Limitation applicable to constructive trust and unjust enrichment claims

Introduction

The decision in Ingram v. Kulynych Estate (“Ingram”), by the Ontario Court of Appeal (the “ONCA”) addressed whether the ten-year limitation period under Section 4 of the Real Property Limitations Act R.S.O. 1990, c. L.15 (“RPLA”) applies to the respondent, Kathleen Ingram’s, constructive trust and unjust enrichment claim against Mr. Kulynych’s estaterather than the two-year period under Section 38(3) of the Trustee Act, R.S.O. 1990, c. T.23 (“Trustee Act”).

Section 4 of the RPLA states:

Limitation where the subject interested

No person shall make an entry or distress, or bring an action to recover any land or rent, but within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to some person through whom the person making or bringing it claims, or if the right did not accrue to any person through whom that person claims, then within ten years next after the time at which the right to ma]ke such entry or distress, or to bring such action, first accrued to the person making or bringing it. R.S.O. 1990, c. L.15, s. 4.

Section 38(3) of the Trustee Act states:

Limitation of actions

(3) An action under this section shall not be brought after the expiration of two years from the death of the deceased. R.S.O. 1990, c. T.23, s. 38.

Unjust enrichment can be defined as “the unjust retention of a benefit to the loss of another, or the retention of money or property of another, against the fundamental principles of justice or equity and good conscience”1.

Facts/Background

Mr. Kulynych (the “Deceased”) died in February 2017, leaving a Last Will and Testament that he had prepared in 1989 (the “Will”). He left his estate to his first wife. If she died first, which she did, then the remainder was left to his three children (the “Beneficiaries”). His daughter, the appellant, Cherise Charron, was appointed as the Estate Trustee pursuant to a Certificate of Appointment in July 2018 (the “Estate Trustee”). The Will left nothing to the respondent.

The respondent claimed that she had been in a common law relationship with the Deceased from 1999 to his death in 2017 and that she supported him financially and emotionally, and “was by [his] side for all of his medical needs and took care of him until the day he died”.

The estate at the time of the Deceased’s death was valued at $690,119.59.

The estate’s principal asset was a house in the Town of Ajax (the “Property”) that the Estate Trustee ultimately sold for $475,585.10 on March 29, 2019. After the distribution of the estate to the beneficiaries, a small holdback of $1,910.07 remained in the estate until July 2021 when the Estate Trustee distributed the holdback to herself.

On March 10, 2021, more than four years after the death of the Deceased, the respondent commenced an application against the estate. She claims that she was entitled to receive one-third of the total value of the estate, to recover “some of the money that she spent in caring for and providing for the deceased over the years”. The respondent commenced an application against Mr. Kulynych’s estate for dependant’s support under the Succession Law Reform Act, R.S.O. 1990, c. S.26 (“SLRA”). She also brought an equitable trust claim for a share of the estate.

Decision of the motion judge

The motion judge relied upon the Superior Court decision in Wilkinson v. The Estate of Linda Robinson, 2020 ONSC 91, 55 E.T.R. (4th) 56 that held the ten-year limitation period under s. 4 of the RPLA applied to equitable trust claims against estates.

It was observed that the respondent’s equitable trust claim was not a “wrong” as defined under Section 38(2) of the Trustee Act and therefore, the ten-year limitation period under the RPLA applied and the respondent’s claim was not statute-barred.

Parties’ position before the ONCA

Position of the appellants– The appellants argued that the motion judge erred in concluding that the 10-year limitation period applied.

The arguments of the appellants were two-fold: (a) The respondent does not have an equitable trust claim; (b) If the respondent has an equitable trust claim, it falls within the claims described in s. 38(2) of the Trustee Act that are subject to the two-year limitation period under s. 38(3) of the Trustee Act.

They urged the court to lay the principle that all such equitable trust claims against an estate must be subject to the two-year period prescribed under s. 38(3) of the Trustee Act.

