Bikur Cholim Jewish Volunteer Services et al. v. Langston et al [Indexed as: Bikur Cholim Jewish Volunteer Services v. Langston]

94 O.R. (3d) 401

Court of Appeal for Ontario,

Rosenberg, Sharpe and Blair JJ.A.

March 4, 2009

Limitations -- Trusts and trustees -- Estate trustee seeking to add estate of former executor LP as defendant in action commenced against another trustee more than two years after LP's death in 2003 and to recover against LP estate on summary judgment motion based on LP's alleged failure to supervise fraudster co-executor -- Limitation period in s. 38(3) of Trustee Act applying without regard to transition provisions in s. 24 of Limitations Act, 2002 -- Term "any other provision of this Act" in s. 19 of Limitations Act, 2002 including transition provisions -- Claim against LP's estate not falling within s. 43(2) of former Limitations Act as it was not founded upon fraud or fraudulent breach of trust to which LP was "party or privy" -- LP not taking part in fraud and having no knowledge of it -- Trustee only to be deprived of benefit of limitation period by operation of s. 43 where trustee knew or was wilfully blind to actions of co-trustee -- Discussion among counsel of possible claim against LP's estate within limitation period not constituting notice of claim within meaning of s. 47 of Estates Act -- Motion for summary judgment being barred by s. 38(3) of Trustee Act -- Estates Act, R.S.O. 1990, c. E.21, s. 47 -- Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, ss. 19, 24 -- Limitations Act, R.S.O. 1990, c. L.15, s. 43(2) -- Trustee Act, R.S.O. 1990, c. T.23, s. 38(3).

LP was an executor and trustee of the estate of PP. Administration of the estate was left in the hands of another trustee, BL, who allegedly looted it. LP died in December 2003. The first report from a forensic accountant suggesting misconduct by BL was received by PP's executors in February 2005. An action was commenced against BL in March 2005. At a meeting of counsel in April 2005, a possible claim against the estate of LP was discussed, but no action was taken. In April 2006, the LP estate was added as a plaintiff to the action. In a motion for summary judgment, the PP estate trustee sought to hold the LP estate liable for some of the losses. The appellant, an executor of the LP estate, brought a motion for a declaration that any claims against the LP estate were barred by virtue of the expiration of the two-year limitation period in s. 38(3) of the Trustee Act. The motion was dismissed. The appellant appealed.

Held, the appeal should be allowed in part.

The limitation period in s. 38(3) of the Trustee Act, which is preserved by s. 19 of the Limitations Act, 2002, applied. Section 19(1) of the Limitations Act, 2002 was engaged since the claim was one to which a provision set out in or under another Act applied, specifically s. 38(3) of the Trustee Act. It was also one to which the Limitations Act, 2002 applied, since the claim was pursued in court proceedings and did not fall within any of the exceptions in s. 2. In those circumstances, s. 19(4) is clear. If there is a conflict between a limitation period established by a provision referred to in s. 19(1), such as s. 38(3), and a limitation period established by any other provision of the Limitations Act, 2002, the limitation period established by a provision such as s. 38(3) prevails. The term "any other provision of this Act" in s. 19 includes the transition provisions of s. 24 of the Limitations Act, 2002. Accordingly, s. 38(3) of the Trustee Act applied in this case without [page402] regard to the transition provisions of s. 24. The claim brought against the LP estate fell within the terms of s. 38(2) of the Trustee Act even though it was cast in terms of breach of fiduciary duty. Section 38(3) of the Trustee Act establishes an absolute limitation period that is not subject to a discoverability exception.

The two-year limitation period in s. 38(3) of the Trustee Act was not prevented from running against the respondents by operation of s. 43(2) of the Limitations Act as the claim was not "founded upon a fraud or fraudulent breach of trust to which the trustee was party or privy". There was no allegation that LP committed any fraud herself, and she was not a "party or privy" to the fraud alleged against BL. It was alleged that LP failed to review BL's activities, abdicated her duty and breached her duty to the beneficiaries of the estate. While she might have been negligent for allowing BL free reign over the administration of the estate, that was not enough to bring her within the exception in s. 43 as a party or privy to BL's fraud. A trustee should only be deprived of the benefit of the limitation period by operation of s. 43 where the trustee knew or was wilfully blind to the actions of the co-trustee.

The discussion among counsel in April 2005 as to a potential claim against LP's estate did not constitute notice of the claim under s. 47 of the Estates Act as it was not "notice giving full particulars of the claim and verified by affidavit" as required by s. 47.

The appellant was not barred from relying on any limitation defence because she did not appeal the order adding the LP estate as a plaintiff.

Nothing in s. 49(2) and (3) of the Estates Act gives a judge the power to award damages in respect of a claim that is statute-barred.

The doctrine of special circumstances survives the enactment of the Limitation Act, 2002 despite the fact that the doctrine was abolished by s. 20 of that Act for cases governed by the limitation periods set out in that Act. However, given the unexplained failure of the respondents to assert a claim against the LP estate within the limitation period despite their knowledge of the possibility of such a claim, this was not a case for application of the special circumstances doctrine to permit adding the LP estate to the action as a defendant. The special circumstances doctrine should be applied with care when it is sought to add an estate as a defendant. There is a presumption of prejudice which was exacerbated in this case by the fact that LP had been incompetent since 1999.

The motion for summary judgment was barred by s. 38(3) of the Trustee Act.

APPEAL from the judgment of Greer J., [2007] O.J. No. 415, 155 A.C.W.S. (3d) 194 (S.C.J.) for the dismissal of a motion for declaration that claims against the estate were statute- barred.

