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What claims can a common-law spouse make on the property of the other spouse?

Posted on 18 Aug'14 Tags: , , , in Case Study, Family Law, General

In Ontario’s Family Law Act, the definition of “spouse” does not include common-law relationships for the purpose of dividing family property. Only spouses who are in a marital relationship have a statutory right under the Family Law Act to share in the property of the other spouse.

There are many scenarios where one common-law spouse is more financially superior and holds all the property in his or her name, while the other spouse takes up domestic duties and remains financially dependent on the employed spouse. When the relationship is over, the latter party often ends up destitute as they have little or no assets to their name. Without the statutory rights that a married spouse would have in this situation, does it mean that the unmarried common-law spouse is without recourse?

Even though in a common law relationship there is no presumed entitlement to property sharing, remedies are available to cohabiting unmarried partners who are unfairly disadvantaged upon the breakdown of the relationship.

The equitable concept of unjust enrichment seeks to remedy the injustice that occurs when one person makes a substantial contribution to the property of another person without compensation.

It is well accepted that an action for unjust enrichment arises when three elements are satisfied:

1) an enrichment;
2) a corresponding deprivation; and
3) the absence of a juristic reason for the enrichment.[*]

The fact that the parties were in a relationship does not amount to a juristic reason for the enrichment, as common law partners have no obligations to provide services for each other.

There are a number of remedies that may be awarded under a claim of unjust enrichment. As it is discussed in the 1993 Supreme Court of Canada Case Peter v. Beblow, one of them is the “value received” approach, where a monetary award is given for the value of the services received. This approach has given rise to disagreements and difficulties, in principle and in practice, in domestic unjust enrichment claims. In some cases it may even be an insufficient remedy when the contributions of the non-title spouse have led to a drastic increase in the value of the property.

The other equitable remedy under a claim of unjust enrichment is the doctrine of constructive trust. This is the “value survived” approach, where the increase in value of the property is used in assessment.

The doctrine of constructive trust addresses such inequities and recognizes the contributions of one spouse (or unmarried partner) to family property when the title of that property is wholly vested in the other spouse.

In order for a court to determine that a constructive trust is an appropriate remedy, there must be two elements. First, there must be a causal link between the contributions and the increase in its value. Second, a monetary award (that is, the other type of remedy under unjust enrichment) must be insufficient.[†]

According to Parrington v. Mead[‡], one spouse’s services in painting and decorating the home, taking care of the children, and doing most of the housework can create a special link between the claimant and the property, amounting to a claim based in constructive trust.

In Parchewsky v. Kozakevich[§], the court found that a constructive trust can be imposed over the property as there was a causal link between the plaintiff’s contributions (such as finishing the basement, renovating the upstairs, and sewing valences for above the windows) and the increase in the value of the property.

The value of a constructive trust award should be determined with regards to the amount the property has increased in value, and not just the value of services rendered. As a consequence, a remedy of constructive trust may yield a bigger award than one of monetary award.

As the claim is based on an interest in the property, the court has shown preference for the “value survived” approach. It is important for one to determine what portion of the value of the property in the claim is attributable to the claimant’s services.

 

[*] See Peter v Beblow, [1993] 1 SCR 980, [1993] SCJ No 36 at para 3.

[†] See Sorochan v Sorochan, [1986] 2 SCR 38, [1986] SCJ No 46.

[‡] See Parrington v Mead, [2007] OJ No 1881, 157 ACWS (3d) 369 at para 36.

[§] See Parchewsky v Kozakevich, 2008 ABQB 4, [2008] AJ N. 89 at paras 42 – 44.

Disclaimer: The above article is not a legal opinion as every case is different and is only for general awareness. Please contact us for specific questions and legal advise.