COURT FILE NO.: CV-05-0117-00
DATE: 2012-12-04
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
STEPHEN BURNS
Stephen Burns representing himself
Plaintiff
- and -
DOUGLAS ALAN MCMILLAN
1103516 ONTARIO LTD.
1103584 ONTARIO LTD.
Not appearing
Defendant
HEARD: June 25, 26 , 2012,
at Thunder Bay, Ontario
Pierce, R.S.J.
Reasons For Judgment
Introduction
[1] At the opening of trial, the plaintiff claimed damages from the defendants of $300,000.00 for breach of contract and breach of fiduciary duty. The defendants did not appear at trial. As a result, the witnesses for the plaintiff were not cross-examined.
[2] The defendants filed a statement of defence disputing any indebtedness or fiduciary relationship between the parties. In the alternative, the defendants pleaded that any claims are statute-barred.
[3] The statement of claim was issued March 18, 2005. The question of whether the claims are statute-barred is a threshold issue. However, some context is required to understand the relationship between the parties, the nature of the claims, when, if any, causes of action arose, and the extent of damages, if any. I will therefore outline the evidence first and deal with the limitation issue later in these reasons.
The Facts
[4] Sharan Sohi, through his corporation, Sohi Holdings Inc. (“Sohi”) developed a franchise for Chinese fast food restaurants called Simplee Chinese. It franchised three locations in Thunder Bay. Each location was run by a different franchisee. Each location lost money in the initial years of operation. The claim in this action relates to the Intercity Mall franchise.
[5] The defendant, Mr. McMillan incorporated 1103516 Ontario Ltd. (“3516”). He was the sole officer and director of the corporation.
[6] In the summer of 1995, McMillan’s corporation, 3516, purchased stock, inventory, equipment, chattels and goodwill from the franchisor, Sohi and became the franchisee. The purchase price was $65,000 paid by a $10,000 deposit with the balance secured by a promissory note payable with 10% interest commencing September 23, 1995.
[7] The plaintiff`s brother, Dennis Burns, purchased shares in 3516. Initially, he paid $24,999 for shares in 3516 and a further $24,999 for shares in Mr. McMillan’s other corporation, 1103584 Ontario Ltd. The corporation, 1103584 Ontario Ltd., remained inactive, so by agreement, Dennis Burns transferred his investment in 1103584 to 3516.
[8] The share certificates issued by 3516 shows the shares were issued to Nesbitt Burns in Trust for Dennis Burns. The share certificates in evidence do not reflect the informal understanding about the transfer of capital to 3516 but I find that Dennis Burns and Douglas McMillan agreed that all of Dennis Burns’ investment would be allocated to 3516.
[9] As well, 3516 entered into a franchise agreement with Sohi. Mr. McMillan acted as the indemnifier for 3516, pursuant to a written indemnity. The agreement provided that 3516 would pay Sohi 5% of gross sales as a “service fee” and 4% of gross sales for advertising. The terms of the agreement and indemnity are set out in exhibit 7.
[10] In the spring of 1996, Dennis Burns negotiated with Mr. Sohi for the purchase of the Intercity franchise at a cost of $35,000 based on certain terms. They agreed that 3516 would operate the location.
[11] Subsequently, Dennis Burns incorporated 1164280 Ontario Ltd. (“1164”) to implement this agreement. He was the sole shareholder. Dennis Burns invested $150,000 - $160,000 in 1164 in order to acquire the franchise. The plaintiff, Stephen Burns, is Dennis Burns’ brother. He was the sole officer and director of 1164 and functioned as the de facto manager of the corporation’s affairs.
[12] The agreement was formalized by Sohi subleasing to 1164, incorporating in the sublease the terms of Sohi`s lease with the Intercity Shopping Centre. An agreement of purchase and sale between Sohi and 1164, dated May 15, 1996, provided that 1164 would acquire the assets and goodwill of the franchise for $125,000.
[13] In exhibits 14 and 15, Mr. McMillan, on behalf of 3516, acknowledged his acceptance of this restructuring. Specifically, 3516 agreed that the debt it previously owed to Sohi had now been assigned to 1164, along with the payment schedules. Dennis Burns testified that a note payable by 3516 to Sohi in the amount of $53,279.11 was also assigned to 1164. A copy of the note was not filed at trial.