Cases referred to

Giroux Estate v. Trillium Health Centre (2005), 2005 1488 (ON CA), 74 O.R. (3d) 341, [2005] O.J. No. 226, 249 D.L.R. (4th) 662, 194 O.A.C. 231, 30 C.C.L.T. (3d) 88, 13 E.T.R. (3d) 1, 136 A.C.W.S. (3d) 778 (C.A.), Waschkowski v. Hopkinson Estate (2000), 2000 5646 (ON CA), 47 O.R. (3d) 370, [2000] O.J. No. 470, 184 D.L.R. (4th) 281, 129 O.A.C. 286, 44 C.P.C. (4th) 42, 32 E.T.R. (2d) 308, 95 A.C.W.S. (3d) 208 (C.A.); apld Air Canada v. M & L Travel Ltd. (1993), 1993 33 (SCC), 15 O.R. (3d) 804, [1993] 3 S.C.R. 787, [1993] S.C.J. No. 118, 108 D.L.R. (4th) 592, 159 N.R. 1, J.E. 93-1761, 67 O.A.C. 1, 50 E.T.R. 225, 45 A.C.W.S. (3d) 801, consd Other cases referred to Basarsky v. Quinlan, 1971 5 (SCC), [1972] S.C.R. 380, [1971] S.C.J. No. 118, 24 D.L.R. (3d) 720, [1972] 1 W.W.R. 303; Canadian Red Cross Society (Re) (2002), 2002 12908 (ON SC), 62 O.R. (3d) 227, [2002] O.J. No. 4326, [2002] O.T.C. 887, 118 A.C.W.S. (3d) 135 (S.C.J.); Edwards v. Law Society of Upper Canada (No. 1) (2000), 2000 4122 (ON CA), 48 O.R. (3d) 321, [2000] O.J. No. 2084, 133 O.A.C. 305, 50 C.P.C. (4th) 231, 36 E.T.R. (2d) 192, 97 A.C.W.S. (3d) 368 (C.A.); [page403] Estate of Taerk: Turk v. Turk, 1957 137 (ON CA), [1957] O.R. 482, [1957] O.J. No. 636, 9 D.L.R. (2d) 601 (C.A.); Fareed v. Wood, [2005] O.J. No. 2610, [2005] O.T.C. 526, 140 A.C.W.S. (3d) 225 (S.C.J.); Frohlick v. Pinkerton Canada Ltd. (2008), 88 O.R. (3d) 401, [2008] O.J. No. 17, 2008 ONCA 3, 232 O.A.C. 146, 62 C.C.E.L. (3d) 161, 49 C.P.C. (6th) 209, 163 A.C.W.S. (3d) 371, 289 D.L.R. (4th) 639; Kramarz v. KMH Cardiology & Diagnostic Centres (2007), 2007 35707 (ON SC), 87 O.R. (3d) 120, [2007] O.J. No. 3258, 160 A.C.W.S. (3d) 167, 51 C.P.C. (6th) 343 (S.C.J.); Langston v. Landen, [2007] O.J. No. 3667, 160 A.C.W.S. (3d) 921 (S.C.J.); Meady v. Greyhound Canada Transportation Corp. (2008), 90 O.R. (3d) 774, [2008] O.J. No. 2338, 2008 ONCA 468, 53 C.P.C. (6th) 1, 61 M.V.R. (5th) 195, 294 D.L.R. (4th) 152, 166 A.C.W.S. (3d) 763, 240 O.A.C. 188; Philion (Litigation Guardian of) v. Lemieux (Estate of) (2007), 85 O.R. (3d) 1, [2007] O.J. No. 1405, 2007 ONCA 281, 223 O.A.C. 267, 46 C.P.C. (6th) 203, 156 A.C.W.S. (3d) 916; Roth v. Weston Estate (1997), 1997 1125 (ON CA), 36 O.R. (3d) 513, [1997] O.J. No. 4445, 104 O.A.C. 316, 20 E.T.R. (2d) 69, 75 A.C.W.S. (3d) 361 (C.A.); Simone v. Cheifetz, 2000 16978 (ON CA), [2000] O.J. No. 4191, 137 O.A.C. 351, 36 E.T.R. (2d) 297, 104 A.C.W.S. (3d) 243 (C.A.); Swain Estate v. Lake of the Woods District Hospital (1992), 1992 7601 (ON CA), 9 O.R. (3d) 74, [1992] O.J. No. 1358, 93 D.L.R. (4th) 440, 56 O.A.C. 327, 9 C.P.C. (3d) 169, 34 A.C.W.S. (3d) 1015 (C.A.); York Condominium Corp. No. 382 v. Jay-M Holdings Ltd. (2007), 84 O.R. (3d) 414, [2007] O.J. No. 240, 2007 ONCA 49, 220 O.A.C. 311, 59 C.L.R. (3d) 15, 36 C.P.C. (6th) 233, 30 M.P.L.R. (4th) 161, 154 A.C.W.S. (3d) 1205

Statutes referred to

Estates Act, R.S.O. 1990, c. E.21, ss. 47 [as am.], 49, (2), (3) Limitations Act, R.S.O. 1990, c. L.15 [rep.], ss. 43, (2), 44 Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, ss. 2, 4, 19 [as am.], (1) [as am.], (4), 20, 24, (4), (5), (6), 26(1), Sch. [as am.] Trustee Act, R.S.O. 1990, c. T.23, s. 38(3)

Authorities referred to

Dukelow, Daphne A., ed., The Dictionary of Canadian Law, 3rd ed. (Toronto: Thomson Canada Ltd., 2004), s.v. "privy" James, John S., ed., Stroud's Judicial Dictionary of Words and Phrases, 5th ed. (London: Sweet & Maxwell Ltd., 1986), s.v. "privy" Oxford English Dictionary, 2nd ed., s.v. "privy" Waters, Donovan W.M., Waters' Law of Trusts in Canada (Toronto, Thompson Carswell) Werker, Anne, "Limitation Records in Ontario and Claims by Beneficiaries" (2008), 34 Advocates' Q. 1

C. Clifford Lax, Q.C., for appellant Sylvia Bennett. Peter Griffin and Matthew Sammon, for Ronald Rutman, Estate Trustee during litigation.

The judgment of the court was delivered by

[1] ROSENBERG J.A.: -- This case raises issues concerning limitation periods, administration of estates and liability of executors [page404] for misconduct by other executors. The appellant Sylvia Bennett is an executor of the estate of Lorraine Penna. Lorraine Penna in turn was an executor of the estate of her husband Paul Penna. It is alleged that another of the Paul Penna estate trustees, Barry Landen, looted that estate. The new Paul Penna estate trustee seeks to hold the Lorraine Penna estate liable for some of the losses in a summary judgment motion.

[2] The appellant submits that any claims against the Lorraine Penna estate are barred by virtue of the expiration of the limitation period in s. 38(3) of the Trustee Act, R.S.O. 1990, c. T.23. She moved for a declaration to that effect.

