The Supreme Court of Canada (SCC) released a 7-0 decision in Kerr v. Baranow,  S.C.J. No. 10 and its companion case, Vanasse v. Seguin, dealing with claims by common-law spouses on the basis of unjust enrichment.
In Kerr, K and B, in their late 60s, separated after 25 years of living together. K claimed support and a share of B’s property based on claims of unjust enrichment and resulting trust. B claimed unjust enrichment against K for having taken care of K after a stroke. The trial judge awarded K $315,000 which was a third of the value of the home in B’s name that they shared, based on resulting trust and unjust enrichment. The Court of Appeal dismissed the property claims, concluding that K has not contributed financially to the acquisition or improvement of the property. The SCC allowed the appeal from the order dismissing K’s unjust enrichment claim and ordered a new trial.
In the companion case, S and V had a 12 year common-law relationship. For the first four years they both pursued their careers. V then took a leave of absence to move across the country with S so he could pursue a business opportunity. About a year later, S stepped down as CEO of the business and they moved back into a jointly owned home in Ontario. During this time, V had children and stayed home with them while S worked long hours and travelled extensively. In 2000, S sold his share of the business for $11 million. S then spent most of his time at home until the separation in 2005. The trial judge found there was no unjust enrichment during the first period of the cohabitation when both were pursuing their careers, or after S sold the business and stayed home. However, during the period of the move so S could pursue the business opportunity and when the children were born, S had been unjustly enriched at V’s expense so V was entitled to half of the value of S’s wealth accumulated during that period. The court of appeal set this aside and said the proper way to value V’s claim was on the basis of what her services were worth, or quantum meruit. The SCC restored the order of the trial judge.
In its 125 page judgment, the SCC has now definitively stated that the doctrine of resulting trust based on common intention (requiring proof that both parties intended to share the property) no longer exists in domestic cases. More importantly, the monetary remedy for unjust enrichment in domestic cases has been expanded beyond just the value of the services received. Now, if there is a “joint family venture” and there has been a disproportionate allocation of assets, the value of the claim will be based on the increase in value of the assets during the course of the relationship.
The “fee for service” valuation of a claim for unjust enrichment is not gone in all cases. Justice Cromwell did say that the monetary award for unjust enrichment “need not, as a matter of principle, always be calculated on a fee-for-services basis” implying there may be times when the fee-for-service will be applied. He also said this does not mean there is a presumption of equal sharing and furthermore, the act of cohabitation does not itself entitle one spouse to a share of the property of the other. Rather, where one spouse retains a disproportionate share of assets resulting from a joint family venture, and a monetary award is appropriate, it should be calculated on the basis of a share of the assets proportionate to the claimant’s contribution. There must be a link between the contributions and the accumulation of assets or wealth. The question of whether there was a joint family venture is one of fact.
The decision sets out what must be established before making a claim for unjust enrichment and then what facts will be regarded in determining whether there was a joint family venture.
On first reflection, this decision supports the conclusion that the courts in this country are determined to ensure spouses, including common-law spouses, leave the relationship on an equal financial footing. Persons entering into common-law relationships will now have much more reason to ensure there is a domestic contract in place if they want to protect their individual assets.