McConnell v. Huxtable
Ontario Reports
Ontario Superior Court of Justice,
Perkins J.
February 11, 2013
113 O.R. (3d) 727 | 2013 ONSC 948
Case Summary
Limitations — Trusts and trustees — Applicant in family law case claiming ownership interest in respondent's house (and monetary compensation in alternative) based on constructive trust — Claim being "action to recover land" — Ten-year limitation period in Real Property Limitations Act applying to constructive trust claim and also [page728] to alternative claim for monetary compensation — Sections 4 and 5 of Limitations Act, 2002 not applying to constructive trust claim in family law context — Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, ss. 4, 5 — Real Property Limitations Act, R.S.O. 1990, c. L.15.
In a family law action, the applicant claimed a constructive trust in the respondent's house (and, in the alternative, for monetary compensation) arising from an alleged 13-year cohabitation. The respondent moved for summary judgment dismissing the claim on the basis that it was barred by the two-year limitation period under s. 4 of the Limitations Act, 2002.
Held, the motion should be dismissed.
The constructive trust claim, including the alternative claim for monetary compensation, was an "action to recover land" within the meaning of s. 4 of the Real Property Limitations Act. The ten-year limitation period in that Act applied. It was not possible to conclude on the record that the applicant's claim was barred by the ten-year limitation period.
Other than s. 4 of the Real Property Limitations Act, there is no applicable statutory limitation period for a constructive trust claim in a family law case. Sections 4 and 5 of the Limitations Act, 2002 do not apply. If s. 4 of the Real Property Limitations Act did not apply, then there was a gap in the legislative scheme, and the court could devise an appropriate time limit using its equitable jurisdiction.
Cases referred to
Davies v. White, [2012] O.J. No. 5290, 2012 ONSC 6298 (S.C.J.); Hainey v. Hainey, 1999 14992 (ON SC), [1999] O.J. No. 1983, 49 R.F.L. (4th) 290, 88 A.C.W.S. (3d) 830 (S.C.J.); Freeland v. Freeland, 1982 1104 (AB KB), [1982] A.J. No. 592, 19 Alta. L.R. (2d) 180, 48 A.R. 199, 13 A.C.W.S. (2d) 366 (Q.B.); Hartman Estate v. Hartfam Holdings Ltd., 2006 266 (ON CA), [2006] O.J. No. 69, 263 D.L.R. (4th) 640, 205 O.A.C. 369, 22 E.T.R. (3d) 161, 23 R.F.L. (6th) 201, 145 A.C.W.S. (3d) 52 (C.A.); Johansson v. Fevang, [2009] A.J. No. 1063, 2009 ABQB 573, 80 C.P.C. (6th) 27; Kerr v. Baranow, [2011] 1 S.C.R. 269, [2011] S.C.J. No. 10, 2011 SCC 10, 274 O.A.C. 1, 328 D.L.R. (4th) 577, 2011EXP-624, 411 N.R. 200, J.E. 2011-333, [2011] 3 W.W.R. 575, 64 E.T.R. (3d) 1, 14 B.C.L.R. (5th) 203, 300 B.C.A.C. 1, 93 R.F.L. (6th) 1, EYB 2011-186472; McCracken v. Kossar, 2007 4875 (ON SC), [2007] O.J. No. 664, 279 D.L.R. (4th) 431, 54 R.P.R. (4th) 246, 155 A.C.W.S. (3d) 556 (S.C.J.); Milavsky v. Milavsky, [2011] A.J. No. 841, 2011 ABCA 231, 55 Alta. L.R. (5th) 382, 513 A.R. 282; Mongroo v. Mongroo, [2010] O.J. No. 5710, 2010 ONSC 7069 (S.C.J.); Peter v. Beblow, 1993 126 (SCC), [1993] 1 S.C.R. 980, [1993] S.C.J. No. 36, 101 D.L.R. (4th) 621, 150 N.R. 1, [1993] 3 W.W.R. 337, J.E. 93-660, 23 B.C.A.C. 81, 77 B.C.L.R. (2d) 1, [1993] R.D.F. 369, 48 E.T.R. 1, 44 R.F.L. (3d) 329, 39 A.C.W.S. (3d) 646, EYB 1993-67100; Pirani v. Karmali (2012), 109 O.R. (3d) 698, [2012] O.J. No. 1369, 2012 ONSC 1647 (S.C.J.); Rawluk v. Rawluk, 1990 152 (SCC), [1990] 1 S.C.R. 70, [1990] S.C.J. No. 4, 65 D.L.R. (4th) 161, 103 N.R. 321, J.E. 90-299, 38 O.A.C. 81, 36 E.T.R. 1, 23 R.F.L. (3d) 337, 19 A.C.W.S. (3d) 260; Sorochan v. Sorochan, 1986 23 (SCC), [1986] 2 S.C.R. 38, [1986] S.C.J. No. 46, 29 D.L.R. (4th) 1, 69 N.R. 81, [1986] 5 W.W.R. 289, 46 Alta. L.R. (2d) 97, 74 A.R. 67, [1986] R.D.F. 501, 23 E.T.R. 143, 2 R.F.L. (3d) 225, 39 A.C.W.S. (2d) 347; Von Wiegen v. Hobe Estate, [2007] Y.J. No. 11, 2007 YKSC 10, 33 E.T.R. (3d) 96, 155 A.C.W.S. (3d) 344; Williams v. Thomas, [1909] 1 Ch. 713 (C.A.), consd
Other cases referred to
Bouchan v. Slipacoff, [2010] O.J. No. 2592, 2010 ONSC 2693 (S.C.J.); Central Trust Co. v. Rafuse, 1986 29 (SCC), [1986] 2 S.C.R. 147, [1986] S.C.J. No. 52, 31 D.L.R. (4th) 481, 69 N.R. 321, 75 N.S.R. (2d) 109, [1986] R.R.A. 527, 34 B.L.R. 187, 37 C.C.L.T. 117, 42 R.P.R. 161, 1 A.C.W.S. (3d) 294; [page729] International Corona Resources Ltd. v. LAC Minerals Ltd., 1989 34 (SCC), [1989] 2 S.C.R. 574, [1989] S.C.J. No. 83, 61 D.L.R. (4th) 14, 101 N.R. 239, J.E. 89-1204, 36 O.A.C. 57, 44 B.L.R. 1, 26 C.P.R. (3d) 97, 35 E.T.R. 1, 6 R.P.R. (2d) 1, 16 A.C.W.S. (3d) 345, affg (1987), 1987 4308 (ON CA), 62 O.R. (2d) 1, [1987] O.J. No. 883, 44 D.L.R. (4th) 592, 23 O.A.C. 263, 18 C.P.R. (3d) 263, 28 E.T.R. 245, 46 R.P.R. 109, 6 A.C.W.S. (3d) 363 (C.A.); Kamloops (City) v. Neilson, 1984 21 (SCC), [1984] 2 S.C.R. 2, [1984] S.C.J. No. 29, 10 D.L.R. (4th) 641, 54 N.R. 1, [1984] 5 W.W.R. 1, J.E. 84-603, 66 B.C.L.R. 273, 11 Admin. L.R. 1, 29 C.C.L.T. 97, 8 C.L.R. 1, 26 M.P.L.R. 81, 26 A.C.W.S. (2d) 453; Murdoch v. Murdoch, 1973 193 (SCC), [1975] 1 S.C.R. 423, [1973] S.C.J. No. 150, 41 D.L.R. (3d) 367, [1974] 1 W.W.R. 361, 13 R.F.L. 185; Mustard v. Brache, [2006] A.J. No. 1137, 2006 ABCA 265, 275 D.L.R. (4th) 545, 62 Alta. L.R. (4th) 203, 397 A.R. 361, 39 C.P.C. (6th) 120, 27 E.T.R. (3d) 15, 29 R.F.L. (6th) 284, 153 A.C.W.S. (3d) 55; Peixeiro v. Haberman, 1997 325 (SCC), [1997] 3 S.C.R. 549, [1997] S.C.J. No. 31, 151 D.L.R. (4th) 429, 217 N.R. 371, J.E. 97-1825, 103 O.A.C. 161, 46 C.C.L.I. (2d) 147, 12 C.P.C. (4th) 255, 30 M.V.R. (3d) 41, 74 A.C.W.S. (3d) 117; Placzek v. Green, [2009] O.J. No. 326, 2009 ONCA 83, 307 D.L.R. (4th) 441, 69 C.P.C. (6th) 42, 245 O.A.C. 220; Rizzo & Rizzo Shoes Ltd. (Re) (1998), 1998 837 (SCC), 36 O.R. (3d) 418, [1998] 1 S.C.R. 27, [1998] S.C.J. No. 2, 154 D.L.R. (4th) 193, 221 N.R. 241, J.E. 98-201, 106 O.A.C. 1, 50 C.B.R. (3d) 163, 33 C.C.E.L. (2d) 173, 98 CLLC Â210-006, 76 A.C.W.S. (3d) 894; Schneider v. State Farm Mutual Automobile Insurance Co., [2010] O.J. No. 3850, 2010 ONSC 4734 (S.C.J.); Waschkowski v. Hopkinson Estate (2000), 2000 5646 (ON CA), 47 O.R. (3d) 370, [2000] O.J. No. 470, 184 D.L.R. (4th) 281, 129 O.A.C. 286, 44 C.P.C. (4th) 42, 32 E.T.R. (2d) 308, 95 A.C.W.S. (3d) 208 (C.A.)
Statutes referred to
Adult Interdependent Relationship Act, S.A. 2002, c. A-4.5
Family Law Act, S.A. 2003, c. F-4.5, s. 6
Family Law Act, R.S.O. 1990, c. F.3, ss. 5(1), (2), 7(1), (3)
Limitations Act, R.S.A. 2000, c. L-12 [as am.], ss. 3(1), (2) (a), 6(1)
Limitations Act, R.S.O. 1990, c. L.15, Part II, ss. 42, 43, (2), Part III
Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, ss. 1, 2(1) (a), 4, 5 [as am.], (1)(a), (i), (ii), (iii), (iv), (b), (2), (3), 19(1), (a), 42, Schedule [as am.]
Real Property Limitations Act, R.S.O. 1990, c. L.15, ss. 1, Part I [as am.], 4, 15, Part II [as am.], 42 [as am.], 43(2), Part III [as am.]
Rules and regulations referred to
Family Law Rules, O. Reg. 114/99, Rule 16 [as am.]
Authorities referred to
Goff, Robert, and Gareth Jones, The Law of Restitution, 2nd ed. (London: Sweet & Maxwell, 1978)
Mew, Graeme, The Law of Limitations, 2nd ed. (Toronto: LexisNexis Butterworths, 2004)
Ontario, Legislative Assembly, Official Report of Debates (Hansard), 37th Parl., 2nd Sess. (December 2, 2002) (Michael Bryant)
Ontario Law Reform Commission, Report on Limitation of Actions (Toronto: Department of the Attorney General, 1969)
Ontario Limitations Act Consultation Group, Recommendations for a New Limitations Act: Report of the Limitations Act Consultation Group (Toronto: Ministry of the Attorney General, 1991)
Ontario Ministry of the Attorney General, Discussion Paper on Proposed Limitations Act (Toronto: Ministry of the Attorney General, 1977) [page730]
MOTION by the respondent for summary judgment.
William D. Rogers, for applicant.
Bryan R.G. Smith and Lindsey Love-Forester, for respondent.
PERKINS J.: —
1. Issues
[1] This is a summary judgment motion brought under Rule 16 of the Family Law Rules, O. Reg. 114/99 by the respondent. The applicant served an application in which she made a constructive trust claim for an ownership interest in the respondent's house (and, in the alternative, for compensation in money), arising from what the applicant says was a 13-year cohabitation. The respondent has moved for dismissal of the applicant's claim on the ground that the claim is barred by a limitation period. The sole issues raised on the motion before me are questions of law. They were not articulated as clearly as I would have liked, so I have reformulated them as follows:
(1) Is a claim in a family law case in which the claimant pleads facts to establish a constructive trust and asks the court to award an ownership interest in land, with an alternative claim for monetary compensation, governed by the ten-year limitation period set out in s. 4 of the Real Property Limitations Act, R.S.O. 1990, c. L.15 or by the two-year limitation period set out in s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B?
(2) Is there a gap in the limitations legislation such that there is no applicable statutory limitation period for a constructive trust claim in a family law case, leaving scope for the court to devise a time limit using its equitable jurisdiction?
[2] If, as the respondent submits, the two-year limitation period under s. 4 of the Limitations Act, 2002 applies, the applicant's claim is statute-barred and must be dismissed. The applicant argues there is no applicable statutory limitation period, and therefore the court should use its equitable jurisdiction to adopt a limitation period that would allow her claim to proceed to the next step, which the parties agree would be completion of documentary disclosure and oral questioning under the Family Law Rules. The applicant submits in the alternative that the ten-year limitation period under s. 4 of the Real Property Limitations Act applies, in which case her claim was brought in time and is not barred. [page731]
[3] The applicant made a claim in her application for a property interest based not only on a constructive trust, but also on a resulting trust. However, the parties agreed at the start of the motion hearing before me that the applicant did not have the evidence to establish a resulting trust in her favour, and that accordingly this part of the applicant's case should be dismissed on consent, leaving only the continuation of her constructive trust claim before me for decision.
[4] Also not before me is the viability of the applicant's claim for spousal support, which is proceeding regardless of the outcome of this motion.
2. Result
[5] The motion for summary judgment on the constructive trust claim is dismissed for the reasons set out below. In summary, I find that the applicant's constructive trust claim, including the alternative claim for damages, is an application to recover land governed by the ten-year limitation period in s. 4 of the Real Property Limitations Act. If this conclusion is not correct, then the applicant's claim is one to which no statutory limitation period applies.
[6] The applicant's claim based on a resulting trust is dismissed on consent.
[7] Counsel are to confer and try to agree on costs. If not agreed, costs are to be addressed initially in writing.
3. Background Facts
[8] The parties met in 1993 or 1994. The applicant says they began cohabiting in 1994 and separated in 2007. The respondent admits they were friends and occasionally intimate but denies they ever cohabited. They were both previously married and divorced. They did not marry each other and they did not have any children.
[9] Between 1994 and 2007, the respondent bought two houses and sold them, and then acquired a third one, all in his name alone. The applicant lived for some time in two or possibly all three of them and claims to have been cohabiting with and in a "joint family venture" with the respondent for 13 years. The respondent denies any form of joint venture or other compensable contribution.
[10] In August 2002, the applicant started a civil action against the respondent in which she claimed an equitable interest in one of the houses then owned by the respondent. The action did not proceed. It was either discontinued or dismissed. [page732]
[11] The applicant was living in the respondent's house until late June 2007. In June 2007, the parties' relationship, whatever it was, broke down. The respondent had the applicant removed by the police from his house. The parties have not shared a residence, financial dealings or any form of relationship since then. They did, through their lawyers, engage in some negotiations for a financial settlement in 2007, but no agreement was reached.
