Lawyers are keenly aware of limitation periods. If a lawyer fails to commence a claim on behalf of a client within the limitation period, they will likely face a professional negligence suit (not good).
Whether lawyers like them or not, limitation periods play an important role in the civil justice system. The provide certainty and finality. In Ontario, a plaintiff has two years to start a claim from the date that the claim could have been reasonably discovered. Of course, there are some notable exceptions to this basic two year limitation period, including those established in the Real Property Limitations Act and the Trustee Act.
The Real Property Limitations Act establishes a 10 year limitation period to pursue claims involving land. In contrast, s. 38 of the Trustee Act sets a hard deadline on third parties to commence a claim against the estate within two years of the deceased’s date of death.
Not surprisingly, limitation periods generate a fair amount of litigation as disputes arise over when a claim could or should have been “discovered” or where, for example, a claim involves land and a deceased person (disagreements over which limitation period applies is almost certain to follow).
Unlike the general two year limitation period, which begins to run at the time the claim is reasonably discovered, there is no uncertainty about the limitation period established pursuant to s. 38 of the Trustee Act: it begins to run at the time of death. The Limitations Act confirms that where there is a conflict between the limitation periods set out in the Limitations Act and s. 38 of the Trustee Act, the Trustee Act prevails.
There are specific policy reasons for this strict deadline. At common law (that part of law derived from custom and judicial precedent rather than legislation), a claim against the deceased is extinguished on death. While this provided certainty to the estate administration, it also created some unfairness where there were legitimate claims to be pursued. As a compromise, the Ontario legislature created the two-year limitation period in s. 38 of the Trustee Act, calculated from date of death. This two year limitation period balances the need to allow estates to advance or defend a claim without creating indefinite fiscal vulnerability for an estate.
The Trustee Act does not provide the court with discretion to extend the two year limitation period: it is a strict deadline. Instead, s. 38 represents a clear policy choice in favour of certainty and finality in estate matters after a fixed period of two years. Estates need to be administered and wound-up in a relatively timely way.
However, one way to toll or postpone the running of the Trustee Act’s two year limitation period is to argue that a party fraudulent concealed a claim such that the limitation period does not begin to run until a party actually became aware of the claim.
For fraudulent concealment to be established, the following three elements must be found: (i) the defendant and the plaintiff had a special relationship with one another; (ii) given the special or confidential nature of the relationship, the defendant’s conduct is unconscionable or unjust; and (iii) the defendant concealed the plaintiff’s right of action actively, or the right of the action is concealed by the manner of the defendant’s wrongdoing.
Establishing each branch of the test is not easy. For example, the court has held that a debtor/creditor relationship does not create a special relationship when it comes to an estate dispute. Unconscionability (i.e. a party’s actions that are reprehensible or unjust) is also hard to prove, as is active concealment (each case will be fact specific). Nevertheless, the courts are aware that in limited circumstances, it would be unfair to impose a strict two year limitation period where a party wrongly tried to hide or conceal a wrongdoing which would give rise to a claim involving an estate. However, such exceptions are narrowly construed and the evidentiary burden high. In the end, the best advice is not to wait but to start a claim involving an estate within two years of date of death.