[3] Greer J. dismissed the appellant's motion for a declaration. She held that the combined effect of the Trustee Act, the former Limitations Act [the Limitations Act], R.S.O. 1990, c. L.15, the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B and the Estates Act, R.S.O. 1990, c. E.21 was that there was no limitation period. In my view, the appeal should be allowed in part. There is a limitation period, namely s. 38(3), that bars any claims against the Lorraine Penna estate in the summary judgment motion. The Facts

[4] Paul Penna passed away on August 29, 1996. His will appointed his wife Lorraine Penna, Charles Langston and Barry Landen to be the executors of the will and trustees of his estate. The most significant asset of the estate was shares in Paul Penna's holding company, Jakmin Investments Ltd. Upon his death, the three executors also became directors of Jakmin. Lorraine Penna held a life interest in Paul Penna's estate. On her death, the residual beneficiaries were a number of charities. At the time of Paul Penna's death, the estate had a value of approximately $24 million. By February 2004, the value of the estate had dropped to $590,000.

[5] The Paul Penna executors did not probate his will and left administration of the estate and of Jakmin in the hands of Landen. For example, there were never any meetings of the directors of Jakmin and Landen used a rubber stamp to affix Langston's name to cheques issued on behalf of Jakmin and the estate.

[6] By at least 1999, Lorraine Penna's mental health had begun to deteriorate to the point that on October 14, 1999, Ernie Sheriff, Paul Penna's nephew, replaced her as director of Jakmin. Inexplicably, Sheriff did not replace Lorraine as executor and trustee of Paul Penna's estate. In 2002, Lorraine was moved out of her home into a care facility and was diagnosed with Alzheimer's disease. [page405] She passed away on December 18, 2003. Sheriff was appointed executor and trustee of the Paul Penna estate in Lorraine's place. Landen and the appellant, Lorraine's sister, became the executors of Lorraine's estate.

[7] An affidavit by Langston dated February 28, 2005 attaches a report from LECG, a forensic accounting firm. The report accounts for some $11 million which may be legitimate expenses of the Paul Penna estate, such as a tax liability of $7.2 million and other debts. The firm was not able to account for another $11.6 million missing from the estate, except for approximately $4.5 million in "questionable items", most of which relate to actions by Landen. The only mention of Lorraine Penna is that an unknown amount may have been paid for her living expenses. In a more detailed report from the firm dated January 23, 2006, Landen is reported to have withdrawn approximately $92,796 in cash disbursements for the care and maintenance of Lorraine Penna. In a response to the LECG report, Landen appears to accept some of the findings in the report.

[8] On March 1, 2005, Langston, Sheriff and Jakmin issued a notice of action against Landen, his wife and their company. On March 2, 2005, Wilton-Siegel J. issued a Mareva injunction freezing Landen's assets.

[9] On March 31, 2005, Langston, Sheriff and Jakmin commenced an action against Landen, his wife and their company. The statement of claim alleges that Landen misappropriated funds from the Paul Penna estate and from Jakmin. For example, it is alleged that Landen arranged to pay himself large sums from the estate, sold shares held by Jakmin and used the proceeds to purchase a home for himself, caused Jakmin to make various unauthorized payments to himself or his company, and generally "improperly divested large sums of money from the Estate for his personal benefit and for the benefit of his family members and others". The claim makes no allegations against Lorraine Penna. In the statement of claim, Sheriff and Langston state that they knew nothing of the fraudulent and unauthorized activities.

[10] In a meeting of counsel on April 20, 2005, which included counsel for the appellant, there was discussion of a possible claim against the Lorraine Penna estate. This was followed up by a letter from counsel for one of the charities to counsel for the appellant. The letter contains the following:

You have previously been put on notice that the beneficiaries of the estate intend to look to Lorraine Penna's estate for damages arising from her negligence while she acted as an executrix of the Penna estate. (Emphasis added) [page406]

[11] In a notice of application dated December 21, 2005, the various charities that were the residual beneficiaries of the Paul Penna estate brought an application to inter alia remove Langston, Sheriff and Landen as executor and trustees, replace them with new executors and trustees, and appoint an accounting firm as inspector of Jakmin. While the appellant as executor of the Lorraine Penna estate is named as a respondent to this application, the application makes no other mention of the Lorraine Penna estate. For example, while the application alleges that Langston, Sheriff and Landen breached their obligations as executors and trustees, no mention is made of Lorraine Penna or the appellant.

[12] On April 7, 2006, the motion judge made an order removing Landen, Sheriff and Langston as trustees of the Paul Penna estate and removing Sheriff and Langston as directors of Jakmin. Landen, Sheriff and Langston were ordered to pass their accounts as estate trustees of the estate of Paul Penna. The motion judge also made an order adding the estate of Lorraine Penna as a plaintiff to the March 1, 2005 action.

[13] The first formal notice to the appellant in any court document of her possible liability or the liability of the Lorraine Penna estate to the Paul Penna estate is in a notice of motion dated December 4, 2006 seeking partial summary judgment in the amount of $412,353 against Landen, Langston and "Sylvia Bennett and Barry Landen as Estate Trustees of the Estate of Lorraine Penna", in their capacities as estate trustees of the estate of Paul Penna and directors of Jakmin. The notice of motion bears the same court file number as the March 1, 2005 action in which the Lorraine Penna estate is a plaintiff. The allegations against Lorraine Penna are contained in the following paragraphs of the notice of motion:

10. Mrs. Penna (now deceased) was possibly incompetent to act as an Estate Trustee from in or about 1999, yet Mr. Landen, as her co-trustee and attorney under power of attorney, and Mr. Langston as co-trustee did nothing to have her removed.

11. Mrs. Penna, Mr. Sheriff and Mr. Langston took no steps whatsoever to review the activities of Mr. Landen concerning the Estate, blindly trusting him to manage the Estate, thus abdicating their duties, and as such, breached their fiduciary duties as Estate Trustees. . . . . .

12. Mrs. Penna, Mr. Sheriff and Mr. Langston breached their duties as directors and, for Mr. Langston as an officer (secretary and treasurer), of Jakmin to the shareholder of Jakmin (namely, the Estate) by taking no steps whatsoever to review the activities of Mr. Landen, thus abdicating their duties, blindly trusting Mr. Landen to manage Jakmin.

13. The former Estate Trustees and Officers and Directors of Jakmin (Mr. Landen, Mr. Langston, Mr. Sheriff and Mrs. Penna) have therefore [page407] breached their fiduciary duties to the beneficiaries of the Estate and are jointly and severally responsible for the replenishment to the Estate for the amounts of $412,353.00 (Mr. Landen, Mr. Langston and the Estate of Mrs. Penna) and $970,994.57 (Mr. Landen, Mr. Langston, the Estate of Mrs. Penna and Mr. Sheriff), together with interest plus any amount determined to be an additional loss to the capital of the Estate arising from their conduct including but not limited to the failure by them to act in the best interests of the shareholder and beneficiaries, to keep an even hand, to invest for capital growth, and to invest prudently.