[12] The respondent still owned the house in February 2012, when the applicant issued her application in Form 8 under the Family Law Rules. On the claim page, she checked box 50 -- "Other (Specify.)" -- and specified her claim was for "Damages for unjust enrichment, resulting trust and/or constructive trust, see below". Below, under the instruction"Give details of the order you want the court to make" she set out:
A declaration that, pursuant to the doctrines of resulting trust, constructive trust, or as a proprietary award for unjust enrichment, the applicant has a 50% interest (traceable to any proceeds) in the house at [address, lot and plan and property identifier number], which is registered solely in the name of the respondent;
In the alternative, an award to the applicant of monetary damages for unjust enrichment in an amount to be determined.
[13] The factual dispute about whether the parties cohabited or participated in a joint family venture is not before me. For purposes of deciding the legal issues on this motion, I assume the applicant has a triable case that she and the respondent cohabited or formed a "joint family venture", or that she otherwise made compensable contributions to the respondent's property, and that her contributions might entitle her to a proprietary remedy rather than just damages as compensation.
[14] The parties have agreed about one key fact for limitations purposes:
On June 27, 2007, the applicant Judith June Barry McConnell was aware that she had claims, or potential claims, against the respondent Brian Wesley Scott Huxtable in the nature of relief as against Mr. Huxtable's property, including but not limited to claims for unjust enrichment, and the remedies of constructive trust and/or damages flowing therefrom.
[15] In correspondence between counsel, the applicant's lawyer agreed he would not argue "discoverability" of the applicant's claim because it does not apply to this case.
4. Relevant Rules
[16] The motion has been brought under Rule 16 of the Family Law Rules, the relevant provisions of which are: [page733]
RULE 16: SUMMARY JUDGMENT
WHEN AVAILABLE
16(1) After the respondent has served an answer or after the time for serving an answer has expired, a party may make a motion for summary judgment for a final order without a trial on all or part of any claim made or any defence presented in the case.
NO ISSUE FOR TRIAL
(6) If there is no genuine issue requiring a trial of a claim or defence, the court shall make a final order accordingly.
ONLY ISSUE QUESTION OF LAW
(8) If the only genuine issue is a question of law, the court shall decide the issue and make a final order accordingly.
It is common ground that the only issues on this motion are questions of law and that the motion for summary judgment is an appropriate way to determine them.
5. Relevant Statutory Provisions
[17] The respondent submits the applicant's claim for a constructive trust is barred by ss. 4 and 5 of the Limitations Act, 2002. The applicant says ss. 4 and 5 do not apply to her claim and s. 7(3) of the Family Law Act, R.S.O. 1990, c. F.3 should be applied by analogy. Alternatively, she argues s. 2(1) (a) of the Limitations Act, 2002 excludes her claim and instead s. 4 of the Real Property Limitations Act applies. The relevant provisions of the Limitations Act, 2002 are:
DEFINITIONS AND APPLICATION
Definitions
- In this Act"claim" means a claim to remedy an injury, loss or damage that occurred as a result of an act or omission;
Application
2(1) This Act applies to claims pursued in court proceedings other than,
(a) proceedings to which the Real Property Limitations Act applies[.]
[page734]
BASIC LIMITATION PERIOD
Basic limitation period
- 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.
Discovery
5(1) A claim is discovered on the earlier of,
(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).
Presumption
(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.
Demand obligations
(3) For the purposes of subclause (1)(a)(i), the day on which injury, loss or damage occurs in relation to a demand obligation is the first day on which there is a failure to perform the obligation, once a demand for the performance is made.
Other Acts, etc.
19(1) A limitation period set out in or under another Act that applies to a claim to which this Act applies is of no effect unless,
(a) the provision establishing it is listed in the Schedule to this Act;
SCHEDULE
(SECTION 19)
subsection 7(3) [page735]
[18] Sections 1 and 4 of the Real Property Limitations Act provide:
Definitions
- In this Act"action" includes an information on behalf of the Crown and any civil proceeding;
Limitation where the subject interested
- No person shall make an entry or distress, or bring an action to recover any land or rent, but within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to some person through whom the person making or bringing it claims, or if the right did not accrue to any person through whom that person claims, then within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to the person making or bringing it.
[19] The applicant has referred to the limitation period set out in s. 7(3) of the Family Law Act because it is the provision that prescribes the time limit for married persons to make a claim for their statutory matrimonial property rights on separation or divorce. She submits that there is a gap in the limitations legislation for constructive trust cases in family law and that the court should adopt the limitation provision in s. 7(3) by analogy. To understand s. 7(3), it is necessary to reproduce ss. 5(1)-(2) and 7(1) of the Family Law Act:
Equalization of net family properties
Divorce, etc.
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.
Death of spouse
(2) When a spouse dies, if the net family property of the deceased spouse exceeds the net family property of the surviving spouse, the surviving spouse is entitled to one-half the difference between them.
Application to court
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.
[page736]
Limitation
(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.
6. Parties' Main Submissions
[20] It is agreed that on June 27, 2007 the applicant knew she had a potential unjust enrichment claim against the respondent either for a constructive trust interest in his house or for monetary compensation. It is also agreed that if the Limitations Act, 2002 applies, her claim was statute-barred on June 27, 2009, some two and a half years before she issued her application.
[21] The respondent submits, and the applicant agrees, that the applicant's claim as set out in her application is a claim for equitable relief and that equitable claims in general are covered by the Limitations Act, 2002, unless some other statute such as the Real Property Limitations Act applies. The applicant qualifies this agreement by saying that her particular kind of equitable claim is not covered by the Limitations Act, 2002.
[22] The predecessor legislation, the Limitations Act, R.S.O. 1990, c. L.15, generally did not apply to claims for equitable relief: see Hartman Estate v. Hartfam Holdings Ltd., 2006 266 (ON CA), [2006] O.J. No. 69, 205 O.A.C. 369 (C.A.), at paras. 81-85; Ontario Law Reform Commission, Report on Limitation of Actions (Toronto: Department of the Attorney General, 1969), at 18-22, 53-61. However, it appears that equitable claims are generally covered under the new Limitations Act, 2002: Bouchan v. Slipacoff, [2010] O.J. No. 2592, 2010 ONSC 2693 (S.C.J.), at para. 9 (rectification of a contract); Schneider v. State Farm Mutual Automotive Insurance Co., [2010] O.J. No. 3850, 2010 ONSC 4734 (S.C.J.), at para. 49 (breach of fiduciary duty); Graeme Mew, The Law of Limitations, 2nd ed. (Toronto: LexisNexis Butterworths, 2004), at 37; and see Placzek v. Green, [2009] O.J. No. 326, 2009 ONCA 83, at paras. 25, 34-45 and 50, which deals with a statutory cause of action based on equitable principles.
[23] In this case, the only statutory provision that could exclude the operation of the two-year limitation period under s. 4 of the Limitations Act, 2002 is s. 4 of the Real Property Limitations Act, which would apply if the applicant's constructive trust claim is "an action to recover any land" within the meaning [page737] of s. 4 of the Real Property Limitations Act. If it is "an action to recover . . . land", then the ten-year limitation period of the Real Property Limitations Act applies by virtue of s. 2(1)(a) of the Limitations Act, 2002.
[24] The respondent's primary argument in support of his motion for summary judgment is that the applicant's claim is for restitution arising out of unjust enrichment; this sort of claim is not a proprietary claim; and it is therefore not "an action to recover land" covered by the Real Property Limitations Act.
[25] The applicant's first submission is there is an unintentional gap in the Limitations Act, 2002 in respect of family law constructive trust claims, for both married and unmarried couples. She points out the limitation period for net family property equalizations under the Family Law Act for married persons is six years after they separate or two years after they divorce, whichever comes first. Constructive trust claims are often made between married persons in conjunction with a net family property equalization claim, at least since the decision in Rawluk v. Rawluk, 1990 152 (SCC), [1990] 1 S.C.R. 70, [1990] S.C.J. No. 4, which recognized that married persons could make both claims in the same case. If the respondent were correct in contending that constructive trust claims have a two-year limitation period under s. 4 of the Limitations Act, 2002, then married couples would find the two-year limitation period had run out well before the time limit for a net family property equalization claim and would scramble in every case to meet the two-year time limit despite the longer period legislated in s. 7(3) of the Family Law Act. The legislature could never have intended this. It would also be contrary to the policy of the Family Law Act, which gives separating spouses an adequate time for healing and for negotiation of their financial entitlements before having to assert their claims in court. Further, the concept of a joint family venture as the basis for a constructive trust was first articulated by the Supreme Court in Kerr v. Baranow [and Vanasse v. Seguin, both reported together], [2011] 1 S.C.R. 269, [2011] S.C.J. No. 10, 2011 SCC 10, decided about nine years after passage of the Limitations Act, 2002 and clearly not within the contemplation of the legislature when the Limitations Act, 2002 was passed. The applicant submits this court should use its inherent equitable jurisdiction to fill a statutory gap and prevent an absurdity by ruling constructive trust claims in family law cases are not subject to the two-year limitation period in s. 4 of the Limitations Act, 2002.
[26] The applicant's alternative submission is that her constructive trust claim in this case is an "action to recover land" [page738] within the meaning of s. 4 of the Real Property Limitations Act, and therefore subject to a ten-year limitation period.
[27] In reply, the respondent submits there is no legislative gap in the limitations scheme respecting family law constructive trust claims; all equitable claims were consciously and deliberately swept into the new Limitations Act, 2002; constructive trust claims as between married couples have been well known at least since the case of Murdoch v. Murdoch, 1973 193 (SCC), [1975] 1 S.C.R. 423, [1973] S.C.J. No. 150; Kerr v. Baranow, above, did not invent a new claim, but rather reaffirmed that a constructive trust claim was a claim in equity based on unjust enrichment and not a proprietary claim.
7. Is This an Action to Recover Land?
Introduction
[28] Though the applicant put her statutory gap argument first and advanced the argument that s. 4 of the Real Property Limitations Act applied to her case as her secondary argument, it is more convenient for me to address the latter argument before I deal with her submission about a statutory gap.
[29] I will first dispose of two small statutory interpretation issues about s. 4 of the Real Property Limitations Act, the meaning of the words "action" and "recover" in that section. Then I will discuss the respondent's main contention that this case is not one for recovery of land, but rather a case seeking restitution for unjust enrichment.
"Action"
[30] Section 4 of the Real Property Limitations Act speaks of an "action" to recover land. Although an "action" is not the same thing as an "application", the definition of "action" in s. 1 of the Real Property Limitations Act extends s. 4 to "any civil proceeding", which includes this case.
"Recover"
[31] Dictionary definitions of "recover" yield the everyday meaning of to get back something that has been lost or taken (which would not be applicable to the facts of this case because the applicant never owned the house in question), but also a special meaning used in the law that would be applicable here: to obtain something by a judgment in a court of law or to acquire title to something through legal process. See Bryan A. Garner, Black's Law Dictionary, 8th ed. (St. Paul, MN: Thomson/ West, 2004): [page739]
Recover. vb. 1. To get back or regain in full or in equivalence
See, also, Daphne A. Dukelow, The Dictionary of Canadian Law, 4th ed. (Toronto: Carswell, 2011):
Recover. v. 1. "[T]he usual meaning in the context of the judicial process is that of 'gaining through a judgment or order' . . . " Centrac Industries Ltd. v. Vollan Enterprises Ltd. (1989), 1989 ABCA 302, 70 Alta. L.R. (2d) 396 at 398 [. . .] 2. " [T]he taking of possession of some form of property . . ." Prism Petroleum Ltd. v. Omega Hydrocarbons Ltd. (1992), 1992 6169 (AB KB), 4 Alta. L.R. (3d) 332 at 348 [. . .] .
And see:
http://dictionary.reference.com/browse/recover?s=t;
http://www.merriam-webster.com/dictionary/recover;
<http://oxforddictionaries.com/definition/english/ recover?q=recover>.
[32] The meaning of "recover" in ss. 4 and 43(2) of the Real Property Limitations Act was discussed in Hartman Estate v. Hartfam Holdings Ltd., supra, at para. 57. Though the actual decision found that s. 43(2) rather than s. 4 was applicable, the court adopted the meaning "obtain by judgment of the court" as the meaning of "recover" in s. 4.
Recovery of land and restitutionary claims
[33] Determining that "recover" does not merely mean "get back" is only the beginning of the issue. The respondent asserts that the applicant's constructive trust claim is to recover something, but what the applicant claims is not really land, but rather something else. That may seem a difficult position to argue, given that the applicant has asked the court to award an ownership interest in a house, but the respondent cites some weighty authorities as support for the position he takes.
[34] The applicant asserts her claim is an "action to recover land" within the ordinary meaning of those words and within the meaning of s. 4 of the Real Property Limitations Act. She argues the respondent's cases leave scope for this court to conclude that her claim is within the meaning of the section.
[35] The respondent adopts as a general statement of the law the following passage from Robert Goff and Gareth Jones, The Law of Restitution, 2nd ed. (London: Sweet & Maxwell, 1978), at 47-48, which was approved in [page740] International Corona Resources Ltd. v. LAC Minerals Ltd. (1987), 1987 4308 (ON CA), 62 O.R. (2d) 1, [1987] O.J. No. 883 (C.A.), at para. 180, affd 1989 34 (SCC), [1989] 2 S.C.R. 574, [1989] S.C.J. No.83:
It is only in recent years that the law of restitution has matured, and it is therefore not surprising that a distinction is not always drawn in the cases between pure proprietary claims and restitutionary proprietary claims. A pure proprietary claim is a claim that property belongs to and never left the plaintiff. In contrast a claim that a transaction should be rescinded and that property should be revested in the plaintiff is a restitutionary proprietory claim. Such a claim is well known to English law. But there is another kind of restitutionary claim, namely, that it is just that the defendant should be compelled to hold property as a constructive trustee for the plaintiff or that the plaintiff should be granted a lien, or should be subrogated to another's lien, over the defendant's property; constructive trust, lien and subrogation in the law of restitution are generally "nothing more than a formula for equitable relief".
[36] A restitutionary proprietary claim, says the respondent, is not a "pure proprietary claim", and s. 4 of the Real Property Limitations Act applies only to the latter and not the former. He refers to a number of authorities to support his argument.
