REASONS FOR JUDGMENT

[1] This action is brought by the plaintiff, Kirloskar Technologies (P) Ltd. (“KTPL”), claiming payment of a debt owed to it by the defendant, Best Theratronics Ltd. (“BTL”), for unpaid commissions for work done by the KTPL.

[2] On consent of the parties, the trial of this action proceeded in a summary fashion via Zoom.

ISSUES

[3] The parties agree that there are outstanding funds owing to KTPL from BTL for work that was done by KTPL for the sale of the BTL’s medical equipment in India and Nepal. The parties have had a long-standing commercial relationship and, until this recent dispute, BTL had paid KTPL’s commissions for the sale of its equipment without issue. A portion of the commissions owing are in Canadian dollars and a portion are in American dollars. The amounts outstanding are not in dispute.

[4] BTL raises three defences as to why it is not liable to pay the KTPL’s current outstanding invoices:

A portion of the claim for amounts owing is statute barred by virtue of the Limitations Act 2002 S.O. 2002, c. 24 Sched. B (the “Limitations Act”);
BTL is entitled to a set-off against the amount owing for various alleged breaches of contract by KTPL; and
BTL risks prosecution under the Corruption of Foreign Public Officials Act, S.C. 1998, c34 [CFPOA] if it makes any payment to KTPL.

RESULT

[5] I reject each of the three defences raised by BTL and I find that KTPL is entitled to judgment in the full amount claimed of $300,594.00 CAD plus $203,581.39 USD at an allowed exchange rate of 1.24350 or $253,153.46 CAD for a total judgment in favour of KTPL in the amount of $553,747.46. Pre-judgment interest and costs are reserved.

BACKGROUND FACTS AND ANALYSIS

[6] The material facts in this case are largely undisputed.

[7] BTL is a Canadian corporation that manufactures medical equipment. KTPL is incorporated under the laws of India and was the agent for BTL in India at the material time. An agency agreement governed the relationship between the parties and provided commission rates payable to KTPL from BTL for sale of medical equipment in India and Nepal. The applicable agency agreement had been in place since January 13, 2000.

[8] There is no dispute that certain invoices rendered from KTPL to BTL for commissions totalling $300,594.00 CAD and $203,581.39 USD remain unpaid. KTPL commenced this action on May 24, 2017.

[9] BTL gave written notice to KTPL on March 4, 2015 that it intended to terminate the agency agreement early. Following the termination of the agency agreement, BTL started selling its equipment directly to the Indian market. In this action there are no damages sought for the early termination of the agency agreement. KTPL seeks only payment of the outstanding amounts owing to it from BTL.

[10] BTL’s statement of defence includes a counterclaim for $10,000,000 arising from alleged damage to BTL’s reputation in India as a result of KTPL’s breach of contract. BTL’s counterclaim was abandoned at the commencement of trial.

Issue 1: Are any portions of KTPL’s claim statute barred by virtue of the Limitations Act?

[11] Section 4 of the Limitations Act provides that a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

[12] This proceeding was commenced by KTPL on May 24, 2017. BTL’s position is that $197,546.00 CAD of the amounts owing to KTPL relate to commissions arising from sales that were invoiced prior to May 24, 2015. Since more than two years had passed between the time these invoices were rendered and the proceeding was commenced, BTL alleges that this portion of the claim is statute barred.

[13] KTPL relies on s. 13 of the Limitations Act which states, in part:

13(1) If a person acknowledges liability in respect of a claim for payment of a liquidated sum, the recovery of personal property, the enforcement of a charge on personal property or relief from enforcement of a charge on personal property, the act or omission on which the claim is based shall be deemed to have taken place on the day on which the acknowledgement was made.

(8)…this section applies to an acknowledgment of liability in respect of a claim for payment of a liquidated sum even though the person making the acknowledgment refuses or does not promise to pay the sum or the balance of the sum still owing.

[14] KTPL submits that BTL acknowledged liability for the outstanding commission payments in an email from a “Credit & Collection Specialist” at BTL named Yvan Bond dated February 29, 2016. The February 29, 2016 email from Mr. Bond states:

I have completed the analysis of all the documents pertaining to your account. In your Xcel spread sheet, please see my “Comments from BTL 02/08/16”. Also see the yellow tab (called Feb-16), this shows a summary of what I believe is outstanding. I have attached a copy of your most current statement of account showing the unpaid invoices from 05/30/13. I also attached two invoice files, with copies of all the unpaid invoices. Please provide your comments.

[15] The Statement of Account that was attached to Mr. Bond’s February 29, 2016 email includes details about the commissions claimed by KTPL and comments from both BTL and KTPL. For each of the amounts being claimed in this action, BTL confirmed the amounts owing by noting “OK” within the spreadsheet. The amounts being sought by KTPL in this action are identical to the amounts marked “OK” in the Statement of Account. It was the evidence at trial that this was the historical way the parties determined commission amounts payable by BTL to KTPL.

