POA Compensation and Limitation Periods

A case review of Armitage v. Salvation Army ¹

The Limitations Act, 2002, S.O. 2002, c. 24, Sched. B (the “Act”) applies to all claims to remedy an injury, loss or damage that occurred as a result of an act or omission, subject to a schedule of exceptions contained within the Act.² Under the Act, the basic limitation period is the second anniversary of the day on which the claim was discovered.³ There is an ultimate limitation period such that even if the claim was never discovered no proceeding shall be commenced in respect of any claim after the 15th anniversary of the day on which the act or omission on which the claim is based took place.⁴ The above information is a very basic summary of the Act.

Based on this information alone, one might expect that an attorney for property would have to pursue unpaid compensation that s/he may be entitled to within 2 years or the incapable person or his estate would a limitation period defence against the claim. Let’s see what the Court of Appeal for Ontario had to say on this issue in Armitage v. Salvation Army.

Sharon Armitage was both the attorney for property and estate trustee for her late friend. She claimed attorney’s and executor’s compensation within two years after her friend’s demise. The Salvation Army was the beneficiary of the estate and argued that Sharon was not entitled to compensation as an attorney for property. Their position was that she was disentitled, in part”⁵, to compensation as attorney for property on the basis that the claim was not made within the general two-year limitation period under the Act.⁶

The Salvation Army argued that s. 40(1) of the Substitute Decisions Act, 1992, S.O. 2002, c. 30 (the “SDA”), provides that an attorney for property may take annual compensation.⁷ They submitted that since Sharon was permitted to take compensation every year, the clock started running at that point in time when the statute permitted Sharon to take compensation and any claim to compensation after the second anniversary date was statute barred under the Act. The Application judge disagreed.

At the initial hearing, Justice Timothy D. Ray decided that the date of the deceased’s death terminated the power of attorney and that was the triggering point for the limitation period for the Attorney for Property’s claim for compensation. As Sharon brought the application to pass her accounts within that time frame, her claim was not time barred.

This is what the Court of Appeal had to say about the seeking of compensation by an attorney for property and limitation periods:

19     While I agree with the result reached by the application judge, I disagree with his conclusion that the Limitations Act, 2002 had any application in the circumstances of this case. As I will discuss below, in my view, the Limitations Act, 2002 does not apply because compensation for an attorney for property through the passing of accounts process does not constitute a “claim” within the meaning of the Limitations Act, 2002…..

24     At first blush it would appear that such claims might be captured by the general limitation period. The Limitations Act, 2002 was designed to comprehensively deal with all manner of civil claims, whether grounded in equity, law, or statute. There are specific carve outs in the legislation for claims that are not subject to the Act. It is arguable, therefore, that if compensation for attorneys for property was intended to be exempted from the general limitation period it would have been specifically exempted under the Limitations Act, 2002.

25     The difficulty with that argument is that the Limitations Act, 2002 applies only to the assertion of a “claim”, and a claim is defined in the Act as follows: “a claim to remedy an injury, loss or damage that occurred as a result of an act or omission.”

27     …. The fact is that in seeking court approval of the passing of accounts, an attorney for property is not seeking redress for any loss, injury, or damage. Rather, he or she is seeking approval from the court of his or her actions in managing the property, including approval for compensation previously taken or now sought. A passing of accounts application is the opposite of remedial; it is a process that seeks a court order that no remedy is necessary with respect to the accounts…. Thus, the passing of accounts does not fit within the first part of the Limitations Act, 2002 definition of claim.

28     An application for the passing of accounts also does not fit within the second part of the statutory definition of claim. Where the definition speaks of an act or omission, it must surely refer to an action taken or not taken by a third party that has the effect of causing loss, injury, or damage. It would be a strange result if a limitation period could not be triggered until the party asserting the claim took an action or omitted to do something.

29     The result, in my view, is that a passing of accounts under the SDA is not subject to the two-year general limitation period found in the Limitations Act, 2002.. The common law in that regard was not changed with the enactment of that legislation. Consequently, the only defences available are the equitable defences of laches and acquiescence, neither of which were asserted in the present case.

We suspect that Justice Ray, the judge hearing the initial application, like many of us, was surprised by the Court of Appeal’s conclusion. It’s hard to shake what the Court of Appeal called the “first blush” view that an attorney for property seeking compensation constitutes a claim. When the grantor of a power of attorney or his/her representative challenges an Attorney’s request for compensation there is a compelling logic to the argument that the attorney for property has suffered a loss or damage that occurred as a result of an act by the representative of the incapable person. The nuanced understanding of the SDA and the Act as set out in the Court of Appeal decision should inspire litigators to look at the law with fresh eyes and ask what else does not constitute a claim under the Act.