<\/p>\n
In Conde v. Ripley et al.<\/a><\/em>, Justice Dunphy held that the limitation period applicable to a claim under section 2 of the Fraudulent Conveyances Act<\/a> <\/em>depends on whether the claim is to recover land, in which case the ten year limitation period in the Real Property Limitations Act<\/a><\/em> applies, or for personal property, in which case the general two year limitation in the Limitations Act, 2002<\/a><\/em> applies.<\/p>\n Section 2 of the FLA <\/em>entitles a person to commence an action against a transferee of real or personal property to declare the transfer to be void as against \u201ccreditors or others\u201d where there was fraudulent intent.<\/p>\n The defendants in Conde <\/em>argued that such an action is subject to the Limitations Act alone.\u00a0 In a well-reasoned and correct decision, Justice Dunphy rejected this position.<\/p>\n Section 2(1)(a) of the Limitations Act provides that the Act doesn\u2019t apply to proceedings subject to the RPLA<\/em>.\u00a0 Section 4 of the RPLA <\/em>applies to \u201can action to recover any land\u201d.\u00a0 If the two year limitation period in the Limitations Act applied to an FCA <\/em>action seeking to invalidate a \u00a0transfer of an interest in land\u00a0while the claim to the land itself is subject to the ten year RPLA <\/em>limitation period, it would be \u201cinconsistent in the extreme\u201d; the action to set aside the \u00a0transfer would be barred before the action to claim the interest.\u00a0 This result, Justice Dunphy noted, \u201cappears contrary to common sense\u201d. (I wonder whether it is the two year limitation\u00a0period that would apply to the FCA<\/em> claim under the\u00a0<\/i>Limitations Act; section 16(1)(a)\u00a0provides that\u00a0no limitation period applies to claims that seek\u00a0only a declaration–ie, that a transfer of land is void).<\/p>\n The problem with the defendants’ position was their confusion between\u00a0standing to bring a claim under the FCA <\/em>and\u00a0\u00a0the nature of the FCA <\/em>claim itself:<\/p>\n [40]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0 In arguing for a two year limitation period, the moving parties have confused standing to bring a claim under the FCA<\/a> with the nature of the FCA<\/a>claim itself.\u00a0 Standing \u2013 which is granted by s. 2<\/a> of the FCA<\/a> to \u201ccreditors or others\u201d \u2013 is to be distinguished from the nature of the action itself.\u00a0 As I have explained at some length, standing to bring FCA<\/a> claims is granted to \u201ccreditors or others\u201d whereas a claim, once brought by a creditor with standing, has many of the characteristics of a class proceeding.\u00a0 For limitations purposes, in my view, it is necessary to consider the nature of the FCA<\/a> claim and not the standing of the individual claimant.<\/p>\n [41]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0 An FCA claim, if successful, does no more or less than invalidate the impugned transfer as against \u201ccreditors or others\u201d of whom the plaintiff is obviously an exemplar. \u00a0Where the conveyance attacked is of real property, such an action is thus quite literally an \u201caction to recover land\u201d since the outcome of the action, if successful, is to \u201crecover\u201d the land to the estate of the transferor (in this case Mr. Ripley) so that \u2013 once so recovered \u2013 it can respond to the claims of creditors or others as if it had never been transferred.\u00a0 The outcome of the plaintiff\u2019s claim against the transferor may well be a money judgment \u2013 the outcome of the claim against the transferee under the FCA<\/a> is an order \u201cto recover land\u201d which is then available to satisfy that claim.<\/p>\n [42]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0 Importantly, even if the underlying claim of the \u201ccreditor or others\u201d is a money claim, the outcome of an FCA<\/a> action is not a money judgment ordering the transferee to pay that claim.\u00a0 The transferee may well pay the judgment to free the property of the claim \u2013 if they so choose.\u00a0 That, however, is a consequence of choice and not of the order made.<\/p><\/blockquote>\n Justice Dunphy found nothing regrettable about the two separate limitation periods applying to FCA <\/em>actions:<\/p>\n [44]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0 This might seem somewhat inelegant or even regrettable.\u00a0 In my view, it is neither.\u00a0 It is simply the by-product of the FCA<\/a> being a descendent of a very old statute going back literally hundreds of years upon which has been overlaid a more comprehensive and newly-elaborated system of limitation periods than formerly applied.\u00a0 FCA<\/a> actions were once considered to be actions for which no limitation period specifically applied.\u00a0 The Legislature has seen fit to change that, and in so doing, to differentiate between actions involving recovery of land and other types of actions.\u00a0 The result, when applied to this old statute, is what I have described.<\/p><\/blockquote>\n It\u2019s also worth noting Justice Dunphy\u2019s rather pithy reminder that for the purposes of the limitation period, the law will impute a solicitor\u2019s knowledge on her client:<\/p>\n [67]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0 The limitation period commences when the plaintiff discovers the underlying material facts or, alternatively, when the plaintiff ought to have discovered those facts by the exercise of reasonable diligence:\u00a0 Tender Choice Foods Inc. v. Versacold Logistics Canada Inc.<\/em>, 2013 ONSC 80 (CanLII)<\/a> at para. 56.\u00a0 The plaintiff here had<\/em> the facts but chose to disbelieve them due to a search conducted without due care and accepted without sufficient examination.\u00a0 As between the two, it may well be that the solicitor should have found what her client failed to, but I must attribute the knowledge of one to the other.<\/p>\n [68]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0 To hold otherwise would be, in my view, to provide a solicitor\u2019s negligence exception to the Limitations Act, 2002<\/a><\/em>.\u00a0 While such a development would, I have no doubt, warm the hearts of lawyer insurance providers everywhere, I can find no support for it in the statute.\u00a0 Section 5(1)<\/a>(b) requires the application of an objective test to a consideration of the subjective capacities of the plaintiff.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":" In Conde v. Ripley et al., Justice Dunphy held that the limitation period applicable to a claim under section 2 of the Fraudulent Conveyances Act depends on whether the claim is to recover land, in which case the ten year limitation period in the Real Property Limitations Act applies, or for personal property, in … Continue reading Ontario: limiting fraudulent conveyance actions<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[114,24,21,200,53,54,116,117],"class_list":["post-254","post","type-post","status-publish","format-standard","hentry","category-ontario","tag-fraudulent-conveyances-act","tag-ontario-act","tag-ontario-act-s-161a","tag-ontario-act-s-21","tag-real-property","tag-real-property-limitations-act","tag-solicitor-negligence","tag-warming-the-hearts-of-lawyers"],"_links":{"self":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/254","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=254"}],"version-history":[{"count":2,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/254\/revisions"}],"predecessor-version":[{"id":262,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/254\/revisions\/262"}],"wp:attachment":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=254"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=254"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=254"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}