Ontario Real Property Limitations Act

Ontario: a claim for common area fees is subject to the RPLA

In 2373322 Ontario Inc. v. Nolis, Justice Broad held that a claim by a landlord against a tenant for failure to pay common area maintenance charges under a commercial lease is subject to the six year limitation period in s. 17 of the Real Property Limitations Act.

The decision includes a useful summary of the relevant principles:

[57]           The tenant submits that all or a portion of the landlords’ claim for arrears of additional rent is barred by the Limitations Act, 2002 S.O. 2002 c. 24, Sch. B, which provides for a two year limitation period for bringing action for an injury, loss or damage that occurred as a result of an act or omission. The tenant submits that the Limitations Act, 2002 applies to the landlords’ claim and not the Real Property Limitations Act R.S.O. 1990, c. L.15 (the “RPLA”) as it does not constitute a claim for “rent” under the RPLA.

[58]           It is noted that, pursuant to ss. 2 (1)(a) of the Limitations Act, 2002, that Act applies to any claim to which the RPLA does not apply.

[59]           In the case of Pickering Square Inc. v. Trillium College Inc. 2014 ONSC 69 (S.C.J.) Mew, J. held, at para. 27, that with the enactment of theLimitations Act, the Legislature created a single, comprehensive general limitations law that is to apply to all claims for injury, loss or damage except, in relevant part, when the RPLA specifically applies, and that accordingly, the application of the Limitations Act should be construed broadly and the RPLAnarrowly.

[60]           Justice Mew conducted a careful review of the historical and current meanings of “rent” and concluded that “rent” in s. 17 of the RPLA means “the payment due under a lease between a tenant and landlord as compensation for the use of land or premises.”

[61]           S. 17 of the RPLA provides as follows:

17. (1) No arrears of rent, or of interest in respect of any sum of money charged upon or payable out of any land or rent, or in respect of any legacy, whether it is or is not charged upon land, or any damages in respect of such arrears of rent or interest, shall be recovered by any distress or action but within six years next after the same respectively has become due, or next after any acknowledgment in writing of the same has been given to the person entitled thereto or the person’s agent, signed by the person by whom the same was payable or that person’s agent. R.S.O. 1990, c. L.15, s. 17 (1).

[62]           None of the cases cited by the tenant in the case at bar, in support of its submission that the landlords’ claim in this case does not constitute “rent”, dealt with claims for common area maintenance charges of the nature claimed by the landlords in this case. The claims under consideration in Pickering Square were for damages for the tenant’s failure to occupy and carry on business at the premises and resulting from the tenant’s failure to restore the premises to the required condition at the end of the lease term. The claims in Bill Co. v. Yellowstone Property Consultants Corp. 2012 ONSC 5116 (CanLII), 2012 ONSC 5116 (S.C.J.) similarly constituted claims for damages. The claim in Coffee Culture Systems Inc. v. Krukowski 013 ONSC 1588 (S.C.J.) (S.C.J.) was by the tenant against the landlord for breach of the lease.

[63]           In Toronto Standard Condominium Corporation No. 1487 v. Market Lofts Inc. 2015 ONSC 1067 (CanLII), 2015 ONSC 1067 (S.C.J.) Perell J. stated at para. 58 “that the parties to a lease described a payment as rent or additional rent is not determinative of whether the charge is a rent charge, and if it is just a contractual charge it will be governed by the Limitations Act, 2002.”

[64]           In contrast to the cases cited by the tenant, common area charges of the nature claimed by the landlords in the present case were found to constitute “rent” for the purpose of the RPLA in the case of Ayerswood Development Corp. v. Western Proresp Inc. 2011 ONSC 1399 (CanLII), at para. 31.

[65]           Although the characterization by the parties of “additional rent” as” rent” in the lease, as amended, is not determinative, I find that the additional rent, constituting “CAM charges” is properly characterized as “payments due under a lease between a tenant and landlord as compensation for the use of land or premises” and therefore constitutes “rent” for the purposes of the RPLA, which provides for a six year limitation period. Conversely, even if my conclusion, as set forth above, that the parties did not intend, by the amendment agreement, to exclude “additional rent” from “rent” under the lease is wrong, the landlords’ claim for additional rent would still constitute “rent” for the purposes of the RPLA.

Ontario: The limitation of claims for trusts over real property

Justice Doyle’s decision in Campbell v. Nicol contains a helpful summary of the limitation of claims for the imposition of a constructive trust on real property:

[71]           With respect to equitable claims, the Ontario Court of Appeal dealt with this issue in McConnell v. Huxtable, 2014 ONCA 86 (CanLII), 118 O.R. (3d) 561, where the court dealt with a claim for the remedial constructive trust over real property based on an allegation of unjust enrichment. The Court held that the applicable limitation period was the 10 year period under s. 4 of the Real Property Limitations Act.

[72]           The question for the Court was whether a claim for unjust enrichment in which the claimant asks the court to impose a constructive trust upon the respondent’s real property is an action to recover any land. The Court answered in the affirmative. The Court concluded that the constructive trust remedy for unjust enrichment as well as the purposes and contextual interpretation of the Real Property Limitations Act justified a finding that the claim fell within this category.

