COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Freeway Properties Inc. v. Genco Resources Ltd.,

 

2012 BCCA 258

Date: 20120619

Dockets: CA038831 & CA039082

Docket: CA038831

Between:

Freeway Properties Inc.

Appellant

(Plaintiff)

And

Genco Resources Ltd.

Respondent

(Defendant)

- and -

Docket: CA039082

Between:

John B. Pub Ltd.

Appellant

(Plaintiff)

And

Genco Resources Ltd.

Respondent

(Defendant)

Before:

The Honourable Madam Justice Ryan

The Honourable Mr. Justice K. Smith

The Honourable Mr. Justice Chiasson

On appeal from: Supreme Court of British Columbia, January 25, 2011
(Freeway Properties Inc. v. Genco Resources Ltd., 2011 BCSC 81,
New Westminster Registry 130573)

On appeal from: Supreme Court of British Columbia, May 19, 2011
(John B. Pub Ltd. v. Genco Resources Ltd., 2011 BCSC 657,
New Westminster Registry 130572)

Counsel for the Appellants Freeway
Properties Ltd. and John B. Pub Ltd.:

J.J. Casey

Counsel for the Respondent:

J.D. Shields

Place and Date of Hearing:

Vancouver, British Columbia

February 8 and 9, 2012

Place and Date of Judgment:

Vancouver, British Columbia

June 19, 2012

 

Written Reasons by:

The Honourable Mr. Justice K. Smith

Concurred in by:

The Honourable Madam Justice Ryan

The Honourable Mr. Justice Chiasson


 

Reasons for Judgment of the Honourable Mr. Justice K. Smith:

[1]             These reasons concern two appeals that were heard together since they involve common issues of law and fact, related appellants, and a common respondent.

[2]             Appeal No. CA38831 (the “Freeway appeal”) is brought from an order made January 25, 2011 by the Honourable Mr. Justice N. Brown dismissing the appellant’s action following a summary trial set down on motion of the respondent.  Mr. Justice Brown’s reasons for judgment are indexed as 2011 BCSC 81.  Appeal No. CA39082 (the “JBP appeal”) is brought from an order made May 19, 2011 by the Honourable Madam Justice Fitzpatrick dismissing the appellant’s action following a summary trial, also set down on motion of the respondent.  Madam Justice Fitzpatrick’s reasons for judgment are indexed as 2011 BCSC 657.

[3]             Both actions were for debt and both were dismissed on the basis they were statute-barred by s. 3(5) of the Limitation Act, R.S.B.C. 1996, c. 266, [the Act] which provides that no such action may be brought after the expiration of six years after the right to bring action arose.  In each action, the appellant relied on s. 5 of the Act and argued unsuccessfully that the limitation period began anew when the respondent confirmed the causes of action while time was running and before the limitations expired and that the actions were begun within the fresh limitation period.  The relevant provisions of s. 5 are:

5.   (1)  If, after time has begun to run with respect to a limitation period set by this Act, but before the expiration of the limitation period, a person against whom an action lies confirms the cause of action, the time during which the limitation period runs before the date of the confirmation does not count in the reckoning of the limitation period for the action by a person having the benefit of the confirmation against a person bound by the confirmation.

(2)  For the purposes of this section,

(a)  a person confirms a cause of action only if the person

(i)   acknowledges a cause of action, right or title of another, or

(ii)  makes a payment in respect of a cause of action, right or title of another,

(b)  an acknowledgment of a judgment or debt has effect

(i)   whether or not a promise to pay can be implied from it, and

(ii)  whether or not it is accompanied by a refusal to pay,

...

...

(5)  For the purposes of this section, an acknowledgment must be in writing and signed by the maker.

(6)  For the purposes of this section, a person has the benefit of a confirmation only if the confirmation

(a)  is made to the person or to a person through whom the person claims...

...

(9)  For the purposes of this section, a confirmation made by or to an agent has the same effect as if made by or to the principal.

[4]             The background circumstances are as follows.

[5]             The respondent (“Genco”) is a public company.  The appellants Freeway Properties Inc. (“Freeway”) and John B. Pub Ltd. (“JBP”) are private companies.  At all material times, one John Lepinski was the president and “principal” of JBP and was the controlling shareholder, president, and sole director of Freeway.  He was also the president and a director of Genco from February 1980 until he resigned as president in December 2003 and as a director on June 22, 2004.  As well, through JBP, he held a controlling share interest in Genco until 2002, when he transferred control to a new group of investors.  In July 2004, JBP ceased to be a shareholder in Genco.

