Saskatchewan Court of Appeal rules in favour of estate that asked beneficiary to pay tax liability

The Saskatchewan Court of Appeal has allowed an appeal of an estate, which had sued one of its beneficiaries for the amount owed for taxes she had agreed to pay, given the judge’s error in applying the province’s Limitations Act, 2004. 

In Gersten Estate v Weimer, 2026 SKCA 13, the appellant was the executor of the estate of a doctor who passed away. The respondent was a residual beneficiary of the estate and the designated beneficiary of the doctor’s registered retirement savings plan (RRSP). 

Other beneficiaries challenged the respondent’s entitlement under the will. They managed to settle the dispute. Under the settlement, the respondent would receive the RRSP proceeds, pay the associated tax liability, and give up her claim as a residual beneficiary. 

In April 2020, the Saskatchewan Court of King's Bench found the settlement binding on the parties and ordered the estate to transfer the RRSP proceeds to the respondent. However, that judgment did not set a payment deadline or specify how to calculate the tax liability. 

After receiving the RRSP proceeds, the respondent asked the appellant to confirm the tax liability incurred due to the RRSP’s deemed disposition so that she could pay the estate that amount in line with the settlement. The appellant gave no such confirmation. 

On Aug. 19, 2020, the respondent notified the appellant that she believed the time to commence an action against her for payment of the amount owed to the estate had commenced running, and that she would rely on the limitation period for such an action, if necessary. 

On Oct. 20, 2020, the appellant requested payment of $325,406, the amount allegedly owed, plus the respondent’s share of executor fees. On Oct. 27, 2022, the estate filed a suit claiming payment of the taxes the respondent had agreed to pay. 

Under rule 7-9 of The King’s Bench Rules, the respondent applied to strike the claim. She alleged that the limitation period for initiating the action against her had expired.

On Apr. 24, 2025, a chambers judge of the Court of King’s Bench granted the respondent’s application and struck the estate’s claim. She determined that the respondent’s obligation to pay the estate’s tax liability attributable to the deemed RRSP disposition was akin to a demand obligation and that the limitation period for bringing an action to enforce it had expired. 

In obiter, the judge acknowledged that she would have ordered the respondent to pay the estate the tax liability according to the settlement if she had the authority to do so. 

On appeal, the appellant argued that the judge erred in striking the estate’s claim by: 

• considering the claim against the respondent statute-barred because it was discovered on Oct. 20, 2020, over two years before the action’s commencement 
• failing to recognize her inherent authority to order the respondent to comply with the settlement despite the expiry of the relevant limitation period 

Estate’s appeal succeeds

The Court of Appeal for Saskatchewan set aside the chambers judge’s decision and awarded the appellant costs on the estate’s behalf. The appeal court determined that the judge erred by summarily striking the statement of claim under Rule 7-9. 

The appeal court accepted that the judge correctly: 

• identified the applicable legal principles 
• recognized that a claim based on a demand obligation arises when the debtor defaults on payment, pursuant to s. 10 of Saskatchewan’s Limitations Act 
• explained that the claim is discovered when the debtor defaults on payment in response to a demand for payment 
• found that the two-year limitation period begins to run on the day of default 

However, the appeal court ruled that the judge erred in principle in applying s. 10 by finding that the applicable limitation period started to run on Oct. 20, 2020 – when the estate demanded payment – rather than the day the default in performing the demand obligation occurred. 

The appeal court thus did not consider it plain and obvious that the estate’s claim had been discovered and a default had occurred on Oct. 20, 2020, pursuant to s. 10. 

The appeal court added that this case did not engage the presumption in s. 6(2) of the Limitations Act that the estate’s claim was discovered on Oct. 20, 2020. 

Given these findings, the appeal court deemed it unnecessary to address the appellant’s second ground of appeal.