Limitations and the Doctrine of Fraudulent Concealment

At common law, an action in negligence or for an intentional wrong is not permitted against or on behalf of a deceased person. The right to sue arises from statute, in Ontario the Trustee Act (s. 38). As a result, compliance with the Act is a must. The Act includes its own limitation period for actions, providing that an action under section 38 “shall not be brought after the expiration of two years from the death of the deceased”. Unlike the Limitations Act, 2002, there is no “discoverability” factor to be considered.  The date is fixed.
However, like most rules, there is an exception. This limitation period can be extended or “tolled” under the equitable doctrine of “fraudulent concealment”.  In other words, where a party has actively concealed wrongdoing, he or she cannot rely on the statutory limitation period to frustrate an action. In order to show fraudulent concealment though, the party asserting concealment must show:
(a) the parties are in a special relationship with one another;
(b) given be nature of this relationship, the conduct complained of amounts to an “unconscionable thing” for one to do to the other;
(c) the person conceals the right of the other (either actively, or as a result of the manner in which the act that gave rise to the right of action is performed)
This doctrine was recently considered in by the Ontario Superior Court of Justice in Rajmohan v. Solomon Family Trust. At issue was whether victims of a mortgage fraud could sue the estate of their lawyer more than two years after his death. The lawyer was not a party to the fraud but did not discover it.  The Court found that the requisite special relationship existed and that there had been concealment because the facts surrounding he lawyer’s actions only became evident after a review of his file. However, while the Court was very critical of the manner by which the lawyer handled the transaction, such actions were at best negligent and did not amount to an “unconscionable thing”.  As a result the doctrine could not be applied to toll the limitation period and the action was dismissed.
Updated:  The Court of Appeal upheld the decision of the Motions Judge

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