Case law in Ontario
[37] Hartman Estate v. Hartfam Holdings Ltd., above, arose from the following facts. A husband bought a condominium, which he put into his wife's name. She died and he remarried. He and his second wife lived in the condo but the title was in the name of the estate of the first wife. The husband and second wife started an action against his children because, they claimed, the children wrongfully removed him as executor of his first wife's estate and conspired to prevent him from using the estate's assets and other assets to buy a home in Ottawa and another in Florida to provide for the second wife when he died. The husband died shortly after starting the action, and the second wife carried on the lawsuit in her personal capacity and as executrix for the husband. She then sought to add a claim that the husband's estate was entitled to ownership of the condominium on the basis of resulting or constructive trust. She needed a court order to permit amendment of her statement of claim to add the new claim. The children opposed the amendment, saying the claim was barred by a limitation period, but the court disagreed and allowed the amendment to be made. The Court of Appeal's decision in respect of the limitation issue was that ss. 42 and 43 (actions against a trustee still holding trust property) of the old Limitations Act applied, and it was unnecessary to decide whether s. 4 of the old Act (the same as s. 4 of the Real Property Limitations Act) was applicable. Section 43(2) of the old Limitations Act, repealed by the Limitations Act, 2002, used the expression "action . . . to recover trust property". It was in this [page741] context that the decision discussed the meaning of s. 4's similar expression"recover any land", and concluded that "recover" meant "to obtain by judgment of the court".
[38] The Hartman Estate case includes a lengthy discussion of whether "trust property" in s. 43(2) extends to property held on a resulting or constructive trust. In my view, that discussion does not help decide the issue of whether a constructive trust claim can be an action to recover land within the meaning of s. 4 of the Real Property Limitations Act. There is also a discussion of the nature of a remedial constructive trust, including the following (at para. 69):
The remedial constructive trust did not exist at the time that Taylor v. Davies [(1919), 1919 521 (UK JCPC), 51 D.L.R. 75 (P.C.)] was decided. This type of constructive trust has its origins in Canadian jurisprudence and, as previously stated, requires a finding that there has been an enrichment of one party and a corresponding deprivation of another, for which there is no juristic reason. This type of constructive trust is as much a remedy as it is a cause of action hence its description as a "remedial constructive trust"[.]
Hartman Estate expressly leaves open (at para. 85) the question of whether a constructive trust claim is an action to recover land within the meaning of s. 4 of the Real Property Limitations Act.
[39] In Hainey v. Hainey, 1999 14992 (ON SC), [1999] O.J. No. 1983, 49 R.F.L. (4th) 290 (S.C.J.), a former wife sought to amend her pleadings to claim a constructive trust interest some 13 or 19 years after the parties separated. The former husband resisted the amendment because, he claimed, the claim was barred by the Family Law Act s. 7(3) limitation period of six years from separation. The court refused the amendment because it found the constructive trust claim was "an oblique effort to recharacterize the fact situation underpinning the original equalization application" (at para. 18) and the ex wife was "actually seeking . . . to 'dress up' the 'equalization claim' (which is statute barred) as a 'constructive trust' claim" (at para. 21). The court found the wife's claim was not really a constructive trust claim, and accordingly I do not find Hainey to be helpful in this case.
[40] McCracken v. Kossar, 2007 4875 (ON SC), [2007] O.J. No. 664, 279 D.L.R. (4th) 431 (S.C.J.) involved a 1987 separation agreement under which the wife released her rights in a cottage property, including a road allowance that went with it, and agreed to transfer her interest to the husband. She transferred the cottage lot but by mistake did not transfer the road allowance. The husband was, both before and after the agreement was signed, in possession of both the cottage and the road allowance. In 2003, the mistake was discovered. The husband asked for and then sued for a transfer of the road allowance, but the wife resisted, saying [page742] the husband had breached other terms of the separation agreement, and also invoking the ten-year limitation period in s. 4 of the Real Property Limitations Act. The wife moved for summary judgment for dismissal of the husband's claim on the ground it was barred by the limitation period. The court refused to dismiss the husband's claim, concluding he had a triable case, in part on the ground the ten years under the Real Property Limitations Act might not have run either because the husband had not discovered he had a claim until 2003 or because the husband was actually in possession of the road allowance, and in part because the husband might have equitable claims not governed by any limitation period. McCracken does not determine the issue left open by Hartman Estate, above.
[41] In Mongroo v. Mongroo, [2010] O.J. No. 5710, 2010 ONSC 7069 (S.C.J.), a husband and wife separated under the same roof in 1995. A separation agreement was drawn up in 1999, under which the home (owned solely by the husband) was to be transferred to the wife's name. She signed it but he did not, and title was never transferred, but the wife understood from the husband's behaviour that he accepted the home was now hers. Some weeks after the wife signed the agreement, the husband was removed from the matrimonial home and charged with and convicted of an assault on the wife. He went to jail. The wife and children remained in the home, with the wife paying all expenses, including taxes, repairs and maintenance. In 2003, the husband applied for a divorce and amended his claim to seek exclusive possession of the home. The wife and children left the home in 2004. She opposed the husband's application and sought to claim a net family property equalization (as well as child and spousal support) after the six-year limitation period in s. 7(3) of the Family Law Act. She later consented to an order that the husband have possession of the home, abandoned her Family Law Act equalization claim but then advanced a claim for a 50 per cent interest in the home by way of constructive trust. The husband relied on Hainey, above, and submitted the wife's constructive trust claim was statute barred by s. 7(3) as [at para. 13] "an equalization claim in disguise". The court accepted the wife's belief that the home was hers, although title had not been transferred, and concluded that unlike in Hainey, there was "no attempt to masquerade here" (at para. 111). In dismissing the husband's limitation argument and awarding the wife a sum of money for unjust enrichment, the court said, at paras. 112-13:
The right of the claimant to a remedy arises at the time the cause of action (unjust enrichment) arises. That is, when the elements necessary to establish unjust enrichment coincide, a right to a remedy arises. In the instant [page743] case, the wife's claim arose when the husband petitioned her for exclusive possession of the home and she realized that she would not retain the property thought to be her own from 1999 to 2003.
In the unique circumstances of this case, I do not find that the wife is barred from claiming a remedial constructive trust based on unjust enrichment.
Mongroo turns on the "unique circumstances" of the wife's reliance on an apparent agreement and the finding that the wife's claim arose only when she realized she could no longer rely on it. There was also no discussion in the case of either the Limitations Act, 2002 or the Real Property Limitations Act. That case is very different from the case before me and I do not find it helpful.
[42] Pirani v. Karmali (2012), 109 O.R. (3d) 698, [2012] O.J. No. 1369, 2012 ONSC 1647 (S.C.J.) was a motion for summary judgment (not in a family law case). In it, the court addressed the "excruciating difficult issues" about whether s. 4 of the Real Property Limitations Act barred a claim to recover land transferred by the original defendants to two persons (the Nathoos) later added as defendants, on the ground the Nathoos were part of a conspiracy against the plaintiffs or were unjustly enriched by the transfer. In reviewing Hartman Estate, above, the court said (at paras. 49-57):
How the Real Property Limitations Act applies to equitable claims to land remains uncertain. If one, however, turns to the Limitations Act, 2002, it is arguable that unjust enrichment claims, constructive trust claims, knowing receipt, and knowing assistance claims come within the definition of "claim" under the Limitations Act, 2002.
But that is the rub; does the Limitations Act, 2002 apply to the circumstances of the case at bar or has it been ousted by the Real Property Limitations Act? Section 2(1) of the Limitations Act, 2002 provides that the Act applies to claims pursued in court proceedings "other than proceedings to which the Real Property Limitations Act applies" but Justice Gillese's comment in Hartman Estate suggests that claims to land based on resulting or constructive trust might be subject to a statutory limitation period under the Real Property Limitations Act. She says that there is no clear answer; thus, it is arguable that the Plaintiffs' claim to land in the case at bar might be subject to the Real Property Limitations Act and not the Limitations Act, 2002.
Assuming that a limitation period from the Real Property Limitations Act applies, then it would be the ten-year limitation period provided by s. 4 of the Act. Applying the ten-year period of s. 4 and the discoverability principle, the limitation period would expire in 2015. Thus, under the Real Property Limitations Act, the Plaintiffs' claim would not have expired.
(I note parenthetically that this last conclusion also explains why transitional provision s. 24(3) of the Limitations Act, 2002 does not apply in the case at bar because it only applies if the limitation period has expired.)
But to repeat, Justice Gillese's comment in Hartman Estate suggests also that claims to land based on resulting or constructive trust might not be [page744] subject to a statutory limitation period under the Real Property Limitations Act. Thus, using the language of s. 2(1) of the Limitations Act, 2002, it would be arguable that the claim in the case at bar is a claim other than a claim pursued in proceedings to which the Real Property Limitations Act applies. Thus, the Real Property Limitations Act would not apply to preclude the application of the Limitations Act, 2002, and, therefore, the analysis returns to whether or not the Plaintiffs' claim is statute-barred under the Limitations Act, 2002.
However, the problem remains that it is unclear whether the Real Property Limitations Act does or does not apply to the claims in the case at bar. Thus, where this protracted analysis takes me is to [the] conclusion that there is a genuine issue requiring a trial about the characterization of the Plaintiffs' claim and whether or not it is within the scope of the Real Property Limitations Act or the Limitations Act, 2002.
I appreciate that there are peculiar aspects to this outcome. At the trial, the Nathoos will argue that they did nothing wrong, in which case they will not need the technical defence of any limitation period. Alternatively, if they need to rely on the limitations period defence, then they must argue that they committed a wrong that is not subject to a statutory limitation period under the Real Property Limitations Act. This argument, if accepted, would trigger the operation of the transitional provisions of the Limitations Act, 2002 and the conclusion that they were entitled to a limitation period defence under that Act. If the argument failed, then the Nathoos will have committed a wrong subject to an unexpired limitation period under the Real Property Limitations Act.
This peculiarity that a defendant must classify his or her wrongdoing arises because the Legislature did not follow up on the observation of the Ontario Law Reform Commission that there were many problems about the operation of the former Act when a trustee, including a constructive trustee, commits a breach of trust and on its recommendation that there should be a "catch-all" provision of six years for all causes of action except where a statute has prescribed a different limitation period. See Ontario Law Reform Commission, Report on Limitation of Actions (Toronto: Department of the Attorney General, 1969), pp.53-63.
In any event, I conclude that there are genuine issues that require a trial and that cannot be decided by a summary judgment procedure.
[Emphasis in original]
[43] In the end, Pirani, above, does not take a side on the question I must decide.
[44] Davies v. White, [2012] O.J. No. 5290, 2012 ONSC 6298 (S.C.J.) was a decision on a motion in a family law constructive trust case that was published while this decision was under reserve. In that case, the parties had cohabited for some years. The applicant sought a proprietary interest in land held by the respondent, despite an agreement to compensate her for her property rights and to release the respondent from further claims. The court assumed without deciding that the applicant's claim was governed by and probably barred by the two-year limitation period in the Limitations Act, 2002, but nevertheless took the pragmatic approach of allowing the applicant to pursue her [page745] potential claim as a live issue in the course of questioning the respondent before trial. The Real Property Limitations Act was not referred to in the decision. Neither Hartman Estate, above, nor McCracken, above, nor Pirani, above, was cited. The question before me was not raised in Davies.
Case law from other jurisdictions
[45] Von Wiegen v. Hobe Estate, [2007] Y.J. No. 11, 2007 YKSC 10 was an action by a woman who had lived with a man for ten years for an interest in a piece of land he owned, based on her contributions in money and labour. The claim was pleaded as a constructive trust and as unjust enrichment, though not apparently as a resulting trust. The plaintiff brought the action after the man's death, eight years after the couple ended their cohabitation. The estate administrator moved to dismiss the action on the ground it was barred by a limitation period, and in the alternative because the equitable doctrine of laches applied and should result in the action being barred. The court held that the action was barred by the six-year statutory limitation period governing actions for "equitable relief", and was not saved by the ten-year limitation period for actions to "recover any land" [at paras. 11-18]:
The first question which arises here is whether the claim of constructive trust is a proceeding to recover land within the meaning of s. 17. Counsel were unable to provide me with any case law on this point. My own research reveals that the matter is surprisingly less than clear in the jurisprudence. In his text, Limitation of Actions in Canada (Toronto: Butterworths, 1972), J.S. Williams, at p. 85, states that an action for recovery of land is "the successor to the action in ejectment". He also notes the relationship between the type of limitation period in s. 17 and the doctrine of adverse possession. At p. 86, he says that such possession must be exclusive of, and therefore adverse to, the possession of the true owner.
In Freeland v. Freeland, 1982 1104 (AB KB), [1982] A.J. No. 592 (Q.B.), Veit J. was dealing with a case involving a claim of constructive trust and the potential applicability of s. 18(a) of the Alberta Limitation of Actions Act, which I understand to be the equivalent of our s. 17. In that case, the defendant pleaded that s. 18(a) of the Alberta Act precluded the plaintiff's claim of constructive trust. Veit J. disagreed, citing Williams' text, which I just cited, at para. 32, where she stated:
The word "recover" in s. 18 therefore means return to the legal owner. The cases on this point bear out the interpretation given to the section by Williams. These are all cases of adverse possession. This is not the case here and, in my view, there is nothing arising on the facts of this case which cause me to question the traditional interpretation given to the limitation period . . . (my emphasis)
Accordingly, Veit J. held that the plaintiff's claim of constructive trust was not an action for the recovery of land and therefore was not barred by the limitation period dealing with recovery of land. [page746]
Similar comments are made by Graeme Mew in his text, The Law of Limitations, 2d ed. (Ontario: Butterworths, 2004), at p. 207, where he dealt with the general principles relating to recovery of land, stating:
At common law, a person who is wrongfully dispossessed or who discontinues possession of land has the right to enter upon the land and repossess it. This right has been modified by statutes -- in most provinces the general Limitations Statute . . . -- which limit the period of time in which an owner of land can make entry or distress or bring an action to recover the land . . . (my emphasis)
Later, at p. 208, Mew says:
In actions for the recovery of land, the expiry of a limitation period not only bars the enforcement of a remedy. It also has the effect of adjudicating the land to the occupant who has remained in possession of the land throughout the limitation period, thus barring the original owner's right to property as well. This extinction of the rights of the dispossessed owner does not, however, automatically confer title upon the dispossessor. (my emphasis)
In Skippon v. Scharnatta, [1986] S.J. No. 106 (C.A.) at p. 6, Brownridge J.A., in dissent, referred to the "formidable argument" of the respondents, who relied on the judgment of Estey J. in the Supreme Court of Canada in Canadian Pacific Railway Co. v. Turta, 1954 58 (SCC), [1954] S.C.R. 427, which held that for an action to be a "proceeding to recover land" within the meaning of s. 18 of the Alberta Statute of Limitations, there must be a claim for both ownership and possession. Brownridge J. concluded, at p. 6, that the appellant wife there was claiming neither; rather:
What she is claiming is an unjust enrichment by retention of the benefits of her labour without compensation. It is apparent that her claim is not one for the recovery of land within the meaning of s. 18 of the Act. (my emphasis)
Cameron J.A., for the majority in Skippon, found it unnecessary to decide the point, since, in his view, the wife's application for a declaration that she be entitled to half of the equitable title to the farm fell within s. 43 of the Saskatchewan Limitation of Actions Act. That section provided that in an action against a trustee, if the trustee retains the trust property and the claimant is a beneficiary of the trust, then the trustee cannot rely on a limitation period defence.
