Ontario: the Trustee Act doesn’t supersede the RPLA

Wilkinson v. The Estate of Linda Robinson is a reminder that the Trustee Act does not supersede the RPLA.  An estate’s claim for the recovery of an interest in real property is subject to the RPLA, not the Trustee Act:

[19]           The position of the Estate that the Trustee Act is an absolute bar to the constructive trust claim is not borne out by the prior cases or by the legislation. The Estate takes the position that if the parties were alive, the ten-year rule would apply, but since the death of Robinson, the limitation period becomes two years.

 [20]           While there is no doubt that section 38(3) of the Trustee Act is a hard limitation, there is no jurisprudence to demonstrate that the Real Property Limitations Act should not apply in cases of a constructive trust as has already been determined by the Court of Appeal in McConnell v. Huxtable.
 [21]           In Rolston v. Rolston2016 ONSC 2937, the Court was asked to consider whether the Plaintiff’s claim for constructive trust was barred by the limitation period in s.38(3) of the Trustee Act. The claims were brought some seven years after the date of death. In considering what limitation period would apply to actions for unjust enrichment seeking a remedial constructive trust, Leach J., accepted at paras 58 and 59 that section 38 of the Trustee Act was intended to apply not only to tort actions, but to other “personal” actions. However he went on to note that the Trustee Act was entirely dependent on provisions of the Limitations Act, that the same legislation confirms that it does not apply to claims pursued in proceedings to which the Real Property Limitations Act applies and that as confirmed by the Court of Appeal in McConnell v. Huxtableclaims for unjust enrichment and associated remedies of constructive trust are governed by section 4 of the Real Property Limitations Act.
 [22]           The heading of the applicable section in the Trustee Act refers to claims in tort. This is not a tort claim. This is an action for an interest in property.
 [23]           A simple analysis is that the Real Property Limitations Act is dealing with a right to land, not with a wrong against a person. This case, as in McConnell v. Huxtable, deals with a right to property.

Ontario: dubious equitable arguments won’t overcome the Trustee Act limitation period

The decision in Zacharias Estate v. Giannopoulos is an example of futile equitable arguments made to avoid the application of the Trustee Act limitation period.  The plaintiff estate commenced a proceeding to recover money from the defendant more than two years after the death.  The estate relied on the special circumstances doctrine; the court dismissed the argument because special circumstances applies only to the addition of a party to a proceeding:

[42]           Despina submits that the plaintiffs’ claim is barred by the limitations provision contained in s. 38 (3) of the Trustee Act, RSO 1990, c. T. 23 which states:

 “An action under this section shall not be brought after the expiration of two years from the death of the deceased.”

[43]           In other words, the limitation period begins to run at the time of that death, not from the time the estate trustee discovers the claim:  Levesque v Crampton Estate2017 ONCA 4552017 CarswellOnt 8319 at paras. 55-56Giroux Estate v Trillium Health Centre2005 CarswellOnt 241 at para. 28.

 [44]           While the rule may, at first blush, seem harsh, it was a specific policy choice.  At common law, any claim by the deceased would have been extinguished on death.  As a compromise to this draconian rule, the legislature provided a two-year limitation period which is not subject to the discoverability principle:  Giroux at para. 25.
 [45]           George died on February 19, 2015.  The claim was issued on December 29, 2017, 2 years and 10 months after George’s death.
 [46]           The Saccals admit they discovered the transfer to Despina between January and March 2016.  That left them approximately one year to commence an action within the limitation period.
 [47]           The plaintiffs resist the application of a limitation period by relying on doctrine of special circumstances.  That doctrine however, is limited to adding, after the expiry of a limitations period, a party or cause of action to a claim that was commenced within the limitations period.  The doctrine does not allow a party to commence a new proceeding after the expiry of the limitations period:  Graeme Mew, The Law of Limitations, 3d ed. (Toronto: LEXIS-NEXIS, 2016).

