Ontario's Court of Appeal Clarifies Limitation Period for Equitable Trust Claims Against Estates

September 25, 2024

Written By Nathan Shaheen, Adam Walji and Sophia DiNicolo

In its recent decision in Ingram v Kulynych Estate,¹ the Court of Appeal for Ontario clarified the timeline for bringing equitable trust claims against estates, concluding that such claims are subject to the two-year limitation period outlined in s. 38(3) of the Trustee Act,² rather than the 10-year limitation period under s. 4 of the Real Property Limitations Act (RPLA).³ The decision also affirmed the analytical framework for determining which statutory limitation provision applies.

Facts

In 2017, Mr. Kulynych passed away, leaving nothing in his will to his common-law partner, Ms. Ingram, with whom he had been in a common law relationship for nearly two decades.

Four years after Mr. Kulynych's death, Ms. Ingram commenced an application against the estate. She asserted that she had supported Mr. Kulynych financially and emotionally until his death. On that basis, Ms. Ingram claimed, among other things, that she was the beneficiary of an equitable trust and entitled to a share of the estate's assets, arguing that Mr. Kulynych had unjustly enriched himself by renting out his house while living at her house over the course of their relationship.

The estate brought a motion to have Ms. Ingram's claim dismissed on the grounds that it was statute-barred under s. 38(3) of the Trustee Act, which provides for a two-year limitation period in respect of claims against an estate for wrongs committed by a deceased. The motion judge, however, found that Ms. Ingram's claim was a property claim under s. 4 of the RPLA, which provides a 10-year limitation period with respect to claims for an interest in real property, and not a "wrong" committed by the deceased as required by s. 38(2) of the Trustee Act. The motion judge therefore applied the 10-year limitation period under s. 4 of the RPLA and dismissed the estate's motion.

The estate appealed the motion judge's decision, claiming that there was no equitable trust claim, and if there was, that it was limitation-barred by s. 38(3) of the Trustee Act.

Decision

The Court of Appeal allowed the appeal and concluded that Ms. Ingram’s claim to an equitable trust was statute-barred. In doing so, the Court first reviewed the motion judge's decision, applying the analytical approach from the Bank of Montreal v Iskenderov (Iskenderov)⁴, including the following factors:

1. the historical approach to the limitation period and the legislative purpose of the statute;
2. the judicial approach to interpreting the limitation period in issue;
3. the nature of the relief sought in the action; and
4. the language of the statutory limitation provision.

Applying those factors, the Court emphasized the Legislature's intent to impose shorter limitation periods in the estates context, stating that "the underlying policy considerations for a two-year limitation period apply to all estate claims captured under s. 38(2) of the Trustee Act."

The Court also held that the motion judge construed the word "wrong" in s. 38(2) of the Trustee Act too narrowly by restricting it only to tortious conduct, emphasizing that it includes all actionable wrongs, including unjust enrichment. As a result, Ms. Ingram's claim fell within the scope of the word "wrong" in s. 38(2) of the Trustee Act.

Notably, Ms. Ingram's equitable trust claim was found to be encompassed by the provisions of the Trustee Act as she was claiming unjust enrichment against all of the estate's assets, not just the real property. The Court therefore concluded that Ms. Ingram's equitable trust claim was statute-barred by the two-year limitation period as it had crystallized on Mr. Kulynych's death.

Key Takeaways

In Ontario, the courts will use the Iskenderov analytical approach when determining which limitation period applies where not expressly resolved by legislation. This approach involves considering the legislative purpose and history, judicial treatment, and the wording of the statutes.

Equitable trust claims against an estate are subject to the two-year limitation period under s. 38(3) of the Trustee Act, rather than the 10-year limitation period under s. 4 of the RPLA. The term "wrong" in s. 38(2) includes all actionable wrongs, including unjust enrichment. This broad interpretation underscores the need for claimants to ensure their claims are properly pleaded.

In light of the Court of Appeal’s decision, claimants with potential equitable trust claims against an estate should act promptly after the date of death. For estate trustees, this two-year limitation period provides a clear timeline, allowing them to confidently administer and complete distributions from the estate if no claims are made within the two-year period.

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