Recent Decisions on Section 38 of the Trustee Act
The Ontario Superior Court recently considered the application of section 38 of the Trustee Act in John C. Chaplin v. First Associates Investments Inc. et al and Abrahamovitz v Berens.
Section 38(1) of the Trustee Act states:
Except in cases of libel and slander, the executor or administrator of any deceased person may maintain an action for all torts or injuries to the person or to the property of the deceased in the same manner and with the same rights and remedies as the deceased would, if living, have been entitled to do, and the damages when recovered shall form part of the personal estate of the deceased; but if death results from such injuries no damages shall be allowed for the death or for the loss of the expectation of life, but this proviso is not in derogation of any rights conferred by Part V of the Family Law Act.
In Bonaparte v. Canada (Attorney General), the Court held that in considering whether a wrong falls within the ambit of s38(1), “the focus is not upon the form of the action but whether the alleged wrong constitutes an injury to the person.” The courts have held that this section applies to claims in tort, contract, and breach of fiduciary duty.
In John C. Chaplin, an Estate commenced an action against an investment advisor for making speculative investments, which resulted in losses. In this case, the Court seems to expand the scope of s. 38(1) further, to include actions for purely economic loss, stating:
The property of the deceased, being her money, was allegedly destroyed in value due to the wrongful acts of Mr. Monaghan. Black’s Law Dictionary includes in the definition of “injury” the “violation of another’s legal right, for which the law provides a remedy; a wrong or injustice” and “any harm or damage”. That is broad enough to include the claims here for damages arising from the actions of Mr. Monaghan who was a registered investment advisor with First Associates.
The court also considered the limitation period in section 38(3) of the Trustee Act, which states:
An action under this section shall not be brought after the expiration of two years from the death of the deceased.
The Court held that this limitation period is strict and that the discoverability rule does not apply. This limitation period applies both to claims by and against the estate, under s. 38(2). Moreover, in Abrahamovitz v Berens the Court held that the section does not extend or toll a limitation period created by the Limitations Act, but simply passes the right to commence an action from the deceased to the personal representative if the cause of action arose before death.
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