Tag: limitations act
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.
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As lawyers well know, all lawsuits must be instituted within the applicable limitation period as a first hurdle to successful litigation. While the time periods within which one must start a claim are clear in the Limitations Act and in other legislation, the time from which those periods start to run is not always so clear and may be a matter for a judge to decide.
In Zurba v. Lakeridge Health Corp. (2010), 99 O.R. (3d) 596 (ON SCJ), the plaintiff fractured his ankle in a way that exposed his bone and internal tissues to grass and dirt in August of 2003. The doctor who initially treated the plaintiff cleaned and dressed the wound with a cast instead of proceeding with the necessary surgery. Significant ongoing infection at the fracture site later caused another doctor to suggest amputation. The plaintiff refused and after lengthy course of surgeries and therapy with no improvement, the plaintiff retained counsel and initiated the law suit. The plaintiff subsequently received an expert medical opinion from an orthopaedic expert that the treating doctor’s care was negligent.
The Ontario Superior Court considered the Limitations Act, 2002 and its applicability with respect to the discoverability of the cause of action. Lauwers, J. found that a plaintiff must not only know of the injury but must also know that someone erred before the cause of action crystallizes and the limitation period commences running.
The Court went on to establish two categories of cases: 1) Where an expert opinion is not necessary to know whether to institute an action because all the material facts are known; and 2) where an expert opinion is required to trigger the limitation period because all material facts cannot be known without one. In Zurba, notwithstanding that the statement of claim was issued before the expert medical report was obtained, the Court found that it could consider the report with respect to discoverability in order to determine when the limitation period began to run.
Sharon Davis – Click here for more information on Sharon Davis.
Hughes v. Kennedy Automation Limited: due diligence and discoverability under the Limitations Act, 2002
The Ontario Court of Appeals recently affirmed the decision of Mr. Justice Glithero to refuse a motion to add a solicitor and his law firm as a defendant party to a proceeding for breach of contract, because the claim was discoverable more than two years prior to the motion.
In Hughes v. Kennedy Automation Limited, 2008 ONCA 770, the plaintiffs were suing the defendant for non-payment under a purchase and sale agreement for shares. The purchase and sale agreement had been drafted by the defendant corporation’s solicitor; the plaintiffs had not retained their own lawyer to act for them in the share sale transaction. The plaintiffs became aware of the original non-payment on July 31, 2005. However, the plaintiffs waited until November 2006 to retain their own lawyer to sue the defendant.
In November 2007, the plaintiffs brought a motion to add the defendant’s solicitor and his law firm, for breach of fiduciary duty and negligence. The plaintiffs were alleging that the solicitor acted in a conflict of interest and failed to recommend they seek independent legal advice. The motions judge ruled that the claim against the solicitor and his law firm were barred by the two-year limitation in section 4 of the Limitations Act, 2002. On the evidence before him, Glithero J. was satisfied that the identity of the solicitor and his law firm, the facts surrounding his involvement and the fact of non-payment were all known to the plaintiffs by July 31, 2005. Therefore the presumption in section 5(2) of the Limitations Act, 2002 applied to make the claim discoverable by that time, more than two years before the November 2007 motion to add the solicitor and his law firm. The Ontario Court of Appeals affirmed this decision.
Enjoy your vacation,
On Monday morning Hull & Hull LLP hosted its latest Breakfast Series covering notable issues and salient case-law in the estates area.
Justin W. de Vries spoke first on Pecore v. Pecore,  S.C.J. No. 17 (QL) and Madsen Estate v. Saylor,  S.C.J. No. 18 (QL), two compelling decisions of the Supreme Court of Canada, and in that regard provided an effective and comprehensive analysis of the Court’s new take on the presumption of resulting trust and advancement. Justin’s paper also contains a succinct review of other recent cases you should consider reading.
Craig Vander Zee followed with a discussion about demand promissory notes and the limitation period issues in respect of the enforcement of such notes, particularly in light of the language of the new Limitations Act, S.O. 2002, c. 24. In so doing, Craig reviewed the Court of Appeal decision in Hare v. Hare  O.J. No. 5502. He finished off by informing us about how this issue impacts estate matters and highlighted considerations parties to promissory notes might want to take into account.
Sean Graham ended the presentation with his thoughts on reasons to delay estate distribution. Three important incentives he touched upon are the risks of an increase in resulting trust claims as a result of the Pecore decision, exacerbated by the fact that there may be no limitation period to such claims; foreign tax issues raised by foreign assets and foreign beneficiaries; and dependant support claims.
The presenters’ papers will be made available on our Hull & Hull LLP website. I highly recommend them all.
Have a nice day,
Natalia R. Angelini