[14] In an order dated December 4, 2006, the motion judge ordered that the "Estate of Lorraine Penna, by her Estate Trustees Sylvia Bennett and Barry Landen, shall bring an application to pass Estate Accounts from the date of death of Mr. Penna to the date of death of Mrs. Penna". She also directed a summary determination of inter alia whether Landen, Langston and the appellant as estate trustees of the Lorraine Penna estate are personally, jointly and/or severally liable to the Paul Penna estate for $412,353, "being the amount Mr. Landen has admitted that he owes the Estate".

[15] On February 5, 2007 [[2007] O.J. No. 415, 155 A.C.W.S. (3d) 194 (S.C.J.)], the appellant brought a motion for a declaration that the summary judgment motion and all subsequent claims against the estate of Lorraine Penna or its executors were statute-barred.

[16] On September 21, 2007 [[2007] O.J. No. 3667, 160 A.C.W.S. (3d) 921 (S.C.J.)], the motion judge gave partial summary judgment against Landen for over $3 million. In her reasons, she noted that Landen has admitted that he never paid the $1 million bequest under the Paul Penna will to Lorraine Penna, and invited the Lorraine Penna estate to bring a summary judgment motion of its own against Landen.

The Reasons of the Motion Judge

[17] The motion judge found that no limitation period applied. She rejected the argument of the appellant that the two-year limitation period under s. 38(3) of the Trustee Act, running from Lorraine Penna's death, applied. The motion judge appears to have relied upon ss. 43 and 44 of the former Limitations Act, which she interpreted as preventing any limitation period from running against a beneficiary where the claim is based on fraud, fraudulent breach of trust or conversion of trust property. She also rejected the appellant's submission that the Limitations Act, 2002 barred the claim. The motion judge also referred to s. 24 of the Limitations Act, 2002, the transition provision, and found that no limitation period applied using the rules in that section.

[18] The motion judge also mentioned s. 47 of the Estates Act. That provision prevents a limitation period from running "where [page408] notice of the claim giving full particulars of the claim and verified by affidavit, is filed with the executor" at any time prior to the date upon which the claim would be barred under the Trustee Act. It is unclear whether the motion judge viewed this provision as applying to the facts of this case.

Analysis

[19] In considering the issues raised by this appeal, it is helpful to keep in mind certain key dates:

August 29, 1996 Paul Penna's death December 18, 2003 Lorraine Penna's death January 1, 2004 The "effective date" under the Limitations Act, 2002 February 28, 2005 First report from forensic accountant suggesting misconduct by Landen March 1, 2005 Action commenced by Langston, Sheriff and Jakmin against Landen, his wife and his company. March 31, 2005 Statement of claim issued by Langston, Sheriff and Jakmin April 20, 2005 Meeting of counsel where possible claim against Lorraine Penna estate discussed May 13, 2005 Letter from counsel for one of the charities to counsel for the appellant December 18, 2005 Two years from Lorraine Penna's death April 7, 2006 Charities and Lorraine Penna estate added as plaintiffs to March 31 action; Landen, Sheriff and Langston removed as estate trustees of Paul Penna estate and ordered to pass their accounts December 4, 2006 Order of motion judge giving directions concerning the summary judgment motion and ordering that the estate for Lorraine Penna by her estate trustees (the appellant and Landen) bring an application to pass their accounts from the date of the death of Paul Penna to the date of death of Lorraine Penna. [page409]

[20] The position of the appellant is relatively straightforward. She submits that the two-year limitation period under s. 38(3) expired in December 2005, well before the summary judgment motion was brought almost a year later. She points out that s. 38(3) is preserved by the Limitations Act, 2002. She also submits that the transition provisions under the Limitations Act, 2002 have no application.

Application of the Limitations Act, 2002

[21] Section 2 of the Limitations Act, 2002 provides that subject to certain exceptions that have no application here, the Act applies to claims pursued in court proceedings. Thus, on its face, the Limitations Act, 2002 applies to this case. Ordinarily, that would mean that the basic two-year limitation period from the day on which the claim was discovered, established by s. 4 of the Limitations Act, 2002, would apply. Arguably, the claim was not discovered until February 2005, with the report of the forensic accounting firm. If that were the case, the claim is not barred.

[22] However, the appellant relies upon the limitation period contained in s. 38(3) of the Trustee Act, which is preserved by s. 19 of the Limitations Act, 2002. In view of its importance in resolving the issues in this case, I set out s. 19 in full:

19(1) A limitation period set out in or under another Act that applies to a claim to which this Act applies is of no effect unless, (a) the provision establishing it is listed in the Schedule to this Act; or (b) the provision establishing it, (i) is in existence on January 1, 2004, and (ii) incorporates by reference a provision listed in the Schedule to this Act.

(2) Subsection (1) applies despite any other Act.

(3) The fact that a provision is listed in the Schedule shall not be construed as a statement that the limitation period established by the provision would otherwise apply to a claim as defined in this Act.

(4) If there is a conflict between a limitation period established by a provision referred to in subsection (1) and one established by any other provision of this Act, the limitation period established by the provision referred to in subsection (1) prevails.

(5) Sections 6, 7 and 11 apply, with necessary modifications, to a limitation period established by a provision referred to in subsection (1).

[23] The Schedule to the Limitations Act, 2002 lists s. 38(3) of the Trustee Act. Section 38 provides as follows:

38(1) Except in cases of libel and slander, the executor or administrator of any deceased person may maintain an action for all torts or injuries to the [page410] person or to the property of the deceased in the same manner and with the same rights and remedies as the deceased would, if living, have been entitled to do, and the damages when recovered shall form part of the personal estate of the deceased; but, if death results from such injuries, no damages shall be allowed for the death or for the loss of the expectation of life, but this proviso is not in derogation of any rights conferred by Part V of the Family Law Act.

(2) Except in cases of libel and slander, if a deceased person committed or is by law liable for a wrong to another in respect of his or her person or to another person's property, the person wronged may maintain an action against the executor or administrator of the person who committed or is by law liable for the wrong.

(3) An action under this section shall not be brought after the expiration of two years from the death of the deceased.

[24] Thus, while s. 38(2) allows a person to maintain an action against the executor of an estate (like the appellant in this case) for any wrong to the person or to the person's property by the deceased, s. 38(3) bars any such action after two years from the death of the deceased. The claim brought against the Lorraine Penna estate falls within the terms of s. 38(2), even though cast in terms of breach of fiduciary duty: see Roth v. Weston Estate (1997), 1997 1125 (ON CA), 36 O.R. (3d) 513, [1997] O.J. No. 4445 (C.A.).

