The recent Ontario Court of Appeal (“ONCA”) decision in Ingram v Kulynch Estate has provided much-needed clarity for estates and trusts practitioners on the limitation periods for trust claims against estates. This case, which deals with the application of limitation periods under the Trustee Act and the Real Property Limitations Act (“RPLA”), is significant because it resolves a longstanding uncertainty surrounding claims that involve real property in estate litigation.
Background
The case arose after the common-law partner of the deceased, Mr. Kulynch, claimed entitlement to a portion of his estate on the basis of a constructive trust and unjust enrichment. The testator had rented his house for years while residing with his common-law partner, and she argued that he had accumulated significant value at her expense. She sought an interest in his estate, which included his real property.
However, her claim was brought more than four years after his death, long after the two-year limitation period under section 38 of the Trustee Act had expired. The estate argued that the claim should be dismissed due to the expired limitation period. The initial court, however, applied the ten-year limitation period from section 4 of the RPLA, assuming it applied to the claim involving real property.
The Court of Appeal’s Decision
The Ontario Court of Appeal reversed the lower court’s decision, affirming that the claim was governed by the two-year limitation period under section 38 of the Trustee Act, rather than the ten-year period under the RPLA. This judgment is important because it settles the debate over which limitation period applies to trust claims involving real property in estate litigation.
Justice Roberts, in writing for the Court of Appeal, highlighted several key principles that led to the decision:
- The Legislative Intent Behind Section 38 of the Trustee Act: Section 38 of the Trustee Act provides a specific limitation period for claims against estates, which is generally two years from the date of death. This section was created to strike a balance between ensuring access to remedies for claimants while also promoting the efficient and timely administration of estates. The Court emphasized that this provision must be applied strictly to avoid indefinite financial exposure to the estate.
- Equitable Trust Claims and the Trustee Act: The Court found that equitable claims, including constructive trust claims, fall under section 38 of the Trustee Act. The decision clarified that even if the claim involves real property, it does not automatically trigger the longer ten-year limitation period under the RPLA. This aligns with earlier case law that affirmed the application of the Trustee Act‘s two-year limitation period to equitable claims against estates.
- The Absence of the “Discoverability” Principle: Importantly, the ONCA noted that section 38 does not allow for the “discoverability” principle, which could extend the limitation period. This principle allows claimants to delay bringing an action until they are aware of their claim, but it does not apply in cases governed by section 38. As a result, Estate Trustees can confidently proceed with distributing the estate two years after death, knowing that the limitation period under section 38 has expired—unless a claimant is under a legal disability.
- No Application of the RPLA: The Court also pointed out that the RPLA’s ten-year limitation period applies only to actions specifically seeking to recover land. In the case at hand, the claim sought an interest in the deceased’s entire estate, not just the real property, which further reinforced the inapplicability of the RPLA.
What Does This Mean for Estate Trustees?
The Ingram v. Kulynch Estate decision provides clarity for Estate Trustees by affirming that the two-year limitation period under section 38 of the Trustee Act applies to all trust claims against estates, including those involving real property. This means that after two years from the date of death, trustees can generally proceed with distributing the estate without fearing the emergence of new claims.
However, caution is still advised in cases where the claimant might be under a legal disability (such as being a minor or incapable). The Limitations Act provides that the limitation period does not run against individuals who are legally incapable unless they are represented by a litigation guardian. This introduces a potential exception to the strict application of section 38 for certain claimants, and Estate Trustees must be careful to consider whether any beneficiaries or potential claimants are affected by this provision.
Conclusion
The Ingram v. Kulynch Estate decision has resolved a key issue in estate litigation by clarifying the applicable limitation period for trust claims against estates. Estate Trustees can now proceed with greater confidence, knowing that the two-year limitation period under section 38 of the Trustee Act is the governing rule for most claims. However, as always, legal advice should be sought to ensure that trustees navigate the complexities of limitation periods and claims that might involve minors or incapable individuals. If you are an Estate Trustee or are dealing with trust claims against an estate, it is crucial to understand the nuances of limitation periods and how they apply to your situation.
Contact us today to discuss how the recent ruling in Ingram v. Kulynch Estate may impact your estate planning and administration needs. Our team of experienced estate lawyers is here to guide you through complex legal issues and ensure your estate is handled efficiently and in accordance with the law.