In companion rulings made February 18, 2011, the Supreme Court of Canada clarified the law relating to property division resulting from the breakdown of a common law relationship: Kerr v Baranow; Vanasse v Séguin, 2011 SCC 10.
The Court first noted that common law partners’ rights were traditionally based on the principles of resulting trust and unjust enrichment.
Under the traditional analysis, a resulting trust can arise in two situations: the gratuitous transfer of property from one partner to the other, or a couple’s joint contribution to the acquisition of property, where title has been registered in the name of only one of them. An unjust enrichment claimant must traditionally establish three distinct elements: an enrichment, a corresponding deprivation, and the absence of a juristic reason for the enrichment.
The Supreme Court rejected common past practice where courts have required the claiming partner to show a direct connection between his or her own financial or other efforts and the acquisition of the property that came to be in the other’s name. It was held that this “fee-for-service” calculation fails to reflect the reality of the lives of many domestic partners and is inconsistent with the inherent flexibility of unjust enrichment and with the courts’ approach to equitable remedies.
The court substituted a more “common sense” analysis for this rigid approach to quantifying compensation, stating at para. 69: “[T]he legal consequences of the breakdown of a domestic relationship should reflect realistically the way people live their lives. It should not impose on them the need to engage in an artificial balance sheet approach which does not reflect the true nature of the relationship”.
The courts should, however, continue to consider if a share of the property should be awarded (using the principle of constructive trust) or whether a monetary award is sufficient. Where a monetary award is to be made, the courts’ “common sense” analysis now requires a consideration of whether or not there was a “joint family venture” to which both partners contributed.
. When examining whether a relationship is a “joint family venture”, the courts are to review the evidence under four broad headings: mutual effort; economic integration; actual intent; and priority of the family. Once the “joint family venture” is established, the courts can then consider the net wealth that has accumulated proportionate to the claimant’s contributions. Thus, there must be a link between contributions and the accumulation of wealth.
In the Kerr case, the plaintiff was unsuccessful in establishing an entitlement to one-half of the wealth accumulated during the relationship. She was not able to show that the defendant had been unjustly enriched at her expense, that their relationship constituted a joint family venture, and that her contributions were linked to the generation of wealth during the relationship.” The parties kept their financial affairs separate.
In the Vanesse case, however, the couple had been working collaboratively towards common goals. They jointly raised children together and acquired wealth together. The court took into account, among other things, their economic integration evinced by a joint bank account and by the property being jointly registered in their names.