In Re Wall Estate, 2018 ONSC 1735, Justice Mulligan, considered the applicability of the Limitations Act, 2002 SO 2002, c 24 Sch B to a Notice of Objection in a passing of accounts application. The issue here was whether an estate trustee may move to strike a beneficiary’s Notice of Objection to Accounts in the face of the estate trustee’s application to pass accounts, based on the Limitations Act, 2002, or the doctrine of laches or acquiescence.
Background
The deceased (the objector’s mother) died in 2005. In accordance with her Will, her former lawyer became the estate trustee until his removal through a consent Order dated August 4, 2016.
The Will left the bulk of the deceased’s estate to her two children, in trust, until they attained the age of 60. The Will further provided that the trustee had absolute discretion to pay funds to these two beneficiaries during their lifetime before reaching age 60.
The deceased’s son passed away before reaching 60, leaving her 54-year-old daughter as the sole vested beneficiary.
The trustee managed the deceased’s complex mix of assets and made investments in the years following her death. In the course of doing so, he held annual meetings with both beneficiaries, and then just with the daughter after the son died. There were differing versions as to what took place at these meetings, but the undisputed facts were as follows:
(i) the daughter never signed a formal release for any of the years in question;
(ii) the trustee never passed accounts in the years that followed;
(iii) the trustee did not send out the annual accounts to the beneficiaries before these meetings, nor did he provide them with copies to take away; and
(iv) the trustee did not arrange for independent legal advice for the daughter regarding any of the annual meetings.
In 2014, the daughter brought an application for the trustee to pass accounts for the entire period from 2005 onwards. An order to that effect was received in January of 2015 for the period up to December 31, 2013. On June 2, 2015, the daughter filed a 13-page Objection to the Accounts. The trustee brought this motion to strike the objections.
Analysis:
The trustee did not dispute that he was required to pass accounts. However, he took issue with the requirement to address the Objections to Accounts which were not filed until June 2, 2015. He argued that because of the Limitations Act, 2002 or laches or acquiescence, he is not required to address any objection to accounts for the period from the date of death until December 31, 2012.
In concluding that the Objection was not statute barred, the Court reviewed various decisions on topic, in particular, the recent decision of the Ontario Court of Appeal in Armitage v. Salvation Army,[1] where Justice Hourigan, speaking on behalf of the Court noted that “the Limitations Act, 2002 does not apply [to passing of accounts] because compensation for an attorney for property through the passing of accounts process does not constitute a “claim” within the meaning of the Limitations Act, 2002.”
Justice Hourigan went on in Armitage to conclude that:
The result, in my view, is that a passing of accounts under the SDA is not subject to the two-year general limitation, found in the Limitations Act, 2002. The common law in that regard has not changed with the enactment of that legislation. Consequently, the only defences available are the equitable defences of laches and acquiescence, neither of which were asserted in the present case.
However, in obiter, the following footnote was added to the above paragraph:
- I do not mean to categorically provide that the Limitations Act, 2002 has no applicability to the passing of accounts process under the SDA. In particular, it may be that the filing by the beneficiary of a Notice of Objection after an attorney has sought passing of accounts is a claim within the meaning of the Limitations Act, 2002. However, I leave this determination to another case where it arises directly on the facts.
After reviewing the matter, Justice Mulligan found that if the passing of accounts does not constitute a “claim”, neither does the Notice of Objection in this case. The Objections taken at their highest may result in a reduction or loss of compensation. If the Objections are successful to any extent, no additional funds would be payable immediately to the daughter as a beneficiary of the discretionary trust. The corpus of the estate would be enlarged, increasing the funds available for the discretionary trust, and ultimately, could increase the amount available to be paid to her, but only if she survives to age 60. “On the facts here, I am not satisfied that the Notice of Objection rises to the level of a “claim” as contemplated by the Limitations Act, 2002.”
The Court then considered the alternate defences of laches and acquiescence.
In Armitage, the Court of Appeal turned to the Black’s Law Dictionary to define laches as the “unreasonable delay in pursuing a right or claim – almost always an equitable one – in a way that prejudices the party against whom relief is sought.”
Referencing Lindsay Petroleum Co. v Hurd,[2] Justice Mulligan noted that in cases where the defence of laches is raised, there are two important factors to consider: the length of the delay and the nature of the acts done during the interval, “which might affect either party and cause a balance of justice or injustice in taking the one course or the other so far as it relates to the remedy.”
Justice Mulligan went on to cite the Supreme Court of Canada’s decision in MK v HM, [1992] SCJ No 85, which considered the basic principles surrounding laches and acquiescence. There the Court noted that acquiescence was a fluid term, with a primary meaning of estoppel, a secondary element of delay on the part of the Plaintiff and a final element, being an alteration in the defendant’s position based on the Plaintiff’s inaction.
Applying these principles to the facts of this case, the Court was not satisfied that the doctrine of laches or acquiescence has any application.
Takeaways:
While the Court here decided that the Limitations Act was not applicable to the Notice of Objection filed, it did so on the particular facts of this case. Hence the question of the Act’s applicability remains open for consideration.
This case is also a reminder to Estate Trustees to have their administration approved and discharged. Either by way of passing accounts or by asking beneficiaries to approve their administration and provide for their informal discharge through Releases. It would have been beneficial in this situation for the Trustee to recommend that the beneficiaries obtain independent legal advice and to provide them with copies of accounts before and after the annual meetings.