[6]             Genco’s audited consolidated financial statements for the fiscal year ended July 31, 2004 contained, in the balance sheet, an entry of $73,402 described as a current liability “Due to related parties”.  The appellants say they are the “related parties” by reason of Mr. Lepinski’s common links to them and to Genco during the fiscal period and that this entry simply reports the sum of the amounts owing to them respectively.  The financial statements were approved and signed by two directors of Genco on November 3, 2004.  The accompanying auditors’ report, dated November 3, 2004 and addressed “To the Shareholders of Genco Resources Ltd.”, stated that “these consolidated financial statements present fairly, in all material respects, the financial position of the company as at July 31, 2004.”  The statements were filed with the British Columbia Securities Commission in compliance with regulatory requirements and were disclosed to the public on December 17, 2004.  On December 29, 2004, they were mailed to the shareholders, including JBP.  They were received by the appellants in January 2005.

[7]             The debts in question stem from the time when Mr. Lepinski was in control of all three companies.  JBP and Genco agreed in the late 1980s that JBP would rent office space and provide certain administrative services to Genco for a fee of $1,000 per month ($400 for rent and $600 for the administrative expenses) plus interest at 8% on any outstanding balance from time to time.  In 2002, Genco moved from its office in JBP’s premises to new office premises and the parties agreed the monthly payment would be reduced to $500 to cover certain administrative services that continued to be provided by JBP.  By April 2003, a large unpaid balance had accrued.  It remains unpaid.  In addition to this debt, Genco borrowed $7,500 from Freeway in 2001, repayable on demand.  Freeway made demand in December 2004 but Genco failed to pay and the loan remains outstanding.

[8]             On August 31, 2010, the appellants, through their solicitor and counsel, Mr. Casey, demanded payment of both debts.  Genco failed to pay and, on October 7, 2010, the appellants commenced separate actions against Genco in the Supreme Court of British Columbia, New Westminster Registry – Freeway for $7,500 and JBP for $65,901.65, which was made up of $42,090.02 in unpaid fees and $23,811.63 in accrued interest.

[9]             It is not disputed that the six-year limitations applicable to the appellants’ causes of action for these debts would have expired before the actions were commenced unless the limitation periods were renewed pursuant to s. 5 of the Act.  It is the appellants’ position that the $73,402 entry in the balance sheet was an acknowledgment of their causes of action and that the limitation periods began afresh when Genco “confirmed” the causes of action in January 2005 by delivering the acknowledgment to them.  In that event, the actions would have been commenced within the renewed limitation period.

[10]         Mr. Casey led evidence on the summary trial before Madam Justice Fitzpatrick in the JBP action that the appellants were the “related parties” mentioned in the balance sheet and that the balance sheet entry was simply the sum of the amounts owing to them.  However, the summary trial in the Freeway action proceeded before Mr. Justice Brown without any evidence from Freeway.  This curious situation occurred because of the way in which events transpired.

[11]         The parties commenced documentary and oral discovery procedures in both actions in the fall of 2010, shortly after the actions were commenced.  On December 9, 2010, Mr. Casey wrote to Mr. Shields, counsel for Genco, advising that examinations for discovery would have to be rescheduled from that week because no court reporter was available and because Mr. Casey had just received Genco’s list of documents and considered that numerous relevant documents had been omitted.  He demanded a supplementary list.  In a letter to Mr. Shields the following day, Mr. Casey said the examinations of Mr. Lepinski in each action should proceed serially after proper documentary disclosure and that, since there were common issues, he would consent to the use of discovery evidence interchangeably between the two actions.  He further advised that Mr. Lepinski would be out of the country on December 21st, the date Mr. Shields wished to examine him, and suggested that “once the document issue is resolved, we set the examinations on 3 consecutive days that are mutually convenient.”

[12]         On December 14, 2010, without responding to Mr. Casey’s letter, Mr. Shields filed a notice of application in the Freeway action returnable in Vancouver on January 5, 2011 for an order dismissing the action on a summary trial on the ground it was statute-barred by the Act.  Alternatively, he sought “an order that the defendant not list any more documents” on the grounds that the action was for only $7,500 and could have been brought “in the Small Claims Court Division of the Provincial Court, where there is no automatic right to discovery of documents or a List of Documents” and that “in this court, the new proportionality consideration of Rule 1-3(2) would likely operate to end further production of documents.”

