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.]