Tag: limitation period
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.
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.
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:
- The Plaintiff must rebut the presumption of prejudice that would result to the party to be added; and
- 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:
- The claims to be made against the Proposed Defendant were identical to those already commenced against the existing Defendants;
- The action against the Proposed Defendant was tenable in law; and
- 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.
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A recent decision of the Ontario Court of Appeal considered whether s. 7 of the Limitations Act, 2002 applies to extend the time within which an estate trustee can bring a claim that arose prior to a deceased person’s death.
Section 7 of the Limitations Act, 2002 provides as follows:
7 (1) The limitation period established by section 4 does not run during any time in which the person with the claim,
(a) is incapable of commencing a proceeding in respect of the claim because of his or her physical, mental or psychological condition; and
(b) is not represented by a litigation guardian in relation to the claim.
(2) A person shall be presumed to have been capable of commencing a proceeding in respect of a claim at all times unless the contrary is proved. 2002, c. 24, Sched. B, s. 7 (2).
(3) If the running of a limitation period is postponed or suspended under this section and the period has less than six months to run when the postponement or suspension ends, the period is extended to include the day that is six months after the day on which the postponement or suspension ends.
In Lee v Ponte, 2018 ONCA 1021, the estate trustee of the deceased person commenced a claim more than 2 years after the date on which the limitation period began to run, as determined by the trial judge. As a result, the action was statute barred.
The estate trustee appealed, taking the position that section 7 of the Limitations Act, 2002 should be “liberally construed”. The estate trustee argued that a deceased person is incapable of commencing a proceeding because of “his or her physical, mental or psychological condition”. He also argued that policy reasons support allowing additional time for an estate trustee or litigation guardian to be appointed and take over the management of the affairs of the incapable/deceased person.
The Court of Appeal disagreed and did not allow the appeal. In its view, the “grammatical and ordinary sense of the words of s. 7 are simply not elastic enough to apply to a deceased person and to construe an estate trustee to be a litigation guardian.”
Although the outcome is not surprising, it does serve as a reminder that limitation periods can be unforgiving. Estate trustees would be well-advised to act swiftly in reviewing the affairs of a deceased person in order to determine whether any claims may have arisen prior to death, and whether the expiry of any limitation periods are looming.
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Other blog posts that may be of interest:
This week on Hull on Estates, Natalia Angelini and Kira Domratchev discuss the decision in Shannon v Hrabovsky, 2018 ONSC 6593, and the question of a limitation period in a Will challenge.
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Applications to pass accounts are unique as civil proceedings go. The nature of the inquiries being made by the Court, the relief that a judge is empowered to grant, and the procedural considerations that apply are all features that distinguish applications to pass accounts from other civil applications. Procedural considerations in particular have garnered some notoriety recently as a result of several notable decisions released in the past few years. The recent decision of the Court of Appeal for Ontario (then sitting as the Divisional Court) in Wall v Shaw, 2018 ONCA 929, provides some clarity to a few of the loose ends.
In Wall, the Deceased died leaving a Will naming the appellant as estate trustee and which created two testamentary trusts for the benefit of her two children. The Deceased’s nieces and nephews were also named as contingent beneficiaries in the event that both children died before vesting in the trust property.
The estate trustee acted for more than 10 years, but never formally passed his accounts. Instead, the estate trustee held frequent informal meetings with the Deceased’s children to review the administration of the estate and to discuss the estate trustee’s compensation.
A dispute between the Deceased’s daughter and the estate trustee relating to the latter’s compensation eventually led the daughter to bring an application seeking an order compelling the estate trustee to pass his accounts.
The estate trustee subsequently commenced an application to pass accounts in March 2015. In June 2015, the Deceased’s daughter filed a notice of objection to the accounts, followed in January 2016 by a notice of objection delivered by two of the Deceased’s nieces.
In response, the estate trustee brought a motion seeking to strike out the objections of the daughter on several grounds. Notably, the estate trustee took the position that the daughter’s approval of the accounts at the informal meetings constituted acquiescence of the estate trustee’s conduct. In the alternative, the estate trustee argued that the daughter’s objections were now statute-barred pursuant to sections 4 and 5 of Ontario’s Limitations Act or barred by the doctrine of laches.
