• by Amruta Ponkshe
Originally published in the OFLM 2023-10 edition
In Ontario, when a marriage breaks down, division of property and equalization is dealt with under the Family Law Act – a fairly simple procedure with straight forward rules of calculating property division. However, equalization does not apply to common-law spouses. For common-law spouses, ownership and division of assets usually comes down to which party has title to the property in question.
And, when the non-titled common-law spouse makes contributions to the assets or family in general (monetarily or otherwise), life for family law lawyers gets significantly harder. Because now, how spouses are compensated for their contribution requires additional legal principles to consider and apply.
Fortunately, the Supreme Court of Canada decision in Kerr v. Baranow and Vanasse v. Seguin (2011 SCC 10) consolidated the law of unjust enrichment and created the useful concept of “joint family venture” to assist us in the process.
Kerr v. Baranow and Vanasse v. Seguin (2011 SCC 10)
The Supreme Court of Canada in Kerr confirmed that unjust enrichment remains the “primary vehicle” to address claims of inequitable distribution of assets upon the breakdown of a relationship between unmarried couples.
As discussed in Peel (Regional Municipality) v. Canada (1992 CanLII 21 SCC), and reiterated in Kerr at paragraph 31, “[a]t the heart of the doctrine of unjust enrichment lies the notion of restoring a benefit which justice does not permit one to retain.”
The three elements required to establish a claim for unjust enrichment were reiterated in Kerr:
Enrichment of the other spouse (the Respondent) – the Applicant must demonstrate that they gave a tangible benefit to the Respondent that enriched the Respondent and that can be given back to the Applicant either monetarily or in property.
Corresponding deprivation to the Applicant – the Applicant must show that they suffered a corresponding deprivation because of the enrichment of the Respondent.
Absence of juristic reason for the enrichment – the Applicant must demonstrate that there is no reason in law or justice for the Respondent’s retention of the benefit conferred by the Applicant, making its retention “unjust” in the circumstances of the case.
Monetary versus proprietary remedy
As discussed in Kerr, once a claim for unjust enrichment has been established, the Applicant may be entitled to a monetary award or a proprietary remedy. The first remedy to consider is always a monetary award (at para. 47).
In Martin v. Sansome (2014 ONCA 14 at para. 52), the Ontario Court of Appeal discussed the framework from Kerr to address cases in which proprietary awards may be appropriate. Justice Hoy established that the framework established in Kerr requires the court to ask the following questions:
- have the elements of unjust enrichment -- enrichment and a corresponding deprivation in the absence of a juristic reason -- been made out;
- if so, will monetary damages suffice to address the unjust enrichment, keeping in mind bars to recovery and special ties to the property that cannot be remedied by money;
- if the answer to question 2 is yes, should the monetary damages be quantified on a fee-for-service basis or a joint family venture basis; and
- if, and only if monetary damages are insufficient, is there a sufficient nexus to a property that warrants impressing it with a constructive trust interest?
Value Received versus Value Survived
The Supreme Court in Kerr at paragraph 49 established that monetary relief may not be limited to the monetary value of unpaid services, often referred to as the quantum meruit or “value received” or “fee-for-services” approach. But in certain circumstances, monetary relief may be assessed more flexibly – in effect, on a value survived basis – by reference, for example, to the overall increase in the couple’s wealth during the relationship. Justice Cromwell at paragraph 80 further stated:
…Where the unjust enrichment is best 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, the monetary remedy should reflect that fact.
In order to apply the value survived approach, it is necessary to identify whether the parties have been engaged in a joint family venture.
Joint Family Venture
The Supreme Court of Canada held that a “joint family venture” may form the basis for an unjust enrichment claim. To obtain an award for unjust enrichment arising from a joint family venture, the Applicant must demonstrate that (a) a joint family venture existed and (b) there was a link between the Applicant’s contribution to the joint family venture and the accumulation of wealth or assets.
In Symmons v. Symmons (2012 ONCA 747), the Ontario Court of Appeal discussed the Kerr decision and reiterated that:
A joint family venture is characterized by a relationship in which the contributions of both parties have resulted in an accumulation of wealth. It can be identified with reference to the mutual effort of the parties, their degree of economic integration, their actual intent during the relationship, and the prioritization of the family unit in decision-making. For the purposes of an unjust enrichment claim, the applicant party must demonstrate that one party has retained a disproportionate share of the economic fruits of their joint efforts. (emphasis added)
In Kerr, the Supreme Court of Canada discussed the above four elements as follows:
Mutual effort involves the parties working collaboratively towards common goals. Indicators include:
- the pooling of efforts and resources, such as, the use of parties’ funds entirely for family purposes, or where one spouse takes on all or a greater portion of domestic labour, freeing the ither spouse from those responsibilities, and enabling him or her to pursue activities in the paid workforce [see Nasser v. Mayer-Nasser (2000 CanLII 5654 ONCA), Panara v. Di Ascenzo (2005 ABCA 47];
- the decision to have and raise children together; and
- the length of the relationship, etc.
