CITATION: Reid et al. v. Reid; Reid v. Reid et al., 2016 ONSC 2098
COURT FILE NO.: 14-061 / 12-150
DATE: 20160324
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ROBERT REID, as Estate Trustee of the Estate of Mary Reid, ROBERT REID, in his personal capacity and SPRINGBANK CHALET FARMS LIMITED
Judith L. Turner, for the Applicants
Applicants
- and -
BARRY WALTER REID
G. Edward Oldfield, for the Respondent
Respondent
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
BARRY REID
G. Edward Oldfield, for the Applicant
Applicant
- and -
ROBERT REID, as Estate Trustee of the Estate of Mary Reid and ROBERT REID, in his personal capacity
Judith L. Turner, for the Respondents
Respondents
HEARD: March 22, 2016
REASONS FOR JUDGMENT
Conlan J.
I. Introduction
[1] Barry and Robert Reid are brothers. Barry is sixty years old. Robert is younger. Their parents are both deceased. The family operated a farm for many years.
[2] With the loss of their folks, one would have thought that the two brothers might look to each other for love and support. Unfortunately, their only connection is as adversaries in litigation.
[3] This case involves two siblings who are fighting about the applicability of a limitation period that might bar Barry’s claims and the validity of a purported holograph will that Barry states represents their father’s last wishes.
[4] The matter came to trial before me in Owen Sound on March 22, 2016. On consent of both parties, I heard evidence and submissions on the limitation period issue alone. My decision in that regard will govern whether it is necessary to advance to the next stage of the trial - an assessment of the validity of the alleged holograph will.
[5] On March 22, some documents were entered as exhibits, all on consent. I heard testimony from Barry and Robert. No other witnesses were called. The parties have agreed on the chronology of events and jointly filed a list of relevant dates to assist the Court.
[6] I am grateful to two experienced and professional counsel who came to Court prepared and focussed and who presented the evidence and the arguments succinctly.
II. The Chronology and the Facts Not in Issue
[7] On December 29, 1971, Springbank Chalet Farms Limited (“Springbank”) was incorporated. That was at all material times the corporate entity through which the family owned and operated the farm. It was primarily a dairy operation. There were about 75 acres total, in two parcels – the larger parcel (including the home) in the former Sydenham Township and the smaller parcel across the road in the former Holland Township, all in Grey County.
[8] On April 17, 1984, Walter Reid, the late father of Barry Reid and Robert Reid, executed his “Last Will and Testament”. This document is in the Trial Record and is what one would expect a typical lawyer-prepared will to look like. In short, Walter appointed his wife, Mary Reid, as his Executrix and Trustee and bequeathed all of his property to her.
[9] In April 1984, Walter signed a handwritten document on farm corporation letterhead indicating that he wished to be cremated. On that document, also in the Trial Record, there are what appear to be confirmations of that wish in 1985, 1986, 1988 and January 1991.
[10] The purported holograph will allegedly signed by Walter on January 14, 1991 is in the Trial Record. The date is at the top – “Jan 14 1991”. It is addressed “to whom it may concern”. The next five lines on the document read as follows: “please find this as my last Will”; “I leave my 301 shares to Barry Reid”; “I leave my 5000 shares to Barry Reid”; “I leave my share of the quota to Barry Reid”; “I leave my share of the Farm to Barry Reid”. At the bottom of the document, it states (in three lines) “signed by myself” “on January 14/1991” “Walter Inglis Reid”. No new trustee was appointed. Nothing was stated about the other property, albeit very limited, owned by Walter at that time.
[11] It is the validity of that writing as an alleged holograph will that is the issue for the second stage of the trial, if we get that far.
[12] On April 2, 1995, Walter Reid died.
[13] The first Income Tax Return filed by Springbank after Walter’s death (Exhibit 4) shows Mary Reid as the owner of 93% of the corporation’s voting shares. Prior to Walter’s death, the two spouses were roughly equal owners of the shares. Barry and Robert, both before and after Walter died, split equally the remaining 7% of the voting shares.
[14] Not long after Walter died, Barry Reid left the farm. Mary Reid and Robert Reid remained.
[15] On February 15, 1999, Brian Barrie, a lawyer retained by Barry Reid, wrote a letter to Mary Reid (Exhibit 1) which invited negotiations to settle Barry’s interest in Springbank.
[16] On June 30, 1999, Brian Barrie dictated a memo to file (Exhibit 2) which indicated that he had met with Barry Reid that morning, at which time Barry Reid showed Mr. Barrie the purported holograph will dated January 1991.