[13]         The record does not disclose when the application papers were served on Mr. Casey but, on the morning of January 4, 2011, Mr. Casey, who practices as a sole practitioner from his office in Coquitlam, emailed Mr. Shields as follows:

Subject:        John B Pub Ltd. v. Genco and Freeway Properties Inc. v. Genco

John:

I acknowledge receipt of your Notice of Application in Action No. S-130573. You set the time and place of this application without consulting me. Mr. Lepinski is still out of the country, not returning until January 16th. I also did not consent to having this application being heard in Vancouver. I confirm it was my understanding that applications in New Westminster actions had to be heard in New Westminster and believed the application was thereby defective.

As is evident from the correspondence in the above cases, both of us were proceeding on the basis that these actions would be tried together. The Freeway action was commenced in the Supreme Court rather than in Small Claims Court because the limitation issue was common to both actions and should be dealt with by one court. I wish to bring an application to have both of these actions heard at the same time so as to avoid conflicting orders. I also confirm that another client matter has and continues to completely preoccupy my time and I have not been able to deal with this matter. I would kindly request that your application be adjourned until after Mr. Lepinski is back in the country and I have a reasonable time to bring on an application for an order that both actions be heard together and that discovery of documents be completed prior to any summary trial proceedings.

I also confirm that I have now been presented with another challenge in my practice as my printer/fax/scanner machine has just died.

Notwithstanding the above, you have advised that you will not consent to an adjournment.

[14]         When the application came before Mr. Justice Brown for hearing the following day, Mr. Casey appeared, outlined the circumstances as he had set them out in his email to Mr. Shields, and applied for an adjournment so he could obtain Mr. Lepinski’s evidence and prepare for a summary trial.  He argued that he would be able to show by evidence that the entry in the balance sheet was the sum of the debts claimed by Freeway and JBP and that they were the “related parties” by reason of Mr. Lepinski’s connections with all parties concerned.  Mr. Shields opposed the application, relying on Blackline Oil Corp. v. Canada Payphone Corp., [1998] B.C.J. No. 1671 (S.C.), where it was held that an auditor’s report and an entry in audited financial statements were not confirmation of the cause of action asserted because they “[did] not specifically set out that the debt is owed to the plaintiff”; because they were addressed “to the shareholders” and were “not specifically written to the plaintiff”; and because the Act requires that “the acknowledgment of the debt has to be written to the party to whom the debt is owed” (at paras. 32, 33).  Mr. Shields contended that the statements should be viewed objectively and that the evidence Mr. Casey wished to call to explain the entry was inadmissible.  The judge dismissed Mr. Casey’s adjournment application, heard submissions on the summary trial, and reserved judgment.  In reasons handed down on January 25, 2011, he dismissed Freeway’s action, stating,

[29]      Blackline is clear in its conclusions. Here, as in Blackline, there is no specific reference to the debtor in the Financial Statement. The Financial Statement should be viewed objectively. The authorities give no basis for divining the Financial Statement’s intending to acknowledge the debt based on what might have been in the mind of Freeway.

...

[33]      In sum, Blackline governs. The plaintiff cannot satisfy the requirements for confirmation, either through payment or through acknowledgments as required by the Act.

[15]         For reasons that will become apparent, it is my view that Mr. Justice Brown erred in dismissing the action on this basis.

[16]         Having succeeded on his application against Freeway, Mr. Shields filed a like notice of application in the JBP action.  This time, however, Mr. Casey filed affidavits sworn by the former bookkeeper for Genco and JBP and by Mr. Lepinski to explain the genesis of the balance sheet entry in question.  In his affidavit, Mr. Lepinski explained that the entry was the total of the discrete amounts owing to the appellants.  He claimed personal knowledge of the relevant matters based on his position with Genco at the material times.  Using copies of some of Genco’s financial documents, he traced the entry back to show its derivation in the amounts claimed by the appellants.  He explained that the reference to “related parties” was a result of his relationship to all parties at the time.

[17]         In her reasons on the summary trial, Madam Justice Fitzpatrick stated the issues as she saw them:

[25]      There are three issues to be decided:

(a)        Was there an acknowledgement of the cause of action within the meaning of the Act?

(b)        Was there a confirmation to JBP?

(c)        What is the effective date of any confirmation?

[18]         On the first issue, she found the balance sheet contained an acknowledgment of the causes of action asserted, that it was not necessary that the balance sheet identify the creditor by name, that whether the balance sheet contained an acknowledgment was to be determined objectively, and that the context in which the financial statements were communicated “contains irrefutable evidence as to the exact amounts referred to in those financial statements” (para. 64).  She continued,

[66]      I accept JBP’s submissions that given the form of the financial statements, and that JBP and Freeway were the only parties to whom this related party identification applied, Genco would have known that the allocation of the indebtedness of $73,402 would be well understood by Mr. Lepinski to be the debts due to JBP and Freeway. I consider that, when viewed objectively, Genco could only have been reporting on and confirming these debts and that Mr. Lepinski understood as a “reasonable person” that this was the case.

