ONCA Provides Mixed Guidance on Limitation Periods in 56(4) Applications
In the recent Ontario Court of Appeal decision, Kyle v. Atwill (2020 ONCA 476), the ONCA dealt with the tricky issue of limitation periods in family law proceedings. The decision provides two different approaches that can have significant consequences on limitation periods when dealing with claims to set aside a marriage contract under section 56(4) of the Family Law Act, R.S.O. 1990, c. F.3, (“FLA”). The majority’s decision is not good. Justice Brown’s concurring decision provides a far more helpful analysis. Regrettably, Justice Zarnett’s swing vote takes the court (much like Michigan/Pennsylvania/Florida) in a direction that could ultimately require a course correction.
In Ontario, limitations periods are governed by section 4 of Limitations Act, 2002, S.O. 2002, c. 24, Sched. B (“Limitations Act”). Under this legislation, there is a basic 2-year limitation period. Persons have 2 years from the date of discovering harm to commence a claim in court, otherwise, they are limitation barred. For family law proceedings, there are two important provisions in this statute.
- Firstly, section 16(1) provides that no limitation periods apply to:
- (c) a proceeding to obtain support under the Family Law Act or to enforce a provision for support or maintenance contained in a contract or agreement that could be filed under section 35 of the FLA.
Secondly, section 19(1)(a) says that the basic limitation period does not apply to equalization claims, which are carved out and left to be governed specifically by s.7(3)(b) of the FLA. Under this provision of the FLA, instead of the 2-year basic limitation period, a person with entitlement to equalization must bring their application prior to the earliest of the following dates:
- two years after obtaining a divorce (or a judgment of nullity);
- six years after the parties separate; and
- six months after a spouse’s death.
So the basic rule of thumb is that if you want spousal support, 16(1)(c) of the Limitations Act says that you have no limitation period. If you want equalization, section 19(1)(a) of the Limitations Act says that you should look to section 7(3)(b) of the FLA, which provides the two years after a divorce, six months after a spouse’s death, or six years after cohabitation limitation periods.
The question that arises, in this case, is what about an application under section 56(4) of the FLA to set aside a marriage contract? Specifically, the issue is whether such an application can be dealt with under the above two sets of provisions, or if it should be dealt with under section 16(1)(a) of the Limitations Act which says that no limitation period applies to:
- (a) a proceeding for a declaration if no consequential relief is sought.
This issue is effectively the crux of the ONCA decision and where the majority, respectfully, loses the plot. Rather than deal with a 56(4) FLA application under the two main governing limitations provisions, the majority address a 56(4) application under section 16(1)(a) of the Limitations Act, which creates unhelpful guidance and confusing law.
In this case, the husband and wife entered into a marriage contract one week prior to the wedding. The contract was based on an online template found by the wife. In the contract, the parties waived entitlement to spousal support as well as equalization. Neither received independent legal advice prior to signing and neither provided financial disclosure. Subsequently, after seven years of marriage, they separated. Immediately following separation, the husband and wife retained lawyers and tried to settle the terms of their separation. The negotiations went nowhere.
After five years of separation, the husband brought an Application for equalization of net family property and spousal support. In her Answer, the wife relied on the marriage contract. The husband then asked in his Reply that the court set aside or rescind the marriage contract under section 56(4) of the FLA. He argued that he signed the marriage contract without financial disclosure, without legal advice, under duress, and under a clear power imbalance.
Eventually, the wife amended her pleadings and brought a motion for summary judgment. At the motion for summary judgment, the court had dealt with:
- whether the two-year limitation period in s.4 of the Limitations Act applied to the husband’s application to set aside a marriage contract under s.56(4) of the FLA, and
- if so, whether the husband brought his application in time.
The wife argued that the basic limitation period applied since the husband’s request to set aside the marriage contract was a “claim” (as governed by section 4 of the Limitations Act). The husband responded that his request to set aside the marriage contract was really a request for a “declaration”. Per section 16(1)(a) of the Limitations Act, no limitation period applied. In addition, he also relied on the two main governing provisions. He said that per section 16(1)(c) of the Limitations Act, no limitation periods applied to his spousal support claim, and per section 7(3) of the FLA he was still within 6 years of cohabitation.
The Motion Judge rejected the husband’s arguments. Firstly, the Motion Judge concluded that the husband’s requests amounted to consequential relief and not just a declaration so his request under section 16(1)(a) of the Limitations Act had to fail. The husband was not just asking for the Court to declare that the marriage contract be set aside – he was asking for remedies: equalization and spousal support. Secondly, the spousal support exception to the limitation period under section 16(1)(c) of the Limitations Act did not apply because the husband was not asking a court to “enforce” a contract, but to set aside a contract. Thirdly, the court suggested that although he was within the 6-year period to make claims for equalization, that claim could not succeed unless the marriage contract was first set aside, which came with a much shorter 2 year limitation period (para 33).
The Motion Judge concluded the husband should have brought his claim within two years of discovering the issue and was out of time. Although the husband had argued that he lacked capacity (because of a purported bipolar disorder), the Court found that there were no genuine issues about his capacity.
