Tag: limitations act
Under the Limitations Act, 2002, most actions are subject to a two-year limitation period. However, the limitation period does not run during any time in which the person with the claim is incapable of commencing a proceeding AND not represented by a litigation guardian in relation to the claim. A person is presumed to be capable unless the contrary is proved.
What happens when a claim is commenced, but not all defendants are named? This issue arose in the recent decision of Wood v. David Mitchell et al., 2020 ONSC 4903 (CanLII). There, the plaintiff suffered a stroke. He sued a number of defendants in relation to his medical care. One doctor was referred to in the Statement of Claim, but not named as a party. Three years after the claim was started, the Public Guardian and Trustee was appointed as the plaintiff’s litigation guardian. The PGT moved to add the doctor as a defendant. The doctor moved to strike the claim on the basis of the passage of the limitation period. The plaintiff resisted, taking the position that the plaintiff did not have capacity when the claim was commenced, and did not have a litigation guardian.
The doctor raised two main points. Firstly, the doctor sought information about communications between the plaintiff and his initial lawyers going to his capacity at the time. Secondly, the doctor argued that the plaintiff was represented initially by a “de facto” litigation guardian, a Mr. McQueen.
The decision addressed these issues from the perspective of a motion to compel answers to questions and further production. The plaintiff had refused to answer questions about his and Mr. McQueen’s communications with his initial lawyers and to produce the lawyers’ file on the basis of relevance and privilege.
At first instance, the Master disallowed the questions. On appeal, the court ordered that the lawyers’ files as they relate to the plaintiff’s capacity and to Mr. McQueen’s dealings with the lawyers must be produced, even if privileged.
The court held that on the first issue, as the plaintiff put his capacity in issue, information that his lawyers had about his capacity was to be produced. The court stated that the “elephant in the room” was “what were the plaintiff’s initial lawyers thinking” when they commenced the claim? Did they believe that the plaintiff had capacity? If so, what was that belief based on?
On the second issue, the court referred to the Court of Appeal decision of Azzeh (Litigation Guardian of) v. Legendre, 2017 ONCA 385 for the proposition that a de facto litigation guardian could recommence the running of the limitation period. In Azzeh, the court held that a person could be considered litigation guardian, even if not formally appointed, if they held themselves out as litigation guardian. In Wood, the court held that the definition of “litigation guardian” might even by broader.
As can be seen, the issues that arise in litigation where the capacity of a party may be in issue can be complex. The courts must walk a fine line of ensuring that the right to sue is not taken away from an incapable person, while ensuring that the rights of third parties, including the right to the protection of limitation periods, are safeguarded.
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Few would have the audacity (or the poor judgment) to perform surgery or fly an airplane without requisite training. The hero of The Simpsons, Homer, (a sad example of his namesake), can often be seen, rather comically, making errors on the job at the Springfield nuclear power plant – and yet there is nothing funny, in real life, about an untrained nuclear technician staring down a crisis. Our world is no longer one in which most people provide all their wants for themselves; instead, trades are highly specialized. Lawyers, for instance, will not typically build their own houses – most, indeed, would not know how to build their own tables. There is temptation, however, in self-sufficiency: one may save money in cutting one’s own hair and gain pride in cooking one’s own meals; and in case of failure, one may always pay one’s expert barber to salvage one’s botched haircut and scramble to one’s favourite restaurant to relieve one’s palate.
Whereas the consequences of conducting surgery or flying an airplane without training are readily apparent to the imagination, the risks associated with self-representation in court can be deceiving. Some think they are – or truly are – qualified to argue their own cases if they do some private research, study the procedures and access free legal resources at their disposal. They may find the endeavour exciting, a personal rite of passage or a challenge from which they may grow. It is a sad truth, as well, that many self-represented litigants simply do not have the financial means to afford legal counsel. Options available to litigants of more modest means – such as legal aid, pro bono and hiring a lawyer on contingency – are often imperfect (and, alas, sometimes unattainable), but they may be preferable to going into the legal fray alone. In any case, Bristol v. Bristol,  O.N.S.C. 1684 (“Bristol”), is a stirring instance of what may go wrong with respect to legal self-representation.
The facts in Bristol are as follows: the matriarch of the Bristol family, Elizabeth, passed away on December 6, 2016, survived by ten children; in 2002, she executed a will in which she distributed her estate equally amongst the ten children; in 2004, she left another will by which she disinherited nine of the children and left her entire estate to Berry, the tenth child. Her stated purpose for disinheriting the nine others was that she had assisted them sufficiently throughout their lives.