[19]         The judge distinguished Mr. Justice Brown’s decision in Freeway, stating,

[68]      I am, however, persuaded that on the basis of the extrinsic evidence presented by Mr. Lepinski and the JBP/Genco bookkeeper, Ms. Young, a different result is justified on this point.

[20]         Although he supported the judge’s order dismissing the JBP action, Mr. Shields argued that she erred in concluding that the balance sheet acknowledged JBP’s cause of action.

[21]         However, it is well-settled that a company’s balance sheet is capable of containing an acknowledgment of “a cause of action, right or title of another”: see Re Atlantic and Pacific Fibre Importing and Manufacturing Co. Ltd., [1928] 1 Ch. 836; Re The Coliseum (Barrow) Ltd., [1930] All E.R. 221, [1930] 2 Ch. 44; Ledingham v. Bermejo Estancia Co. Ltd., [1947] 1 All E.R. 749; Jones v. Bellegrove Properties Ltd., [1949] 2 All E.R. 198, [1949] 2 K.B. 700 (C.A.); Consolidated Agencies Ltd. v. Bertram Ltd., [1964] 3 All E.R. 282, [1965] A.C. 470 (P.C.); Re Gee & Co. (Woolwich) Ltd., [1974] 1 All E.R. 1149, [1975] 1 Ch. 52; Miller v. Belmil Products Ltd., [1976] N.Z.L.R. 311; Re Compania de Electricidad de la Provincia de Buenos Aires Ltd., [1978] 3 All E.R. 668, [1980] 1 Ch. 146; Stage Club Ltd. v. Millers Hotels Pty. Ltd., [1981] HCA 71, 150 C.L.R. 535 (H.C.A.).

[22]         The judge was correct that the balance sheet must be construed objectively but, with respect, she was not clear in her application of this test, as appears from para. 66 of her reasons.

[23]         In Ryan v. Moore, 2005 SCC 38, [2005] 2 S.C.R. 53 at para. 45, it was stated that “a party can only be held to have acknowledged the claim if that party has in effect admitted his or her liability to pay that which the claimant seeks to recover.”  And, as stated in Podovinikoff v. Montgomery (1984), 14 D.L.R. (4th) 716 at 721, 58 B.C.L.R. 204 (C.A.),

... I am ... of the view that ... a bare acknowledgment of the existence of a cause of action is quite insufficient to meet the requirements of s. 5(2)(a)(i) of the Act. Those provisions provide that a person confirms a cause of action only if he “acknowledges a cause of action, right or title of another”. The acknowledgment of a right or title must, in my view, involve the acknowledgment of some liability. The word “acknowledgment” must have the same meaning when used with reference to a cause of action. It follows, therefore, that what binds a defendant and activates s. 5(2)(a)(i) is an acknowledgment in writing of a cause of action which admits some liability thereunder.

[24]         Thus, what must be decided objectively is whether the “maker” of the alleged acknowledgment intended by it to admit liability.  This rule is exemplified by Nguyen v. Johnson, 2008 BCCA 218 at para. 47, 82 B.C.L.R. (4th) 76, where, after referring to Podovinikoff for the same rule, this Court said,

[47]      The test to be applied to determine if there is an acknowledgement of the cause of action is an objective one. The question is whether a reasonable person, reading the concluding sentence in the context of the letter and in the circumstances of I.C.B.C. paying for the deductible on the husband’s collision coverage, would take it that the insurer was admitting liability for the appellant’s personal injury claim.

[25]         In the case at bar, Genco listed the $73,402 item in its balance sheet as a current liability and described it as “Due to related parties”.  Thus, Genco clearly admitted liability for that amount to the “related parties”, whoever they might be.  There was no need for any objective analysis of whether a reasonable person in JBP’s circumstances would have understood the entry to be an admission of liability for JBP’s cause of action.  Whether it was such was a matter for proof by extrinsic evidence.

[26]         With respect to the use of extrinsic evidence for this purpose, Lord Goddard C.J. said, for the Court, in Jones v. Bellegrove Properties, supra, at 704-05,

I can see no reason why a balance sheet should not contain a good acknowledgment within the meaning of the Act. The acknowledgment was only of a sum due to a number of unnamed persons; but the plaintiff established by evidence that he was one of the sundry creditors and that his debt of 1,807l. was included in the total sum acknowledged to be due to those creditors. In my view, therefore, the claim was not barred.