The estate trustee was unsuccessful at first instance on all three grounds, but only chose to appeal the first ground. Specifically, the estate trustee argued on appeal that the judge at first instance had erred in refusing to apply the two-year limitation period under section 4 of the Limitations Act. The appeal was dismissed, and the reasons on appeal provide some procedural clarity in respect of the interplay between limitation periods and passings of accounts.
Section 4 of the Limitations Act generally provides that a “proceeding” cannot be commenced in respect of a “claim” if more than two years have elapsed since the date the claim was discovered. The Court of Appeal took issue with each of the quoted terms.
Notably, the held that a notice of objection does not commence a “proceeding” for the purposes of section 4 of the Limitations Act. Rather, a notice of objection ought to be viewed as a response to a proceeding that has already been commenced, being the application to pass accounts. The Court also pointed to its prior ruling in Armitage v The Salvation Army, in which it was held that an application to pass accounts was not a “claim” pursuant to section 4 of the Limitations Act. Accordingly, it followed that a responding objection raised in that application could also not constitute a claim.
Finally, the Court highlighted an important distinction between applications to pass accounts and other civil applications. Unlike a traditional civil claim, the Court in an application to pass accounts is not tasked with awarding judgment in favour of one party or the other. The purpose of an application to pass accounts to is initiate a “judicial inquiry” into the management of an estate and, if appropriate, provide redress to the estate, rather than to the beneficiaries personally.
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When does the limitation period start running for a challenge to the validity of a Will? A recent decision at the Superior Court of Justice dealt with this very question and found that the limitation period may continue to run even after two years from the date of death of the testator.
In the decision of Shannon v Hrabovsky, 2018 ONSC 6593, the testator prepared a will in 2006 which he provided to his daughter following its execution. However, the testator subsequently executed a will in 2007 (the “2007 Will”) which essentially disinherited his daughter to the benefit of his son. The daughter was not provided with a copy of this will, but the daughter was aware that the testator attended a lawyer’s office in 2007 and signed something. The testator died on November 15, 2014 and the daughter was provided a copy of the 2007 Will in January 2015 when her brother and uncle applied for a Certificate of Appointment of Estate Trustee under the 2007 Will.
The daughter commenced a challenge to the validity of the Will on December 23, 2016. This claim was commenced more than two years after the testator’s date of death, but less than two years from when the daughter received a copy of the 2007 Will in January 2015. As a preliminary issue, Justice Wilton-Siegel determined the issue of whether the limitation period for bringing a challenge to the validity of the 2007 Will had expired.
In particular, Justice Wilton-Siegal examined the issue of whether the discoverability principle applies in the case of will challenges. Under the Limitations Act, 2002, SO 2002, c 24, sched B, a claim generally may not be commenced after the second anniversary of the day on which the claim is discovered. Section 5(1) of that act sets out that:
5 (1) A claim is discovered on the earlier of,
(a) the day on which the person with the claim first knew,
(i) that the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,
(iii) that the act or omission was that of the person against whom the claim is made, and
(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and
(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).
(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.
Justice Wilton-Siegel referred to the decision in Leibel v Leibel, 2014 ONSC 4516 where the Court found that as a will speaks from the date of death, the limitation period begins running from the date of death. In Shannon v Hrabovsky, it appears that the respondents attempted to argue that the discoverability principle did not apply and that a will challenge can only be brought within two years of the date of death. Justice Wilton-Siegel found, however, that the discoverability principle continues to apply to will challenges and that Leibel v Leibel was not to be taken as meaning that such a principle did not apply.
In the circumstances of the case, Justice Wilton-Siegel found that the will challenge was not statute-barred as the daughter had not discovered the existence of the 2007 Will until she was provided with a copy in January 2015.
The circumstances of each case are unique and while some might be concerned that this case opens up potential claims against the validity of a Will long after a testator has passed away, it is important to remember that the Court will examine the discoverability principle with respect to whether a reasonable person ought to have discovered the claim.
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In today’s podcast, Natalia Angelini and Doreen So discuss the case of MacDonald v. Estate of James Pouliout, 2017 ONSC 3629, which was an interesting decision on constructive trusts, the limitation period applicable to dependants relief, and vesting pursuant to section 9 of Estate Administration Act.
Should you have any questions, please email us at email@example.com or leave a comment on our blog.