On December 30, 2016, one of the disinherited children, Stephanie, filed a Notice of Objection, on behalf of herself and four of her siblings, alleging incapacity and undue influence with respect to the latter will. Berry filed his Notice to Objector on July 18, 2017, and then Stephanie filed a Notice of Appearance on July 25, 2017. After almost two years, during which time Stephanie was allegedly waiting for Berry to “take a step in the probate proceeding”, Stephanie brought a Motion for Directions. This was on April 23, 2019. The Court indicated that she should issue an Application within 45 days but without prejudice to Berry bringing a motion to dismiss on the grounds that the Application was statute-barred, for sections 4 and 5 of the Limitations Act prohibit a proceeding from commencing more than two years after the day on which the claim was discovered.
In its decision, the Court found that the steps Stephanie had taken, namely filing the Notice of Objection and Notice of Appearance, did not commence a proceeding; the former is merely a “caveat” or “caution”, not a proceeding, and the latter does not institute proceedings. She needed to issue an Application. It was next determined that the date of discoverability was either December 6, 2016 (the date of death) or at the latest December 30, 2016 (the date of the Notice of Objection), and that, therefore, the two-year limitation period had expired. As a last resort, Stephanie argued that she was seeking declaratory relief and that no limitation period thus barred her. The Court decreed that “will challenges cannot be framed as declaratory relief”.
There was sympathy for Stephanie’s position, but the Court declined to make an exception for her merely because she was self-represented:
“The Applicant insisted that because she was self-represented and because the Respondent had taken no steps, she was forced to bring a Motion for Directions in April 2019. It was only on the motion date that she learned that she was required to actually issue an Application. While all of this is unfortunate, it does not permit the Applicant to escape the presumption in ss. 4 and 5 of the Act.”
In consideration of Stephanie’s position, however, the Court opted not to order costs for Berry, to which he would have been entitled “in normal circumstances”.
In conclusion, we may finish with three observations. Firstly, as Berry won the case, the Court may have awarded costs against Stephanie. As was mentioned in the decision, estates litigants may have costs awarded against themselves personally – the estate no longer by necessity absorbs the legal costs for all parties. Secondly, had Stephanie hired counsel, it is likely that this procedural error would have been avoided and the will challenge determined on its merits. Engaging counsel would have perhaps carried greater financial risks, but the chance of gain (winning the case, settling) would have also sweetened the prospect. Lastly, Bristol is another lesson that litigants, both trained and untrained, must beware of time, and the limitations it summons, for it can be a stern and unconquerable foe.
Ian Hull & Devin McMurtry
An important and useful tool in any estate planning toolkit is the ability to transfer title to real property between spouses, which typically occurs for nominal consideration and/or natural love and affection. These types of transfers are recognized at law. In certain circumstances, transfers of this nature may be used by spouses seeking to defeat, hinder, delay, or defraud creditors. The Fraudulent Conveyances Act (“FCA”) provides the legislative authority to set aside transfers of property that are entered into with the intent to defeat the claims of a creditor.
Such was the case in Anisman v Drabinsky, 2020 ONSC 1197. On September 11, 2015, Mr. Drabinsky and his wife, Ms. Winford-Drabinsky, transferred their joint ownership of their home to Ms. Winford-Drabinsky alone (the “Drabinsky Property”). At the time of said transfer, Mr. Drabinsky had several unpaid judgments against him as well as ongoing monthly debt payments that were nearly double his monthly income. One such judgment, dated November 2018, was in favour of the Plaintiff for monies owed by Mr. Drabinsky.
In an effort to recover monies owed to him, the Plaintiff obtained a Certificate of Pending Litigation against the Drabinsky Property. It was not until April 2019 that the Plaintiff testified that he learned of the transfer through a title search conducted on Mr. Drabinsky in preparation for his examination in aid of execution respecting the unpaid judgment. On June 18, 2019, some three years and nine months after the impugned transfer of title, the Plaintiff commenced an action seeking to reverse the transfer of title in the Drabinsky Property.
In his defence, Mr. Drabinsky argued that the transfer itself was not fraudulent, but that in any event, the Plaintiff’s claim was statute barred given that the 2-year limitation period provided for in the Limitations Act, 2002, SO 2002, c. 24 (“Limitations Act”) had expired.
