Many cases involving construction disputes end up in the Small Claims Court. The appeals from that court go to the Divisional Court, which is one or more Superior Court trial judges, sitting as an appeal court on questions of law.
In the case of Edges Contracting v Ghotbi, the contract was for leasehold improvements to Dr. Ghotbi’s dental practice office location. The contract itself was not in question.
Edges first two invoices were paid in full. On its third invoice there was some dispute and it was partially paid.
The parties exchanged texts about the $25,000 allegedly still owing.
Edges Contracting did not sue within two years of the date of the invoice in question. However it did sue within two years of a text from Dr. Ghotbi that inferentially acknowledged liability for at least part of the invoice.
His text read “the balance will be paid once everything is completed as per your agreement. No payment will be made until everything is clear. I am going to hire a third party inspector and their fees will be deducted from your payments too.”
The question was whether that was a valid acknowledgement of the debt to trigger Section 13 of the Limitations of Actions Act 2002, and thus mean that the claim was issued in time.
The first problem the parties and their lawyers faced was that Section 13 (1) would seem to say that the text would not be a triggering event to save the time line because it did not “acknowledge liability” but Section 13(2) seems to allow such a text to be a triggering event even though there was no promise to pay a sum certain. That alone would give a court a tough call.
However, Section 13 has a third subsection which states that the written document will not be a trigger for the time line unless it is “signed in writing by the person making it”.
We all know that texts are not signed, in the traditional sense.
The court viewed the fact that there were identifying markers that showed it came from Dr. Ghotbi and he did not deny sending the text, and the court found that his text was a triggering event and agreed with the Small Claims Court trial judge that he owed the money to Edges Contracting. In other words, the court read “signed by the maker” in the modern sense, of identifying markers, not signature.
What I find most interesting about this recent case is that no-one specifically mentioned Section 25 of the Courts of Justice Act. That section governs the Small Claims Court and states “The Small Claims Court…may make such order as is considered just and agreeable to good conscience.”
To me, that section justifies the “judicial activism” of reading in words to a statute like what happened here; i.e. essentially the Small Claims court read into Section 13(3) of the Limitations Act that “signed by the maker” should read “authenticated by the maker.”
In other words, if this matter had been heard initially by the Superior Court for an amount above the Small Claims Court ceiling of $35,000, I would argue that the result is wrong in law.
However, since it was heard initially the Small Claims Court, even though Section 25 of the Courts of Justice Act is not specifically referenced, I think this decision might survive any subsequent appeal up to the Ontario Court of Appeal.