In Hartman Estate v. Hartfam Holdings Ltd., 2006 266 (ON CA), [2006] O.J. No. 69, the Ontario Court of Appeal addressed an estate case involving, in part, the potential application of s. 4 of the Limitations Act in that province. That section is similar to s. 17 of the Yukon Limitation of Actions Act, in that it creates a 10-year limitation period for an action to "recover" land. The respondents argued that s. 4 did not apply to claims for recovery of land based on resulting and constructive trust principles, as such actions are for a declaration of ownership and not to "recover" land. Ultimately, it became unnecessary for the Court of Appeal to decide the question, because s. 43(2) of the Limitations Act contained an exception within which the proposed trust claims squarely fell, with the result that the appellants could not rely on s. 4 to bar the proposed trust claims. Nevertheless, the Court commented, at para. 57:
On a plain reading of s. 43(2), the word "recover" appears to mean "to obtain" the trust property. Such an interpretation accords with the [page747] meaning given to "recover" in s. 4 of the Act. In Williams v. Thomas, [1909] 1 Ch. 713 (C.A.) at p. 730, the English Court of Appeal held that the expression "to recover any land" in comparable legislation is not limited to obtaining possession of the land nor does it mean to regain something that the plaintiff had and lost. Rather"recover" means to "obtain any land by judgment of the Court". See also OAS Management Group Inc. v. Chirico (1990), 1990 6909 (ON SC), 9 O.R. (3d) 171 (Dist. Ct.) at 175 to the same effect.
Ultimately, at para. 85, the Court said:
It is apparent that there is no clear, general answer to the question of whether claims to land based on resulting or constructive trust are subject to a statutory limitation period . . .
On balance, I prefer the "traditional" view, referred to by Veit J. in Freeland, that an action to recover land is one brought by the original legal owner, which ordinarily follows from an ejectment or dispossession of that owner.
In the case at bar, Ms. Von Wiegen does not claim to be the "legal" or "original" owner of the lands. Nor does she claim that she is an owner who has been "dispossessed" of the lands by Mr. Hobe. She has raised no issue of adverse possession. Rather, Ms. Von Wiegen specifically seeks a declaration that she has an equitable one-half interest in Mr. Hobe's lands at McClintock Place by virtue of the principles of constructive trust. In my view, her claim is not a proceeding to recover land and therefore s. 17 of the Limitation of Actions Act does not apply. The constructive trust claim is, however, an action grounded in equity and therefore s. 2(1)(h) of the Yukon Limitation of Actions Act is applicable. In the result, the claim by Ms. Von Wiegen is statute barred.
[46] Von Wiegen, above, and Freeland v. Freeland, cited in it, are on point but not binding on me. In Von Wiegen, the motion judge had a choice of which direction to go and chose the six-year statutory limitation period for equitable claims over the ten-year limitation for actions to recover land. It appears I too may have a choice to make, but the statutory alternatives here are a two-year general purpose limitation period and a ten-year period for recovery of land. There is no specific limitation period in Ontario for claims for equitable relief.
[47] In Williams v. Thomas, [1909] 1 Ch. 713 (C.A.), referred to in both Hartman Estate, above, and Von Wiegen, above, the plaintiff was a widow who sought the assignment of her dower rights and an accounting of the rents from her late husband's lands some 20 years after her husband's death. The husband's heirs defended, invoking a statutory limitation period of 12 years applicable to actions to recover land. The English Court of Appeal held that the action was not barred because it was not an action to recover land but was more like an action for partition as among persons who were already co-owners, and therefore subject only to the equitable doctrine of laches, not to any [page748] statute of limitations. Williams was cited by our Court of Appeal in Hartman Estate, above, at para. 57, but only for the meaning of "recover" and not for the meaning of "action to recover land". The respondent cites it because he says the action for assignment of dower is analogous to an action claiming a portion of land under the doctrine of constructive trust. Neither, he says, is to "recover land". Williams turned on a choice between an equitable defence, which the court found to be unavailable on the facts, and a 12-year limitation period that would have barred the widow's claim. The Court of Appeal in Hartman Estate, above, did not find that Williams decided the issue of the applicability of s. 4 of the Real Property Limitations Act.
Supreme Court constructive trust cases
[48] The respondent also relies on a series of Supreme Court decisions, beginning with Rawluk v. Rawluk, supra, that have developed the remedial constructive trust in family law cases. In Rawluk, the issue was whether married persons could avail themselves of both the statutory matrimonial property regime under the Family Law Act and the doctrine of constructive trust. The decision was that both were available. The majority traced the history of constructive trusts in Canadian family law and concluded, at para. 28"These cases show that in Canada the doctrine of remedial constructive trust has been accepted for almost a decade as an important remedial device whose prime function is to remedy situations of unjust enrichment." The majority held that constructive trust was available to determine who was or were the beneficial owners of the matrimonial property before going on to effect a statutory division of it. In contrast, the minority concluded (at para. 69) that"The doctrine of constructive trust, as it has developed in Canada, is not a property right but a proprietary remedy for unjust enrichment . . .", and "should not be applied in this case because the Family Law Act, 1986 provides a remedy for the unjust enrichment . . ." .
[49] Peter v. Beblow, 1993 126 (SCC), [1993] 1 S.C.R. 980, [1993] S.C.J. No. 36 involved an unmarried couple who lived together for 12 years. The court awarded the plaintiff an interest in the defendant's property on the basis of constructive trust. The majority discussed (at para. 3) the availability of an ownership interest in such cases:
The basic notions are simple enough. An action for unjust enrichment arises when three elements are satisfied: (1) an enrichment; (2) a corresponding deprivation; and (3) the absence of a juristic reason for the enrichment. These proven, the action is established and the right to claim relief made out. At this point, a second doctrinal concern arises: the nature [page749] of the remedy. "Unjust enrichment" in equity permitted a number of remedies, depending on the circumstances. One was a payment for services rendered on the basis of quantum meruit or quantum valebat. Another equitable remedy, available traditionally where one person was possessed of legal title to property in which another had an interest, was the constructive trust. While the first remedy to be considered was a monetary award, the Canadian jurisprudence recognized that in some cases it might be insufficient. This may occur, to quote La Forest J. in Lac Minerals Ltd. v. International Corona Resources Ltd., 1989 34 (SCC), [1989] 2 S.C.R. 574, at p. 678"if there is reason to grant to the plaintiff the additional rights that flow from recognition of a right of property". Or to quote Dickson J., as he then was, in Pettkus v. Becker, 1980 22 (SCC), [1980] 2 S.C.R. 834, at p. 852, where there is a "contribution [to the property] sufficiently substantial and direct as to entitle [the plaintiff] to a portion of the profits realized upon sale of [the property]." In other words, the remedy of constructive trust arises, where monetary damages are inadequate and where there is a link between the contribution that founds the action and the property in which the constructive trust is claimed.
[50] Kerr v. Baranow and Vanasse v. Seguin, both reported together, supra, involved cohabiting unmarried couples. Cromwell J., speaking for the court, discussed unjust enrichment and constructive trusts as follows (at paras. 30-34, 46 and 50-52):
III. Unjust Enrichment
A. Introduction
The law of unjust enrichment has been the primary vehicle to address claims of inequitable distribution of assets on the breakdown of a domestic relationship. In a series of decisions, the Court has developed a sturdy framework within which to address these claims. However, a number of doctrinal and practical issues require further attention. I will first briefly set out the existing framework, then articulate the issues that in my view require further attention, and finally propose the ways in which they should be addressed.
B. The Legal Framework for Unjust Enrichment Claims
At the heart of the doctrine of unjust enrichment lies the notion of restoring a benefit which justice does not permit one to retain: Peel (Regional Municipality) v. Canada, 1992 21 (SCC), [1992] 3 S.C.R. 762, at p. 788. For recovery, something must have been given by the plaintiff and received and retained by the defendant without juristic reason. A series of categories developed in which retention of a conferred benefit was considered unjust. These included, for example: benefits conferred under mistakes of fact or law; under compulsion; out of necessity; as a result of ineffective transactions; or at the defendant's request: see Peel, at p. 789; see, generally, G. H. L. Fridman, Restitution (2nd ed. 1992), c 3-5, 7, 8 and 10; and Lord Goff of Chieveley and G. Jones, The Law of Restitution (7th ed. 2007), c. 4-11, 17 and 19-26.
Canadian law, however, does not limit unjust enrichment claims to these categories. It permits recovery whenever the plaintiff can establish three elements: an enrichment of or benefit to the defendant, a corresponding deprivation of the plaintiff, and the absence of a juristic reason for the enrichment: Pettkus; Peel, at p. 784. By retaining the existing categories, while recognizing other claims that fall within the principles underlying [page750] unjust enrichment, the law is able "to develop in a flexible way as required to meet changing perceptions of justice": Peel, at p. 788.
The application of unjust enrichment principles to claims by domestic partners was resisted until the Court's 1980 decision in Pettkus. In applying unjust enrichment principles to domestic claims, however, the Court has been clear that there is and should be no separate line of authority for "family" cases developed within the law of unjust enrichment. Rather, concern for clarity and doctrinal integrity mandate that "the basic principles governing the rights and remedies for unjust enrichment remain the same for all cases" (Peter v. Beblow, 1993 126 (SCC), [1993] 1 S.C.R. 980, at p. 997).
Although the legal principles remain constant across subject areas, they must be applied in the particular factual and social context out of which the claim arises. The Court in Peter was unanimously of the view that the courts "should exercise flexibility and common sense when applying equitable principles to family law issues with due sensitivity to the special circumstances that can arise in such cases" (p. 997, per McLachlin J. (as she then was); see also p. 1023, per Cory J.). Thus, while the underlying legal principles of the law of unjust enrichment are the same for all cases, the courts must apply those common principles in ways that respond to the particular context in which they are to operate.
(3) Remedy
Remedies for unjust enrichment are restitutionary in nature; that is, the object of the remedy is to require the defendant to repay or reverse the unjustified enrichment. A successful claim for unjust enrichment may attract either a "personal restitutionary award" or a "restitutionary proprietary award". In other words, the plaintiff may be entitled to a monetary or a proprietary remedy (Lac Minerals Ltd. v. International Corona Resources Ltd., 1989 34 (SCC), [1989] 2 S.C.R. 574, at p. 669, per La Forest J.).
(b) Proprietary Award
The Court has recognized that, in some cases, when a monetary award is inappropriate or insufficient, a proprietary remedy may be required. Pettkus is responsible for an important remedial feature of the Canadian law of unjust enrichment: the development of the remedial constructive trust. Imposed without reference to intention to create a trust, the constructive trust is a broad and flexible equitable tool used to determine beneficial entitlement to property (Pettkus, at pp. 843-44 and 847-48). Where the plaintiff can demonstrate a link or causal connection between his or her contributions and the acquisition, preservation, maintenance or improvement of the disputed property, a share of the property proportionate to the unjust enrichment can be impressed with a constructive trust in his or her favour (Pettkus, at pp. 852-53; Sorochan, at p. 50). Pettkus made clear that these principles apply equally to unmarried cohabitants, since "[t]he equitable principle on which the remedy of constructive trust rests is broad and general; its purpose is to prevent unjust enrichment in whatever circumstances it occurs" (pp. 850-51).
As to the nature of the link required between the contribution and the property, the Court has consistently held that the plaintiff must demonstrate a [page751] "sufficiently substantial and direct" link, a "causal connection" or a "nexus" between the plaintiff's contributions and the property which is the subject matter of the trust (Peter, at pp. 988, 997 and 999; Pettkus at p. 852; Sorochan, at pp. 47-50; Rathwell, at p. 454). A minor or indirect contribution will not suffice (Peter, at p. 997). As Dickson C.J. put it in Sorochan, the primary focus is on whether the contributions have a "clear proprietary relationship" (p. 50, citing Professor McLeod's annotation of Herman v. Smith (1984), 1984 1238 (AB KB), 42 R.F.L. (2d) 154, at p. 156). Indirect contributions of money and direct contributions of labour may suffice, provided that a connection is established between the plaintiff's deprivation and the acquisition, preservation, maintenance, or improvement of the property (Sorochan, at p. 50; Pettkus, at p. 852).
The plaintiff must also establish that a monetary award would be insufficient in the circumstances (Peter, at p. 999). In this regard, the court may take into account the probability of recovery, as well as whether there is a reason to grant the plaintiff the additional rights that flow from recognition of property rights (Lac Minerals, at p. 678, per La Forest J.).
[51] From the Supreme Court cases, the respondent draws the following conclusion in his factum (at para. 66):
It is submitted that given the clarification of the nature of constructive trust as a remedy, it is now apparent that in a claim for unjust enrichment, resulting in a declaration of ownership, the ownership interest does not exist until it is so declared by the court. As a result, it is not a claim for the recovery of land[.]
[52] While I agree that land is not impressed with a constructive trust until the court declares it, this does not answer the question whether a case in which a person claims an ownership interest in land and pleads facts to justify the claim is an action to "recover land".
Limitations legislation changes for express trusts
[53] The respondent also points to the repeal of Part II, including ss. 42 and 43, of the old Limitations Act, which governed actions involving trusts and trustees, and to the addition of a new s. 42 to the Real Property Limitations Act concerning actions based on an express trust. Section 42 of the Real Property Limitations Act reads:
Express trust: when right of beneficiary accrues
- Where land or rent is vested in a trustee upon an express trust, the right of the beneficiary of the trust or a person claiming through the beneficiary to bring an action against the trustee or a person claiming through the trustee to recover the land or rent, shall be deemed to have first accrued, according to the meaning of this Act, at and not before the time at which the land or rent has been conveyed to a purchaser for a valuable consideration, and shall then be deemed to have accrued only as against such purchaser and any person claiming through the purchaser. [page752]
[54] He submits that the repeal of the old Part II and the addition of the new s. 42 indicate the legislature intended that s. 4 of the Real Property Limitations Act was not to apply to constructive trust claims relating to land. However, the new s. 42 deals only with express trusts, and states (or perhaps creates) a rule for determining when a beneficiary's right to bring an action accrues. I think the new s. 42 sheds no light on whether s. 4 of the Real Property Limitations Act is intended to cover constructive trusts. As for the repeal of the old Part II, the same is true. That part was restricted in its application to "trusts created by an instrument or an Act of the Legislature":[old] Limitations Act, s. 42. It had no application to constructive trusts.
Other commentators
[55] The respondent refers to the Ontario Law Reform Commission's Report on Limitation of Actions and to other commentators for the proposition that s. 4 of the Real Property Limitations Act is the basis for the extinction of title by adverse possession. That is certainly true, although s. 4 is just a limitation period for bringing the action; it is another provision, s. 15 of the Real Property Limitations Act, that actually extinguishes the owner's title after the limitation period has run. The Commission report and the commentators refer to the historical or "traditional" (see Von Wiegen, above) use of s. 4 for adverse possession claims but do not say that s. 4 is not applicable to cases such as this one.