The estate also relied on the fraudulent concealment doctrine (because why not?).  The court set out the elements of the doctrine and found that none of them applied. There was no special relationship, there was no unconscionable conduct, and there was no concealment.  One wonders about the strategy that leads to making two limitations arguments plainly bound to fail; it will be interesting to see how the court awards costs.  These are the material fraudulent concealment arguments:

[48]           The plaintiffs also rely on the doctrine of fraudulent concealment to avoid the limitation period.  The doctrine of fraudulent concealment is an equitable principle:

“aimed at preventing a limitation period from ‘operating as an instrument of injustice.’ When applicable, it will ‘take a case out of the effect of the statute of limitation’ and suspend the running of the limitation clock until such time as the injured party can reasonably discover the cause of action”:  Giroux at para 28.

[49]           For the doctrine of fraudulent concealment to apply, the plaintiffs must establish that:

(a)               the defendants and plaintiffs had a special relationship with one another;

(b)               given the special or confidential nature of the relationship, the defendants’ conduct is unconscionable; and

(c)               the defendants concealed the plaintiffs’ right of action actively or the right of action is concealed by the manner of the defendants’ wrongdoing:  Estate of Graham v Southlake Regional Health Centre, 2019 ONSC 392, at para. 88.

[50]           As set out below, none of these elements apply.

(a)               No Special Relationship

[51]           The plaintiffs assert that Despina owes the estate $700,000 and that there is a special relationship between an estate trustee and debtor to the estate.

[52]           If the plaintiffs are correct, then a special relationship would, by definition, be created whenever estate trustees asserted that someone owed the estate money.  That would effectively put an end to the two-year limitation period in the Trustee Act.

[53]           In the alternative, the Saccals submit that Despina created a special relationship, by creating an extended parent-child relationship with them.  To support this extended parent-child relationship, the plaintiffs point to the fact that Despina arranged to let the Saccals know about their father’s condition.  In addition, the plaintiffs point to a number of other allegations to support the parent-child relationship including the following:  George told Despina that he wanted to leave money for his grandchildren.  Despina placed a note on the file at the funeral home not to permit the Saccals access.  Despina attended with the Saccals at George’s office and was present when they searched for the will.  Despina contacted an estates solicitor friend of the Deceased (James Daris) and told the Saccals that the Deceased did not have a will.

[54]           I cannot see how these additional allegations amount to creating a parent-child relationship between Despina and the Saccals.  The essence of a special relationship is one of closeness, trust or dependence.

[55]           Despina was a stranger to the Saccals.  She had never met them until they appeared at the hospital a couple of days before George died.  The plaintiffs have introduced no evidence to suggest that there was any type of relationship of particular trust or confidence between them and Despina.  If the plaintiffs are correct and they were aware that Despina had left some type of note at the funeral home to restrict the Saccals access, that would belie any type of special relationship.

[56]           Moreover, the Saccals’ own conduct belies any special relationship.  On April 28, 2015 their lawyer wrote to Despina saying:

“… You have taken upon yourself to represent to the public that you are a common-law spouse of the Deceased, our clients strongly dispute and deny that status.  You are hereby forbidden to approach any persons with which the Deceased had any business dealings or other relationships and make any further misleading or inappropriate representations or warranties to the effect that you have any relationship with the Deceased, beyond having had normal social interaction or friendship with the Deceased.  Any communication that you intend to make regarding your relationship to the Deceased or viz the Estate should be made only through this office.”

[57]           “Forbidding” Despina to have any contact with anyone who had any relationship with George and demanding that Despina make any statement about her relationship with George only through counsel to the Saccals would appear to belie any special relationship.  It is noteworthy that the letter was sent at least 8 months before the Saccals became aware of the $700,000 transfer to Despina.

(b)               Defendant’s Conduct Is Not Unconscionable

[58]           The plaintiffs have not established that Despina’s conduct was unconscionable.

[59]           In their factum, the plaintiffs make bald allegations that Despina was deceitful towards them but do not say how.

