Time Limitations in Setting Aside Marriage Contracts
In a recent Ontario Court of Appeal decision, the court had to determine which, if any, time limitations applied to a request to set aside a marriage contract.
Husband Seeks to Set Aside Marriage Contract
The husband and wife were married in July 2005. Prior to the wedding, they had signed a marriage contract.
When the parties separated in August 2012, the husband moved out of the matrimonial home, which was owned by the wife.
The husband and wife each retained counsel and began negotiations until the husband abandoned the negotiations in the spring of 2013 because his existing mental illness had worsened. In the spring of 2015, the husband’s lawyer contacted the wife’s lawyer to indicate that the husband was preparing to initiate a court proceeding.
However, no proceeding was commenced until August 24, 2017, when the husband brought an application for spousal support, equalization of net family property, and yearly financial disclosure. The husband did not explicitly seek to set aside the marriage contract in his original pleading, but his statement of facts referred to the contract and stated that he had signed it with no legal advice, no financial disclosure, and under duress.
The wife filed an answer, relying primarily on the marriage contract as a defence to the husband’s claims. She subsequently amended her answer to argue that the husband’s claim to set aside the marriage contract was statute-barred by s. 4 of the Limitations Act.
The two issues on the motion were :
- Whether the two-year limitation period in s. 4 of the Limitations Act applied to an application to set aside a marriage contract under s. 56(4) of the Family Law Act; and
- If so, whether the husband had brought his application in time.
Lower Court Finds that Husband’s Request is Out of Time
The motion judge found that the request to set aside the marriage contract constituted a “claim to remedy an injury, loss or damage” within the meaning of s. 4 of the Limitations Actbecause the husband’s loss was the extinguishment of his rights under the Family Law Act to equalization and spousal support by an allegedly improperly obtained marriage contract. Therefore, the two-year limitation period applied unless the Limitations Act provided otherwise.
The motion judge then considered whether a request to set aside a marriage contract came within s. 16(1)(a) of the Limitations Act, which provides that there is no limitation period for “a proceeding for a declaration if no consequential relief is sought”. The motion judge found that while the husband was seeking a declaration that the marriage contract was of no force or effect, s. 16(1)(a) was not engaged because he was also seeking the consequential relief of spousal support and equalization of net family property.
Having found that the two-year limitation period applied, the motion judge turned to the question of when the husband discovered his claim. He found that by October 17, 2012, when the husband told his social worker that the marriage contract “had issues” and that the wife was still relying on it, the husband knew that a court proceeding was appropriate.
Accordingly, the motion judge found that the husband’s request for rescission of the marriage contract was out of time, as more than two years had elapsed since he discovered his claim.
Court of Appeal Reverses Lower Court
The court began by explaining that, in the family law context, the operation of the Limitations Act together with the Family Law Act prescribes limitation periods that are, in most cases, considerably more generous than the two-year period set out in s. 4 of the Limitations Act, in recognition of the unique situation of spouses and families on the breakup of a marriage.
The court noted that there is no limitation period provided in the Family Law Act for setting aside all or part of a domestic contract under s. 56(4). Additionally, the court found that s. 16(1)(a) of the Limitations Act provides that there will be no limitation period for a proceeding for a declaration “if no consequential relief is sought”.
The court concluded that the request to set aside a marriage contract under s. 56(4) of the Family Law Act was a proceeding for a declaration where no consequential relief is sought under 16(1)(a); therefore,there was no limitation period for bringing the proceeding.
As a result, the court concluded that the motion judge erred in law in failing to find that s. 16(1)(a) of the Limitations Actapplies to a proceeding under s. 56(4) of the Family Law Act for a declaration setting aside the marriage contract, and in finding that the two-year limitation period under s. 4applied.
The court allowed the appeal and set aside the lower court judgment.
At Feigenbaum Law, our goal is to help you move forward following the breakdown of a relationship while retaining as much financial stability as possible and ensuring your children are provided for. Mark Feigenbaum is able to counsel his clients on all potential risks that may result from a family law dispute, not just those related strictly to the breakdown of a marriage. Contact Mark online or call him at (905) 695-1269 or toll-free at (877) 275-4792 to book a consultation.