In considering the validity of Mr. Drabinsky’s limitation defence, the court considered two key principles regarding limitation periods: discoverability of claims and the applicable statutory authority. With respect to the latter, the court considered whether it was the 2-year limitation period pursuant to the Limitations Act, or the 10-year limitation period in the Real Property Limitations Act (“RPLA”), that applied. The RPLA applies to actions to “recover” land. The question then became, does an action to set aside a conveyance of real property fall within the category of claims to “recover land”?
The court ultimately found that it was the 10-year limitation period in the RPLA that applied to the present action. In reaching its decision, the court relied on the case of Conde v Ripley, 2015 ONSC 3342, which found that claims made to set aside a conveyance of real property under the FCA are on their face, a claim to recover land. The court went further to say, “the Legislature has seen fit to… differentiate between actions involving recovery of land and other types of actions” given that the Limitations Act addresses claims in contract or tort, while the FCA addresses the recovery of real property.
However, as identified in this article, this line of reasoning contradicts earlier decisions that differentiated between the recovery of land itself and the recovery of debts connected to that land (see Wilfert v McCallum, 2017 ONSC 3853 and the Ontario Court of Appeal case of Zabanah v Capital Direct Lending Corp, 2014 ONCA 872), leaving the law in a state of uncertainty.
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The main issue on appeal was whether Justice Dietrich was right in finding that the applicant could still ask the court to determine whether certain codicils were valid (or invalid) seven years after death. Justice Dietrich based her limitations analysis on whether this proceeding would fall under section 16(1)(a) of the Limitations Act, 2002 where there is no limitation period in respect of “a proceeding for a declaration if no consequential relief is sought”.
In her reasons, Justice Dietrich distinguished the case before her from the other limitations cases that have applied the two-year, basic limitation period to will challenges: Leibel v. Leibel, 2014 ONSC 4516, Birtzu v. McCron, 2017 ONSC 1420, and Shannon v. Hrabovsky, 2018 ONSC 6593. The case before her was different from Liebel, Birtzu, and Shannon because nothing had been done by the respondent beneficiary to propound the codicils that she had an interest in. If the proceeding was started differently in 2015, by the very beneficiary who has an interest in the codicils, then the estate trustee would have a limitations defence against the beneficiary. Since the beneficiary had done nothing, it remained opened to the estate trustee to commence an application for declaratory relief. Such declaratory relief is “a formal statement by a court pronouncing upon the existence or non-existence of a legal state of affairs.’ It is restricted to a pronunciation on the parties’ rights” (see para. 46, 2019 ONSC 1190).
The Court of Appeal agreed that there was no limitation period in this case because the applicant did not seek consequential relief in addition to a determination of the validity or invalidity of the codicils. The Will had not been probated and nothing had been done for seven years to resolve the issue.
“In these circumstances, Helen was entitled to seek declaratory relief, simply to establish the validity, or lack of validity, of the codicils – to define the rights of the parties in order to avoid future disputes.”, Strathy C.J.O., MacPherson J.A., and Jamal J.A.
Thanks for reading and more on these limitation cases to follow later this week!
When most people reference a “limitation period” in Ontario, chances are that they are referencing the limitation period imposed by the Limitations Act, 2002, which generally provides an individual with two years from the date on which a claim is “discovered” to commence a claim before it is statute barred. Although an individual is presumed under the Limitations Act to have “discovered” the claim on the date that the loss or injury occurred, if it can be shown that the individual did not “discover” the claim until some later date the limitation period will not begin to run until that later date, potentially extending the limitation period for the claim to be brought for many years beyond the second anniversary of the actual loss or damage.
Although the limitation period imposed by the Limitations Act must be considered for situations in which an individual intends to commence a claim against someone who has died, individuals in such situations must also consider the much stricter limitation period imposed by section 38 of the Trustee Act.
Section 38 of the Trustee Act imposes a hard two year limitation period from the date of death for any individual to commence a claim against a deceased individual in tort. Unlike the limitation period imposed by the Limitations Act, the limitation period imposed by section 38 of the Trustee Act is not subject to the “discoverability” principle, but is rather a hard limitation period that expires two years from death regardless of whether the individual has actually yet to “discover” the claim. If an individual starts a claim against a deceased individual in tort more than two years after the deceased’s individual’s death it is statute barred by section 38 of the Trustee Act regardless of when the claim was “discovered”.
