Court File and Parties

Court File No.: 412/17 Date: 2019-06-13 Superior Court of Justice - Ontario

Re: F.K., Applicant (Husband) And: E.A., Respondent (Wife)

Before: Mr. Justice Timothy Minnema

Counsel: Christina T. Roraback, for the Applicant Carolyn Shelley, for the Respondent

Heard: May 27, 2019

Endorsement on Summary Judgment Motion

MINNEMA, J.

Issue

[1] This is a summary judgment motion by the respondent wife asserting that the applicant husband’s request to set aside the parties’ marriage contract was brought outside of the applicable limitation period.

Basic Facts

[2] The parties began a relationship in 2000. They began cohabitating in June of 2004, and a marriage proposal was made in August of 2004 that was accepted. The wedding date was eventually set for July 20, 2005; it was decided on and planned in less than 30 days.

[3] On July 14, 2005, the parties entered into a marriage contract styled as a “Prenuptial Agreement”. It was prepared by the wife who obtained a template off the internet. It waived spousal support and indicated that the parties would be separate as to property and not be subject to an equalization of net family property. It was witnessed by a mutual friend, and her evidence was that both parties went to her place to sign and appeared to be doing so voluntarily.

[4] Although the agreement indicates that each party retained their own lawyer and received independent legal advice, in fact neither did. Their accounts as to why differ.

[5] The wife says that this was an uncontentious matter. They had both been married before and had children from their previous relationships. They had different financial philosophies, and had discussed and agreed that they would be financially independent. It was understood that the contract would eliminate conflict. She indicates that the husband had left all the pre-wedding planning to her, which he denies, and getting marriage contract completed was just one item on her checklist.

[6] The husband does not dispute the pre-marriage financial arrangement, but claims that the parties never discussed how they would structure their lives after they married. He thought they both had agreed never to get married again, and was surprised when she indicated otherwise. He then proposed and she accepted. He says he was presented with the marriage contract six days before the wedding and was told by the wife that she would not go through with the marriage unless he signed. That ultimatum is specifically denied by the wife. According to her not only did she not say that, but the husband never mentioned needing more time to review the written agreement or that he felt rushed. The husband goes on to say that the wife did not suggest that he obtain legal advice. Again the wife to the contrary says that she specifically she told him he was free to do so, but the husband said he did not feel that it would be worth the money. She adds that, as this was a second marriage for each of them, they both had some understanding of family law. The husband indicates that her knowledge was much greater than his.

[7] There was no formal exchange of financial disclosure. The wife says there was no need as they had kept their finances separate during their year of cohabitation and that was not going to change. The husband acknowledges having had some general understanding of the wife’s finances, in that she owned a home and a cottage. The marriage contract indicates that each party was provided fair and reasonable disclosure of their property and financial obligations, and each had, or reasonably could have had, adequate knowledge.

[8] For the most part the parties did keep their finances separate after the wedding, although the husband suggests that this was imposed rather than agreed.

Separation and Litigation History

[9] After seven years of marriage the parties separated on August 13, 2012. The husband moved out of the matrimonial home that was owned by the wife. She provided him with $1,600 to help with first and last month’s rent, and made it clear that he could expect nothing further from her.

[10] Shortly after the separation the husband retained a lawyer. Negotiations ensued. The husband indicated that he suffered a mental health setback in the spring of 2013 and abandoned the negotiations at that time. Consistent with that, the wife indicated that her counsel waited for a response to their letters and follow-up letters which never came. The husband suffers from bi-polar disease, and has for 25 years. The wife knew about the illness. The husband indicates that he had good days and bad days during the relationship, but he was able to live his daily life with treatment and medication.

[11] The wife asserts and the husband does not deny that in the spring of 2015 his counsel wrote to her counsel indicating court documents were being prepared and asking whether service would be accepted on her behalf. The wife’s counsel was not retained at that time, and indicated that all communication had to be with the wife directly.

[12] The application for spousal support and equalization of property was not issued until August 24, 2017. Although the pleadings are unclear, there is agreement that they include a claim to set aside the marriage contract. The wife filed her answer in due course.

[13] On January 4, 2019, the wife amended her answer to plead that the husband’s claim to set aside the marriage contract was statute barred pursuant to section 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B (the “Act”). She then brought this motion for summary judgment based on that defence which was heard by me exactly four weeks before the scheduled start of their 8-day trial. She also sought leave to bring this motion after the Trial Scheduling Conference which was unopposed.

