A lawsuit alleging that a now-deceased man was cognitively impaired, and was taken advantage of in a couple of real estate deals, can continue, after an Ontario court ruled that the limitation period on legal actions may be suspended when they involve a person that wasn’t capable of managing their own finances.
In the case, the estate trustee for a man who died in 2019 is suing various companies and individuals — including a real estate brokerage and a law firm — that were involved with real estate transactions with the deceased, Reinhold ‘Roy’ Tocholke, in the years before he died. The estate trustee alleges that the parties engaged in a scheme to convince Tocholke to sell a couple of properties at well below their market value.
According to the Ontario Superior Court of Justice’s decision, it’s alleged that Tocholke was duped in two real estate deals in 2017 when he agreed to sell a house for $100,000 and some undeveloped land for $60,000 in March 2017 — properties that were allegedly quickly re-sold for large profits. The lawsuit alleged that the house was re-sold in October 2017 for $285,000 and the land was sold for $135,000 in 2019.
The allegations have not been proven, and haven’t been tested in court.
Indeed, before even getting to trial, the defendants in the case brought a motion arguing that the legal action is barred by the two-year limitation period that applies to civil suits in Ontario.
According to the court, they argued that the legal action, which was filed in December 2023, came too late, as Tocholke died in January 2019.
The plaintiff in the case argued that the typical limitation period should be “tolled” (suspended) because, among other things, the deceased man lacked the cognitive capacity to enter into “a solicitor-client relationship or a principal-agent relationship,” and that he lacked the capacity to enter into the real estate deals in the first place.
Ultimately, the court sided with the plaintiff, ruling that the limitation period “can be tolled due to incapacity.”
And in this case, the court noted that the plaintiff didn’t discover the alleged capacity issue until December 2021, when the trustee finally received access to the deceased’s medical records, “and discovered information suggesting that [he] may not have had the requisite capacity to engage in the transactions underlying this litigation.”
In deciding the limitation issue, the court said that the allegations that Tocholke may have lacked the capacity to manage his financial affairs are not “patently ridiculous or manifestly incapable of proof … It is therefore not plain and obvious that the deceased had capacity to manage his financial affairs…”
As a result, it denied the motion to dismiss the case based on the limitation period arguments — finding that it will be open to the judge that ultimately hears the case “to conclude that the deceased did not have the capacity to enter into an agreement to sell the lands, which would suspend the running of the limitation period…”