[27]         Similarly, in Good v. Parry, [1963] 2 All E.R. 59 at 61, [1963] Q.B. 418 (C.A.), Lord Denning M.R., for the Court, said,

In order to be an acknowledgment ... the debt must be quantified in figures or, at all events, it must be liquidated in this sense that it is capable of ascertainment by calculation, or by extrinsic evidence, without further agreement of the parties. For instance: “I admit I owe you the sum shown in this rent book” would be a perfectly good acknowledgment, for it only needs to be calculated. Again, in Jones v. Bellgrove Properties Ltd., the balance-sheet contained the acknowledgment: “To sundry creditors £7,638 6s. 10d.” It was possible by extrinsic evidence to sort out the various items in that lump sum, and it was held to be a sufficient acknowledgment. But if the debt is not quantified and is not ascertainable without further agreement, then there is no acknowledgment sufficient to satisfy the statute.

[28]         To the same effect, see Dungate v. Dungate, [1965] 3 All E.R. 393 at 397, [1965] 1 W.L.R. 1497 (C.A.); Chianti Pty. Ltd. v. Leume Pty. Ltd., [2007] WASCA 270 (Western Australia Court of Appeal); Re Brookers (Australia) Ltd. (in liq.); Brooker v. Pridham (1986), 41 S.A.S.R. 380 (Supreme Court of South Australia).

[29]         In none of these cases was there any material difference in the relevant statute that would rob the decisions of persuasive value in the interpretation of our Act.

[30]         As already noted, Madam Justice Fitzpatrick concluded that the extrinsic evidence led on behalf of JBP contained “irrefutable evidence as to the exact amounts referred to in those financial statements” (at para. 64) and that the “related parties” were JBP and Freeway.  These findings of fact are amply supported by the evidence and I would reject Mr. Shield’s submission that the judge erred in concluding that the balance sheet entry was an acknowledgment of JBP’s cause of action.

[31]         On the question whether there was a confirmation to JBP, the second issue, Mr. Shields submitted that there had been no communication of the acknowledgment to JBP qua creditor as required by s. 5(6)(a) of the Act.  Madam Justice Fitzpatrick rejected this submission.  She quoted from Re Compania de Electricidad, supra, at 193-94, where it was said that a company’s balance sheet must “be regarded as implicitly addressed to (among other persons) those creditors whose debts are referred to in it” and that an acknowledgment is effective in respect of any creditor who can establish he actually received the balance sheet signed by the company’s directors and that he is one of the “sundry creditors” referred to in the balance sheet (para. 72).  She distinguished Blackline and Mr. Justice Brown’s decision in Freeway, stating,

[73]      Justice Prowse in Blackline concluded that the confirmation had not been established because, in part, the financial statements were not specifically written to the plaintiff. In para. 32, the Court in Blackline indicated that the financial statements were not specifically written to the plaintiff, but, rather to the shareholders. No authority is cited for this proposition.

[74]      In Freeway, Freeway contended that since it was a shareholder, Genco must be taken to have known that the financial statements would be sent to it: para. 21. In the end result, Justice N. Brown concluded at para. 31 that the financial statements had not been specifically addressed to Freeway, citing Blackline.

[75]      In this case, JBP did receive the financial statements as a shareholder. I must say that I have some difficulty with the conclusion in Freeway, following Blackline on this point, in that such a communication must be specifically addressed to the plaintiff qua creditor. The Act does not require that either the communication be specifically written to the plaintiff, or that the communication be addressed to the plaintiff. In addition, the English authorities were not considered in either case.

[76]      I note that the statutory requirement is simply that the confirmation be “made to the person”. In this case where there is a public company, dissemination of the financial documents would inevitably have occurred publicly just as Mr. Lepinski says they were. In Blackline, the issue arose because the creditor was not a shareholder of the company. Nevertheless, where a plaintiff is both a shareholder and a creditor, it seems logical to my mind that in communicating the financial statements, that communication takes place to all shareholders, and, implicitly to any shareholders who also happen to be creditors.

[77]      I conclude that JBP has satisfied the fourth element relating to the requirement that the acknowledgement was made to it in accordance with the Act.

[32]         As Madam Justice Fitzpatrick observed, there is nothing in the Act that requires that the acknowledgment be “specifically written to the plaintiff, or that the communication be addressed to the plaintiff.”  In my view, an acknowledgment actually received by the creditor would be effective under s. 5(6)(a) of the Act whether or not the “maker” of the acknowledgment intended that the creditor should receive it, and it is not necessary to imply such an intention.  However, there is no need to resolve that question in this case and I am satisfied that the judge’s conclusion that the acknowledgment was made to JBP is unassailable.

