The Ontario Superior Court of Justice’s decision in Hutton v. Wakely, 2023 ONSC 6964, offers valuable insights for family law practitioners dealing with property division between unmarried partners. The case grapples with the complex intersection of property rights, resulting trusts, and limitation periods.
Facts
Susannah Hutton and Kenneth Wakely, an unmarried couple, cohabited from 2007 to 2012 and had one child together. They jointly purchased a family home using Wakely’s inheritance funds, with the property registered in both names as joint tenants.
Post-separation, Hutton brought an application under the Partition Act, R.S.O. 1990, c. P.4 to force the sale of the jointly owned home. Wakely argued that Hutton held her interest in trust for him under a resulting trust, as he had provided the funds for the purchase.
Legal Analysis
The Court confirmed that, as a joint tenant, Hutton had a prima facie right under s. 2 and 3(1) of the Partition Act to compel the sale of the property – a joint tenant has this right unless the applicant has acted maliciously, oppressively, or with vexatious intent.
In assessing Wakely’s resulting trust claim, the Court applied the principles from Pecore v. Pecore, 2007 SCC 17. Mr. Wakely, the Respondent, asserted that placing the Applicant on title was gratuitous and therefore presumptively gave rise to a resulting trust in his favour. However, there is an exception to this general presumption of a resulting trust called a presumption of advancement. A presumption of advancement arises in two situations, one of which is a transfer between a husband and a wife (Pecore, at paras. 28). The Respondent argued that since he and the Applicant were not married, therefore, this presumption of advancement does not apply. The Court agreed with the Respondent. The Legislature had codified this presumption of advancement and did not include unmarried couples in s. 14 of the Family Law Act. This is in keeping with the exclusion of unmarried couples from the equalization and matrimonial home regimes under Parts I and II of the Family Law Act. It also codified the presumption of resulting trust in other situations under the same provision.
Significantly, the Court found that Wakely’s resulting trust claim was barred by the 10-year limitation period under s. 4 of the Real Property Limitations Act, R.S.O. 1990, c. L. 15. Relying on McConnell v. Huxtable, 2014 ONCA 86, the Court confirmed that this limitation period applies to both resulting and constructive trust claims in the family law context. The claim was discoverable at separation and brought more than 10 years later.
Court Findings
The Court granted Hutton’s application and ordered the sale of the property pursuant to the Partition Act. To balance the parties’ interests and avoid oppression, the Court directed that each party receive $50,000 from the sale proceeds, with the remainder to be held in trust pending further agreement or court order. This would provide Wakely with funds for alternative housing while preserving the remaining equity for outstanding issues like child support.
Practice Tips
- Advise clients on the impact of title and the Partition Act: Ensure clients understand the implications of joint tenancy and the prima facie right to partition and sale under the Partition Act, subject to the test in Silva v. Silva.
- Consider the presumptions of resulting trust and advancement: When dealing with gratuitous transfers between unmarried partners, be alert to the potential application of the presumption of resulting trust per Pecore v. Pecore. Marshall evidence to rebut or support the presumption as appropriate.
- Adhere to limitation periods: McConnell v. Huxtable and now Hutton v. Wakely confirm the 10-year limitation period under s. 4 of the Real Property Limitations Act applies to both resulting and constructive trust claims in family law. Advise clients to bring claims within this timeframe.
- Craft nuanced property orders: When seeking partition and sale orders, consider creative solutions to balance competing interests and avoid oppression, such as releasing some funds to the parties while holding the remainder in trust pending the resolution of other issues.
Hutton v. Wakely serves as a valuable reminder of the intricate legal and equitable principles at play in unmarried property division cases. By understanding the key tests, presumptions, and limitation periods, and crafting strategic arguments and creative solutions, family law practitioners can effectively advocate for their clients in these challenging cases.
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