Ontario: the limitation of breach of resulting trust claims

In Sinclair v. Harris, the plaintiff argued that no limitation period applies to claims for breach of a resulting trust relating to real property.  The court rejected this argument and found that the ten-year limitation period in s. 4 the RPLA applies. The defendant relied on a dubious interpretation of the Court of Appeal decision in Drakoulakos, in which some unlikely facts allowed me to make a successful s. 24 argument:

[18]           The first issue that needs to be resolved is what limitation period, if any, is applicable in this case.  There is a stark difference in the position of the parties.  The plaintiffs submit that no limitation is applicable to a resulting trust in equity.  The defendants submit that a 10-year limitation period applies to this trust.

[19]           The definition of a resulting trust is succinctly stated in Waters’ Law of Trusts in Canada 4th Ed.:

Broadly speaking, a resulting trust arises whenever legal or equitable title to property is in one party’s name, but that party is under an obligation to return it to the original title owner, or to the person who paid the purchase money for it.

See Pecore v. Pecore, 2007 SCC 17 (CanLII) at para. 20.

[20]           The responding parties argue that the plaintiffs’ action should be dismissed because any resulting trust established on the evidence is statute barred.  They rely upon the 10-year limitation period found in s. 4 of the Real Property Limitations Act, R.S.O. 1990, c. L.15 (“RPLA”):

No person shall make an entry or distress, or bring an action to recover any land or rent, but within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to some person through whom the person making or bringing it claims, or if the right did not accrue to any person through whom that person claims, then within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to the person making or bringing it.

[21]           In McConnell v. Huxtable, 2014 ONCA 86 (CanLII), Rosenberg J.A. traced the history of the law of limitations in this province. With respect to s. 4, he held that it applied to constructive trusts where the claimant did not have any interest in the property until so declared by the court.  In other words, it applied to an equitable interest in land through the imposition of a constructive trust.

[22]           In Waterstone Properties Corp. v. Caledon (Town), 2017 ONCA 623 (CanLII), the court made it clear that the 10-year limitation period in s. 4 did not just apply to claims for the possession of land but would encompass claims of ownership of land advanced by way of a resulting trust (at para. 32):

The words “action to recover any land” in s. 4 of the RPLA are not limited to claims for possession of land or to regain something a plaintiff has lost. Rather, “to recover any land” means simply “to obtain any land by judgment of the Court” and thus these words also encompass claims for a declaration in respect of land and claims to the ownership of land advanced by way of resulting or constructive trust: Hartman Estate v. Hartfam Holdings Ltd.2006 CanLII 266 (ON CA)[2006] O.J. No. 69, at para. 56McConnell v. Huxtable2014 ONCA 86 (CanLII)118 O.R. (3d) 561, at paras. 38 – 39.

[23]           The plaintiffs rely on the case of Drakoulakos v. Stirpe2017 ONCA 957 (CanLII).  This was an appeal of a summary judgment motion whereby the motions judge granted summary judgment on the basis that the claim was statute barred based on the basic limitation period of the Limitations Act 2002In that case, more than 15 years had passed since the plaintiff had known or ought to have known he had an action arising from a resulting trust.  The Court of Appeal overturned the decision because there was no limitation period for a claim based upon the transitional provisions of the Limitations Act 2002where there was no limitation period for the claim against the trustee of a resulting trust or property still in the possession of the trustee under the former Act and the claim was discovered before January 1, 2004.

[24]           These comments, which are relied upon by the plaintiffs to support their position that there are no limitations for any resulting trust, must be read with care. The Ontario Court of Appeal was dealing with the application of the transitional provisions when it came to a resulting trust.  They were not making broad statements that are applicable to the facts before me. I further see Drakoulakos as distinguishable.  In that case, the court was dealing with taxi licenses and shares in a company.  It was unconnected to any real property. Thus, the Real Property Limitations Act would have no application to it. Similarly, in McConnell v. Huxtable, (at para. 41) Rosenberg J.A. held that s. 4 did not apply where the claimant was seeking an interest in a pension or a business. See also The Equitable Trust Co. v. Marsig2012 ONCA 235 (CanLII) at para. 19.  I see no conflict in these authorities.

[25]           Likewise, comments made in McCracken v. Kossar2007 CanLII 4875 (ON SC)[2007] O.J. No. 664 (S.C.J.) at para. 36, relied upon by the plaintiff, that queries whether equitable trusts are subject to the RPLA have now been overtaken by the appellate authorities noted above, and must be viewed in that light.

