Kyle v. Atwill
Ontario Reports
Court of Appeal for Ontario
K.N. Feldman, D.M. Brown and Zarnett JJ.A.
July 23, 2020
152 O.R. (3d) 59 | 2020 ONCA 476
Case Summary
Family law — Domestic contracts and separation agreements — Types — Prenuptial and marriage contracts — Legality and validity — Practice and procedure — Limitation periods — Appeal by husband from decision determining that husband's plea for rescission of a marriage contract was statute-barred allowed — Plea for rescission of marriage contract was proceeding for declaration where no consequential relief was sought and therefore, under s. 16(1)(a) of Limitations Act, no limitation period applied — Husband's claim for equalization subject to the six-year period in s. 7(3)(b) of Family Law Act — Claim for spousal support was subject to a limitation period — Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, s. 16(1)(a) — Family Law Act, R.S.O. 1990, c. F.3,. s. 7(3)(b).
Appeal by the husband from a decision of a motion judge determining that the husband's plea for rescission of a marriage contract was statute barred. The parties entered into a prenuptial agreement immediately before their marriage. The contract waived any entitlement to spousal support and provided that the parties would be separate as to property. After seven years of marriage, the parties separated. The husband brought family law proceedings claiming equalization of net family property and spousal support and asked the court to set aside or rescind the marriage contract on the basis that he had signed it without financial disclosure, without legal advice, under duress, and under a clear power imbalance. Although the husband commenced the proceeding within the six-year limitation period for equalization claims under the Family Law Act, more than two years had elapsed since the parties separated. The motion judge found that rescission of a marriage contract constituted a claim under the Limitations Act subject to the two-year limitation period and that the husband discovered his claim two months after separation.
Held, the appeal should be allowed.
The fact that the Family Law Act did not provide a limitation period for an application to set aside a marriage contract under s. 56(4) was a clear legislative signal that the Limitations Act was to apply. The husband's plea for rescission of the marriage contract was a proceeding for a declaration where no consequential [page60] relief was sought and therefore, under s. 16(1)(a) of the Limitations Act, no limitation period applied to that pleading. The husband's claim for equalization was subject to the six-year period set out in s. 7(3)(b) of the Family Law Act, and his claim for spousal support was not subject to a limitation period, pursuant to s. 16(1)(c) of the Limitations Act.
Cases referred to
Alguire v. Manufacturers Life Insurance Co. (c.o.b. Manulife Financial) (2018), 140 O.R. (3d) 1, [2018] O.J. No. 1099, 2018 ONCA 202, 419 D.L.R. (4th) 356, 290 A.C.W.S. (3d) 171; Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, [2002] S.C.J. No. 43, 2002 SCC 42, 212 D.L.R. (4th) 1, 287 N.R. 248, [2002] 5 W.W.R. 1, J.E. 2002-775, 166 B.C.A.C. 1, 100 B.C.L.R. (3d) 1, 18 C.P.R. (4th) 289, 93 C.R.R. (2d) 189, REJB 2002-30904, 113 A.C.W.S. (3d) 52; Fehr v. Sun Life Assurance Co. of Canada, [2018] O.J. No. 4513, 2018 ONCA 718, 84 C.C.L.I. (5th) 124; Leibel v. Lewis, [2014] O.J. No. 3745, 2014 ONSC 4516, 244 A.C.W.S. (3d) 255 (S.C.J.); Miglin v. Miglin (2003), 66 O.R. (3d) 736, [2003] 1 S.C.R. 303, [2003] S.C.J. No. 21, 2003 SCC 24, 171 O.A.C. 201, 34 R.F.L. (5th) 255, 122 A.C.W.S. (3d) 101, REJB 2003-40012; Piekut v. Romoli, [2020] O.J. No. 137, 2020 ONCA 26, 55 E.T.R. (4th) 166 (C.A.); Scheel v. Henkelman (2001), 2001 24133 (ON CA), 52 O.R. (3d) 1, [2001] O.J. No. 55, 195 D.L.R. (4th) 531, 142 O.A.C. 374 (C.A.); Skylark Holdings Ltd. v. Minhas, [2018] O.J. No. 1276, 2018 ONSC 1568 (Div. Ct.); Starz (Re) (2015), 125 O.R. (3d) 663, [2015] O.J. No. 2331, 2015 ONCA 318, 334 O.A.C. 218; Van Halteren v. De Boer Tool Inc., [2018] O.J. No. 1226, 2018 ONSC 1554 (S.C.J.)
Statutes referred to
Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) [as am.]
Family Law Act, R.S.O. 1990, c. F.3, ss. 2(8), (10), 5, (1), 7, (1), (3), (b), 33 [as am.], (1), (4) [as am.], 52 [as am.], (1)(a), (b), 56(4)
Limitations Act, 2002, S.O. 2002, c. 24, Sch. B [as am.], ss. 1, 4, 5 [as a,m.],16(1) [as am.], (a), (c), 19(1) (a)
Authorities referred to
Abrams, Linda, S. and McGuinness, Kevin, P., Canadian Civil Procedure Law, 2nd ed. (Markham: LexisNexis, 2010)
Ministry of the Attorney General of Ontario, Recommendations for a New Limitations Act: Report of the Limitations Act Consultation Group (Toronto: 1991)
Sarna, Lazar, The Law of Declaratory Judgments, 4th ed. (Toronto: Carswell, 2016)
APPEAL from the order of Minnema J. [2019] O.J. No. 3115, 2019 ONSC 3707, 25 R.F.L. (8th) 195 (S.C.J.).
