{"id":131,"date":"2015-01-11T20:14:21","date_gmt":"2015-01-12T00:14:21","guid":{"rendered":"http:\/\/limitations.ca\/?p=131"},"modified":"2015-06-08T22:53:03","modified_gmt":"2015-06-09T02:53:03","slug":"ontario-the-limitations-act-2002-applies-to-claims-that-affect-real-property","status":"publish","type":"post","link":"https:\/\/limitations.ca\/?p=131","title":{"rendered":"Ontario: just because a claim affects property doesn’t mean the limitation period is ten years"},"content":{"rendered":"

Update: The Supreme Court refused<\/a> leave to appeal from the Court of Appeal’s judgment.<\/p>\n

The Court of Appeal\u2019s decision in Zabanah v. Capital Direct Lending <\/em><\/a>brings certainty to the application of the Real Property Limitations Act <\/em><\/a>(and its plaintiff-friendly limitation periods).\u00a0 There mere fact that a claim affects real property will not exclude the application of the Limitations Act, 2002<\/em><\/a>.<\/p>\n

The appellant purchased a second mortgage on a home from the respondent, Capital Direct.\u00a0 The mortgagor had fraudulently informed Capital Direct that the balance of the first mortgage on her home was $83,000 when it exceeded $200,000.\u00a0 The mortgagor made an assignment in bankruptcy.\u00a0 The first mortgagee advised the appellant that the sale of the home under power of sale had yielded insufficient proceeds to pay off the first mortgage. There was nothing left for the appellant.<\/p>\n

The appellant claimed against Capital direct for negligence, breach of contract, and breach of fiduciary duty.\u00a0 Capital Direct succeeded on a motion for summary judgment on the basis that the action was started after the expiry of two-year limitation period in the Limitations Act, 2002<\/em>.\u00a0 On appeal, the appellant argued that it was the ten-year limitation period in section 43 of the Real Property Limitations Act<\/em> that applied. Section 43 provides as follows:<\/p>\n

Mortgage covenant<\/strong><\/p>\n

(1) No action upon a covenant contained in an indenture of mortgage or any other instrument made on or after July 1, 1894 to repay the whole or part of any money secured by a mortgage shall be commenced after the later of,<\/p>\n

(a) the expiry of 10 years after the day on which the cause of action arose; and<\/p>\n

(b) the expiry of 10 years after the day on which the interest of the person liable on the covenant in the mortgaged lands was conveyed or transferred.<\/p><\/blockquote>\n

The appellant\u2019s position was that her claim affected real property because her loss was the reduced value of her security interest in the property.\u00a0 She relied on the Court of Appeal decision in The Equitable Trust Co. v. Marsig <\/em>(2012) for the proposition that the Limitations Act, 2002 <\/em>does not apply to a claim affecting real property.<\/p>\n

Justice Blair disagreed. The appellant\u2019s claim sounded in negligence and contract.\u00a0 The negligence related to what Capital Direct allegedly did and said. \u00a0The contract related to the transaction where the appellant acquired the second mortgage.\u00a0 Neither claim was within the category of claims described by section 43.\u00a0 Marsig <\/em>involved a guarantee covenant contained in a mortgage and was distinguishable on that basis.\u00a0 The court\u2019s obiter <\/em>in Marsig<\/em> about the application of the Limitations Act, 2002 <\/em>to claims affecting real property was limited to the distinction between guarantees associated with land transactions, which are subject to the Real Property Limitations Act<\/em>, and guarantees associated with contract claims, which are not.<\/p>\n

Accordingly, section 43 does not apply to every action in which a mortgage or real estate is involved:<\/p>\n

[18]\u00a0\u00a0 \u00a0\u00a0 We agree with the motion judge\u2019s qualification regarding s. 43 of the RPLA<\/em>, that \u201c[t]o the extent that language could be read as encompassing every action in which a mortgage or piece of real estate is in any way involved, I do not believe that it accurately describes the present state of the law.\u201d The motion judge\u2019s statement at the end of para. 46 is unassailable, and makes all the difference: \u201cNothing that this court decides will affect any party’s relationship to the second mortgage or the property.\u201d The appellant\u2019s action, as against Capital Direct, is simply a negligence and contract claim, and is not a claim to an interest in land, as in Marsig<\/em>.<\/p><\/blockquote>\n

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Update: The Supreme Court refused leave to appeal from the Court of Appeal’s judgment. The Court of Appeal\u2019s decision in Zabanah v. Capital Direct Lending brings certainty to the application of the Real Property Limitations Act (and its plaintiff-friendly limitation periods).\u00a0 There mere fact that a claim affects real property will not exclude the application … Continue reading Ontario: just because a claim affects property doesn’t mean the limitation period is ten years<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[24,43,53,54,55],"class_list":["post-131","post","type-post","status-publish","format-standard","hentry","category-ontario","tag-ontario-act","tag-ontario-court-of-appeal","tag-real-property","tag-real-property-limitations-act","tag-s-43"],"_links":{"self":[{"href":"https:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/131","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=131"}],"version-history":[{"count":4,"href":"https:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/131\/revisions"}],"predecessor-version":[{"id":256,"href":"https:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/131\/revisions\/256"}],"wp:attachment":[{"href":"https:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=131"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=131"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=131"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}