With the high percentage of common-law unions throughout Canada, the legal principles of unjust enrichment and the joint family venture have never been more prevalent in the context of the breakdown of those relationships.
Aside from the provinces that have enacted legislation with respect to property division for non-married spouses, the rest of Canada relies on the 2011 Supreme Court decision of Kerr v. Baranow for guidance and direction.
One of the novel legal principles that emerged from Kerr v. Baranow was the joint family venture: a concept and a method of describing the joint efforts of the parties during their relationship that are linked to the accumulation of wealth.
The Supreme Court in Kerr expounded on and categorized the above principles and proposed the joint family venture which is now an integral component of the unjust enrichment analysis for common-law spouses.
A court now must take into consideration the four pillars (or characteristics/headings) of the family venture: mutual effort, economic integration, actual intent and priority of the family.
The purpose of this article is to provide a summary and an overview of the concepts of unjust enrichment and the joint family venture as discussed in the Supreme Court decision.
Unjust enrichment and the joint family venture
(a) Establishing an unjust enrichment claim – step by step
The Supreme Court in Kerr v. Baranow summarized the law of unjust enrichment, namely, that for there to be a recovery by a plaintiff, he or she must establish an enrichment of or benefit to the defendant, a corresponding deprivation of the plaintiff, and the absence of juristic reason — in law or justice — for the enrichment.
The Court then emphasized that in applying the principles of unjust enrichment to family law issues, one must “respond to the particular context in which they are to operate.”
The Court went on and provided the two step analysis to establish the absence of juristic reason as outlined in Garland v. Consumers’ Gas Co.
In the first step, the plaintiff must show that no juristic reason exists to deny recovery from an established category.
The categories include a contract, a disposition of law, a donative intent, and any other valid equitable or statutory common law obligations. If there is no juristic reason from an established category, then the plaintiff has made out a prima facie case under the juristic reason component of the analysis.
In the second step, the defendant may rebut the prima facie case for unjust enrichment by having the court consider the reasonable expectations of the parties and public policy.
A successful unjust enrichment claim may result in one of two types of remedies: monetary award or a proprietary award.
The Court held that restricting the monetary remedy to a fee-for-services (quantum meruit) calculation is inappropriate and introduced the concept of the joint family venture.
The Supreme Court also decided on four related issues pertaining to unjust enrichment.
The “common intention” approach to resulting trust has no further role to play in the resolution of property claims by domestic partners on the breakdown of their relationship.
With respect to the nature of the monetary remedy for a successful unjust enrichment claim, the monetary remedy should not be based on a minute totting up of the give and take of daily life, but should treat the claimant as a co-venturer if both parties have worked together for the common good with each making extensive, but different, contributions to the welfare of the other and as a result accumulated assets.
The mutual conferral of benefits assessment should be addressed at the defense and remedy stage of the unjust enrichment analysis.
The assessment of the parties’ reasonable or legitimate expectations in the unjust enrichment analysis should have a limited role and must be considered in relation to whether there is a juristic reason for the enrichment part of the analysis.
(b) Calculating unjust enrichment awards — Joint Family Venture
Justice Cromwell in Kerr v. Baranow proposed a method to calculate a monetary award for unjust enrichment cases.
First, assess the relationship and determine whether the parties were involved in a joint family venture.
Second, decide whether the contributions of the claimant during the course of the joint family venture were linked to the generation of the wealth of the parties.
Finally, in a case of a joint family venture, calculate the award according to the share of the accumulated wealth proportionate to the claimant’s contributions.
Justice Cromwell held that “...when the parties have been engaged in a joint family venture, and the claimant’s contributions to it are linked to the generation of wealth, a monetary award for unjust enrichment should be calculated according to the share of the accumulated wealth proportionate to the claimant’s contributions.”
In other words, if there exists a link between the value received (contribution) and the value surviving (accumulation of wealth), then in such a relationship, one party may be left with a disproportionate share of the jointly earned assets — i.e. unjust enrichment.
The notion of a joint family venture recognizes the contributions of both parties to the economic survival and growth of the family.
Much of Canada’s matrimonial property legislation presumes that married spouses should share the remaining property equally because they are presumed to be engaged in a joint family venture.