Aaron Franks and Rhea Kamin, for appellant.
Carolyn Shelley and Silvia Cioci, for respondent.
FELDMAN J.A. (ZARNETT J.A. concurring): —
A. Overview
1The issue on this appeal is whether a plea asking the court to set aside a marriage contract is subject to a limitation period, and if so, what is the period? [page61]
2The parties entered into a prenuptial agreement (the "marriage contract") immediately before their marriage. The contract waived any entitlement to spousal support and provided that the parties would be separate as to property. After seven years of marriage, the parties separated.
3Eventually, the husband brought family law proceedings claiming equalization of net family property and spousal support. The wife defended by relying on the marriage contract as a complete answer. He replied by asking the court to set aside or rescind the marriage contract on the basis that he had signed it without financial disclosure, without legal advice, under duress, and under a clear power imbalance.
4Although the husband commenced the proceeding within the six-year limitation period for equalization claims under the Family Law Act, R.S.O. 1990, c. F.3, s. 7(3) (b), more than two years had elapsed since the parties separated. The wife's position was that the request to rescind the marriage contract was out of time. On summary judgment, the motion judge found that rescission of a marriage contract constitutes a "claim" under the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, that claim is subject to the two-year limitation period in s. 4 of the Act, and the husband discovered his claim roughly two months after separation. The motion judge therefore found the claim to be time-barred.
5For the reasons that follow, I would allow the appeal. The husband's plea for rescission of the marriage contract is a proceeding for a declaration where no consequential relief is sought and therefore, under s. 16(1)(a) of the Limitations Act, no limitation period applies to that pleading. The husband's claim for equalization is subject to the six-year period set out in s. 7(3)(b) of the Family Law Act, and his claim for spousal support is not subject to a limitation period, pursuant to s. 16(1)(c) of the Limitations Act. Neither is time-barred and the action may proceed.
B. Facts
6The parties married in July 2005 after cohabiting for one year.
7One week before the wedding, they signed the marriage contract based on a template for prenuptial agreements that the wife had found on the Internet. Although the contract states that each party "has retained their own lawyer and has received independent legal advice", neither the husband nor the wife retained or consulted a lawyer. Similarly, the contract states that the parties exchanged financial disclosure, but no formal exchange took place. [page62]
8The agreement contains provisions setting out the parties' intent to keep their assets separate, to bar any property claims following separation, and to waive any future rights to spousal support.
9When the parties separated in August 2012, the husband moved out of the matrimonial home, which was owned by the wife.
10The parties retained counsel and began negotiations until the husband abandoned the negotiations in the spring of 2013 because his existing mental illness had worsened. In the spring of 2015, the husband's lawyer contacted the wife's lawyer to indicate that the husband was preparing to initiate a court proceeding.
11However, no proceeding was commenced until August 24, 2017, when the husband brought an application for spousal support, equalization of net family property, and yearly financial disclosure. The husband did not explicitly seek to set aside the marriage contract in his original pleading, but his statement of facts referred to the contract and stated that he had signed it with no legal advice, no financial disclosure and under duress.
12The wife filed an answer, relying primarily on the marriage contract as a defence to the husband's claims. She subsequently amended her answer to argue that the husband's claim to set aside the marriage contract was statute-barred by s. 4 of the Limitations Act.
13Following the amendment, the husband filed a reply contesting the applicability of the Limitations Act and stating that the marriage contract should be deemed invalid because he signed it "without financial disclosure, without legal advice, under duress and with a clear power imbalance".
C. Decision of the Motion Judge
14The issue whether the husband's request to set aside the marriage contract was statute-barred was heard four weeks prior to the scheduled trial date, as a summary judgment motion. The two issues on the motion were whether a trial was required to decide: first, whether the two-year limitation period in s. 4 of the Limitations Act applies to an application to set aside a marriage contract under s. 56(4) of the Family Law Act; and second, if so, whether the husband had brought his application in time.
15Dealing with the first issue, the motion judge found that the request to set aside the marriage contract constituted a "claim to remedy an injury, loss or damage" within the meaning of s. 4 of the Limitations Act. The husband's loss was the extinguishment of his [page63] rights under the Family Law Act to equalization and spousal support by an allegedly improperly obtained marriage contract: at para. 27. Therefore, the two-year limitation period applied unless the Limitations Act provided otherwise.
16The motion judge then considered whether a request to set aside a marriage contract comes within s. 16(1)(a) of the Limitations Act. That section provides that there is no limitation period for "a proceeding for a declaration if no consequential relief is sought". The motion judge found that while the husband was seeking a declaration that the marriage contract was of no force or effect, s. 16(1)(a) was not engaged because he was also seeking the consequential relief of spousal support and equalization of net family property: at para. 31.
17Having found that the two-year limitation period applied, the motion judge turned to the question of when the husband discovered his claim, using the criteria in s. 5 of the Limitations Act. He found that by October 17, 2012, when the husband told his social worker that the marriage contract "had issues" and that the wife was still relying on it, the husband knew that a court proceeding was appropriate: at para. 44.
18The motion judge rejected the husband's further argument that he was not legally able to discover what limitation period applied to a proceeding to rescind a marriage contract under s. 56(4) of the Family Law Act because there was no previous case law on the issue: at para. 46. The motion judge also considered whether the husband's mental health issues had made him incapable of commencing the proceeding until he did so more than two years after October 17, 2012, but the motion judge found no evidence in the record to make incapacity a genuine issue for trial: at para. 50.
