Common Law Spouses and Property Division in Ontario

Common law couples do not have the right to seek an equalization of family property under current Ontario legislation – this fact cannot be overstated.  As discussed in a previous post by my colleagues:

Division of property is dealt with in Part I of the Family Law Act. When married couples separate, generally speaking they are entitled to divide their property equally between the two spouses, regardless of who legally owns the property.  Under the Family Law Act, “spouses” are entitled to divide their property on the breakdown of the marriage. “Spouse” is defined as either (1) two people who are married to each other, or, (2) two people who entered into a marriage that is either void or voidable, in good faith. It does not include “common law couples” – even couples who have lived together for more than least 3 years, or are living together and are the parents of a child. So, what does that mean exactly? It means that common law couples cannot look to the Family Law Act to make a claim to a share of property that they do not own.

Though common law partners in Ontario who are separating cannot look to the Family Law Act to claim a share of the property owned by their spouses, they may be able to make an indirect claim for a share of those assets by establishing a claim for unjust enrichment, which is defined as receiving a benefit by another person, without offering reimbursement in circumstances where reimbursement is reasonably expected.

The Supreme Court of Canada in Kerr v. Baranow [2011] 1S.C.R. 269 clarified the application of unjust enrichment in the family law context.  Generally to establish a claim for unjust enrichment, the claimant must prove that:

1.     The defendant spouse has been enriched by the spouse making the claim;

2.     The claiming spouse has suffered a corresponding deprivation; and

3.     There is no juristic reason for the enrichment.

If this test is met, the claimant spouse has established that he or she has been unjustly enriched by the defendant spouse.   The court then has to determine which remedy it will apply as a result of the unjust enrichment.   In Kerr, the court indicated a strong preference for monetary remedies in unjust enrichment cases.  However, the court indicated that, in some cases, a constructive trust remedy may be more appropriate.    The topic of constructive trust – what it is and how it can be established – will be explored in a future posting.

A monetary remedy is often granted where the unjust enrichment is 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.   This means that where a joint family venture is found and there is a link between the contributions of the party claiming the unjust enrichment and the accumulation of wealth, the remedy for the unjust enrichment should be calculated on the basis of the share of those assets proportionate to the claimant’s contributions.

What exactly is a “joint family venture”?  To determine whether a joint family venture is present, the court will analyze the evidence of the parties’ relationship to determine how it fits into the four factors:

(a) mutual effort,

(b) economic integration,

(c) actual intent and

(d) priority of the family

It should be noted that making a successful claim for unjust enrichment can be a lengthy, arduous and expensive process, as the proof required to establish the claim is often extensive.  Unjust enrichment cases tend to be fact-driven which can lead to a great deal of uncertainty about the proper entitlement of a claimant spouse.  Such uncertainty can cause difficulty for parties trying to resolve cases before trial. 

Although the unjust enrichment/ joint family venture analysis provides a legal avenue through which common law couples can seek compensation for their contributions to a marriage-like relationship in some cases, the process is generally much simpler for married couples, who can rely on the equalization scheme contained in the Family Law Act. 

Some provinces, such as British Columbia, have made legislative changes to allow common law couples the right to the division of property upon separation. 

Until Ontario adopts similar legislation, common law couples in this province should bear in mind that they have no legislated right to make a claim to a share of property that they do not own.

- Michael D. Heikkinen for abblaw.ca


[The above article is for general informational purposes only and is not legal advice. If you live in the Ottawa area and would like advice about a legal issue please email us or call 613-569-9500 to speak with one of our lawyers or a member of our staff.]

Spousal Support Formulas: The Basics

Determining Factors for Spousal Support Entitlement

The Supreme Court of Canada in Bracklow v. Bracklow identified three bases for spousal support entitlement: contractual, compensatory, and non-compensatory, Contractual support would be support based on any agreement that existed between the parties. Compensatory support is meant to reimburse the spouse for choice’s they made during the marriage that required them to sacrifice professional success in favour of the marriage. Non-compensatory is based on the need of the spouse, determined according to the economic interdependency created during the marriage. The longer the marriage, the greater the amount of interdependency, and the longer that may be required to unravel it.

Formulas

There are generally two different methods used to determine both the amount and duration of spousal support: the with child support formula, and the without child support formula. Regardless of the formula applied, both calculations originate from s. 15.2 of the Divorce Act. The Divorce Act sets out, that in making a spousal support order the Court shall consider the means needs and other circumstances of each spouse including:

(a) the length of time the spouses cohabited;

(b) the functions performed by each spouse during cohabitation; and

(c) any order, agreement or arrangement relating to support of either spouse.

These considerations are further supplemented by s. 33(9) of the Family Law Act which provides a long list of considerations to be made when the court is addressing both amount and duration of spousal support. The Court weighs these issues in light of the objectives of spousal support, which the Divorce Act sets out as follows:

(a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;

(b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;

(c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and

(d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

 

The Spousal Support Advisory Guidelines (“SSAGs”) set out two formulas and the method for determining the amount and duration of spousal support.

While the SSAGs do not need to be strictly adhered to, and contain several exceptions, they have become a valuable tool for the courts in determining duration. In fact, the Ontario Court of Appeal in Fisher v. Fisher held that when Judges deviate from the SSAGs, after being referred to them by counsel, they must provide a reason as to why the SSAGs should not be relied upon.

In the SSAGs, calculations regarding the duration of spousal support rely heavily on the duration of marriage. The amount or ‘quantum’ of support is calculated differently based upon whether child support is being paid.

 

The Without Child Support Formula

The without child support formula proposes two occasions when a spouse is entitled to indefinite support. First, when the marriage has been 20 years or longer in length. Second, indefinite support may be awarded where the marriage has lasted five years or longer if the years of marriage plus the age of the support recipient at the time of separation equals or exceeds 65. This is known as the “rule of 65”. Indefinite support does not mean permanent support; it simply means that there is no set date of termination.

When the situation does not fit one of these two scenarios, the duration is generally within the range of, at minimum, half the length of the marriage and, at a maximum, the entire duration of the marriage.

In regards to amount, it ranges from 1.5 to 2 percent of the difference between the spouses’ gross incomes for each year of marriage, up to a maximum of 50 percent. For marriages of 25 years or longer the maximum percentage that will be granted is between 37.5 and 50 percent.

The With Child Support Formula

The Guidelines establish that any initial orders when a spouse is also receiving child support should be indefinite. The SSAGs simply suggest that the original order not have an end date but allow for it to be established subsequently. To do this, the Guidelines further include a duration with an upper and lower limit. The minimum being the longer of one half the length of marriage or the date the youngest child starts full time school and the maximum being the longer of the length of the marriage or the date the last or youngest child finished high school.

Under the basic calculation of this formula, the amount is based on a spouse’s individual net disposable income (INDI), which for the paying spouse is essentially their income after removing child support and taxes. The recipient’s spouse’s INDI is their income adjusted for child support, taxes, and, government benefits. The spousal support amount is then calculated based on the recipient spouse receiving between 40 and 46 percent of the spouses’ combined INDI.

How these factors are to be assessed in determining the amount and duration of spousal support will always be a matter to be determined by a judge. A properly prepared and experienced lawyer will have the knowledge to explain the situation to a court in a thorough and persuasive manner regardless of the type of spousal support order being sought.

— Daniel Pinsky for abblaw.ca

[The above article is for general informational purposes only and is not legal advice. If you live in the Ottawa area and would like advice about a legal issue please email us or call 613-569-9500 to speak with one of our lawyers or a member of our staff.]