Executive Summary: Key Legal and Evidentiary Issues

• Applicability of the two-year limitation period under the Limitations Act, 2002 to the appellant’s claim for unpaid invoices.

• Characterization of the invoices as demand obligations rather than part of an ongoing construction contract.

• Determination of the commencement date for the limitation period—specifically, whether it began on the date of the last invoice or a later alleged demand for payment.

• Consideration of whether the discoverability principle applies to demand obligations under the Limitations Act, 2002.

• Evaluation of whether there was a written and signed acknowledgment of debt sufficient to extend or reset the limitation period.

• Assessment of the sufficiency of the appellant’s evidence regarding the existence and terms of any contract between the parties.

Facts of the case

A & A Flooring Supplies Inc. (the appellant) is a corporation providing flooring materials and services. On March 21, 2020, Iraj Gardideh (the respondent) asked the appellant to install flooring in his home. A quote of $62,195.20 was delivered to the respondent, and on March 24, 2020, an invoice in the same amount was submitted. By June 2020, the respondent had paid $32,600. The appellant alleged that extra costs were added to the project, including customization, repairs, and add-ons, increasing the overall cost. On November 27, 2020, the appellant submitted a final invoice in the sum of $10,271.70. In December 2020, the respondent paid a further $10,000, bringing total payments to $42,600. On September 23, 2023, the appellant commenced a claim, acknowledging the respondent’s payments of $42,600, but alleging a balance owing of $34,156.38.

Proceedings in the Small Claims Court

On February 2, 2024, the parties attended a settlement conference before Deputy Judge Schwartz. The issue arose as to whether the claim was statute barred under the Limitations Act, 2002. The judge ordered the parties to deliver written submissions and any further documentary evidence on the limitation period issue. The respondent submitted that the two-year limitation period was triggered on December 3, 2020, the date of the last invoice, and expired on December 3, 2022. The appellant submitted that the limitation period started on May 30, 2022, when an alleged request for payment was made, or alternatively, when it was discovered that the respondent would not make the final payment. The appellant also argued that the invoices were part of an ongoing contract for goods, services, and payment.

The Small Claims Court decision

The judge found that the appellant’s position that there was an ongoing contract was not supported by the evidence or the law. The judge found the appellant’s evidence lacked specifics, particularly regarding dates to support the claim that the money owing was only discovered less than two years before the claim was commenced. The judge determined that the invoices were demand obligations, and that the limitation period began on December 3, 2020, the date of the last invoice. The judge also held that the discoverability principle does not apply to demand obligations and that there was no written and signed acknowledgment of debt as required by s.13(10) of the Limitations Act. The claim was dismissed as statute barred.

The appeal to the Divisional Court

The appellant appealed, submitting that the judge erred by failing to find a construction contract and by failing to apply the limitation period for construction contracts, by relying on Hare v. Hare, by finding the invoices were demand obligations, and by failing to determine when the demand for payment began. The standard of review for errors of law is correctness, and for findings of fact or mixed fact and law, it is palpable and overriding error.

Legal analysis and discussion of policy terms

The Divisional Court found no error in law or palpable and overriding error of fact in the judge’s finding that there was no contract between the parties and therefore no construction contract. The court agreed that the invoices were demand obligations, as they did not specify a date for payment, and that the limitation period began on the date of the last invoice, December 3, 2020. The court confirmed that the discoverability principle does not apply to demand obligations and that there was no written and signed acknowledgment of debt. The court also found no error in the judge’s reliance on existing case law regarding demand obligations and limitation periods.

Ruling and outcome

The Divisional Court dismissed the appeal, upholding the dismissal of the claim as statute barred. The successful party was the respondent, Iraj Gardideh. No amount was ordered or awarded in favor of the appellant, and the decision does not specify any costs or additional monetary awards in favor of the respondent, so the exact amount ordered cannot be determined from the judgment.