[14] On behalf of his corporation, Mr. McMillan agreed that 3516 would thereafter pay franchise fees to 1164. This undated written agreement was formalized by a written agreement dated June 1, 1996. This agreement recited that:
3516 accepted 1164 as franchisor, landlord, and holder of 3516`s note, formerly payable to Sohi;
The balance on the note then payable to 1164 was $53,279.11 with monthly payments of $1,168.59 due to 1164 commencing June 23, 1996;
3516 would pay a franchise fee of 5% to 1164 no later than the 10th of each month commencing July 10, 1996; and
3516 would also pay monthly rent to 1164 in the amount of $7,082.49 commencing June 1, 1996.
[15] As part of the restructuring, 3516 became the subtenant of 1164. This acknowledgement is styled as a memorandum from the corporation 3516 to the corporation 1164. Mr. McMillan’s name appears above his corporation’s name. There is no indication that he signed the acknowledgement in his personal capacity.
[16] Mr. McMillan arranged with the plaintiff that he would pay the rent directly to Sohi, who was the shopping centre’s tenant, but would but advise the plaintiff if his corporation defaulted.
[17] After the restructuring, the shopping centre engaged in a major construction project that disrupted business. It had a serious impact on the operation of the food court where 3516’s operation was located. The plaintiff alleges that, notwithstanding the construction, 3516 had enough revenue to pay its obligations but did not do so. On December 1, 1996, 1164 sent a demand letter to Mr. McMillan concerning 3516’s defaults. The letter went unanswered.
[18] Defaults by 3516 continued. The shopping centre served notice of default in January, and again in March, 1997. Dennis Burns also testified that 3516 owed 1164 a franchise fee of 5% on account of gross sales.
[19] The demand letters and ledger accounts filed by the plaintiff as exhibits are internally contradictory and are not itemized by cause of action.
[20] On February 1, 1997, the plaintiff wrote a demand letter to Mr. McMillan (exhibit 17) advising that as of June 1, 1996, principal and interest on the note in the amount of $53,279.11 was due, and the defendants were now 8 months in arrears. No calculation of interest on the outstanding principal was provided.
[21] Secondly, the plaintiff’s letter demanded arrears of franchise fees in the amount of $12,009.33.
[22] Thirdly, the demand letter required repayment of accounts paid on behalf of 3516, then said to be $87,725.25. Although the plaintiff’s letter referenced an accompanying statement setting out these amounts, no statement was attached to the exhibit.
[23] The plaintiff warned Mr. McMillan that if these debts were not retired within ten days, collection proceedings would follow. Thus, the plaintiff was aware, as of February 1, 1997, that a cause of action for breach of contract existed.
[24] As I said, the plaintiff testified that 3516 also stopped paying miscellaneous accounts including hydro and gas related to the operation of the franchise. Exhibit 18 is the ledger of accounts paid by 1164 on behalf of 3516 for the period from May, 27, 1996 to February 1, 1997. The ledger is supported by cancelled cheques. The total amount is $129,146.91. Included in that sum are accounts for unpaid rent at $7,082.49 per month for June, August, and September - December, 1996 and January - February, 1997. The total for rent is 8 x $7,082.49 = $56,659.92.
[25] There is no explanation for the discrepancy between the demand for $87,725.25 in the February 1, 1997 letter (exhibit 17) and the ledger amount of $129,146.91 (exhibit 18) for the same period. It is unclear whether there is an accounting error, or certain expenses were reimbursed by 3516, or forgiven by 1164 or simply written off.
[26] Apart from these discrepancies in accounting, there is a more fundamental issue concerning the plaintiff’s claim for reimbursement of operating expenses paid by 1164 on behalf of 3516. The difficulty is that, aside from rent, there appears to be no contractual basis for these payments. While the plaintiff has proven a contractual obligation for payments of principal and interest on the note, and for payment of franchise fees and monthly rent, as set out in exhibit 15, the plaintiff cannot point to a single document or agreement by which the defendants agreed to repay 1164 for other miscellaneous accounts for business operation. At best, exhibit 17, being a letter written to Mr. McMillan on February 1, 1996 states:
…In addition, we have had to make payments on your behalf to ensure that our obligations to the landlord are in good standing….
[27] This unilateral statement is not evidence of a meeting of the minds required for the formation of a contract between the two corporations. Without that mutuality of obligation, there can be no contract binding the defendants. The payments by 1164 are simply gratuitous.
[28] Further, the 3516 ceased operation of the restaurant by February 28, 1997 at the latest, as Mr. Robert Favuzzi took over operation of the restaurant on March 1, 1997. Even if there were a contractual obligation to reimburse 1164, it should not have extended into June of 1997 as the plaintiff suggests.