However, for unmarried spouses, there is no such presumption.
Nevertheless, there are many domestic relationships that exist where the parties jointly contribute to a family venture.
To identify whether a party has been involved in a joint family venture, Justice Cromwell divided the hallmarks of a family venture into four main headings: mutual effort, economic integration, actual intent and priority of the family.
He also noted that there is “overlap among factors that may be relevant under these headings and there is no closed list of relevant factors”.
Justice Cromwell added that the examples provided within each heading were not a checklist of conditions for a finding (or not) of a joint family venture.
The headings and their listed factors were meant to “...provide a useful way to approach a global analysis of the evidence and some examples of the relevant factors that may be taken into account...” in assessing the relationship.
(c) The Original Joint Family Venture Headings
The original headings of the joint family venture as outlined in Kerr are listed in summary fashion below.
(i) Mutual Effort
The general description of “mutual effort” is whether the parties worked collaboratively towards common or mutual goals.
The indicators of “mutual effort” are
- pooling of effort
- team work
- decision to have and raise children together
- the length of the relationship
- joint contributions
- contributions to a common pool
- pooling of efforts and resources, whether capital or income
Examples of pooling of efforts and resources are (a) the use of parties’ funds entirely for family purposes, and (b) where one spouse takes on all, or a greater proportion, of the domestic labour, freeing the other spouse from those responsibilities, and enabling him or her to pursue activities in the paid workforce.
(ii) Economic Integration
The general description of “economic integration” is the degree of economic interdependence and integration that characterized the parties’ relationship.
The indicators are
- the sharing of expenses and the amassing of a common pool of savings
- the parties’ conduct indicating a sense of collectivity, mutuality, and prioritization of the overall welfare of the family unit over the individual interests of the individual members
Two examples provided are (a) the existence of a joint bank account used as a common purse, and (b) the family farm being operated by the family unit.13
(iii) Actual Intent
The general description of “actual intent” is the actual intentions of the parties having been expressed by the parties or inferred from their conduct.
The indicators are
- intention to share in the wealth the parties jointly created
- parties intended the domestic and professional spheres of their lives to be part of a larger, common venture
- the relationship being a “partnership” in the social and economic sense
- the parties accepting their relationship was “equivalent to marriage”
- the parties held themselves out to the public as married
- the stability of the relationship and the length of the cohabitation
Two examples of the parties’ intention to share wealth, or some portion of it, equitably are (a) the way the parties hold title to property together (example, joint tenants), and (b) the parties showing little concern with the details of title and accounting of monies spent for household expenses, renovations, taxes, insurance, etc.
An example of an indication that the parties saw one another as domestic and economic partners is when there was a plan for property distribution on death, whether in a will or a verbal discussion.
Finally, the Court noted that “the parties’ actual intent may also negate the existence of a joint family venture, or support the conclusion that particular assets were to be held independently.”
(iv) Priority of the Family
The general description of “priority of the family” is to what extent the parties have given priority to the family in their decision making.
The indicators are
- whether there has been in some sense detrimental reliance on the relationship, by one or both of the parties, for the sake of the family
- whether the parties have been proceeding on the basis of understandings or assumptions about a shared future which may or may not be articulated
- the contributions to the domestic and financial partnership, and particularly financial sacrifices made by the parties for the welfare of the collective or family unit
- one party relies on the success and stability of the relationship for future economic security, to his or her own economic detriment
The examples of detrimental reliance on the relationship for economic security are
- leaving the workforce for a period of time to raise children
- relocating for the benefit of the other party’s career (and giving up employment and employment-related networks as a result)
- foregoing career or educational advancement for the benefit of the family or relationship (this may be done either by the spouse with the higher income or the spouse with the lower income relative to the other)
- accepting underemployment in order to balance the financial and domestic needs of the family unit.
Conclusion
When a common-law couple separates, it will be beneficial for them to first understand the two concepts of unjust enrichment and the joint family venture.
These two concepts are the cornerstones of how property gets divided among common-law couples in Ontario and certain other provinces.
With a fuller understanding, it is the hope that couples proceed in reaching a more amicable settlement and reducing any possible unreasonable expectations that they may otherwise have.
