Email Transactions in Land – in New Brunswick

The New Brunswick Court of Appeal has published a substantial review of the impact of using email to transfer real estate. Its decision in Druet v. Girouard 2012 NBCA 40 overturned the decision of the Court of Queen’s Bench, 2011 NB 204 (in French only on CanLII; the English text is at [2011] N.B.J. No. 260, and [2011] A.N.-B.no 260.)

In this case the parties exchanged a total of seven emails about the plaintiff Girouard’s possible purchase of the defendant Druet’s condominium apartment in Moncton. The final email was from Druet, withdrawing from the transaction. Girouard took the view that a binding agreement had been reached, and the Court of Queen’s Bench agreed. The Court of Appeal disagreed.

At least three elements of the decision are worthy of attention.

1. New Brunswick has a Statute of Frauds that requires that agreements for the sale of land are not enforceable unless acknowledged in a memorandum in writing signed by the party to be bound. Here both courts had no problem agreeing that the exchange of emails constituted writing for that purpose. At first instance the court relied on the common law, which was said to be taking a more expansive view of what constituted ‘writing’ (citing Sopinka on Evidence) as well as the definition of ‘writing’ in the Interpretation Act. The CA agreed and referred as well to the Electronic Transactions Act. which contains the uniform provision based on the UN Model Law on Electronic Commerce, that an electronic message satisfies a writing requirement if it is accessible so as to be usable for subsequent reference. One has the impression that there was no serious issue on that point in the case.

2. The defendant submitted that her name at the end of her emails could not be taken as a signature without greater evidence of her intention – as there would have been if she had included the word ‘signed’. Her name appeared in different forms in the four emails she sent – the final one (saying no deal) simply reporting ‘Kelty’s iPhone’.

The CA went on at some length (paras 24 – 30) about the nature of electronic signatures and the intention of the signer, but declined to rule on whether the signatures in the emails were sufficient to satisfy the Statute of Frauds, because on the third issue it held that there was no sufficient intention to be bound in any case.

I wonder if all the verbiage of the CA was necessary. New Brunswick’s Electronic Transactions Act contains the uniform definition of electronic signature: electronic information that a person has created or adopted in order to sign a document and that is in, attached to or associated with the document’. It goes on to give two non-exhaustive methods of signing electronically, not found in the Uniform Electronic Commerce Act or in any other Canadian legislation (so far as I know), including writing the name and stating expressly that the name is intended to be a signature.

Despite several further paragraphs about case law back to 1862, it seems to me that the intention of the defendant to sign the emails was very clear. If what she put on her emails was not a signature, then very few emails are ever signed. I do not believe that the law would be well served by such a conclusion.

However, as the CA notes later (para 52), the plaintiff never appended his name to the end of his emails. As he was not the party to be bound, the Statute of Frauds would not have required it. Nevertheless the contrast is striking. The CA mentions a couple of cases about headers in emails being held to be signatures, or not. The leading English case held No. A Singaporean case held Yes. Some US cases hold Yes. No doubt it may depend on the facts or on the equities of the case, as the CA notes in an ‘aside’ in para 30.

In short, the CA came up to the line on an e-signature case in the absence of much direct precedent, but declined to rule. Too bad.

3. The CA goes on at length about the intention of the parties to be bound. This is an objective test, and thus requires considerable weighing of the facts. Some of the discussion will remind lawyer readers of debates from first year contracts classes about ‘subject to contract’, ‘subject to solicitors’ approval’ and so on.

For our purposes the point of most interest is the statement that an exchange of emails should be presumed to be not intended to be binding, subject to rebuttal. ‘Such a presumption accords with what we perceive to be the populist view that, generally, an exchange of emails qualifies as preliminary negotiations that may lead to the signing of a formal and binding contract.’ (para 41) This is particularly true for real estate transactions .

The Court said that one should ‘view the emails as the equivalent of recorded telephone conversations which reveal the extent to which the parties have engaged in informal discussions that could lead to a formal and binding contract. In our view, [this] perspective is more in line with the reasonable expectations of today’s consumer.’ (para 41)

Given that this case arose in first instance on a motion for a ruling on a question of law, and proceeded to the CA on the answers, neither court heard evidence on what ‘the populist view’ was, or what the ‘reasonable expectations of the consumer’ might be. I do not say that the Court was wrong on this, but one wonders where this view came from.

It is interesting to compare this view to that of the Uniform Law Conference of Canada, which excluded land transfers from the Uniform Electronic Commerce Act in 1999, on the ground that it may be too risky to dispense with paper documents when people might buy and sell houses without professional advice. (See the commentary to section 2 of the Uniform Act.)

It is especially interesting to do so because New Brunswick’s Electronic Transactions Act did not exclude land transfers, though it otherwise enacted the essence of the UECA. Perhaps the government of New Brunswick did not hold the ‘populist view’ of such matters that the ULCC shared with the NBCA.

In addition, the ULCC in 2011 removed the exception for land transfers from the UECA. The reasons can be found here (final item in list). Just who speaks for the populist or for the reasonable expectation of the consumer?

On the facts, the decision of the NB Court of Appeal has considerable merit. The intention of the parties in a rapid exchange of emails over two days may not have been so firm that specific performance should have ensued. And the question of formality is not an empty one. The Court was no Luddite. ‘Frankly, there is more legal formality surrounding the millions of transactions that occur daily on eBay than what occurred in the present case.’ (para 53) The Court probably got it right, but it might have been a bit more helpful in deciding that the emails from the defendant were signed, and a bit less hasty in appealing to populist views of which it had no evidence. A sage judicial view might have reached the same conclusion.

[h/t to Tim Rattenbury for drawing the decision to my attention.]