[29] I conclude that, in the absence of proof, payments were for miscellaneous operating expenses were made without consideration. The plaintiff’s claim for reimbursement of miscellaneous expenses to February 1, 1997 is dismissed.
[30] Exhibit 19 shows further accounts paid by 1164 on behalf of 3516 from March 1 – April 1, 1997. These accounts are supported by receipts and cancelled cheques in the amount of $9,852.29. Why 1164 continued to pay accounts for 3516 when Mr. Favuzzi had assumed operation of the franchise is unclear. These payments were also made without evidence of consideration and are not contractually binding on the defendants.
[31] Mr. McMillan gave a security interest (exhibit 20) in an unspecified amount personally and on behalf of 3516 on April 30, 1997, waiving their rights to receive any financing statement filed under the Personal Property Security Act, R.S.O. 1990 c. P. 10. There is no evidence that the financing statement was filed or what amount it secured. There is no evidence that the defendants responded to the security agreement subsequently. The plaintiff testified that Mr. McMillan agreed to be responsible for the debt less whatever was recovered from Mr. Favuzzi. Mr. Favuzzi made an assignment in bankruptcy in May, 1999. There is no evidence as to what, if any amount was recovered from Mr. Favuzzi to be credited against 3516’s indebtedness.
[32] The plaintiff wrote an undated and unsigned letter to Mr. McMillan (exhibit 22) enclosing sales and income statements for 3516 and setting out outstanding accounts as of June, 1997 totalling $97,032.02. These accounts include $40,000 for Goods and Services tax and other items that do not appear in exhibit 18. I conclude that these claims are in addition to those set out in exhibit 18. No proof of payment is attached to the letter. For the reasons set out above, there is no evidence, on a balance of probabilities, that the defendants are contractually bound to repay 1164 for these payments made on behalf of 3516, if in fact the payments were made. The payments were made without consideration.
[33] Exhibit 22 also detailed a further $8,900 owed by Mr. McMillan for personal expenses, such as rent. The letter does not contain a demand for payment and the statement of accounts is not verified by cancelled cheques. There is no evidence that 1164 or the plaintiff paid these accounts on behalf of either Mr. McMillan or his corporations. If payments were made, there is no evidence of an agreement between 1164 and 3516 for repayment.
[34] I therefore find that, as of February 1, 1997, 3516 was indebted to 1164 in the amount of $49,561.96 for the promissory note plus interest of $3,717.15, for a total of $53,279.11 plus franchise payments of $12,009.33 plus rent of $56,659.92 for a total of $121,948.36.
[35] Exhibit 22 asks Mr. McMillan to produce financial statements and income tax returns for 3516 so they can be given to Mr. Favuzzi. Dennis Burns testified that Mr. McMillan assured him that he would sign off the books at the accountant’s office, but he moved from Thunder Bay without doing so. He never supplied the documents, which is a subject of complaint by the plaintiff. Dennis Burns testified he discounted the purchase price for the Simplee Chinese franchise to Robert Favuzzi by $10,000 - $25,000 because they could not produce McMillan’s financial statements for Mr. Favuzzi’s bank.
[36] The plaintiff argues that by failing to sign the accountants statements so that 3516s income taxes could be filed, Mr. McMillan breached his fiduciary duty to the shareholders of 3516, including Dennis Burns.
[37] Dennis Burns testified that Mr. McMillan assured him, before permanently leaving Thunder Bay, that he would be paid. He said that it was not until late 2004 that he began to worry that McMillan would not repay the debt.
[38] On June 20, 2011, Dennis Burns testified that he visited Mr. McMillan at his home in Quebec in order to serve him with a summons for the Coyotes night club law suit. Mr. Burns stated that McMillan spoke of paying off this claim with proceeds from the Coyotes action or his anticipated inheritance. Burns said that he and McMillan discussed the sum of one million dollars “to cover bills;” and that McMillan never denied his indebtedness. It is noteworthy that the plaintiff does not value his damages at one million dollars in this action. In any event, the Coyotes law suit was dismissed. Mr. McMillan never acknowledged any indebtedness in writing. His statement of defence disputes any indebtedness.
[39] Dennis Burns complains that he did not recover his investment of $50,000 in shares in 3516. He refers, of course, to the notional transfer of his investment of $24,999 for the purchase of shares in McMillan’s inactive corporation to 3516.
