Tough Questions
One of the topics that I discuss often with clients and prospective clients is property rights of common-law partners. There are many misconceptions and myths regarding this topic. For example, I often hear questions similar to the following:
– My partner and I have been together for two years; that means we are entitled to half of each other’s property, correct?
– My partner and I have been living together for 10 years. We purchased furniture together and most of our property was purchased after we started living together. We are each entitled to half of each other’s property, correct?
– My partner and I have been together for 6 months; is s/he entitled to half of my stuff?
The answer to many of these questions is “no, but….”. It’s understandable that these issues become confusing for the average person. The beginning of the confusion for most people starts with the Marital Property Act, SNB 2012, c.107, which defines “spouse” as a “married person”. Therefore, the division of property under the Marital Property Act (upon which the above questions are based) only applies to married people.
Kerr v. Baranow changes the landscape
In the now oft-cited case, Kerr v. Baranow, 2011 SCC 10, Justice Cromwell for the Supreme Court of Canada, noted at paragraph 1 that over a period of 30 years, courts have wrestled with property division for married couples, resulting in the various marital property acts enacted in the provinces in the late 1970s and 1980s. However, he notes that these acts only apply to married people. Regarding unmarried couples, Cromwell stated as follows:
For unmarried persons in domestic relationships in most common-law provinces, judge made law was and remains the only option. The main legal mechanisms available to parties and courts have been the resulting trust and an action in unjust enrichment. (Kerr, supra at para 1)
While common-law couples may not be able to turn to a provincial marital property statute for division of their property, the Supreme Court in Kerr, supra allows a division of property through unjust enrichment. If the claimant can prove the couple were engaged in a “joint family venture” and that he/she contributed to the joint family venture through work or funds contributed, then he/she may be able to use unjust enrichment to seek compensation for his/her contributions to the joint family venture.
Justice Cromwell notes at paragraph 31 in Kerr that “at the heart of the doctrine of unjust enrichment lies the notion of restoring a benefit which justice does not permit one to retain.” In other words, where a provincial marital property statute is not an avenue to compensation, but unjust enrichment may be.
Test for unjust enrichment
For recovery of the funds/services provided, the test for unjust enrichment requires the claimant to prove the following:
- The defendant has been enriched by the plaintiff (through the plaintiff’s contribution to the joint family venture);
- The plaintiff has suffered a corresponding deprivation (loss) due to the defendant’s enrichment;
- There is no juristic reason why the claim for unjust enrichment must fail and for the defendant to retain the benefit conferred by the plaintiff. At this step of the analysis, the plaintiff must exclude specific legal categories, which would provide reason for why the action in unjust enrichment must fail (gifts, statutory obligations, etc.). Secondly, this part of the analysis requires consideration of the reasonable expectations of the parties and public policy considerations of why recovery should be denied.
Finally, the Court notes that the remedy for unjust enrichment could include either a monetary award or proprietary award (return of property) but favours a monetary award if possible.
You Can’t Always Get What you Want!…and Other Sad Songs
Since 2011, Kerr v. Baranow has been cited several times by New Brunswick courts in dealing with property rights for common-law couples (for example, see paragraph 19 in Wills v. Kennedy, 2015 NBCA 31 (CanLII) for a list of cases citing Kerr v. Baranow). However, in Rollie Thomson, Lovers in a Dangerous Time’: Loose Ends After Kerr v. Baranow (Paper presented by Rollie Thomson at Canadian Bar Association, Midwinter 2014, February, 2014, Moncton, NB), Professor Thomson notes that many questions arise about Kerr’s application to specific circumstances: How do we quantify contributions? Does a property remedy through unjust enrichment apply to pre-marriage cohabitation in actual marriages? Does the analysis in Kerr affect spousal support payments?
Courts in New Brunswick have notably applied the unjust enrichment remedy unequally in different cases, making outcomes less predictable. In Mike Landry, “Breaking up is hard to do: common law partner denied share of ex’s pension” Telegraph-Journal (29 September 2016), the author refers to the recent (September 8, 2016) New Brunswick Court of Appeal case of Noel v. Butler, 2016 NBCA 49, wherein the Court denied Noel’s request for a portion of Butler’s pension because of lack of evidence that Noel specifically “contributed in any meaningful way to Butler’s ability to work as a teacher and accumulate pension benefits.”
After reflecting on Kerr v. Baranow, the answer to the questions above could now be: “possibly, if you can prove unjust enrichment based on the facts.” But absent legislative changes to clarify this area of the law, common law couples will remain “lovers in a dangerous time” because “breaking up is hard to do” and “you can’t always get what you want.”
Should you have any specific questions regarding your property rights in a common-law relationship, feel free to contact us.