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Limitations - RPLA (3). Maxwell v. Altberg
In Maxwell v. Altberg (Ont CA, 2023) the Court of Appeal considered the limitations issue of 'acknowledgements', here under RPLA s.23(1):[3] The issue before the motion judge turned on whether enforcement of the mortgage was precluded by s. 23(1) of the Real Property Limitations Act, R.S.O. 1990, c. L.15. That section provides that no action to enforce a mortgage may be brought more than 10 years after the mortgage went into default, unless in the meantime there has been a payment made or a written acknowledgment of the indebtedness, in which case the limitation period is 10 years from the payment or acknowledgment. . Browne v. Meunier
In Browne v. Meunier (Ont CA, 2023) the Court of Appeal considers the limitations doctrine of 'common law discoverability', here in relation to an RPLA limitation:The discoverability rule and whether it applies to s. 4 of the RPLA
[9] Statutory limitation periods may be subject to a common law rule of discoverability, “such that a cause of action will not accrue for the purposes of the running of a limitation period until ‘the material facts on which [the cause of action] is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence’”: Pioneer Corp. v. Godfrey, 2019 SCC 42, [2019] 3 S.C.R. 295, at para. 31. This common law rule of discoverability has been expressly codified in some statutory provisions. The Supreme Court has made clear, however, that the applicability of the discoverability rule to a statutory limitations provision is a matter of statutory interpretation – of ascertaining how the legislature intended to change the law through the statutory text it enacted – and the discoverability rule can be understood to apply even where it is not expressly referenced in the provision. That is, substance is to prevail over form, and “even where the statute does not explicitly state that the limitation period runs from ‘the accrual of the cause of action’, discoverability will apply if it is evident that the operation of a limitation period is, in substance, conditioned upon accrual of a cause of action or knowledge of an injury”: Pioneer Corp., at para. 36.
[10] The issue in the present case, then, is whether the limitation period in s. 4 of the RPLA runs from the accrual of a cause of action. If it does, then there is a presumption that the discoverability rule applies. As explained below, I conclude that it does.
[11] Section 4 of the RPLA expressly references the accrual of the action:No person shall … bring an action to recover any land or rent, but within ten years next after the time at which the right … to bring such action, first accrued to some person through whom the person making it 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 bring such action, first accrued to the person making or bringing it. [Emphasis added]. Section 15 carries on to provide that at the end of the 10 year period, the right to bring an action is extinguished.
[12] The trial judge did not refer to Pioneer Corp. and likely was not referred to it by counsel. In any event, the trial judge erred in reasoning that because “the discovery regime” set out in s. 5 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, had no application to the RPLA, the discoverability rule therefore did not apply. The error was in failing to consider how the common law rule of discoverability interacts with the provisions of the RPLA. That question is resolved by Pioneer Corp., which provides the interpretive presumption that a statutory limitation period premised on the accrual of an action begins to run when the facts establishing the cause of action were known or ought to have been known by a reasonably diligent person.
[13] The trial judge also considered s. 28 of the RPLA, which explicitly provides for discoverability in cases of concealed fraud, and concluded that had the legislature intended discoverability to apply to s. 4, it would have used similarly explicit language. Again, I do not agree with this conclusion. The expressio unius interpretive principle is not absolute and in the case of the interpretation of s. 4, this principle is overcome by the strength of the competing interpretive principle articulated in Pioneer Corp., which presumes the application of the discoverability rule and requires explicit language to oust its application.
[14] In my view, applying the proposition articulated in Pioneer Corp. to the interpretation of s. 4 leads to the conclusion that discoverability must apply to that section. As noted above, the trigger for bringing the action is, expressly, the accrual of the action and not some external event: Pioneer Corp., at para. 35. The running of the limitation period under s. 4 would therefore be tolled until the material facts constituting the infringement were discovered or were discoverable by a reasonably diligent person in the circumstances of the rights holder. (Note that these reasons are restricted to the interpretation of s. 4 and do not address the issue of the application of the discoverability rule to any other section of the RPLA).