[17] Barry Reid testified that he found that document in a safe in the farm home at some unknown date prior to his meeting with his lawyer on June 30, 1999. Thus, it is common ground that any limitation period that might exist with regard to Barry’s claims in this litigation started to run, at the very latest, on June 30, 1999.
[18] On July 13, 2009, Barry Reid’s current counsel, Mr. Oldfield, wrote a letter to Mary Reid and Robert Reid (Exhibit 3) which essentially attempted to re-start the settlement negotiations that began in 1999.
[19] On May 28, 2012, Barry Reid commenced an Application at Court. Among other relief, he sought a declaration of the validity of the alleged holograph will dated January 1991 and a declaration that he is the owner of all of the shares in Springbank that Walter owned when he died.
[20] On September 4, 2012, Mary Reid died.
[21] On March 13, 2014, a Court Application was commenced by Robert Reid (both as Trustee of the Estate of Mary Reid and personally) and Springbank. Among other relief, it sought a declaration that Barry’s claims are statute-barred by a limitation period.
[22] On August 22, 2014, an Order was made consolidating the two Applications and directing a trial of four issues including the limitation period conundrum.
[23] Here we are today.
III. The Positions of the Parties on the Limitation Period Issue
[24] For convenience, I refer to in these Reasons as the “old Act” the Limitations Act, R.S.O. 1990, chapter L.15, and I refer to as the “new Act” the Limitations Act, 2002, S.O. 2002, chapter 24, Schedule B.
[25] The parties agree that, because Barry Reid discovered the purported holograph will dated January 1991 in 1999 (prior to the coming into force of the new Act), the old Act governs (subject to a consideration of the transition provisions contained in the new Act).
[26] Barry Reid submits that, under the old Act, his claims are not subject to any limitation period. Further, it is submitted that, by virtue of subsection 24(6) of the new Act, it remains that Barry’s claims are not subject to any limitation period.
[27] Robert Reid submits that, under the old Act, Barry’s claims are subject to a six-year limitation period that expired, at the latest, on June 30, 2005 (six years after June 30, 1999, the date that Barry gave the alleged holograph will to his then lawyer, Brian Barrie, and was advised of his option to take the matter to court). As such, Barry’s claims (advanced by an Application commenced many years later, in May 2012) are statute-barred.
[28] Alternatively, Robert Reid submits that Mr. Oldfield’s letter dated July 13, 2009 (Exhibit 3) effectively re-started (my term) the limitation period, that period being two years under the new Act. Consequently, Barry’s claims are subject to a limitation period that expired on July 13, 2011. Barry’s Application not having been commenced until May 2012, his claims are statute-barred.
IV. The Relevant Legislation and the Issues to be Decided
[29] Part II of the old Act, sections 42 through 44 (at tab 5 of the Book of Authorities submitted by Barry Reid), provides as follows.
This Part applies to a trust created by an instrument or an Act of the Legislature heretofore or hereafter executed or passed. R.S.O. 1990, c. L.15, s. 42.
(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:
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.
If the action is brought to recover money or other property and is one to which no existing statute of limitations applies, the trustee or person claiming through the trustee is entitled to the benefit of, and is at liberty to plead, the lapse of time as a bar to such action in the like manner and to the like extent as if the claim had been against the trustee or person claiming through the trustee in an action of debt for money had and received; but so nevertheless that the statute shall run against a married woman entitled in possession for her separate use, whether with or without restraint upon anticipation, but shall not begin to run against any beneficiary unless and until the interest of such beneficiary becomes an interest in possession.
(3) No beneficiary, as against whom there would be a good defence by virtue of this section, shall derive any greater or other benefit from a judgment or order obtained by another beneficiary than the beneficiary could have obtained by bringing the action and pleading this section. R.S.O. 1990, c. L.15, s. 43.
- (1) Where land or rent is vested in a trustee upon an express trust, the right of the beneficiary of the trust or a person claiming through the beneficiary to bring an action against the trustee or a person claiming through the trustee to recover the land or rent, shall be deemed to have first accrued, according to the meaning of this Act, at and not before the time at which the land or rent has been conveyed to a purchaser for a valuable consideration, and shall then be deemed to have accrued only as against such purchaser and any person claiming through the purchaser.
(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. R.S.O. 1990, c. L.15, s. 44.
[30] As the reader can see, clause 1 of subsection 43(2) of the old Act is the presumptive clause – the trustee is entitled to the protection of what was then the standard limitation period of six years.