Plain meaning of s. 4 of the Real Property Limitations Act
[56] I have already dealt with the meaning of "recover" in s. 4 of the Real Property Limitations Act. Now, to the central question of whether this case is "to recover any land".
[57] In Rizzo & Rizzo Shoes Ltd. (Re) (1998), 1998 837 (SCC), 36 O.R. (3d) 418, [1998] 1 S.C.R. 27, [1998] S.C.J. No. 2, at para. 21, Iacobucci J., speaking for the court, discussed the general approach to interpreting legislation according to academic writers, referring to three textbooks and concluding:
. . . Elmer Driedger in Construction of Statutes (2nd ed., 1983) best encapsulates the approach on which I prefer to rely. He recognizes that statutory interpretation cannot be founded on the wording of the legislation alone. At p. 87 he states:
Today there is only one principle or approach, namely, the words of an Act are to be read 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 Parliament. [page753]
[58] What is the ordinary sense of the expression "to recover any land" in s. 4 of the Real Property Limitations Act? I reproduce the section again here:
Limitation where the subject interested
- No person shall make an entry or distress, or bring an action to recover any land or rent, but within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to some person through whom the person making or bringing it claims, or if the right did not accrue to any person through whom that person claims, then within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to the person making or bringing it.
[59] The respondent submits that this case is not within the meaning of "to recover any land". I have difficulty with this proposition. For me, the ordinary sense of the words covers this case. The meaning of "recover" has already been established by the Court of Appeal in Hartman Estate, above, as being not just to get back something wrongly taken, but also to "obtain by judgment of the court". It seems to me, as a result, that a case in which someone asks the court to award them ownership of part or all of a piece of land held by somebody else is an action to recover land. That is exactly what the applicant has asked this court to do in her application.
Context of s. 4 of the Real Property Limitations Act
[60] However, I must also consider the matters listed by Driedger, above: the "entire context" of the provision, the scheme of the Act, the object of the Act and the intention of the legislature.
[61] Section 4 of the Real Property Limitations Act used to be one of some 40 sections in Part I, headed "Real Property", of the old Limitations Act. Part II of the Act dealt with express trusts and Part III dealt with "personal actions", which were the old common law actions for debt, trespass, torts, contracts, mortgages and many other matters. Section 4 and the rest of the old Limitations Act, Part I, are now the Real Property Limitations Act and have been entirely separated from the new Limitations Act, 2002. Section 4 creates a ten-year limitation period not just for actions to recover land, but also for actions to recover rent and for the self-help remedies of entry and distress. The rest of the Real Property Limitations Act deals with a number of specific situations, prescribing rules for when the claimant's right arises for purposes of calculating the limitation period and dealing with how the limitation period applies to future interests, mortgagees and other persons with claims to ownership. They certainly give colour to the Real Property Limitations Act as [page754] being generally about claims by those who have an interest in land by reason of a deed or will.
[62] The context of s. 4, the scheme and object of the Act and the intention of the legislature include a consideration of not only the Real Property Limitations Act but also the Limitations Act, 2002, which was adopted by the legislature at the same time, indeed, in the same bill. The context also includes the historical context of limitations law in Ontario.
[63] The old Limitations Act was far from a comprehensive code of limitations. It largely did not apply to equitable claims. It appears, from the Ontario Law Reform Commission Report on Limitation of Actions, at 18-22, that trust claims historically were not subject to any fixed limitation period and that only the equitable doctrines of laches and acquiescence could be invoked to bar them by reason of delay.
[64] The Report on Limitation of Actions, proposed a complete revamping of Ontario limitation periods. It set out, at 9-10, the general purposes of limitation statutes:
Lawsuits should be brought within a reasonable time. This is the policy behind limitation statutes. These laws are designed to prevent persons from beginning actions once that reasonable time has passed. Underlying the policy is a recognition that it is not fair that an individual should be subject indefinitely to the threat of being sued over a particular matter. Nor is it in the interests of the community that disputes should be capable of dragging on interminably. Furthermore, evidentiary problems are likely to arise as time passes. Witnesses become forgetful or die: documents may be lost or destroyed. Certainly, it is desirable that, at some point, there should be an end to the possibility of litigation in any dispute. A statute of limitation is sometimes referred to as an "Act of peace".
Apart from the protection they give to potential defendants, limitation statutes enable the courts to function more effectively by ensuring that litigation is not started so long after the event that there are likely to be evidential difficulties. In addition, the commercial world is able to carry on more smoothly. The limitation statutes encourage early settlements so that the disrupting effect of unsettled claims on commercial intercourse is minimized.
[65] The report described the limitations relating to land as "complex, confused and obscure" (at 65) but recommended "no change in the substance" of the provisions for actions to recover land (at 66). It made the following recommendations concerning limitation periods for all kinds of trusts, including constructive trusts (at 165):
- Trusts
(a) All actions for breach of trust should be subject to some limitation period; [page755]
(b) There should be no distinction made between different kinds of trusts (i.e., express, implied, resulting and constructive trusts should be treated in the same way);
(c) Executors and administrators should be treated as trustees for the purposes of limitations;
(d) Limitation periods should be applicable to actions as follows:
Ten Years
Actions against the personal representatives of a deceased person for a share of the estate, whether that person left a will or died intestate,
Actions in respect of any fraud or fraudulent breach of trust to which the trustee was party or privy,
Actions against a trustee for the conversion of trust property to his own use,
Actions to recover trust property, or property into which trust property can be traced, against a trustee or any other person,
Actions to recover money on account of a wrongful distribution of trust property, against the person to whom the property is distributed, or his successor.
Six Years
All other actions brought in respect of a breach of trust for which a period of limitation is not prescribed by some other provision of the proposed statute.
[66] The commission's report was not implemented by the government but in 1977 the Ministry of the Attorney General published a Discussion Paper on Proposed Limitations Act (Toronto: Ministry of the Attorney General, 1977) that adopted most of the recommendations. The discussion paper contained a draft statute that dealt in the same section with both trust claims (in the same words as the commission recommendation) and actions to recover possession of land, and subjected both kinds of claims to a ten-year limitation period.
[67] The 1977 ministry discussion paper did not result in legislation. A bill was introduced in 1983 but did not proceed. Instead, in March 1991, the Ministry of the Attorney General published Recommendations for a New Limitations Act: Report of the Limitations Act Consultation Group (Toronto: Ministry of the Attorney General, 1991), which resulted from 16 meetings of a consultation group established by the ministry. The report recommended a new (for Ontario) approach to limitations. All claims for an injury, loss or damage would be subject to a two-year limitation period, running from the date the claimant knew of the injury, loss or damage, or the date a reasonable person ought to have known, whichever came first. However, the report [page756] did not recommend its new approach be applied to actions to recover land, because the members of the consultation group felt they lacked the expertise to deal with that area of limitations law. The group recommended the 1983 bill's provisions, based on the 1969 Law Reform Commission report"might be appropriate . . . as the first phase of reform of real property limitations" (at 49). The 1991 report did not mention constructive or resulting trust claims and did not discuss what kinds of claims would be dealt with under "real property limitations".
[68] The 1991 ministry report also did not result in legislation until 2002, although there were bills introduced in 1992, 2000 and 2001 that did not proceed. On November 26, 2002, the Attorney General introduced a three-part bill, Bill 213, dealing with three disparate subjects (lawyers' contingent fees, limitation periods and regulation of public accountants). One part of the bill enacted the new Limitations Act, 2002, repealed Parts II and III of the old Limitations Act, renamed the remaining Part I of the old Act as the Real Property Limitations Act and made a myriad of consequential amendments to other legislation. There was very little debate in the legislature on the bill and only part of the debate dealt with the limitations part of the bill.
[69] Only one member (not the Attorney General, but rather an opposition critic) talked about the provisions governing limitations periods for land claims. His comments, recorded in Legislative Assembly of Ontario, Official Report of Debates (Hansard), 37th Parl., 2nd Sess. (December 2, 2002), were as follows:
Mr Bryant:
The bill does not address limitations for real property. When I get around to talking about my questions and concerns that must be voiced, as the official opposition is duty bound to do, we have questions and concerns about the absence of one of the most complicated areas involved in limitation periods, and that's real property. But I understand it probably isn't in here because it's so complicated, but that's probably all the more reason why we did need a little more certainty here.
The experts say the bill does not address one of the most complicated areas of limitation period law, involving real property. I recognize that this is because, in part -- obviously the government will have to answer this question, but I know that many people, many experts who have spent time on this issue in the interests of the administration of justice and access to justice and in the interests of serving consumers and achieving some certainty on these particular matters, have said that it is really because this area is so complicated that we do need some certainty.
Graeme Mew, speaking for the Advocates' Society, said in a published report, the Law Times of January 8, 2001, because at the time there was a limitations bill in place that didn't address real property"Real property will be [page757] left with the same hodgepodge of 18th and 19th century provisions inartfully melded together. Certainly I know it is one of the most difficult areas, and I could see why consolidation would be intimidating. That's probably more reason why it should be attempted." It's a fair comment. I think obviously that issue and question needs to be answered and addressed by the government. I look forward to hearing from them on this in the debate as we move forward on that particular issue. It takes nothing away from the clarity that ought to be and will be provided under this particular bill.
[70] The government did not reply to these comments. The bill was not referred to committee for clause-by-clause consideration, was passed without amendment and received royal assent a week later. Equitable causes of action in general and constructive trusts in particular were not discussed in the legislature at all. No change of substance or even of language was made to Part I of the old Limitations Act, which governed real property; it was simply renamed as the Real Property Limitations Act. (Confusingly, both the old Limitations Act, as it was before Bill 213 was passed, and the new Real Property Limitations Act, created by Bill 213 in 2002, have the same citation as R.S.O. 1990, c. L.15.) The new Limitations Act, 2002 and Real Property Limitations Act took effect from January 1, 2004.
Scheme and object of the Limitations Act, 2002 and intention of the legislature
[71] Until 2004, the limitations scheme in Ontario's old Limitations Act was incomplete"complex, confused and obscure" (see para. 65 above). It did not prescribe limitations periods for most equitable claims, but it did set limitations periods for trusts created by deed and for most of the old common law actions. It had limitations of two, six, ten, 20, 40 and 60 years, depending on the claim. It did not interfere with numerous special limitations periods that were sprinkled all over the statutes of Ontario. It appears that constructive (and other non express) trust claims, with the possible exception of claims seeking ownership of land, were not subject to any fixed limitation period but were subject to the equitable doctrines of laches and acquiescence, which conferred discretion on the court to look at the facts of each case in order to determine whether or not the trust claim ought in good conscience to be allowed to proceed despite the claimant's delay in bringing it to court: see Ontario Law Reform Commission, Report on Limitation of Actions, at 18-22, 53-61. Actions "to recover land" were subject to a ten-year limitation, which might be longer or shorter than the indeterminate limitation of equity for laches.
[72] Since 2004, the limitations landscape has changed dramatically. The new Limitations Act, 2002 seems to be intended [page758] as a complete scheme encompassing all claims, whether they are statutory, common law or equitable causes of action. The history of the legislative reform, starting in 1969 with the Ontario Law Reform Commission, continuing with ministry discussion papers, including the very brief debate in the legislature in 2002 and ending in the language of the Limitations Act, 2002 itself, all indicates this intention. The definition of "claim" in s. 1 is extremely broad -- "a claim to remedy an injury, loss or damage that occurred as a result of an act or omission". The exclusions in s. 2 consist only of claims governed by the Real Property Limitations Act, provincial offences, judicial review, certain appeals and aboriginal rights. The listing of exclusions in s. 2, the binding of the Crown in s. 3, and the statement in s. 19(1)"A limitation period set out in or under another Act that applies to a claim to which this Act applies is of no effect" unless it is listed or incorporated by reference in the schedule to the Act, all indicate that the Limitations Act, 2002 is meant to be a comprehensive scheme. (I will say more below about the applicant's argument that not all situations are actually covered.)
[73] In today's statutory limitations scheme, for claims about land there are only two choices: two years, under the Limitations Act, 2002, or ten years, under the Real Property Limitations Act.
Conclusions about s. 4 of the Real Property Limitations Act
[74] In my experience as a full-time family court judge in Ontario dating back to 1995, the practice in family law constructive trust cases has not changed -- defences invoking the old Limitations Act, the Limitations Act, 2002 or the Real Property Limitations Act have been very rare. Hainey and Mongroo, above, are two Ontario cases where a limitations defence was argued. But Hainey was found not to be a constructive trust case and both Hainey and Mongroo discussed only s. 7(3) of the Family Law Act, not the Limitations Act, 2002 or s. 4 of the Real Property Limitations Act. It is as if the lawyers in those cases thought the six-year Family Law Act limitation period from the separation date applied, at least by analogy.
[75] McCracken, above, was decided shortly after Hartman Estate, above. Section 4 of the Real Property Limitations Act was raised in the context of a breached separation agreement, but the issue was not decided. Davies, above, released while this decision was under reserve, is the first and only case counsel and I have been able to find where a two-year limitation period has been discussed. Counsel are generally not raising limitations defences in family law constructive trust cases, even where [page759] the alleged contributions were made several years before the couple separated and even if more than two years have passed since the couple separated. Just last month, I had a case before me of two unmarried persons who had cohabited and had been separated for three years before a constructive trust claim involving land was made, and the limitations issue was not raised at all.
[76] The respondent cited the cases referred to in paras. 48-50 and Goff and Jones, above, to show that constructive trust claims are not "proprietary" or "purely proprietary", but neither of those expressions appears in s. 4 of the Real Property Limitations Act, and I do not find them helpful in interpreting "action to recover any land" in its entire context. Likewise, I do not find helpful the respondent's attempt to characterize constructive trust as a "remedy" rather than a "cause of action". See Hartman Estate, above, which says (at para. 69) that constructive trust is as much one as the other.
[77] A party seeking an ownership interest by way of constructive trust must plead and then prove facts establishing entitlement to it. The fact that a claimant must prove enrichment of the other party and a corresponding deprivation of the claimant, with no juristic reason for the enrichment in order to establish a constructive trust, and must also show that damages alone are insufficient and only a proprietary remedy is adequate, does not alter the fact that the claimant has asked the court from the beginning to award an interest in land. To me, all this means is that the claimant has to plead and prove those key elements, usually called "material facts" in litigation, to justify the order sought. It should not matter how many material facts there are or whether the entitlement to land requires a two-step analysis, so long as the application makes a claim of entitlement to ownership of land.