Court of Appeal
At the Court of Appeal, writing for the majority, Justice Feldman overturned the Motion Judge’s conclusions and accepted the husband’s argument. However, the analysis she employed continued to look at the problem as a section 16(1)(a) problem, which in the end caused unnecessary confusion.
Firstly, Justice Feldman disagreed with the Motion Judge’s view that in asking for the court to set aside the marriage contract, the husband was asking for consequential relief. She cited case law for the principle that a declaration is a “formal statement by a court pronouncing upon the existence or non-existence of a legal state of affairs – it is restricted to a declaration of the parties’ rights and does not order any party to do anything” (48). She then cited a consultation group formed by the Attorney General at the time when the Limitations Act was being developed, to explain that declarations are not statute-barred because they do not contain consequential relief and provide no judicial remedies:
Declarations do not grant any judicial remedy. Therefore, since they impose no legal obligation on the defendant there is no justification for barring them. Moreover, there will be circumstances in which parties will wish to submit matters to court, such as interpretation of legal instruments like wills and contracts, without seeking a remedy from the court.
She then stated that when analyzing an issue under section 16(1)(a), one must avoid focusing on whether a declaration and remedy are being sought in the same proceeding but on whether a claim for declaration is “coupled” with a separate claim so that effectively the very substance of the declaration becomes a remedy (51). This is important because each item of relief comes with its own limitation periods – “different limitation periods may govern different claims in the same action.” (50).
Regrettably, Justice Feldman’s application of this principle was less then helpful. Despite stating that one must avoid focusing on procedure and instead focus on the substance (para 51), she suggested that the husband’s claim for a declaration was not “coupled” with his claims for equalization and spousal support because they had different limitation periods. There is no real explanation of what this means.
In any event, she ultimately concluded that “there is no limitation period for bringing the proceeding for a declaration setting aside a marriage contract, whether as a stand-alone matter or if the proceeding also claims other family law relief”. Therefore, the husband was not out of time.
Justice Brown’s Approach
Fortunately, Justice Brown provided his own explanation and although he agreed with Justice Feldman that the appeal should succeed, he disagreed on approaching the issue under section 16(1)(a) of the Limitations Act altogether.
Firstly, Justice Brown did not think that all proceedings under section 56(4) of the FLA should have no limitation period apply. According to Justice Brown, family litigants only ask for declarations under section 56(4) of the FLA so they can set aside marriage contracts and then ask for other consequential relief – usually support or equalization. Declarations are invariably “coupled” with claims for remedies. The reality is that a family proceeding in which a litigant only asks for declaratory order under section 56(4) of the FLA is “a rare bird”.
In fact, in this case, the husband’s pleadings explicitly sought remedies consequential to setting aside the marriage contract. The husband wanted remedies that could only be obtained once the court set aside the marriage contract. The declaration was an attempt to “open the door” to spousal support and equalization. The husband was therefore not just asking for a declaration – he was in pith and substance asking for spousal support and equalization.
Having addressed this, Justice Brown then stated that:
“The starting points for determining the limitation periods applicable to a proceeding in which spousal support or an equalization payment is sought are s. 16(1)(c) of the Limitations Act and s. 7(3) of the FLA, respectively.
This was a significant departure from Justice Feldman because Justice Brown simply avoided looking at the problem under section 16(1)(a) of the Limitations Act. Once again, section 16(1)(a) of the Limitations Act says that no limitation periods apply to declarations; section 16(1)(c) of the Limitations Act says there is no limitation period for support claims, and section 7(3) of the Family Law Act governs the limitation periods for equalization claims.
Justice Brown stated that the starting points (of 16(1)(c) and 7(3) as opposed to 16(1)(a)) should not change just because a court is dealing with a claim under section 56(4) of the FLA to set aside a marriage contract. A proceeding under section 56(4) can ultimately still be viewed as a proceeding for spousal support and equalization (paras 96-100).
Justice Brown then concluded that in this case, the husband was within the 6-year limitation period to address equalization, and could indefinitely address spousal support. Thus, the Motion Judge erred by thinking the husband was out of time.
Ultimately, this case may need to be revisited by the ONCA. The majority’s decision is confusing and unsatisfactory. Justice Feldman does not even use the standard terminology under 16(1)(a) of the Limitations Act, which asks for the court to look at a declaration’s “pith and substance”. Her “coupling” analysis is not helpful and her explanation of why the Husband’s claims are now uncoupled is unclear. It is also not particularly nuanced to assert that all claims under section 56(4) are declaration proceedings to which no limitation periods apply. To borrow Justice Brown’s words, section 16(1)(a) “may or..may not” apply in such cases.
It is simply unhelpful to look at 16(1)(a) when dealing with claims to set aside a marriage contract under section 56(4) of the FLA. If for nothing else, section 16(1)(a) of the Limitations Act should simply be avoided because otherwise one risks using the basic limitation period (a fixture of the civil litigation realm) to deal with family issues, which already come with their own limitation periods. This can cause strange outcomes.