Kerr v. Baranow / Vanasse v. Seguin: Unmarried partners in most common-law provinces in Canada must rely on the judge for property rights upon break-up.
By Gary S. Joseph and Vanessa Lam
Unmarried partners in most common-law provinces in Canada must rely on judge-made common law for property rights upon relationship breakdown. Primarily, the courts have turned to the law of resulting trust and the doctrine of unjust enrichment.
A resulting trust traditionally arose where a trust “results” to the person who advanced the purchase money for the property but was not on title. The intention of the grantor or contributor alone is what counts. In Canada, a “common intention” resulting trust developed from the common intention of the parties to share ownership of property even though it was held in only one party’s name. However, the Supreme Court of Canada took a fresh look at the law of resulting trusts in this case. The court held that the “common intention” theory was doctrinally unsound and should have no continuing role in the resolution of domestic property disputes.
Kerr v. Baranow / Vanasse v. Seguin: Basis for the Distribution of Assets
Unjust enrichment, on the other hand, was described as the “pre-eminent vehicle” for these type of claims, providing for a principled basis to address claims for the distribution of assets. The plaintiff must establish three elements: i) an enrichment to the defendant; ii) a correspondent deprivation to the plaintiff; and iii) the absence of a juristic reason for the enrichment. There is a straightforward economic approach to the first two elements, where the plaintiff must show that he or she has provided a tangible benefit to the defendant that the defendant received and retained (which may include provision of domestic services). The Supreme Court of Canada also endorsed a more nuanced, two-part approach to the third element – the absence of a juristic reason. First, the court examines established categories of juristic reasons (e.g. a contract, a donative intent). Second, if necessary, the court considers the reasonable expectations of the parties and public policy considerations to determine whether the parties’ mutual expectations show that retention of the benefit is just. Here the defendant bears the burden of establishing that there is a juristic reason for retaining the benefit that does not fall within the existing categories. Evidence of the mutual exchange of benefits is limited at this stage to the extent that it is relevant to the parties’ reasonable expectations. Otherwise, the mutual exchange of benefits should be taken into account at the defence and/or remedy stage.
Rejection of Dichotomy of Remedial Choice
If all three criteria for unjust enrichment are established, the court may award a “personal restitutionary award” (monetary) or a “restitutionary proprietary award” (usually a constructive trust interest in the property). The Supreme Court of Canada rejected the “dichotomy of remedial choice,” where some courts held that a monetary award must invariably be quantified on a quantum meruit / “fee-for-services” / “value received” basis and thus courts had to choose between awarding a monetary remedy on that basis or a constructive trust. A more flexible approach would address the fact that many domestic partners do not fit comfortably in a “fee-for-services” or “share of specific property” mold. Where unjust enrichment is best characterized as an unjust retention of a disproportionate share of assets accumulated during the course of a joint family venture to which both partners have contributed, the monetary remedy should reflect that fact. It should be assessed by determining the proportionate contribution of the plaintiff to the accumulation of wealth made through joint efforts. At this stage, the respective contributions of both parties are taken into account, which generally does not call for a minute examination of the give and take of all daily life, but reasoned exercise of judgment in light of all the evidence. The court must first determine if the parties have in fact been engaged in a joint family venture and, if so, if there is a link between the contributions and the accumulation of assets/wealth. In determining whether there was a joint family venture, the court may look at (i) mutual effort, (ii) economic integration, (iii) actual intent, and (iv) priority of the family. Only where a monetary award is inappropriate or insufficient is a proprietary remedy of a constructive remedial trust imposed, which is a broad and flexible tool and does not refer to an intention to create a trust. A constructive trust requires a “clear proprietary link” between the contributions, which may be direct or indirect, and the property. The extent of the trust should be proportionate to the plaintiff’s contributions (and thus could result in unequal shares of the property).
The Supreme Court of Canada also commented that, although discretion will be exercised in ordering spousal support prior to the date of the order, the date of effective notice of a claim or the date of the application has been considered the “general rule,” “default option,” or “usual commencement date” for spousal support.
Gary S. Joseph is a certified specialist in family law with an LL.M. in constitutional law. He has extensive trial and appellate experience at all levels of our courts in both Ontario and Alberta and has appeared as counsel in the Supreme Court of Canada. He is a founding lecturer for the Family Information Session program of the Superior Court of Justice and was recognized by the Chief Justice for his efforts in this regard.
Vanessa Lam studied psychology at the University of Toronto and law at Queen’s University. Prior to joining MacDonald & Partners LLP, she worked as a judicial law clerk with the Ontario Superior Court of Justice. Vanessa’s practice is focused on research in all areas of family law, with a special interest in children’s issues.