The non-applicability of the “discoverability” principle to the two year limitation period imposed by section 38 of the Trustee Act is confirmed by the Ontario Court of Appeal in Waschkowski v. Hopkinson Estate, (2000) 47 O.R. (3d) 370, wherein the court states:
“As indicated earlier in these reasons, based on the language of the limitation provision, the discoverability principle does not apply to s. 38(3) of the Trustee Act. The effect of s. 38(3) is, in my view, that the state of actual or attributed knowledge of an injured person in a tort claim is not germane when a death has occurred. The only applicable limitation period is the two-year period found in s. 38(3) of the Trustee Act.” [emphasis added]
Although the Court of Appeal in Waschkowski v. Hopkinson Estate appears firm in their position that the court should not take when the claim was “discovered” into consideration when applying the limitation period from section 38 of the Trustee Act, it should be noted that in the recent decision of Estate of John Edward Graham v. Southlake Regional Health Centre, 2019 ONSC 392 (“Graham Estate“), the court allowed a claim to brought after the second anniversary of the deceased’s death citing “special circumstances”. Although the Graham Estate decision is from the lower court while the Waschkowski v. Hopkinson Estate decision is from the Court of Appeal, such that it is at least questionable whether it has established a new line of thinking or was correctly decided, the Graham Estate decision may suggest that the application of the limitation period from section 38 of the Trustee Act is not as harsh as it was once considered. More can be read about the Graham Estate decision in Garrett Horrocks’ previous blog found here.
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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:
“No one likes to see a limitation period applied to dismiss a claim. That said, there are good reasons for limitation periods. This case is an example of why they exist.”
So says Justice Nakatsuru in the opening line of his decision of Sinclair v. Harris, 2018 ONSC 5718 (CanLII).
There, the estate trustees of the estate of Virginia Rock (“Rock”) sued Merilyn and Frederick Harris (“the Harris’s”), claiming an equitable interest in lands purchased by the Harris’s, as part of the funds for the purchase of the lands were provided by Rock.
There, the relevant time line was as follows:
July 12, 2000: Rock provides money to the Harris’s to buy a property
August 5, 2003: The Harris’s sell the property. Rock was apparently aware of this.
November 17, 2015: Rock dies
February 24, 2017: Rock’s estate trustees commence the action
Justice Nakatsuru found that the 10 year limitation period under the Real Property Limitations Act applied. He disagreed with the estate trustees’ position that no limitation period applies to a claim for resulting trust. As the claim was a claim for the recovery of land (or “money to be laid out in the purchase of land”), the limitation period in the Real Property Limitations Act applied.
The court held that the limitation period would have commenced on the date the funds were advanced. Alternatively, it would have run from the time when the Harris’s sold the property. Under either interpretation, the limitation period had passed.
The action was dismissed.
Justice Nakatsuru said that “No one likes to see a limitation period applied to dismiss a claim.” No one other than a defendant.
Footnote: Justice Nakatsuru has been called the “poetic” judge and lauded in Macleans Magazine for his “heartfelt, easy-to-read rulings”. For an excellent example of this, see his decision on a bail application in R. v. Sledz, 2017 ONCJ 151 (CanLII).
Have a great weekend.
The applicability of limitation periods to estates, trusts, and capacity matters is crucial for litigators to consider. In a recent decision of the Superior Court of Justice, the Court was asked to consider the application of the limitation period in Part V of the Succession Law Reform Act (“SLRA”) to a claim that was advanced by the Public Guardian and Trustee (the “PGT”) as the litigation guardian of an incapable support claimant.
Shaw v. Barber, 2017 ONSC 2155, is an important precedent for the proposition that limitation periods do not run against the incapable person from the day that the PGT becomes his/her statutory guardian of property. By operation of section 16(5) of the Substitute Decisions Act, 1992, the PGT automatically becomes an incapable person’s statutory guardian of property the moment they receive a certificate of incapacity from the assessor. In Shaw v. Barber, the dependant support claimant, Lois Shaw, was assessed and found to be incapable of managing property on February 16, 2015 and a copy of the certificate was sent to the PGT on or about February 25, 2015.
Prior to the assessment, Ms. Shaw lived with Frank Cyril Barber on the date of his death, although they were not married. Mr. Barber died in August, 2014, leaving a Will which named his son as the sole Estate Trustee and beneficiary of his Estate. A Certificate of Appointment of Estate Trustee with a Will was issued to Mr. Barber’s son on February 5, 2015. Pursuant to section 61(1) of the SLRA, an application for dependant support may not be made six months after the grant of probate, subject to the Court’s discretion in section 61(2) to allow claims against the undistributed portion of an estate. Without considering the Court’s discretion in section 61(2) of the Act, Justice McNamara found that Ms. Shaw’s claim for dependant support was not statute barred despite the fact that it was issued, one year after six months from probate, on August 5, 2016.