We have previously blogged about the limitation period that applies to applications for dependant’s relief under Part V of the Succession Law Reform Act, and the circumstances in which the Court will extend the limitation period.
In the recent decision of Habberfield v Sciamonte, 2017 ONSC 4332, the Court was asked to consider whether an application for support by a beneficiary with a life interest in a testamentary trust was statute-barred.
The Law Regarding Limitation Periods and Dependant Support Claims
Section 61(1) of the Succession Law Reform Act (the “SLRA”) provides that an application for dependant’s support must be made within six months from the issuance of probate.
An application may be made beyond the six-month limitation period, with leave. Section 61(2) of the SLRA provides the Court with discretion, if it considers it proper, to allow an application to be made by a dependant “at any time with respect to any portion of the estate remaining undistributed at the date of the application”.
Generally, case law has interpreted s. 61(2) to limit any claim made after six months to the remaining, undistributed portion of the estate, and to bar any claim made after the assets have been fully distributed. Paul Trudelle previously blogged on this application of s. 61(2).
In Habberfield, the Applicant (“Joan”) claimed that she was the long-time common law spouse of the Deceased. The Deceased died on April 11, 2012. Probate was granted on October 30, 2012. Joan’s application was heard on June 30, 2017, more than five years after the Deceased’s death.
At the time of the application, the assets of the Deceased’s Estate had an approximate value of $2,000,000.00. The assets primarily consisted of the Deceased’s home and an adjacent rental property.
Under the Deceased’s Will, the home and the rental property were to be held in trust for Joan until she died, no longer desired the properties, entered into a new relationship or moved to a seniors’ or nursing home. Upon such an event, the Will directed for the properties to be sold and for $100,000.00 to be held in a discretionary trust to meet Joan’s needs. The balance of the net proceeds of sale were to be divided amongst the Deceased’s issue. Joan was responsible for the carrying and repair costs for the properties during her life tenancy.
On the application, Joan argued that she had not considered the adequacy of the support she received under the Will prior to the expiration of the limitation period. At the time of the application, Joan was 78 years old, had limited resources to continue to pay the carrying costs of the properties and was considering moving into a care home. The latter option would only provide her with an interest in a discretionary trust of $100,000.00.
The respondent Estate Trustees argued that Joan’s claim was statute-barred, and also argued that Joan’s claim for support was weak on its merits.
Justice Lofchik’s Decision
As in prior cases that have considered the Court’s discretion under s. 61(2) of the SLRA, Justice Lofchik concluded that the discretion should be “exercised judicially in a broad and liberal manner.”
Justice Lofchik noted that the bulk of the Deceased’s Estate remained undistributed, and in fact could not be distributed until Joan’s life interest was extinguished. As a result, Justice Lofchik held that there would be no prejudice to the Estate or to the residuary beneficiaries in allowing Joan’s claim to proceed.
Justice Lofchik’s decision is consistent with prior decisions that have considered s. 61(2), where the Courts have held that the discretion to allow an application to proceed can be exercised at any time as to the assets that are undistributed as of the date of the application.
However, the discretion ultimately rests with the Court. The message to take from this case is that it is generally advisable for potential dependants to consider their present and future needs for support prior to the expiry of the statutory limitation period in order to minimize the additional risk and cost of seeking the leave of the Court.
Thank you for reading,
Umair Abdul Qadir
We have previously blogged about the limitation period that applies to claims for dependant support under Part V of the Succession Law Reform Act (“SLRA”), and the circumstances in which the Court will exercise its discretion to extend the period.
In the recent decision of MacDonald v Estate of James Pouliot, 2017 ONSC 3629, the Honourable Justice Nightingale considered whether the limitation period could be extended for a dependant’s support claim where the real property owned by the deceased had already vested in a beneficiary, by operation of section 9 of the Estates Administration Act.
Limitation period for dependant support claims
Under subsection 61(1) of the SLRA, no application for dependant support can be made more than six months after probate has been granted.
However, subsection 61(2) provides the Court with the discretion to allow an application to be made at any time “as to any portion of the estate remaining undistributed at the date of the application.”
As we have previously blogged, the Court has generally interpreted section 61(2) to allow claims that are made more than six months after probate as against the assets that remain undistributed as of the date of the application. In one recent decision, the Court granted leave even though the assets of the estate had been distributed due to the conduct of the estate trustee.