When was the cause of action discoverable by a reasonably diligent person?
[15] What flows from this for the present case? The appellants argue that the cause of action was not discoverable by the person making the claim – the appellants – until such time as they conducted the survey, and not only discovered that the boat house was in fact located in front of their shoreline, but that the shallowness of the water was such that the boat house impeded their ability to navigate into the deep channel of the river. Accordingly, they argue, the action was brought well within the 10-year period.
[16] I do not agree. The problem is this. Section 4 refers to the time when the right of action first accrued “to some person through whom the person making it or bringing it claims.” Riparian rights run with the property, so an action for breach of such rights can “accrue” to the predecessor(s) in title at the time of the breach, and pass to a subsequent holder of title. The saliant question, then, is whether (and when) the breach of riparian rights was knowable by the appellants’ predecessors in title. If the limitation period had already expired and the cause of action been extinguished before the appellants purchased the property, the transfer of title to the appellants could not revive the extinguished cause of action.
[17] The trial judge made no finding in this regard. However, the infringement of riparian rights would, in this case, have been obvious to the appellants’ predecessors in title immediately upon the construction of the boat house. The presence of the boat house could hardly have been missed. Although the appellants argue that specialized knowledge of boating and the topography of the water would be required to determine that the boat house impaired access to the deep water channel from the shoreline, I do not agree. It is conceded that the depth of the very shallow water in front of the appellants’ cottage was obvious and easily ascertainable by an observer. From that concession, it is a very short walk to the conclusion that only boats capable of moving through very shallow water could dock near the shore. The presence of the boat house and dock would have prevented the construction of a similar boat house by the appellants’ predecessors in title, which would have substantially impaired their ability to access the deep channel.
[18] Accordingly, the infringement of the riparian rights of the appellants’ predecessors in title would had to have been obvious to those predecessors from the time the boat house was constructed in 1969 (or shortly thereafter, given the seasonal use of vacation property). In any event, once the predecessor’s right of action had been extinguished under s. 15, it could not be revived by transferring title.
[19] I note this result is consistent with the reasoning and conclusion in Mihaylov v. Long Beach Residents’ Association, 2018 ONSC 14, 95 R.P.R. (5th) 202, aff’d, 2018 ONCA 871, 95 R.P.R. (5th) 220, leave to appeal refused, [2018] S.C.C.A. No. 527. In that case, Morgan J. found that the plaintiffs’ predecessors in title had ten years after the construction of a wharf and gravel landfill to make a claim for interference with riparian rights: at paras. 51-55. Although the trial judge distinguished Mihaylov on the basis that it was the interference with the riparian rights of the predecessors in title that started the limitations clock under s. 4, rather than the discovery of that interference, in my view those two dates would have been the same, much like in this case. . Northwinds Brewery Ltd. v. Caralyse Inc.
In Northwinds Brewery Ltd. v. Caralyse Inc. (Ont CA, 2023) the Court of Appeal considers which limitation prevailed, that of the two-year Limitations Act or that of the six-year [s.17(1) 'Maximum of arrears of rent or interest recoverable'] of the Real Property Limitations Act:[22] In my view, the trial judge erred in law in applying a two-year limitation period to the Landlord’s claim for the Tenant’s past use and occupation of the space. The claim is governed by the six-year limitation period for rent arrears under the RPLA.
[23] Section 17(1) of the RPLA provides that “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 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”. “Rent” is defined under the RPLA as including “all annuities and periodical sums of money charged upon or payable out of land”.
[24] The term “arrears of rent” has an objective meaning under the RPLA. As Mew J. noted in Pickering Square Inc. v. Trillium College Inc., 2014 ONSC 2629, 44 R.P.R. (5th) 251, aff’d on other grounds, 2016 ONCA 179, 64 R.P.R. (5th) 175, the term does not depend on how rent is defined by the parties in their lease; it is not “an empty vessel that the parties may fill at their discretion”. It must be interpreted in light of the context, scheme and object of that statute and the law of limitations in Ontario: at para. 52.
