Hurry up and sue!

It’s hard to argue with the wisdom of Neil Sedaka, whose classic 1962 song captured an obvious truth: Breaking Up is Hard to Do. Thanks to the Ontario government, it just got a whole lot harder.

The problem is that if you break up, the deadline for launching a court action against your ex has been dramatically tightened — to two years. The old deadline was six years, and had been in force since the the era of Shakespeare. But recently (in law years), the Ontario government, under Premier Mike Harris, cut it down. They passed the Limitations Act, 2002 which created a new general rule that lawsuits must be filed within two years from the day a person first knows — or a “reasonable person” in their circumstances would first know — that they were wronged.

Two years may seem like plenty of time. For instance, if you get fired from a job and you believe it was wrongful dismissal, surely you can get down to the courthouse to file an action within two years. If you can’t manage that, do you really deserve to be in a court of law? And should your former employer have to worry for six whole years that they are under threat of your lawsuit?

Family law is different, however. Unlike the law of business and commerce, family law involves emotional elements like love, consortium, children, and heartbreak. With these peculiar forces at play, it seems wrongheaded to rush into litigation. By the time you pull out of your emotional nosedive, grapple with urgent problems such as lodging and the children, and try to produce your financial and tax documentation, the cutoff might be looming uncomfortably close.

True, if you’re married and you break up, you have six years to go to court and make a property equalization claim (or two years from the date of a divorce order) because Section 7(3) of the Family Law Act says so and, thank goodness, the Limitations Act, 2002 incorporates this as one of its many specific exceptions to the two-year rule. (These exceptions include, for example, the preservation of the pre-existing, and rather tight, limitation periods for making damage claims under The Drainage Act if you suffer the misfortune of being flooded.)

Unfortunately, though, even married people must rush to court if they want to add a different kind of claim to their equalization one, something called “constructive trust.” Constructive trust is part of the centuries-old law of “equity,” where courts tailor their rulings to the realities of each particular case, according to “conscience.” A constructive trust basically says that even though you don’t “own” something on paper, you own it according to conscience.

Married people often do add a constructive trust claim, because equalization in the Family Law Act only covers a couple’s asset-growth from date of marriage to date of separation — but there is often asset-growth also occurring prior to marriage, and/or after separation. To share in such growth, a constructive claim must be added. That means a two-year deadline.

The bottom line is, for unmarried couples, equalization is not available, so constructive trust is all they’ve got, therefore their deadline is two years. For married couples who want to add a constructive trust claim — that is: many, if not most, of them — the deadline is also two years, practically speaking.

There is some good news, though. In family law at least, there seems to be flexibility and wiggle-room in determining when the two-year clock starts ticking, if ever. This comes thanks to the Ontario Court of Appeal’s groundbreaking decision in McConnell v. Huxtable. One thing is clear from this decision: the clock does not necessarily start ticking on the date of separation.

Justice Marc Rosenberg, writing for a unanimous panel which included himself and Justices John Laskin and Stephen Goudge, addressed, at paragraph 52, the question of when the clock starts ticking: “In the family law context,” he says, “this may typically occur on the date of separation, when shared assets, including real property, are divided and the possibility therefore arises of one party holding onto more than a fair share.” [emphasis added] So while the clock “may typically” start running on the date of separation, it also may not.

Justice Rosenberg gives us further comfort in the next paragraph, where he notes that “in some cases it may be difficult” to figure out when the clock starts ticking for “equitable claims,” such as constructive trust. Of course, the clock can’t start ticking until you know you’ve been wronged. This ancient and obvious rule of “discoverability” is codified in Section 5 of the Limitations Act, 2002, which says the clock starts when you first know — or a “reasonable person” in your circumstances would first know — that there has been “injury, loss or damage” which was “caused by or contributed to” by an “act or omission” of the person you’re suing, and filing a lawsuit is an “appropriate” means of seeking a remedy.

In cases where it is difficult to figure this out, “it may well mean,” says Justice Rosenberg “that the claim has not been discovered within the meaning of Section 5 and so the two-year limitation period does not run. This does not mean there is a gap in the legislation and there is no limitation period. Rather, the plaintiff will be able to pursue his or her claim until the ultimate limitation period applies…” He goes on to explain that in most cases the “ultimate” limitation period is fifteen years — regardless of whether you knew, or a reasonable person would have known, about the alleged wrong.

So it seems fair to say that if the going gets rough trying to tell exactly when you first knew you were cheated out of your fair share of property by your ex — having regard, as surely we must, to constructive trust’s overriding and flexible principle of conscience — then it might well mean the clock doesn’t start ticking, and therefore you would have up to fifteen years (repeat: fifteen years) before the “ultimate” deadline arrives.

Another salutary aspect of this case is that it addresses a bizarre problem, raised by Justice Craig Perkins at paragraph 127 of the fascinating judgment he handed down at the original time-bar motion. Shining a spotlight on the potential absurdity of the discoverability test in Section 5 of the Limitations Act, 2002, Justice Perkins pointed out that the two-year clock could arguably start ticking, and run out, while a couple is still together.

For example, imagine you are talking to your common law spouse, and you ask them to please put you on title of the home you share. They say no. Then they proceed to affirm how much they love you, and how you shouldn’t worry, and how they’ve got a great bottle of wine and a box of chocolates. This sort of thing happens. And if it does, years down the road your partner could argue that you should have sued then, the night you asked to go on title of the house, and they said no, and instead broke out the booze and candy. Because arguably, according to Section 5 of the Limitations Act, 2002, that night was the night when a reasonable person would first know that they had suffered an injury, loss or damage, and that it was caused or contributed to by their common law spouse’s act or omission, and that it would be appropriate to go to court to try and fix it.

Thankfully Justice Rosenberg, at paragraph 54, goes a long way toward deflating this notion: “I would think that ordinarily,” he says, “the claim should be taken not to have been discovered until the parties have separated and there is no prospect of resumption of cohabitation…” [emphasis added]

The upshot to all this, in the humble opinion of the writer of this blog (which is not legal advice), is that if you want to make a constructive trust claim against your ex, you had better sue within two years of date of separation — regardless of whether you’re married or not. However, if more than two years has already gone by, your claim is not automatically time-barred, and you might still be okay. If two years from separation has indeed passed, then don’t procrastinate. Make sure you sue as soon as possible, and cross your fingers and pray that you are saved by the the flexibility and wiggle room described above, in the name of conscience.

There is also, very importantly, a special limitation period of ten years for any claim — including a constructive trust claim — that seeks an interest in real property, such as a house. Prior to McConnell v. Huxtable, it was an open question as to whether this special ten-year deadline applied only where the claimant was already on title to the land, as a legal owner, and was trying to get it back — for instance, from squatters. Thankfully, McConnell v. Huxtable says that no such restriction exists. Even if you’re not on title, and therefore your land claim is in the form of constructive trust — ownership not on paper, but on conscience — you still have the benefit of the ten-year real property limitation period. In this regard, the writer of this blog can only echo the wisdom of Leonard Cohen’s classic song: “Hallelujah!”

 

Bill Rogers is a Toronto lawyer and blogger covering family law and fertility law issues, and a columnist for the Medical Post covering the law of malpractice. He is counsel for the successful respondent-on-appeal in McConnell v. Huxtable. He can be contacted at www.rogersfamilylaw.com

2014-03-06T16:51:32+00:00March 6th, 2014|Blog, Uncategorized|
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