[31] There are, however, exceptions to that protection afforded to a trustee. The exceptions are delineated in the first few lines of subsection 43(2) of the old Act. The exceptions arise in cases of (i) fraud or fraudulent breach of trust, (ii) where the claim against the trustee is to recover trust property or proceeds therefrom still retained by the trustee, and (iii) where the claim against the trustee is to recover trust property or proceeds therefrom previously received by the trustee and converted to the trustee’s use.
[32] Where one or more of those exceptions apply, the claim against the trustee is not subject to any limitation period.
[33] In our case, Barry Reid submits that two of the exceptions apply – items (ii) and (iii) outlined above. Robert Reid submits that none of the exceptions apply.
[34] The transition provisions contained in the new Act, subsections 24(1) through 24(6) (at tab 6 of the Book of Authorities submitted by Barry Reid), state as follows.
- (1) In this section,
“former limitation period” means the limitation period that applied in respect of the claim before January 1, 2004. 2002, c. 24, Sched. B, s. 24 (1); 2008, c. 19, Sched. L, s. 5 (1, 2).
(2) Subject to subsection (2.1), this section applies to claims based on acts or omissions that took place before January 1, 2004 and in respect of which no proceeding has been commenced before that date. 2002, c. 24, Sched. B, s. 24 (2); 2008, c. 19, Sched. L, s. 5 (4); 2016, c. 2, Sched. 2, s. 5 (1).
(2.1) This section does not apply to a claim in respect of which clause 16 (1) (h), (h.1) or (h.2) applies. 2016, c. 2, Sched. 2, s. 5 (2).
(3) If the former limitation period expired before January 1, 2004, no proceeding shall be commenced in respect of the claim. 2002, c. 24, Sched. B, s. 24 (3); 2008, c. 19, Sched. L, s. 5 (3).
(4) If the former limitation period did not expire before January 1, 2004 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 that date, there is no limitation period. 2002, c. 24, Sched. B, s. 24 (4); 2008, c. 19, Sched. L, s. 5 (5).
(5) If the former limitation period did not expire before January 1, 2004 and if a limitation period under this Act would apply were the claim based on an act or omission that took place on or after that date, the following rules apply:
If the claim was not discovered before January 1, 2004, this Act applies as if the act or omission had taken place on that date.
If the claim was discovered before January 1, 2004, the former limitation period applies. 2002, c. 24, Sched. B, s. 24 (5); 2008, c. 19, Sched. L, s. 5 (3, 6, 7).
(6) If there was no former limitation period and if a limitation period under this Act would apply were the claim based on an act or omission that took place on or after January 1, 2004, the following rules apply:
If the claim was not discovered before January 1, 2004, this Act applies as if the act or omission had taken place on that date.
If the claim was discovered before January 1, 2004, there is no limitation period. 2002, c. 24, Sched. B, s. 24 (6); 2008, c. 19, Sched. L, s. 5 (3, 8).
[35] As the reader can see, the import of clause 2 of subsection 24(6) of the new Act is that, because there is no dispute that Barry’s claims were discovered before January 1, 2004, if Barry is successful in persuading the Court that his claims were not subject to any limitation period under the old Act then there is no limitation period.
[36] The key issue, therefore, is whether Barry’s claims are subject to the six-year limitation period under the old Act. More specifically, the inquiry is whether any of the exceptions referred to in subsection 43(2) of the old Act apply in this case, thereby removing the protection otherwise afforded to claims against the trustee (Mary Reid).
[37] With even more particularity, do Barry’s claims fall within item (ii) outlined above – are they claims against the trustee to recover trust property or proceeds therefrom still retained by the trustee, and/or do Barry’s claims fall within item (iii) outlined above – are they claims against the trustee to recover trust property or proceeds therefrom previously retained by the trustee and converted to the trustee’s use?
V. The “Elephant in the Room”
[38] I am well aware of the fact that, if I conclude that Barry’s claims are statute-barred by a limitation period, the result will appear quite unfair on its face: Robert will end up with 96.5% of Springbank (because Mary Reid left Robert everything), while Barry will end up with just 3.5%.
[39] That may not be what many parents would want for their children, but I cannot make my decision on the limitation period issue based on that concern. Persons, with few exceptions, are free to arrange their testamentary affairs however they wish. Mary Reid had every right to leave her entire estate to Robert. It is not this Court’s function to second-guess Mary’s decisions and then tailor my decision on the limitation period issue to try to advance the case to the next stage of the trial and to suit what I think would be a more equitable result.