[33]         Finally, Madam Justice Fitzpatrick dealt with the effective date of the confirmation.  She referred to Mr. Shields’ submission that the effective date was July 31, 2004, the end of the year to which the balance sheet related, and that, on that basis, the limitation expired on July 31, 2010 and the action commenced on October 7, 2010 was out of time.  After observing that neither counsel cited authority in support of their positions on this point, Madam Justice Fitzpatrick said,

[83]      It does not appear that this was an issue in Blackline, nor does it appear that this issue was raised in Freeway. However, this issue has been addressed in the English authorities.

[84]      In Re Gee [Re Gee & Co. (Woolwich) Ltd., [1975] 1 Ch. 52], the Court considered whether, in relation to balance sheets, the effective date of the acknowledgement was as of the date of the balance sheet or the date that the balance sheets were signed. Justice Brightman stated at 70:

... I shall accordingly decide this case on the footing that a balance sheet, if duly signed by the directors, is capable of being an effective acknowledgment of the state of indebtedness as at the date of the balance sheet, and that, in an appropriate case, the cause of action will be deemed to have accrued at the date of the balance sheet, being the date to which the signatures of the directors relates. In my judgment the balance sheet of the company as at December 31, 1965, signed by the directors on November 25, 1966, would have been an effective acknowledgment as at December 31,1965, of the liability of the company so as to take the matter out of the Limitation Act 1939. ... [Emphasis added by Fitzpatrick J.]

[85]      On this point, Re Gee was followed in Re Compania at 194:

... the balance sheet of the company would constitute an effective acknowledgement of the relevant debt, not as at the date on which it was actually signed by the directors or received by the creditor, but as at the date of the balance sheet, being the date to which the signature of the directors related; and the cause of action would be deemed to have accrued at that date: see In re Gee & Co. (Woolwich) Ltd. [1975] Ch. 52, 71, per Brightman J.

Justice Slade confirmed his conclusions on this point in Re Compania in his later decision in Re Overmark [Re Overmark Smith Worden Ltd., [1982] 3 All E.R. 513 (Ch. D.)] at 523-524.

[86]      I find the English cases persuasive in the circumstances. Even though the communication may take place later than the signing of the financial statements, they must be taken as confirmation as of the date of the balance sheets which is, as stated in Re Gee, the date to which the signatures of the directors “relate”. There may, however, be circumstances where the communication of a financial statement can be construed as confirming a later effective date. This appears to have been the case in Jones, where there was evidence confirming the amount owing as of the date of the annual general meeting which had been earlier disclosed in the financial statements: see Jones at 703, as discussed in Re Gee at 69.

[34]         After rejecting Mr. Casey’s submission that the effective date should be the date the directors signed the financial statements on the basis there was no evidence “the directors were confirming the amount of the outstanding debt as of November 2004 or even January 2005” (para. 88), she concluded,

[89]      I therefore conclude that the action was commenced outside of the limitation period which began after the confirmation arising by reason of the July 31, 2004 financial statements.

[35]         Mr. Casey contends Madam Justice Fitzpatrick erred on this point.  In his submission, the word “confirms” in s. 5 of the Act, properly construed in accordance with Driedger’s “modern principle” (see Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559 at para. 26), indicates a legislative intention that an acknowledgment of a cause of action does not by itself constitute a confirmation of the cause of action – that an acknowledgment becomes effective as a confirmation only by communication of the acknowledgment to the party with the cause of action.  Thus, he contends, the words “date of confirmation” in s. 5(1) of the Act must mean the date when the confirmation was perfected by delivery of the written signed acknowledgment to the other party.  In this case, he submits, that was in January 2005.

[36]         With respect, I cannot agree.

[37]         The Act, which was first enacted as S.B.C. 1975, c. 37, is the progeny of the Law Reform Commission of British Columbia’s (“LRCBC”) Report on Limitations (1974).  The LRCBC drew heavily in its report on the New South Wales Law Reform Commission’s First Report on the Limitation of Actions (October, 1967), which resulted in the Limitation Act, 1969 (N.S.W.).  As a result, s. 5 of our Act, which adopted the provision concerning acknowledgments and payments recommended by the LRCBC, with inconsequential grammatical changes, (see Report on Limitations, s. 4 of the “suggested legislation” at 221), is in substance virtually identical to s. 54 of the New South Wales statute.  These sections introduced the concept of “confirmation” for the first time into the law governing the effect of acknowledgments and payments on limitations.  The LRCBC stated, at p. 86 of the Report on Limitations, “The New South Wales Law Reform Commission adopted the term ‘confirmation’ to encompass both acknowledgment and part payment” and, at p. 92, it recommended that “The term ‘confirmation’ be adopted to cover both acknowledgments and part payments.”

