E. Property Rights

Author:Julien D. Payne - Marilyn A. Payne
Pages:49-56
 
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Page 49

Every Canadian province and territory has enacted legislation to provide for the sharing of property between spouses on marriage breakdown or divorce. Unmarried cohabitants are not always covered by this legislation and cannot invoke section 15 of the Canadian Charter of Rights and Freedoms to claim statutory property rights.42Although British Columbia,43Manitoba,44Nova Scotia, Nunavut, the Northwest Territories, Quebec, Saskatchewan,45and the Yukon Territory currently confer statutory rights on unmarried cohabitants under prescribed conditions, Alberta, New Brunswick, and Newfoundland and Labrador continue to exclude all unmarried cohabitants from their matrimonial property regimes. Consequently, there is a patchwork quilt of diverse provincial and territorial regimes in Canada, which will continue to generate litigation that may become relatively complex in light of the inter-provincial mobility of Canadians and the implications of private international law rules.

Unmarried cohabitants receive some measure of protection across Canada under the judge-made doctrine of unjust enrichment, but this doctrine, unlike statutory matrimonial support regimes, does not trigger any presumption of equal sharing on the breakdown of the relationship. In order for

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the doctrine of unjust enrichment to apply, three conditions must be satisfied; there must be

1) a benefit or enrichment of one party;

2) a corresponding deprivation of the other party; and

3) the absence of any juristic reason or legal justification for the enrichment, such as a contract or gift.

As Handrigan J, of the Newfoundland and Labrador Supreme Court, remarked in Fewer v Smith,46Huddart JA’s "basic outline" in the judgment of the British Columbia Court of Appeal in Wilson v Fotsch47is rapidly emerging as a template for analyzing claims in family cases based on unjust enrichment. Huddart JA’s outline for the requisite analysis is summarized as follows:

  1. Benefit/Enrichment

  2. Detriment

  3. Absence of a juristic reason for the enrichment

    1. Established categories

    i.  Contract

    ii.  Disposition of law

    iii.  Donative intent

    iv.  Other valid common law, equitable, or statutory obligations

    b.  Reason to deny recovery

    i.  Public policy considerations

    ii.  Legitimate expectations

    iii.  Potential new category

    Defences

    Change of position; estoppel; statutory defences; laches and acquiescence; limitation periods;48counter-restitution not possible

    Choice of Remedy

    a.  Is a monetary remedy sufficient?

    b.  Is a constructive trust required (or equitable damages for the value of the trust interest)?

    Quantification of the Remedy

    a.  Value received (quantum meruit basis)

    b.  Value survived (proportionate share basis)

    Set-Off (equitable and legal)

    Pre-judgment interest

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    Remedies for unjust enrichment are restitutionary in nature. A successful claimant may be entitled to a monetary or a proprietary remedy. Only in cases where a monetary award is inappropriate or insufficient will a proprietary remedy be required by way of a remedial constructive trust. Imposed without reference to intention to create a trust, the constructive trust is a broad and flexible equitable tool used to determine beneficial entitlement to property. Where the claimant can demonstrate a link or causal connection between his or her contributions and the acquisition, preservation, maintenance, or improvement of the disputed property, a share of the property proportionate to the unjust enrichment can be impressed with a constructive trust in his or her favour. As to the nature of the link required between the contribution and the property, the plaintiff must demonstrate a "sufficiently substantial and direct" link, a "causal connection," or a "nexus" between the plaintiff’s contributions and the property that is the subject matter of the trust. A minor or indirect contribution will not suffice. The primary focus is on whether the contributions have a "clear proprietary relationship." Indirect contributions of money and direct contributions of labour may suffice, provided that a connection is established between the plaintiff’s deprivation and the acquisition, preservation, maintenance, or improvement of the property. In this regard, the court may take into account the probability of recovery, as well as whether there is a reason to grant the plaintiff the additional rights that flow from recognition of property rights. The extent of the constructive trust interest should be proportionate to the claimant’s contributions. Where the contributions are unequal, the shares will be unequal. The court will assess the contributions made by each domestic partner and make a fair, equitable distribution having regard to their respective contributions. In most cases, a monetary award will be sufficient to remedy the unjust enrichment. However, calculation of such an award is far from straightforward. Two issues have given rise to disagreement and difficulty in domestic unjust enrichment claims. First, the fact that many domestic claims of unjust enrichment arise out of relationships in which there has been a mutual conferral of benefits gives rise to difficulties in determining what will constitute adequate compensation. A second difficulty arises from the fact that some courts have concluded that when a monetary award is appropriate, it must invariably be calculated on the basis of the monetary value of the unpaid services. This is often referred to as the quantum meruit, or "value received," or "fee-for-services" approach. These issues were addressed by the Supreme Court of Canada in Kerr v Baranow and Vanasse v Seguin,49wherein Cromwell J,

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    who delivered the unanimous judgment of the Court, pointed out that some courts have taken the view that, if a claimant’s contribution cannot be linked to specific property, a monetary remedy must always be assessed on a "value received" or fee-for-services basis, whereas other courts have taken a more flexible approach by adopting a "value survived" approach based on the overall increase in the couple’s wealth during their relationship. While asserting that it is not the purpose of the law of unjust enrichment to replicate for unmarried partners the legislative presumption that married partners are engaged in a joint family venture, Cromwell J concluded that the common law of unjust enrichment can and should recognize and respond to the reality that there are unmarried domestic arrangements that are partnerships and the remedy in such cases should address the disproportionate retention of assets acquired through joint efforts. In the words of Cromwell J:

    [W]here both parties have worked together for the common good, with each making extensive, but different, contributions to the welfare of the other and, as a result, have accumulated assets, the money remedy for...

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