[25] In Waschkowski v. Hopkinson Estate (2000), 2000 5646 (ON CA), 47 O.R. (3d) 370, [2000] O.J. No. 470 (C.A.), this court held that s. 38(3) establishes an absolute limitation period that is not subject to a discoverability exception. The motion judge, at para. 29, [[2007] O.J. No. 415, 155 A.C.W.S. (3d) 194 (S.C.J.)] appeared to hold that if she were wrong and there was a limitation period, the claim would not be barred because "the discoverability rule would still apply under the circumstances of this case". In view of Waschkowski, that alternative basis for finding the claim against the appellant to proceed cannot stand: see Anne Werker, "Limitation Records in Ontario and Claims by Beneficiaries" (2008), 34 Advocates' Q. 1, at p. 17. The harshness of the inapplicability of the discoverability rule to cases governed by s. 38(3) is mitigated somewhat by the doctrine of fraudulent concealment: see Giroux Estate v. Trillium Health Centre (2005), 2005 1488 (ON CA), 74 O.R. (3d) 341, [2005] O.J. No. 226 (C.A.), at paras. 28-34. However, there was nothing to suggest that the doctrine had any application in this case.

[26] Section 19(1) of the Limitations Act, 2002 is engaged since the claim in this case is one to which a provision set out in or under another Act applies, specifically s. 38(3) of the Trustee Act. It is also one to which the Limitations Act, 2002 applies, since the claim is pursued in court proceedings and does not fall within any of the exceptions in s. 2. In these circumstances, s. 19(4) is [page411] clear. If there is a conflict between a limitation period established by a provision referred to in s. 19(1), such as s. 38(3), and a limitation period established by any other provision of the Limitations Act, 2002, the limitation period established by a provision such as s. 38(3) prevails.

[27] It may be that the transition provisions in s. 24 of the Act could produce a different result. In my view, however, the term "any other provision of this Act" in s. 19 must include the transition provisions of s. 24. This is consistent with the obvious intent of s. 19, which was to preserve a small number of limitation periods, which would not be affected by the new legislation: see York Condominium Corp. No. 382 v. Jay-M Holdings Ltd. (2007), 2007 ONCA 49, 84 O.R. (3d) 414, [2007] O.J. No. 240 (C.A.), at para. 32.

[28] In my view, this conclusion is consistent with the intent of the Act. I say that for several reasons. First, the transition provisions are based in one way or another on the concept of a "former limitation period". It is difficult to describe the limitation periods referred to in s. 19 as former limitation periods. As Lederer J. said in Kramarz v. KMH Cardiology & Diagnostic Centres (2007), 2007 35707 (ON SC), 87 O.R. (3d) 120, [2007] O.J. No. 3258 (S.C.J.), at para. 32, "the limitation period in the Trustee Act is not a 'former limitation period' because as a result of s. 19(1) of the Limitations Act, 2002 it continues in place. We are not transitioning from one regime to another. The Trustee Act did and does apply. It is not 'of . . . the past'."

[29] Second, if s. 38(3) could properly be described as a former limitation period, the result of applying the applicable rule from s. 24 would be that there is no limitation period. The applicable rule is found in s. 24(4), which provides as follows: [See Note 1 below]

24(4) If the former limitation period did not expire before the effective date and if no limitation period under this Act would apply were the claim based on an act or omission that took place on or after the effective date, there is no limitation period.

[30] Assuming s. 38(3) contains a former limitation period, it did not expire before the effective date. Since there is "no limitation period under this Act", there would be no limitation period. I say that there is no limitation period under this Act because, in my view, the limitation periods referred to in the Schedule are not limitation periods under the Limitation Act, 2002. This is apparent [page412] from the opening words of s. 19(1), which refer to a limitation period "set out in or under another Act" and provide that such a limitation period is of no effect unless the provision establishing it is listed in the Schedule. The provisions listed in the Schedule and preserved by s. 19(1) are under another Act, not "under this Act" within the meaning of s. 24(4). The result is that there is no limitation period. If s. 24(4) were to apply, actions governed by s. 38(3) before and after the Limitations Act, 2002 came into force would be subject to a strict two-year limitation period, while for the small number of actions where the two years did not expire before January 1, 2004, there would be no limitation period at all. The legislature could not have intended such an absurd result: see Philion (Litigation Guardian of) v. Lemieux (Estate of) (2007), 2007 ONCA 281, 85 O.R. (3d) 1, [2007] O.J. No. 1405 (C.A.). In this regard, I agree with Lederer J.'s comments at para. 29 of Kramarz:

For the few cases this approach would govern, there would be no limitation. The potential plaintiffs would obtain new rights. They could sue forever. This is different from the treatment given to actions that arose before and after the actions affected by the transition provisions.

[31] To conclude, in my view, s. 38(3) of the Trustee Act applies to this case without regard to the transition provisions in s. 24.

The former Limitations Act

[32] However, the respondents submit that this is not the end of the story. They argue that even if s. 38(3) would otherwise apply, the two-year limitation period does not run against them because of ss. 43 and 44 of the former Limitations Act. Those provisions provide, in part, as follows:

43(1) In this section,

"trustee" includes an executor, an administrator, a trustee whose trust arises by construction or implication of law as well as an express trustee, and a joint trustee.

(2) In an action against a trustee or a person claiming through a trustee, except where the claim is founded upon a fraud or fraudulent breach of trust to which the trustee was party or privy, or is to recover trust property or the proceeds thereof, still retained by the trustee, or previously received by the trustee and converted to the trustee's use, the following paragraphs apply:

1. All rights and privileges conferred by any statute of limitations shall be enjoyed in the like manner and to the like extent as they would have been enjoyed in such action if the trustee or person claiming through the trustee had not been a trustee or person claiming through a trustee. . . . . . [page413]

44(2) Subject to section 43, no claim of the beneficiary of a trust against the trustee for any property held on an express trust, or in respect of any breach of such trust, shall be held to be barred by any statute of limitations. (Emphasis added)

[33] In Edwards v. Law Society of Upper Canada (No. 1) (2000), 2000 4122 (ON CA), 48 O.R. (3d) 321, [2000] O.J. No. 2084 (C.A.), at para. 13, Goudge J.A. explained that the intent of these provisions was to "free actions against trustees from all statutory limitation periods [including s. 38(3) of the Trustee Act] where they fall within the kinds of action specified in s. 43(2)". The respondents submit that their action falls within s. 43(2), being a claim "founded upon a fraud or fraudulent breach of trust to which the trustee was party or privy".

