Where an estate trustee becomes aware of a potential claim against the estate, but no claim has yet been commenced, it can be difficult to decide how to proceed. Sections 44 and 45 of the Estates Act contain a seldom used procedure that may be of some assistance to estate trustees in this situation.
Under these sections, where someone makes a claim or demand against an estate, or where the estate trustee has notice of a claim or demand, the estate trustee can serve a Notice of Contestation on the claimant. The effect of this is to accelerate the claimant’s limitation period. The Act provides that, upon being served with a Notice of Contestation, the claimant has 30 days to apply to the Superior Court for an order allowing the claim, after which the claimant is deemed to have abandoned the claim and it is forever barred.
The Court has jurisdiction to extend the 30 day window by three months.
While potentially useful, there are some important limits on the use of this procedure. A 2008 decision of the Ontario Court of Appeal, Omicuolo Estate v. Pasco, explored the meaning of “claim or demand” under these sections. David Smith has previously blogged about this case as well. Upon a thorough review of relevant case law, the Court held that this provision refers to a claim or demand against the estate by a creditor for payment of a money demand. The Court held that a claim for dependant’s support under the Succession Law Reform Act was in the nature of declaratory relief, and therefore fell outside of the meaning of “claim or demand”, and thus sections 44 and 45 could not be used to accelerate a support claim.
In its review of the case law and relevant texts, a number of other types of claims were discussed. A claim to enforce a gift mortis causa (or deathbed gift) was held to fall outside the scope of these sections. These sections have been found not to apply to a claim for a judicial sale or foreclosure in the context of a mortgage. They also cannot be used to dispute a beneficiary’s claim to a legacy.
Where, however, there is a potential claim against an estate that does fall within these sections, they can be a useful way of moving things along.