Position of the respondent– The respondent submitted: (a) There is no reason to distinguish between limitation period for inter vivos equitable trust claims and estate equitable trust claims; (b) Equitable trust claims are not “wrongs” committed by the deceased as defined in the Trustee Act. Therefore, the motion judge correctly ascertained that the ten-year limitation period under the RPLA is applicable.

Analysis of the ONCA

Legislative history: The ONCA perused multiple case laws to ascertain the legislative intent. Primarily the court relied upon the decision in Waschkowski v. Hopkinson Estate, (2000), 47 O.R. (3d) 370 (C.A.), which confirms that the two-year limitation period under the Trustee Act is a strict limit, and the discoverability principle does not apply to actions under s. 38 of the Trustee Act.

The inapplicability of the discoverability principle and the two-year limitation period evidences the legislative intent that actions against estates be subject to the shorter limitation period. The shorter, two-year limitation period for estate matters reflects the long-established duty of estate trustees to administer estates promptly and diligently, including ascertaining the estate’s liabilities and debts as quickly as possible, as the expeditious administration of estates is in the interests of justice2.

The ONCA specifically noted paragraph 9 of Waschkowski which explains that the two-year period allows “access to a remedy available for a limited time without creating indefinite fiscal vulnerability for an estate.” The ONCA explained the underlying legislative policy considerations that inform the enactment and meaning of s. 38 of the Trustee Act:

The underlying policy considerations of this clear time limit are not difficult to understand. The draconian legal impact of the common law was that death terminated any possible redress for negligent conduct. On the other hand, there was a benefit to disposing of estate matters with finality. The legislative compromise in s. 38 of the Trustee Act was to open a two-year window, making access to a remedy available for a limited time without creating indefinite fiscal vulnerability for an estate. [Emphasis added.]

The ONCA compared related statutes to infer the legislative intent of a shorter limitation period for estate matters. This approach seeks to avoid contradictions or inconsistencies among parts of the same body of legislation and presumes that constituent elements of a legislative scheme are meant to work together logically and purposively, each contributing to the achievement of the legislature’s goal.

In line with this, the ONCA compared the limitation periods under the Succession Law Reform Act, the Estates Act, the Family Law Act and the older Limitation Act to note that very short limitation period under s.38(2) applies to estates, unless there is an exception.

Respondent’s claim: The subsequent issue to be decided by the ONCA was whether the respondent’s equitable trust claim falls within s.38(2) of the Trustee Act. The ONCA observes that the respondent’s claim for unjust enrichment falls squarely within s.38(2) of the Trustee Act.

Unjust enrichment is appropriately construed as a “wrong” under s.38(2) of the Trustee Act.

The ONCA also applied the principle of generalia specialibus non derogant3 to adjudicate upon the apparent conflict between the specific provisions of s.38 of the Trustee Act and the general provisions of s.4 of the RPLA.

Applying this principle, having regard to the language, the legislative history and purposes, and judicial treatment of ss. 38(2) and (3) of the Trustee Act, the ONCA held that those provisions are more specific than s. 4 of the RPLA and are intended to apply to equitable trust claims against estates.

Decision of the ONCA

The ONCA concluded that the two-year limitation period under the Trustee Act applies to the respondent’s equitable trust claim against the appellants.

The ONCA held that as the respondent failed to bring her equitable trust claim within two years of the Deceased’s passing, it is statute-barred and should be dismissed.

Conclusion

This decision emphasizes the need for timely action in estate claims, particularly in cases involving equitable claims like constructive or resulting trusts. By confirming that such claims are subject to the shorter, two-year limitation period, the court affirmed the legislative goal of ensuring that estate matters are resolved promptly. This decision now serves as an important precedent in estate and trust law, guiding claimants to bring timely claims seeking equitable remedies from an estate.

This article was originally published by Law360 Canada, part of LexisNexisCanada Inc.