Limitation Periods – Passing of Accounts

January 22, 2007 Hull & Hull LLP Executors and Trustees, Passing of Accounts Tags: , , , 0 Comments

Today, I want to consider limitation periods in the context of a passing of accounts.

For lawyers, limitation periods are more of a curse than a blessing. While it provides a client with certainty, the conscientious lawyer is always nervous that a limitation period is approaching or has already passed. The first question a lawyer should ask a prospective client is when a claim or cause of action first arose.

Currently, I am embroiled in a complex estate passing of accounts. The issue of whether the beneficiaries of an estate are out of time in which to claim damages pursuant to section 49 of the Estates Act is very much in play.

A passing of accounts is essentially an estate audit. The executor is required to account for his/her actions to the beneficiaries. An executor will often be required to bring a court application to have the accounts approved. Beneficiaries can object to specific transactions and/or the compensation claimed by the executor. The beneficiaries can also seek damages against the executor on a passing of accounts as a result of misconduct, neglect or default. The issue is whether the two year limitation period set in the new Ontario Limitation Act, which came into force January 1, 2004, applies to a passing of accounts and a claim for damages.


In Ontario, there is generally a two year limitation period in which to bring a claim, subject to some exceptions, including the concept of discoverability (that is, when a claim could have been reasonably discovered by the complaining party). Whether the two year limitation period applies to a passing of accounts is less than clear and the answer seems to depend on the facts. The general sense is that it is up to the executor to pass his accounts from time to time and that a beneficiary need not request that the executor pass his/her accounts every two years in order to preserve the right to object to the accounts or claim damages pursuant to section 49 of the Estates Act. However, once estate accounts have been prepared, it seems reasonable that the beneficiaries have two years in which to make a claim for damages.

However, the one situation where there may be some onus on the beneficiary to demand that an executor pass his or her accounts immediately is when the executor dies without having passed his/her accounts. Section 38 of the Trustee Act generally imposes a two year limitation period for claims against a deceased’s estate. No doubt, a beneficiary would become aware in short order that an executor died. Given the two year limitation period imposed by section 38, a beneficiary should demand that the executor’s estate pass the executor’s accounts in order to preserve the beneficiaries’ right to claim damages for misconduct, neglect, or default on the part of the dead executor. The courts have stated in no uncertain terms that there must be some degree of legal finality with death. From a public policy point of view, it would be an anomaly if a damage claim, in the context of a passing of accounts, could survive indefinitely while most other claims against an estate would be statute barred.

Justin de Vries

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