Constructive Trusts Lawyers In Toronto

The fact that there is no legislation that deals with property division for Ontario's common law couples does not mean that common law couples are prohibited from applying for property division on separation. It means that in the absence of legislated rules as to how property is to be divided, common law couples in Ontario who wish to claim property division on separation must rely on the equitable doctrine of unjust enrichment to do so.

The application of unjust enrichment principles to common law relationships is highly subjective and relies on much judicial discretion. In order to claim unjust enrichment, the nontitled spouse must demonstrate that his or her efforts have enriched the other spouse with a corresponding deprivation to the nontitled spouse, and there is no legal basis for the enrichment. In a typical example, the nontitled common law spouse has dedicated his or her time, money and effort to renovate a home registered in the name of the other spouse, thus adding value. The nontitled spouse claims that the titled spouse would be unjustly enriched by his or her efforts if the nontitled spouse is not granted compensation or an ownership interest in the home resulting from his or her efforts. The law will not presume that the nontitled spouse performed the work as a gift to the other without clear evidence of the intent to bestow a gift. Once the unjust enrichment is established, courts must then decide the appropriate remedy, either a monetary compensation or a partial ownership ("constructive trust") interest in the property.

The difficulty with the unjust enrichment claim is that it requires an extensive accounting of which party did what and who paid for what during the common law relationship. The accounting exercise in some cases can go back as far as 10-20 years. Further, there is much difficulty in determining the intent of the parties regarding the acquisition and sharing of property many years after the commencement of the relationship.

Kerr v. Baranow

In the 2011 Supreme Court of Canada decision in Kerr v. Baranow, the Court set a number of principles to further define the law of unjust enrichment as applied to common law couples. Justice Cromwell uses the concept of "joint family venture" to determine whether an unjust enrichment claim should succeed. According to Justice Cromwell, if common law parties are engaged in a "joint family venture", and one party leaves the relationship with significant more assets and wealth than the other, it will be assumed that the titled spouse would be unjustly enriched if there was no obligation to share the wealth. The concept of "joint family venture" is intended by to reduce the need for extensive accounting in determining whether unjust enrichment exists.

In determining whether or not a "joint family venture" exists, the following factors should be considered, although not exhaustive:

•· Mutual effort: Have the parties worked together toward a common goal? This may include consideration of the pooling of efforts and teamwork, decision to raise children together, and the length of the relationship.

•· Economic Integration: The more extensive the integration of the couple's finances, economic interests and economic well-being, the more likely it is that they should be considered as having been engaged in a joint family venture.

•· Actual Intent: Did the parties intend to form a joint family venture? These intentions may be stated or inferred by the parties' actions. Did the parties hold themselves out as being "equivalent to married?" Was the relationship long and stable so that engaging in the precise weighing of the benefits conferred within the relationship would be nearly impossible? Were the parties lax in such issues as accounting for contributions to properties, holding of titles or contributions to renovations, all which demonstrate an intent to create a joint family venture?

•· Priority of the Family: A relevant question is whether there has been in some sense detrimental reliance on the relationship, by one or both of the parties, for the sake of the family. Did the parties plan for their financial future together? Did one party give up his or her employment for the common financial future of both of them or to raise children? Is one party left in a worse position than he or she otherwise would have been if he or she had not acted in a way to assist the family to his or her financial detriment?

•· Mutual Benefit Conferral: According to Justice Cromwell, the unjust enrichment analysis in domestic situations is often complicated by the fact that there has been a mutual conferral of benefits, as each party in almost all cases confers benefits to the other. In determining whether or not there has been unjust enrichment given the mutual exchange of benefits, the respective contributions of the parties are taken into account in determining the claimant's proportionate share. This weighing of benefits is not an exact science. It calls for the reasoned exercise of judgment in light of all the circumstances. According to Justice Cromwell, mutual enrichments should mainly be considered at the defence and remedy stages, and also may be considered at the juristic reason stage to the extent that the provisions of reciprocal benefits constitute existence (or nonexistence) of juristic reasons for the enrichment.

•· Reasonable or Legitimate Expectations: In some cases, the fact that mutual benefits were conferred or that the benefits provided pursuant to the parties reasonable expectations may be relevant evidence of whether one of the existing categories of juristic reasons is present, such as a contract for the provision of a benefit. The question is whether the parties' expectations show the retention of the benefit is just.

Once the "joint family venture" is established, courts must then define the remedy, which may be monetary compensation or a percentage interest in the "joint family venture." Courts still have significant discretion in terms of the appropriate remedy. For instance, if a percentage interest in the "joint family venture" is awarded to a common law spouse, such percentage may be anywhere from 1-100% depending on the evidence and the particular circumstances of the case.

What Does This All Mean In Practise For Ontario Common Law Couples?

The important point to remember is that the lack of legislation in Ontario governing property division for common law couples does not mean that there is no common law property division in Ontario. Individuals in common law relationships must understand that if they wish to clearly specify property rights, or spousal support rights, that will govern on separation, a properly drafted cohabitation agreement is absolutely essential. Without such a cohabitation agreement, common law couples who go through a separation may very well face lengthy and very expensive court proceedings to determine whether spousal support may be justified in the circumstances of the relationship, and whether a "joint family venture" exists, and if so, what the appropriate remedy may be.

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Contact one of our offices to discuss your questions with a Mississauga or Toronto family law lawyer. Our initial consultations are offered at a reduced rate. We will conduct a thorough review of your case, provide honest answers to your questions, and explain what we can do to help you. You can reach us by phone at 888-353-1817 or via email to get started.