Issues

[14] The parties agree on the law regarding summary judgment (Rule 16 of the Family Law Rules). Briefly, I am required to grant summary judgment if satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.

[15] The following explains how the parties have framed the limitations issue.

[16] There is a six-year limitation period relating to the husband’s Family Law Act property claim (section 7(3) of that Act), but the application was brought in time. There is no limitation period with respect to the husband’s Family Law Act spousal support claim (section 16(1)(c) of the Limitations Act, 2002). However, the Prenuptial Agreement is a marriage contract and therefore a domestic contract under Part IV of the Family Law Act. As it is in writing, signed by the parties, and witnessed (as required by section 55 of that Act), it is presumed to be valid and enforceable as a defence to the support and property claims unless there is a declaration pronouncing it void or an order is made setting it aside (see MacLeod v. MacLeod, 2019 ONSC 2136 at paragraph 23). [1] The husband is applying pursuant to section 56(4) of the Family Law Act to have it set aside, and it is to that claim that any alleged limitation period would apply. As noted, the limitation period pled is the general 2 year limitation period in the Limitations Act, 2002.

[17] The parties therefore agree that I am to decide whether there is a genuine issue requiring a trial that (1) the relief sought by the husband to set aside the marriage contract is subject to the 2 year limitation period and, if so, (2) whether he brought his application in time.

[18] As an aside, the differing accounts of the background summary above relating to the formation and execution of the marriage contract are of little relevance to the stated issues. Those factual disputes go to the question of whether the husband can meet the tests in section 56(4) of the Family Law Act, which is an issue for trial if this motion is denied.

Law/Analysis

[19] As noted the Limitations Act, 2002 establishes a general 2 year limitation period which reads as follows:

4. Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

[20] The parties focussed their argument on three distinct questions arising from that section: (1) is the husband’s request to set aside the marriage contract a “claim”; if so, (2) does the Act “provide otherwise” with respect to the limitation period applying to that claim; and, if not, (3) when was the claim “discovered”? There was also a final separate question arising from section 7 of the Act, namely (4) whether the husband suffered from an incapacity that would suspend the running of the limitation period.

Definition of “Claim”

[21] The previous version of the Limitations Act (R.S.O. 1990, c. L.15) indicated in section 45(1)(g) that an action related to contract had to be commenced “within six years after the cause of action arose.” The reference to “cause of action” generally meant that the limitation period started to run when all elements of the wrong existed, which included, for example, the discoverability principle: James C. Morton, Limitation of Civil Actions, (The Carswell Co. Ltd, Agincourt, Ontario, 1988) at pages 10 and 11.

[22] According to Black’s Law Dictionary, Ninth Edition (Thompson Reuters, St. Paul, Minnesota, 2009), the definition of “cause of action” included “[a] group of operative facts giving rise to one or more bases for suing”, “a factual situation that entitles one person to obtain a remedy in court from another person”, “[a] legal theory of a lawsuit”, and “[l]oosely, a lawsuit”.

[23] Without any law to support it, the husband asserts that “a claim to set aside a domestic contract is not in itself a cause of action”. Looking at the above definitions, in my view it clearly is; he is seeking a remedy in court. However, that is no longer the test. The limitation period now commences, not when the cause of action arose, but when the “claim” was first discovered.

[24] The husband suggests that this new wording is more than just a distinction without a difference. The term “claim” is defined in section 1 of the Limitations Act, 2002, as follows:

“claim” means a claim to remedy an injury, loss or damage that occurred as a result of an act or omission

[25] As can be seen, the definition starts with the assertion that ‘a claim means a claim’, and therefore the general definition of “claim” is important. Referring again to Black’s Law Dictionary, “claim” is defined quite broadly including “[t]he aggregate of operative facts giving rise to a right enforceable by a court”, [t]he assertion of an existing right”, [a] demand for … a legal remedy to which one asserts a right”, and “the part of a complaint in a civil action specifying what relief the plaintiff asks for”. Comparing the respective definitions, it is difficult to see much of a distinction between a “claim” and a “cause of action” in this context.

[26] The husband argues, however, that the request to set aside the marriage contract is not a “claim” per the full definition in section 1, as it fails to meet the qualifier that the claim must be “to remedy an injury, loss or damage”. He maintains per his factum that he “is not claiming that he has suffered a loss due to a breach of a contract” rather that his application or claim simply “goes to the heart of contract law and the formation of a contract”.