[26]           The plaintiffs submit that the limitation period does not apply since the claim is not about land but it is about the monies that Ms. Rock gave the defendants.  I cannot agree.  First of all, it is clear from the statement of claim and the evidence that this claim is about a resulting trust in a piece of real property.  The monies were expressly given to the defendants so that they could purchase the home and land.  This is not a case where Ms. Rock gave a sum of money which was unrelated to any real property to the defendants.  Here the connection is clear and direct.  Further, to try and distinguish the defendants’ authorities on this basis is futile.  In most real property transactions, money is involved.  The RPLA cannot simply be avoided by an attempt to characterize the transaction as being about money and not land. The fact that the plaintiffs are not actually seeking the return of the Beeton property or any other piece of real property, does not avoid the application of s. 4 given what they are seeking is “money to be laid out in the purchase of land” which fits within the definition of “land” under the RPLAHarvey v. Talon International Inc., 2017 ONCA 267 (CanLII) at paras. 50 to 54 (dealing with a return of a deposit on the purchase of land); Scicluna v. Solstice Two Ltd., 2018 ONCA 176 (CanLII) at para. 25 (dealing with relief from forfeiture of a deposit for the purchase of land); Goldhar Estate v. Mann, [2016] O.J. No. 6872 (S.C.J.) (holding that the Act applied to equitable mortgage).

[27]           In short, the plaintiffs’ claim is an action to recover land and as such falls within s. 4 of the RPLA.

Ontario: the Land Titles Act and possessory and prescriptive rights

Aragon (Wellesley) Development (Ontario) Corp. v. Piller Investements Ltd. will be useful to the real property bar for its summary of the effect of the Land Titles Act on possessory and prescriptive rights (starting at para. 122), abandonment of easements (starting at para. 154), and prescriptive easements (starting at para. 165).

 

 

Ontario: the limitation of applications to recover real estate advances

In Scicluna v. Solstice Two Limited, the Court of Appeal reminds us that an application to recover monies advanced in a real estate purchase is subject to the Real Property Limitations Act:

[25]      Although the application judge should have responded overtly in her decision to Solstice’s limitation period defence, she was clearly correct to reject it. In my view, Yim v. Talon International Inc.2017 ONCA 267 (CanLII)137 O.R. (3d) 184 confirms that Ms. Scicluna’s claim is governed by the 10 year limitation period in s. 4 of the Real Property Limitations Act, R.S.O. 1990, c. L.15(“RPLA”), not by the Limitations Act. I reject Solstice’s attempt to distinguish this case based on the factual difference that Yim dealt with a deposit whereas the “forfeited money” claimed by Solstice is no longer a deposit. The RPLA governs actions to recover “land”, and “land” is defined in s. 1 as including “money to be laid out in the purchase of land”. Ms. Scicluna’s application to recover monies advanced in a real estate purchase falls under that definition regardless of whether it is properly characterized as a deposit.al

Ontario: RPLA applies to all claims to obtain land

After a prolonged summer break, Under the Limit returns!

In Waterstone Properties v. Caledon (Town), the Court of Appeal reminds us that s. 4 of the Real Property Limitations Act applies to any court proceeding to obtain land by court judgment:

[32]      The words “action to recover any land” in s. 4 of the RPLA are not limited to claims for possession of land or to regain something a plaintiff has lost.  Rather, “to recover any land” means simply “to obtain any land by judgment of the Court” and thus these words also encompass claims for a declaration in respect of land and claims to the ownership of land advanced by way of resulting or constructive trust:  Hartman Estate v. Hartfam Holdings Ltd.2006 CanLII 266 (ON CA)[2006] O.J. No. 69, at para. 56McConnell v. Huxtable2014 ONCA 86 (CanLII)118 O.R. (3d) 561, at paras. 38-39.

As to what it means to obtain land by court judgment, some direction comes from Justice Faieta’s decision in Wilfert v. McCallum from June 2017.  The prospect that a financial benefit may accrue to a plaintiff/judgment creditor resulting from a declaration to set aside a transfer of land under the Fraudulent Conveyances Act does not result in the the plaintiff obtaining land by court judgment.

[26]           With the greatest of respect for the views expressed by my colleague in Conde v. Ripley2015 ONSC 3342 (CanLII) at para. 48, the prospect that a financial benefit may accrue to a plaintiff/judgment creditor resulting from a declaration to set aside the transfer of land under the FCA does not result in the plaintiff “obtaining land by judgment of the Court”.  Accordingly, an action to set aside a fraudulent conveyance of land is not an action to recover land.

Ontario: claims for the return of condo deposits subject to ten year limitation period

The Court of Appeal has held that a claim for the return of deposits advanced toward the purchase of a condo unit is subject to the ten year limitation period in s. 4 of the Real Property Limitations Act.

Justice Epstein’s analysis in Harvey v. Talon International Inc. is refreshingly methodical and lucid.  It begins with the governing principle of statutory interpretation:

[40]      This is a matter of statutory interpretation. Statutory interpretation is governed by the approach described in Elmer Driedger,Construction of Statutes, 2nd ed. (Toronto: Butterworths, 1983), at p. 87, and adopted by the Supreme Court of Canada in Re Rizzo & Rizzo Shoes Ltd., 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27, at para. 21:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

Principles Applied

[41]         Section 4 of the RPLA provides as follows:

No person shall make an entry or distress, or bring an action to recover any land or rent, but within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to some person through whom the person making or bringing it claims, or if the right did not accrue to any person through whom that person claims, then within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to the person making or bringing it.

