Limitations statutes can be unforgiving. One dairy farmer learned this lesson in Reid et al. v Reid; Reid v Reid et al., 2016 ONSC 2098, when his will challenge was dismissed for being commenced out of time.
Barry and Robert are brothers. Their parents, Walter and Mary, operated a dairy farm which was held by a family corporation (the parents each held 46.5% of the shares; the children each held 3.5%). Walter made a will in 1984 leaving all of his assets, including his shares in the family corporation, to his wife Mary (the “Will”).
In 1991, Walter allegedly made a holograph will which appeared to leave his shares in the family corporation to Barry (the “Purported Holograph Will”). Walter died in 1995. On June 30, 1999, Barry provided a copy of the Purported Holograph Will to his lawyer (confusingly enough, the lawyer’s name was Mr. Barrie). Mr. Barrie had been retained to settle Barry’s interest in the family corporation. Matters lay dormant until Barry’s new lawyer wrote to Mary and Robert on July 13, 2009 to restart settlement discussions. On May 28, 2012, Barry commenced an application for, inter alia, a declaration that the Purported Holograph Will was valid and a declaration that he is the owner of all of Walter’s shares in the family corporation.
Mary died on September 4, 2012. In her will, she left everything to Robert.
As Barry knew of the Purported Holograph Will on at least June 30, 1999, the Limitations Act, R.S.O. 1990, c. L.15 (the “Old Act”) governed (the Court did not address Robert’s alternative argument that the July 13, 2009 letter restarted the limitation period and the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B thus applied). Under the Old Act, there was a six year limitation period for claims against trustees. However, there would be no limitation period if the claim was against the trustee to recover trust property or proceeds therefrom which were:
- still retained by the trustee, or
- previously received by the trustee and converted to the trustee’s use.
The brothers disagreed whether the above exemptions applied. If the exemptions did not apply then the claim would be out of time, as it was commenced more than six years after June 30, 1999. However, if either exemption applied, then there would be no limitation period.
There was “no question” that Barry’s claim was to recover trust property. It does not appear that it was argued that there should be no limitation period with respect to a declaration that the Purported Holograph Will was valid. However, as a practical matter, Barry needed to recover trust property as his father’s estate had been long since distributed.
Justice Conlan held that the first exemption above did not apply as the shares at issue were not being held by Mary as a trustee but as an owner; as the shares had been bequeathed and transferred to her pursuant to the Will. Barry’s submitted that the second exemption applied because Mary converted the shares to her own use when she transferred them from herself (as trustee) to herself (as beneficiary). Justice Conlan rejected this “creative argument”. His Honour held that the shares were not converted, as none of their form, character or function changed. Moreover, “converted” implies that something wrongful or improper was done, because Mary was lawfully and reasonably entitled to rely upon the Will.
As such, Justice Conlan dismissed Barry’s application as “the clock had simply ran out”. His Honour acknowledged the “elephant in the room”: Robert ended up with 96.5% of the family corporation while Barry has just 3.5%. While this may not be what many parents would want for their children, Mary had every right to leave everything to Robert and it was not the Court’s function to second-guess her decision. His Honour, however, expressed a final hope that the brothers try to mend some of their differences.