[27] The test is not limited to a loss suffered due to a breach of a contract. It relates to any loss. The loss the husband is alleging is the extinguishment of his family law remedies by virtue of the allegedly inadequate or improperly constituted marriage contract. He is seeking to address that loss by obtaining the remedy of having that contract set aside. If he did not suffer a loss, he would not need that remedy. In keeping with this analysis, in York Condominium Corporation No. 62 v. Superior Energy Management Gas L.P., 2013 ONCA 789, the court found that a claim attacking the formation of a contract, namely asserting that it was void, was subject to the 2 year limitation period. The court in Sutton v. Balinsky, 2015 ONSC 3098, came to the same conclusion. In my view the husband’s claim to set aside the marriage contract is a “claim” as defined in the Act, and his argument does not raise a genuine issue requiring a trial.

Provisions in the Act that Provide Otherwise

[28] There are three sections of the Limitations Act, 2002, that address situations where the Act itself or a limitation period in it do not apply.

[29] First, the Act as a whole does not apply to claims in court proceedings that are listed in section 2. There is no suggestion that this proceeding falls within that list.

[30] Second, section 16(1) of the Act lists a number of proceedings where the general limitation period does not apply. The following two have been noted:

16(1) There is no limitation period in respect of, (a) a proceeding for a declaration if no consequential relief is sought; … (c) a proceeding to obtain support under the Family Law Act or to enforce a provision for support or maintenance contained in a contract or agreement that could be filed under section 35 of that Act;

[31] While there is no specific reference to a request for a declaration in the application, that relief is in keeping with what the husband is seeking; he wants the court to indicate that the marriage contract is of no force and effect. However, he also seeks consequential relief, namely spousal support and an equalization of net family property. I cannot see how subsection 16(1)(a) is engaged.

[32] Regarding the first part of subsection 16(1)(c), this has already been touched on above in the framing of the issues. The claim for support itself is not statute barred, but the marriage contract is a full defence to that claim unless it is set aside. Regarding the second part of that same subsection, the husband is not seeking to enforce the marriage contract, in fact the opposite.

[33] Third and last, section 19(1) of the Limitations Act, 2002 provides that a limitation period in another Act that applies to a claim to which the Limitations Act, 2002 applies is of no effect unless listed in Schedule B. The only relevant listed limitation period is the one in section 7(3) of the Family Law Act relating to the equalization claim, also touched on above regarding the framing of the issues. Again, that claim is not statute barred, but the marriage contract is a full defence to it unless it is set aside.

[34] In my view there is no genuine issue requiring a trial with respect to the noted exceptions, and the Limitations Act, 2002 applies to the husband’s claim to set aside the marriage contract. The next two headings therefore assess whether the husband brought his application within time.

Discoverability

Additional Facts

[35] The husband was seeing a social worker Terry Mauer for supportive therapy/counselling for years, including around and after the time of the separation (August 13, 2012). The following excerpts from Mr. Mauer’s notes were in evidence:

September 11, 2012 [The husband] shared with me some of his mixed feelings with respect to opinion/advice given to him by friends with respect to some practicalities around marital separations (i.e. separation agreement, entitlement under the Family Law Reform Act,) in contrast to the prenuptial agreement that he and [the wife] signed approximately 7 years ago. [Emphasis added]

September 25, 2012 … [The husband] described that he is feeling well supported by his friends who are all encouraging him to get an independent legal opinion with respect to what his rights are in terms of [the wife] having initiated a marital separation. [The husband] feels somewhat “manipulated” by [the wife] who stated to him that she would not accept any formal/legal demands from [the husband] for any financial remuneration/support. … [The husband] anticipates that he will be attending a meeting with a lawyer for a legal consultation, and that a friend of his has offered to provide some assistance with the legal fees as well as accompany [the husband].

[36] In line with the above, Mr. C., a friend to both of the parties, indicates that soon after the separation he and his wife advised the husband, indeed “pushed him”, to seek legal advice to obtain knowledge about the separation and determine his rights. They attended with him and covered the fees. There was no evidence from Mr. C. or his wife as to what was said at the appointment. However, the husband says “[i]t was pretty clear that the Marriage Contract was not going to be relied upon to deal with our separation issues” and that the lawyer “took the position that the Marriage Contract was not valid.” The parties were still talking, and the wife similarly says the husband’s lawyer told the husband (the husband presumably relayed this to her) that the “contract was not worth the paper it was written on.” [2]

[37] The notes of the social worker Mr. Mauer then continue:

October 17, 2012 [The husband] described that he has spoken with a lawyer in Kingston and has been informed of some issues related to the prenuptial agreement that he and [the wife] had signed in addition to some family law issues related to the separation. [Emphasis added] [The husband] described that [the wife] has been very harsh with him with respect to his discussion with a Kingston lawyer, while she has talked with a lawyer herself as well; [The husband] described that [the wife] is expecting that he not expect any money with respect to shared property/matrimonial home, in the context of a separation agreement. Along these lines, [the husband] described that [the wife] is expecting that in the event they agree on mediation, that [the husband] will not “bring to the table” any property/financial matters. … At this point, [the husband] is anticipating that he will request that [the wife] consider attempting mediation, only if he is able to “bring to the table” all matters that seem appropriate, including finances, and that failing this, the separation agreement will be left in the hands of their respective lawyers.

[38] The parties negotiated through counsel until the spring of 2013 when as noted the husband said he stepped away because of a health setback although he “knew of the 6 year limitation period”. He indicated with respect to those prior negotiations:

For a time period … counsel tried to reach a resolution of the matter but were unsuccessful [the wife] wanted to rely on the terms of the Marriage Contract she had drafted in such a haphazard manner. [Emphasis added]

Law

[39] As noted the husband’s request to set aside the contract is under section 56(4) of the Family Law Act which reads as follows:

56(4) A court may, on application, set aside a domestic contract or a provision in it, (a) if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made; (b) if a party did not understand the nature or consequences of the domestic contract; or (c) otherwise in accordance with the law of contract.

[40] In his application the husband relies on all three subheadings: lack of legal advice, lack of financial disclosure, and duress.

[41] The Limitations Act, 2002 has codified the discoverability rule as follows:

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). (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.

[42] The first part of the test is therefore subjective requiring actual knowledge (subsection 5(1)(a)) and the second part is an objective test (subsection 5(1)(b)): Ferrara v. Lorenzetti, Wolfe Barristers and Solicitors, 2012 ONCA 851 at paragraph 33.

Subsections 5(1)(a)(i) to (iii) – the Loss, Cause, and Person Responsible

[43] In a certain sense, with the husband alleging duress and given the presumption in section 5(2), he must have known that there were difficulties with the marriage contract as of the date it was signed. Regardless, he knew that it was “in contrast” to certain family law entitlements, and his friends reminded him of that soon after separation. He clearly knew when he obtained legal advice that the viability of the marriage contract was an issue (from his perspective), and that the alleged difficulties were caused by acts or omissions by the wife. Although the exact date he first attended his lawyer’s office is not specified, it was sometime before October 17, 2012. The evidence therefore establishes that by that date at the latest he had actual knowledge of the matters referred to in subsections 5(1)(a)(i) to (iii) of the Act.

Subsection 5(1)(a)(iv) – When a Proceeding would be Appropriate

[44] The wife indicated to the husband at separation (when she told him he could expect “nothing further” from her) and consistently afterwards that she was relying on the marriage contract and therefore the property and financial matters were off the table. She even refused to mediate those issues. Her position did not change after the husband met with his lawyer and became aware that he had grounds to challenge the marriage contract. The husband therefore knew, and any reasonable person in his position ought to have known, that a court proceeding was appropriate. Indeed, in the spring of 2015 court documents were being prepared although there had not been any further discussions or negotiations. I find that the limitation period in this case began to run on October 17, 2012. That was the date the husband acknowledged to Mr. Mauer both that the marriage contract had issues and that the wife was still relying on it.

[45] The husband argued that the limitation period ought not to run at all because he was unable to discover, not the claim, but the limitation period itself. He points to the fact that no previous cases have been decided in Ontario where a claim to set aside a marriage contract or other domestic agreement was caught by the 2 year rule. [3] He therefore suggests that “most, if not all” lawyers in Ontario are unaware of it, and cautions that such a precedent could have “far-reaching” consequences, including exposing lawyers to negligence claims from their clients. He adds that it would be unjust in those circumstances if he were to be the first to be caught by the Act. He therefore submits that “applying the general two-year limitation period would harm the interests of public policy”.