[73]           The Court also found that the applicant’s alternative claim for monetary compensation was also governed by the 10-year limitation, not the two-year limitation period pursuant to the Limitations Act, 2002.

Analysis

[74]           The applicant issued his application six years after the date of separation. Given the decision in McConnell, the court finds that the proper limitation period for the claim in unjust enrichment is 10 years under the Real Property Limitations Act.

[75]           A claim based unjust enrichment has two remedies. The Court must first consider a monetary remedy and secondly a property remedy: see Kerr v. Baranow; Vanasse v. Seguin, 2011 SCC 10 (CanLII), [2011] 1 S.C.R. 269.

[76]           Here, the applicant did couch the remedy he was seeking as a property claim for the unjust enrichment claim. The Ontario Court of Appeal in McConnell confirmed that the limitation period for an unjust enrichment claim requesting a property remedy is 10 years. Even though a trial court will, upon finding unjust enrichment, must first determine if the unjust enrichment can first be remedied by a monetary claim as stated in Kerr and Vanasse, the McConnell case states that the claim for unjust enrichment has a limitation period of 10 years even if the alternate claim is for monetary compensation.

 

Ontario: Adverse possession is a limitations issue

Justice McKinnon’s decision in Osman v. Heath sets out nicely the principles of adverse possession.  Perhaps surprisingly to those who don’t practice in the area, these are limitations principles determined by the Real Property Limitations Act.  Here are the relevant paragraphs:

The Law

[49]           The cases on adverse possession are legion and each case turns on its own set of particular facts. In Ontario, adverse possession claims are governed by sections 4, 13, and 15 of the Real Property Limitations Act, R.S.O. 1990, c. L.15, which establishes a ten-year limitation period in which a dispossessed owner must bring an action to recover possession once a right to possession has accrued. By section 15, when a person has not attempted to recover the land within ten years after the right to bring an action or make entry or distress accrued, the right and title of the owner of the land is extinguished. A person claiming a possessory title as against the legal owner must establish the following:

  1.    Actual possession for the statutory period;
  2.    That such possession was with the intention of excluding the true owner; and
  3.    That the true owner’s possession was effectively excluded for the statutory period: Pflug v. Collins, 1951 CanLII 80 (ON SC), [1952] O.R. 519 (Ont. H.C.); Marotta v. Creative Investments Ltd. (2008), 69 R.P.R. (4th) 44 (Ont. S.C.); Keefer v. Arillotta (1976), 1976 CanLII 571 (ON CA), 13 O.R. (2d) 680 (C.A.).

[50]           The claimant must meet each of these three criteria and time will begin to run against the owner from the last date when all three are satisfied: Masidon Investments Ltd. v. Ham (1984), 1984 CanLII 1877 (ON CA), 45 O.R. (2d) 563 (C.A.).

[51]           Marotta is a particularly helpful decision; it sets out in detail the applicable law, and I shall briefly follow the analysis employed in that decision.

Actual possession

[52]           The claimant must establish actual possession for the ten-year period and the acts of possession must be open, notorious, constant, continuous, adverse and exclusive of the right of the true owner. In Teis v. Ancaster (Town) (1997),1997 CanLII 1688 (ON CA), 35 O.R. (3d) 216 (C.A.), at paras. 14, 16, Laskin J.A. explained the requirement of open and notorious possession in these words:

First, open possession shows that the claimant is using the property as an owner might. Second, open possession puts the true owner on notice that the statutory period had begun to run. Because the doctrine of adverse possession is based on the true owner’s failure to take action within the limitation period, time should not run unless the delay can fairly be held against the owner….

 

The element of adversity means that the claimant is in possession without the permission of the owner. If the claimant acknowledges the right of the true owner then the possession is not adverse.

[…]

[57]           Further, the “inconsistent use” test does not apply to cases of honest unilateral mistake: Cunningham v. Zebarth Estate (1998), 71 O.T.C. 317 (Ont. Gen. Div.). The “inconsistent use” test does not apply in circumstances in which the person in possession operates under the honestly held belief that he or she is the rightful owner of the property or in cases where the legal owner and person in possession operate under a mutual mistake as to title or boundaries. In such cases, an inference may be drawn that the occupier is in possession of the land with the intention of excluding all others including the legal owners.

[…]

Actual exclusion of the true owners

[59]           The final part of the test for possessory title requires that the true owner be excluded from possession. In analyzing this subject, the conduct of the owners in relation to the land is considered.

[60]           As I have stated, the true owners had effectively abandoned the large shed certainly when the business was moved to another location in Kemptville, and probably during the 1980s. When the Doucettes acquired the Residential Property they closed off all entrances to the large shed on the side of the Commercial Property. It was effectively sealed off from access by the true owner. The sealing off was accomplished openly and notoriously. The entire building was raised and leveled, concrete was poured, and work was carried out on the exterior. Photos show Mr. Doucette on a ladder performing renovations to the exterior of the large shed. The true owners had been excluded from the large shed since at least 1990.