{"id":1047,"date":"2020-04-28T21:29:09","date_gmt":"2020-04-29T01:29:09","guid":{"rendered":"http:\/\/limitations.ca\/?p=1047"},"modified":"2020-04-28T21:29:44","modified_gmt":"2020-04-29T01:29:44","slug":"ontario-futile-equitable-arguments-are-futile","status":"publish","type":"post","link":"http:\/\/limitations.ca\/?p=1047","title":{"rendered":"Ontario: dubious equitable arguments won’t overcome the Trustee Act limitation period"},"content":{"rendered":"

The decision in Zacharias Estate v. Giannopoulos <\/em><\/a>is an example of futile equitable arguments made to avoid the application of the Trustee Act<\/em> limitation period.\u00a0 The plaintiff estate commenced a proceeding to recover money from the defendant more than two years after the death.\u00a0 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:<\/p>\n

\n

[<\/a>42]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0Despina submits that the plaintiffs\u2019 claim is barred by the limitations provision contained in\u00a0s. 38 (3)<\/a>\u00a0of the\u00a0Trustee Act<\/i>, RSO 1990, c. T. 23<\/a>\u00a0which states:<\/p>\n

\u00a0\u201cAn action under this section shall not be brought after the expiration of two years from the death of the deceased.\u201d<\/div>\n

[<\/a>43]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0In other words, the limitation period begins to run at the time of that death, not from the time the estate trustee discovers the claim: \u00a0Levesque v Crampton Estate<\/i>,\u00a02017 ONCA 455<\/span><\/a>,\u00a02017 CarswellOnt 8319<\/span>\u00a0at paras.\u00a055-56<\/a><\/span>;\u00a0Giroux Estate v Trillium Health Centre<\/i>,\u00a02005 CarswellOnt 241<\/span>\u00a0at para.\u00a028<\/span><\/span>.<\/p>\n

\u00a0[<\/a>44]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0While the rule may, at first blush, seem harsh, it was a specific policy choice. \u00a0At common law, any claim by the deceased would have been extinguished on death. \u00a0As a compromise to this draconian rule, the legislature provided a two-year limitation period which is not subject to the discoverability principle:\u00a0\u00a0Giroux<\/i>\u00a0at para. 25.<\/div>\n
\u00a0[<\/a>45]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0George died on February 19, 2015.\u00a0 The claim was issued on December 29, 2017, 2 years and 10 months after George\u2019s death.<\/div>\n
\u00a0[<\/a>46]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0The Saccals admit they discovered the transfer to Despina between January and March 2016.\u00a0 That left them approximately one year to commence an action within the limitation period.<\/div>\n
\u00a0[<\/a>47]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0The plaintiffs resist the application of a limitation period by relying on doctrine of special circumstances. \u00a0That 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.\u00a0 The doctrine does not allow a party to commence a new proceeding after the expiry of the limitations period:\u00a0 Graeme Mew,\u00a0The Law of Limitations<\/i>, 3d ed. (Toronto: LEXIS-NEXIS, 2016).<\/div>\n<\/blockquote>\n

The estate also relied on the fraudulent concealment doctrine (because why not?).\u00a0 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.\u00a0 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.\u00a0 These are the material fraudulent concealment arguments:<\/p>\n

\n

[48]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0The plaintiffs also rely on the doctrine of fraudulent concealment to avoid the limitation period. \u00a0The doctrine of fraudulent concealment is an equitable principle:<\/p>\n

\u201caimed at preventing a limitation period from \u2018operating as an instrument of injustice.\u2019 When applicable, it will \u2018take a case out of the effect of the statute of limitation\u2019 and suspend the running of the limitation clock until such time as the injured party can reasonably discover the cause of action\u201d: \u00a0Giroux at para 28.<\/p>\n

[49]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0For the doctrine of fraudulent concealment to apply, the plaintiffs must establish that:<\/p>\n

(a)\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0the defendants and plaintiffs had a special relationship with one another;<\/p>\n

(b)\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0given the special or confidential nature of the relationship, the defendants\u2019 conduct is unconscionable; and<\/p>\n

(c)\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0the defendants concealed the plaintiffs\u2019 right of action actively or the right of action is concealed by the manner of the defendants\u2019 wrongdoing:\u00a0\u00a0Estate of Graham v Southlake Regional Health Centre,<\/em>\u00a02019 ONSC 392<\/a>, at para.\u00a088<\/a>.<\/p>\n

[50]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0As set out below, none of these elements apply.<\/p>\n

(a)\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0<\/strong>No Special Relationship<\/strong><\/p>\n

[51]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0The 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.<\/p>\n

[52]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0If the plaintiffs are correct, then a special relationship would, by definition, be created whenever estate trustees asserted that someone owed the estate money. \u00a0That would effectively put an end to the two-year limitation period in the\u00a0Trustee Act<\/em>.<\/p>\n