[46] I am unable to grant the forbearance the husband requests. As noted in Sutton v. Balinsky at paragraph 54 “[l]imitation periods are the law of the land … [t]hey are not merely a factor to be considered by a judge in exercising discretion.” As noted by Justice Graeme Mew in The Law of Limitations (Third Edition, LexisNexis Canada Inc., Toronto, 2016) at paragraph 4.32 “[e]xcept where the courts have expressly been granted discretion under a statute, there is no inherent jurisdiction in a court to permit a proceeding to be commenced that is entirely out of time.” As to the confusion about the law, Justice Mew in that same text noted at paragraph 3.94:

Section 5(1)(a)(iv) does not import an idiosyncratic limitation period calibrated by the claimant’s familiarity with or ignorance of the law. The test is an objective one. A citizen is presumed to know the law of the land.

The ‘law of the land’ includes of the law of limitations, and error or ignorance as to the application of a limitation period does not postpone it or stop it from running: Boyce v. Toronto (City) Police Services Board, 2011 ONSC 53, at paragraph 37.

Capacity

[47] The last question is whether there is a genuine issue requiring a trial that the running of the limitation period was postponed or suspended because of a lack of capacity. Section 7 of the Limitations Act, 2002 reads as follows:

7 (1) The limitation period established by section 4 does not run during any time in which the person with the claim, (a) is incapable of commencing a proceeding in respect of the claim because of his or her physical, mental or psychological condition; and (b) is not represented by a litigation guardian in relation to the claim. (2) A person shall be presumed to have been capable of commencing a proceeding in respect of a claim at all times unless the contrary is proved.

[48] The husband hints in his affidavit that his bi-polar disorder and mental health delayed him bringing the application. After his setback in the spring of 2013, he says “[i]t was not until July, 2017 that I felt well enough to move forward with the litigation.” Despite this, his factum did not develop an incapacity argument or refer to the above section.

[49] Justice Champagne made an order at the settlement conference on August 15, 2018 which required the husband to provide medical records as they pertain to his mental health from the commencement of the parties’ relationship “to the present time.” The relevant notes from his social worker Mr. Mauer (touched on above) span only September 11, 2012 to December 6, 2012, a period of just four months. They do not speak to an incapacity. An occupational therapist’s report dated September 26, 2012 was in evidence, but only indicated that the husband was not working (Mr. Mauer subsequently noted an expected return to work in January 2013). Lastly, there was a psychiatry note in evidence from Dr. Dusan Kolar dated October 10, 2012, but rather than assisting the husband it indicates that his “insight and judgment were intact” at that time.

[50] The husband has not provided any reliable evidence that the presumption of capacity in section 7(2) can be rebutted. In fact, there is no evidence addressing the test, and no evidence at all from 2013 to 2017 related to his general mental health. The simple statement that he did not feel well enough until 2017 to move forward with the litigation does not raise a genuine issue about capacity. Further, it is inconsistent with his lawyer having sent a letter in the spring of 2015 indicating that court documents were being prepared.

Decision

[51] For the reasons set out above, I fail to see a genuine issue requiring a trial. In my view the Limitations Act, 2002 applies to the husband’s claim to set aside the marriage contract, and the evidence clearly establishes that he failed to bring that claim within the 2 year prescriptive period. I therefore grant the wife’s motion dismissing the husband’s claim that the Prenuptial Agreement dated July 15, 2005 is void.

[52] If not resolved beforehand, the parties can speak to me on June 24, 2019, at 10 a.m. as to what issues, if any, remain for trial, and on costs.

Footnotes

[1] The exceptions to this found in section 33(4) of the Family Law Act relating to support (unconscionable circumstances, recipient on public assistance, default in support payments) were not raised in argument or in the Facta, and have not been pled.

[2] No hearsay objection were raised, presumably because the statements attributed to the lawyer were not tendered as to their truth.

[3] Both counsel advise that upon a thorough review of the Ontario law, the majority of decided cases seeking to set aside a domestic contract were brought within the 2 year limitation period, and in the few cases brought beyond the 2 years no one raised or pled the limitations defence. Only one decision addresses the limitation period, A.P v. F.D., 2016 ONSC 2566. The court at paragraph 75 stated “[t]here is no time limitation with respect to an application to set aside the Separation Agreement or any provision in it.” The Limitations Act, 2002 as noted was not pled and in addition there was no analysis to support that proposition. Therefore, despite the principle of stare decisis, counsel acknowledge that I am not bound to follow it: see Holmes v. Jarrett (1993), 68 O.R. (3d) 667. The wife pointed out that in British Columbia there is a 2 year limitation in the Family law Act (S.B.C. 2011, c. 25 subsection 198(3)) that specifically applies to an application to set aside an agreement for spousal support or property. While an interesting footnote, that legislation has no bearing on my decision.

Released: June 13, 2019 Mr. Justice Timothy Minnema