Saturday, January 17, 2009

fradulent concealment and limitation periods
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[11] The issue on this motion is whether the doctrine of fraudulent concealment operates in this case as a bar to the limitation period defence asserted by Dr. Harvey pursuant to section 38(3) of the Trustee Act...."

"...[20] In summary, the doctrine of fraudulent concealment applies in cases when:
a) the defendant and plaintiff are engaged in a special relationship with another;

b) given the special or confidential nature of their relationship, the defendant’s conduct amounts to an unconscionable thing for the one to do towards the other;

c) the defendant conceals the plaintiff’s right of action (either actively, or as a result of the manner in which the act that gave rise to the right of action is performed).

[21] When these elements are satisfied, the doctrine of fraudulent concealment will be used to postpone limitation periods...."

"...[22] The doctrine of fraudulent concealment is not a tool of statutory construction as is the doctrine of discoverability. Rather, it is a remedial tool to stay the operation of a limitation period by the invocation of the Court’s equitable jurisdiction to prevent an injustice. Cameron J. in Buell, supra stated at para. 51:
In my opinion the doctrine of concealed fraud is not wholly subsumed in the more recent discoverability rule when applied to actions governed by the statute of limitations. The doctrine will stay the running of a statutory limitation period where the defendant’s conduct constitutes abuse of a confidential relationship until the defendant’s conduct which constitutes the abuse becomes discoverable...."

and more expansively:

"...[24] An example of the court applying equitable principles so as not to permit a statute to be used as an instrument of fraud is Goldin (Trustee of) v. Bennett & Co. 2003 CanLII 4764 (ON C.A.), (2003), 229 D.L.R. (4th) 736 (Ont. C.A.) at para. 35, in which the Ontario Court of Appeal refused to permit the application of the clear wording of a statute because to do so would permit its use as an instrument of equitable fraud. In that case, the Court of Appeal applied the doctrine of equitable fraud to stay the operation of section 136 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, which statutorily mandated that the trustee’s fees be paid in priority to the fees of the estate solicitor. On the facts of the case, when the trustee retained the solicitors and instructed them to pursue certain funds, it knew there were insufficient funds in the estate to pay the fees that would be incurred as a result of those instructions. Although section 136 of the Bankruptcy and Insolvency Act gave a trustee statutory priority to the assets of the estate for payment of its fees, Gillese J.A. stated at paragraph 44:

To permit the Trustee to rely on the provisions of section 136 in such circumstances, in my view, would be unconscionable as it would enable the Trustee to take unfair advantage of its legal rights. In that sense, it would be to permit the Trustee to use s. 136 as an instrument of equitable fraud..."

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