Exploring the Limitation Period for Estate Disputes

This article focuses on how the limitation period for legal disputes involving an estate often differ from ordinary claims.

When are Estates Involved?

In Ontario, there are often litigation claims where a deceased individual is involved in some capacity as a named party. In these circumstances, the estate of the deceased would be the named plaintiff or the named defendant. The deceased’s estate is typically represented by an Estate Trustee appointed by the deceased prior to their death or appointed by the court in the event the deceased died intestate. For instance, if the deceased was involved in a motor vehicle accident and was killed, the deceased’s estate would be the plaintiff for the wrongful death lawsuit. Conversely, if a plaintiff is harmed by the actions of an individual who subsequently dies, the plaintiff would proceed with a lawsuit against the estate of the deceased defendant.

Basic Limitation Period

The limitation period is noticeably different when dealing with deceased persons named in a lawsuit. In most cases, the basic limitation period for a plaintiff to bring an action is two years from the date of the loss, injury, or damage to the plaintiff. Under section 5 of the Limitations Act, this date commences on the date the plaintiff reasonably discovers they suffered a loss, injury, or damage and they have knowledge of who caused the same. This is known as the discovery principle, and it suggests that the limitation period does not always start from the date of the occurrence but the date the plaintiff reasonably discovers the occurrence and that they have a claim against the defendant.

Limitation Period Where Deceased is a Named Party

When there is a legal claim on behalf of a deceased person, or against the deceased person, the Limitations Act typically does not apply. In most circumstances, section 38 of the Trustee Act applies and provides a two-year limitation starting from the date of the death of the deceased. In Waschkowski v Hopkins Estate, the Ontario Court of Appeal concluded that the discoverability principle does not apply to the limitation period under the Trustee Act. The court held it is an absolute limitation period which is not dependent on the claimant’s knowledge of the loss, injury, or damage and, therefore, the discoverability principle does not apply. This effectively means certain claims might be time-barred even before they are reasonably discovered by the claimant.

Limitation Period for Passing of Accounts

Passing of Accounts is a court proceeding in which the Estate Trustee obtains the court’s approval for their accounting and financial administration of the estate. A beneficiary of an estate who disputes how the estate is being distributed can compel an Estate Trustee to pass their accounts.

In Armitage v. The Salvation Army, the Ontario Court of Appeal held that an Application to Pass Accounts is not a “claim” as anticipated by the legislation. As such, it is not subject to the two-year limitation period under the Limitations Act or the Trustee Act.

Section 49(3) of the Estates Act allows the court to award monetary damages within an Application to Pass Accounts.  In Wall v. Shaw, the court indicated there is no limitation period for a beneficiary to seek damages against an Estate Trustee if such claims are advanced as part of an Application to Pass Accounts.

The potential to insulate otherwise time-barred claims within an Application to Pass Accounts was recently addressed in part in Re Schultz Estate, 2023 ONSC 3959. In Re Schultz Estate, an Estate Trustee attempted to argue that a claim that was advanced against them in an Application to Pass Accounts regarding certain real property being held by them on a resulting trust for the benefit of the estate was statute barred by the expiry of the limitation period.  The court disagreed and confirmed that in accordance with Wall v. Shaw there was no limitation period for Passing of Accounts, thereby allowing the court to consider the resulting trust claim when they may otherwise not have been able to because of the expiry of the limitation period.

The recent decision of Re Schultz Estate has significant implications for beneficiaries making a claim against a deceased’s estate. If they are otherwise time-barred by the limitation period of the Trustee Act, the beneficiary can potentially circumvent this issue by proceeding with the claim through an Application to Pass Accounts.