[60]           They have pointed to no instance in which they asked a question of Despina to which she gave a false or misleading answer.  Their real complaint appears to be that Despina did not volunteer that she had received a $700,000 payment from George.  I do not find Despina’s failure to volunteer that information to be unconscionable.  At the time of the interactions, Despina was clearly grief stricken.  She had no knowledge of George’s financial affairs and no knowledge of whether he had a will, what the terms of the will might be and who the executor might be.  She did not know the Saccals and knew only that George had been estranged from them for over 20 years and did not want to see them.  In those circumstances it cannot be said that the failure to volunteer, out of the blue, that George had given her $700,000 is unconscionable.

[61]           As noted earlier, the plaintiffs merely point to a series of suspicions they have.  In paragraph 26 of their factum, the plaintiffs begin seven successive sentences with the word “suspiciously” followed by a circumstance that the plaintiffs deem to be questionable.  By way of example they state:  “Suspiciously, no power of attorney or will were located.”  It is not particularly suspicious to fail to locate a will if none exists. That people die without a will is not, in itself suspicious.  It is a common occurrence.

[62]           Beginning a series of sentences with the adjective “suspiciously” does not convert mistrust on the plaintiffs’ part into unconscionable conduct on the defendant’s part.

(c)               No Fraudulent Concealment 

[63]           The third element of the doctrine of fraudulent concealment is that the defendant have concealed the plaintiffs’ right of action either actively or by the manner of the defendant’s wrongdoing:  Estate of Graham v Southlake Regional Health Centre2019 ONSC 392, at para. 88.

[64]           There was no active concealment on Despina’s part.  The plaintiffs have pointed to no conduct that made it more difficult for them to discover their alleged cause of action apart from the fact that Despina did not volunteer the receipt of a payment from George.  There was no duty on her to volunteer that information.  As noted above, her lack of disclosure was understandable and acceptable.

[65]           Despina’s uncontradicted evidence is that she had no information about George’s estate, assets, liabilities or general financial matters while alive or after his death.  In those circumstances she could not have hidden anything from the Saccals.

[66]           The plaintiffs have not brought themselves within any exception to s. 38 (3) of the Trustee Act, as a result of which the limitation period contained in s. 38 (3) of that statute applies and the action should be dismissed as statute barred.

Ontario: there’s no limitation period for an application for a declaration of a codicil’s validity

 

In Piekut v. Romoli, the applicant sought a declaration as to whether codicils were valid. The respondent moved to dismiss the application as statute-barred. The court denied the motion on the basis that no limitation period applied pursuant to s. 16(1)(a), which prescribes no limitation period for a proceeding for a declaration if no consequential relief is sought.    The applicant was not seeking consequential relief:

[50]           I find that Helen’s question with respect to the validity of the codicils is restricted to declaratory relief. She is not seeking consequential relief. She is not asking the court to determine the ultimate beneficiary of Dundas St. properties or to vest the properties in any particular beneficiary or beneficiaries.

This is the correct outcome by the wrong reasoning.  No limitation period applied to the proceeding because it didn’t pursue a “claim”.  The Limitations Act applies to “claims” pursued in court proceeding (s. 2).  If there’s no “claim”, there’s no limitation period.  “Claims” derive from causes of action.  If there’s no cause of action, there’s no “claim”.

There’s no cause of action asserted in an application for a declaration regarding the validity of a codicil (or a will).  Accordingly, the applicants were not pursuing a “claim” in a court proceeding, and no limitation period applied to it.

Update! The Court of Appeal upheld this decision.

Ontario: Court of Appeal says death is not a “condition”

In Lee v. Ponte, the Court of Appeal held that death does not trigger the application s. 7 of the Limitations Act.

Section 7 suspends the limitation period when the claimant “is incapable of commencing a proceeding in respect of the claim because of his or her physical, mental or psychological condition”.  The appellant in Lee argued that this provision could extend the limitation period for an estate trustee to bring a claim that the deceased person had before death:

[5]         The appellant urges that s. 7 should be interpreted to apply when the person having the claim dies before commencing proceedings. He argues 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. He submits 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 apply to an estate trustee. He points out that it takes time for an estate trustee to review the affairs of the deceased, and to obtain probate.

The Court rejected this argument:

[6]         We are not persuaded the motion judge erred by dismissing the claim as statute barred. 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.

