Signed Acknowledgements in the Digital Age: Revisited

Embee Diamond Technologies Inc. v I.D.H. Diamonds NV, 2017 SKCA 79

The Saskatchewan Court of Appeal recently affirmed a decision by Justice Layh regarding the interpretation of the in writing and signed requirements under The Limitations Act SS 2004, c L-16.1 [the “Act”] and The Electronic Information and Documents Act, 2000, c E-77.22 [“EIDA”].

A Kanuka Thuringer LLP Insights article, Signed Acknowledgements in the Digital Age: I.D.H Diamonds NV v Embee Diamond Technologies Inc., 2017 SKQB 79 , explores in fuller detail the circumstances of this case. In summary, Embee Diamond Technologies Inc. (“Embee”) purchased raw diamonds from I.D.H. Diamonds NV (“IDH”), after which there was an outstanding balance on the purchase price, and attempts to negotiate alternative arrangements regarding payment eventually led to litigation. Embee submitted that the claim was statute barred by operation of the two year limitation period within the Act. The Court of Queen’s Bench determined that there was enough information contained in the emails regarding on ongoing debt obligation to satisfy an “acknowledgement” of the debt for the purposes of section 11(2)(a) of the Act, despite Embee not acknowledging the quantum of the debt.

The Court determined that the emails met the “in writing” requirement of section 11(2) of the Act, as they were in writing and accessible for subsequent reference. The Court also relied on section 3(b) of the EIDA to conclude that Embee had adopted proper “electronic signatures”. Even though Embee had used different signatures throughout the correspondence, there was no doubt as to the authorship or authenticity of the emails, and there were sufficient indicia to establish that the contents were created or adopted by Embee.

Embee appealed the initial dismissal of its application by the Court of Queen’s Bench on two grounds. The Court of Appeal had to determine first, if the Chambers judge erred by reversing the burden of proof onto the Defendant Embee, with respect to the expiry of a limitation period under the Act. Second, the Court of Appeal examined if the Chambers judge erred in his interpretation of the in writing and signed requirements under the Act and the EIDA.

The Court of Appeal found on the first ground of appeal that even though the Chambers judge was mistaken in saying that Embee had the burden to prove the limitation period had not expired, ultimately nothing in the case turned on this. The Court determined the Chambers judge had assessed the evidence before him in a way that neutralized the effect of the error. In answering this question the Chambers judge had assessed the whole of the evidence before him and determined that Embee had acknowledged the debt through the emails. The Chambers judge then addressed whether the electronic nature of the acknowledgement had satisfied thein writing and signed requirements under s 11 of the Act, and decided that it had.

The Court of Appeal found that the Chambers judge property adjudicated the matter before him, as the issue came down to what the evidence had established regardless of who held the burden of proof. The Court of Appeal similarly found no error in the Chambers judge’s interpretation and application of the EIDA to the facts of the case.

Moving forward, if there is information in an email, in an electronic form, that must have been created or adopted by a person in order to sign a document, and the information is attached to or associated with the document, it may constitute an “electronic signature” under the EIDA. Parties in negotiations via electronic communication will need to keep this front of mind, as these communications may inadvertently extend a plaintiff’s limitation period.