Roulston v. McKenny


Citation:     Roulston v. McKenny, 2017 ONCA 9 (CanLII), <>, retrieved on 2017-01-06

Republished Excerpt // Emphasis Added

[1]         This appeal concerns the estate of the late Paul Penner, who died in March, 2013. He is survived by his sister, the appellant Rita Roulston, who is his estate trustee, as well as a beneficiary under his will. Mr. Penner is also survived by his former wife, the respondent Pauline McKenny.

[2]         Mr. Penner and Ms. McKenny signed a separation agreement in 2002. It was a term of that agreement that Mr. Penner would maintain $150,000 in life insurance designating Ms. McKenny as the beneficiary. The parties also agreed that in the event Mr. Penner failed to maintain the insurance, Ms. McKenny would have a first charge against his estate in the amount of $150,000. At the time of their 2007 divorce, a court ordered an amendment to the separation agreement so that Mr. Penner was not required to maintain the life insurance policy beyond age 50. However, he died before he reached 50 years of age.

[3]         As matters transpired, Mr. Penner failed to pay the premiums on the life insurance policy, which lapsed before his death.

[4]         Mr. Penner’s estate is worth slightly more than $100,000. Under his will, the residue is divided 50:50 between his sister, Ms. Roulston, on the one hand, and several nieces and nephews, on the other.

[5]         In September 2015, Ms. McKenny commenced an action against the estate seeking payment of $150,000. In the context of an application for directions brought by Ms. Roulston as estate trustee, the parties asked the court to determine Ms. McKenny’s claim against the estate. The estate trustee took the position Ms. McKenny’s claim was statute-barred.

[6]         The application judge held Ms. McKenny’s claim for a first charge against the estate was not statute-barred. Ms. Roulston appeals, in her personal capacity as a beneficiary under her brother’s will.


[7]         The appellant takes no issue with the application judge’s finding that the limitation period in s. 38(3) of the Trustee Act, R.S.O. 1990, c. T.23, applies to Ms. McKenny’s claim against the estate. Section 38(3) provides that an action brought against an estate trustee under s. 38 shall not be brought after the expiration of two years from the death of the deceased.

[8]         Mr. Penner died on March 20, 2013. Ms. McKenny commenced her action more than two years later, on September 18, 2015.

[9]         However, the application judge held that Ms. McKenny’s action was not statute-barred because the application of the doctrine of fraudulent concealment to the conduct of the estate trustee tolled the two-year limitation period until at least September 25, 2013. As a result, Ms. McKenny commenced her action within the limitation period.

[10]      Applying the principles regarding fraudulent concealment enunciated by this court in Giroux Estate v. Trillium Health Centre (2005), 2005 CanLII 1488 (ON CA), 74 O.R. (3d) 341 (C.A.), the application judge found: (i) the estate trustee, Ms. Roulston, was in a special relationship with Ms. McKenny because she had exclusive possession of knowledge and information whether an insurance policy existed and thus whether Ms. McKenny had a debt claim against the estate; (ii) the estate trustee acted in an unconscionable manner by withholding from Ms. McKenny material facts about the status of the insurance policy; and, (iii) as a result of withholding that information, Ms. McKenny had a reasonable belief, at least until September 25, 2013, that Mr. Penner’s insurance policy had been in good standing at the time of his death.

[11]      Ms. Roulston submits the application judge made two main errors in applying the doctrine of fraudulent concealment. First, the trial judge erred in finding a special relationship existed between the estate trustee and Ms. McKenny. Second, he erred in finding that the conduct of the estate trustee was such as to attract the operation of the doctrine of fraudulent concealment.

[12]      We are not persuaded by either submission.

[13]      First, we see no error in the application judge’s finding that a special relationship existed between Ms. Roulston, as estate trustee, and Ms. McKenny. In the present case, the special relationship arose from a combination of the duties owed at law by an estate trustee to estate creditors and Ms. Roulston’s control over information about any insurance policies owned by the deceased.

[14]       The law imposes on estate trustees duties to the deceased’s creditors. Property of a deceased that vests in his estate trustee is subject to the payment of his debts: Estates Administration Act, R.S.O. 1990, c. E.22, s. 2(1). As a result, one of the fundamental duties of an estate trustee is to ascertain the debts and liabilities owing by the estate and to pay them: Carmen S. Thériault, ed., Widdifield on Executors and Trustees, loose-leaf (2011-Rel. 1), 6th ed., (Toronto: Thomson Reuters, 2016), at p. 3-1.