19Accordingly, the motion judge found that he could decide on the record before him on summary judgment that the husband's request for rescission of the marriage contract was out of time, as more than two years had elapsed since he discovered his claim: at para. 51.
D. Issues on Appeal
20The sole issue on the appeal is whether the motion judge erred by dismissing the husband's claims for equalization and spousal support on summary judgment because his plea to rescind the marriage contract was statute-barred. As the Family Law Act provides no limitation period for an application to set aside a marriage contract, the appeal requires this court to decide which of the Limitations Act's provisions governs the request to set aside the marriage contract under s. 56(4) of the [page64] Family Law Act. The question is thus whether the application to set aside the marriage contract is subject to no limitation period because it is a proceeding under s. 16(1)(a) of the Limitations Act for a declaration where no consequential relief is sought, or whether it is subject to the two-year limitation period and if so, when the loss or damage occurred and when the claim was discovered.1
E. Standard of Review
21The parties agree that the standard of review on this appeal is correctness. Although the motion judge made a number of determinations of mixed fact and law in granting summary judgment, the issue under appeal is whether he erred in law by determining that the two-year limitation period under s. 4 of the Limitations Act applies to an application under s. 56(4) of the Family Law Act.
F. Legislative Context
22There are two Ontario statutes that govern limitations issues in family law matters: the Limitations Act and the Family Law Act. The Limitations Act sets out the general limitation periods for actions in Ontario as well as the applicability of limitation periods set out in some other acts, including the Family Law Act.
(1) The Limitations Framework under the Limitations Act
23The Limitations Act provides the basic two-year limitation period for claims in Ontario, as well as the circumstances in which other limitation periods may apply.
24The general limitation period is stated, at s. 4:
4 Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.
25"Claim" is defined in s. 1:
1 In this Act, . . . "claim" means a claim to remedy an injury, loss or damage that occurred as a result of an act or omission[.]
26Section 5 sets out when a claim is discovered:
5(1) A claim is discovered on the earlier of, [page65]
(a) the day on which the person with the claim first knew,
(i) that the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,
(iii) that the act or omission was that of the person against whom the claim is made, and
(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and
(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).
(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1)(a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.
27Section 16(1) gives a list of proceedings for which there is no limitation period. Subsection 16(1)(a) provides that "[t]here is no limitation period in respect of . . . a proceeding for a declaration if no consequential relief is sought".
(2) Limitation periods for equalization and for spousal support
28In the family law context, the operation of the Limitations Act together with the Family Law Act prescribes limitation periods that are, in most cases, considerably more generous than the two-year period set out in s. 4 of the Limitations Act, in recognition of the unique situation of spouses and families on the breakup of a marriage.
29Section 19(1)(a) of the Limitations Act provides for the application of limitation periods contained in other Acts. One such limitation period is s. 7(3) of the Family Law Act, which sets out three limitation periods for applications for equalization of net family property that may be brought under s. 5 of the Family Law Act. Section 7(3) states:
7(3) 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;
(c) six months after the first spouse's death. [page66]
30Unlike with limitation periods contained in the Limitations Act, the court may extend limitation periods specifically provided in the Family Law Act under s. 2(8) of that Act, in certain enumerated circumstances.
31With respect to spousal support, the Family Law Act does not provide a limitation period for seeking an order for spousal support under s. 33(1) of that Act. The limitation issue is dealt with in s. 16(1)(c) of the Limitations Act, which provides that there is no limitation period for bringing a proceeding to obtain support or to enforce a contract providing for support under the Family Law Act.
32These special limitation periods account for the need to allow spouses more time to try to resolve their property issues without having to go to court, and the fact that a spouse or former spouse's support needs can change over time and may be addressed whenever they do.
(3) Limitation period for setting aside a domestic contract
33Persons who are married or intend to marry may agree regarding their rights and obligations during and after the marriage in a marriage contract, which is one form of domestic contract: Family Law Act, s. 52.
34A domestic contract prevails over the Act unless the Act provides otherwise: s. 2(10). A number of provisions of the Family Law Act permit a court to set aside all or part of a marriage contract, two of which are relevant to this appeal.
35First, in the context of an application for spousal support, s. 33(4) gives the court the power to set aside a provision in a marriage contract that waives or reduces the right to support in three enumerated situations, including where the provision results in unconscionable circumstances.
36Second, s. 56(4) allows a court to set aside an entire marriage contract or any provision in it, on application. That provision states:
56(4) A court may, on application, set aside a domestic contract or a provision in it,
(a) if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made;
(b) if a party did not understand the nature or consequences of the domestic contract; or
(c) otherwise in accordance with the law of contract.
37There is no limitation period provided in the Family Law Act for setting aside all or part of a domestic contract under [page67] s. 56(4), although that section specifically contemplates a court application for such relief. There is also no limitation provided for setting aside a spousal support provision of a marriage contract under s. 33(4), but that determination is made as part of a spousal support application for which there is no limitation period, as provided in s. 16(1)(c) of the Limitations Act.
