Property Division and Common Law Spouses – The Principle of Unjust Enrichment

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BY VALERIE DYE

In Canada couples who are going through a divorce divide their assets through the process of equalization. This is a process whereby both parties calculate their net family property by determining the value of property owned at the date of separation (valuation date) less debts and liabilities and excluding property owned before marriage (note that the matrimonial home is not excluded even if owned before marriage). The party who has the higher net family property pays half of the difference to the other party. The aim of equalization is to place both parties on equal footing so that they each leave the marriage with equal value in terms of assets.

Common Law spouses do not benefit from equalization. Unless a common law spouse has legal ownership to a property there is no automatic claim to that property. For instance, if property is owned jointly by a common law couple then obviously both of them are entitled to that property. On the other hand, if property is owned only by one common law spouse the spouse who does not have legal ownership to that property is not automatically entitled to a share in it unless he or she can prove a tangible contribution toward the acquisition of that property.

This may seem unfair to common law couples who have lived together for years and who may have contributed to the joint family venture which resulted in an enrichment of the couple. It is for this reason that the courts have allowed common law couples to rely on the principle of unjust enrichment in order to benefit from a share in family property.  One spouse may claim that the other spouse will become unjustly enriched if that other spouse is allowed to be the sole beneficiary of property acquired during the union.

To prove unjust enrichment the claimant must prove that the defendant has become unjustly enriched, that the claimant has suffered some detriment and that there is no justifiable reason for the enrichment.  In the case of Kerr v Baranow (2011) 1 SCR 269, the Supreme Court of Canada stated that the claimant ‘must show that he or she has given a tangible benefit to the defendant that the defendant received and retained’.  The claimant must also have suffered some form of deprivation. This case also highlights the fact that the provision of domestic services may be seen as unjust enrichment, since a common law spouse has no duty to perform domestic services for the other. Such services are seen as a tangible benefit being conferred upon the family and may also be seen as a deprivation suffered by the spouse who performs those duties often without compensation.

The 2015 Ontario Superior Court Case of Gibson v Mead provides an example of domestic services being seen as an enrichment to one of the spouses. In that case the common law wife was a stay at home mother while the Respondent obtained higher education and improved his employment income. The court determined that the elements of an unjust enrichment existed and that the wife was entitled to a share of the assets on the basis of her contribution.

In determining whether a common law spouse is becoming unjustly enriched the court needs to carry out an analytical exercise to determine the nature, value and reasons for the contributions made by the other spouse. Thus, while common law spouses are not automatically entitled to a share in assets to which they have no legal title, they are not left without any recourse.

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