[16] BTL takes the position that s. 13(1) of the Limitations Act does not apply as there was ambiguity with respect to Mr. Bond’s email and attached spreadsheet and, regardless, Mr. Bond did not have authority to acknowledge debts on behalf of the company.

[17] I reject BTL’s argument that there was any ambiguity with respect to Mr. Bond’s email. I find that Mr. Bond’s February 29, 2016 email contains a clear and unequivocal acknowledgment of the outstanding commissions owed to KTPL by BTL. BTL concedes that invoices rendered by KTPL remain unpaid in the exact amounts set out in the Statement of Account attached to Mr. Bond’s email. There is no ambiguity whatsoever in the amounts owing to KPTL by BTL for these commissions. I accept that the Statement of Account reconciliation was the accepted way in which the parties determined the amounts owing as between them over the course of their business relationship.

[18] Ontario courts have confirmed that acknowledgment of liability, for the purpose of s. 13(1) of the Limitations Act, can be in an email or even a text message: Lev v. Serebrennikov, 2016 ONSC 2093 at para 25, 1475182 Ontario Inc. o/a Edges Contracting v. Ghotbi, 2021 ONSC 3477 at paras 34 – 36.

[19] I find that the Statement of Account attached to Mr. Bond’s February 29, 2016 email, together with the content of Mr. Bond’s email message itself, is an acknowledgment of the liability for the purposes of s. 13(1) of the Limitations Act in favour of KTPL.

[20] I reject BTL’s position that Mr. Bond did not have authority to acknowledge debts on behalf of the company. Mr. Bond’s job description at BTL was filed in evidence and confirms that Mr. Bond was responsible for, amongst other things, “commission reconciliation and final approval for payments”.

[21] A current BTL employee, Mary Davidson, gave evidence that many of BTL’s job descriptions were inaccurate. Ms. Davidson did not start working at BTL until 2019. Ms. Davidson was unable to provide the court with any information regarding Mr. Bond’s authority at the material time or whether his job description was inaccurate. I find Ms. Davidson’s evidence to be unhelpful.

[22] BTL’s CEO, Krishnan Suthanthiran, swore an affidavit that was admitted as evidence at trial wherein he deposed that Mr. Bond did not have authority to bind BTL at the material time. During his cross-examination however, Mr. Suthanthiran confirmed that he had “no idea” of Mr. Bond’s job description at the material time. I find Mr. Suthanthiran’s affidavit evidence that Mr. Bond did not have authority to approve payments or acknowledge liabilities to be self-serving and to lack credibility given his admission that he had no knowledge of Mr. Bond’s particular job responsibilities.

[23] I find that Mr. Bond had the authority to acknowledge BTL’s liability to KTPL and did so in his email of February 29, 2016.

[24] Since I have found that BTL acknowledged the liability to KTPL on February 29, 2016, and KTPL’s claim was initiated on May 24, 2017, I accordingly find that no portion of KTPL’s claim is statute barred by the Limitations Act.

Issue 2: Is BTL entitled to a set-off for various breaches of contract by KTPL?

[25] At the commencement of trial, BTL advised that it was not pursuing its counterclaim for $10,000,000 in damages, however, it was advancing the defence of equitable set-off.

[26] The ability to pursue a set-off as a defence is set out in s. 111 of the Courts of Justice Act R.S.O. 1990, c. C. 43, which states:

111.(1) In an action for payment of a debt, the defendant may, by way of defence, claim the right to set off against the plaintiff’s claim a debt owed by the plaintiff to the defendant.

[27] The availability of a set-off defence is limited to liquidated sums. BTL has not produced any evidence of liquidated sums owing to it from KTPL above and beyond what has already been considered.

[28] BTL is advancing the argument it is entitled to a set-off for damages arising out of breach of contract. To support this position, BTL sought to adduce evidence at trial about customer dissatisfaction relating to KTPL’s alleged sub-par service. BTL abandoned its counterclaim at the commencement of trial. There is no claim before the court pertaining to breach of contract. I find that BTL’s proposed evidence about KTPL’s quality issues is largely based on hearsay and is inadmissible on the basis that it is irrelevant to the issues for determination before the court.

[29] I find that BTL is not entitled to a set-off.

Issue 3: Does the risk of prosecution under the [Corruption of Foreign Public Officials Act](https://www.canlii.org/en/ca/laws/stat/sc-1998-c-34/latest/sc-1998-c-34.html), S.C. 1998, c34 [CFPOA] absolve BTL from paying the debt it owes to KTPL?

[30] BTL’s final defence involves the issue of outstanding criminal charges against KTPL in India.

[31] On consent, the parties agreed to admit into evidence a “Charge Sheet” from India that purports to detail criminal charges against both KTPL and BTL, and other individuals related to the sale of medical equipment that occurred in 2006.

