The Power of Forgiveness
While parents are alive, they often make a concerted effort to treat each of their children equally so as not to create the appearance (either real or contrived) of favouring one child over another. However, as the realities of life play out, a parent may be called upon to lend financial assistance, in the form of a gift or a loan, so that his or her children can enjoy a life every parent dreams for their child. In the recent Saskatchewan decision of Neudorf (Estate) v. Sellmeyer (2012) 83 E.T.R. (3d) 172, the testator tried to do both.
The Deceased left a Last Will and Testament which included the following provision:
“To divide my entire estate among my children, in equal shares, share and share alike, for their own use and benefit absolutely; provided however, that should any child of mine owe me any money at the time of my death, I direct that such sum be deducted from the share of such child, in order that my children will all have shared equally in my estate.”
As required by the terms of the Will, the Estate Trustee located records, in various forms, which he used to calculate certain amounts owed by the children to the Deceased at the time of her death. He proposed to deduct these amounts from the gifts payable to the respective children. However, as pointed out by one of the children, each of the loans was sufficiently old that, by the time the testator had died, they were each statute barred pursuant to The Limitations Act, S.S. 2004, c. L-16.1.
While The Limitations Act couldn’t prohibit the testator from distributing her Estate in the manner that she saw fit, including modifying the gifts to account for loans which remain unpaid (whether enforceable or not), the wording of the Will did not articulate that the loans should be taken into account irrespective of their legal enforceability. While the court agreed that it appeared consistent with the intention of the testator that these loans be taken into account, in the absence of any other evidence, the court held that it had no option but to apply the plain meaning of the words chosen by the Deceased.
The court then turned its attention to the legal effect of limitation periods. While, certainly, the expiry of a limitation period precluded the enforcement of the debt, the issue as to whether the indebtedness ceased to exist would dictate the outcome of the proceeding. The court, relying upon the Supreme Court of Canada decision in Tolofson v. Jensen  3 S.C.R. 1022 and subsequent cases, reiterated that a statutory limitation period is more than merely procedural. It is substantive. The court therefore concluded that the expiry of the limitation period not only barred enforcement proceedings, but also extinguished the debt to which the limitation period applied. The court also confirmed that this result was not affected by the rule in Cherry v. Boultbee (1939), 4 My. & C. 442 which prohibits a beneficiary from taking under an Estate until the beneficiary repay his/her indebtedness to the Estate.
It was found that none of the Deceased’s children owed the Deceased any money at the time of her death, and as a consequence, all of the children shared in the Estate equally.
In this particular case, it appears that the legislature was more forgiving than the beneficiaries’ mother. Sometimes, life can be like that.