38Because the Family Law Act is silent as to the limitation period that applies to an application to set aside a marriage contract or a provision in it, one must look to the Limitations Act to determine which provisions of that Act, if any, apply. In this respect, I do not share my colleague's view that the provision establishing the limitation period for seeking equalization should be read to also apply to an application to set aside a marriage contract under s. 56(4) of the Family Law Act. The fact that the Family Law Act does not provide a limitation period for an application to set aside a marriage contract under s. 56(4) is, in my view, a clear legislative signal that the Limitations Act is to apply.
G. Analysis
(1) Preliminary Issue: Does it matter whether the request to set aside the marriage contract was part of the husband's original claim or part of his response to the wife's defence?
39As a preliminary matter, I wish to address the husband's submission that because the question of setting aside the marriage contract only arose procedurally in the context of the wife's defence, no limitation applies.
40I would reject this argument. Procedurally, the husband did not initiate a request to set aside the marriage contract until it was raised as a defence, whereupon he asked that the contract be set aside in a reply pleading. However, regardless of how the issue arose, in order for the husband to obtain an order under the Family Law Act for equalization or spousal support in contravention of the marriage contract he signed, he requires an order under s. 56(4) setting all or part of that marriage contract aside.2 [page68] Otherwise, the court will enforce the contract: Family Law Act, s. 2(10).
41Therefore, the motion judge did not err by treating the issue as a request by the husband for relief, thereby engaging the limitation issue.
(2) Section 16(1)(a) of the Limitations Act
42On questions of statutory interpretation such as those at issue in this appeal, a court must read the words of an Act in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of the legislature: Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, 2002 SCC 42, at para. 26. Here, there are two statutes that work together to provide limitations in the family law context, and the court must interpret them applying the same principles.
43Section 4 of the Limitations Act mandates the basic two-year limitation period for all claims unless the Act provides otherwise. As a result, if there is another provision that governs the limitation for the relevant proceeding, that provision prevails. Therefore, if s. 16(1)(a) applies, then there is no limitation period for bringing a proceeding to set aside a marriage contract under s. 56(4) of the Family Law Act.
44In addressing the potential applicability of s. 16(1)(a) of the Limitations Act to a proceeding under s. 56(4) of the Family Law Act, the motion judge agreed that the application to set aside the marriage contract is a proceeding for a declaration: at para. 31. The declaration is that the contract is of no force and effect and is set aside. However, the motion judge found that the husband was claiming consequential relief in the form of equalization and spousal support and for that reason, the proceeding did not come within s. 16(1)(a) for limitation purposes: at para. 31.
45I agree with the motion judge that the application to set aside the marriage contract is an application for a declaration. However, I do not agree that that application seeks consequential relief.
46The current Limitations Act was the product of a lengthy process of law reform efforts over a number of years. In the early 1990s, the Limitations Act Consultation Group to the Attorney General made a series of recommendations that ultimately formed the basis for the current Limitations Act, including the provision setting out the limitation period for declarations: see Recommendations for a New Limitations Act: [page69] Report of the Limitations Act Consultation Group (Toronto: Ministry of the Attorney General of Ontario, 1991). At p. 18, the Consultation Group gave its recommendation that there be no limitation period for a proceeding seeking a declaration:
Recommendation 2: Applicability and Exemptions from Limitations:
c) Exemption -- Declarations
Declarations do not grant any judicial remedy. Therefore, since they impose no legal obligation on the defendant there is no justification for barring them. Moreover, there will be circumstances in which parties will wish to submit matters to court, such as interpretation of legal instruments like wills and contracts, without seeking a remedy from the court.
There is some concern that if there is no limitation period on seeking declarations the procedure may be used to circumvent limitation periods. Then, the declaration could be used in aid of non-judicial remedies. If evidence develops that there is abuse of the declaration power then this provision may have to be re-examined.
47The Committee's commentary explains that declarations would be exempt from any time limit because no consequential remedy would be ordered against another party. Professor Lazar Sarna explains the distinction between a declaratory and a remedial judgment as follows in his text, The Law of Declaratory Judgments, 4th ed. (Toronto: Carswell, 2016), at p. 54:
A distinction is made between a remedial judgment and a declaration. In those provinces where declaratory orders are excluded from limitations statutes or the purview of juries, the distinction is crucial. A remedial judgment carries within its own terms a solution for the cure of a dispute, be that an order to do or not to do, or more specifically, to pay, deliver over, seize, sell, dissolve, remove, or refrain. It is self-executing in the sense that the parties and the executing officer need no further direction or authorization than that contained in the judgment. A declaration confirms or denies the existence of a right, as if bearing witness to what has always been the legal relationship between the disputing parties. Put that way, it is an existential judgment that considers rights to be or not to be. An executing officer would be at a loss for guidance if called upon to execute the declaration because no remedial course is stated in the declaration. The parties are not even called upon to take the next step in accommodating the declaration: rather, their challenge is to consider immediate compliance, or new court proceedings to remedy a situation interpreted and clarified by the declaration.
(Footnote omitted)
48This description of declaratory and remedial judgments is reflected in the jurisprudence of this court. A declaratory judgment is a "formal statement by a court pronouncing upon the existence or non-existence of a legal state of affairs -- it is [page70] restricted to a declaration of the parties' rights and does not order any party to do anything": Starz (Re), 2015 ONCA 318, 125 O.R. (3d) 663, at para. 102; see also Fehr v. Sun Life Assurance Company of Canada, 2018 ONCA 718, 84 C.C.L.I. (5th) 124, at para. 207; Peikut v. Romoli, 2020 ONCA 26, 55 E.T.R. (4th) 166, at paras. 12-13.