[15]      In addition, in the present case information about any insurance policies in place at the time of the deceased’s death lay within the control of the estate trustee. Following Mr. Penner’s death, counsel for Ms. McKenny wrote to counsel for the estate asking for particulars of any policy of insurance under the separation agreement. Estate counsel responded on June 4, 2013 that the estate trustee was “currently making investigations with respect to the insurance policy.” Ms. McKenny’s counsel then contacted the insurer, Sun Life Financial, seeking information about any policy. Sun Life advised it could only release information to the estate trustee and therefore was “unable to confirm the status of any policy [Mr. Penner] may have been insured under.”

[16]      Ms. McKenny was unable to obtain information about a policy directly from the insurer. Therefore we see no error in the application judge’s findings that (i) “the estate trustee had exclusive possession of knowledge and information of whether Ms. McKenny’s debt actually existed” and (ii) “since the estate trustee was in a unique and privileged position to obtain information, it was reasonable for Ms. McKenny to rely on what she was being told.”

[17]      Second, we see no reversible error in the application judge’s finding that the estate trustee’s conduct was unconscionable.

[18]      On April 29, 2013 estate counsel wrote to Sun Life inquiring whether Mr. Penner’s life insurance policy was in good standing. On May 9, Sun Life advised the deceased had no active policies – his two policies had lapsed because of non-payment of the premiums.

[19]      Notwithstanding this clear information from the insurer, on June 4 estate counsel informed Ms. McKenny’s counsel that investigations were underway because Mr. Penner “had expressed to Ms. Roulston and the deceased’s mother that there was insurance in place. Upon receipt of such information, we will provide correspondence to you.” In a subsequent September 25, 2013 letter to Ms. McKenny’s lawyer, estate counsel was only prepared to go as far as to say that the insurer had “advised that the policy may have lapsed.” Neither representation by estate counsel was accurate; the estate trustee knew back on May 9 that Mr. Penner had let his insurance policy lapse.

[20]      Ms. Roulston submits the evidence was more nuanced – it showed counsel for the estate trustee was investigating whether some other insurer might have issued a policy to Mr. Penner. We see no merit in this submission. The record contains no evidence of inquiries by the estate trustee or her counsel to any insurer other than Sun Life.

[21]      She also submits the application judge’s finding of unconscionable conduct cannot stand because he ignored a May 15, 2013 letter to her from counsel for Ms. McKenny. In that letter, counsel inquired whether Ms. Roulston was in charge of Mr. Penner’s estate. He continued: “I wish to put the estate on notice that the insurance was not in place as required by the terms of the Separation Agreement.” She submits that statement demonstrated Ms. McKenny knew she had a claim against the estate as early as May 15 and, therefore, the application judge erred in characterizing as unconscionable the subsequent conduct of the estate trustee and her counsel.

[22]      We are not persuaded by this submission. The mere absence of any reference to a piece of evidence in reasons for judgment does not establish the hearing judge failed to consider that evidence; a party must point to something in the trial record that justifies the conclusion the trial judge failed to consider certain evidence: Waxman v. Waxman (2004), 2004 CanLII 39040 (ON CA), 186 O.A.C. 201, [2004] O.J. No. 1765 (C.A.), at para. 343. Correspondence after May 15, 2013 from Ms. McKenny’s lawyer revealed uncertainty on his part about whether an insurance policy was in place when Mr. Penner died, with the uncertainty mainly caused by the less than forthright correspondence from the estate’s counsel.

[23]      In light of the entirety of that correspondence, it was open to the application judge to find, at para. 52 of his reasons, that:

By withholding material facts, the estate trustee concealed from Ms. McKenny that she had a legitimate debt against the estate as a creditor.  In my view, given the special relationship between the estate trustee and Ms. McKenny, it was unconscionable for the estate trustee to initially suggest that insurance was in place, then delay matters by promising to bring an application for directions, and then later take the position (a position which provided a direct material benefit to her as a beneficiary of the estate), that the time for claiming against the estate had expired.

[24]      Given those circumstances, we see no basis to interfere with the application judge’s conclusion that the doctrine of fraudulent concealment applied to the conduct of Ms. Roulston, as estate trustee, with the result that the two-year limitation period for Ms. McKenny’s claim was tolled from the date of Mr. Penner’s death until at least September 25, 2013, when estate counsel advised the policy “may have lapsed.” Consequently, Ms. McKenny’s action claiming a first charge of $150,000 on the estate’s assets is not statute-barred.


[25]      The appeal is dismissed.

[26]      The respondent is entitled to her costs of the appeal fixed in the amount of $7,500, inclusive of disbursements and HST.

“Doherty J.A.”

“David Brown J.A.”

“Grant Huscroft J.A.”


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