Canadian law has struggled for decades with the issue of how property is divided when a common law couple breaks up. Prior to this Supreme Court of Canada decision, the property dispute was often decided through finding a resulting trust or bringing an unjust enrichment complaint. In the context of a common law relationship, a resulting trust can arise where one spouse contributes to the acquisition of property, without their name being on title. Earlier decisions often found that the parties had a common intention that the spouse whose name was on title held it in trust for the other spouse.
Unjust enrichment is different
The elements of unjust enrichment are that the defendant was enriched by the plaintiff, who was correspondingly deprived, and that there is no reason in law or justice for the defendant to keep that enrichment. The purpose of an unjust enrichment remedy is to repay or reverse the benefit. The plaintiff may be entitled to either a monetary payment or an entitlement to property.
If the plaintiff is entitled to a monetary payment, the Supreme Court decided in this case that it was not limited to value received or quantum meruit. Limiting it this way is like restricting the payment to a fee-for-services calculation, which does not appropriately reflect the lives of many domestic partners and is inconsistent with the flexibility of unjust enrichment. In this decision, which considered two separate appeals, the Supreme Court also held that while the common intention resulting trust played an important role historically, it was no longer needed for resolving property disputes in the breakdown of a common law relationship. Instead, unjust enrichment is a more appropriate tool to use.
In Kerr v. Baranow, the couple were in their late 60s and had been together for over 25 years when they separated. Ms. Kerr had entered the relationship with debts, which Mr. Baranow paid off. Although they shared living expenses, they kept their accounts separate throughout the relationship. When Ms. Kerr had a stroke, Mr. Baranow took early retirement to help care for her. He eventually found this too hard and placed Ms. Kerr in a care home. She sought division of their property just days later. Both parties claimed unjust enrichment, and Ms. Kerr claimed a resulting trust. The Supreme Court saw problems with both the trial and appeal decisions in this case, and noted that the parties should have the opportunity to argue the issues in light of the law as set out in this decision. A new trial was ordered, to hear Ms. Kerr’s unjust enrichment claim and Mr. Baranow’s counterclaim.
In Vanasse v. Seguin, it was clearer that there was a joint family venture in place. The parties lived together for around 12 years and had two children. Ms. Vanasse had relocated with Mr. Seguin for his work, and she took care of domestic labour and child care. This gave Mr. Seguin the freedom to develop his business. At the time the parties separated, Ms. Vanasse’s assets were far less than Mr. Seguin’s. The trial judge found unjust enrichment over a period of 3.5 years, and made a monetary award representing half of the earnings during those years. The court of appeal reversed this. The main issue on appeal was whether the trial judge should have applied the quantum meruit approach in calculating the monetary award. The Supreme Court found that this was not necessary, and reinstated the trial judge’s order.