VI. Short Conclusion
[40] This case does not turn on the testimony at Court on March 22, 2016 of Barry and Robert Reid. It turns on the law.
[41] Despite Mr. Oldfield’s very able submissions, I disagree that either of the two exceptions relied upon in subsection 43(2) of the old Act apply in this case. Consequently, I find that the claims advanced by Barry against the trustee (Mary Reid) are subject to a six-year limitation period and expired no later than June 30, 2005. As Barry’s Application was not commenced until nearly seven full years after the expiration date, Barry’s claims are statute-barred. His Application must, therefore, be dismissed.
[42] Barry Reid chose to sit on what he believed was his late father’s last will (the January 1991 document) for years and years, without any action at all. He chose to wait until 2012, at least thirteen years after finding the purported holograph will, to bring the matter to court. The only explanation offered by Barry is a lack of finances, which explanation makes no sense because he had the money to retain Brian Barrie in 1999 and eventually paid Mr. Barrie’s outstanding account(s) in order to get his documents back and retain Mr. Oldfield by merely selling a few shares that he owned in Gay Lea, shares that he owned all along.
[43] The clock simply ran out on Barry Reid.
[44] There is no need to address Robert Reid’s alternative argument that, under the new Act, Barry’s claims became statute-barred two years after Mr. Oldfield’s letter dated July 13, 2009 (Exhibit 3).
VII. Analysis
[45] None of the court decisions filed by counsel are directly on point, however, some of them are helpful in terms of basic principles.
[46] Barry Reid relies upon the following passage in the decision of Justice Molloy in Ekstein v. Brown Estate, [1996] O.J. No. 3058 (Gen. Div.), at paragraph 17.
- I am also of the view that the claim is not defeated by s. 43 of the Limitations Act which imposes upon an action against a trustee for the recovery of money the same limitation period as in an action of debt for money had and received (i.e. 6 years from the date the cause of action arose). First, that section, by its own terms, does not apply to a claim to recover trust property which is still retained by the trustee or which was previously received by him and converted to his own use. In this case, it is not clear whether the funds remain in the hands of the trustee because the trustee has never passed his accounts. If the funds are still held by the trust, the limitation period in the Act does not apply. If the funds were disbursed, they were disbursed to parties not at arm’s length from the trustee (i.e. to Nugate and to his daughter) and therefore could be said to have been converted to his own use. Again, this would make the limitations provision inoperable. Second, and most important, the cause of action here was not discovered until 1993. The beneficiary should not be penalized for failing to bring an action to recover money she did not know existed. In my view, the principles that led to the development and acceptance of the discoverability rule in other contexts, are equally applicable here. Thus, since this action was brought promptly once the facts giving rise to it were discovered, and since the delay itself has not caused any prejudice to the respondent, in my opinion the requirements of the Limitations Act have been met.
[47] Counsel for Barry Reid argues that the said passage supports the position that the third exception in subsection 43(2) of the old Act (dealing with conversion of property) does not have to involve anything criminal, nefarious or even improper – it could include a simple transfer of property. Thus, counsel argues, it includes what happened here when, after Walter Reid died, Mary Reid (as trustee) transferred Walter’s shares in Springbank in to her own name (as evidenced by Exhibit 4, the corporate Income Tax Return).
[48] It is a creative argument, however, it does not persuade me.
[49] Any standard definition of the word “convert”, from which “conversion” is derived, is to change in form, character or function. See, for example, the most recent edition of The Concise Oxford Dictionary.
[50] Mary Reid did not convert the shares. In accordance with Walter Reid’s 1984 will, she simply took the shares, first as the custodian trustee and then as the rightful beneficiary. None of the form, character or function of the shares changed.
[51] Further, any standard definition of the term “convert to one’s own use” is to do something wrongful or improper. See, for example, the most recent edition of The Concise Oxford Dictionary.
[52] Nothing wrongful or improper was done here. Mary Reid was not only lawfully but reasonably entitled to rely upon the 1984 will.
[53] The facts that confronted Justice Molloy in Ekstein, supra were quite different from what we have in this case. The trustee in the case relied upon by Barry Reid acted in a clandestine manner in either retaining trust property funds without passing accounts, as required, or disbursing trust property funds to others who were not at arm’s length from the trustee. Either way, the Court concluded that it would have been inequitable to allow the trustee to benefit from his secret affairs by barring the claims of the ignorant beneficiaries (see paragraphs 16 and 17 of the decision).
[54] Mary Reid did not act in some secret manner. Everyone knew about the 1984 will. Mary received what was bequeathed to her. It is that simple.
