The Application to Pass Accounts can be a powerful tool in a beneficiary’s arsenal. Not only does it empower the beneficiary to receive a court audit of the administration of the estate, and with it the ability to dispute certain steps in the administration, the court also has the authority under s. 49(3) of the Estates Act to award damages payable by the Estate Trustee for any perceived wrong without a separate claim needing to be commenced. As a result an Application to Pass Accounts can have the same financial penalty for an Estate Trustee accused of misconduct as if the beneficiary had issued a Statement of Claim, with the court having the same power to award damages against the Estate Trustee as they would under a Statement of Claim.
The Application to Pass Accounts also carries an additional legal benefit for the beneficiary which may not be available under a Statement of Claim, namely the potential ability to insulate claims which otherwise may be statute barred by the expiry of the limitation period if such claims are advanced as part of a Notice of Objection to Accounts rather than a Statement of Claim. There is a general two year limitation under the Limitations Act, 2002, for an individual to commence a claim. The Ontario Court of Appeal (sitting as the Divisional Court) in Wall v. Shaw, 2018 ONCA 929, confirmed there is no limitation period on claims advanced by way of Notice of Objection to Accounts served within an Application to Pass Accounts. As the court has the ability under s. 49(3) of the Estates Act to award monetary damages within the Application to Pass Accounts, Wall v. Shaw would appear to suggest there is no limitation period for a beneficiary to seek damages against an Estate Trustee if such claims are advanced as part of an Application to Pass Accounts.
The potential to insulate otherwise statute barred claims within an Application to Pass Accounts was recently addressed in part in Re Schultz Estate, 2023 ONSC 3959, where an Estate Trustee attempted to argue that a claim that was advanced against them in an Application to Pass Accounts regarding certain real property being held by them on a resulting trust for the benefit of the estate was statute barred by the expiry of the limitation period. The objecting beneficiaries disagreed, noting that Wall v. Shaw found there is no limitation period for a Notice of Objection to Accounts, and the objection they advanced that the starting balance of the estate was incorrect for the omission of the property was a valid objection and the court had authority under the Estates Act to investigate the complaint. The court agreed with the beneficiaries, confirming that in accordance with Wall v. Shaw there was no limitation period for a Notice of Objection, thereby allowing the court to consider the resulting trust claim when they may otherwise not have been able to due to the expiry of the limitation period.
The ability to potentially insulate otherwise statute barred claims if brought within an Application to Pass Accounts can be a powerful strategic tool for a beneficiary. If you are a beneficiary who is considering advancing a claim for damages against an Estate Trustee or other fiduciary, but have concerns the amount of time which has passed since the underlying complaint may result in the claim being statute barred, consideration should be paid to whether such claims could be advanced as part of a Notice of Objection to Accounts thereby potentially insulating the claim under the rationale of Wall v. Shaw. As cases like Re Schultz Estate show the use of an objection to the “starting balance” of the estate can potentially capture events that even pre-date the death of the testator, including alleged gifts and the receipt of joint-property by right of survivorship, thereby significantly expanding the possible claims against the Estate Trustee which may have no limitation period.
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