In the recent decision of Connell v. Huxtable, 2014 ONCA 86 (CanLII) the Ontario Court of Appeal considered and clarified the applicable limitation periods for various types of unjust enrichment claims that are frequently advanced in family law litigation.
The Ontario Court of Appeal was asked to set aside the decision of the Motions Judge who ruled that that the limitation period for an unjust enrichment claim related to real property was ten years (in accordance with the Real Property Limitations Act) rather than the two year limitation period (in accordance with the Limitations Act).
The background facts of the case are fairly typical and straightforward. The parties had been in a relationship for approximately thirteen years, during which they sold two homes and purchased a third home. All of the properties acquired during the relationship were owned by Mr. Huxtable.
Not surprisingly, after they separated in 2007, there was a dispute regarding whether Ms. McConnell made contributions to the three properties.
Although the parties began negotiations in 2007, no settlement was reached and no litigation commenced.
Ms. McConnell commenced an action for unjust enrichment in 2012, claiming there had been a joint family venture during the period of cohabitation and that she was entitled to either an interest in the property or damages for unjust enrichment.
Mr. Huxtable countered by bringing a Motion for summary judgment on the basis that since the claim was brought in 2012 (almost five years after the date of separation), the claim was barred by section 4 of the Limitations Act, 2002 which provides for a two year limitation period.
In defense of her claim, Ms. McConnell argued that the limitation period in the Limitations Act did not apply to unjust enrichment claims in relation to real property, instead arguing that the ten year limitation period under section 4 of the Real Property Limitations Act applied and that the claim was well within the ten year period set out in that legislation.
The Motions Judge agreed with the argument advanced by Ms. McConnell and concluded that section 4 of the Real Property Limitations Act did apply in cases where unjust enrichment claims were advanced in relation to real property. The Motions Judge also agreed with Ms. McConnell’s that her alternative claim for a monetary award in relation to the land was also covered by the Real Property Limitations Act and was subject to the ten year limitation period.
Mr. Huxtable appealed the decision. A unanimous Ontario Court of Appeal upheld the Motion Judge’s decision that the ten year limitation period set out in the Real Property Limitations Act applied to all unjust enrichment enrichments in relation to real property. The Court of Appeal went even further and concluded that the ten year limitation period would apply whether the remedy of a proprietary constructive trust in real property was sought, or the alternative claim for monetary damages in relation to the real property was sought.
While this part of the decision is a relief to potential claimants of unjust enrichment, perhaps the most important and far reaching aspect of the decision was that the Court concluded that all unjust enrichment claims unrelated to land are subject to the two year limited period set out in the Limitations Act, 2002.
It is now imperative for any practitioner of family law to be aware of the two year limitation period under the Limitations Act, 2002, which now clearly applies to all claims for unjust enrichment unrelated to land, including unjust enrichment claims in a family law context relating to investments, pensions, and businesses.
I commend this case to every family law lawyer as the failure to scrupulously identify and diarize the two year limitation period for unjust enrichment claims unrelated to real property could prove to be fatal to your client’s otherwise meritorious claim for unjust enrichment.