by Safiyya Vankalwala

Navigating limitation periods is a critical aspect of legal practice in Ontario and lawyers are often faced with the challenge of determining which legislation applies to their clients’ cases. In a recent case, the Ontario Court of Appeal ruled that the two-year limitation period under the Trustee Act applied to the respondent’s equitable trust claim based on unjust enrichment against an estate, overturning a lower court decision that had applied the ten-year period under the Real Property Limitations Act (RPLA).

Case summary
The respondent, who was the common-law partner of the deceased, brought an equitable trust claim against the estate four years after her partner’s death. She claimed unjust enrichment based on her financial contributions to the estate. However, the estate argued that her claim was statute-barred under the Trustee Act, which imposes a two-year limitation period for claims against estates.

The motion judge allowed the case to proceed under the ten-year limitation period outlined in the RPLA. On appeal, the Ontario Court of Appeal reversed this decision, ruling that the claim was indeed barred by the two-year limitation period in the Trustee Act.

A key aspect of the Court’s reasoning was its interpretation of the term “wrong” as defined in section 38(2) of the Trustee Act. The Court found that the motion judge had interpreted “wrong” too narrowly, applying it solely to tort claims. It clarified that the term encompasses all actionable wrongs against an estate for which a deceased individual may be held liable, including claims for unjust enrichment.

Furthermore, the Court emphasized the legislature’s intent to impose shorter limitation periods in estate matters. Given that the respondent’s claim sought relief against all the estate’s assets, not limited to real property, it fell under the two-year limitation period, which had expired by the time she filed her claim.

Practice Management Tips*

1. Identify the applicable limitation period:

When multiple limitation periods may apply (e.g., under the Trustee Act or the Real Property Limitations Act), always assume the shortest period applies to mitigate risk. Then, consult with colleagues, with senior lawyers or mentors to verify your assessment and explore options.

2. Where to find assistance

Having fellow lawyers to call, when in need, is vital. If you are looking for a mentor or to speak to a lawyer regarding an issue on a file, consider the following:

  • Find a mentor using our Mentoring resources on our PracticePRO website
  • Find an advisor for a file-specific issue using the LSO Coach and Advisor Network
  • Attend our upcoming complimentary CPD, with the TLA, on this topic on November 7, 2024. Enrollment information will be available soon and the recording of the program will be posted on our CPD and YouTube pages

3. Communicate with clients early and clearly:

Poor communication is a leading cause of malpractice claims. Here are some best practices to help you manage client relationships when limitation periods are involved:

  • Set expectations early: If you’re retained close to a deadline, be upfront about time constraints and assess whether taking on the retainer is feasible. If a quick turnaround is unrealistic, communicate this clearly and enforce boundaries. If necessary, decline or terminate the retainer following the Law Society of Ontario’s Rules of Professional Conduct.
  • Document lapsed limitation periods: If the client retains you after the limitation period has expired, provide a written explanation of the situation. Clients may have received incorrect advice or done their own research, so it’s critical they fully understand the legal advice you are providing them with.
  • Outline options clearly: Explain any potential legal strategies, including filing a claim and arguing for the longer limitation period, but ensure the client is aware of the risks, costs, and time commitments involved. This allows the client to make an informed decision.

Lawyers should be vigilant about limitation periods to safeguard their clients’ rights and interests. Knowing the law and seeking help when needed can prevent costly errors, and clients should always be advised in writing about potential risks and limitations in their cases. Effective communication is key; convey information in a timely, clear, and concise manner while diligently documenting such communications.

*LAWPRO is not asserting that the lawyer for the respondent acted incorrectly or that there is any basis for a claim. The purpose of this article is to highlight an important decision by the Ontario Court of Appeal regarding limitation periods in estate matters and to provide practice management tips.