After many months of waiting to see what the Supreme Court of Canada would do with property division in common law relationships, lawyers got answers on Feb. 18 when Justice Thomas Cromwell, writing on behalf of a unanimous bench, expanded the law to make it easier for common law spouses to bring forward unjust enrichment claims upon the breakdown of a relationship.
The court heard two cases together last year, Kerr v. Baranow and Vanasse v. Seguin, that both dealt with the issue of unjust enrichment in the context of common law relationships.
In Vanasse, the couple cohabited for 12 years and had two children together. Michele Vanasse, while initially very involved with her career, stayed home with the couple's children while David Seguin focused on developing his business, the sale of which left him a very wealthy man. In Kerr, the issue involved a long-term relationship that had lasted 25 years. For Margaret Kerr, this was a second relationship. It appears to have been a first relationship for Nelson Baranow. The parties had no children together, and both worked until Kerr suffered a severe stroke and was unable to return to work due to her paralysis. Baranow, meanwhile, took early retirement in part to assist with Kerr's care.
The primary point of Cromwell's reasons was that if a party can show that the common law couple functioned as a marriage-like family unit or, as he termed, a "family joint venture," the relationship falls within the new analysis for property division. Specifically, once a spouse can establish that the couple functioned as a "family joint venture," there's no longer a need to show a specific link between that party's contribution either through money or some form of services and the specific asset to be shared. Nor is that spouse limited, if there's insufficient proof of that link, to monetary compensation on the former model of fee for services rendered.
Cromwell's decision makes very clear that neither approach was reflective of reality in circumstances in which the parties cohabited in a truly unified manner. At the same time, it dispenses with a long-standing need to pigeonhole spouses into non-realistic constructs to obtain equitable relief.
According to the top court, in order to determine whether the family functioned as a family joint venture, there must be regard to the following four non-exhaustive criteria:
- Mutual effort: Whether and to what extent there was a pooling of efforts and teamwork to achieve common goals. In assessing this, there's no need to ascribe monetary value to individual efforts. Rather, there must be regard to the totality of results arising from the pooling of efforts.
- Economic integration: Whether and to what extent the parties pooled resources to pay for all or part of the common expenses. The issue includes the question of whether one spouse was financially dependent on the other, as was the case for Vanasse.
- Intent of the parties: What were the actual intentions of the parties, something the court confirmed it's also possible to infer from their actions. Cromwell was very clear that what a "reasonable person ought to have intended" given the circumstances plays no role in the analysis. The focus is strictly on what actually happened and what the parties actually said and did throughout the relationship.
- Priority of the family: Whether and to what extent the parties gave priority to family life in their decision-making. For example, did one spouse take time off from work to stay home with the children or did one of them forego employment advancement opportunities to spend more time with family? Essentially, is there good evidence to show that the parties gave priority in decision-making to the family unit as opposed to their individual interests?
If there are other relevant criteria that come into play based on the specific facts and circumstances of a case, the court must consider them as well. Cromwell's resounding point emphasizes flexibility in analysis to maintain focus on the reality of the relationship and the equities involved.
The reasons go on to deal with two additional elements that, according to Cromwell, have historically been applied incorrectly and inconsistently: mutuality of benefits and the reasonable expectations analysis.
With respect to mutuality of benefits, Cromwell clarified that this argument only comes into play at the defence or set-off stage of the analysis. The courts aren't to consider arguments about the mutuality of benefits in the initial determination of whether there has been an unjust enrichment. It is on this point that Cromwell allowed Kerr's appeal and sent the matter back to trial. In his view, the B.C. Court of Appeal truncated Kerr's ability to make out her claim for unjust enrichment by focusing on Baranow's contributions in the "juristic reason" stage of the analysis.
Finally, Cromwell confirmed that the days of arguments about reasonable expectations are at an end. Again, the real focus is on what did happen, not what ought to have happened or what "the reasonable person" would have expected to happen.
There has been a great deal of public commentary on this decision and there appears to be an emerging perception that there's now a presumption of property sharing among common law spouses. That's certainly not the case. The court has created no presumptions. What has happened, however, is a shift from a boxed-in analysis to one that recognizes that when analyzing how two people shared their lives together in order to determine whether there are equitable remedies that should flow from the breakup, the focus must be on those specific people and that particular relationship.
Marta Siemiarczuk is a lawyer practising family law litigation and collaborative family law at Nelligan O'Brien Payne LLP LLP in Ottawa. She can be reached at firstname.lastname@example.org
[This article is reprinted with permission and first appeared in the March 2011 issue of The Law Times.]