49As enacted, s. 16(1)(a) of the Limitations Act provides that there will be no limitation period for a proceeding for a declaration "if no consequential relief is sought". As this is a limitations statute, as a matter of statutory interpretation, the question is: what is the meaning of consequential relief in this section, and what is the intent of limiting the circumstances when there will be no limitation period to when the request for a declaration does not also claim consequential relief?
50To answer the question, one must be careful not to confuse procedure with substance in interpreting and applying s. 16(1)(a) of the Limitations Act. The Limitations Act is not concerned with procedural issues: the purpose and effect of its provisions is to govern the time limits for commencing actions and proceedings. Whether the parties have combined different claims or causes of action into one or more proceedings will not alter the time periods that govern. Put differently, different limitation periods may govern different claims in the same action.
51The key, therefore, is not whether consequential relief in the form of a claim for a remedy against another party is sought procedurally in the same proceeding or in a subsequent proceeding. The key is whether the request for a declaration coupled with a claim for enforceable relief is, in substance, a claim for a remedy against the other party and not merely a request for a declaratory order.
52This is because, if it is a claim for a substantive remedy against another party, then the limitation period applicable to that substantive remedy will apply to that claim. Similarly, if a declaration is necessary as a prelude to a claim for a remedy against another person, no limitation period applies to the proceeding for a declaration, but the applicable limitation period for seeking the remedial order may still bar that claim.
53Accordingly, if a party seeks both consequential and declaratory relief against another party, the consequential relief is subject to the limitation periods set forth in the Limitations Act, or in this case, the Family Law Act, while the declaratory relief alone benefits from the absence of a limitation period. The bar is not against joining a claim for consequential relief; the bar is against applying no limitation period to the consequential relief. [page71]
54Applying the principle to this case, where the husband seeks a declaration that would remove a significant obstacle to his claims for equalization and for spousal support, that declaration is subject to no limitation period, pursuant to s. 16(1)(a) of the Limitations Act. The limitations governing the consequential relief he seeks, namely equalization and support, are the periods applicable to those forms of relief: six years from the date of separation for equalization, and no limitation period for support.
55Conversely, had the husband brought his equalization claim seven years after the date of separation with no reasonable possibility of reconciliation, and therefore out of time, the fact that he would be able to obtain a declaration setting aside the marriage contract would not mean that his equalization claim could proceed. That claim would remain time-barred, subject to the power of the court to extend the time under s. 2(8).
56In summary, although one may always characterize any relief that is sought that depends on the outcome of the declaration proceeding as consequential relief, the intent and effect of s. 16(1)(a) is not to preclude the party seeking the declaration from also asking for consequential relief as a matter of procedure. It is to prevent a party who seeks a consequential remedy from circumventing the limitation period that is applicable to the claim for the remedy by joining that claim with an application for a declaration: see, for example, Alguire v. The Manufacturers Life Insurance Company (Manulife Financial), 2018 ONCA 202, 140 O.R. (3d) 1, at para. 29; see also Sarna, at pp. 55-56.3 [page72]
(3) Conclusion on s. 16(1)(a) of the Limitations Act
57I conclude that a proceeding under s. 56(4) of the Family Law Act comes within s. 16(1)(a) of the Limitations Act. There is no limitation period for bringing the proceeding for a declaration setting aside a marriage contract, whether as a stand-alone matter or if the proceeding also claims other family law relief. The other relief remains subject to the applicable limitation periods, including the residual discretion of a family court to grant extensions of time under s. 2(8) of the Family Law Act. In this case, those limitation periods are six years for the husband's equalization claim, and there is no limitation period for his spousal support claim.
58This result also works seamlessly within the limitation structure of the Family Law Act, because it does not add a new, shorter limitation period of two years, which would disrupt the longer time spouses have been given to resolve their affairs. It does not interfere with the philosophy of the Act, which is to give more generous time periods for separating spouses to resolve their claims for equalization and spousal support.
59Moreover, while spouses may seek to set aside a marriage contract in the circumstances set out in s. 56(4) at any time, a spouse is unlikely to bring such an application during the marriage, even if the spouse learns that the other spouse failed to disclose some material assets when they were negotiating their agreement. If they remain happily married, there will be no need.
60An application to set aside a marriage contract would likely be brought in the context of marriage break-up and its financial consequences for the parties. Those financial consequences are governed by the limitation periods specified in the Act and in the Limitations Act. An application to set aside a marriage contract will not extend or reduce those periods.
(4) Is the request to set aside a marriage contract a claim for loss or damage caused by an act or omission?
61Because of my conclusion that the request to set aside a marriage contract under s. 56(4) of the Family Law Act is a proceeding for a declaration where no consequential relief is sought [page73] under 16(1)(a) of the Limitations Act, it is unnecessary to consider whether that request falls within the definition of claim, and in that context when the loss or damage occurred and when the husband discovered the claim.
H. Disposition
62Accordingly, I conclude that the motion judge erred in law in failing to find that s. 16(1)(a) of the Limitations Act applies to a proceeding under s. 56(4) of the Family Law Act for a declaration setting aside the marriage contract, and in finding that the two-year limitation period under s. 4 applies.
63I would therefore allow the appeal and set aside the summary judgment, with costs of the appeal to the husband in the agreed amount of $10,000 inclusive of disbursements and HST. If the parties are unable to agree on the costs of the summary judgment motion in light of the disposition of the appeal, they may each file costs submissions not exceeding two pages in length by August 10, 2020.
