Ontario Court of Appeal takes another look at the Two-Year Limitation Period for Commencing Claims after a Divorce has been Finalized
El Feky v. Tohamy, 2010 ONCA 674
In this case, the parties were married for 22 years when they separated in 2004. Originally from Egypt, the parties had built their life in Canada to include a successful business and investment properties which were owned equally by the parties and their two sons on the Date of Separation.
In 2004, the Husband gave the Wife a “separation agreement” to be signed which released her claims to the Matrimonial Home and Spousal Support following a $100,000.00 USD lump sum payment. The Wife signed this agreement and moved back to Egypt.
In 2006 she was served with a copy of the Husband’s Application for Divorce while she was still in Egypt, but did not have the financial means to obtain Canadian legal advice at that time. She did not receive a copy of the final Divorce Order until her return to Canada in 2008 when she learned that she had been Divorced. Also in 2008, she was given a second Final Agreement from the Husband to sign. She claimed that she was brought to the lawyer’s office by her son and signed the document although the lawyer advised that it was unfair because she was frightened by her son and he had threatened to leave her there if she did not sign it.
The two-year Limitation Period within which to bring a claim for Divorce ended on November 2, 2008 and the Wife brought her claim for equalization, support and ancillary relief four months after that. She relied on s. 2(8) of the Family Law Act as part of her claim to extend the time within which she was allowed to bring her claim and the fact that the Agreements of 2004 and 2008 should be set aside as per s. 56(4) of the Family Law Act. The Husband responded by bringing a Motion for Summary Judgment based on the fact that the Limitation Period within which to bring a claim had expired. The Motions Judge denied the Wife’s application for an extension of time of the Limitation Period and allowed the Husbands Motion for Summary Judgment as he believed that the Wife understood both of the agreements that she had signed and therefore, there was no reason for her to bring a subsequent claim for equalization, support, and ancillary relief.
Court of Appeal Decision
The Wife Appealed the decision of the Motions Judge and the Court agreed with her and allowed the Appeal. In its reasons, the Court stated that the Motions judged erred in law in his application of the test under s. 2(8) of the Family Law Rules as he failed to look at the merits for her claims for Equalization, but only focused on the explanation for delay. The “relief” which is referred to in s. 2(8)(a) and (b) is “not referable to the extension of time sought by the moving party on the motion, but to the relief sought on the prescribed claim.” Therefore, the Motions Judge was wrong in focusing on the relief of the extending the Limitation Period and should have instead looked into the relief of Equalizing the Net Family Property and the merits of her claim for same.
It was also held that the Motions Judge failed to look at whether the Wife would be able to set aside the 2008 agreement in order to gain access to the Equalization provisions of the Family Law Act. Pursuant to s. 56(4) of the Act, the Wife could do so by showing that the Husband had
- failed to disclose significant debts or assets or other liabilities,
- that she did not understand the nature or consequences of the contract, or
- otherwise in accordance with the law of contract.
As the Motions Judge only considered the misrepresentation by the Husband, he failed to look at the coercion which the son placed on the Wife forcing her into signing the 2008 Agreement against the advice of her lawyer. It was clear to the Court of Appeal that there were reasons to believe that the agreement was signed under coercion or duress and on that basis, the Agreement could be set aside. Therefore, the Wife would be able to gain access to the provisions of the Family Law Act. This finding strengthened her claim for the relief sought and the reasons why the two year Limitation Period should be extended under s. 2(8) of the Act. Therefore, the Court held that there were apparent grounds for relief and that she had met the first condition under s. 2(8).
The second condition to be met is in regards to whether the delay had been incurred in good faith. The Court held that the Motions Judge erred in determining otherwise as the Wife did not have legal advice when she signed the first agreement in 2004, she was not able to obtain legal advice in 2006 when she was served with the Divorce Application, and when she learned about the Divorce Order upon her return to Canada, she immediately applied for relief under the Act. Therefore, she had acted in good faith and was not willfully blind when allowing the two year Limitation Period to lapse before bringing her claims.
Overall, the Court of Appeal, allowed the Appeal and allowed the Wife to bring her Application for an extension of time under s. 2(8) of the Family Law Act and to bring her claim for Equalization of Net Family Property. On that note, the Court mentioned that her claim for Equalization would first be reliant on her ability to have the Agreements of 2004 and 2008 set aside, but at least she would now have the chance to have her arguments heard. Finally, based on all of the foregoing, the Court of Appeal held that the order of the Motion’s Judge granting the summary judgment must also be set aside.