Extension of limitation period for claiming equalization of property
Horner v Horner, 2014 ONSC 6320
In this case, the Applicant wife makes a motion under Section 2(8) of the Family Law Act to extend the time for her to make a claim for equalization of Net Family Property.
The parties married in September 1997 and separated on October 8, 2006. Following separation, they individually retained counsel and began negotiating over the next couple years over corollary issues and attempted to deal with property issues. Aside from the jointly owned matrimonial home, there was debate whether a cottage owned by the Respondent prior to marriage was a matrimonial home for which he obtained real estate value appraisals for during the negotiations. In 2009, the Applicant’s counsel advised that she had equalization claim against the Respondent, but she remained unaware of the limitation period on her right to make the claim. Later that year, the Applicant relieved her lawyer as she could no longer afford counsel.
The matrimonial home where the Applicant and the children resided post-separation was destroyed in a fire on October 13, 2013; one year after the expiry of the six year limitation period for an equalization claim. The lawyer she consulted with regarding the fire advised her that there was a limitation period for equalization claims. The Applicant immediately brought an Application to seek an equalization payment and a commenced motion to seek an extension of time for division of net family property.
Under section 7(3) of the Family Law Act, an equalization claim under section 5 must be brought within six years of separation. However, the Court has power to grant an extension of time to bring a claim if the Applicant can satisfy the three pronged test in section 2(8) as follows:
- there are apparent grounds for relief;
- relief is unavailable because of delay that has been incurred in good faith;
- no person will suffer substantial prejudice by reason of the delay
Apparent Grounds for Relief
The Applicant had a prima facie case for equalization because she was a joint owner of the matrimonial home at the time of the fire and was thus entitled to division of the insurance proceeds.
Relying on Rae v Rae¸ the Respondent asserts that ignorance of the limitation period does not constitute “good faith,” as such, her delay lacked a necessary element for relief.
However, according to the Court of Appeal decision in El Feky v Tohamy, Justice Rosenberg articulated that to establish ‘good faith’ under s. 2(8), the moving party must demonstrate that they “acted honestly and with no ulterior motive.” Furthermore, while mere failure to make inquiries does not necessarily negate ‘good faith’, the absence of enquiries should not constitute willful blindness or otherwise fall below community expectations in all the circumstances.
Justice Rosenberg had found that the Applicant in El Feky was ignorant of her rights with a state of mind was that of blameless ignorance. He ruled that there was no willful blindness, as, in those circumstances, willful blindness would have amounted to a lack of good faith.
In the case at hand, the evidence demonstrated that while the Applicant was aware of her general rights to equalization, she remained unaware of the limitation period until after the house fire. The Court concluded that the Applicant was not willfully blind in delaying pursuit of a claim for the following reasons:
- She would have commenced a claim earlier had she known of the limitation period and acted promptly when she was notified of such by her counsel in 2013;
- She was not dishonest in delaying commencement of her claim;
- There was no ulterior motive to her failure to commence earlier;
- She did not commence the action earlier in 2009 because she had limited resources, could not continue to pay legal fees, and became concerned with care of her child who was having significant health issues.
No Substantial Prejudice to the Respondent
The Respondent argues that he would suffer substantial prejudice as the additional year following the expiry of the limitation period makes the various property issues difficult to litigate because of the passage of time. In particular, he claimed that it would be difficult for him to gather the necessary evidence to support his position at trial since some documentation was destroyed in the fire.
As the Respondent’s claim was too vague, it failed to establish any substantial prejudice, especially since a trial would be the more appropriate venue to deal with the property-related issues.
Furthermore, the Respondent was aware that the Applicant had a claim under the FLA for equalization, especially since he had obtained appraisals of the cottage to support position. There was no substantial prejudice arising from the additional delay as alternative methods were available for the Respondent to obtain copies of the destroyed documents.
The Applicant was granted an extension of time under s. 2(8)) of the FLA.