Property Division and Unjust Enrichment in Family Law

October 23, 2023
October 23, 2023 Plat Simionati

Property Division and Unjust Enrichment in Family Law

Disclaimer: This article aims to provide educational information surrounding unjust enrichment. It is not intended to serve as legal advice. Consult with a lawyer and exercise your discretion before taking action based on the information provided in the blog. 

We spoke in a previous article about the difference between the rights of married couples and a common-law relationship under The Family Law Act.  

If you are in a common-law partnership that is ending, you may wonder, how will we divide our property? How will we treat the assets we bought together? Can I make a claim for property that belonged to my partner? 

This article will answers these questions and shed light on the intricate legal aspects of property division within common-law relationships. 

General Principles of Property Division for Domestic Partnerships 

As noted, the Family Law Act provisions discussing how to divide property only applies to legally married couples.

So, how is your property divided if your common law relationship ends? 

In broad strokes, the general rule can be summarized as follows:

  • You retain what you brought into the relationship. 
  • If you bought it during the relationship, it’s yours. 
  • Assets purchased jointly are divided equally. 

However, it can become more complicated. The longer the relationship, the more the lines between “mine” and “yours” have blurred. For example, what if you have contributed significantly to your family’s home and increased its value, but the legal title belongs to your spouse? One spouse may have purchased the property in question, but both partners contributed to its maintenance or improvement throughout the relationship. 

That is where the doctrine of unjust enrichment comes in. It plays a pivotal role in ensuring equitable property division and protecting the rights of each spouse. These legal doctrines, recognized in Ontario and throughout Canada, address situations where one party has been unjustly enriched to the detriment of the other in a common-law relationship or marriage. 

Unjust Enrichment Claim: Elements and Significance

You must be able to establish three elements to initiate an unjust enrichment claim.

  1. You must establish that there was an enrichment of or benefit to one spouse.
  2. This enrichment meant that the other party suffered a corresponding deprivation.
  3. There must be no valid juristic reason for the enrichment, whether in law or justice. This means that there should be no legal justification for one spouse to benefit unfairly at the expense of the other.

The Doctrine of Constructive Trust

In cases where unjust enrichment has been established, the court may impose a constructive trust. This equitable remedy addresses situations where one party, often the legal owner of the property, holds the property in trust for the benefit of the other party who has made contributions and acquisitions related to that property. Essentially, the court “constructs a trust” to recognize the other party’s equitable interest in the property.

In a successful claim for unjust enrichment, the court can decide on two appropriate remedies: either a monetary award or a proprietary award. It may require the legal owner to transfer a portion of their ownership interest to the other party, effectively acknowledging joint ownership. Alternatively, it may entail the sale of the property, and dividing the proceeds between the parties according to their respective contributions. 

How are Monetary Awards for Unjust Enrichment Calculated?

The Supreme Court of Canada held that the usual method of calculating the value for services (quantum meruit) is not appropriate in these cases. It instead introduced the concept of a joint family venture. If a claim for unjust enrichment has been made and adequately proven, how does the court set an amount for that monetary award? 

First, evaluate the relationship to determine if the parties participated in a joint family venture. If so, ascertain whether the contributions during that period were connected to the accumulation of wealth for both parties. The award should amount to the party’s contributions in proportion to the accumulated wealth.

How does the court discern whether the parties participated in a joint family venture?  

Landmark Supreme Court Case: Kerr v. Baranow 

The case of Kerr v. Baranow, a pivotal 2011 Supreme Court of Canada decision (2011 SCC 10), is the key case related to property division for common-law spouses in Canada. It introduced the concepts of unjust enrichment. It also introduced the joint family venture as the guiding principle in cases where unmarried couples seek to divide their assets following a relationship breakdown.

In family law, married couples are presumed to be working together on shared family goals. The law does not make that presumption for unmarried couples. In determining whether a joint family venture existed, the court will consider four key pillars: 

  • mutual effort,
  • economic integration,
  • actual intent, and
  • the priority of the family

This is not an exhaustive checklist. The courts will consider these factors in the context of all the evidence the parties bring forward. 

Mutual Interest

Mutual interest simply means that the parties work together towards a common or joint goal. For example, this may mean pooling resources entirely to fund the family’s plans. Likewise, it could mean one partner taking on all or most of the domestic labour to free up the other to pursue more opportunities in the workforce. 

Economic Integration 

Basically, economic integration means looking at how intermingled the couple’s finances are, including joint investments, debts and liabilities. 

Actual Intent

Actual intent can be either what the parties expressed or can be reasonably inferred by their behaviour. This can include how their property was to be dispersed upon their deaths (e.g., in a will) or if the parties considered their relationship equivalent to a marriage. 

The Priority of the Family  

The “priority of the family” refers to the degree to which the parties have prioritized the family when making their decisions. For example, a partner may leave the workforce to focus on raising their children or relocate to facilitate the other party’s career, sacrificing their career and employment-related network. 

Planning Ahead: The Role of Cohabitation Agreements

Of course, the best way to solve a problem is to avoid it in the first place. Again, common-law spouses can take proactive measures to protect their financial interests by entering into cohabitation agreements. These legal documents can specify property division from the outset, reducing potential disputes during a separation. Cohabitation agreements can certainly address financial expectations, contributions, and property rights, providing clarity and protection for both parties.

Navigating Your Unjust Enrichment Claim With Plat Simionati LLP 

Unjust enrichment and constructive trust are powerful tools that help ensure fair division of your property and protect the rights of spouses. When navigating these legal principles, it’s essential to consider the specific facts of each case, the contributions made by each party, and the reasonable expectations concerning property. 

Experience the difference with Plat Simionati LLP, your dedicated family law experts. Our unwavering commitment to your case means we offer comprehensive solutions, including family law mediation, expert legal advice, and courtroom representation. Let us guide you through your family law journey with a personalized touch and a steadfast resolve to achieve your desired outcomes.