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Judge sets 10-year limitation period for constructive trust claims

|Written By Yamri Taddese

In a motion a judge said was a first for Ontario’s legal system, the Superior Court decided the expiry date for claiming a constructive trust in family law is 10 years after finding out about the claim.

The Limitations Act of 2002 imposes a general two-year limitation period for constructive trust claims. The two-year time frame begins as soon as an applicant discovers a constructive trust claim. But this legislation can’t reasonably apply to family law cases, Justice Craig Perkins ruled in a case this month.

The court came to that conclusion in a motion involving a common law partner who claimed a constructive trust over property her spouse owned. The applicant had known about the claim since 2007. When she brought the case to court, the respondent said her claim should have expired several years ago due to the two-year limitation period.

Limitation periods aim to spare a potential defendant from indeterminate litigation risk. They also help the courts run more efficiently since evidence is easier to gather closer to the time an applicant became aware of a constructive trust claim.

According to Perkins, this is the first time a motion related to constructive trust limitation periods has arisen in a family law case in Ontario.

But instead of the Limitations Act, the judge ruled it’s more practical in family law to apply the Real Property Limitations Act that provides a 10-year limitation period for claims to recover land.

In McConnell v. Huxtable, Perkins said it’s difficult to know when the clock on the limitation period starts ticking in a common law relationship or marriage. Asserting a definitive point of awareness of a claim is tricky, according to Perkins.

“Does that knowledge reasonably or actually arise when the couple are no longer getting along?” he asked. “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?”

He added: “The Limitations Act of 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 sections 4 and 5 so as to make them apply to constructive trusts in family law cases.”

If the two-year limitation applies to family law, Perkins noted, it could mean a person would have to sue the partner before their relationship ends.

“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 (cohabitation) ends?” he asked.

Family lawyer Bill Rogers, who represented the applicant, argued the Limitations Act would have “absurd” implications in family law.

“If you’re in a spousal relationship, when do you know you’ve been cheated?” he asks. “There is no coherent answer. The way I look at it is not like a commercial relationship, which doesn’t usually involve . . . a romantic relationship. It’s not like a  car accident, a wrongful dismissal or a house fire. You can’t pinpoint it.”

Perkins’ decision, assuming it stands, means “family lawyers can breath a sigh of relief,” says Rogers.

The two-year limitation period “would have increased litigation because a lot of people would be scrambling to get under the two year, a lot of people would miss it,” he adds.

“It would just be a nightmare. In my opinion, it would wreck everything.”

Bryan Smith, counsel for the respondent, calls the case complex and suggests Perkins’ decision is in some ways inconsistent. Smith argued the applicant was bringing a claim for unjust enrichment, which isn’t a proprietary claim and therefore not an action to recover land covered by the Real Property Limitations Act. He notes his client is considering an appeal.

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