[32] From review of the Charge Sheet, the prosecution in India appears to relate to the alleged bribery of government officials in India, but it is far from clear. BTL did not produce an expert in Indian law to provide the court guidance on the significance of the Charge Sheet or what charges are presently before the court in India. The parties do agree that the charges relate to allegations against KTPL that are unproven. The parties further agree that the transaction involved in the Indian criminal prosecution is unrelated to the sales for which KTPL is claiming outstanding commissions are owing from BTL in this lawsuit.

[33] Nevertheless, BTL claims it risks prosecution in Canada under the CFPOA if it were to pay any commissions owing to KPTL considering the outstanding charges in India. BTL submits that if its other defences fail, any judgment should be stayed or paid into court until KTPL is exonerated in India and all appeals have been exhausted.

[34] The caselaw relied upon by BTL relates to prosecutions under the CFPOA. The case before this court relates to payment of an undisputed debt that was legitimately earned by KTPL.

[35] I find that the outstanding criminal charges against KTPL in India, if any, are a collateral issue and not relevant to the civil case before this court.

[36] I reject BTL’s argument that a perceived risk of prosecution under the CFPOA absolves BTL from paying the legitimate outstanding debt owed to KTPL or delays payment of that debt.

CONCLUSION AND JUDGMENT TO ISSUE

[37] As a result, I find that KTPL is entitled to judgment in the full amount claimed of $300,594.00 CAD plus $203,581.39 USD at an allowed exchange rate of 1.24350 or $253,153.46 CAD for a total judgment in favour of KTPL in the amount of $553,747.46.

[38] With respect to the currency conversion, s. 121 of the Courts of Justice Act R.S.O. 1990, c. C. 43 provides that:

…where a person obtains an order to enforce an obligation in a foreign currency, the order shall require payment of an amount in Canadian currency sufficient to purchase the amount of the obligation in the foreign currency at a bank in Ontario listed in Schedule I to the Bank Act (Canada) at the close of business day on the first day on which the bank quotes a Canadian dollar rate for purchase of the foreign currency before the day payment of the obligation is received by the creditor.

[39] The Canadian dollar rate for the purchase of $203,581.39 USD was 1.24350 based on the published rate for the RBC, a bank listed in Schedule I to the Bank Act (Canada) as of the close of business day on June 11, 2021. I find that the Canadian currency equivalent to $203,581.30 USD is $253,153.46 CAD.

[40] I therefore find the total amount owing by BTL to KTPL to be $553,747.46 CAD [$300,594.00 + $253,153.46 = $553,747.46].

[41] A judgment shall issue as follows:

The defendant, Best Theratronics Ltd., shall pay to the plaintiff, Kirloskar Technologies (P) Ltd., $553,747.46 plus post judgment interest from June 14, 2021 at the prescribed Courts of Justice Act rate.

PRE-JUDGMENT INTEREST AND COSTS

[42] Pre-judgment interest and costs are reserved.

[43] If the parties cannot come to an agreement on pre-judgment interest and costs of the action on or before July 16, 2021, counsel shall file written submissions in accordance with the following schedule: KTPL shall serve and file its costs submissions on or before July 30, 2021; BTL shall serve and file responding submissions on or before August 13, 2021; KTPL may serve and file reply cost submissions, if any, on or before August 27, 2021 after which time I will determine the issues of prejudgment interest and costs based on the material filed.

[44] Counsel shall file their written submissions by sending them by email to the Superior Court of Justice civil trial coordinator in Ottawa assigned to this matter.

Muszynski J.

Released: June 14, 2021

Kirloskar Technologies (P) Ltd. v. Best Theratronics Ltd., 2021 ONSC 4291

ONTARIO

SUPERIOR COURT OF JUSTICE

KIRLOSKAR TECHNOLOGIES (P) LTD.

– and –

BEST THERATRONICS LTD.

REASONS FOR JUDGMENT

Muszynski J.

Released: June 14, 2021

Kirloskar Technologies (P) Ltd. v. Best Theratronics Ltd., 2021 ONSC 4291

Case Summary

REASONS FOR JUDGMENT

ISSUES

RESULT

BACKGROUND FACTS AND ANALYSIS

Issue 1: Are any portions of KTPL’s claim statute barred by virtue of the Limitations Act?

Issue 2: Is BTL entitled to a set-off for various breaches of contract by KTPL?

Issue 3: Does the risk of prosecution under the [Corruption of Foreign Public Officials Act](https://www.canlii.org/en/ca/laws/stat/sc-1998-c-34/latest/sc-1998-c-34.html), S.C. 1998, c34 [CFPOA] absolve BTL from paying the debt it owes to KTPL?

CONCLUSION AND JUDGMENT TO ISSUE

PRE-JUDGMENT INTEREST AND COSTS

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Legislation 4