[78] I understand the reasoning in Von Wiegen, above, where the court looked to the "traditional" use of the limitation period, being only for claims for adverse possession, ejectment or dispossession. In Freeland, cited in Von Wiegen, above, the court said it had no reason to question the traditional interpretation. The courts in those two cases had legislation (Yukon in Von Wiegen, Alberta in Freeland) containing not only a ten-year limitation period for actions to recover land but also a six-year limitation specifically applicable to equitable claims. Given those provisions, those courts chose the specific six-year period for equitable claims. However, Ontario has a very different legislative context with no specific provision for equitable claims. If I follow Von Wiegen and Freeland, we will have gone in Ontario from no fixed limitation period for equitable claims in general [page760] (except possibly ten years for recovery of land) to a two-year limitation period for all equitable claims including land claims. This would be so even though the "cause of action" for a constructive trust, to use the old terminology, is established and time arguably starts to run from the moment the claimant has made a contribution that unjustly enriches the other party: see Peter v. Beblow, passage cited at para. 50, above. In many cases, two years would run even before the couple separate. This will be discussed further below.
[79] It seems odd, more than a century after the abolition of the common law forms of action and the merger of common law and equitable jurisdiction, more than 40 years after the debate on limitations reform began in Ontario and more than a decade since the enactment of a new limitations scheme, that we would be constrained to adopt the "traditional" approach of limiting s. 4 of the Real Property Limitations Act to adverse possession claims. The plain words of the section"action to recover any land", seem to apply comfortably to the applicant's claim in this case. The rest of the Real Property Limitations Act talks about various kinds of claims other than trust claims but does not indicate any intention that constructive trust claims are not properly within the meaning of s. 4. The repeal of the former Parts II and III of the old Limitations Act does not shed light on the meaning of s. 4. A ten-year period for constructive trust claims seeking ownership of land is not inconsistent with the rest of the Real Property Limitations Act or with the general scheme of the Limitations Act, 2002, which expressly defers to the Real Property Limitations Act.
[80] From the plain meaning of the words "action to recover any land" in s. 4 of the Real Property Limitations Act, in their "entire context" as described above, I find that the applicant's claim in this case for an ownership interest in the house in question is an "action to recover any land" within the meaning of s. 4 of the Real Property Limitations Act. It is subject to a ten-year limitation period. Based on the record before me, it is not possible for me to conclude that the applicant's claim in this case is barred by the ten-year limitation. Accordingly, this part of her claim is entitled to proceed.
Discoverability principle and s. 4 of the Real Property Limitations Act
[81] It has apparently not been decided in Ontario whether the ten-year period under s. 4 of the Real Property Limitations Act, running from "the time at which the right . . . to bring such action first accrued", attracts the discoverability principle [page761] adopted by the Supreme Court in Kamloops (City) v. Nielson, 1984 21 (SCC), [1984] 2 S.C.R. 2, [1984] S.C.J. No. 29; Central Trust Co. v. Rafuse, 1986 29 (SCC), [1986] 2 S.C.R. 147, [1986] S.C.J. No. 52; and Peixeiro v. Haberman, 1997 325 (SCC), [1997] 3 S.C.R. 549, [1997] S.C.J. No. 31. That principle is that as a general rule"a cause of action arises for purposes of a limitation period when the material facts on which it is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence" (Central Trust, at para. 77). In McCracken, above, the court left open the question of whether the discoverability principle applied to s. 4 of the Real Property Limitations Act.
[82] It could be argued that the discoverability principle does not apply to s. 4 of the Real Property Limitations Act because the legislature did not intend it to. The legislature did not expressly adopt it for that Act while it was enacting, in the same bill, as ss. 4 and 5 of the Limitations Act, 2002, a detailed replacement for the discoverability principle developed by the courts. However, I would not ascribe any intention about this to the legislature other than to leave the complex issues of limitations law governing land claims for another time, if ever.
[83] It is not necessary for me to decide whether the discoverability principle applies in order to decide the motion before me. The respondent has conceded on the record that the applicant discovered she had a claim or potential claim on June 27, 2007 and not before. I will simply say it seems to me there is nothing in s. 4 of the Real Property Limitations Act to take it out of the general rule of "discoverability" articulated in the three Supreme Court cases referred to above. See Waschkowski v. Hopkinson Estate (2000), 2000 5646 (ON CA), 47 O.R. (3d) 370, [2000] O.J. No. 470 (C.A.), at para. 7.
Alternative claim for damages
[84] Does the applicant's alternative claim for monetary compensation shelter under the claim for recovery of land, so as to have the benefit of the ten year limitation period, or is it subject to its own separate limitation period? There appears to be no authority on the point. We are reduced, as counsel said in argument, to relying on common sense.
[85] The applicant submits that although her claim for relief includes damages in the alternative, it is still an "action to recover land". As her lawyer put it in argument"Once a claim for land, always a claim for land." The applicant argues that the principal claim being for land is enough to equip the court with power at the end of the case to choose, if appropriate, the [page762] alternative form of relief claimed. To borrow a criminal law concept, it is a lesser and included remedy.
[86] I am mindful of Hainey, above, and Mongroo, above, where the argument was made that a claim was being "dressed up" or "disguised" as something it was not. No such suggestion has been made here. It is assumed this case is a genuine, triable case for an ownership interest in land.
[87] The respondent submits the ten-year period under s. 4 of the Real Property Limitations Act does not cover an alternative claim for a monetary award. The section applies only to an "action to recover land", which a damage claim is not.
[88] My analysis of the question begins with the words of the section: ". . . bring an action to recover any land . . .". In contrast to the Limitations Act, 2002, which deals with individual "claims", this provision deals with an "action" (extended by s. 1 of the Real Property Limitations Act to include "any civil proceeding"). An action or application can and frequently does include a principal claim with an alternative claim, as in this case. Here, the damages claim is an alternative or fallback position to the first claim advanced by the applicant, which is for an ownership interest. The statute does not say "action to recover only land". Further, it would not make sense to interpret s. 4 of the Real Property Limitations Act as a sort of all or nothing proposition, forcing the court either to award a proprietary interest on what it finds to be a meritorious claim, when a monetary award would otherwise be an adequate and appropriate remedy, or to award nothing at all, because a shorter limitation period for a damage award bars that kind of remedy. To interpret the section as not protecting an alternative damage award would mean that a claimant would never be able to rely on the section in determining when to launch a court case involving land and would always have to meet the limitation period for a damages claim, for fear of being locked out at the end of the case.
[89] For these reasons, I conclude the applicant's claim for monetary compensation as an alternative to her claim for a proprietary interest is covered by s. 4 of the Real Property Limitations Act as part of an action to recover land.
8. Is There a Statutory Gap?
Introduction
[90] The applicant vigorously pressed her statutory gap argument -- that no statutory limitation period applies -- for both the proprietary and the monetary compensation parts of her claim. A claim for unjust enrichment that is not covered by the [page763] Real Property Limitations Act could not be saved on the facts of this case unless the applicant is correct that there is a legislative gap leaving her claim uncovered by the two-year limitation period in s. 4 of the Limitations Act, 2002.
[91] The respondent, for his part, disagrees that the applicant's claims are covered by the Real Property Limitations Act and rejects the applicant's submission that there is an unintentional hole in the statutory limitations scheme dealing with family law constructive trust claims.
[92] The issues before me are important. As far as I know, they have not been squarely raised before now in a family law case in Ontario. This decision may well receive attention in an appellate court, which may or may not agree with my conclusions about s. 4 of the Real Property Limitations Act. If my conclusions are found to be incorrect in whole or in part, the applicant may still prevail on her statutory gap argument, and the issue needs to be resolved.
[93] Now that the issue of limitations for constructive trust claims has been raised in this case, it will no doubt be raised in many other family law cases.
[94] For all these reasons, I now proceed to address the applicant's second argument. In doing so, I restrict my focus to constructive trust claims raised in a family law context. I am aware the Supreme Court stated in Kerr, above, that there should be "no separate line of authority for 'family' cases developed within the law of unjust enrichment" (at para. 33). However, at the same time the court noted (at para. 34) that the courts must apply "equitable principles to family law issues with due sensitivity to the special circumstances that can arise in such cases" and "in ways that respond to the particular context in which they are to operate". It is with this in mind that I limit my consideration to cases where a constructive trust claim is alleged to arise out of a cohabitation (married or unmarried). This was the case before me and was the basis of the arguments presented to me.
Consequences of a two-year limitation period
[95] In Rizzo, above, Iacobucci J. discusses (at para. 27) what amounts to an absurd result when a court is interpreting legislation:
In my opinion, the consequences or effects which result from the Court of Appeal's interpretation of ss. 40 and 40a of the ESA are incompatible with both the object of the Act and with the object of the termination and severance pay provisions themselves. It is a well established principle of statutory interpretation that the legislature does not intend to produce absurd consequences. According to Côté, supra, an interpretation can be considered absurd if it leads to ridiculous or frivolous consequences, if it is [page764] extremely unreasonable or inequitable, if it is illogical or incoherent, or if it is incompatible with other provisions or with the object of the legislative enactment (at pp. 378-80). Sullivan echoes these comments noting that a label of absurdity can be attached to interpretations which defeat the purpose of a statute or render some aspect of it pointless or futile (Sullivan, Construction of Statutes, supra, at p. 88).
[96] The applicant submits that a six-year limitation period under s. 7(3) of the Family Law Act, without a similar six-year period being available for either married or unmarried constructive trust claimants, would lead to absurd and ridiculous consequences that could never have been intended by the legislature. Married persons with a potential constructive trust claim would have to sue within two years in order to avoid a limitations defence, even if their main claim was the Family Law Act statutory claim with a six-year limitation period and their secondary or weaker claim was for a constructive trust. The applicant says this would increase and accelerate litigation, give rise to more malpractice claims against lawyers, reduce the time available to family law litigants for healing and negotiation, increase families' emotional and financial stress, and if the relevant limitation period is missed, impoverish separated spouses and children. The applicant further argues that two different limitation periods for married people in relation to the same piece of property would force them into court within two years when the legislature has said it meant them to have as long as six, an absurd result.
[97] I agree with the applicant that this result is inconsistent with the six-year limitation period deemed appropriate for resolution of matrimonial property disputes by the legislature in s. 7(3) of the Family Law Act, and it seems unreasonable that there should be two different time limits for advancing issues relating to the same property arising from a marriage. It is true that a constructive trust claim depends on proof of contributions to the property, whereas a net family property equalization claim is not dependent on such proof, but both claims arise out of the marriage of a couple and both require the couple to go back and examine the financial history of their relationship from the start. If a married person can raise a net family property equalization claim up to six years after separation, thereby forcing the other spouse to look for evidence of the existence and value of the property each spouse held on the date of their marriage -- no matter how far back that date may be -- it is reasonable for married persons to be able to raise constructive trust claims going back at least six years.
[98] What about unmarried persons? They do not have statutory property rights, and must establish either a resulting trust or the elements of a constructive trust described in the cases [page765] cited at paras. 48-50, above, namely, deprivation and enrichment arising from the claimant's contributions, without a juristic reason entitling the respondent to keep the enrichment. Is it logical or reasonable that unmarried claimants who have no statutory property rights, and thus have less reason to be aware of a claim or to be confident of success in court, should have less time than married persons to assert a constructive trust claim? Constructive trust claims of married couples and of unmarried persons who have cohabited are identical in nature and require proof of exactly the same kinds of facts.
[99] The respondent argues there is nothing illogical about the rights of unmarried and married persons being different from each other. He submits the legislature knew of this and chose to leave a special six-year period for statutory property claims for married persons while subjecting constructive trust claims, of both married and unmarried persons, to the general two-year limitation period provided by s. 4 of the Limitations Act, 2002 for all manner of different claims, whether common law, equitable or statutory.
[100] Short of an absurd result dictated by the words of the legislation, it is not for me to question its policy. While a two-year limitation period for family law constructive trust claims gives rise to results that appear unfortunate or illogical, I am not able to accept the applicant's submission that the result is, in and of itself, so illogical or unreasonable as to be absurd: see Rizzo, above, passage cited at para. 95, above. Accordingly, my role is limited to construing and applying the words of the legislation as best I can to a constructive trust claim in a family law case. In the section that follows, I undertake a close review of the legislative provisions to examine their interaction with such a constructive trust claim.
The language of the Limitations Act, 2002
[101] Because so much turns on an analysis of ss. 4 and 5 of the Limitations Act, 2002 and their application to a "claim" as defined in s. 1, I reproduce the sections again here:
Definitions
- In this Act"claim" means a claim to remedy an injury, loss or damage that occurred as a result of an act or omission;
[page766]
Basic limitation period
- 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.
Discovery
5(1) A claim is discovered on the earlier of,
(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).
Presumption
(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.
Demand obligations
(3) For the purposes of subclause (1)(a)(i), the day on which injury, loss or damage occurs in relation to a demand obligation is the first day on which there is a failure to perform the obligation, once a demand for the performance is made.
[102] Section 4 is the basic limitation period for all "claims" as defined in s. 1 of the Act. The discussion in paras. 22 and 71-72, above, has led me to conclude that equitable claims, other than claims governed by the Real Property Limitations Act, are generally meant to be covered by ss. 1 and 4.
"Discovered"
[103] The limitation period for any kind of claim governed by s. 4 starts to run only when the claim is "discovered". "Discovered" has an ordinary meaning that might have been sufficient for limitations purposes. The courts have also adopted a principle of "discoverability" for limitations purposes that as a general rule"a cause of action arises for purposes of a limitation period when the material facts on which it is based have been discovered [page767] or ought to have been discovered by the plaintiff by the exercise of reasonable diligence": Central Trust, above, at para. 77.
[104] But the legislature did not choose to rely either on the ordinary meaning of the word or on the case law. Rather, it enacted, in s. 5(1)(a) and (b), a very precise and detailed provision setting out exactly the facts and circumstances of which the claimant must have knowledge, or of which a reasonable person ought to have had knowledge, for a claim to be "discovered". The provision is airtight -- there is no room for other facts or circumstances to be brought forward to allow the court to conclude a claim has been "discovered", so as to start the relevant limitation period running. For a claim to be "discovered", the four elements set out in s. 5(1)(a)(i)- (iv) must be satisfied, and time starts to run only when all four of them are in place.
[105] The parties in this case have an agreed statement of facts (see para. 14, above) saying that the applicant knew, on June 27, 2007, she had "claims, or potential claims, against the respondent . . . for unjust enrichment, and the remedies of constructive trust and/or damages flowing therefrom." In e-mails exchanged between counsel leading to the signing of the statement of agreed facts, the respondent's lawyer put to the applicant's lawyer that the applicant should admit her claims were "'discovered' by her within the meaning of the Limitations Act" in 2007. The applicant's lawyer replied by sending the statement of agreed facts, signed by his client, and undertook not to argue "discoverability" -- the ability to know the material facts on which her claim is based -- as it was not applicable to this case. The applicant has admitted as a fact that she knew about her claims in June 2007, but has not admitted the legal conclusion that her claims were "discovered" within the meaning of the Limitations Act, 2002. That is an important difference.