[25] Although the Shed Area was not part of the Rentable Area of the Premises (and therefore did not attract rent under the Lease), this conclusion did not take it outside the terms of the RPLA. Monthly payments by the Tenant to the Landlord for the exclusive occupation of the Shed Area fit neatly within the RPLA’s definition of “rent” as they constitute “periodical sums of money charged upon or payable out of land”.
[26] I will briefly deal with the Tenant’s assertion that, notwithstanding that he used the term “non-lease-based rent”, the trial judge recognized and imposed a licence fee, or alternatively that the amount was a form of damages – both of which, according to the Tenant, would fall under the two-year limitation period under the Limitations Act.
[27] The Tenant asserts that the arrangement imposed by the trial judge was accurately described in his subsequent reasons[2] as granting the Landlord “rent in the nature of a license fee”, which would take it outside the definition of rent arrears under the RPLA. However, as the parties acknowledged in oral argument on the appeal, no one at trial argued that the Tenant’s occupation of the Shed Area was in the nature of a licence. In addition, the trial judge’s findings that the Tenant had occupied the Shed Area exclusively since the Commencement Date and that the space was essential to the Tenant, his recognition that the Tenant had ongoing rights to the Shed Area that were not dependent on the Landlord’s agreement, and his award of “non-lease-based rent” are consistent with a lease, not a licence.
[28] Nor, as the Tenant argues, did the Landlord claim or the trial judge award the Landlord damages. The award of “non-lease-based rent” is unlike the landlord’s claim for damages for its tenant’s intentional interference with contractual relations and oppression in Sterling Waterhouse Inc. v. LMC Endocrinology Centres (Toronto) Ltd., 2015 ONSC 3987, aff’d on other grounds, 2016 ONCA 343, a case relied on by the Tenant. In that case, the nature of the misconduct for each cause of action “[distanced] the claims from the type of real property claim that would fall under s. 17 of the RPLA, even though the damages [related] to rent”: at para. 35. By contrast, the Landlord’s claim in this case in relation to the Shed Area was consistently referred to by the trial judge as a claim for rent retroactive to the Commencement Date: see paras. 33, 50 and 97. And, that is precisely what the trial judge ordered: non-lease-based rent from the Commencement Date (subject to the applicable limitation period), together with a declaration that the Tenant had an ongoing right to occupy the space, and an ongoing obligation to pay rent. In any event, even if the arrears could be characterized as a form of damages, the six-year limitation period prescribed by s. 17 applies not only to arrears of rent but also to “damages in respect of such arrears”.
[29] For these reasons, I would allow the Landlord’s appeal in relation to the Shed Area, only to the extent that the Landlord is entitled to recover arrears of non-lease-based rent retroactive to six years prior to the issuance of its counterclaim. . Studley v. Studley
In Studley v. Studley (Ont CA, 2022) the Court of Appeal considered a conflict between the general two-year limitation of the Limitations Act, and s.4 of the Real Property Limitations Act (RPLA):(b) The Limitations Issue
[17] As part of her resistance to the respondent’s motion to amend, the appellant submits that the constructive and resulting trust claims are statute-barred. The appellant contends that, because the respondent’s claims are essentially in the nature of equalization claims, the applicable limitation period is two years, as prescribed by s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.[1]
[18] The respondent submits that, because his amended Answer claims a trust interest in land, the governing limitation period is 10 years, pursuant to s. 4 of the Real Property Limitations Act, R.S.O. 1990, c. L.15 (“RPLA”).
[19] The motion judge concluded that the relevant limitation period is 10 years.
[20] The appellant also contends that the motion judge should not have determined the limitations issue on a final basis because it prematurely extinguished her substantive defence to the respondent’s new claims.
[21] The appellant makes a further argument in relation to the Florida property. She submits that Ontario courts have no jurisdiction to make in rem orders relating to real property situated in a foreign jurisdiction.
[22] I would not accept any of these submissions.
