Litigants Beware – The Standard Limitation Period Applies to Constructive Trust Claims Against Estates

Adherence to timelines is essential for any litigation; failure to bring a claim within the permitted period is grounds for dismissal. In Ingram v Kulynych Estate, 2024 ONCA 678 (CanLII), the Court of Appeal provides an interesting analysis of the limitation period applicable to constructive trust claims.

THE FACTS

Henry Kulnych died in February 2017. He left his Estate to his first wife, and then to his children if his wife predeceased him. More than four years after Mr. Kulnych’s death, Kathleen Ingram, the deceased’s common-law spouse, filed an application against the Estate. For the purposes of this discussion, the key factual basis for the application was her assertion that while Mr. Kulnych lived with her, he retained the rental income from his own house, which was his Estate’s main asset. His house (and thus his Estate) increased in value, to Ms. Ingram’s detriment, because he left her nothing in his will. By the time Ms. Ingram filed her application, all but $1,910 remained undistributed from the Estate, which itself was relatively modest (under $700,000).

Ms. Ingram advanced the equitable claims of constructive trust and resulting trust based on her provision of shelter and caregiving services. While she asserted that she had a claim to a “portion of the home”, the relief she sought was stated as follows:

An order that [she] is entitled to an interest in the Estate by virtue of Constructive Trust and Resulting Trust in relation to all estate assets on the basis of contribution or money’s worth.

Under the Trustee Act, a court can remedy a “wrong” that was committed by a deceased person if the claim is made within two years of the date of death. For real property claims, a claim to “recover any land or rent” may be made within 10 years of the date that a right to land or rent arose. (Real Property Limitations Act, s.4). This is a material eight-year difference. Was Ms. Ingram claiming a trust/equitable remedy or a property remedy? By 2021, she was out of time to seek relief from the Estate under the Trustee Act but could still argue that a right to land or rents survived if the RPLA applied. The nature and scope of how her claims were asserted is key to the Appeal Court’s decision.

THE DECISION BELOW

On the hearing of the motion, the Estate Trustee argued that Ms. Ingram’s claims were out of time. The motions judge disagreed, determining that her claim was a property claim that was filed within the applicable limitation period. The motion judge expressly rejected the application of s.38(2) of the Trustee Act, which is covered by a two-year limitation period and reads as follows:

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.

The motions judge ruled that Ms. Ingram was not asserting that Mr. Kulnych “wronged” her person or property, ascribing a narrow meaning to the idea of a “wrong,” framing it as a matter of tortious conduct. The Estate Trustee appealed.

The Court of Appeal conducted a thorough analysis of the trust and real property statutory regimes. Its analysis involved a consideration of the statutory language, purpose, history of amendments, caselaw, and the nature of the relief sought. The Court of Appeal also considered principles of statutory interpretation when there are potential conflicts between statutes, noting the principle that a more specialized or specific statute will prevail over a more general statutory regime. The Court considered the rationale for a shorter, two-year limitation period for estates: the need for expeditious and final settling of estate matters for trustees and beneficiaries alike.

The Court of Appeal noted that “a wrong” is to be given a broad meaning, including claims to remedy unjust, inequitable, or unconscionable actions. The Court determined that the essence of Ms. Ingram’s claim was unjust enrichment: Mr. Kulnych and his Estate benefited by him living rent-free with Ms. Ingram before he died. She had a corresponding detriment or cost. Had she brought the claim within two years, the Court may have remedied an unfairness.

The Court also considered more precisely whether Ms. Ingram’s claim was for an interest in a specific real property, or compensation in relation to property, so as to keep the RPLA’s longer limitation period in play. It determined that she sought a constructive or resulting trust over “all estate assets” and not just the real property, so that her claim was for equitable relief and not recovery of a property or property-associated right. When Mr. Kulnych died, his assets were vested in the Estate Trustee. Ms. Ingram’s claim was against Estate assets, to which the Trustee Act’s limitation period applied.

Because the Court of Appeal concluded that this was in essence an estate claim, Ms. Ingram was outside the two-year time period in which to seek relief and her claim was dismissed. The Estate Trustee was awarded costs of both the appeal and the motion.

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