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Unmarried Spouses and the Joint Family Venture: An Update on the State of the Law

11 minute read
Also authored by: Jennifer Philpott

It has been nearly a decade since the Supreme Court of Canada released the decision of Kerr v. Baranow, 2011 SCC 10, which simplified the ability for unmarried spouses to obtain a fair division of the family property accumulated during cohabitation. In the decisions that have followed, courts have referred to Kerr as the leading authority on the concepts of the unjust enrichment and the joint family venture. Along the way, judges have endorsed and refined the key elements of these doctrines, as set out below.

No Statutory Family Property Regime for Unmarried Spouses in Ontario

In Ontario, Section 1 of the Family Law Act (“the Act”) defines “spouse” as either two persons who are married to each other or who have entered into a marriage that is voidable or void in good faith on the part of the person relying on this clause to assert any right. While unmarried spouses are included in the support section of the Family Law Act, the definition of “spouse” under Part I of the Family Law Act, which pertains to family property, does not apply to unmarried spouses. Furthermore, unlike other common law provinces, Ontario has not legislated a property regime for unmarried spouses. Consequently, unmarried spouses who separate must resort to equitable principles, namely the law of unjust enrichment, to address their claims of inequitable distribution of assets upon the breakdown of a relationship.

The Test for Unjust Enrichment

As explained in Kerr, “the doctrine of unjust enrichment lies in the notion of restoring a benefit which justice does not permit one to retain.”[1] In order to establish unjust enrichment, the unmarried spouse advancing the claim (the Applicant) must prove the following:

  1. Enrichment of the Respondent: The Applicant must demonstrate that he or she gave a tangible benefit to the Respondent that enriched the Respondent and can be given back to the Applicant in property or monetarily.
  2. Corresponding Deprivation to the Applicant: The Applicant must show that he or she suffered a corresponding deprivation because of the enrichment of the Respondent.
  3. Absence of Juristic Reason for the Enrichment: This is a two-step process. First, the Applicant must demonstrate that the Respondent’s retention of the benefit would be “unjust.” The Applicant may be prevented from recovering the benefit where there is a contract, a disposition of law, a donative intent, or any other valid common law, equitable, or statutory obligation. However, even where an Applicant demonstrates that there is no juristic reason for the enrichment, the Respondent may be successful if he or she can show another reason, given the circumstances, to deny recovery.

Unjust Enrichment Arising from a Joint Family Venture

In Kerr, the Supreme Court of Canada held that a “joint family venture” may form the basis for an unjust enrichment claim. To obtain an award for unjust enrichment arising from a joint family venture, the Applicant must demonstrate that:

  1. A joint family venture existed; and
  2. There was a link between the Applicant’s contribution to the joint family venture and the accumulation of wealth or assets.[2]

Understanding a Joint Family Venture

A joint family venture occurs where, during the relationship, both parties contributed to the accumulation of family wealth. Unjust enrichment arises if the parties separate and one party retains a disproportionate amount of the accumulated wealth.

While a claim for a joint family venture is primarily made by unmarried spouses, married spouses who cohabited for a lengthy duration prior to marriage may also bring this claim.

Although the Supreme Court of Canada in Kerr emphasized that there is not a closed list of relevant factors, Kerr and the decisions thereafter highlight four key considerations[3] when determining whether or not the parties were engaged in a joint family venture prior to their separation:

 (1) Mutual Effort of the Parties

To determine whether there was a mutual effort between the parties in the accumulation of wealth, a Court will examine:

  • Whether the parties worked collaboratively toward common goals;
  • If the parties pooled their effort and worked as a team;
  • Whether the parties mutually agreed to have and raise children together; and
  • The duration that the parties cohabited.

For example, in Farkas v. Bedic, 2016 ONCA 82, where one party purchased a motel five years before commencing a relationship with the other party, mutual effort was demonstrated by the parties’ collaborative teamwork in renovating and operating the motel.[4]

Courts will also consider non-monetary contributions to the accumulation of the parties’ wealth.[5] For instance, in Rudky v. Kaybaki, 2015 ONSC 6431, the Applicant contributed more funds to the parties’ joint bank account, while the Respondent contributed primarily through labour during the relationship.[6]

(2) Economic Integration of the Parties’ Finances

To ascertain the degree of independence and integration that characterizes the relationship, a Court will consider whether the parties:

  • Integrated their finances and to what extent;
  • Had any jointly held assets.

For example, in Sullivan v. McCarthy, 2017 ONSC 94, the transfer of funds from one party to another in order to pay bills was found to constitute financial integration.[7]

(3) Actual Intent of the Parties

The Court will consider whether the parties made a conscious and deliberate choice to participate in economic integration and may examine whether:

  • The parties’ conduct indicated that they intended to share in the wealth that they accumulated together;
  • The parties’ relationship reflected a “partnership” in the social and economic sense;
  • The parties ever accepted or referred to their relationship as “equivalent to marriage”;
  • The parties held themselves out as married to the other party;
  • The parties held joint title or joint tenancy to property;
  • The parties planned for property distribution on death, whether in a written will or verbal discussion.

