Tag: real property limitations act
An important and useful tool in any estate planning toolkit is the ability to transfer title to real property between spouses, which typically occurs for nominal consideration and/or natural love and affection. These types of transfers are recognized at law. In certain circumstances, transfers of this nature may be used by spouses seeking to defeat, hinder, delay, or defraud creditors. The Fraudulent Conveyances Act (“FCA”) provides the legislative authority to set aside transfers of property that are entered into with the intent to defeat the claims of a creditor.
Such was the case in Anisman v Drabinsky, 2020 ONSC 1197. On September 11, 2015, Mr. Drabinsky and his wife, Ms. Winford-Drabinsky, transferred their joint ownership of their home to Ms. Winford-Drabinsky alone (the “Drabinsky Property”). At the time of said transfer, Mr. Drabinsky had several unpaid judgments against him as well as ongoing monthly debt payments that were nearly double his monthly income. One such judgment, dated November 2018, was in favour of the Plaintiff for monies owed by Mr. Drabinsky.
In an effort to recover monies owed to him, the Plaintiff obtained a Certificate of Pending Litigation against the Drabinsky Property. It was not until April 2019 that the Plaintiff testified that he learned of the transfer through a title search conducted on Mr. Drabinsky in preparation for his examination in aid of execution respecting the unpaid judgment. On June 18, 2019, some three years and nine months after the impugned transfer of title, the Plaintiff commenced an action seeking to reverse the transfer of title in the Drabinsky Property.
In his defence, Mr. Drabinsky argued that the transfer itself was not fraudulent, but that in any event, the Plaintiff’s claim was statute barred given that the 2-year limitation period provided for in the Limitations Act, 2002, SO 2002, c. 24 (“Limitations Act”) had expired.
In considering the validity of Mr. Drabinsky’s limitation defence, the court considered two key principles regarding limitation periods: discoverability of claims and the applicable statutory authority. With respect to the latter, the court considered whether it was the 2-year limitation period pursuant to the Limitations Act, or the 10-year limitation period in the Real Property Limitations Act (“RPLA”), that applied. The RPLA applies to actions to “recover” land. The question then became, does an action to set aside a conveyance of real property fall within the category of claims to “recover land”?
The court ultimately found that it was the 10-year limitation period in the RPLA that applied to the present action. In reaching its decision, the court relied on the case of Conde v Ripley, 2015 ONSC 3342, which found that claims made to set aside a conveyance of real property under the FCA are on their face, a claim to recover land. The court went further to say, “the Legislature has seen fit to… differentiate between actions involving recovery of land and other types of actions” given that the Limitations Act addresses claims in contract or tort, while the FCA addresses the recovery of real property.
However, as identified in this article, this line of reasoning contradicts earlier decisions that differentiated between the recovery of land itself and the recovery of debts connected to that land (see Wilfert v McCallum, 2017 ONSC 3853 and the Ontario Court of Appeal case of Zabanah v Capital Direct Lending Corp, 2014 ONCA 872), leaving the law in a state of uncertainty.
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In the recent case of Wilkinson v. The Estate of Linda Robinson, 2020 ONSC 91, the court rejected an argument that the 2-year limitation period set out in the Trustee Act applied to a claim against an estate for an interest in a real property on the basis of constructive trust. The court held that the 10-year limitation period set out in the Real Property Limitations Act applied.
In the case, the deceased died on July 2, 2015. The deceased died owning a real property that she and her common-law spouse lived in. In her will, the deceased allowed her spouse to live in the house for 2 years. The surviving spouse brought a claim that he was entitled to an equal interest in the house.
However, the claim was not commenced until September 25, 2017. The estate seized upon this delay and brought a motion to have the application dismissed on the basis of the passage of the 2-year limitation period set out in the Trustee Act.
The court dismissed this argument. It held that the appropriate limitation period was not the one set out in the Trustee Act, but the one set out in the Real Property Limitations Act.
The court quoted extensively from the Court of Appeal decision of McConnell v. Huxtable, 2014 ONCA 86. There, the court determined that a claim for a constructive trust in a common law relationship based on unjust enrichment was an action for recovery of land and therefore was governed by the Real Property Limitations Act. The applicable limitation period was therefore 10 years.
In a similar case, Rolston v. Rolston, 2016 ONSC 2937, the court refused to apply the 2-year limitation period to a claim for a remedial constructive trust brought 7 years after the date of death of the deceased. Again, the action was allowed to continue under the 10-year limitation period set out in the Real Property Limitations Act.
Ideally, any claim involving an estate should be brought within 2 years of the date of death of the deceased so as to avoid any limitation period issue. However, where this has not been done, it may still be possible to maintain a claim under certain circumstances.
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The doctrine of constructive trust was recently applied earlier this year to register a transfer of a parking space to an applicant who entered into an agreement of purchase and sale of a condominium in 1997.
In Chopra v. Vincent, 2015 ONSC 3203, the Applicant Chopra agreed to purchase a condo from the Respondent Vincent on June 30, 1997. The Agreement of Purchase and Sale between the parties expressly provided for the purchase of a condominium unit and a related parking space. Since 1997, the Applicant Chopra lived in the condo unit, parked in the parking space, and paid related expenses such as common area charges and property tax.
18 years later, the Applicant discovered that the lawyers for the vendor and purchaser neglected to include a transfer of the parking space which has a separate PIN from the condominium unit. Once discovered, the Applicant Chopra sought a declaration of his ownership of the parking space in order to sell the parking space along with the condominium unit while the Respondent Vincent could not be located.
The Court found that equitable title to the parking space was transferred to the Applicant, notwithstanding the inadvertence of the legal transfer of title, on the basis that the Applicant had paid the agreed purchase price in full consideration for a transfer of the condominium unit and the parking space.
According to Justice Dunphy,
“The right of a beneficiary of a constructive trust to enforce his or her title as against the trustee is governed by the Real Property Limitations Act, R.S.O. 1990, c. L-15 (the “RPLA”): McConnell v Huxtable, 2014 ONCA 86 (CanLII). Section 2(1)(a) of the Limitations Act, 2002 provides that it does not apply to a proceeding to which the RPLA applies. Under the RPLA, there is a ten year limitation period (RPLA, s. 4) for an action to claim an interest in land. However, where the interest in land claimed is an equitable title under a constructive trust, the limitation period is subject to the principle of discoverability (McConnell v. Huxtable, supra, at para. 53-54) or possibly is governed by s. 5(1) of the RPLA and only begins to run from the time of dispossession (which has not occurred). In either event, there can be no question of the limitation period having run since the applicant has not been dispossessed and only discovered the error in connection with preparing to sell his condominium over the past few months and has acted promptly.”
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