[106] True to his word, the applicant's lawyer did not argue "discoverability", but did argue that the Limitations Act, 2002 can not sensibly be made to apply to the applicant's claims. That required me to read closely and interpret ss. 1, 4 and 5 of the Limitations Act, 2002 to see whether and how they apply. I asked for and received additional submissions by the two lawyers on those sections and their application.
[107] Though the respondent submitted that "discoverability" was not an issue in this case, the applicant's statutory gap argument has forced me to review how the term "discovered" as used in ss. 4 and 5 fits or does not fit the applicant's claim. The difficulty is that the four elements of s. 5(1)(a)(i)-(iv) can not be applied to a family law constructive trust claim coherently, on a close reading of the section. [page768]
[108] I will go through the legislative provisions in detail and then review some cases that may help with their applicability to constructive trust claims.
Section 1 -- "claim"
[109] The definition of "claim" in s. 1 fits comfortably enough in a family law constructive trust case. The Supreme Court cases that created the remedial constructive trust in Canadian family law have made it clear, using the word "deprivation", that a constructive trust claimant must have suffered what amounts to "an injury, loss or damage". They also make it apparent the injury, loss or damage comes as a result of the claimant's contributions directly or indirectly to the property of another person -- this is the "act" that gives rise to both the deprivation and the enrichment referred to in the Supreme Court decisions discussed in paras. 48-50, above. There does not appear from the cases to be any requirement of an act or omission by the person who is enriched before the right to make a restitutionary constructive trust claim will be found to have come into existence.
Section 5(1)(a)(i) -- "the injury, loss or damage had occurred"
[110] When and in what circumstances does a constructive trust claimant know that the first element, that an "injury, loss or damage had occurred" (s. 5(1)(a)(i)), has been satisfied? The applicant submitted there was no coherent answer to this question, but the date of separation ought to be the date at which such knowledge might be presumed, though this too was problematic. A "loss" in a constructive trust claim is not like a car accident, a wrongful dismissal or a house fire and can not be pinpointed in time.
[111] The respondent submitted that although a constructive trust claim comes into existence on the date of the enrichment/ deprivation, the knowledge required by s. 5(1)(a)(i) might not be present until much later, and each case would require an examination of the facts. He suggested that ordinarily, the separation date would be the date to start the limitation period running, especially if the respondent to a claim took the position at separation that no or very limited compensation would be offered. However, the respondent also suggested a scenario in which the parties continued to reside together and operate a sort of joint economic venture, even after "separation" in the sense of living separate and apart, in which case the claimant would not know of an "injury, loss or damage" because there was no indication that compensation would be refused. And the respondent suggested a third scenario, in which a change occurs in the [page769] economics or other aspects of a continuing relationship, in which case the requisite knowledge might occur before there was a separation. I found the respondent's submission on this issue hard to follow.
[112] It seems to me a claimant would often be aware of making a contribution and might, but would not necessarily, know that that he or she has suffered a deprivation or enriched the other party. While a couple live together and get along reasonably well, there would likely not be any thought of deprivation or loss. Does that knowledge reasonably or actually arise when the couple are no longer getting along? When one of them thinks of separating? When one of them tries to raise the issue of the title to a particular piece of property? Is every case dependent on what the mythical reasonable person would have known at a particular time?
[113] It will not infrequently be the case that one party is completely unaware that ownership of property is in the other party's name. In Mongroo, above, the claimant discovered years after making her contributions that the property had not been transferred into her name as previously agreed (or thought to be agreed by the claimant), and the court held the relevant start time for limitations purposes was when she learned the agreement could no longer be relied on (though ss. 4 and 5 of the Limitations Act, 2002 were not raised in that case). But there will be many cases where there is no agreement and no discussion between persons who cohabit about how title to property is taken until years after the property is acquired, if ever. It is not at all uncommon for parties in the midst of litigation to make unwelcome discoveries about the legal ownership of what they thought were their assets. In any event, I find the establishment of the start date of the knowledge that an "injury, loss or damage had occurred" problematic in family law constructive trust cases.
Section 5(1)(a)(ii) -- "act or omission"
[114] The second element (s. 5(1)(a)(ii)) is that the claimant must know "the injury, loss or damage was caused by or contributed to by an act or omission". The parties' submissions on this point were the same as on s. 5(1)(a)(i). Again, I think the claimant would know of the claimant's own contributions that went into the enrichment/deprivation that is central to a constructive trust claim, but as discussed in the preceding paragraph, the problem lies in just when the claimant knows or reasonably ought to know that there has been an "injury, loss or damage" as a result of those contributions. [page770]
Section 5(1)(a)(iii) -- "of the person against whom the claim is made"
[115] The third element (s. 5(1)(a)(iii)) of the discovery provision raises a problem of a different nature and one that is at least as confounding as the first two elements. Though the definition of "claim" in s. 1 talks of an "act or omission", without specifying by whom, s. 5(1)(a)(iii) requires an act or omission by the respondent to the claim.
[116] I have no knowledge of the particular facts of this case, but in family law constructive trust cases, the respondent generally has not done any act to cause or contribute to the claimant's "injury, loss or damage", has done nothing other than being passively enriched by virtue of the applicant's efforts. Has such a respondent omitted to do anything?
[117] Dictionary definitions of "omission" offer the following. From Bryan A. Garner, Black's Law Dictionary, 8th ed.:
Omission. n. 1. A failure to do something; esp., a neglect of duty
See, also, Daphne A. Dukelow, The Dictionary of Canadian Law, 4th ed.:
Omission. n. 1. ". . . [M]eans the failure to do something which it is one's duty to do, or which a reasonable man would do." Greenlaw v. Canadian Northern Railway, 1913 426 (MB CA), 12 D.L.R. 402 at 405 (Man. C.A.) [. . .] 2. Includes a deliberate choice to leave something out.
Non-legal dictionaries offer the following meanings: something neglected or left undone; apathy toward or neglect of duty; failure to fulfil a moral or legal obligation; the act of omitting.
http://www.merriam-webster.com/dictionary/omission
http://dictionary.reference.com/browse/omission?s=t
http://oxforddictionaries.com/definition/english/omission?q=omisson.
Dictionary definitions of "omit" include leave out; leave undone; fail or neglect to do. See:
http://www.merriam-webster.com/dictionary/omit
http://dictionary.reference.com/browse/omit?s=t
http://oxforddictionaries.com/definition/english/omit?q=omit.
[page771]
[118] The notion of an omission connotes leaving out, leaving undone, failing or neglecting to do something that was a duty or otherwise required, actually intended or ordinarily expected. The cases and textbooks dealing with constructive trusts do not use this kind of language about the respondent's behaviour in discussing what the claimant has to show in order to prove a claim. Rather, they say things like"it is just that the defendant should be compelled to hold property as a constructive trustee for the plaintiff or that the plaintiff should be granted a lien": Goff and Jones, above, at 47; "there is no reason in law or justice for the defendant's retention of the benefit conferred by the plaintiff, making its retention 'unjust' in the circumstances of the case": Kerr, above, at para. 40. Although there may be "no reason in law or justice" for a person to keep benefits conferred by a spouse, it seems to me reaching too far to say there is an "omission" if the person receiving the benefit in the course of a domestic relationship does not offer compensation, during or even after the end of the relationship.
[119] It is true that "the reasonable expectations of the parties and public policy considerations" are factors in deciding whether there is a juristic reason for the owner of property to keep the benefit conferred by the claimant"to assess whether recovery should be denied": Kerr, above, at para. 43; but the creation of reasonable expectations by the respondent is not one of the material facts a claimant must plead or prove to establish unjust enrichment. All a claimant has to allege in a pleading is that the respondent was enriched by the claimant to the claimant's detriment. The lack of juristic reason for the respondent to keep the benefit of the claimant's contributions could be based not on anything the respondent did or said or omitted to do or say, but rather entirely on public policy considerations or, for that matter, on the law as stated by the Supreme Court. Lack of a juristic reason is a conclusion of law. The law in this area is complex -- the Supreme Court has taken up the issue several times in the last 30 years -- and the results are variable, depending on the facts of each case.
[120] Once a claimant has pleaded and proved enrichment/ deprivation, it is the respondent who must plead and prove facts showing that there is a juristic reason to retain the enrichment conferred by the claimant. No doubt there will be situations where something done or not done by a respondent gives rise to a reasonable expectation by the claimant of receiving compensation: see, for example, Mongroo, above. See, also, Sorochan v. Sorochan, 1986 23 (SCC), [1986] 2 S.C.R. 38, [1986] S.C.J. No. 46, in which an unmarried couple cohabited for 42 years and the [page772] woman asked for an ownership interest in the family farm more than a decade before the couple separated. However, there will often be cases where all the claimant has is a silent hope or expectation of compensation that the court ultimately decides is right and just, not based on anything the respondent actually did or omitted to do. Cases where the claim is made after the death of the title holder would be only one example.
[121] There is also nothing in the cases or the texts that predicates the right to a constructive trust, much less entitlement to make a claim for a constructive trust, on first making a demand of the title holder. There will be situations where a claimant approaches the owner of the property in question with a direct request or a demand to be put on title or given compensation for direct or indirect contributions. There will be cases where the issue of title or compensation is raised indirectly or obliquely. However, in my experience, equally if not more often there are situations where a family law claimant is afraid or reluctant to make waves in the relationship. Not wanting to disturb what is a delicate but on balance positive or at least tolerable situation, a claimant may not raise the issue at all, and the title holder may be completely unaware of any dissatisfaction on the point.
[122] On the third element, as set out in s. 5(1)(a)(iii), I find that there will often, in fact usually, be constructive trust claims in family law where there is no act or omission of the respondent that caused or contributed to the claimant's loss. This could be true even where the claimant has made a request (direct or indirect) for a change in title or for compensation, which the respondent has neither accepted nor rejected. There is no duty to say yes.
[123] With no act or omission of the respondent, the claimant could not reasonably have knowledge of suffering a loss caused or contributed to by an "act or omission" of the respondent. Without that knowledge, the third element is not satisfied, the claim has not been "discovered" and the limitation period never starts to run. I conclude that s. 5(1)(a)(iii) simply does not work for family law constructive trust claims.
[124] Even if s. 5(1)(a)(iii) could be construed to create an omission by the respondent, we still have the problem of when the claimant knows the contributions rise to the level of enrichment or deprivation.
Section 5(1)(a)(iv) -- "a proceeding would be an appropriate means to remedy it"
[125] Finally, we come to the fourth element as set out in s. 5(1)(a)(iv)"that, having regard to the nature of the injury, loss [page773] or damage, a proceeding would be an appropriate means to seek to remedy it". It appears the provision is directed at the question of whether the injury, loss or damage is of such a nature that it could be redressed by a court case, but the word "appropriate" is quite elastic. I again turn to the dictionary and find that "appropriate" can mean suitable or fitting to a particular purpose or in particular circumstances. See:
http://www.merriam-webster.com/dictionary/appropriate
http://dictionary.reference.com/browse/appropriate?s=t
<http:// oxforddictionaries.com/definition/english/appropriate?q=appropriate>.
[126] There is no doubt that the kind of loss or damage asserted in a constructive trust claim is capable of being redressed in a court case. The question is whether the word "appropriate" should be construed as taking into account the state of the relationship of the parties in a family law situation at a given point in time. The loss is one that involves what is likely the end of a romantic or domestic relationship. Is a claim in court "an appropriate means" to remedy this kind of loss when a couple are living in relative peace or contentment? When they are no longer getting along? When one of them forms the intention to end the relationship? When they no longer live together or the relationship is ended? When they are in negotiations about their economic rights and obligations?
[127] The other three elements of whether a claim is "discovered", set out in s. 5(1)(a)(i)-(iii), deal only with the claimant's knowledge of the existence and causation of the loss. The fourth element speaks of having regard to the nature of the loss, which appears to me to require consideration of the fact the claimant has been deprived of monetary recompense or of an ownership interest. The respondent submitted that the greater the nature and extent of the contributions of a claimant, the sooner it would be appropriate to consider a lawsuit for compensation. He gave the example of a person who built a large extension on the house owned by another and contrasted that with the situation of a person who supplied homemaking and child care services in a home owned by the other party. The first example would likely bring an earlier consciousness of the appropriateness of a legal proceeding than the second situation. I would add, though, that these two examples feed into my discussion above of just when a claimant has or ought to have knowledge of an "injury, loss or damage" or deprivation. In the first example, the respondent's argument suggests an awareness long before there is an end of [page774] the relationship of the parties. If, despite that awareness, the potential claimant continues the relationship (or cohabitation) more or less unchanged for two years, is the claim barred even before the relationship or cohabitation ends? It appears the respondent's answer would be yes.
[128] The appropriateness of a particular time to sue in the progress of any given relationship is much more subjective than the appropriateness of a court case for a particular form of loss. It seems to me that the fourth element, as set out in s. 5(1)(a)(iv), is meant to focus on the appropriateness of a lawsuit as a means to secure money or an award of ownership to make up for the deprivation articulated in the cases as being at the root of constructive trusts in family law, rather than the appropriateness of a time in the breakdown of a relationship to launch a claim in court.
[129] If my conclusion on the meaning of "appropriate" in s. 5(1)(a)(iv) is correct, it does not pose a problem for constructive trusts in family law. If, however"appropriate" is meant to incorporate consideration of when in the course of a domestic relationship it is appropriate for a claim to be presented, this fourth element becomes as problematic as the other three elements in determining when a claimant has "discovered" a constructive trust claim, so as to start the limitation period running.
The presumption in s. 5(2)
[130] Section 5(2) creates a presumption that a claim is "discovered", as defined by s. 5(1), on the day "the act or omission on which the claim is based took place" unless the claimant proves otherwise. This will no doubt aid defendants/ respondents in a great many cases. However, once a claimant displaces the presumption in relation to any one of the four elements -- by showing lack of knowledge that a "loss" had occurred, that the loss had been caused or contributed to by the other party, or that there had been an omission by the other party, for example -- then all the difficulties discussed above of establishing the four elements of s. 5(1)(a)(i)-(iv) come back into play and the presumption falls by the wayside.
Demand obligations -- s. 5(3)
[131] There is a special provision for demand obligations that postpones the start of the limitation period until there is a demand followed by a failure to perform. As discussed above in relation to the Supreme Court constructive trust cases, there is no requirement of a demand in order to establish entitlement to a constructive trust (or damages in place of a proprietary [page775] award). Section 5(3) is not applicable to constructive trust cases, though a similar legislative provision referring to a specific event would be useful in eliminating arguments about when the limitation period begins to run.
Cases on application of the Limitations Act, 2002
[132] There does not appear to be any Ontario case that assists me in dealing with the applicant's statutory gap argument.