[42]         When those aspects of s. 4 of the RPLA that do not apply to this case are removed, it provides that:

No person shall bring an action to recover any land, but within ten years after the time at which the right to bring any such action first accrued to the person bringing it

[43]         Thus, there are 3 requirements in s. 4: an “action”, to “recover” and what must be recovered is “land”.

[44]         An action is defined in s. 1 of the RPLA to include “any civil proceeding”.

[45]         “Recover” is defined in legal dictionaries as “gaining through a judgment or order”. This was the definition adopted for the use of “recover” in s. 4 in McConnell v. Huxtable, 2014 ONCA 86 (CanLII), 118 O.R. (3d) 561, at paras. 16-20, specifically, at para. 17, where this Court noted that the English Court of Appeal has held that the expression “to recover any land” in comparable legislation “is not limited to obtaining possession of the land, nor does it mean to regain something that the plaintiff had and lost. Rather, “recover” means to ‘obtain any land by judgment of the Court’”

[46]         I agree with the application judge’s approach on this point. This is clearly an action to recover.

[47]         The remaining question is whether what Ms. Yim seeks to recover – her deposit – is “land”. The definition of land in s. 1 of the RPLA is as follows:

“land” includes messuages and all other hereditaments, whether corporeal or incorporeal, chattels and other personal property transmissible to heirs, money to be laid out in the purchase of land, and any share of the same hereditaments and properties or any of them, any estate of inheritance, or estate for any life or lives, or other estate transmissible to heirs, any possibility, right or title of entry or action, and any other interest capable of being inherited, whether the same estates, possibilities, rights, titles and interest or any of them, are in possession, reversion, remainder or contingency;

[48]         In my view, the application judge was also correct in concluding that an application for the return of the deposit was an action for the recovery of “land”; specifically the recovery of “money to be laid out in the purchase of land”.

[…]

[51]         In support of this conclusion, I note that several cases have clarified the relationship between claims for damages and claims covered by the RPLA. The Supreme Court in Canson Enterprises Ltd. v. Boughton & Co., 1991 CanLII 52 (SCC), [1991] 3 S.C.R. 534, defined damages as “a monetary payment for the invasion of a right at common law”. In Toronto Standard Condominium Corp. No. 1487 v. Market Lofts Inc., 2015 ONSC 1067 (CanLII), the plaintiff sought damages based off the defendant’s failure to meet its obligations under a Shared Services Agreement. Perell J., beginning at para. 49, noted that the fact that real property is incidentally involved in an action does not necessarily mean that the action is governed by the RPLA. Among the cases he cited was Metropolitan Toronto Condominium Corp. No. 1067 v. L. Chung Development Co., 2012 ONCA 845 (CanLII). In that case, this Court made the following comment, at para. 7:

Finally, we do not think that the [RPLA] applies to the case as framed by the appellant. In its Statement of Claim, the appellant frames its action as one for damages flowing from the respondents’ negligence, breach of contract, conflict of interest, and breach of duty of care, fiduciary duty and statutory duty. None of these relates to the categories of actions encompassed by the [RPLA].

[52]         Thus, had Ms. Yim’s claim been one primarily seeking damages, for example breach of contract, her application would be statute-barred. This would be true even if the claim for damages incidentally related to real property, specifically the condominium that was the subject of her APS. Claims for damages do not fit within the definition of “land” in the RPLA.

[53]         However, Ms. Yim is not seeking damages. She advances a specific claim under a provision in the Act, a provision that only allows for the return of her deposit and interest, not damages. The Tax Court defined a deposit in Casa Blanca Homes Ltd. v. R., 2013 TCC 338 (CanLII), as “a pool of money retained until such time as it is applied in partial payment or forfeited”. As noted by the Alberta Court of Appeal in Lozcal Holdings Ltd. v. Brassos Development Ltd. (1980), 1980 ABCA 72 (CanLII), 111 D.L.R. (3d) 598, “a genuine deposit ordinarily has nothing to do with damages, except that credit must be given for the amount of the deposit in calculating damages”.

[54]         This leads me to the consideration of “money to be laid out in the purchase of land”, a phrase on which there is scant jurisprudence. However, in my view an action for the return of a deposit fits comfortably within its plain meaning. Frankly, I struggle to understand what would fit within this phrase if not an action such as this.

[55]         On the basis of the foregoing analysis, I conclude that Ms. Yim’s application is not statute-barred. This is also true of the amendment of her initial application to specifically claim statutory rescission. As her application is covered by s. 4 of the RPLA, the applicable limitation period is ten years. The application is an action, which is defined as any civil action. She seeks “recovery”, which has been defined as “gaining through a judgment or order”. And the recovery she seeks is of “land”; namely, her deposit, which is money laid out in the purchase of land.

[56]         I would therefore not give effect to this ground of appeal.