[34] The possible application of ss. 43 and 44 raise two issues. First, is the claim against the appellant "founded upon a fraud or fraudulent breach of trust to which the trustee was party or privy, or is to recover trust property or the proceeds thereof, still retained by the trustee"? If so, what is the effect of the repeal of ss. 43 and 44 of the former Limitations Act?

[35] I have set out the allegations against Lorraine Penna in the notice of motion for partial summary judgment. The affidavit in support of the motion for summary judgment does not add anything to these allegations. There is no allegation that she committed any act of fraud or that she was in possession of any trust property. Accordingly, if the exemption in s. 43 is to apply it must rest on the allegation that she was a party or privy to the fraud alleged against Landen. In my view, the allegations against Lorraine Penna do not fall within the exemption. It is alleged that she failed to review the activities of Landen, abdicated her duty and breached her duty to the beneficiaries of the estate. In my view, this did not make her a party to or privy to Landen's fraud within the meaning of the former s. 43.

[36] The ordinary rule is set out in Waters' Law of Trusts in Canada (Toronto: Thomson Carswell), at p. 1212: a trustee "is liable for his personal acts and omissions and not for those of his co-trustees" and "does not insure his co-trustee's honesty, attentiveness, or competence". The authors go on to explain that this rule is mitigated by the fact that trustees' responsibilities for their own behaviour may make them liable for the loss caused by another trustee's acts by, for example, permitting investments to be held solely in the co-trustees name.

[37] Lorraine Penna might well have been negligent for allowing Landen free reign over the administration of the estate. But that is not enough to bring her within the exception in s. 43 as a party or privy to Landen's fraud. The term "party" implies at least knowledge on her part of the fraud by Landen. The respondents [page414] make no such allegation. A person cannot be a party to a fraud without at least knowing or being wilfully blind to the fraud.

[38] The term "privy" is not one commonly found in statutes. John S. James in Stroud's Judicial Dictionary of Words and Phrases, 5th ed. (London: Sweet & Maxwell Limited, 1986), at p. 2027, provides this explanation of privy:

As distinguished from a party, a privy "signifies him that is partaker, or hath an interest, in any action or thing" (Cowel);

[39] A similar definition is found in Daphne A. Dukelow, The Dictionary of Canadian Law, 3rd ed. (Scarborough: Thomson Canada Limited, 2004): "Someone who partakes or has an interest in some action or thing". The Oxford English Dictionary, 2nd ed., gives a number of definitions of "privy". The only one that could have application in this context is the following:

Participating in the knowledge of something secret or private; in the secret; privately cognizant or aware; intimately acquainted with or accessory to some secret transaction

[40] The allegations against Lorraine Penna do not show that she falls within any of these definitions. She did not take part in the fraud and had no knowledge of it. In my view, ss. 43 and 44 of the former Limitations Act do not apply. While the motion judge referred to ss. 43 and 44, in my view she overstated their effect by holding that they were "intended to exempt claims for fraud or fraudulent breach of trust or conversion of trust property, from all limitation provisions" (para. 15). The exemption only applies to claims against trustees who are party to or privy to the fraud.

[41] So far as I am aware, the meaning of the term "party or privy" in s. 43 has never been considered by this court. However, some assistance in interpreting the section can be found in the decision of the Supreme Court of Canada in Air Canada v. M & L Travel Ltd. (1993), 1993 33 (SCC), 15 O.R. (3d) 804, [1993] 3 S.C.R. 787, [1993] S.C.J. No. 118. In that case, the court was required to consider the liability of directors of a closely held corporation for breach of trust. The court noted that strangers to the trust can be held liable for a breach of trust as trustees de son tort or if they knowingly participate in a breach of trust. It is the latter concept that provides a helpful analogy in considering the meaning of party or privy. The court held, at p. 810 S.C.R. that a stranger to the trust can be held liable for breach of trust "as one in receipt and chargeable with trust property and as one who knowingly assisted in a dishonest and fraudulent design on the part of the trustees". Thus, liability is based on receipt of trust property or knowing assistance. Similarly, the exception in s. 43 applies where [page415] the trustee is in receipt of trust property or party or privy to the fraud of another trustee.

[42] In Air Canada, at p. 811 S.C.R., the court held that the degree of knowledge required for knowing assistance is "actual knowledge; recklessness or wilful blindness". At p. 812 S.C.R., the court explained the rationale for refusing to impose liability on the basis of mere negligence or constructive knowledge:

The reason for excluding constructive knowledge (that is, knowledge of circumstances which would indicate the facts to an honest person, or knowledge of facts which would put an honest person on inquiry) was discussed in In re Montagu's Settlement Trusts, supra, at pp. 271-73, 275-85. Megarry V.- C. held, at p. 285, that constructive notice was insufficient to bind the stranger's conscience so as to give rise to personal liability. While cases involving recklessness or wilful blindness indicate a "want of probity which justifies imposing a constructive trust", Megarry V.- C., at p. 285, held that the carelessness involved in constructive knowledge cases will not normally amount to a want of probity, and will therefore be insufficient to bind the stranger's conscience. (Emphasis added)

[43] Admittedly, there are distinctions between the concept under consideration in Air Canada and the issues in interpreting s. 43. Most importantly, s. 43 applies to a trustee, not a stranger to the trust. Nevertheless, it seems to me that the concept discussed in Air Canada of "want of probity", meaning lack of honesty, captures the notion implicit in the concept of a party or privy to a fraud or fraudulent breach of trust. It cannot be enough that the trustee was simply negligent or ought to have known that the co-trustee was committing a fraud or fraudulent breach of trust. Therefore, as with the case of a stranger to a trust considered in Air Canada, I would hold that a trustee should only be deprived of the benefit of the limitation period by operation of s. 43 where the trustee knew or was wilfully blind to the actions of the co-trustee. No such allegations have been made against Lorraine Penna.

[44] In view of my conclusion with respect to the meaning of s. 43, I need not deal with the effect of the repeal of that section and s. 44 by s. 26(1) of the Limitations Act, 2002.

