In Roulston v McKenny et al, 2016 ONSC 2377, the deceased’s ex-wife had a claim against his estate if a life insurance policy lapsed. Even though the estate trustee knew that the policy had lapsed, she withheld this information from the ex-wife – and then argued the ex-wife’s claim was brought out of time.
The deceased and his ex-wife signed a separation agreement which required the deceased to maintain $150,000 in life insurance designating his ex-wife as beneficiary. While the parties released claims against each other’s estates, if the deceased failed to maintain the life insurance, the ex-wife would have a first charge on the estate for $150,000.
The deceased died on March 20, 2013. His will named his sister as estate trustee and gave her half of the residue of the estate.
On May 9, 2013, the insurer wrote to the estate trustee’s lawyer to advise there were no active life insurance policies. Despite this letter, the estate trustee’s lawyer – in responding to an inquiry from the ex-wife’s lawyer – advised his client was “currently making investigations with respect to the insurance policy as the deceased had expressed to [her] and the deceased’s mother that there was insurance in place. Upon receipt of such information, we will provide correspondence to you.”
On July 11, 2013, the ex-wife advised the estate trustee (through counsel) that she could not obtain any information on the life insurance policy from the insurer – as the insurer would only provide this information to the estate trustee. As such, the ex-wife’s lawyer requested that the estate confirm whether or not the life insurance policy was in effect: if it was, to confirm that steps were being taken to collect and if it wasn’t to confirm that the estate was responsible to pay the outstanding amount.
There was no response to this letter.
The ex-wife’s lawyer followed up on August 27, 2013, which was responded to on September 25, 2013, via a without prejudice letter stating that the insurance policy “may have lapsed” and that an application for directions would be brought as there were a number of claims against the estate.
The application for directions was ultimately issued in April 2015. Prior to the hearing, the estate trustee’s lawyer noted that there might be a limitations period issue because the ex-wife did not commence a proceeding regarding her claim against the estate within two years of the deceased’s death. The ex-wife then commenced her claim regarding the $150,000 on September 18, 2015.
This matter came before Justice Koke when the parties agreed his Honour could determine the limitation period question in a summary way. His Honour considered the relevant limitations statutes.
If the Limitations Act, 2002 applied, then it is clear that the ex-wife’s claim was commenced in time, as that act provides for a limitation period of two years after the claim was discovered. In this case, the claim was discovered when the estate trustee advised the policy “may have lapsed”. However, the Trustee Act imposed its own limitation period for actions for all injuries of a personal nature against an estate. Notably, there is no discoverability principle under the Trustee Act for such claims – the limitation period is simply two years after the deceased’s death. As the ex-wife’s claim was for an injury of a personal nature against the deceased, then the Trustee Act applied and the time for the ex-wife to bring her claim had expired.
That did not end the inquiry. The Court considered whether the doctrines of special circumstances and fraudulent concealment could be used to allow the ex-wife’s action to proceed. The Court quickly dismissed the applicability of special circumstances as this doctrine allowed for a new party to be added to an existing action outside of the limitation period, it did not encompass an entirely new action being commenced.
Under the doctrine of fraudulent concealment, a limitation period would be tolled (e.g. paused) when:
- the plaintiff and defendant have a special relationship;
- given the special or confidential nature of the relationship, the defendant’s conduct is unconscionable; and
- the defendant conceals the plaintiff’s right of action (either actively, or through omission).
Justice Koke found that the parties were in a special relationship with each other; the ex-wife was entirely reliant on the estate trustee’s representations regarding the status of the deceased’s insurance policy and, therefore, the existence of the debt. His Honour held it would be “unconscionable” for the estate trustee to initially suggest that there was life insurance in place, then delay matters by promising to bring an application for directions, and then argue that the time for claiming against the estate had expired (especially as the estate trustee had a personal interest in the outcome). The failure to disclose the lapse of the insurance policy concealed from the ex-wife that she had a claim against the estate.
As such, Justice Koke held that the ex-wife’s claim was not statute-barred and could thus proceed.
I pause to consider the Yiddish word chutzpah. This word was first used in a Canadian decision in 1983 (R. v. Duncan, 1983 CarswellBC 1825 – 11 years after the first American court to use this word). It means “outrageous insolence” but is often defined through the story of a man killing both his parents and begging the court for mercy on the grounds that he’s an orphan. I leave it up to the reader whether this word has any applicability in this case.