The issue in Pouliot
In Pouliot, the Applicant (“Mary”) was in a common-law relationship with the Deceased for 22 years. The Deceased died intestate on September 10, 2013.
The primary asset of the Estate was a house (the “Home”) that Mary and the Deceased purchased together in 1999. Although each contributed to half of the cost of the Home, title to the Home was in the name of the Deceased. The Court found that Mary and the Deceased shared the expenses of the Home during their relationship. Following the Deceased’s death, Mary continued to live at the Home and made all of the monthly mortgage payments on the Home.
As the Deceased died intestate, and given that common-law spouses do not inherit on an intestacy, the Deceased’s son was the sole beneficiary of the Deceased’s Estate. The Deceased’s son (the “Estate Trustee”) obtained probate on June 8, 2015. Mary commenced her Application on November 10, 2016, seventeen months after probate was granted.
Mary’s Application sought a declaration that she had an equal interest in the Home by way of a constructive or resulting trust. Mary also sought support as a dependant pursuant to Part V of the Succession Law Reform Act. The Estate Trustee opposed Mary’s Application, arguing that it was statute-barred due to section 61 of the SLRA and section 9 of the Estates Administration Act.
Under section 9(1) of the Estates Administration Act, real property that has not been disposed of, conveyed to, divided or distributed amongst the persons who are beneficially entitled to it within three years after the death of the deceased owner automatically vests in such persons. Mary’s Application was commenced more than three years after the Deceased’s death.
In the circumstances, although Mary was successful in her claim that she held an equal interest in the Home, Justice Nightingale held that “the applicant’s SLRA claim in this proceeding is barred as it relates to the only property of the estate that has already vested in the respondent….”
The Court concluded that there were no assets in the Estate against which an order for support could be made in Mary’s favour.
Thank you for reading,
Umair Abdul Qadir
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The doctrine of constructive trust was recently applied earlier this year to register a transfer of a parking space to an applicant who entered into an agreement of purchase and sale of a condominium in 1997.
In Chopra v. Vincent, 2015 ONSC 3203, the Applicant Chopra agreed to purchase a condo from the Respondent Vincent on June 30, 1997. The Agreement of Purchase and Sale between the parties expressly provided for the purchase of a condominium unit and a related parking space. Since 1997, the Applicant Chopra lived in the condo unit, parked in the parking space, and paid related expenses such as common area charges and property tax.
18 years later, the Applicant discovered that the lawyers for the vendor and purchaser neglected to include a transfer of the parking space which has a separate PIN from the condominium unit. Once discovered, the Applicant Chopra sought a declaration of his ownership of the parking space in order to sell the parking space along with the condominium unit while the Respondent Vincent could not be located.
The Court found that equitable title to the parking space was transferred to the Applicant, notwithstanding the inadvertence of the legal transfer of title, on the basis that the Applicant had paid the agreed purchase price in full consideration for a transfer of the condominium unit and the parking space.
According to Justice Dunphy,
“The right of a beneficiary of a constructive trust to enforce his or her title as against the trustee is governed by the Real Property Limitations Act, R.S.O. 1990, c. L-15 (the “RPLA”): McConnell v Huxtable, 2014 ONCA 86 (CanLII). Section 2(1)(a) of the Limitations Act, 2002 provides that it does not apply to a proceeding to which the RPLA applies. Under the RPLA, there is a ten year limitation period (RPLA, s. 4) for an action to claim an interest in land. However, where the interest in land claimed is an equitable title under a constructive trust, the limitation period is subject to the principle of discoverability (McConnell v. Huxtable, supra, at para. 53-54) or possibly is governed by s. 5(1) of the RPLA and only begins to run from the time of dispossession (which has not occurred). In either event, there can be no question of the limitation period having run since the applicant has not been dispossessed and only discovered the error in connection with preparing to sell his condominium over the past few months and has acted promptly.”
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Listen to: Hull on Estates #329 – Limitation Periods
Today on Hull on Estates, David Smith and Saman Jaffery discuss the recent Ontario Superior Court of Justice decision in McConnell v. Huxtable. This recent decision considers what limitation period applies in respect of a constructive trust claim in connection with real property in a family law context. As David and Saman discuss, this decision also provides guidance to estate lawyers and practitioners.
If you have any questions, please e-mail us at firstname.lastname@example.org or leave a comment on our blog page.
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