For example, in Porteous v. Conway, 2015 ONSC 5871, the joint retainer of a financial planner to assist with retirement goals, acquisition of a home in Red Rock in both names, and the completion of wills in which the parties named each other and trustees and sole beneficiaries indicated their intent and pointed to the existence of a joint family venture.[8]

(4) Priority of the Family

To determine if the parties prioritized their family in their decision-making, a court will contemplate if one party:

  • Exhibited a detrimental reliance on the success and stability of the relationship for the sake of the family or economic security;
  • Left the workforce to raise the children;
  • Relocated for the benefit of another party’s career, thereby giving up his or her own employment and employment-related networks;
  • Sacrificed their career, career advancement, or educational advancement for the benefit of the relationship or for the family;
  • Accepted underemployment to balance both financial and domestic needs of the family unit.

This section of the test is not limited to former couples with children. In Farkas, although the parties did not have children, the evidence nevertheless demonstrated that parties prioritized working together and sharing responsibilities. For example, one party prioritized the other party’s interests over her own when she retired early from her former employment at a hospital to work with the other party at the motel.[9]

Linking the Joint Family Venture to the Accumulation of Wealth

When a claimant has successfully established the existence of a joint family venture, the claimant must next prove that there is a “link between his or her contributions to it and the accumulation of assets and/or wealth.”[10] Courts will also recognize the accumulation of wealth by the reduction of liability and expenses. In Porteous, the Court considered the time that the Applicant spent providing domestic services and supervising home renovations, in addition to her financial contribution of WSIB benefits, to determine her contribution to the accumulated household wealth.[11] Although the Court did not find unjust enrichment, the Court stated that the Respondent directly benefited from the Applicant’s non-monetary contributions because she did not have to pay for these expenses.[12]

When this link is established, a Court will review the contributions that each party made during the relationship and determine the parties’ proportionate shares. For example, in Farkas, the Court held that the parties’ proportionate shares should be equal. The evidence showed that both parties contributed to operating the motel through renovations and management duties and that during the relationship, neither party received a wage from the business.[13]

Monetary v Proprietary Remedy

Where a Court finds that a joint family venture is the basis for unjust enrichment, there are two options for remedies: money or an interest in property.

In 2014, the Ontario Court of Appeal in Martin v. Sansome, 2014 ONCA 14, refined the framework from Kerr to address which remedy is most appropriate where unjust enrichment occurs between unmarried spouses. The Court’s analysis is as follows:

  1. Have the elements of unjust enrichment – enrichment and a corresponding deprivation in the absence of a juristic reason – been made out?
  2. If so, will monetary damages suffice to address the unjust enrichment, keeping in mind bars to recovery and special ties to the property that cannot be remedied by money?
    • If the answer to question 2 is yes, should the monetary damages be quantified on a fee-for service basis or on a joint family venture basis?
    • If [the answer to question #2 is no], and only if monetary damages are insufficient, is there a sufficient nexus to a property that warrants impressing it with a constructive trust interest?[14]

In most circumstances, courts tend to find that a monetary award is a sufficient remedy for unjust enrichment. However, where a claimant can demonstrate that money would be insufficient and there is a link or causal connection between their contribution(s) and the acquisition, preservation, maintenance, or improvement of a particular asset, a court may award the claimant’s share as a constructive trust.[15] As stated in Kerr, indirect contributions of money and direct contributions of labour may be sufficient to justify a property award if a connection or “nexus” clearly exists between the claimant’s deprivation and the acquisition, preservation, maintenance, or improvement of the property.[16] The constructive trust should be proportionate to contributions made by claimant.[17]

Conclusion

The test for a joint family venture is clearly far more complex than the statutory right of equalization of net family property set out in the Family Law Act for married spouses. The analysis, however, is becoming more refined since Kerr and lawyers now have a better ability to advise clients on the likelihood of success of a joint family venture claim.


[1] Kerr v Baranow, 2011 SCC 10 at para 31 [Kerr].

[2] Ibid at para 81.

[3] Ibid at paras 90-99.

[4] Farkas v Bedic, 2016 ONCA 82 at para 37 [Farkas].

[5] Rudky v Kaybaki, 2015 ONSC 6431 at para 84.

[6] Ibid at para 80.

[7] Sullivan v McCarthy, 2017 ONSC 94 at para 52.

[8] Porteous v Conway, 2015 ONSC 5871 at para 70 [Porteous].

[9] Farkas, supra note 3 at 40.

[10] Kerr, supra note 1 at para 100.

[11] Porteous, supra note 7 at para 91.

[12] Ibid at paras 84 and 92.

[13] Farkas, supra note 3 at paras 43-44.

[14] Martin v Sansome, 2014 ONCA 14 at para 52.

[15] Kerr, supra note 1 at para 50.

[16] Ibid at para 52.

[17] Ibid at para 53.

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