[40] Exhibit 3 shows that 3516 issued Class “C” preference shares to Nesbitt Burns in Trust for Dennis Burns to a value of $24,999. Dennis Burns withdrew money from his RRSP at Nesbitt Burns in order to purchase the shares. On March 15, 2000, Dennis Burns assigned Stephen Burns his rights as a common and preferred shareholder in 1164. While Dennis Burns undoubtedly held the beneficial entitlement to the shares, there is no evidence that Nesbitt Burns joined in the assignment of shares to the plaintiff. Had the defendants appeared at trial with counsel, they might well have taken exception to the plaintiff’s status to bring this action on the strength of the assignment of the cause of action without the consent of Nesbitt Burns, the trustee.
[41] The articles of incorporation for 3516 provide:
The holders of the Class “C” Preference shares shall in each year in the discretion of the directors, but always in preference and priority to any payment of dividends on the Class “A” and “B” Preference and Common Shares for such year, be entitled, out of any or all profits or surplus available for dividends, to cumulative dividends at the rate of 20% per annum on the amount paid up on the Class “C” Preference Shares....
[42] Dennis Burns purchased Class “C” preference shares in 3516. He did not lend the corporation money. There is no evidence whether the corporation has been wound up or is simply inactive.
[43] A profit is a prerequisite to a declaration of dividends for shareholders. Upon purchasing shares, the shareholder hopes that the value of his shares will increase, but he also assumes the risk that their value will fall and the investment may be compromised or even lost. That is what happened here. There is no evidence that the 3516 made a profit or that its director, Douglas McMillan, declared a dividend. There is a strong inference to the contrary: that 3516 was heavily in debt. In light of the sustained defaults by the corporation, I conclude 3516 was insolvent. It is obvious that the corporation only functioned as long as it did because of infusions of cash from 1164. It is ironic that a corporation in which Dennis Burns invested should be indebted to another corporation he created and financed.
[44] Dennis Burns’ entitlement to dividends is not proven. If his expectations of profit were disappointed, there is no breach of contract on that account. His claim to be reimbursed for the cost of the shares and the undeclared dividends is dismissed.
The Law
[45] The plaintiff declined to file any case law in support of his submissions. As a result, the court does not have the advantage of considered legal argument.
Breach of Fiduciary Duty
[46] Stephen Burns claims as the assignee of the shares of Nesbitt Burns in trust for Dennis Burns. There is no doubt that Dennis Burns has a beneficial interest to the shares. Assuming, without deciding that the assignment is proper for purposes of this action and the plaintiff has standing to bring the case, the court must consider whether Mr. McMillan breached his fiduciary duty by:
failing to account to Dennis Burns as a shareholder in the operation of the corporation; or
by failing to provide the corporation’s financial records.
[47] In Elder Advocates of Alberta Society v. Alberta 2011 SCC 24, the Supreme Court of Canada concisely described the nature of a fiduciary relationship. At para. 22, the court observed that the doctrine relating to fiduciary duty arises out of trust principles. It requires the fiduciary to act with absolute loyalty toward the beneficiary in managing the beneficiary's affairs.
[48] In general terms, a fiduciary relationship comprises the following characteristics:
the fiduciary has scope for the exercise of some discretion or power;
the fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary's legal or practical interests; and
the beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power: see Elder at para. 27.
[49] At common law, a director of a corporation has a fiduciary obligation to act in the best interests of the corporation [emphasis added]: see: BCE Inc., Re, 2008 SCC 69, [2008] S.C.J. No 37, at para. 37. The nature of this fiduciary duty was discussed at length in BCE. While that case was based on the Canada Business Corporations Act R.S.C. 1985, c. C-44, the common law principles have general application.
[50] At paras. 34 – 35 of BCE, the court described shares as “fractional parts of a corporation’s capital stock.” The court added that a share “is not an isolated piece of property… [but] a bundle of inter-related rights and liabilities…”
[51] The court observed that a shareholder is entitled to a proportionate share of the corporation’s assets when it is wound up and, by virtue of voting at shareholders’ meetings, to oversee corporate management: para. 35.
[52] The best interests of the corporation are not necessarily aligned with the best interests of the shareholders, as the court noted in BCE. At para. 39, the court commented about the directors’ duty:
We accept as an accurate statement of law that in determining whether they are acting with a view to the best interests of the corporation it may be legitimate, given all the circumstances of a given case, for the board of directors to consider, inter alia, the interests of shareholders, employees, suppliers, creditors, consumers, governments and the environment.