For example, in Mullin v. Sherlock (2023 ONSC 3744), Ms. Mullin claimed unjust enrichment, quantified on a joint family venture basis, for her contribution towards the substantial growth of Mr. Sherlock’s business during the period of approximately eight years when the parties cohabited prior to their marriage. Justice Bloom found that a joint family venture existed before the parties were married. In reaching this conclusion, his Honour considered that Ms. Mullin ran the household of the parties so that Mr. Sherlock could devote himself to the business. She was responsible for cooking and maintenance of their home as well as caring for their dogs. She gave up her architectural career and suffered deprivation corresponding to the benefit conferred on Mr. Sherlock. in Farkas v. Bedic (2016 ONCA 82), the parties cohabited for around thirteen years. Mr. Bedic appealed the trial judge’s decision that Ms. Farkas had a half interest in two motel properties and specifically that Mr. Bedic held title to one of the hotels in trust for himself and Ms. Farkas equally. The trial judge found that a joint family venture existed in connection with a motel as the parties had contributed jointly to its acquisition, maintenance and improvement. Mutual effort was demonstrated by the parties’ collaborative teamwork in renovating and operating the motel. In reaching this conclusion, the trial judge gave consideration to Ms. Farkas’ contribution in running the motel, which included cleaning the rooms, making the bed, cooking all meals and the fact that she worked five hours a day at the motel, for which she was not paid.
Economic integration concerns the degree of economic interdependence and integration that characterizes the parties’ relationship. The more extensive the integration of the couple’s finances, economic interests and economic well-being, the more likely is it that they should be considered as having engaged in a joint family venture. Examples include:
- the existence of a joint bank account that was uses as a “common purse”;
- jointly held assets, etc.
In Sullivan v. McCarthy (2017 ONSC 94), Justice McSorley held that the transfer of funds from one party to another in order to pay bills constituted financial integration.
The actual intent of the parties must be given considerable weight in considering whether there is a joint family venture. Courts may infer from the parties’ conduct that they intended to share the wealth they jointly created. Examples and indicators include:
- where the parties accept that their relationship is “equivalent to marriage” or hold themselves out to the public as married;
- the stability of the relationship and length of cohabitation;
- title to property may reflect an intent to share wealth; and
- plans for property distribution on death of either party.
In Mullin (discussed above), Justice Bloom concluded that the parties intended to share wealth jointly taking into consideration a number of factors:
- that the parties discussed their future together during cohabitation,
- that Ms. Mullin was the sole beneficiary under Mr. Sherlock’s will, and
- that she was also designated as his attorney under the power of attorney for personal care and under the power of attorney for property.
Whether and to what extent the parties gave priority to the family in their decisions-making is the fourth factor to consider in determining whether the parties were engaged in a joint family venture. The focus is on the contributions to the domestic and financial relationship, and particularly the financial sacrifices made by parties for the welfare of the collective or family unit. Indicators include:
- whether the roles of the parties fall into the traditional wage earner/homemaker division;
one party relies on the success and stability of the relationship for future
economic security, to his or her own economic detriment, in ways that include
- leaving the workforce for a period of time to raise children,
- relocating for the benefit of the other party’s career,
- foregoing educational or career advancement for the benefit of the family or relationship, and
- accepting unemployment in order to balance the financial and domestic needs of the family unit.
For example, in Porteous v. Conway (2015 ONSC 5871), Ms. Porteous accompanied Ms. Conway to Nipigon to accommodate a career move, even if that meant she would have to live away from her two daughters from her previous relationship. The parties also moved to Peterborough to accommodate Ms. Conway’s career and Ms. Porteous’ medical needs. The parties made these decisions together, in consultation with one another, and with an eye to their future together. Justice Gordon held that these actions indicated that the parties gave priority to the family and that pointed to the existence of a joint family venture. For a more detailed review of the concept of joint family venture and examples of its application, please see David Frenkel’s article in the Canadian Family Law Quarterly titled “Joint Family Venture: A Synthesis of the Post-Kerr Case Law”, 34 CFLQ 35.
Galbraith v. Kinsley (2023 ONSC 3332)
Galbraith v. Kinsley is a case that involved unmarried spouses who cohabited for around 10 years from January 2008 to September 2018. The parties had three children together during that time. The parties had resolved all other issues arising from their separation, except for the issue of Ms. Galbraith’s trust claim for a share of the home Mr. Kinsley purchased in January 2008.
Summary of Facts
The parties began dating in or around 2003, when Ms. Galbraith was 15 years old, and Mr. Kinsley was 19 or 20 years old. In 2007, Mr. Kinsley wanted to move out of his parents’ home and wanted to buy a house. He discussed this with his parents and with their support started looking for a house to purchase.
The parties disputed the extent of Ms. Galbraith’s involvement in the process of viewing and selecting the house. However, it is agreed that Ms. Galbraith attended the viewing of 150 Dundalk, the house which Mr. Kinsley ultimately bought.
