McConnell v. Huxtable, 2014 ONCA 86 (Applicable Limitation Period for Constructive Trust Claims over Real Property)

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In McConnell v. Huxtable, 2014 ONCA 86, the Court of Appeal for Ontario considered the relationship between theLimitations Act, 2002 and the Real Property Limitations Act (the “RPLA”) in the context of an action for unjust enrichment and a remedial constructive trust arising in a family law case.   The main issue was whether a claim for unjust enrichment in which a claimant asks the court to impose a constructive trust upon real property constitutes an “action to recover land” such that the ten year limitation period under the RPLA applies.  The Court of Appeal answered in the affirmative holding that the limitation period for such claims when they involve real property is ten years under section 4 of the RPLA.

The parties were in a common law relationship for over a decade.  During the course of the relationship, Huxtable bought a house, which was registered in his name only. About five years after the relationship ended, McConnell learned that the house was for sale.  She filed an application stating that she was entitled to a remedial constructive trust interest in the property due to the work she had devoted to helping renovate it. In the alternative, she sought a monetary remedy. The application was commenced well past the two-year limitation period under the Limitations Act, 2002.  Huxtable brought a motion on the basis that the claim was statute-barred.  The motions judge dismissed the motion, concluding that the ten year limitation period under the RPLA applied, which meant that the action was commenced in time.  Huxtable appealed.

Meaning of the word “Recover” 

Justice Rosenberg, writing for a unanimous court, noted that one of the exceptions to the two-year limitation period under section 2(1)(a) of the Limitations Act, 2002 was cases that have to do with real property. Specifically, section 4 of the RPLA applies to actions to “… recover any land.” Accordingly, the court’s analysis hinged on the meaning of the word “recover.”  The court canvassed the use of the word “recover” in other cases, as well as the intention of the Legislature when drafting the new Limitations Act, 2002, and concluded that a claim to a constructive trust in real property does constitute a recovery of land. 

Interestingly, the court held that McConnell’s alternative claim for monetary compensation (in lieu of a constructive trust) was also governed by section 4 of the RPLA.  At para. 40, Rosenberg J.A. adopted the reasoning of the motions judge:

… 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. … 

Determining the date when the ten-year period begins to run

For the purposes of an unjust enrichment claim, Rosenberg J.A. confirmed that the limitation period would begin to run once the elements of the unjust enrichment claim have been crystallized (i.e. that the defendant retains a benefit without juristic reason in circumstances where the claimant suffers a corresponding deprivation).  In other words, the relevant act of the defendant is simply the act of keeping the enrichment (or the omission to pay it back) once the elements of the unjust enrichment have crystallized.  The Court further confirmed that its analysis and conclusion was not limited by the fact that it arose in the family law context, and that the issue of whether the RPLA applies to a claim for a constructive trust will be the same where the equitable claim for an interest in land arises out of a purely business transaction.