[53] In this case, exhibit 22 includes 3516’s cumulative sales, income statements and expenses for the operation of the fast food outlet until February 28, 1997. Finally, there is a statement of the corporation’s outstanding accounts as of June, 1997.
[54] By February 28, 1997, Mr. McMillan had abandoned the operation and turned in his keys to the plaintiff.
[55] The plaintiff had possession of exhibit 22 and filed the financial records at trial. The covering letter accompanying the document suggests that the plaintiff prepared it. The evidence also indicates that the financial records for 3516 were reviewed by the plaintiff and Dennis Burns on an on-going basis.
[56] It is apparent that 1164 was essentially operating 3516 from at least January, 1997 without reference to Mr. McMillan. Although the income and expense statements were not formalized by the corporation’s accountant, there is no evidence that either Mr. McMillan or 3516 failed to account to Dennis Burns about the operation of the corporation. Both Dennis Burns and the plaintiff were aware early in Mr. McMillan’s management of 3516 that the business was unprofitable for a variety of reasons. They knew the state of accounts to the penny. Infusions of cash from 1164 began in late May, 1996. The evidence also shows that the plaintiff attempted to steady the hand of management with various measures, such as paying expenses and helping with advertising.
[57] The chief complaint Dennis Burns makes about the lack of formal statements from 3516 was that 1164 discounted Robert Favuzzi’s purchase price for the franchise by $10,000 – $25,000 because 1164 could not provide Mr. Favuzzi with financial statements to show to an institutional lender. Whether the discount was wise or necessary, the court is not in a position to guess. The discount may have been a detriment to Mr. Burns’ corporation, 1164, but there is no evidence that it had an adverse effect on his interest as a shareholder in 3516, which I conclude was by then insolvent. If Mr. McMillan had a fiduciary obligation, it was to the shareholders of 3516, not to the shareholders of 1164.
[58] It appears that Mr. McMillan failed to file corporate tax returns following his abandonment of the franchise. There is no evidence as to whether a tax return was subsequently filed or whether the corporation was wound up. Nor is there any evidence as to the impact of this default on the corporation. The evidence does not indicate whether the failure to file a corporate tax return was an advantage or disadvantage to Dennis Burns as shareholder of 3516. There is no evidence that Dennis Burns, in his role as shareholder in 3516, was vulnerable to Mr. McMillan or to 3516.
[59] For the reasons set out above, I cannot conclude that Mr. McMillan had a fiduciary duty to Dennis Burns in his capacity as shareholder of 3516, or that he breached his fiduciary duty to Dennis Burns as shareholder of 3516 by failing to provide corporate financial statements and income tax returns to him. The claim for damages for breach of fiduciary duty is dismissed.
Liability for Breach of Contract
[60] As I have found above, 3516 defaulted on contractual obligations to 1164. I assess these damages provisionally at $121,948.36. The plaintiff claims damages for breach of contract against Mr. McMillan and his two corporations. If there is liability, who should pay?
[61] As there is no evidence that 1103584 Ontario Limited entered into any contracts with the plaintiff or 1164, the claim against 1103584 is dismissed.
[62] As I indicated, exhibit 15 contains the acknowledgement of obligation from 3516 to 1164. There is no indication on the face of the document that Mr. McMillan intended personally to guarantee the obligations of 3516 as he did in the indemnity agreement given to Simplee Chinese on August 23,1995 (exhibit 7). There is no evidence that the indemnity agreement was renewed when the contractual obligations were transferred to 1164 at the time of restructuring.
[63] If there is liability for breach of contract, it falls on 3516 alone and not on Mr. McMillan personally.
Limitations
[64] At the beginning of this decision, I deferred consideration of the defendants’ position that the claims are statute-barred until a factual context was established. The facts, as I have found them, have now been described in detail. It is therefore appropriate to address the limitation arguments as they relate to the plaintiff’s claims.
[65] The plaintiff submits that the governing legislation for breach of contract is the Statute of Limitations, R.S.O. 1990, but argues that this Act has no application to the claim for breach of fiduciary duty. As I have dismissed the claim for breach of fiduciary duty, it is not necessary to deal with this submission.
[66] The plaintiff also submits that private law arrangements trump the application of a limitation period to breach of contract, as set out in Limitations Act. He contends that the contract supersedes the statute prescribing limitations. This is not a correct statement of law. The courts have strictly enforced limitation periods in order to establish certainty and finality in legal disputes and to permit an individual to arrange his affairs without fear of ongoing liability. The plain language of the legislation refers to limitations governing contracts. The limitation clock begins to run once the plaintiff knew or ought to have known of the existence of the cause of action.
