Limitation Periods in Estate Cases
The Ontario Court of Appeal recently issued a decision on whether s. 7 of the Ontario Limitations Act applies to extend the time within which an estate trustee can bring a claim that the deceased person had before death.
In 2007, the deceased person had loaned the respondent $55,000 secured by a promissory note payable on demand or upon the sale of a specified piece of property, whichever occurred first.
The trial judge found the limitations period began to run on June 6, 2013 when the deceased became aware the property had been sold. The deceased’s estate trustee made a demand in May 2015 and then commenced an action on July 17, 2015. The motion judge found the action was statute barred because it was commenced more than two years after June 6, 2013 and dismissed the claim on summary judgment.
The estate trustee appealed to the Ontario Court of Appeal.
On appeal, the estate trustee submitted that s. 7 of the Limitations Act applied to extend the limitation period by six months for the estate trustee’s action.
Section 7(1) of the Limitations Act provides:
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.
(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.
The court noted the estate trustee’s submission that the Limitations Act provision should be liberally construed, based on a previous Ontario case that stated:
“I think the provisions of a statute of limitations should be liberally construed in favour of the individual whose right to sue for compensation is in question. Where two interpretations of the statute are possible, reason favours the one which enables the plaintiff to bring his action.”
In addition, the estate trustee argued that s. 7 of the Limitations Act should be interpreted to apply when the person having the claim dies before commencing proceedings. He argued that a deceased person is incapable of commencing a proceeding in respect of the claim because of his or her physical, mental or psychological condition; as a result, the estate trustee submitted that the same policy concerns for allowing additional time for a litigation guardian to be appointed and take over the management of the affairs of the incapable person should apply to an estate trustee. He pointed out that it takes time for an estate trustee to review the affairs of the deceased, and to obtain probate.
However, the appeal court was not persuaded that the motion judge erred by dismissing the claim as statute-barred. The court stated:
“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.”
As a result, the appeal was dismissed. Costs were fixed in the amount of $6,500.
At the end of its judgment, the court did note that the estate trustee might have looked to rely on s. 38(3) of the Trustee Act, which sets out:
38 (3) An action under this section shall not be brought after the expiration of two years from the death of the deceased.
While the court stated that it had not considered whether it would have had bearing on the issue raised in the appeal, it did not point out that the application of s. 38(3) is preserved by s. 19 of the Limitations Act.
If you or a loved one are planning on the distribution of an estate in preparation for a future event such as a will, it is important to speak to a trusted legal advisor. It is usually best to plan an estate ahead of time, to foresee issues before they arise and have them handled according to the wishes of the grantor.
For assistance, Contact Mark Feigenbaum, Barrister and Solicitor online or call him at (905) 695-1269 or toll-free at (877) 275-4792.