BROWN J.A. (Concurring): --
I. Introduction
64I agree with my colleague that the husband's appeal should be allowed and the summary judgment granted by the motion judge be set aside. However, I reach that conclusion by a different path.
II. Points of Disagreement
65Although I agree with my colleague that the motion judge did not err by treating the husband's pleadings (Application and Reply) as containing a request to set aside the marriage contract, I respectfully disagree with two of my colleague's other conclusions.
A. Do all proceedings invoking s. 56(4) of the Family Law Act fall within s. 16(1)(a) of the Limitations Act, 2002?
66With respect, I am unable to agree with my colleague's broad statement, at para. 57, that "a proceeding under s. 56(4) of the Family Law Act comes within s. 16(1)(a) of the Limitations Act".
67It may or it may not.
68I agree that a proceeding that seeks only to set aside a domestic contract under s. 56(4) of the Family Law Act, [page74] R.S.O. 1990, c. F.3 (the "FLA") and does not seek consequential relief may well fall within the language of s. 16(1)(a) of the Limitations Act, 2002, S.O. 2002, c. 24 Sch. B (the "Limitations Act"), namely: "There is no limitation period in respect of (a) a proceeding for a declaration if no consequential relief is sought."
69However, such a proceeding would be a rare bird. As put by Abrams and McGuinness in Canadian Civil Procedure Law, 2nd ed. (Markham: LexisNexis, 2010), at §5.87: "Proceedings for declarative relief within the description of clause 16(1) are relatively rare, although not unknown."
70The reality of family law litigation is that a proceeding in which an applicant seeks to set aside a domestic contract invariably also contains, as part of the prayer for relief, requests by the applicant for consequential relief relating to support or property equalization. Seeking such relief in the same proceeding in which the applicant attempts to set aside a domestic contract would take the "proceeding" outside of the language of Limitations Act, s. 16(1)(a).
B. Does the husband's proceeding seek consequential relief?
71Second, I respectfully disagree with my colleague's conclusion, at para. 45, that the husband's proceeding is one for a declaration that does not seek consequential relief within the meaning of Limitations Act, s. 16(1)(a).
72A declaratory judgment is a formal statement by a court pronouncing upon the existence or non-existence of a legal state of affairs -- it is restricted to a declaration of the parties' rights and does not order any party to do anything: Starz (Re), 2015 ONCA 318, 125 O.R. (3d) 663, at para. 102. However, the present case is not one where the husband's request for an order setting aside the marriage contract is for an "existential judgment that considers rights to be or not to be" or where "the parties are not even called upon to take the next step in accommodating the declaration" so that "the failure of the parties to abide by its guidance will inevitably lead to independent subsequent proceedings claiming consequential relief", all hallmarks of a proceeding for a declaration in which no consequential relief is sought: Lazar Sarna, The Law of Declaratory Judgments, 4th ed. (Toronto: Thomson Reuters, 2016), at pp. 7 and 54.
73On the face of his pleadings, the husband seeks relief consequential to setting aside the marriage contract. The husband's originating Application, in the section headed "Claim by Applicant", seeks three forms of relief: (i) indexed spousal support; (ii) equalization of net family properties; and (iii) costs. In addition, the motion judge interpreted portions of the husband's [page75] Application and Reply as requesting an order to set aside the marriage contract pursuant to s. 56(4) of the FLA. Consequently, the husband's request for an order setting aside the marriage contract goes beyond clarifying the nature of a particular obligation: Alguire v. The Manufacturers Life Insurance Company (Manulife Financial), 2018 ONCA 202, 140 O.R. (3d) 1, at para. 29; Leibel v. Leibel, 2014 ONSC 4516, at para. 38.
74Instead, the request attempts to open the door to the court granting him spousal support and an equalization payment. So framed, the "essential nature" of what the husband is seeking in his proceeding, the "pith and substance" of the relief he seeks, is spousal support and an equalization payment: Skylark Holdings Limited v. Minhas, 2018 ONSC 1568 (Div. Ct.), at para. 8; Van Halteren v. De Boer Tool Inc., 2018 ONSC 1554, at para. 6.
75Accordingly, if the husband's proceeding is characterized as one seeking a declaration under s. 56(4) of the FLA, it is not a proceeding for a declaration in which no consequential relief is sought. On the contrary, it very much is a proceeding in which relief is sought consequential to the order to set aside the marriage contract. As a result, it does not fall within the language of s. 16(1) (a) of the Limitations Act.
76The question then is: what limitation periods apply to the husband's proceeding?
III. The Parties' Positions
77The parties offer two different answers to that question.
78The respondent wife supports the motion judge's conclusions that (i) the husband's request to set aside the marriage contract constitutes a discrete "claim" within the meaning of s. 1 of the Limitations Act; (ii) to which the two-year basic limitation period contained in s. 4 of that Act applies; (iii) with the result that since the husband discovered that claim no later than October 17, 2012; (iv) his August 24, 2017 application was commenced out-of-time; (v) notwithstanding that his requests for an equalization payment and spousal support were brought within the applicable limitation periods. However, the respondent further submits that this court should add a gloss to ss. 4 and 5 of the Limitations Act so that a "claim" to set aside a marriage contract is presumptively "discovered" on the date the parties separate. This submission appears to recognize that requiring a party to apply to set aside a marriage contract within two years of the discovery of some "injury, loss or damage" while the marriage remains on-going would result in a harsh, if not absurd, application of the Limitations Act. [page76]
79On his part, the husband disagrees that his request to set aside the provisions of the marriage contract regarding his claims for an equalization payment and spousal support is a stand-alone "claim" for limitation period purposes. Instead, he characterizes his request to set aside those provisions as a "gateway" to claiming his statutory rights to equalization and spousal support. As such, the timeliness of his "set aside request" falls to be determined by the limitation periods applicable to his monetary claims for an equalization payment and spousal support, a six-year limitation period and no limitation period, respectively.
