Limitation Periods and Special Circumstances: Discoverability under the Trustee Act

January 21, 2019 Garrett Horrocks Executors and Trustees, Health / Medical, Litigation, Trustees Tags: , , , 0 Comments

Section 38 of Ontario’s Trustee Act provides that an estate trustee may commence or maintain, on behalf of a Deceased individual, an action in tort that could otherwise have been commenced by that individual.  As discussed in related blogs on this section, such actions are ordinarily subject to a stricter limitation period than that of other civil claims.

In typical civil claims, Ontario’s Limitations Act imports a two-year limitation period which begins to run as of the date the cause of action was discovered.  The limitation period under the Trustee Act, however, begins to run as of the Deceased’s date of death and is not subject to this principle of discoverability, unless the Plaintiff can satisfy the Doctrine of Special Circumstances.  The decision in Graham Estate v Southlake Regional Health Centre recently contextualized this Doctrine and, in so doing, suggests that the principle of discoverability will not always be dispensed with.

The Facts

In May 2008, the Deceased in Graham Estate underwent a botched surgical procedure that ultimately gave rise to a claim in medical negligence.  The Deceased subsequently died in February 2009, and a claim was commenced by the Deceased’s Estate in May 2010, well within the two-year limitation period under section 38(3).

As part of this initial claim, the Estate obtained disclosure of relevant medical records relating to the operation.  In or about 2015, more than four years after the limitation period had expired, counsel for the Estate subsequently received an additional unprompted cache of records that had not been previously disclosed.  This new set of records gave rise to a claim against a party who was not a party to the existing litigation.

In February 2017, the Estate subsequently brought a motion seeking to add the Proposed Defendant as a party to the litigation.  At issue in this decision was whether the Estate was out of time as a result of the strict operation of section 38(3) of the Trustee Act.  The Court ultimately held that the Estate ought to succeed on the basis of the Doctrine of Special Circumstances.

Special Circumstances

As the claim against the Proposed Defendant was, on its face, out of time, the Estate argued that the Doctrine of Special Circumstances ought to apply.  This Doctrine is comprised of a two-step test to be satisfied by the Plaintiff:

  1. The Plaintiff must rebut the presumption of prejudice that would result to the party to be added; and
  2. The Plaintiff must satisfy the Court that special circumstances justify the addition of that party.

At the outset, the Court held that the loss of a limitation defence immediately gave rise to a presumption of prejudice in favour of the Proposed Defendant.  However, the Estate identified a number of factors that operated to rebut the presumption of prejudice, notably:

  1. The claims to be made against the Proposed Defendant were identical to those already commenced against the existing Defendants;
  2. The action against the Proposed Defendant was tenable in law; and
  3. There would be no procedural unfairness to the Proposed Defendant if he were added as a party, as no trial date had been set and he would have sufficient time to prepare a defence.

The Court then considered whether there were any equitable special circumstances that merited the addition of the Proposed Defendant as a party.  As above, the Court held that there were, but in so doing, in effect considered factors not unlike the discoverability principle.

Chiefly, the Court noted that the Proposed Defendant’s role in the circumstances giving rise to the initial negligence claim had not become apparent until the limitation period had already expired.  The Court found that the Estate had made efforts to obtained the relevant records well within the limitation period, and that the records implicating the Proposed Defendant had erroneously been omitted.  The Court held that this was not a case in which the Estate was “handicapped by its own inaction.”

While section 38(3) of the Trustee Act on its face imports a strict limitation period, the Graham Estate decision nonetheless suggests that the courts will consider discoverability, among other factors.  That said, this analysis is only engaged if the presumption of prejudice is rebutted.

Thanks for reading.

Garrett Horrocks

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