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ONTARIO COURT OF APPEAL: NO SEPARATE LIMITATION PERIOD FOR SETTING ASIDE A DOMESTIC CONTRACT

Kyle v. Atwill, 2020 ONCA 476

In Kyle v. Atwill, 2020 ONCA 476, the Court of Appeal for Ontario, in allowing our client's appeal, clarified the application of limitation periods to cases where a party seeks to claim relief contrary to the provisions of a marriage contract.

Aaron Franks and Rhea Kamin argued the appeal on behalf of the Husband.

Limitation periods have serious consequences for litigants and lawyers in Ontario. They govern the  time limits by which a person must bring a claim for relief against another person.  Claims commenced after an applicable limitation period has expired can be barred from proceeding.  Accordingly, lawyers need to be aware of what limitation period or periods apply for their client’s particular claim or claims.

The Limitations Act, 2002, which was meant to harmonize and standardize limitation periods, sets out a general two-year limitation period that applies to all claims to "remedy an injury, loss or damage as a result of an act of omission". There are exceptions to the two-year limitation period, including for certain family law claims, that are specifically set out in other statutes. For example, the two-year limitation period does not apply to a claim for equalization of net family properties under the Family Law Act. That claim is subject to the limitation periods in the Family Law Act, which is the earlier of six years after the date the parties separate; or two years after the marriage is terminated by divorce or declared a nullity; or six months after a spouse dies. Also, the Limitations Act, 2002, specifically says that there is no limitation period to commence a claim for spousal support or child support.

But what about a request to set aside a marriage contract under section 56(4) of the Family Law Act? What limitation period applies, if any? There is no limitation period specified in that section of the Act. Is it the two-year limitation period in the Limitations Act, 2002, the Family Law Act limitation periods or is there no limitation period? That was the issue that the Court of Appeal had to decide in this case.

In this case, the parties signed a marriage contract about one week before their wedding, in July 2005. The wife found a template "prenuptial agreement" on the internet and asked the husband to sign it. The agreement stated that, in the event of a separation, the parties would be "separate as to property". They also waived their right to claim "alimony or support". The agreement also said that the parties had independent legal advice and exchanged financial disclosure, neither of which occurred.

The parties separated in August, 2012. They retained lawyers and began negotiating a resolution to their separation. The negotiations stopped due to the husband's health issues. In the spring of 2015, the husband told the wife that he was going to start a court proceeding. However, he did not start the proceeding until August 24, 2017.

In his Application, the husband sought an Order for equalization of net family properties and spousal support.    In response, the wife relied on the marriage contract and took the position that it barred his claims for equalization and spousal support. The husband took the position that the marriage contract was invalid and sought to set it aside. The wife said that the husband was out of time to set aside the marriage contract because the general two-year limitation period had expired.

The wife brought a motion for summary judgment to dismiss the husband's "claim" to set aside the marriage contract, something that would have to be determined before he could claim his other relief.  The motions judge agreed with the wife that the husband's request to set aside the marriage contract was a separate "claim" to which the more restrictive two-year limitation period applied. Since the husband's application was commenced two years after the expiry of the limitation period, he could not ask the court to set aside the marriage contract..  

Epstein Cole acted for the Husband on his appeal to the Court of Appeal. 

In two sets of concurring reasons, the Court of Appeal unanimously allowed the Husband’s appeal, but the Court was divided in the legal theory used to allow the appeal.

Justice Feldman and Justice Zarnett concluded that the Limitations Act, 2002 applies to an application to set aside a marriage contract. However, because such a request constitutes a claim for a "declaration where no consequential relief is sought" it is not captured by the two year limitation period, in accordance with s.16(1)(a) of the Limitations Act, 2002. The husband could therefore proceed with his request to set aside the marriage contract, and his claim for equalization and spousal support, neither of which was time-barred.

Justice Brown disagreed with the majority's reasons, but not the result. Justice Brown accepted the husband's position that a request to set aside a marriage contract is not a stand-alone "claim" that attracts a limitation period; rather, it is a "gateway" to claiming other relief, in this case, equalization and spousal support. Therefore, the limitation periods that applied are:

  1. the Family Law Act's six-year limitation period, in the case of the husband's claim for equalization of net family properties; and
  2. no limitation period, in the case of the husband's claim for spousal support.

Although the Panel was divided in its reasons, all judges acknowledged  the "unique" nature of family law in deciding this appeal. Justice Feldman commented that the special and often more generous limitation periods in family law, "account for the need to allow spouses more time to try to resolve their property issues without having to go to court, and the fact that a spouse or former spouse's support needs can change over time and may be addressed whenever they do." (at para 32)

Justice Brown was concerned that applying a separate two-year limitation period to a request to set aside a marriage contract would overcomplicate family law proceedings, and could even lead to harsh and absurd results where, for example, a spouse must apply to set aside the contract while they remain happily married.

This is an important and welcome decision for family law litigants and their lawyers because it clarifies a limitation period issue that has been unresolved to date. Parties and lawyers do not need to worry about a separate two-year limitation period when seeking an Order  setting aside a domestic contract.  However, we must still be aware of the various limitation periods that apply to a party's substantive claims in a family law context - that has not changed.