This is a very sensible response to a doubtful argument.  It’s plain that the Legislature didn’t intend that a “physical, mental or psychological condition” should be so broad as to encompass the condition of being dead.  Besides, it’s the Trustee Act that limits the pursuit of a deceased person’s claim.  The appellant didn’t rely on this provision, probably because it wouldn’t have helped, but it should be the starting point when considering the limitation of a deceased’s person claim.

Ontario: the limitation of will challenges

The decision in Shannon v. Hrabovsky follows Leibel for the principle that the Limitations Act applies to will challenges:

[63]           As I understand the analysis in Leibel v. Leibel, because a will is effective as of the date of death, section 5(2) creates a presumption that an applicant has knowledge of the contents of the will on such date. Given this presumption, an applicant with knowledge at the date of death of a will, and its contents, together with all other facts upon which a claim for lack of testamentary capacity would be based would therefore be fixed with all necessary knowledge as of that date.  In such circumstances, the date on which such a claim would have been discovered for the purposes of section 5(1)(a) would be the date of death. The same principle would appear to operate with respect to any claim for undue influence.

I’ve given this issue quite a lot of consideration in the course of drafting a paper on the limitation of will challenges.  In short, I don’t think that it does.  Statutory limitation periods have always applied to causes of action.  A will challenge is not a cause of action.  The Limitations Act applies to “claims”, not causes of action, but a “claim” is just a universalized cause of action that functions to simplify the accrual analysis and allow for a general basic and ultimate limitation period.  If there’s no cause of action, there’s no “claim”.  If there’s no “claim”, the Limitations Act doesn’t apply.  Let me if know you’d like a copy of the draft paper; I’m happy to provide it.

The quotation above illustrates the problem.  Section 5(2) creates a presumption that discovery occurs on the date of the “act or omission” giving rise to the claim.  No act or omission necessarily occurs on the date of death.  Indeed, there isn’t necessarily any act or omission at all in a will challenge.

The fundamental flaw in Leibel, and the jurisprudence that follows it, is to understand the Limitations Act as having expanded the scope of the statutory limitations scheme to include all court proceedings.  This is wrong: the Limitations Act only expanded the scope of the limitations scheme to include all causes of action (the old Act applied to a closed list of causes of action, excluding some, like certain equitable causes of action, that were limited only by equity).

 

Ontario: Does the limitations act apply to Notices of Objection?

In the Wall Estate, the court held that the Limitations Act does not apply to a claim asserted in a beneficiary’s Notice of Objection to Accounts:

[1]               The discreet issue for consideration at this motion is as follows:  Can an estate trustee move to strike a beneficiary’s Notice of Objection to Accounts in the face of the estate trustee’s Application to Pass Accounts, based on the Limitations Act, 2002, or laches or acquiescence?  For reasons that follow, I am satisfied that the beneficiary, Elizabeth Wall, is not barred from filing an objection to the accounts for the entire period under administration.

Marjorie Wall died in 2005.  The objector was Elizabeth Wall, her daughter and beneficiary of the estate.  Marjorie left the bulk of her estate to her two children in trust until they attained the age of 60 years.  Both children were under 60 at the time of Marjorie’s death.  The trustee had absolute discretion to pay funds to the children during their lifetime prior to reaching 60.  If they didn’t reach 60, the will provided that the estate’s residue was to be divided amongst nieces and nephews.  Elizabeth was 54 at the time of the application, so she had a vested interested in the discretionary trust and a contingent interest in the residue of the estate.

In response to her objection, the trustee took the position that he was not required to address it because it was time-barred, either by the Limitations Act or equity.

The court disagreed.  Relying on the decision in Armitage, the court reasoned that if a passing of accounts doesn’t fit the definition of a “claim” in the Limitations Act, neither does a Notice of Objection:

[31]           Based on the facts in Armitage, Hourigan J.A. found that the passing of accounts does not fit within the definition of a claim within the Limitations Act, 2002.  In my view, if the passing of accounts does not constitute a claim, I am not satisfied that a Notice of Objection is a claim.  In filing a Notice of Objection, the beneficiary is seeking answers to questions about steps taken by the estate trustee during the currency of an administration of an estate.  Answers to those questions may assist the beneficiary in consenting to the passing of accounts without the necessity of a formal hearing.  An absence of consent will require a formal hearing.  A formal hearing will assist the court in determining if the fees sought and investment steps taken are appropriate under all the circumstances.

