Limitation Periods in Family Law for Property Claims

Limitation Periods in Family Law for Property Claims

By Ivana Vaccaro, Partner at RV Law

Lawyers and parties should remain distinctly aware of any time limits or limitation periods imposed by statute or the common-law on their right to pursue property claims in family law, including claims for an equalization of the net family property. Missing the limitation period for bringing such a claim can result in a party being statutorily barred from doing so, particularly where an extension of time is subsequently not granted by the Court. Consequently, that party will be denied the relief they may have otherwise been entitled to, forever. Following are a few limitation periods that parties should be cognizant of at all times.

The limitation period for applying for an equalization payment under section 5 of the Family Law Act is set out under subsection 7(3) of the Act, which states that:

An application based on subsection 5 (1) or (2) shall not be brought after the earliest of,

(a) two years after the day the marriage is terminated by divorce or judgment of nullity;

(b) six years after the day the spouses separate and there is no reasonable prospect that they will resume cohabitation; and

(c) six months after the first spouse’s death.

Where the limitation period for bringing an equalization claim has expired, a party may motion to the Court for an extension of time. Subsection 2(8) of the Act states that

The court may, on motion, extend a time prescribed by this Act if it is satisfied that,

(a) there are apparent grounds for relief;

(b) relief is unavailable because of delay that has been incurred in good faith; and

(c) no person will suffer substantial prejudice by reason of the delay.

The “relief” sought by a claimant under subsection 2(8)(a) refers not to an extension of time but to the relief sought in the claim, such as an equalization of the net family property. Moreover, to establish “good faith” for the purposes of satisfying subsection 2(8)(b), the spouse seeking the relief must demonstrate that he or she acted honestly and with no ulterior motive. A spouse’s ignorance of the law and state of “blameless ignorance” is sufficient to conclude that the delay has been incurred in good faith, provided that the spouse’s failure to make enquiries does not constitute wilful blindness.

The limitation period on bringing an equitable claim for an interest in property or for monetary compensation, although not as straightforward as the limitation period for equalization claims set out under the Family Law Act, has recently been afforded its due consideration and a tenable limitation period proffered upon which litigants can rely.

The Honourable Justice Perkins of the Ontario Superior Court of Justice was forced to reconcile the existing statutes and common-law respecting the limitation period for bringing equitable claims in property in the recent case of McConnell v. Huxtable, 2013 ONSC 948 (CanLII). In this case Justice Perkins was asked to determine whether a party was within her right to bring an unjust enrichment claim against her common-law partner and to seek a remedial constructive trust for an ownership interest in the home where she alleged the parties resided during their relationship. The responding party denied that the parties cohabited in a spousal relationship and brought a motion for summary judgement claiming that the two-year limitation period prescribed by the Limitations Act, 2002 had expired and therefore she was barred from bringing such a claim.

Justice Perkins reviewed the germane provisions of the Limitations Act, 2002 and the Real Property Limitations Act and took these provisions into consideration while attempting to answer very practical yet difficult questions. His Honour’s proposal was simple: given that he was dealing with an equitable claim for an ownership interest in (or, alternatively monetary compensation for) real property, the applicable limitation period for such a claim should be that which is set out under the Real Property Limitations Act, being ten years. Justice Perkins opined that the application of the two-year limitation period under the Limitations Act, 2002 and the rules respecting discoverability would be completely impractical and difficult for a claimant to prove. How does one know just when unjust enrichment occurred? If a two-year limitation period were adopted, then common-law partners may very well be forced to bring an equitable claim for an interest in their partner’s real property before the termination of their common-law relationship to avoid being statutorily barred from bringing such a claim. For the time being, Justice Perkins has provided us with a tenable limitation period for equitable claims in real property.

This brought Justice Perkins to the next logical question: what would the limitation period be for equitable claims in property other than real property? His Honour considered sections 4 and 5 of the Limitations Act, 2002, but was not satisfied that either section applied; and moreover, that there was any legislation in existence that could be referenced to determine an appropriate limitation period. Instead, Justice Perkins pointed out a legislative gap that he called on the legislature to fill, and in the interim suggested that, as it stands, there is no limitation period on a party’s right to claim an equitable interest in property other than real property.

It remains to be seen how widely adopted the ten-year limitation period for an equitable claim in real property and the limitless right to claim an equitable interest in all

other property will be. Some might argue that the ten-year limitation period for non-married couples seeking a remedial constructive trust for an ownership interest (or, alternatively monetary compensation) in real property and a limitless right for non-married couples seeking to claim an equitable interest in all other property, may be too generous in the face of the shorter, limitation periods imposed on married couples. After all, did the policy-makers and legislators not intend for there to be a greater benefit derived from a marital relationship than a common-law relationship upon the breakdown of the relationship? At least that is what the Family Law Act purports.

On a final, yet positive note, there is no limitation period for bringing a claim for support under the Family Law Act, or for enforcing an order or agreement for support.