtor makes a signed and written acknowledgment of their debt to the creditor, this two year period instead starts to run from the date of that acknowledgment. There has been some ambiguity as to what qualifies as a signed and written acknowledgment in the context of electronic communications, but the recent British Columbia Supreme Court case of Johal v Nordio, 2017 BCSC 1129 (“Johal”) provides some clarity.

In Johal, one of the plaintiffs, Jatinder Johal, loaned the defendant, Marco-Abel Nordio, $250,000 by way of a promissory note signed by Mr. Johal’s wife, Sonia Kaur Johal. The money was to be used by Mr. Nordio to purchase property in North Dakota and was to be repaid, in addition to a lending fee of 20%, by April 25, 2014.

The loan was not repaid by April 25, 2014, and over the next several months Mr. Nordio and Mr. Johal exchanged many emails regarding Mr. Nordio’s default. One of these emails, sent by Mr. Nordio to Mr. Johal on August 31, 2014, stated in part as follows:

Saying that as soon as I close on HR you will receive the funds. We are looking on a 30 days close….That mean[s] that I am selling HR…I will pay back capital and interest for the one time deal out of my profit from the HR transaction and close the note….

Mr. Nordio concluded this email with what is commonly described as an email signature: electronic text indicating his name, professional title, employer, and contact information.

On July 24, 2016, Mr. and Ms. Johal sued Mr. Nordio for failing to repay the loan. In his defense, Mr. Nordio relied on the Limitation Act, arguing that Mr. and Ms. Johal were required to launch their claim within two years of his failure to repay the loan (April 25, 2016), but neglected to do so. The Johals argued that Mr. Nordio’s August 31st email constituted a signed and written acknowledgment of the debt, extending the expiry of the limitation period to August 31, 2016.

The court found in favour of the Johals. In doing so, it considered both section 24(6) of the Limitation Act and the definition of “electronic signature” within the Electronic Transactions Act, S.B.C. 2001, c. 10 (the “Electronic Transactions Act”).

Section 24(6) of the Limitation Act requires an acknowledgment of debt to be:

  • in writing
  • signed by hand or by electronic signature within the meaning of the Electronic Transactions Act,
  • made by the person making the acknowledgment or the person’s agent, and
  • made to the person with the claim, the person’s agent or an official receiver or trustee acting under the Bankruptcy and Insolvency Act (Canada)

The court was chiefly concerned with whether the email from  August 31, 2014 contained an “electronic signature” within the meaning of the Electronic Transactions Act, which defines an “electronic signature” as: “information in electronic form that a person has created or adopted in order to sign a record and that is in, attached to or associated with the record.”

The court followed the precedent in IDH Diamonds NV v Embee Diamond Technologies, 2017 SKQB 79 in noting that courts have long accepted non-electronic deviations from handwritten signatures, such as crosses, initials, and rubber stamps. The court further determined that Mr. Nordio could have refrained from attaching this information to his email, and inferred that he did so in order to use this information to identify him as the sender of the email and to serve as his signature. In so doing, the court concluded that the email constituted a signed and written acknowledgment, and the Johals’ claim was made in time.

Johal may be helpful for those who have been engaged in discussions with a debtor and are concerned that a limitation period to start a lawsuit has passed. It also provides clarity for those concerned about acknowledging liability. It also serves as a reminder that an individual with a potential legal claim should consult a lawyer regarding limitation periods as soon as possible.