Estate Trustees Beware of Limitation Issues

Typically, subject to some exceptions, a person has 2 years within which a legal proceeding must be commenced in respect of a claim. If a person ffails to bring a legal proceeding in respect of a claim within the limitation period, his or her claim is statute barred unless an exception applies.

In the Ontario Court of Appeal’s decision of Lee v. Ponte [2018] ONCA 1021 (CanLII), the Court considered whether Section 7 of the Limitations Act, 2002, S.O. 2002, C. 24, applies to extend the time for an Estate Trustee to bring a claim on behalf of a deceased person which claim arose prior to the death of the deceased.

In Lee v. Ponte, the deceased person had loaned Mr. Ponte $55,000.00 secured by a promissory note which was repayable on demand or upon sale of a parcel of property whichever occurred first. The Trial Judge found the limitation period began to run on June 6, 2013 when the real estate property sold. The Estate Trustee of the deceased made a demand for repayment in May 2015 and subsequently commenced a legal proceeding in July 2015 for repayment of the loan. The proceeding commenced by the Estate Trustee in July 2015 was outside the 2 year limitation period. The Estate Trustee argued that Section 7 of the Limitations Act applies to extend the limitation period for an Estate Trustee in these circumstances.

In its decision of Lee v. Ponte, the Ontario Court of Appeal ruled that the ordinary and grammatical sense of Section 7 of the Limitations Act is not elastic enough to apply to a deceased person and to construe an Estate Trustee as a litigation guardian. Consequently, the legal proceeding brought by the Estate Trustee for repayment of the loan was statute barred for it was brought outside the limitation period.

This case illustrates the need for an Estate Trustee to seek legal advice as soon as possible to address any looming limitation issues or other time sensitive legal issues.