[67] Alternatively, the plaintiff submits that:
the limitation period runs from October 1, 2004, when Mr. McMillan discontinued his claim in the Coyotes night club action; or
April 30, 2000, when the restaurant finally closed.
[68] Apart from a lack of evidence on these points, the submission represents a misapprehension of the law. The limitation does not run from the abandonment of any hope of collection, but from the genesis of the cause of action itself.
[69] Next, the court must consider whether the plaintiff's claim for breach of contract is statute-barred because of the limitation period.
[70] In Ontario, the law relating to limitation periods was reformed by the passage of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. The new legislation took effect on January 1, 2004. Section 4 of the Limitations Act, 2002 contains a general limitation clause of two years from the date a cause of action is discovered. Before it was enacted, the governing legislation was the Limitations Act, R.S.O. 1990, c. L.15. Section 45 (1) (g) of the predecessor Act set out a six year limitation for "simple contract."
[71] Transitional provisions for causes of action arising before January 1, 2004 are dealt with under section 24 of the Limitations Act, 2002. Section 24 applies to claims arising before January 1, 2004 for which no proceeding was started before that date. In this case, the cause of action for breach of contract was known to the plaintiff on or before February 1, 1997 when he wrote his final demand letter. As the cause of action precedes January 1, 2004, and no claim was started before then, the transition provisions in s. 24(5) of the Limitations Act, 2002 apply.
[72] Section 24(5) provides:
If the former limitation period did not expire before January 1, 2004 and if a limitation period under this Act would apply were the claim based on an act or omission that took place on or after that date, the following rules apply:
i) If the claim was not discovered before January 1, 2004, this Act applies as if the act or omission had taken place on that date.
ii) If the claim was discovered before January 1, 2004, the former limitation period applies.
[73] In this case, the claim for breach of contract was discovered before January 1, 2004. Therefore, a limitation period of six years from the date the cause of action was discovered applies. The plaintiff was therefore bound to issue his statement of claim within six years of February 1, 1997, the date the cause of action was known, by February 1, 2003. However, the claim was not issued until March 18, 2005, more than two years after the expiry of the limitation.
[74] As stated above, Dennis Burns testified that Douglas McMillan assured him in June, 2011, that he would be paid. The evidence of McMillan’s acknowledgement of the debt is vague at best. The plaintiff implies, but does not argue, that acknowledgement of the debt extends the limitation period.
[75] Apart from the weakness of the evidence, section 51(1) of the Limitations Act, R.S.O. 1990 is clear on the point: an oral acknowledgement of debt is not sufficient to extend the limitation period. The acknowledgement must be in writing. The section states:
No acknowledgement or promise by words only shall be deemed sufficient evidence of a new or continuing contract whereby to take out of the operation of this Part, any case falling within its provisions respecting actions,
a) of account and upon the case;
b) on simple contract or of debt grounded upon any lending or contract without specialty; and
c) of debt for arrears of rent,
or to deprive any party of the benefit thereof, unless the acknowledgement or promise is made or contained by or in some writing signed by the party chargeable thereby, or by the party’s agent duly authorized to make the acknowledgement or promise.
[76] The same principle requiring a written acknowledgement of the debt is codified in s. 13(1) of the Limitations Act, 2002.
[77] The reason that a written acknowledgement of debt is required is to avoid evidentiary contests where a creditor asserts a debtor orally acknowledged liability for a debt in order to extend the time to sue on the debt and a debtor denies it. An acknowledgement in writing provides evidence.
[78] In this case, there is no evidence that Mr. McMillan or his agent acknowledged the debt in writing, so as to extend the time. Accordingly, I find the claim for breach of contract is statute-barred. It is therefore dismissed.
Costs
[79] The plaintiff’s claim is dismissed in its entirety. As the defendants did not participate in the trial, this is not a case for costs.
Regional Senior H.M. Pierce
Released: December 4, 2012,
COURT FILE NO.: CV-05-0117-00
DATE: 2012-12-04
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
STEPHEN BURNS
Plaintiff
- and –
DOUGLAS ALAN MCMILLAN
1103516 ONTARIO LTD.
1103584 ONTARIO LTD.
Defendant
REASONS FOR JUDGMENT
Pierce RSJ.
Released: December 4, 2012
/nf