(i) A Final Determination
[23] The motion judge did not err by proceeding in the manner that she did. It was the appellant who sought to resist the motion to amend by raising and seeking a ruling on the limitations issue. The motion judge explained why she was prepared to decide the issue on the motion, at para. 16: “I am not aware of any facts in dispute that would affect a determination of the applicable limitation period. In addition, neither party suggested the question of the limitation period should be left for the trial judge” (emphasis added).
[24] The appellant cannot now complain about the process because she did not like the outcome. She does not identify any “facts in dispute” that prevented the motion judge from determining the limitations issue. Moreover, it was desirable for the motion judge to resolve this issue sooner rather than later, especially given the slow pace of litigation and the importance of efficiency. In fact, the Family Law Rules require the court to actively manage cases, including, “disposing of those that do not need full investigation and trial”: r. 2(5)(a). There is little point in leaving this important issue hanging until trial.
(ii) The Applicable Limitation Period
[25] I agree with the motion judge that the applicable limitation period is determined by s. 4 of the RPLA – 10 years.
[26] In language that is challenging, s. 4 of the RPLA prevents an action to “recover any land” that is not brought within ten years:4. 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. [Emphasis added.] [27] The appellant submits that the respondent’s amended Answer does not involve an action to “recover any land” because the lands in this case have already been sold. Consequently, the claim is essentially a proceeding for an in personam remedy – damages, or more specifically, an equalization claim.
[28] The motion judge rejected this submission, as would I. The motion judge referred to the leading decision of McConnell v. Huxtable, 2014 ONCA 86, 118 O.R. (3d) 561. That case involved a family law dispute in which Ms. McConnell brought an action for unjust enrichment and sought a remedial constructive trust in the property owned by Mr. Huxtable. Though the property had not been sold, the timing of the claim engaged the same issue as in this case – does the more generous limitation period in the RPLA apply?
[29] The resolution of this issue turned on the meaning of the words “an action to recover any land.” Writing for the court, Rosenberg J.A. adopted the legal conclusions of the motion judge that: (a) the ten-year limitation period under s. 4 of the RPLA applies in circumstances where an ownership interest in land is asserted; and (b) an alternative claim in damages in respect of the same land is also protected under s. 4:
[39] In sum, I agree with the motion judge's conclusion, at para. 80 of his reasons:From the plain meaning of the words "action to recover any land" in section 4 of the Real Property Limitations Act, in their "entire context" as described above, I find that the applicant's claim in this case for an ownership interest in the house in question is an "action to recover any land" within the meaning of section 4 of the Real Property Limitations Act. It is subject to a ten year limitation period. Based on the record before me, it is not possible for me to conclude that the applicant's claim in this case is barred by the ten year limitation. Accordingly, this part of her claim is entitled to proceed. [40] I also agree with the motion judge that her alternative claim for a monetary award can shelter under s. 4 for the reasons he gave at para. 88:My analysis of the question begins with the words of the section: ". . . bring an action to recover any land . . .". In contrast to the Limitations Act, 2002, which deals with individual "claims", this provision deals with an "action" (extended by section 1 of the Real Property Limitations Act to include "any civil proceeding"). An action or application can and frequently does include a principal claim with an alternative claim, as in this case. Here the damages claim is an alternative or fallback position to the first claim advanced by the applicant, which is for an ownership interest. The statute does not say "action to recover only land". Further, it would not make sense to interpret section 4 of the Real Property Limitations Act as a sort of all or nothing proposition, forcing the court either to award a proprietary interest on what it finds to be a meritorious claim, when a monetary award would otherwise be an adequate and appropriate remedy, or to award nothing at all, because a shorter limitation period for a damage award bars that kind of remedy… [Emphasis added.] [30] Applying this holding, the motion judge in this case characterized the respondent’s claim in the following way, at para. 20: “In other words, he is seeking a resulting trust interest in property that is enforceable by a monetary award. Although this is not an alternative claim, since the properties have been sold, in my view, it falls within the scope of a claim for damages sheltered under a trust claim.”