Section 47 of the Estates Act

[45] Section 47 of the Estates Act provides that the Trustee Act does not affect the claim of a person against an estate "where notice of the claim giving full particulars of the claim and verified by affidavit, is filed with the executor or administrator of the estate at any time prior to the date upon which the claim would be barred by the Trustee Act". The motion judge said this about s. 47 [at paras. 12-14]: [page416]

Therefore, if an ordinary creditor of Lorraine's Estate had a claim against her, which fell within this provision, and no executor or administrator (now estate trustee) had been appointed, there would be an extension of three months after her death to make the claim, if it would otherwise be barred under the Trustee Act.

The claim against Lorraine, in these proceedings, is not such a claim. See: S. 44 of the said Act. It is a claim arising out of her fiduciary role as one of the estate trustees of her late husband's estate. There was both oral and written notice to Lorraine's estate that a Claim would be forthcoming as early as March 31, 2005, when Lorraine's co- trustee Langston and the replacement co-trustee, Sheriff, took steps against Lorraine's other co-trustee, Landen. Clearly, by April 20, 2005, when the informal meeting of various counsel took place, Lorraine's estate was on notice that the claim against her in her capacity as an estate trustee, would be brought.

Formal Notice of the Partial Summary Judgment now issued was served on Bennett as one of Lorraine's Estate Trustees, on December 4, 2006, seeking damages against Lorraine's Estate. Bennett was aware that the Applicants intended to do so, claiming that such damages arose out of her alleged breach of a legal duty by her while acting as an estate trustee of her late husband's estate. (Emphasis added)

[46] If the motion judge is correct and the claim made against the appellant does not fall within s. 47, then the respondents cannot rely upon that section to relieve against the limitation period in s. 38(3) of the Trustee Act. If the motion judge is incorrect and the claim does fall within s. 47, the respondents still cannot rely upon the section since there is no dispute that the notice specified in s. 47 was not given. While the appellant's counsel was informed orally of a possible claim, which was followed up by a confirmatory letter, there was not "notice of the claim giving full particulars of the claim and verified by affidavit" as required by s. 47.

Waiver of limitation period defence

[47] The respondents submit that since the appellant never appealed the order adding the Lorraine Penna estate as a party, they are barred from relying on any limitation defence. I see no merit to this submission. The estate was added as a plaintiff in April 2006. The appellant would have had no reason to appeal that order. I fail to see how this bars the appellant from relying on a defence that may be open to her when she is called upon to defend a claim. The same applies to the order of the motion judge directing the Lorraine Penna estate to bring an application to pass its estate accounts. I fail to see how the estate's failure to appeal this order constitutes a waiver of any limitation defence.

[48] In a related argument, the respondents submit that the broad jurisdiction under s. 49(2) and (3) of the Estates Act gives the judge the power to inquire into any claim by any person interested in the taking of the accounts. Those subsections provide as follows: [page417]

49(2) The judge, on passing the accounts of an executor, administrator or trustee under a will of which the trustee is an executor, has jurisdiction to enter into and make full inquiry and accounting of and concerning the whole property that the deceased was possessed of or entitled to, and its administration and disbursement.

(3) The judge, on passing any accounts under this section, has power to inquire into any complaint or claim by any person interested in the taking of the accounts of misconduct, neglect, or default on the part of the executor, administrator or trustee occasioning financial loss to the estate or trust fund, and the judge, on proof of such claim, may order the executor, administrator or trustee, to pay such sum by way of damages or otherwise as the judge considers proper and just to the estate or trust fund, but any order made under this subsection is subject to appeal.

[49] There is nothing in s. 49 that suggests a judge has the power to award damages in respect of a claim that is statute-barred. To hold otherwise would fly in the face of s. 38(3) of the Trustee Act. While we were referred to a number of cases [See Note 2 below] that discuss the broad powers under s. 49 and its predecessors, in none of those cases was a claim affected by a limitation period. And, in one of the cases, Simone v. Cheifetz, 2000 16978 (ON CA), [2000] O.J. No. 4191, 36 E.T.R. (2d) 297 (C.A.), at para. 17, this court suggested that an audit under s. 49 is not the appropriate vehicle for litigating a claim of breach of trust.

Special circumstances

[50] In Giroux Estate, this court held that the common-law doctrine of fraudulent concealment applies to suspend the running of the limitation period in s. 38(3) of the Trustee Act. The court also held that this doctrine survives the Limitations Act, 2002. As Moldaver J.A. said, at para. 33:

I would not give effect to that argument. In my view, s. 38(3) was exempted from the new Act so that its common law status would be preserved and it would remain immune from the discoverability rule. In other words, the legislature intended that s. 38(3) should continue to be governed by common law principles. The doctrine of fraudulent concealment is one such principle.

[51] Similarly, this court has held that the doctrine of special circumstances is available to permit a court to add parties to an existing action, despite the expiration of the limitation period in s. 38(3): Swain Estate v. Lake of the Woods District Hospital (1992), 1992 7601 (ON CA), 9 O.R. (3d) 74, [1992] O.J. No. 1358 (C.A.). In Swain, the special circumstances doctrine was applied where the estate was the plaintiff and sought to add additional defendants. Also see [page418] Basarsky v. Quinlan, 1971 5 (SCC), [1972] S.C.R. 380, [1971] S.C.J. No. 118. Although we were not referred to any cases where the special circumstances doctrine was applied against an estate, I can see no basis in principle for distinguishing the two types of cases. Both types of cases turn on the same limitation period in s. 38(3). Applying the reasoning in Giroux Estate, the doctrine of special circumstances also survives the enactment of the Limitations Act, 2002, despite the fact that the doctrine has been abolished by s. 20 of that Act for cases governed by the limitation periods set out in that Act. Also see Meady v. Greyhound Canada Transportation Corp. (2008), 2008 ONCA 468, 90 O.R. (3d) 774, [2008] O.J. No. 2338 (C.A.), at para. 22.

[52] Accordingly, if the plaintiffs in any existing action can show special circumstances, the Lorraine Penna estate can be added as a party. The only existing action appears to be the March 1, 2005 action launched by Langston, Sheriff and Jakmin in which the estate is now a plaintiff. The motion judge did not consider the application of the doctrine of special circumstances.

[53] In my view, this is not a case for application of the doctrine of special circumstances to permit adding the Lorraine Penna estate to the action as a defendant. I begin with the chronology. Lorraine Penna passed away on December 18, 2003. She had been incompetent for some time before that, at least since October 1999, when Ernie Sheriff, Paul Penna's nephew, replaced her as a director of Jakmin. By March 2005, the solicitors for the estate were in possession of the first report from LECG forensic accountants, dated February 28, 2005, clearly indicating questionable transactions by Landen and resulting in a notice of action against Landen, his wife and their company on March 1, 2005. Wilton-Siegel J. issued a Mareva injunction freezing Landen's assets the following day. Langston, Sheriff and Jakmin issued the statement of claim on March 31, 2005. There is no claim against the Lorraine Penna estate.