[53]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0In the alternative, the Saccals submit that Despina created a special relationship, by creating an extended parent-child relationship with them.\u00a0 To support this extended parent-child relationship, the plaintiffs point to the fact that Despina arranged to let the Saccals know about their father\u2019s condition.\u00a0 In addition, the plaintiffs point to a number of other allegations to support the parent-child relationship including the following:\u00a0 George told Despina that he wanted to leave money for his grandchildren.\u00a0 Despina placed a note on the file at the funeral home not to permit the Saccals access. \u00a0Despina attended with the Saccals at George\u2019s office and was present when they searched for the will.\u00a0 Despina contacted an estates solicitor friend of the Deceased (James Daris) and told the Saccals that the Deceased did not have a will.<\/p>\n

[54]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0I cannot see how these additional allegations amount to creating a parent-child relationship between Despina and the Saccals.\u00a0 The essence of a special relationship is one of closeness, trust or dependence.<\/p>\n

[55]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0Despina was a stranger to the Saccals. \u00a0She had never met them until they appeared at the hospital a couple of days before George died. \u00a0The plaintiffs have introduced no evidence to suggest that there was any type of relationship of particular trust or confidence between them and Despina. \u00a0If 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.<\/p>\n

[56]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0Moreover, the Saccals\u2019 own conduct belies any special relationship.\u00a0 On April 28, 2015 their lawyer wrote to Despina saying:<\/p>\n

\u201c\u2026 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. \u00a0You 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. \u00a0Any communication that you intend to make regarding your relationship to the Deceased or viz the Estate should be made only through this office.\u201d<\/p>\n

[57]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u201cForbidding\u201d 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.\u00a0 It is noteworthy that the letter was sent at least 8 months before the Saccals became aware of the $700,000 transfer to Despina.<\/p>\n

(b)\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0<\/strong>Defendant\u2019s Conduct Is Not Unconscionable<\/strong><\/p>\n

[58]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0The plaintiffs have not established that Despina\u2019s conduct was unconscionable.<\/p>\n

[59]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0In their factum, the plaintiffs make bald allegations that Despina was deceitful towards them but do not say how.<\/p>\n

[60]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0They have pointed to no instance in which they asked a question of Despina to which she gave a false or misleading answer. \u00a0Their real complaint appears to be that Despina did not volunteer that she had received a $700,000 payment from George. \u00a0I do not find Despina\u2019s failure to volunteer that information to be unconscionable. \u00a0At the time of the interactions, Despina was clearly grief stricken. \u00a0She had no knowledge of George\u2019s 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. \u00a0She 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. \u00a0In those circumstances it cannot be said that the failure to volunteer, out of the blue, that George had given her $700,000 is unconscionable.<\/p>\n

[61]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0As noted earlier, the plaintiffs merely point to a series of suspicions they have. \u00a0In paragraph 26 of their factum, the plaintiffs begin seven successive sentences with the word \u201csuspiciously\u201d followed by a circumstance that the plaintiffs deem to be questionable.\u00a0 By way of example they state: \u00a0\u201cSuspiciously, no power of attorney or will were located.\u201d\u00a0 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.\u00a0 It is a common occurrence.<\/p>\n

[62]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0Beginning a series of sentences with the adjective \u201csuspiciously\u201d does not convert mistrust on the plaintiffs\u2019 part into unconscionable conduct on the defendant\u2019s part.<\/p>\n

(c)\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0<\/strong>No Fraudulent Concealment\u00a0<\/strong><\/p>\n

[63]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0The third element of the doctrine of fraudulent concealment is that the defendant have concealed the plaintiffs\u2019 right of action either actively or by the manner of the defendant\u2019s wrongdoing:\u00a0\u00a0<\/em>Estate of Graham v Southlake Regional Health Centre<\/em>,\u00a02019 ONSC 392<\/a>, at para.\u00a088<\/a>.<\/p>\n

[64]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0There was no active concealment on Despina\u2019s part.\u00a0 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. \u00a0There was no duty on her to volunteer that information.\u00a0 As noted above, her lack of disclosure was understandable and acceptable.<\/p>\n

[65]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0Despina\u2019s uncontradicted evidence is that she had no information about George\u2019s estate, assets, liabilities or general financial matters while alive or after his death. \u00a0In those circumstances she could not have hidden anything from the Saccals.<\/p>\n

[66]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0The plaintiffs have not brought themselves within any exception to s. 38 (3) of the\u00a0Trustee Act,\u00a0<\/em>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.<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"

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.\u00a0 The plaintiff estate commenced a proceeding to recover money from the defendant more than two years after the death.\u00a0 The estate relied on the special circumstances doctrine; the court dismissed … Continue reading Ontario: dubious equitable arguments won’t overcome the Trustee Act limitation period<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[184,6,50,454,142,121],"class_list":["post-1047","post","type-post","status-publish","format-standard","hentry","category-ontario","tag-equity","tag-estates","tag-fraudulent-concealment","tag-less-than-special-circumstances","tag-ontario-trustee-act-s-383","tag-special-circumstances"],"_links":{"self":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/1047","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1047"}],"version-history":[{"count":3,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/1047\/revisions"}],"predecessor-version":[{"id":1050,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/1047\/revisions\/1050"}],"wp:attachment":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1047"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1047"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1047"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}