[31] I agree with the motion judge’s conclusion, which is bolstered by this court’s recent decision in Bakhsh v. Merdad, 2022 ONCA 130. That case involved a dispute over a condominium property in Ontario. The question was whether Ms. Bakhsh’s claim was an equalization claim under s. 5(1) of the Family Law Act, R.S.O. 1990, c. F.3 (“FLA”), or a constructive trust claim. If it was the former, the two-year limitation period under s. 7(3)(a) of the FLA would apply; if it was a constructive trust claim in relation to real property, the RPLA would apply.
[32] The motion judge found that Ms. Bakhsh had advanced a constructive trust claim in real property. This court agreed, holding that Ms. Bakhsh’s claim was “not a thinly veiled attempt to dress up an equalization claim as an equitable trust claim”: at para. 13. As the court helpfully explained, at paras. 14-16:We disagree with Mr. Merdad’s submission that all property claims between spouses or former spouses must necessarily be equalization claims. And it does not follow that the expiration of time to bring an equalization claim entails the expiration of a constructive or remedial trust claim. Equalization claims and equitable trust claims remain distinct.
The FLA equalization provisions do not deal with property, per se, but, rather, with the equitable calculation, division, and distribution of the value of net family property. Here, Ms. Bakhsh brings forward an equitable trust claim and not a claim for equalization of the value of the parties’ net family property. A claim of ownership is distinct from a claim for a share in property value; an equitable trust claim addresses the former and the equalization regime of the FLA covers only the latter: McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401, at para. 59.
The equalization provisions of the FLA also do not preclude an equitable trust claim respecting property. Section 10(1) of the FLA expressly permits a court application for a determination between spouses or former spouses “as to the ownership or right to possession of particular property, other than a question arising out of an equalization of net family properties” and the court may “declare the ownership or right to possession”, as the respondent has claimed, among other remedies. Importantly, the two-year limitation period in s. 7(3)(a) of the FLA applies only to an application based on subsections 5(1) or (2) and not to the determination of a question of ownership between spouses set out in s. 10(1) of that Act. [Emphasis added.] [33] The court found that the 10-year limitation period under the RPLA applied: “This court’s decision in McConnell v. Huxtable, 2014 ONCA 86, 118 O.R. (3d) 561, supports the application of the ten-year limitation period under the Real Property Limitations Act to family law constructive trust claims”: at para. 12.
[34] I would adopt this analysis.
[35] I acknowledge that this case differs somewhat from McConnell and Bakhsh. In those cases, the properties had yet to be sold; here, they were sold by the appellant after the date of separation. Nonetheless, I agree with the motion judge that an otherwise tenable trust claim in land, one that would be sheltered by s. 4 of the RPLA, cannot be defeated by the sale of that land. This conclusion is supported by both McConnell and Bakhsh. Moreover, a contrary interpretation might incentivize strategic, covert sales designed to reduce the limitation period from 10 years to two, extinguishing an otherwise viable claim. I do not suggest that this happened here. However, it is a foreseeable consequence of the appellant’s position on the operation of s. 4 of the RPLA.
[36] Finally, I find further support in 1250140 Ontario Inc. v. Bader, 2022 ONCA 197, which considered s. 23 of the RPLA. In that case, a mortgagee brought an action to recover funds secured by a mortgage in circumstances where the property had already been sold. Ms. Bader submitted that s. 23, which is triggered by an action brought to “recover out of any land or rent any sum of money secured by any mortgage or lien”, had no application once she, as mortgagor, was dispossessed of the land.
[37] This court rejected this contention: the action was rooted in a claim to real property. As the court explained: “[T]he claim for debt was based on a covenant in the mortgage, and land, as security for the debt, was critical to that claim”: at para. 16. There was no basis to conclude that the mortgagee became disentitled to the longer limitation period in the RPLA because the property had already been sold. The court held that, “The prospect of a shifting limitation period, tied to the disposition of the property in issue, would only foster uncertainty in the application of the RPLA”: at para. 17.