[32]           The objections taken at their highest may result in a reduction or loss of compensation for the estate trustee or other remedies.  In this case, if the objections are successful to any extent, no additional funds would be payable immediately to Elizabeth as beneficiary of the discretionary trust.  The corpus of the estate would be enlarged, increasing the funds available for the discretionary trust, and ultimately, could increase the amount available to be paid to Elizabeth, but only if she survives to age 60.  On the facts here, I am not satisfied that the Notice of Objection rises to the level of a “claim” as contemplated by the Limitations Act, 2002.

This reasoning is problematic.  The threshold question is whether the Notice of Objection contains a “claim”.  If so, as the Limitations Act applies to all claims pursued in court proceedings, it would limit the claim pursued in the Notice of Objection.  Section 1 of the Limitations Act defines “claim”:  “a claim to remedy an injury, loss or damage that occurred as a result of an act or omission”.  Accordingly, answering the threshold question requires assessing whether the elements that comprise a claim—wrongful conduct and resulting damage—are present.

In Armitage, the Court of Appeal found that an attorney for property’s application to pass accounts was not a “claim”. The application did not seek a remedy for any damage, but rather court approval of the attorney’s conduct.

The decision Wall does not quote the definition of “claim” and does not explicitly consider its elements. Rather, it reasons that if the application to pass accounts in Armitage was not a “claim”, then neither was the Notice of Objection.  This is not a sound limitations analysis.

Indeed, the decision certainly gives the impression that the Notice of Objection was “claim”.  In it, Elizabeth alleged that the trustee had wrongfully carried out his duties resulting in a diminution of the funds available to her; in other words, she sought to remedy damage resulting from wrongful conduct.

It may be that the court arrived at the correct decision, but from a limitations perspective it’s a very dubious decision.

Update!

Leigh Sands kindly brought to my attention Iaboni Estate v. Iaboni in which an application judge considered a limitations defence raised in response to a notice of objection without any suggestion that this is an unsettled area of the law:

Did the limitation periods expire, such that the claims made in his Notice of Objection are out of time?

[32]           The objections of Mr. C. Iaboni that the trustee ‘excluded’ many valuable assets such as a mortgage, two businesses, a condo and life insurance policy from the estate of Lidia Iaboni and that when Lidia Iaboni became disabled, her husband’s wealth evaporated and the applicant has no interest in marshalling this wealth is, in part, a complaint about the administration of Umberto Iaboni’s affairs, between the onset of his disability in 2006 and his death in 2010 and latterly a complaint about the administration of his mother’s affairs between the onset of her disability in 2006/2007 and before her death in 2012. His allegations in the Notice of Objection filed in his mother’s estate, as outlined above were in substance the same as those made in the litigation he initiated on December 15, 2010.  All of the transactions about which he complains were disclosed to him no later than the accounting delivered on behalf of his siblings pursuant to the Minutes of Settlement, with the possible exception of the discharge of the mortgage on his sister’s home, which was a matter of public record.  His civil action was dismissed on May 15, 2013.

[33]           It appears, therefore, that Mr. C. Iaboni’s Notice of Objection raises issues as particularized above that are outside of the 2-year period within which they may have been pursued.

The Court of Appeal upheld the decision:

[10]      We are not persuaded that the motions judge made any error. The appellant consented to the passing of accounts from the time of the appointment of BNS, and has not appealed that aspect of the order. Even if the appellant were able to identify errors with respect to the abuse of process and Limitations Act claims, the motions judge’s findings of fact on the merits are fatal to the appeal. She made findings that the appellant had not substantiated his suspicions with respect to the discharge of mortgage, the share certificate, or general dissipation of funds. She also found the evidence of the respondent Norma to be credible and reliable. Those findings are entitled to deference and are dispositive of the appeal.