Finding of Unjust Enrichment and Joint Family Venture
On applying the principles discussed in Kerr to the facts of this case, Justice Chown concluded that this case met the test for unjust enrichment and that the parties were engaged in a joint family venture.
Justice Chown established that Mr. Kinsley was enriched through the actions and efforts of Ms. Galbraith. The financial contributions made by Ms. Galbraith during cohabitation supported the family’s lifestyle and Mr. Kinsley’s lifestyle in very tangible ways.
His Honour referred to Peter v. Beblow (1993 CanLII 126) in discussing that the provision of domestic services can support a claim for unjust enrichment. He also discussed Kerr and reiterated that “there is no reason to distinguish domestic services from other contributions”. The services “constitute an enrichment because such services are of great value to the family and to the other spouse; any other conclusion devalues contributions, mostly by women, to the family economy.”
Justice Chown applied the principles discussed in Kerr as follows:
His Honour highlighted the fact that during the relationship, the parties worked together towards common goals. The parties moved into their home soon after Mr. Kinsley purchased it. While Mr. Kinsley purchased the supplies for most of the home improvements, Ms. Galbraith did most of the housekeeping. The parties raised their three children together and Ms. Galbraith took maternity leave for each child and did most of the childcare. Simply put, the parties generally divided their efforts along traditional gender roles, and their efforts were integrated for the benefit of the family.
While the parties maintained separate bank accounts, they shared expenses. Ms. Galbraith generally paid for groceries, phone plans, internet, cable TV, natural gas (for home heating), and household contents such as towels, curtains, and bedding. Mr. Kinsley paid the mortgage, insurance, taxes, hydro, water, and repair work for the property. The parties consulted on major expenses such as vehicles. Sometimes who would pay for things depended on who had money in their bank account at the time. On reviewing the manner in which the parties shared expenses of the family, Justice Chown was of the opinion that there could be no doubt that the parties integrated their economic well-being and economic lives.
Mr. Kinsley argued that the parties did not have any actual intent to have a joint family venture. He pointed to the lack of planning surrounding children, the absence of discussions about the long-term future and the parties’ long-term goals, Ms. Galbraith’s opposition to marriage, etc. Mr. Kinsley testified that “All this came about… kids came. We didn’t think of having kids. We didn’t say we were having kids. It was just the way life came.” While Mr. Kinsley bought a ring for Ms. Galbraith at some point in the relationship, Ms. Galbraith did not take the ring because she did not want it. Mr. Kinsley denied proposing to Ms. Galbraith and said that the purpose of the ring was to say that he appreciated her to being the mother of his children. However, Mr. Kinsley agreed that the act of marriage would not have changed things.
Justice Chown concluded that the fact remained that the parties were in a relationship that resembled marriage.
Priority of the Family
Ms. Galbraith took three maternity leaves during the ten-year cohabitation. She did everything that was necessary to allow Mr. Kinsley to work long hours. These facts alone show she prioritized the family over her individual economic welfare.
Further, Justice Chown noted that there was no justifiable basis to conclude that the parties did not contribute equally to the joint family venture. Mr. Kinsley earned a higher income, but this was possible because of the parties’ mutual decision that Ms. Galbraith would take primary responsibility for raising the children and for other household responsibilities.
Similarly, Mr. Kinsley did most of the home improvement work, but Ms. Galbraith and her family contributed and, no doubt, much of the work Mr. Kinsley did was made possible or more efficient because Ms. Galbraith looked after the children while he was doing that work.
Monetary or Proprietary Award
Justice Chown reiterated that in an unjust enrichment claim, monetary (as opposed to proprietary) relief “constitutes the default position”: Mitchell McInnes, The Canadian Law of Unjust Enrichment and Restitution, 2nd Ed. (Toronto: LexisNexis, 2022), at 28.01[a]. A constructive trust will be awarded only if a monetary order would be inadequate: McInnes, 28.01[b][i].
Despite the circumstances of this case meeting the requirement for a proprietary award, that is, Ms. Galbraith had shown a direct link between the property and the services rendered, as required by Kerr, Justice Chown was of the opinion that a proprietary award was not appropriate in the circumstances or necessary to achieve a just result. This was because Mr. Kinsley had refinanced the property after separation and ordering the sale of the property would unnecessarily undermine efforts Mr. Kinsley made to preserve the property and may permit Ms. Galbraith to unjustly benefit from the re- financing Mr. Kinsley had arranged. Secondly, Ms. Galbraith did not provide an adequate reason to depart from the default position of a monetary award.
Justice Chown concluded that the circumstances of this case called for a monetary remedy and for a “value-survived” approach to determination of the amount of the monetary remedy.
The typical Ontario family continues to diverge further from the traditional marriage set- up that was once the norm and increasingly more couples are living in common-law relationships.
As a result, the Family Law Act in Ontario will continue to need the complement of equitable principles that are missing in the legislation.
Accordingly (and as seen in the recent case of Galbraith v. Kinsley), the Supreme Court of Canada’s decision in Kerr remains the comprehensive guide in understanding and applying the common-law principles of unjust enrichment and the joint family venture.