The Ontario Court of Appeal recently considered the issue of the applicable limitation period for claims for compensation on a passing of accounts. In Armitage v The Salvation Army, the Court held the Limitations Act, 2002 does not apply to claims for compensation on a passing of accounts.
Facts
The Respondent in this case was the deceased’s power of attorney for property and personal care, as well as estate trustee. The Appellant was the sole beneficiary of the deceased’s estate. The principal issue in this case was whether the Respondent’s claim for compensation was statute barred.
The estate trustee was appointed the deceased’s attorney for property and personal care in 1990, 2001, and 2007. In 2006, the deceased was admitted to hospital and then to a nursing home, where he remained until his death on February 5, 2013. The attorney submitted her claim for attorney compensation on September 5, 2013. She issued a Notice of Application on January 30, 2015 and a further application to pass estate accounts on January 30, 2015 at the request of the sole beneficiary of the estate.
Decision of the Application Judge
The parties disagreed about how to calculate the applicable limitation period for the claim for attorney compensation. The attorney took the position that any claim must be commenced within two years of the death of the person who granted the power of attorney. She explained that she was unsure about whether she would take compensation because it was uncertain how long the deceased would live and what his financial needs would be. The beneficiary took the position that section 40(2) of the Substitute Decisions Act, 1992 gives an attorney the option to claim compensation each year and that the end of each year triggers the beginning of the two year limitation period.
The application judge held that the date of the deceased’s death terminated the power of attorney and therefore triggered the limitation period. An attorney for property would then have two years from the date of death to claim compensation. The application judge approved the attorney and estate trustee claims for compensation.
Decision of the Court of Appeal
The Court of Appeal upheld the application judge’s approval of the claimed compensation, but for different reasons. The Limitations Act, 2002 was intended to deal with all civil claims, grounded in equity, common law, or statute. However, the Limitations Act, 2002 only applies a “claim,” which is defined as “a claim to remedy an injury, loss or damage that occurred as a result of an act or omission.” The court held: “in seeking court approval of the passing of accounts, an attorney for property is not seeking redress for any loss, injury, or damage. Rather, he or she is seeking approval from the court of his or her actions in managing the property, including approval for compensation previously taken or now sought. A passing of accounts application is the opposite of remedial; it is a process that seeks a court order that no remedy is necessary with respect to accounts.”
Therefore, a passing of accounts is not a “claim” within the definition of the Limitations Act, 2002 and not subject to the general 2-year limitation period. The only defences available on a passing of accounts are the equitable defences of laches and acquiescence. The court, however, does leave open the possibility that the filing of a notice of objection by a beneficiary after an attorney has sought a passing of accounts might fall under the definition of “claim” in the Limitations Act, 2002.
This decision allows an attorney for property to make his or her own claim for compensation subordinate to the needs of the person who granted the power of attorney by waiting until the death of the grantor, when the money is no longer needed for the grantor’s care.
Thank you for reading.
Other articles you might enjoy:
https://hullandhull.com/2007/01/limitation-periods-passing-of-accounts/
https://hullandhull.com/2016/05/application-pass-accounts-reply-notice-objection-accounts/
https://hullandhull.com/2008/10/limitation-period-not-a-sword/