[133] In McCracken, above, the court dealt on a summary judgment motion with a situation where a wife had contracted to transfer her interest in a piece of land to her husband but had not, by mistake, carried through on the transfer. The mistake was discovered in 2003, which was during the transition period before the Limitations Act, 2002 came into effect, and accordingly the former limitation periods still applied, so long as they had not expired. The court considered that the husband's claim could be viewed as a claim for a constructive trust, specific performance, rectification or a vesting order and concluded on the basis of both factual and legal complexity that it would not grant summary judgment. There is no analysis in the case of ss. 4 and 5 of the Limitations Act, 2002.
[134] Mongroo, above, did not actually apply ss. 4 and 5 of the Limitations Act, 2002 but tried to articulate when the limitation period (whatever it was) would start to run in an unjust enrichment or constructive trust claim. The court stated the principle that the time runs from when the cause of action is complete. In constructive trust cases, that is when the claimant has enriched the other party and has suffered a corresponding deprivation: see the cases cited in paras. 48-50, above. But in the "unique circumstances" of Mongroo, where the husband had apparently agreed to transfer title to the wife but then failed to follow through, the court found the time started to run from when the wife realized she would not "retain the property thought to be her own". The court did not expressly advert to the discoverability principle in the case law or to the provisions of the Limitations Act, 2002.
[135] Davies v. White, supra, was a family law constructive trust case that was published while this decision was under reserve. In that case, the applicant (a woman) had been living for years and had two children with the respondent, a married man who had in effect been living a secret double life, maintaining two different residences and families. The parties separated no later than April 2010. In that month, the respondent bought out the applicant's interest in their last common residence and she signed a release relating to the homes they had shared. In [page776] early 2011, she issued an application seeking "property interests" against the respondent. In late 2011, she claimed to have found out only then that the respondent was married all along. In late 2012, she sought to add a constructive trust claim in relation to the respondent's property and also to add the respondent's wife as a respondent to the constructive trust claim. She said the respondent was judgment proof, having put his property into his wife's name. She also said her joint venture with the respondent had allowed him to make investments that were put into the hands of his wife.
[136] The court in Davies declined to add the wife as a party for several reasons: the applicant had not yet established a link between "any enrichment or benefit that resulted from any deprivation" on the applicant's part and any property the respondent owned or had put into his wife's name; the addition of the wife as a party would cause delay and likely result in litigation between the respondent and his wife; the wife would likely become embroiled in the question whether the applicant had a valid trust claim against the respondent at all; the court suspected the addition of the wife was sought as a litigation tactic. The court also declined to add the constructive trust claim against the respondent, noting the applicant had already been paid out an agreed sum for her interest in three residences and had signed a release, and finding the applicant had not established a link between her contributions and any particular property in which she sought an interest. The court directed that in the questioning of the respondent before trial, the issue of whether the applicant had a valid constructive trust claim could be explored, even though the claim had not been added. Only if there was "an air of reality" about the claim would the court consider adding it to the case. In that context, the court went on to discuss briefly whether the applicant's claim was barred by the two-year limitation period set out in s. 2 of the Limitations Act, 2002 and concluded the claim arose on "the date of the enrichment/ benefit and deprivation. At the latest [my emphasis] that would correspond with the valuation date in property disputes between spouses under the Family Law Act." The court did not have before it the issue of whether or how ss. 4 and 5 of the Limitations Act, 2002 applied. It put off the limitations issue until after the questioning of the parties, which would help determine whether there was a factual underpinning for the applicant's claim.
Other authorities
[137] The late Professor James G. McLeod, in his annotation to Sorochan v. Sorochan, supra, briefly discussed the problem of [page777] limitation periods in constructive trust cases. Though he suggested the constructive trust was a remedy that arose in theory only when awarded, he rejected his own suggestion, saying:
Given that restitutionary relief can be lost when benefits are conferred or continued in the knowledge that the other party refuses to pay or otherwise be legally accountable, the right should come into existence at the time the three elements of the cause of action are established. The limitation period, however, should not commence until it is evident that appropriate relief will not be forthcoming.
We now know from the Supreme Court cases on constructive trusts that the right comes into existence when the three elements of the cause of action are present. See, also, Mongroo, above, and Davies, above. We do not, however, have authority on the commencement of the limitation period. The McLeod annotation does not refer to the issue of discoverability of a claim as discussed in the case law and predates the Limitations Act, 2002 by some 16 years.
[138] In Milavsky v. Milavsky, [2011] A.J. No. 841, 2011 ABCA 231, the parties cohabited starting in 1989, married in 1999 and separated in 2009. The husband sued for divorce and division of matrimonial property in 2009. The wife issued a claim for unjust enrichment against the husband and against trusts he created, seeking a proprietary interest in both land and personalty, and for an order setting aside transfers made in 1992, 1994, 2001 and 2004 to the trusts. The husband and trustees moved for summary judgment on the ground the wife's claims were barred by a limitation period. The motion judge dismissed all of the wife's claims except in relation to the 2004 transfer. The Alberta Court of Appeal set aside the dismissal and sent the case on for trial. In doing so, it said (at para. 26)"Generally speaking, a claim for unjust enrichment arises at the date of the parties' separation: Johansson v. Fevang, 2009 ABQB 573, [2010] AWLD 468." Johansson v. Fevang, [2009] A.J. No. 1063, 2009 ABQB 573 is the only case cited for this proposition. Johansson in turn cited another Alberta Court of Appeal decision, Mustard v. Brache, [2006] A.J. No. 1137, 2006 ABCA 265, which said, at para. 15,
The remedy for unjust enrichment may be a monetary award. However, depending on the equities and the fact-specific circumstances of the case, a constructive trust may be imposed. In that event, even though declared after the date of separation of the parties, a constructive trust can be deemed to have arisen when the duty to make restitution arose. The property, or share thereof, will therefore be considered to be owned by the beneficiary at the time of separation: Rawluk v. Rawluk, 1990 152 (SCC), [1990] 1 S.C.R. 70 at paragraph. 42. [page778]
[139] In fact, Johansson did not decide anything more than that the start date of the limitation period on the facts before the court was a triable issue that should not be decided on a summary judgment motion. The court in Johansson also had to consider whether Alberta's Adult Interdependent Relationship Act, R.S.A. 2002, c. A-4.5 (which has no equivalent in Ontario) had an impact on the running of the limitation period and whether another Alberta legislative provision (which also has no Ontario counterpart), s. 6 of the Family Law Act, S.A. 2003, c. F-4.5, had an impact. That section allows new claims to be added to an existing case after the expiry of a limitation period in certain circumstances. In Johansson, the court left all these issues to be sorted out at trial.
[140] Alberta's limitations legislation is very different from Ontario's. See the Limitations Act, R.S.A. 2000, c. L-12. Its formulation of the start date for limitation periods in s. 3(1) is not nearly as tightly drawn as s. 5(1)(a) of the Ontario Limitations Act, 2002 and the Alberta Limitations Act contains, in s. 3(2)(a), a special provision extending time for "a claim or any number of claims based on any number of breaches of duty, resulting from a continuing course of conduct . . .". Further, s. 6(1) of the Alberta Limitations Act allows claims to be added to an existing case on terms similar to those set out in s. 6 of the Alberta Family Law Act.
[141] The Alberta cases are of no real help in construing Ontario's limitations legislation.
[142] I refer again briefly to the Supreme Court cases of Sorochan, Peter, Kerr and Vanasse, above, the latter being a recent Ontario case, only to note that those cases all determine a claim for unjust enrichment or constructive trust is complete from the time of the enrichment/deprivation resulting from the claimant's contribution, but they do not discuss the limitations issue. In Sorochan, for example, the parties cohabited, and the claimant presumably contributed, over a period of 42 years. In Vanasse, the trial judge found the applicant enriched the respondent over a three-year period from 1997 to 2000. The parties separated in 2005 and that was when the applicant started her application. The implications of this for limitations purposes are not discussed, perhaps because they occurred well before the Limitations Act, 2002 came into effect.
Conclusions on the statutory gap issue
[143] From the discussion above about the four elements required to "discover" a claim and start the two-year limitation period running, I conclude it is impossible to apply ss. 4 and 5 of [page779] the Limitations Act, 2002 to constructive trust claims in family law. In particular, I think that s. 5(1)(a) makes it impossible to know when if ever the limitation would start running because the claimant may never (reasonably) know of a "loss, damage or injury" and because there is no act or omission of the respondent that the claimant is required to or is even able to point to in order to "discover" a claim for a constructive trust. Claims to recover land aside, the Limitations Act, 2002 may have been meant to but does not manage to encompass constructive trust claims. I am unable to give effect to the precise and detailed wording of ss. 4 and 5 so as to make them apply to constructive trusts in family law cases.
[144] I have come to this conclusion reluctantly and only after much deliberation. The legislature would not have deliberately left a hole in its purportedly comprehensive limitations scheme. Though I could not accept the applicant's argument about the "absurdity" of having a two-year limitation period for constructive trusts in family law cases, when I set about to review and apply the provisions of ss. 4 and 5 of the Limitations Act, 2002, I simply could not find a way to read them so that they could work for constructive trusts -- not without doing violence both to the words of the two sections and to the elements of a claim for constructive trust as laid down in the Supreme Court cases cited at paras. 48-50, above. In other words, while I cannot find that a legislative policy of a two-year limitation period for family law constructive trust claims is "absurd", I find there is no coherent, sensible or reasonable way to apply ss. 4 and 5 of the Limitations Act, 2002 to such claims.
[145] I am therefore driven to conclude that, aside from s. 4 of the Real Property Limitations Act (see above), there is no applicable statutory limitation period for constructive trust claims in family law cases and that there is a legislative gap, as submitted by the applicant. If I had not reached the conclusion that s. 4 of the Real Property Limitations Act applied to family law constructive trust claims seeking an interest in land, my conclusion that there is a legislative gap would have applied to those claims as well.
Equitable limitations
[146] Where there is no applicable statutory limitation period, courts of equity have dealt with limitations in one of two ways. Where there was a common law or statutory claim governed by a limitation period that was considered closely analogous to an equitable claim, courts of equity have decided the other claim's statutory limitation period should be applied to the equitable [page780] claim by analogy. Where there was no analogous claim with a statutory limitation period, courts of equity have applied the equitable doctrine of laches to determine when, in good conscience, the claim should no longer be allowed to go forward. See Mew, above, at 38-41; Ontario Law Reform Commission, above, at 18-23.
[147] There is no common law or statutory claim that is analogous to a family law constructive trust claim. Nevertheless, the applicant urges that I adopt by analogy the limitation period of six years from separation that is specified in s. 7(3) of the Family Law Act. That section creates a limitation period for statutory matrimonial property rights that are different in nature from the rights of parties to a constructive trust claim, but for the reasons articulated in paras. 96-97, above, the application of that limitation period by analogy could be an appropriate result in this case.
[148] However, there are constructive trust claims made in family law cases -- and this case may be one of them -- where, even though the parties were in a romantic relationship, the claimant alleges but does not succeed in proving cohabitation. A limitation period keyed from a separation date would be of no use in those cases. Perhaps a limitation period could be devised that runs from a breakdown of the relationship, from the making of a demand or request for compensation or from the making of the last contribution, but that would stray a long way from the applicant's suggested analogy to s. 7(3) of the Family Law Act.
[149] There is also the concept of laches, which requires an examination of all the facts to allow the court to do justice in each particular case. The attraction of this approach is that each case would receive individual treatment for limitations purposes. The drawbacks are that it would be very difficult for a potential respondent ever to know when the exposure to a constructive trust claim was at an end, and this approach runs counter to the new limitations regime of the Limitations Act, 2002 and the Real Property Limitations Act, which are meant to subject all claims to a fixed limitation period.
[150] It is neither necessary nor proper for me to determine whether the applicant's claim should be subject to the equitable doctrine of laches or whether the court should apply by analogy the time limit of six years from separation found in s. 7(3) of the Family Law Act. A full evidentiary record and full argument by counsel based on that record would be required. Under either approach, the applicant's claim survives this motion for summary judgment, because only a full evidentiary record of the [page781] facts, likely at a trial, would allow the court to decide whether the applicant's claim runs afoul of either time limitation. If the applicant establishes her claim for a constructive trust on the facts, the trial judge will have to grapple with the issue of what limitation period is applicable to those facts.
[151] Because the applicant pressed hard for this court to adopt by analogy the limitation period of s. 7(3) of the Family Law Act, I will merely say I agree with her submission it would be preferable to have a fixed limitation period, like the six-year provision in s. 7(3) of that Act, running from a readily ascertainable event. That would be easier for both claimants and respondents, would be consistent with the applicable period for matrimonial property statutory claims and would be more consistent with the approach of Ontario's new limitations legislation.
Legislative reform
[152] As I said at para. 144, above, I am driven to conclude there is a gap in the legislative scheme of limitations. The issues raised in this case surrounding constructive trusts in family law cases, and likely those arising in both family law and non-family law cases for constructive and resulting trusts and other equitable claims, should receive attention from the legislature to ensure that the Limitations Act, 2002 and the Real Property Limitations Act operate as intended for equitable claims. In addition, the law of limitations in matters involving land remains unchanged from what it was in the old Limitations Act, something that has been identified as being in need of reform since at least the 1969 Ontario Law Reform Commission report, above. Only a comprehensive legislative approach to these matters will result in a coherent and consistent limitations scheme.
9. Order
[153] On the issues of law raised on this summary judgment motion, I have reached the following conclusions:
(1) A family law case in which the claimant pleads facts to establish a constructive trust and asks the court to award an ownership interest in land is an "action to recover land" governed by s. 4 of the Real Property Limitations Act, with a ten-year limitation period. The ten-year limitation period also applies to a claim in the alternative for monetary compensation in such a case.
(2) Other than s. 4 of the Real Property Limitations Act, there is no applicable statutory limitation period for a constructive trust claim in a family law case. Sections 4 and 5 of the [page782] Limitations Act, 2002 do not apply. The court can devise an appropriate time limit using its equitable jurisdiction for claims to which s. 4 of the Real Property Limitations Act does not apply.
[154] Accordingly, the respondent's motion for summary judgment is dismissed, except that on consent, the applicant's claim in her application for a resulting trust is dismissed. The applicant's claim for a constructive trust may continue to the next step.
Costs
[155] Counsel are to confer and try to agree on the costs of the motion. If not agreed, costs are to be addressed initially in writing. Not later than March 15, the applicant is to serve a costs submission of not more than three pages, plus costs summary, authorities and relevant offers to settle, and file the submission in the continuing record. The respondent may serve and file in the record a similar responding submission within 21 days of service of the applicant's submission. The applicant may serve a three-page reply submission and file it within ten days of service of the response. Either party may by March 23 book a 30-minute costs hearing through the trial coordinator. If no hearing is booked by that date, costs will be decided on the basis of the written submissions. The applicant is responsible for having the record sent to me for the decision of costs.
Motion dismissed.
End of Document