—
[1] Armitage v. Salvation Army, [2016] O.J. No. 6636
[2] Lindsay Petroleum Co. v. Hurd, [1874] J.C.J. No. 2
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Written by: Kimberly A. Whaley
Posted on: October 23, 2018
Categories: Commentary, WEL Newsletter
In Re Wall Estate, 2018 ONSC 1735, Justice Mulligan, considered the applicability of the Limitations Act, 2002 SO 2002, c 24 Sch B to a Notice of Objection in a passing of accounts application. The issue here was whether an estate trustee may move to strike a beneficiary’s Notice of Objection to Accounts in the face of the estate trustee’s application to pass accounts, based on the Limitations Act, 2002, or the doctrine of laches or acquiescence.
Background
The deceased (the objector’s mother) died in 2005. In accordance with her Will, her former lawyer became the estate trustee until his removal through a consent Order dated August 4, 2016.
The Will left the bulk of the deceased’s estate to her two children, in trust, until they attained the age of 60. The Will further provided that the trustee had absolute discretion to pay funds to these two beneficiaries during their lifetime before reaching age 60.
The deceased’s son passed away before reaching 60, leaving her 54-year-old daughter as the sole vested beneficiary.
The trustee managed the deceased’s complex mix of assets and made investments in the years following her death. In the course of doing so, he held annual meetings with both beneficiaries, and then just with the daughter after the son died. There were differing versions as to what took place at these meetings, but the undisputed facts were as follows:
(i) the daughter never signed a formal release for any of the years in question;
(ii) the trustee never passed accounts in the years that followed;
(iii) the trustee did not send out the annual accounts to the beneficiaries before these meetings, nor did he provide them with copies to take away; and
(iv) the trustee did not arrange for independent legal advice for the daughter regarding any of the annual meetings.
In 2014, the daughter brought an application for the trustee to pass accounts for the entire period from 2005 onwards. An order to that effect was received in January of 2015 for the period up to December 31, 2013. On June 2, 2015, the daughter filed a 13-page Objection to the Accounts. The trustee brought this motion to strike the objections.
Analysis:
The trustee did not dispute that he was required to pass accounts. However, he took issue with the requirement to address the Objections to Accounts which were not filed until June 2, 2015. He argued that because of the Limitations Act, 2002 or laches or acquiescence, he is not required to address any objection to accounts for the period from the date of death until December 31, 2012.
In concluding that the Objection was not statute barred, the Court reviewed various decisions on topic, in particular, the recent decision of the Ontario Court of Appeal in Armitage v. Salvation Army,[1] where Justice Hourigan, speaking on behalf of the Court noted that “the Limitations Act, 2002 does not apply [to passing of accounts] because compensation for an attorney for property through the passing of accounts process does not constitute a “claim” within the meaning of the Limitations Act, 2002.”
Justice Hourigan went on in Armitage to conclude that:
The result, in my view, is that a passing of accounts under the SDA is not subject to the two-year general limitation, found in the Limitations Act, 2002. The common law in that regard has not changed with the enactment of that legislation. Consequently, the only defences available are the equitable defences of laches and acquiescence, neither of which were asserted in the present case.
However, in obiter, the following footnote was added to the above paragraph:
After reviewing the matter, Justice Mulligan found that if the passing of accounts does not constitute a “claim”, neither does the Notice of Objection in this case. The Objections taken at their highest may result in a reduction or loss of compensation. If the Objections are successful to any extent, no additional funds would be payable immediately to the daughter as a beneficiary of the discretionary trust. The corpus of the estate would be enlarged, increasing the funds available for the discretionary trust, and ultimately, could increase the amount available to be paid to her, but only if she survives to age 60. “On the facts here, I am not satisfied that the Notice of Objection rises to the level of a “claim” as contemplated by the Limitations Act, 2002.”
The Court then considered the alternate defences of laches and acquiescence.
In Armitage, the Court of Appeal turned to the Black’s Law Dictionary to define laches as the “unreasonable delay in pursuing a right or claim – almost always an equitable one – in a way that prejudices the party against whom relief is sought.”
Referencing Lindsay Petroleum Co. v Hurd,[2] Justice Mulligan noted that in cases where the defence of laches is raised, there are two important factors to consider: the length of the delay and the nature of the acts done during the interval, “which might affect either party and cause a balance of justice or injustice in taking the one course or the other so far as it relates to the remedy.”
Justice Mulligan went on to cite the Supreme Court of Canada’s decision in MK v HM, [1992] SCJ No 85, which considered the basic principles surrounding laches and acquiescence. There the Court noted that acquiescence was a fluid term, with a primary meaning of estoppel, a secondary element of delay on the part of the Plaintiff and a final element, being an alteration in the defendant’s position based on the Plaintiff’s inaction.
Applying these principles to the facts of this case, the Court was not satisfied that the doctrine of laches or acquiescence has any application.
Takeaways:
While the Court here decided that the Limitations Act was not applicable to the Notice of Objection filed, it did so on the particular facts of this case. Hence the question of the Act’s applicability remains open for consideration.
This case is also a reminder to Estate Trustees to have their administration approved and discharged. Either by way of passing accounts or by asking beneficiaries to approve their administration and provide for their informal discharge through Releases. It would have been beneficial in this situation for the Trustee to recommend that the beneficiaries obtain independent legal advice and to provide them with copies of accounts before and after the annual meetings.
—
[1] Armitage v. Salvation Army, [2016] O.J. No. 6636
[2] Lindsay Petroleum Co. v. Hurd, [1874] J.C.J. No. 2
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