In a recent post, our BC family lawyers discussed Judge v. Judge, 2015 BCSC 1764, a family law case in which the court determined that properties acquired by contributions of a husband, wife, and the husband’s parents, but held in the name of the husband’s parents alone, should be reapportioned in the wife’s favour. Throughout the marriage, the husband, the wife, and the husband’s parents bought or built real estate, and applied the rental income and equity in each property towards the buying or building of the next property. All four parties also worked together at the family’s business. The extended family was an economically integrated unit that pooled assets and applied them to the common end of maximizing wealth for the benefit of all parties to the joint venture.
BC family law claim for share of properties
Throughout the marriage, the husband managed the pool of money and made decisions about who would hold title to the properties. When the husband and wife separated, title to three of the properties was held in the names of the husband’s parents. The wife brought a BC family law claim seeking a share in those properties. As our BC family lawyers discussed in last week’s post, the wife’s claim succeeded on the basis that the properties were the product of a joint venture such that they were family assets to which the wife had a proportionate claim.
Using unjust enrichment to obtain share in property
In the alternative, the court in Judge v. Judge found that the wife could have established grounds for an equitable remedy based on unjust enrichment. The court noted that unjust enrichment has become the primary vehicle to address claims of inequitable distribution of assets on the breakdown of domestic relationships. To obtain a remedy, the plaintiff must establish the three elements of unjust enrichment:
- An enrichment of or benefit to the defendant;
- A corresponding deprivation of the plaintiff; and
- The absence of a juristic reason – in law or justice – for the enrichment.
BC family lawyers analyze the result in Judge v. Judge
Applying the elements of an unjust enrichment claim to the facts in Judge v. Judge, the necessary link between the wife’s contributions and the acquisition and preservation of the properties had been established:
- The husband’s parents were enriched by the wife’s efforts. The wife made substantial contributions to the pool of wealth which, in turn, permitted the acquisition of the three investment properties.
- The wife suffered a corresponding deprivation. She had fewer assets and savings because her contributions were diverted away from her to the acquisition of the disputed properties held by her parents-in-law.
- There was no juristic reason for this enrichment.
The wife had made substantial direct and indirect contributions to the acquisition and preservation of the properties held in the names of her parents-in-law. Those contributions included the application of jointly held funds to the first investment property; the application of income to the accumulation of wealth; the provision of vastly underpaid labour enhancing the pool of funds available for payout, primarily to the husband’s parents; and the pledging of jointly held assets to obtain financing. Thus, the wife was entitled to a remedy rooted in unjust enrichment.
Conferring mutual benefits
In applying the doctrine of unjust enrichment, the court did not overlook the fact that all parties in Judge v. Judge conferred mutual benefits upon one another in the context of the joint family venture. The parents-in-law had shown substantial direct and indirect contributions to the acquisition and preservation of the three disputed properties. Specifically, they made some contribution from their own funds to the acquisition of the disputed properties. In addition, the mother-in-law looked after the children and cooked, permitting the other members of the venture, particularly the husband and wife, to work long hours and maximize their earnings. So, in that way, the husband and wife were enriched by the efforts of his parents, there had been a corresponding deprivation, and there was no juristic reason for this enrichment. Thus, the husband’s parents had also demonstrated entitlement to a remedy rooted in unjust enrichment. That being said, the contributions of the parents-in-law to the acquisition and preservation of the properties were modest, and in return for those contributions, they lived in this residence rent-free for a substantial time.
Remedy if unjust enrichment is established
A successful claimant may be entitled to a monetary or a proprietary award. The first remedy to consider is always a monetary award (i.e., money). The onus rests on the claimant to show than a monetary award would be insufficient. In this regard, the court may consider the probability of recovery as well as whether there is reason to grant the claimant additional rights flowing from the recognition of proprietary rights. Where a proprietary remedy is granted, the extent of the constructive trust interest should be proportionate to the claimant’s contributions. Similarly, where a monetary award is granted, it should reflect the proportionate contribution of the claimant to the accumulation of wealth. There is no presumptive entitlement to an equal sharing of wealth.
On the facts in Judge v. Judge, the court determined that had it needed to apply the doctrine of unjust enrichment, the result would have been the same: the wife was entitled to a 40% share of the three disputed properties. The court further concluded that it would be necessary to grant the wife a proprietary remedy (i.e., impressing the properties with a constructive trust in the wife’s favour). A proprietary remedy was required not so much because of the probability of recovery, but because the wife had an interest in the post-separation net rental income generated from the three disputed properties and the family residence.
The bottom line from our BC family lawyers
Unjust enrichment has become a primary vehicle to address claims of inequitable distribution of assets on the breakdown of domestic relationships (whether common-law or married). Upon separation or divorce, if legal title to property does not reflect the spouse’s contributions to the property, it is open to a spouse to claim for an equitable remedy for basis of unjust enrichment. If the test for unjust enrichment is met, the court can order that money be paid to the spouse in an amount that is proportionate to their contribution, or the court can order that the property be impressed with a constructive trust in favour of the non-titled spouse. Contact Onyx Law Group’s team of BC family lawyers at (604) 900-2538 if you have questions.