IV. Analysis
80I am persuaded by the husband's submission. It more closely accords with the statutory language regarding the interplay between Ontario's family law and limitation periods regimes.
A key interpretative principle
81A key principle governing the interplay between those two regimes is that the basic two-year limitation period that applies to "a proceeding . . . in respect of a claim" does not apply to proceedings seeking equalization payments or spousal support. Instead, the Limitations Act recognizes special limitation periods for each.
82In the case of spousal support, s. 16(1)(c) of the Limitations Act states:
16(1) There is no limitation period in respect of
(c) a proceeding to obtain support under the Family Law Act or to enforce a provision for support or maintenance contained in a contract or agreement that could be filed under section 35 of that Act.
(Emphasis added)
83In the case of an equalization payment, FLA s. 5(1) sets out the basic entitlement:
5(1) When a divorce is granted or a marriage is declared a nullity, or when the spouses are separated and there is no reasonable prospect that they will resume cohabitation, the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them.
Section 7(1) of the FLA specifies the process by which a person can seek a court order for an equalization payment:
7(1) The court may, on the application of a spouse, former spouse or deceased spouse's personal representative, determine any matter respecting the spouses' entitlement under section 5. [page77]
84Section 19(1)(a) of the Limitations Act recognizes that the limitation period applicable to a proceeding seeking an equalization payment is that set out in FLA s. 7(3), which states:
(3) 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;
(c) six months after the first spouse's death.
In the present case, the husband's request for an equalization payment falls within the six-year limitation period in FLA s. 7(3)(b).
85Accordingly, the starting points for determining the limitation periods applicable to a proceeding in which spousal support or an equalization payment is sought are s. 16(1)(c) of the Limitations Act and s. 7(3) of the FLA, respectively.
The treatment of domestic contracts in the FLA
86Does this starting point change when the proceeding seeking an equalization payment or spousal support also requests an order setting aside a domestic contract, or a provision in a domestic contract, that restricts or waives a party's entitlement to an equalization payment or spousal support? I am not persuaded that it does.
87I recognize that the FLA accords strong recognition to domestic contracts: it provides that the contract prevails in respect of a matter also dealt with by the FLA, unless the Act provides otherwise: FLA, s. 2(10). A marriage contract may deal with the ownership in or division of property, as well as with support obligations: FLA, ss. 52(1)(a) and (b).
88But the FLA subjects aspects of domestic contracts to judicial supervision. Under s. 56(4), a court may "set aside a domestic contract" in the event certain circumstances occurred at the time the contract was entered into, such as inadequate financial disclosure, lack of understanding of the nature and consequences of the contract or basic contract formation problems. FLA s. 56(4) deals with unconscionable agreement: Scheel v. Henkelman (2001), 2001 24133 (ON CA), 52 O.R. (3d) 1 (C.A.), at para. 15.
89As well, a court may set aside a contractual waiver of the right to spousal support where it results in "unconscionable circumstances". Specifically, FLA s. 33(4) provides that in considering an application for support under FLA s. 33(1): [page78]
(4) The court may set aside a provision for support or a waiver of the right to support in a domestic contract and may determine and order support in an application under subsection (1) although the contract contains an express provision excluding the application of this section,
(a) if the provision for support or the waiver of the right to support results in unconscionable circumstances. . .
90The case law recognizes that the setting aside of a waiver of support provision that results in unconscionable circumstances under FLA s. 33(4) occurs as part of the court's consideration of an application for spousal support: Scheel, at paras. 15-16. Consequently, no limitation period would apply to the examination of a waiver of support provision under FLA s. 33(4) that is raised as part of a s. 33 application for spousal support by reason of s. 16(1)(c) of the Limitations Act.
91However, the FLA does not expressly specify the limitation period applicable to an application to set aside a domestic contract that relies on the "unconscionable agreement" factors contained in FLA s. 56(4). The respondent submits that the lack of an express limitation period covering s. 56(4) applications is significant. It means that where an applicant commences a proceeding for an equalization payment and spousal support, coupled with a request to set aside a domestic contract for any of the reasons specified in FLA s. 56(4), a discrete limitation period applies to the "set aside" request: namely, the basic two-year limitation period found in s. 4 of the Limitations Act. That is because the threshold request to set aside the domestic contract constitutes a discrete "claim" in the proceeding that attracts the basic limitation period. As I will explain, I do not accept this submission.
Applying the key interpretative principle
92One must recall the key "carve-out" principle that governs the interplay between Ontario's family law and limitation periods regimes: the basic two-year limitation period in the Limitations Act does not apply to proceedings seeking an equalization payment or spousal support. If such a proceeding includes a request to set aside a domestic contract on any grounds specified in FLA s. 56(4), does a discrete limitation period apply to that part of the proceeding or do the equalization payment and spousal support limitation periods apply?