It is certainly arguable that this decision is determinative of the issue, even if the court determined it without analysis or acknowledgement that it is the subject of debate.

However, Matthew Furrow, who is a far greater authority on these issues than me, disagrees.  He notes that really, all the Court held was that the facts were dispositive of the appeal, and not the limitations analysis.  I think he’s right, which means uncertainty remains.

 

 

 

Ontario: the limitations act applies to claims in notices of objection

The Court of Appeal’s decision in Iaboni Estate v. Iaboni stands for the principle that a claim pursued in a notice of objection filed in an application to pass account is subject to the Limitations Act and capable of being time-barred.

[8]         At the hearing of the motion, Carlo consented to the passing of accounts from the time of the appointment of BNS, but not before. Mullins J. struck the notice of objection on three bases: (1) it was without merit, (2) it was an abuse of process for attempting to relitigate the subject matter of the appellant’s dismissed action; and (3) was time barred under the Limitations Act.

[9]         Carlo appeals the order of Mullins J., striking out the notice of objection.

[10]      We are not persuaded that the motions judge made any error. The appellant consented to the passing of accounts from the time of the appointment of BNS, and has not appealed that aspect of the order. Even if the appellant were able to identify errors with respect to the abuse of process and Limitations Act claims, the motions judge’s findings of fact on the merits are fatal to the appeal. She made findings that the appellant had not substantiated his suspicions with respect to the discharge of mortgage, the share certificate, or general dissipation of funds. She also found the evidence of the respondent Norma to be credible and reliable. Those findings are entitled to deference and are dispositive of the appeal.

Ontario: claims raised in a Notice of Objection subject to Limitations Act

In Bank of Nova Scotia Trust Company v. Iaboni, Justice Mullins held that claims asserted in a Notice of Objection filed in an application to pass account are statute-barred:

[32]           The objections of Mr. C. Iaboni that the trustee ‘excluded’ many valuable assets such as a mortgage, two businesses, a condo and life insurance policy from the estate of Lidia Iaboni and that when Lidia Iaboni became disabled, her husband’s wealth evaporated and the applicant has no interest in marshalling this wealth is, in part, a complaint about the administration of Umberto Iaboni’s affairs, between the onset of his disability in 2006 and his death in 2010 and latterly a complaint about the administration of his mother’s affairs between the onset of her disability in 2006/2007 and before her death in 2012. His allegations in the Notice of Objection filed in his mother’s estate, as outlined above were in substance the same as those made in the litigation he initiated on December 15, 2010.  All of the transactions about which he complains were disclosed to him no later than the accounting delivered on behalf of his siblings pursuant to the Minutes of Settlement, with the possible exception of the discharge of the mortgage on his sister’s home, which was a matter of public record.  His civil action was dismissed on May 15, 2013.

[33]           It appears, therefore, that Mr. C. Iaboni’s Notice of Objection raises issues as particularized above that are outside of the 2-year period within which they may have been pursued.

This is noteworthy because it takes for granted that the Limitations Act applies to claims asserted in a Notice of Objection.   Whether this is so remains the subject of debate.  I’ve argued that the Limitations Act does apply, and so am pleased to see a decision that moves the law in that direction.

Ontario: Appointing a guardian of property doesn’t start the limitation period

 

In Shaw v. Barber, Justice McNamara held that the appointment of the Office of the Public Guardian and Trustee as guardian of property doesn’t cause a limitation period to commence:

[13]           […] Where [the parties] disagree completely is when the six month limitation period for a claim for support under Section 61(1) of the Succession Law Reform Actbegins to run.

[14]           The first point that needs to be made is that under the Limitations Act the six month limitation period under the Succession Law Reform Act is incorporated into the act by Section 19(1) of the Limitations Act. That section provides that any limitation period set out in or under another act applies as long as the provision establishing it is listed in the schedule to the Limitations Act. There is no issue that this particular limitation period is in that schedule.

[15]           It is also common ground that the limitation period in question does not run in the circumstances set forth in Section 7(1) of the Limitations Act.That section 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.  2002, c. 24, Sched. B, s. 7 (1).