[54] On April 20, 2005, at a meeting of counsel, the solicitor for the Lorraine Penna estate was informed of a possible claim. Most of the charities that are now the respondents to this appeal were represented by counsel at this meeting. This was followed up with a letter from counsel for several of the charities. Almost eight months remained before expiration of the two-year limitation period, but neither the Paul Penna estate nor the charities did anything to commence a claim against the Lorraine Penna estate. They did not even invoke the procedure in s. 47 of the Estates Act, which would have stopped the s. 38(3) clock from running. On December 21, 2005, three days after the limitation period under s. 38(3) expired, the charities applied to the court to remove Langston, Sheriff and Landen as executors of Paul Penna's will and trustees [page419] of Paul Penna's estate, and to substitute and replace them with representatives of several of the charities, representing 45 per cent of the charitable beneficiaries of the estate. Again, no action was taken against the Lorraine Penna estate. LECG prepared a more comprehensive report for the estate on January 23, 2006, just over a month after expiration of the limitation period. This report refers to some payments made by Landen for the care of Lorraine Penna. Nothing was done to make a claim against the Lorraine Penna estate. On April 7, 2006, the Lorraine Penna estate was added as a plaintiff to the March 1, 2005 action; nothing was done to add the estate as a defendant.

[55] It is only almost a year after expiration of the limitation period on December 4, 2006 that a claim is made against the Lorraine Penna estate in the motion for summary judgment. The estate trustee during litigation of the estate of Paul Penna, Ronald C. Rutman, provided an affidavit in support of the motion for summary judgment. That affidavit provides no explanation for the delay in commencing any action against the Lorraine Penna estate. Moreover, Mr. Rutman appears to accept the statement contained in a response from Landen to the first LECG report that "within a year and a half after Paul's death [August 1996], Lorraine's mental well being deteriorated" so that he was "given a power of attorney to act on her behalf".

[56] In my view, the special circumstances doctrine should be applied with care when it is sought to add an estate as a defendant. As Abella J.A. observed in Waschkowski, at para. 9 the policy consideration underlying the clear time limit in s. 38(3) is to favour disposition of estate matters with finality. The two-year window makes access to a remedy "available for a limited time without creating indefinite fiscal vulnerability for an estate". In my view, there is an additional policy consideration: the difficulty an estate may have in defending against a stale claim. This case provides an obvious example. Not only is Lorraine Penna not around to defend herself, but it seems that from at least 1999 she was incompetent.

[57] In their factum, the respondents submit that special circumstances clearly exist and that there is no prejudice to the Lorraine Penna estate. I disagree. There is a presumption of prejudice that is exacerbated in this case by the incompetence of Lorraine Penna since 1999. The respondents say that special circumstances exist by the fact that Landen, as co-executor of the Lorraine Penna estate, was well aware of the fraud at all relevant times. But it is hardly a comfort to the estate that the fraudster was aware of his defalcation. In any event, the respondents have an action against Landen. The respondents also rely upon [page420] the notice the estate would have received from the March 2005 application for a Mareva injunction, the April meeting and the May letter. However, the onus is on the respondents to establish special circumstances: Frohlick v. Pinkerton Canada Ltd. (2008), 2008 ONCA 3, 88 O.R. (3d) 401, [2008] O.J. No. 17 (C.A.), at para. 22. They have not explained why they did not commence an action against the estate at that time or at least invoke the s. 47 procedure.

[58] In Canadian Red Cross Society (Re) (2002), 2002 12908 (ON SC), 62 O.R. (3d) 227, [2002] O.J. No. 4326 (S.C.J.), Blair R.S.J. reviewed the application of the special circumstances doctrine in the context of s. 38(3), albeit where it was the estates that sought relief from the expiry of the two-year limitation period (also see Swain Estate). He referred, at para. 23, to the statement in Basarsky, at p. 384 S.C.R., that "the power to allow an amendment after the time limited by a Statute of Limitations will necessarily be infrequently invoked as the circumstances warranting its use will not often occur". In the end, at para. 25, Blair R.S.J. refused to apply the doctrine because there were no special or peculiar circumstances "other than those normally flowing from the individual injustice of a limitation period expiring". In my view, the same must be said here. The respondents have had the advice of solicitors for a considerable time and were in possession of the relevant facts for many months before the limitation period expired. Moreover, the injustice is attenuated here given that the real perpetrator of the fraud, his spouse and his company are parties to the actions, and that the respondents have not produced evidence to indicate that the Lorraine Penna estate received any proceeds of the fraud.

Disposition

[59] The appellant sought a declaration before the motion judge in the following terms:

(a) for a Declaration that the Partial Summary Judgment Motion brought on by Rutman, as Estate Trustee during Litigation, as well as any future claims for damages brought against the Estate of Lorraine Penna, or its executors, arising out of any alleged breach of legal duty by Lorraine Penna while acting as an executor of the Estate of Paul Penna, are statute-barred;

(b) for a Declaration that subparagraph (a) above be a defence to any and all subsequent claims for damages brought against the Estate of Lorraine Penna, or its executors, arising out of any alleged breach of legal duty by Lorraine Penna while acting as an executor of the Estate of Paul Penna, in these or related proceedings;

[60] In my view, the case for such a broad declaration has not been made out. This case was argued entirely in the context of the summary judgment motion. Accordingly, I would allow the [page421] appeal, but only to the extent of declaring that the motion for summary judgment is barred by s. 38(3) of the Trustee Act. In my view, the appellant is entitled to the costs of the appeal, which I would fix at $24,529.58 inclusive of GST and disbursements. The appellant is also entitled to her costs before the motion judge. If the parties are unable to agree on those costs, they may submit brief submissions to the registrar within ten days of the release of these reasons.

Appeal allowed in part.

Notes

Note 1: I say that applicable rule is found in s. 24(4) because the other rules in subsections (5) and (6) are both conditioned on there being a limitation period "under this Act". In the present case, there is no such limitation period: see para. 29.

Note 2: The Estate of Taerk: Turk v. Turk, 1957 137 (ON CA), [1957] O.R. 482, [1957] O.J. No. 636 (C.A.); Fareed v. Wood, [2005] O.J. No. 2610, [2005] O.T.C. 526 (S.C.J.).