Unjust Enrichment and Common Law Spouses

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Image source: www.law.ox.ac.uk

BY VALERIE DYE 

It is now known that common law couples are not automatically entitled to share in assets owned by the other common law spouse even when these assets have been acquired during the relationship. One way in which such couples may be able to claim a share in assets to which they have no legal title is by relying on the principle of unjust enrichment. The claimant spouse will have to show that the other spouse has become unjustly enriched by virtue of the efforts of the claimant and it that it would be unjust for the claimant to be deprived of a share in the assets.

When the court determines that there has been an unjust enrichment the aim is to restore the claimant to the position he or she would have been in were it not for the unjust enrichment.  In most cases the court gives a monetary award to the claimant.  One of the issues faced by the courts in dealing with unjust enrichment in family law cases is whether the claimant should be paid in terms of ‘value received’ by the other spouse or whether the claimant should be paid on the basis of ‘value survived’.  Under the ‘value received’ approach the claimant will be compensated in accordance with the amount of his or her contribution toward the acquisition of the asset.  Under the ‘value survived’ approach the claimant receives a share of the surviving value of the asset regardless of the extent of the contribution. Consequently, if the claimant contributed to the acquisition of an asset and the value of the asset decreased during the relationship the claimant would only be awarded a share of the existing value of the asset.   In the leading case of Kerr v Baranow (2011) 1SCR 269, the Supreme Court of Canada ruled that where parties establish that their common-law relationship was based on a joint family venture the appropriate manner of quantifying the amount the claimant spouse is entitled to is the ‘value survived ‘approach.  Further, in a joint family venture it would not be necessary to examine in minute detail the exact contribution of each party.

How does the court determine whether there has been a joint family venture?   The court stated in Kerr and Baranow that there is no presumption of joint family venture simply because parties have lived together.  It is necessary to examine how the parties have lived their lives.  In that regard, account will be taken of such things as, whether there have been mutual efforts by the parties in attaining certain goals, whether there has been economic integration, the intentions of the parties and whether they treated the family as a priority.

In Montgomery v Schlender 2012 ABQB the court found that although the parties lived together and had a sexual relationship there was no joint family venture despite the fact that the claimant spouse did household chores, contributed to groceries and contributed to the improvement of the home. Some of the reasons that guided the court’s findings were the fact that there was no joint bank account, the parties were responsible for their own debts and they did not name each other as beneficiaries under insurance coverages. The court found that whatever contributions were made were done as cohabiting housemates on the basis of an agreement that each would contribute his or her share of the expenses and share in household chores. As such, there was a mutual conferral of benefits as opposed to a joint family venture.

In conclusion, it is to be noted that common law spouses do have a remedy in unjust enrichment which can compensate for the fact that they do not enjoy the benefit of equalization of assets that married couples do. Nonetheless, it is important to note that even the remedy of unjust enrichment is not automatic as the court will not assume that parties who have lived together were engaged in a joint family venture.

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