[16]           The six month limitation, then, did not run while Ms. Shaw was incapable of commencing a proceeding because of a mental condition and was not represented by a litigation guardian in relation to the claim (emphasis added).

[17]           The Estate argues that after its appointment as Ms. Shaw’s statutory guardian of property the OPGT had the authority to act as litigation guardian and were then under an obligation to advance a claim within a six month period of their appointment.

[18]           That argument, in my view, is flawed.

[19]           There is no mechanism in the Limitations Act for the self-appointment of a litigation guardian. To do that, regard must be had to the Rules of Civil Procedure. A number of provisions are relevant.

[20]           First is Rule 7.01(1) which provides as follows:

7.01  (1)  Unless the court orders or a statute provides otherwise, a proceeding shall be commenced, continued or defended on behalf of a party under disability by a litigation guardian.  O. Reg. 69/95, s. 2.

A proceeding, then, which includes an application, must be commenced on behalf of a party under a disability by a litigation guardian.

[21]           Next Rules 7.02(1) and 1.1(a) which provide:

7.02 (1) Any person who is not under disability may act, without being appointed by the court, as litigation guardian for a plaintiff or applicant who is under disability, subject to subrule (1.1).  O. Reg. 69/95, s. 3 (1).

 

 

Mentally Incapable Person or Absentee

 

(1.1)  unless the court orders otherwise, where a plaintiff or applicant,

(a) is mentally incapable and has a guardian with authority to act as litigation guardian in the proceeding, the guardian shall act as litigation guardian;

[22]           It is important to note that while the above section directs that the guardian shall act as litigation guardian, it does not dictate when that authority is to be exercised. That, in my view, occurs once the guardian of property has determined there is a basis for exercising their authority as litigation guardian.

[23]           Surely that is appropriate. As the affidavit of counsel at the Office of the Public Guardian and Trustee discloses, once they are appointed statutory guardian of property in a factual situation such as existed here, they begin an investigation into the entire matter. That can be, as the affidavit discloses, a time consuming process because there are usually information gaps because of the client’s incapacity which require the OPGT to be reliant on third party information with a need to be verified. The initial investigation is done by a client representative and if the situation warrants it, the matter is then referred to counsel in the OPGT’s office which in this case occurred in October of 2015. According to the evidence, further investigation continued under counsel’s direction exploring options available. Outside counsel was formally retained by the OPGT on May 6, 2016. The application was brought in August.

[24]           Moving carefully and cautiously prior to commencing litigation at public expense would require a thorough investigation of the facts and legal options available. As counsel in his affidavit points out, the client they act for has little capacity to properly advise them of her circumstances, so they have to rely on third party information which may support or not support or be neutral towards the incapable person’s position. I agree with counsel that imposing a limitation period commencing as of the OPGT’s appointment as guardian of property is not only contrary the wording of the Limitations Act, but would also create impossible timelines thus creating the potential for injustice being done to vulnerable individuals.

Ontario: Limitations Act doesn’t apply to applications for attorney compensation

In April, I reported that in Armitage v. The Salvation Army, Justice Ray held wrongly that the limitation period for claiming compensation as a property attorney commences on the death of the person who granted the power of attorney.  I wrote that the Limitations Act doesn’t apply to such an application.  In December, the Court of Appeal agreed.

Armitage brought applications to pass her accounts as attorney for property and as estate trustee.  The Salvation Army filed notices of objection in both proceeding raising a limitations defence.  Justice Ray held that the death of the person who granted the power of attorney terminated the continuing power of attorney and was the commencement of the applicable limitation period.  The applications were accordingly timely.

Not so, I wrote.  While there may be sound policy reasons for limiting a claim for attorney’s compensation after the death of the grantor, no limitation period applies to such an application.  The application is not a “claim” within the meaning of the Limitations Act because it doesn’t seek to remedy loss resulting from an act or omission.  If it’s not a “claim”, the basic and ultimate limitation periods can’t apply.  In fairness to Justice Ray, we noted that neither party raised this point.

