Time Limit to Sue a Trustee for Breach of Trust in Ontario

If you are a beneficiary who suspects a trustee has mismanaged money, the question of timing matters as much as the question of whether there was a breach. Waiting too long can end a claim before it starts.

This article explains how Ontario's Limitations Act, 2002 generally works, including discovery, the 15-year limit and the main exceptions. Because each case turns on its own dates and facts, treat this as a starting point and speak to a lawyer promptly.

The basic two-year period

The general limitation period in Ontario is two years from the day the claim was discovered. After that, a court can refuse to hear the claim, even if it might otherwise have been strong.

The key question is therefore when the claim was discovered, not simply when the trustee did something wrong.

What "discovery" means

A claim is discovered when the claimant knew, or reasonably ought to have known, of it. The words "ought to have known" matter. If information was in front of you, such as account statements you received but never read, a court may treat you as having known.

Dates that are often relevant in trust disputes include:

• When you received accounts, statements or letters from the trustee.
• When you learned that money or property was missing, sold or transferred.
• When you were told of a decision you disagree with.
• When you first asked questions and how the trustee answered.

Keep these records. If you are unsure when the clock started, assume the earlier date and get advice quickly.

The 15-year outer limit

Separately, no proceeding may be started more than 15 years after the act or omission. This limit counts from what the trustee did or failed to do, not from when you found out. So a beneficiary who finds out very late could still be out of time.

Exception: the 15-year period does not run while the defendant wilfully conceals the loss. The claimant must prove the concealment.

Exceptions that can pause the clock

Whether a particular claim against a trustee falls under the general rule or a special one depends on its nature. A lawyer can sort this out from your documents.

What a trustee is expected to do

Knowing what a trustee was supposed to do helps you decide whether something went wrong. In investing trust property, a trustee must use the care, skill, diligence and judgment of a prudent investor. A trustee is not liable for an investment loss if the conduct that led to it followed an investment plan or strategy that a prudent investor could adopt.

The terms of the trust also matter, because the Trustee Act's investment powers do not authorize or require a trustee to act inconsistently with them. A court may relieve a trustee from personal liability for a breach of trust if the trustee acted honestly and reasonably and ought fairly to be excused. That relief does not apply to losses from investing trust property.

Whether a particular decision was a breach depends on the trust document and the facts, so it is worth confirming with a lawyer.

What to do next

• Write down the date you first suspected a problem and the date you received key information.
• Gather accounts, statements, correspondence and the trust or will.
• Ask the trustee for a full accounting. A person who appears to have a financial interest in an estate may bring a motion to require the estate trustee to pass accounts.
• If you object to accounts that are being passed, a beneficiary must serve and file a notice of objection to accounts at least 35 days before the hearing date.
• If a trustee needs to be replaced, the Superior Court of Justice may appoint a new trustee, and for an estate trustee it may remove them on any ground on which it could remove any other trustee.
• See a lawyer before the two-year anniversary of when you may have discovered the claim.

How talks with the trustee affect your deadlines depends on your situation, so it is worth confirming with a lawyer before relying on them.

Frequently asked questions