[38]         This recommendation was given effect in s. 5(2), which defines “confirm”.  As this Court said in Fournier v. Evanow (1995), 2 B.C.L.R. (3d) 237 at para. 3 (C.A.),

[3]        Section 5(2)(a) of the Limitation Act (the “Act”), provides two distinct methods by which a person may “confirm” a cause of action. The two methods are: (i) an “acknowledgment” of the cause of action; and (ii) the making of a payment in respect of it.

To the same effect, the Supreme Court of Canada said, in Ryan, supra, in respect of the Limitations Act, S.N.L. 1995, c. L-16.1, s. 16, which is identical to our s. 5,

40        When a person acknowledges the cause of action of another person or makes a payment in respect of that cause of action, a confirmation of that cause of action occurs. Consequently, the time accrued before the date of that confirmation shall not be considered when determining the limitation period (s. 16(2)). Confirmation must, of course, be made prior to the expiration of the limitation period (s. 16(3)).

...

43        In order to establish confirmation, one of two events must be proven: (1) that the party acknowledged the cause of action; or (2) that there was a payment made in respect of the cause of action (see Mew, at p. 115).

[39]         Thus, “confirmation” is not an act separate from an acknowledgment or a part payment – rather, “confirmation” is merely a generic term used to describe acknowledgments and part payments and I would not give effect to Mr. Casey’s submission that the “date of confirmation” in this case was the date the appellants received the acknowledgment in January 2005.

[40]         Madam Justice Fitzpatrick concluded that the effective date of the confirmation was the date of the balance sheet, July 31, 2004, relying on Re Gee, Re Compania, and Re Overmark (see paras. 84-85 of her reasons, quoted above in para. 33).  To the same effect is Stage Club Ltd. v. Millers Hotels Pty. Ltd., [1981] HCA 71, 150 C.L.R. 535, a case authority that was apparently not drawn to her attention in which the High Court of Australia canvassed the law in the Commonwealth, including the cases on which she relied, in considering the question of the effective date of an acknowledgment contained in a balance sheet.  The case is particularly pertinent, in my view, because it considered s. 54 of the New South Wales statute which, as I have stated, flows from the same spring as, and is virtually identical to, s. 5 of our Act.

[41]         In Stage Club it was argued that, by definition, an acknowledgment does not exist until the writing is signed; that the indebtedness shown in the balance sheet was the indebtedness at the date of the financial statements, not the date on which they were signed; and that to be an effective confirmation of a debt, the writing must acknowledge that there was a presently subsisting debt at the date on which it was signed.  Accordingly, it was contended, the signed balance sheet was not a confirmation of the debt within s. 54 of the statute.  The Court rejected that submission by a majority of three to two.

[42]         In the principal majority judgment, Wilson J. said, at 565-66,

I am unable to find any reason, either in principle or relevant authority, or, indeed, in terms of expediency, to favour the view that to be effective a writing must acknowledge a liability which is presently subsisting at the date on which the writing is signed. Having regard to the multiplicity of circumstances that may arise, such a view is arbitrary and unnecessarily restrictive. It would be a rule which performed no useful purpose.

In my opinion, therefore, the Act on its proper construction yields the conclusion that an acknowledgment may refer to a liability which existed on a date prior to the date on which the acknowledgment is signed.

The effect of such an acknowledgment is that “the time during which the limitation period runs before the date of the confirmation does not count” (s. 54(1)). I would construe the phrase “before the date of the confirmation” as a reference to the date to which the confirmation relates. The result not only accords with common sense and justice, but it reflects that flexibility in approach which has characterized the decisions on this area of the law both in the English courts and in this Court.