Armitage raised the point on appeal, and Justice Hourigan accepted it:

[19]      While I agree with the result reached by the application judge, I disagree with his conclusion that the Limitations Act, 2002had any application in the circumstances of this case. As I will discuss below, in my view, the Limitations Act, 2002 does not apply because compensation for an attorney for property through the passing of accounts process does not constitute a “claim” within the meaning of the Limitations Act, 2002.

[20]      It is useful to briefly consider the nature of compensation for attorneys for property and how the passing of accounts process works. An attorney for property is a fiduciary and has an obligation under s. 32(6) and 38(1) of the SDA to, among other things, keep accounts of all transactions involving the property.

[21]      The attorney for property may bring an application to the Superior Court to have his or her accounts approved. Through that process, the attorney for property may also seek court approval of compensation for his or her services. The responding parties to the application have an opportunity to file a notice of objection to the accounts, and to object to the compensation that the attorney for property proposes to take or has taken.

[22]      Where the attorney for property has not commenced an application for the passing of accounts, an interested party may bring an application under s. 42(1) of the SDA to compel the passing of accounts.

[23]      As noted by Matthew Furrow and Daniel Zacks in their very recent article “The Limitation of Applications to Pass Accounts” (2016) 46 Adv. Q. 2, historically in Ontario there was no statutory limitation period for the passing of accounts. The only bars were the equitable defences of laches and acquiescence. The question becomes whether the enactment of the Limitations Act, 2002changed the law and imposed the general two-year limitation period on claims for compensation for attorney for property.

[24]      At first blush it would appear that such claims might be captured by the general limitation period. The Limitations Act, 2002 was designed to comprehensively deal with all manner of civil claims, whether grounded in equity, law, or statute. There are specific carve outs in the legislation for claims that are not subject to the Act. It is arguable, therefore, that if compensation for attorneys for property was intended to be exempted from the general limitation period it would have been specifically exempted under the Limitations Act, 2002.

[25]      The difficulty with that argument is that the Limitations Act, 2002 applies only to the assertion of a “claim”, and a claim is defined in the Act as follows: “a claim to remedy an injury, loss or damage that occurred as a result of an act or omission.”

[26]      The appellant submits that the right under the SDA to seek compensation is a new statutory right and, as with all rights, where there is a right there must be a remedy. Further, the appellant argues that the respondent’s claim for compensation fits within the statutory definition of a claim. Counsel for the appellant submits that in seeking compensation at this time the respondent has suffered a loss because she chose not to seek self-help and take her compensation earlier. He goes on to argue that this loss is the result of the respondent’s omission in failing to claim compensation earlier.

[27]      I am unable to accede to this rather circular argument. The fact is that 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 the accounts: see Furrow and Zacks, at pp. 9-10. Thus, the passing of accounts does not fit within the first part of theLimitations Act, 2002 definition of claim.

[28]      An application for the passing of accounts also does not fit within the second part of the statutory definition of claim. Where the definition speaks of an act or omission, it must surely refer to an action taken or not taken by a third party that has the effect of causing loss, injury, or damage. It would be a strange result if a limitation period could not be triggered until the party asserting the claim took an action or omitted to do something.

[29]      The result, in my view, is that a passing of accounts under the SDA is not subject to the two-year general limitation period found in the Limitations Act, 2002.[1] The common law in that regard was not changed with the enactment of that legislation. Consequently, the only defences available are the equitable defences of laches and acquiescence, neither of which were asserted in the present case.

Obviously, I think this is sound reasoning (based as it is on a paper I wrote with my colleague Matthew Furrow).

Importantly, Justice Hourigan explicitly not does hold that the Limitations Act has no applicability to the passing of accounts process under the SDA:

[1] I do not mean to categorically provide that the Limitations Act, 2002 has no applicability to the passing of accounts process under the SDA. In particular, it may be that the filing by a beneficiary of a notice of objection after an attorney has sought a passing of accounts is a claim within the meaning of the Limitations Act, 2002. However, I leave this determination to another case where it arises directly on the facts.

In our paper, Matthew and I argue a notice of objection that asserts a claim within the meaning of the Limitations Act is subject to its limitation periods.  Send me a note if you’d like a copy.