[38] In conclusion, the motion judge did not err in finding that the claims asserted in the respondent’s amended Answer were not time-barred. . 1250140 Ontario Inc. v. Bader
In 1250140 Ontario Inc. v. Bader (Ont CA, 2022) the Court of Appeal consider an issue of 'acknowledgement' (which can re-start a limitation period) under the Real Property Limitations Act (RPLA):[10] The motion judge observed that neither party disputed that s. 23(1) of the RPLA applied. The section provides that a claim falling within the ambit of the RPLA expires after 10 years:23(1) No action shall be brought to recover out of any land or rent any sum of money secured by any mortgage or lien, or otherwise charged upon or payable out of the land or rent, or to recover any legacy, whether it is or is not charged upon land, but within ten years next after a present right to receive it accrued to some person capable of giving a discharge for, or release of it, unless in the meantime some part of the principal money or some interest thereon has been paid, or some acknowledgment in writing of the right thereto signed by the person by whom it is payable, or the person’s agent, has been given to the person entitled thereto or that person’s agent, and in such case no action shall be brought but within ten years after the payment or acknowledgment, or the last of the payments or acknowledgments if more than one, was made or given. [Emphasis added.] [11] The motion judge found that Ms. Bader acknowledged the debt in her affidavit in the foreclosure proceedings, thereby extending the limitation under s. 23 of the RPLA. As he said in his reasons, “[t]his is not just any old acknowledgment in writing. It is sworn testimony before the court in a proceeding in which both the defendant and the plaintiff were named parties.”
Discussion
[12] The appellant submits that s. 23 of the RPLA did not apply in the circumstances of this case because, by the time 125 commenced its 2019 action, the property had been sold. The appellant submits that s. 23 applies only to actions for in rem remedies. In this case, because the property had already been sold, it was a proceeding for an in personam remedy. As such, the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B applied and the action was time barred. We do not accept this submission.
[13] First, this submission was not made before the motion judge. Ms. Bader did not raise this issue in her Statement of Defence. Instead, she simply took the position that the 10-year limitation had expired. As discussed below, she disputed that she had acknowledged the debt in the interim. Moreover, Ms. Bader’s Notice of Appeal failed to raise this issue. It was first raised by new counsel (Mr. Whiteley) when he filed a Supplementary Notice of Appeal.
[14] Raising a new issue for the first time on appeal undermines the important interest of finality in judicial proceedings. It leads to inefficiencies in the adjudicative process. It places this court in the role of a first instance decision-maker, rather than a reviewing court. No explanation was provided for this change in position on appeal. In these circumstances, an appellate court should be reluctant to entertain the new submission: see Albert Bloom Limited v. London Transit Commission, 2021 ONCA 74, at para. 46.
[15] Nonetheless, we do not accept that s. 23 of the RPLA only applies when the mortgagor is still in the possession of the property or when the proceeds of the realization of the property have yet to be distributed. Section 23 makes no such distinction. No cases directly support Ms. Bader’s position.
[16] Put simply, s. 23 of the RPLA governs actions about claims to real property: see Equitable Trust v. Marsig, 2012 ONCA 235, 109 O.R. (3d) 561, at para. 27. When Ms. Bader assumed her debt to 125, it was secured by a mortgage on the property. This was not a situation where the land was incidental to an action based in negligence, breach of contract, breach of fiduciary duty, or some other basis of liability: Zabanah v. Capital Direct Lending Corp., 2014 ONCA 872, 123 O.R. (3d) 350. Rather, the claim for debt was based on a covenant in the mortgage, and the land, as security for the debt, was critical to that claim.
[17] Ms. Bader has provided no support for the contention that a mortgagee becomes disentitled to the longer limitation period in the RPLA when the property in question has been disposed of in the meantime. While the land may be out of reach for enforcement purposes, there is no principled reason why a mortgagee should be prevented from pursuing an action for any money still owing, as long as the claim is commenced within the limitation period set out in the RPLA. The prospect of a shifting limitation period, tied to the disposition of the property in issue, would only foster uncertainty in the application of the RPLA.
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