93The answer really boils down to the perspective one takes of the proceeding. Is the "set aside request" a discrete, "stand-alone claim"? Or, should the "set aside request" be treated as one [page79] subsumed within the "proceeding" claiming an equalization payment and spousal support under the FLA?
94In answering those questions, courts should be reluctant to discover or add yet another limitation period to family law litigation given the remedial nature of family law legislation. As well, in seeking to answer the questions courts must recognize the reality of contemporary family litigation: a very large number of family law litigants are now self-represented. Accordingly, in this area of the law, necessity dictates that simplicity and understandability of the "rules of the game" must be a major consideration in the interpretative exercise.
95In my view, the statutory language governing claims for equalization payments and spousal support indicate that any related "set aside request" in a proceeding be treated as one falling under the limitation periods that apply to the requests for an equalization payment and spousal support asserted in the proceeding.
96Dealing first with a proceeding that seeks spousal support, s. 16(1)(c) of the Limitations Act states that:
There is no limitation period in respect of . . . a proceeding to obtain support under the Family Law Act or to enforce a provision for support or maintenance contained in a contract or agreement that could be filed under section 35 of that Act.
(Emphasis added)
97The statutory language of a "proceeding to obtain support under the Family Law Act" is broad enough to include a proceeding that couples a request to set aside the provisions of a domestic contract that limit or waive spousal support for reasons set out in FLA s. 56(4) with a request for an order to provide spousal support under FLA s. 33(1). The bars to relief contained in the domestic contract would have to be set aside in order for the applicant "to obtain" support under the FLA.
98Such an interpretation does not undermine the recognition given to domestic contracts by FLA s. 2(10). It is consistent with the policy of allowing courts to set aside waivers of support in domestic contracts that result in "unconscionable circumstances": FLA, s. 33(4). It also is in step with the approach under the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) that a domestic contract is a factor that the court must consider on an application for spousal support: Miglin v. Miglin, 2003 SCC 24, [2003] 1 S.C.R. 303, at paras. 68-78.
99So too, the language of s. 7 of the FLA is broad enough to include a proceeding that couples a request to set aside the provisions of a domestic contract that limit or waive an equalization payment for reasons set out in FLA s. 56(4) with a request for an [page80] order determining a spouse's entitlement to an equalization payment under FLA s. 5.
100As noted earlier, FLA s. 7(3) creates special limitation periods for an application "based on subsection 5(1) or (2)". The husband's request for an equalization payment is "based on subsection 5(1)". The language in FLA s. 7(1) that authorizes a court to "determine any matter respecting the spouses' entitlement under section 5" (emphasis added) is broad enough to include a concurrent request to set aside, for the reasons set out in FLA s. 56(4), the provisions of a domestic contract that limit or waive the right to an equalization payment. In other words, determining whether the provisions of a domestic contract validly limit or waive a spouse's entitlement to an equalization payment falls within the language of determining "any matter respecting the spouses' entitlement under section 5".
V. Conclusion
101The husband's proceeding couples a request to set aside the provisions of the marriage contract that bar his entitlement to an equalization payment and spousal support with his claims for an equalization payment and spousal support. So framed, the husband's proceeding to set aside the bars to an equalization payment in the marriage contract and to secure an equalization payment is subject to the six-year limitation period in FLA s. 7(3)(b); his proceeding to set aside the bars to spousal support in the marriage contract and to obtain spousal support are not subject to any limitation period pursuant to s. 16(1)(c) of the Limitations Act. Since the husband commenced his proceeding approximately five years following the date of separation, his proceeding is not statute-barred.
102Consequently, I agree with my colleague that the husband's appeal must be allowed and the summary judgment set aside. I agree with my colleague's disposition of costs.
Appeal allowed.
Notes
End of Document
Footnotes
- On appeal, the husband raised other arguments regarding the interpretation of the Family Law Act for limitations purposes, one of which was accepted by my colleague in his concurring reasons.
- The husband did not seek to rely on s. 33(4) of the Family Law Act on the summary judgment motion, but made arguments about the applicability of s. 33(4) for the first time on appeal. In any event, as I discuss at para. 37 of these reasons, an order to set aside a spousal support clause in a marriage contract will be made under that section in the context of a support application under s. 33(1), for which there is no limitation period: see s. 16(1)(c) of the Limitations Act.
- Professor Sarna explains, at pp. 55-56, that some actions for declaratory relief may nevertheless seek remedial orders: The importance of defining an order as declaratory or remedial lies in part in the question of limitations. Limitation periods for remedial claims are statutorily different than that for declarations, if any. For example, many provincial statutes define the "remedial order" as a judgment or an order made by a court in a civil proceeding requiring a defendant to comply with a duty or to pay damages for the violation of a right, but excludes a declaration of rights and duties, legal relations, or personal status without consequential relief. If in addition to declaratory relief, a claim against pension trustees would require them to act by making payment, the thrust of the action seeks a remedial order, and engages the [Ontario] Limitations Act. Similarly, a foreclosure action effectively seeks a remedial order because an order nisi, although containing a declaration of a mortgage being in default, also orders requiring the debtor to pay. The borderline cases where a litigant tries to avoid the limitations bar by using a declaratory recourse will easily be screened out by the presumption that all claims are caught by limitations. Accordingly, the litigant cannot avoid the consequences of the passage of time by seeking a declaration that money is payable. (Footnotes omitted)