[43]         In concurring reasons, Aickin J. wrote, at 551-52,

It seems to me that obvious practical problems would arise in the operation of the New South Wales section if it were regarded as requiring the acknowledgment to be of a debt in existence at the date of its making. Since the acknowledgment must be in writing, it must be delivered to the creditor or his agent in order that it can be said to have been “made” to him. It would however be absurd to make the effectiveness of the acknowledgment depend on personal delivery. Delivery by post would surely be enough, though some days or weeks might well elapse before delivery. The document however will, in the absence of some express provision, speak from the moment of signing and of the position then. Why should it be less effective because it takes a week in transit and on arrival speaks as from a time gone by? Corresponding difficulties arise if the acknowledgment is treated as “made” when it reaches the creditor, for by then the position may have changed by payment or otherwise. The accident of the time it takes for an acknowledgment to reach the creditor is not a likely criterion for the legislature to choose to separate effective from ineffective acknowledgments. A more logical and more probable criterion would be the date to which the document itself refers, whether expressly or impliedly. The contrary view would exclude all statements of a credit balance in a running account as at monthly or quarterly intervals, whether by a bank or a merchant, for inevitably they will speak of the position as at an earlier date, however recent. It may be that computer compiled accounts “instantaneously” transmitted to a print out in the creditor’s office may reduce the time gap but, whether small or large, the gap must necessarily remain.

The view that an acknowledgment should relate to the date to which it expressly or impliedly refers would accommodate ordinary trading and personal arrangements and have an operation which would be certain rather than uncertain. I can find nothing in the present legislation to negative this view.

I do not regard the reasoning of their Lordships in the Privy Council as applicable to the legislation now in question. I find myself in agreement with the reasons expressed by Brightman J. in In re Gee & Co. (Woolwich) Ltd. (1975) 1 Ch 52 which are equally applicable to the New South Wales Act.

[44]         In agreeing with Brightman J. in Re Gee, Aickin J. was obviously influenced by the example posed by Brightman J. at 1156 of the problem inherent in a requirement that there be a subsisting debt at the date the acknowledgment is signed.  Brightman J. said,

... Suppose that a trader, B, buys his goods from a trader, S, and has a running account with S for his purchases.  Suppose that on 7th January 1973, S sends B a half-yearly account made up to 31st December 1972, and requests B to confirm that that account is correct, which B does by a letter signed on 14th January 1973.  It would seem quite contrary to justice and to common sense that the letter of 14th January should be incapable of being an effective acknowledgment for the purposes of the statute merely because it acknowledges the liability as at 31st December and not the liability as at 14th January. Counsel for the trustees submits that, in such a case, the written acknowledgment ought to be treated as relating back to 31st December so that it is an effective acknowledgment as at that date.

[45]         I find the reasoning in these passages persuasive and I adopt it.  Accordingly, it is my view that Madam Justice Fitzpatrick did not err in concluding that the date of confirmation of Genco’s indebtedness to JBP was July 31, 2004, the date to which the financial statements were directed, and that JBP’s action begun on October 11, 2010 was therefore statute-barred.  I would dismiss the JBP appeal.

[46]         That brings me to the appropriate disposition of the Freeway appeal.  Were it not for the JBP appeal, Freeway would be entitled to an order that Mr. Justice Brown’s order be set aside and that the action be remitted for a new trial on the basis the judge erred in dismissing the action on the ground he stated.  However, had Mr. Casey been allowed to lead the extrinsic evidence he led in the JBP action, the Freeway action would properly have been dismissed in any event.  Accordingly, there would be no utility in allowing the Freeway appeal and remitting the action and I would therefore dismiss the appeal.

[47]         It must be mentioned that Mr. Casey applied to lead fresh evidence on the Freeway appeal, consisting essentially of the extrinsic evidence he placed before Madam Justice Fitzpatrick in the JBP action.  The test for the admission of fresh evidence on appeal was reiterated in Topgro Greenhouses Ltd. v. Houweling, 2004 BCCA 39, 23 B.C.L.R. (4th) 351 at para. 26:

[26]      The admissibility of fresh evidence is governed by the principles set out in Palmer v. The Queen (1979), [1980] 1 S.C.R. 759 at 775-776:

(1)        The evidence should generally not be admitted if, by due diligence, it could have been adduced at trial provided that this general principle will not be applied as strictly in a criminal case as in civil cases:  see McMartin v. The Queen, [1964] S.C.R. 484.

(2)        The evidence must be relevant in the sense that it bears upon a decisive or potentially decisive issue in the trial.

(3)        The evidence must be credible in the sense that it is reasonably capable of belief, and

(4)        It must be such that if believed it could reasonably, when taken with the other evidence adduced at trial, be expected to have affected the result.

I would dismiss the application on the basis that the evidence would not have affected the proper result.

[48]         For those reasons, I would dismiss both appeals.  In light of the manner in which these cases were moved through the trial court to this Court, I would make no order for costs.

“The Honourable Mr. Justice K. Smith”

I agree:

“The Honourable Madam Justice Ryan”

I agree:

“The Honourable Mr. Justice Chiasson”