Limitation Periods: When was the Claim “Discovered”?

I am often contacted when a loved one has died, and a family member has concerns about what happened to the deceased’s assets, which ought to have formed part of their estate. There may be much less than expected, or a particular asset may be missing or may no longer be in the deceased’s name. Monies may have been misappropriated using a power of attorney, or procured by undue influence. The family member may have understood that property transferred during the deceased’s lifetime was to be held in trust for certain beneficiaries, but the recipient/transferee now takes the position that the transfer was a gift and they are entitled to keep it.

Sometimes these transactions and transfers have taken place years or even decades before the deceased’s death, but they are not discovered until after the deceased’s death. Sometimes everyone is aware of the transfer itself, but only discover later that the recipient intends to argue that the property belongs to them and is not held in trust. Clients want to know whether it is too late to go back and challenge transfers if they happened many years ago.

This issue was recently considered by the B.C. Supreme Court in Maussion v. Maussion 2021 BCSC 530. Maussion involved a dispute between children with respect to their parents’ estates.  The parents died in 2012 and 2016. The plaintiff son alleged that his sister improperly received assets from the parents during their lifetimes, which were to form part of the estate. She allegedly used a power of attorney granted to her to sell property or transfer it to herself (in 2004, 2005 and 2016). The action was not commenced until January 31, 2019.

The defendant denied the claims on the basis that all transfers were gifts to her. She also applied for dismissal of the claims on the basis that they were statute-barred, i.e. that the action was commenced after the expiration of the limitation period.

The matter was governed by s. 6 of the Limitation Act, SBC 2012, c. 13, which provides that a court proceeding in respect of a claim must not be commenced more than two years after the date on which the claim is discovered. A claim is “discovered” on the first day on which the person knew or reasonably ought to have known:

  1. that injury, loss or damage had occurred;
  2. that the injury, loss or damage was caused by or contributed to by an act or omission;
  3. that the act or omission was that of the person against whom the claim is or may be made; and
  4. that, having regard to the nature of the injury, loss or damage, a court proceeding would be an appropriate means to seek to remedy the injury, loss or damage.

There are specific provisions relating to the discovery of fraud or trust claims. These claims are “discovered” only when the beneficiary becomes fully aware of certain matters. An action to recover trust property from a trustee (for example a party who holds property in resulting trust) does not begin to run until the beneficiary becomes fully aware of the fraud, fraudulent breach of trust, conversion or other act of the trustee on which the action is based.

The defendant in Maussion argued that a letter from the plaintiff’s lawyer in 2011 expressing concern about her conduct showed that the plaintiff “discovered” a potential claim by at least 2011. However, the court concluded that the 2011 letter addressed a completely different issue. Instead, a February 2017 letter from the defendant’s lawyer, in which it was stated that the transfer of certain property was a gift, was the date at which that the plaintiff should have been aware that she had a claim. As a result, the claim was commenced within the limitation period, and the application to dismiss the claim as statute-barred was dismissed.

If you become aware of concerning conduct many years after the suspicious transfer or other event occurred, you may still have a potential claim that has not expired. It will depend upon when you discovered the claim.