Real property limitations is confusing

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.

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: 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.