[55] Thus, I find that the third exception identified in subsection 43(2) of the old Act, conversion, does not apply in our case.
[56] Concerning the second exception contained in subsection 43(2) of the old Act, Barry Reid relies upon the decision of the Court of Appeal for Ontario in Strean v. Hartfam Holdings Ltd., 2006 CanLII 266. Paragraphs 56 through 60 of that decision are instructive.
[56] As previously noted, s. 43(2) provides that a trustee enjoys the rights and privileges conferred by any statute of limitations unless, among other things, the claim in the action is to recover trust property still retained by the trustee (the “second exception”). Thus, it must be determined whether the proposed trust claims are to “recover” trust property and whether the trust property is “retained” by the trustee.
[57] On a plain reading of s. 43(2), the word “recover” appears to mean “to obtain” the trust property. Such an interpretation accords with the meaning given to “recover” in s. 4 of the Act. In Williams v. Thomas, [1909] 1 Ch. 713 (C.A.) at p. 730, the English Court of Appeal held that the expression “to recover any land” in comparable legislation is not limited to obtaining possession of the land nor does it mean to regain something that the plaintiff had and lost. Rather, “recover” means to “obtain any land by judgment of the Court”. See also OAS Management Group Inc. v. Chirico (1990), 1990 CanLII 6909 (ON SC), 9 O.R. (3d) 171 (Dist. Ct.) at 175 to the same effect.
[58] In para. 1(l) of the amended fresh statement of claim, the respondents seek a declaration that Jack’s estate is entitled to ownership of the Echo Drive condominium and in para. 1(m) they seek an order “transferring the lands and residential condominium premises located at … Echo Drive … from the estate of the late Frances Hartman to the estate of the late Jacob Harman and Shirley Strean, as the Estate Trustee of the Estate of the late Jacob Hartman”. It is apparent that the respondents wish to obtain title to the Echo Drive condominium from the trustee. In my view, the respondents seek to “recover” the trust property from the estate trustee.
[59] The amendments necessary to support the proposed trust claims are in paragraphs 39 to 50 of the amended fresh statement of claim. Those paragraphs make it clear that the claim is to recover the trust property from the individual appellants who hold title to the Echo Drive property in their capacity as the successor executor and trustee of Frances’s estate. It does not matter that the persons occupying the position of trustee have changed since Frances’s death. The estate trustee has held title to the Echo Drive condominium since Frances’s death and continues to so hold title. That is, the trust property is “still retained by the trustee”.
[60] Thus, in my view, a plain reading of s. 43(2) leads to the conclusion that the proposed trust claims fall squarely within the language of the second exception with the result that the individual appellants cannot rely on s. 4 to bar the proposed trust claims.
[57] There is no question that Barry’s claims are to “recover” (or obtain) trust property (the Springbank shares).
[58] With respect, however, I fail to appreciate how the Strean, supra decision assists Barry’s submissions with regard to whether Mary Reid, as trustee, retained the shares. She did not. By the time that Springbank filed its very first Income Tax Return after Walter’s death (Exhibit 4), Walter’s shares that had been bequeathed to Mary were in Mary’s name, personally. Unlike the situation in Strean, supra, where the trust property (the condominium) was titled to the estate trustee (paragraph 59 of the decision), the Springbank shares were not being held or retained by Mary as trustee but rather as owner.
[59] I therefore find that the second exception identified in subsection 43(2) of the old Act, trust property retained by the trustee, does not apply in our case.
VIII. The Result
[60] For all of the above reasons, Barry Reid’s Application is dismissed as being statute-barred by the applicable limitation period.
[61] I thank Mr. Oldfield and Ms. Turner for their assistance.
[62] I have one final hope that I cannot help expressing: that is to see these brothers try to mend some of their differences. I realize that Barry will be very disappointed with my decision, but that is my hope nevertheless.
Conlan J.
Released: March 24, 2016
CITATION: Reid et al. v. Reid; Reid v. Reid et al., 2016 ONSC 2098
COURT FILE NO.: 14-061 / 12-150
DATE: 20160324
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Robert Reid, as Estate Trustee of the Estate of Mary Reid, Robert Reid, in his personal capacity and Springbank Chalet Farms Limited
Applicants
- and -
Barry Walter Reid
Respondent
AND BETWEEN:
Barry Reid
Applicant
- and -
Robert Reid, as Estate Trustee of the Estate of Mary Reid, Robert Reid, in his personal capacity
Respondents
REASONS FOR JUDGMENT
Conlan J.
Released: March 24, 2016