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Signed Acknowledgements in the Digital Age

I.D.H. Diamonds NV v Embee Diamond Technologies Inc. - 2017 SKQB 79

In a recent decision by Justice Layh, the Court was asked to rule on the required form of an electronic signature to satisfy the “signed” requirement for legal purposes.

Embee Diamond Technologies Inc. (“Embee”) purchased 352.73 carats of raw diamonds from I.D.H Diamonds NV (“IDH”) for $944,917.26 USD. There was an outstanding balance on the purchase price and Embee engaged in discussions regarding payment or alternative arrangements with the Plaintiff over the span of approximately three years. Negotiations were hopeful but eventually it became clear that litigation was necessary and the Plaintiff commenced the present action. In its defence, Embee submitted that the claim was statute barred by operation of the two year limitation period as set out in The Limitations Act, SS 2004 [Act].

The parties agreed that a limitation period could be reset by a written and signed acknowledgement of the existence of a claim for payment of a debt by virtue of section 11(2)(a). The question to be decided then focused on whether a series of emails between the parties constituted a written, signed acknowledgment as required by section 11 of the Act.

The first part to this inquiry is whether the emails were an “acknowledgment” of the debt. Embee submitted that the emails should not be considered an acknowledgement because they did not specify the amount of the outstanding debt. IDH submitted that since each email referred to an ongoing debt obligation, each email was an acknowledgment and the limitation period was being “continually reset.” The Court agreed with IDH, finding that in looking at the circumstances in which the emails were exchanged, Embee never intimated anything but an ongoing debt obligation. The Court found no need for Embee to have acknowledged a specific quantum of debt.

The second part to this inquiry is whether the acknowledgment was in “writing” and “signed” as required under theAct. The Electronic Information and Documents Act, 2000, SS 2000 [ EIDA] s. 8 states:

8 A requirement pursuant to any law that any information or document be in writing is satisfied if the information or document;

  1. a) Is in an electronic form; and

  2. b) Is accessible so as to be usable for subsequent reference.

Justice Layh found that the emails sent by Embee to IDH were in electronic form and were “accessible so as to be usable for subsequent reference.” The email correspondence meets the “in writing” requirement of s. 11(2) of the Act.

The EIDA also addresses the requirement that a document be signed. Section 14(1) states:

14(1) A requirement pursuant to any law for the signature of a person is satisfied by an electronic signature.

Section 3(b) of the EIDA defines “electronic signature” as:

“electronic signature” means information in electronic form that a person has created or adopted in order to sign a document and that is in, attached to or associated with the document.

Embee presented evidence that its CEO and COO had adopted proper “electronic signatures” in the following form when they wished to officially sign an electronic document:

Because the proper electronic signature above was not used in the emails exchanged during the three years at issue, Embee argued that the emails were not signed. The emails at issue invariably closed in this manner:

Notwithstanding the differences between the signatures, the Court found that the series of emails sent by Embee met the requirements of an “electronic signature” as defined under the EIDA. There is no doubt as to their authorship or authenticity and there are several items of information and indicia to establish that the contents were created or adopted by the Defendant. Both forms of signatures displayed above met the “signature” requirements of the Act. As such, the Court found that the series of emails constituted a continual acknowledgment of the existence of a debt owed by Embee to IDH and the action was not statute barred.

This case builds on similar issues that were decided in another recent Saskatchewan case Quilichini v Wilson’s Greenhouse & Garden Centre Ltd. and Velocity Raceway Ltd., 2017 SKQB 10 [Quilichini]. In Quilichini, it was held that clicking “I agree” on an electronic waiver was sufficient to properly execute the document, creating a valid and legally binding contract.

As technological advancements are weighed against the traditional terminology of legislation, Saskatchewan Courts are favoring a flexible application of the law that permits businesses to adapt with technology without forfeiting legal rights. Justice Layh, in this decision, has provided some clarity in that typing one’s name at the bottom of an email is likely sufficient to hold up in court as a signature (at least in situations where the EIDA is applicable). The exchange of electronic documents is now common practice in the commercial context and Saskatchewan’s judiciary has adapted accordingly, recognizing the need for legal certainty in an electronic world.