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Common-law spouses will not have a right to equalization of net family property, but they may still face property division issues. If both parties are on title to a property, each can have a right to partition and sell the property, but ownership can be disputed where a resulting trust claim is made. Parties must also be aware of the applicable limitation periods and how they interact with property rights.
Party Seeks Partition and Sale of Jointly Owned Home
In Hutton v. Wakely, the applicant brought a motion for a partial summary judgement seeking an order for the sale of the parties’ jointly owned home. The court had to decide whether the ownership of the property raised a genuine issue requiring a trial. The applicant was registered on title as a joint owner with the respondent. However, the respondent claimed that the applicant was a trustee under a resulting trust and that she held the property interest in trust for him. Accordingly, he alleged that the applicant had no standing to compel the sale of the property. The parties were not married, but the property was purchased in both their names as joint tenants while the applicant was pregnant with their child.
Section 3(1) of the Partition Act permits a person interested in land to apply for the partition or sale of the land. Clearly, a joint tenant has a prima facie right to the partition or sale of land. In some cases, courts have discretion to refuse to grant a partition or sale. In Silva v. Silva, the Ontario Court of Appeal recognized that courts can exercise that discretion where the applicant has acted maliciously, oppressively, or with a vexatious intent towards the respondent. In this case, the applicant established that she was registered on title as a joint tenant, and the respondent never denied that. There was also nothing to suggest that the applicant acted maliciously, oppressively, or with a vexatious intent towards the respondent concerning the proposed partition and sale of the property. The core of the respondent’s argument was that the applicant held legal title, but she was gratuitously placed in title, which resulted in trust in his favour.
Respondent Claims Title to Property Was Held for His Benefit
In Pecore v. Pecore, the Supreme Court of Canada explained that while a trustee may have legal title, a resulting trust “arises when title to property is in one party’s name, but that party, because he or she is a fiduciary or gave no value for the property, is under an obligation to return it to the original title owner”. The court went on to explain that if either situation arises, a rebuttable presumption of a resulting trust is established. This shifts the burden of persuasion onto the recipient to rebut the presumption and establish that a gift was intended. However, Pecore confirms that there is an exception to the presumption of a resulting trust. In some circumstances, a presumption of advancement may arise instead. Advancement “is a gift during the transferor’s lifetime to a transferee who, by marriage or parent-child relationship, is financially dependent on the transferor. A presumption of advancement will be applicable in transfers between married couples. If this presumption arises, the party challenging the transfer must rebut the presumption of a gift. As the court outlined, these “presumptions provide a guide for courts in resolving disputes over transfers where evidence as to the transferor’s intent in making the transfer is unavailable or unpersuasive”.
In Hutton, the respondent pointed out that since he and the applicant were not married, the presumption of advancement would not apply. Justice Vella agreed, explaining that the legislature codified the presumption of advancement but did not include unmarried couples. This also aligned with the exclusion of unmarried couples from both the equalization of net family property and the treatment of matrimonial homes under the Act. The judge acknowledged that this resulted in distinct treatment of married couples that was not available for unmarried couples, but commented that “while it may seem to some that in today’s society there should no longer be such a distinction between married and unmarried spouses for equalization or matrimonial home purposes, this is a matter for the legislature”. The result was that the applicant had the onus to rebut the presumption and establish that the respondent intended the transfer to be a gift.
Court to Decide Whether the Transfer was Intended as a Gift
The judge looked at the time the property was purchased. While the purchase took place with proceeds the respondent received from an inheritance, it was also bought while the applicant was pregnant. Additionally, the property was purchased in both parties’ names after they had looked at other houses together. For the judge, it was reasonable to infer that it was bought with the expectation that it would be the family home. The evidence also clearly established that the property was inhabited by the parties and their child as the family home until the relationship ended. The respondent did claim that the applicant did not make a financial contribution to the operational costs of the property. However, he also admitted that during their cohabitation, they applied for three lines of credit for the purpose of supporting the family, and these were secured against the property. In the judge’s view, this suggested the applicant did meaningfully contribute to the property’s costs, since she remained liable for the outstanding line of credit and property taxes, which were in default.
The respondent was definite in his assertion that while he put the applicant on title to the property, he did intend the transfer to constitute a gift. Yet, he did not offer any evidence or provide an explanation why the property was bought in both names if he only intended the applicant to be a trustee. The evidentiary record for both sides was incomplete. Justice Vella concluded that determining the issue in the absence of anything documenting the parties’ intention required assessing their respective credibility while looking at the surrounding circumstances. It was not clear to the judge that there was no genuine issue for trial regarding the respondent’s resulting trust claim.
Resulting Trust Claim Barred by Limitation Period
The resulting trust claim may have raised a genuine issue requiring a trial, but this was not the end of the analysis. The applicant claimed that the ten-year limitation period under section 4 of the Real Property Limitations Act acted to restrict the respondent’s resulting trust claim. That section provides that no person may bring an action to recover any land within ten years after the time to bring the action first accrued. In McConnell v. Huxtable, the Ontario Court of Appeal held that section 4 of the Act applied to unjust enrichment claims that sought to impose a remedial constructive trust over real property within a family law dispute. Justice Vella felt the same rationale applied to claims seeking a resulting trust. Here, the triggering date for the commencement of the ten-year limitation period was the date of separation. As the judge noted, on that date, the respondent knew the applicant was a joint tenant and had the right to request the partition and sale of the property. Now, more than ten years have passed since the date of separation. Accordingly, his resulting trust claim was barred from proceeding due to it exceeding the applicable limitation period. There was no genuine issue requiring a trial concerning the resulting trust claim.
The third issue concerned whether the sale of the property would be oppressive. The respondent argued that if the applicant’s motion were granted, he would become homeless, and this amounted to oppressive conduct. Justice Vella acknowledged that a judge could refuse to order the partition or sale of a property “where the resulting hardship on the co-tenant resisting the application would constitute oppression”. Nevertheless, any potential prejudice was mitigated here by requiring the proceeds to be held in trust with a payment of $50,000 to each of the parties. This ensured funds were available to secure other accommodation. This was a case where partial summary judgement was appropriate, since the issue of the sale of the property could be severed from the other family issues. An order was granted directing the sale of the property.
Understand How Limitation Periods Interact With Property Claims
Claimants seeking a resulting trust over property within a family context will be subject to a ten-year limitation period. Parties should understand that family law claims are often discoverable upon separation and that bringing claims within the required timeframe is necessary.
Windsor Family Lawyers Helping You Navigate Limitation Periods in Common-Law Property Disputes
When dealing with property division as an unmarried couple, understanding how limitation periods affect your rights is critical, especially if you’re pursuing a resulting trust claim or seeking to partition a shared home. If too much time passes after separation, you may lose the right to assert your claim. The experienced team at Johnson Miller Family Lawyers can help you navigate complex family property disputes and ensure your interests are protected. Call 519.973.1500 or complete our online questionnaire to book a confidential consultation today.