In his reasoning, Justice McNamara considered the tolling provision applicable to incapable persons while he/she is not represented by a litigation guardian in section 7 of the Limitations Act, 2002 (which applies to the section 61 of the SLRA). The turning point then becomes whether a guardian of property is automatically a litigation guardian in relation to the claim at issue since a guardian has the power to do anything the incapable person may do except make a will. In this case, there was an affidavit from PGT counsel which explained the time consuming investigations involved when the PGT becomes a statutory guardian of property because of the lack of first-hand information from the incapable individual. Justice McNamara determined that a guardian of property shall act as litigation guardian when he/she has determined that there is a basis for exercising their authority in that role, and that imposing a limitation period from the date in which the PGT becomes statutory guardian is contrary to the Limitations Act and it would create impossible timelines and potential injustice for this vulnerable group. Furthermore, Justice McNamara was also persuaded by the fact that the Estate Trustee in this case will not be prejudiced by the delay, given that he is also the sole beneficiary, and that he was aware all along that the PGT was considering a claim against the Estate.
This case is also an example of the latitude that Courts may accord to large-scale claimants as seen in 407 ETR Concession Company Limited v. Day, 2016 ONCA 709.
Please do not hesitate to contact our firm for a copy of Justice McNamara’s reasons in Shaw v. Barber and click here for comments from Russel Molot, counsel for the PGT in this matter, as reported in the Law Times.
The Ontario Court of Appeal recently considered the issue of the applicable limitation period for claims for compensation on a passing of accounts. In Armitage v The Salvation Army, the Court held the Limitations Act, 2002 does not apply to claims for compensation on a passing of accounts.
The Respondent in this case was the deceased’s power of attorney for property and personal care, as well as estate trustee. The Appellant was the sole beneficiary of the deceased’s estate. The principal issue in this case was whether the Respondent’s claim for compensation was statute barred.
The estate trustee was appointed the deceased’s attorney for property and personal care in 1990, 2001, and 2007. In 2006, the deceased was admitted to hospital and then to a nursing home, where he remained until his death on February 5, 2013. The attorney submitted her claim for attorney compensation on September 5, 2013. She issued a Notice of Application on January 30, 2015 and a further application to pass estate accounts on January 30, 2015 at the request of the sole beneficiary of the estate.
Decision of the Application Judge
The parties disagreed about how to calculate the applicable limitation period for the claim for attorney compensation. The attorney took the position that any claim must be commenced within two years of the death of the person who granted the power of attorney. She explained that she was unsure about whether she would take compensation because it was uncertain how long the deceased would live and what his financial needs would be. The beneficiary took the position that section 40(2) of the Substitute Decisions Act, 1992 gives an attorney the option to claim compensation each year and that the end of each year triggers the beginning of the two year limitation period.
The application judge held that the date of the deceased’s death terminated the power of attorney and therefore triggered the limitation period. An attorney for property would then have two years from the date of death to claim compensation. The application judge approved the attorney and estate trustee claims for compensation.
Decision of the Court of Appeal
The Court of Appeal upheld the application judge’s approval of the claimed compensation, but for different reasons. The Limitations Act, 2002 was intended to deal with all civil claims, grounded in equity, common law, or statute. However, the Limitations Act, 2002 only applies a “claim,” which is defined as “a claim to remedy an injury, loss or damage that occurred as a result of an act or omission.” The court held: “in seeking court approval of the passing of accounts, an attorney for property is not seeking redress for any loss, injury, or damage. Rather, he or she is seeking approval from the court of his or her actions in managing the property, including approval for compensation previously taken or now sought. A passing of accounts application is the opposite of remedial; it is a process that seeks a court order that no remedy is necessary with respect to accounts.”
Therefore, a passing of accounts is not a “claim” within the definition of the Limitations Act, 2002 and not subject to the general 2-year limitation period. The only defences available on a passing of accounts are the equitable defences of laches and acquiescence. The court, however, does leave open the possibility that the filing of a notice of objection by a beneficiary after an attorney has sought a passing of accounts might fall under the definition of “claim” in the Limitations Act, 2002.
This decision allows an attorney for property to make his or her own claim for compensation subordinate to the needs of the person who granted the power of attorney by waiting until the death of the grantor, when the money is no longer needed for the grantor’s care.
Thank you for reading.