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Tick Tock, Watch Your Clock

Estate Trustees are not Litigation Guardians under s.7 of the Limitations Act

Gabriela Caracas
Gabriela Caracas,
Associate

December 2018

by Gabriela Caracas

In Lee v Ponte, 2018 ONCA 1021, the Ontario Court of Appeal considered whether S.7 of the Limitations Act,1 wherein the basic limitation period of two years does not run during the time in which the person with the claim is incapable and is not represented by a litigation guardian, applies to extend the time within which an estate trustee can bring a claim that the deceased person had before death.

The Facts

In 2007, Shui Yee Lee entered into an agreement with Cesar Ponte, where Lee would loan $55,000 to Ponte payable on demand or upon the sale of a specified piece of property, whichever occurred first.

On June 6, 2013, Lee became aware that the specified piece of property had been sold but did not pursue repayment of her loan. Lee passed away and her estate trustee, Orlena Lee, demanded payment in May 2015 and subsequently commenced an action on July 17, 2015.

Justice Arthur M. Gans of the Superior Court of Justice ruled that the basic limitation period of two years began to run on June 6, 2013, the time in which Lee had discovered the sale of the property. The estate trustee was thus roughly 6 weeks tardy in bringing the claim and the action was dismissed on summary judgment.

Orlena Lee appealed this decision in her capacity as estate trustee and argued that s. 7 of the Limitations Act applies to extend the limitation period by six months for the estate trustee's action.

Court of Appeal

The appellant asked the Court of Appeal to consider the ruling in Papamonolopoulos v Toronto (City) Board of Education2 which stated that courts ought to be flexible in interpreting statute of limitations, and to do so in favour of the claimant whose right to sue for compensation is in question. It was further raised by the appellant 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.

...a deceased person could not be characterized as an incapable...

The Court of Appeal simply could not find elasticity in the wording of s.7 and unanimously ruled that a deceased person could not be characterized as an incapable, and similarly, an estate trustee could not be defined as a litigation guardian.

The appeal was dismissed and costs awarded to Ponte.

Conclusion

Timing is everything when it comes to bringing an action. Unfortunately in this scenario, what appeared to be a secured loan, evidenced by a negotiable instrument, will never receive enforceability, and one party walked away further enriched.

Estate trustees are appointed the onerous task of handling very sensitive matters at a difficult time for themselves given that they are often related or have a special relationship with the deceased. The thought of litigation, nevertheless limitation periods, is naturally at the backburner given funeral arrangements and immediate financial affairs that have to be addressed, all the while during a grieving period.

Engaging a legal expert during the initial review of the affairs of the deceased is highly recommended to determine whether there are any debts owing that are potentially actionable.

As this case demonstrates, once the clock strikes midnight, there is no turning back, no matter how unfair it may seem.


1 Limitations Act, 2002, S.O. 2002, c.24
2 [1987] 75 O.R. (2d) 388


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