Sharing Property Not Always Appropriate For Cohabiting Couples

Piggy bank represents shared assets

Ontario legislation does not create a property division regime for unmarried (common-law) spouses. As a result, at the end of a relationship, there is no equalization of net family property. This can leave one party feeling there has been an inequitable distribution of assets.

A party may allege there has been an unjust enrichment and seek a remedy enabling them to share in the other spouse’s property. A finding of a joint family venture is one possible remedy when the parties exercised joint efforts that were linked to the accumulation of wealth. However, courts have indicated that where parties have chosen not to marry, they are able to keep property separate if they so choose.

Finding a Joint Family Venture as a Remedy to Unjust Enrichment

In Kerr v. Baranow,  the Supreme Court of Canada indicated that claims based on unjust enrichment were the primary way to address those situations where there was an inequitable division of assets between unmarried couples following the breakdown of a relationship. Establishing that there has been an unjust enrichment requires there to be:

  1. An enrichment to one party;
  2. A corresponding deprivation; and
  3. The absence of any juristic reason for the enrichment.

Case law has confirmed that when one party leaves a relationship with a disproportionate share of assets that were accumulated by the parties’ joint efforts, a remedy through either a grant of a proprietary interest or a monetary payment may be appropriate. In each case, the remedy must reflect the true nature of the enrichment and the corresponding deprivation.

Establishing an unjust enrichment requires the party to show a direct connection between their contributions and the acquisition of property. In Kerr, the Supreme Court indicated that indirect monetary contributions and labour contributions can be sufficient as long as there is a connection present. Moreover, in that case, the court introduced the concept of the joint family venture. In Kyriacou v. Zikos, the judge suggested that a joint family venture is one of the remedies that are available when an unjust enrichment is found. As explained by the Supreme Court in Kerr:

“… the law of unjust enrichment can and should respond to the social reality identified by the legislature that many domestic relationships are more realistically viewed as a joint venture to which the parties jointly contribute”.

Determining Joint Family Venture Should Not Be a Bookkeeping Exercise

The Supreme Court of Canada has outlined four factors to be assessed in identifying whether there has been an unjust enrichment arising from a joint family venture requiring redress:

  1. Mutual Effort: Did the parties work collaboratively towards common goals?
  2. Economic Integration: Did the parties have joint assets, share expenses, and accrue common savings?
  3. Intention of the Parties: What did the parties actually intend? Did they plan on keeping their assets separate?
  4. Priority of the Family: Did the parties give priority to their family and make sacrifices for the sake of the family unit?

Whether there was a joint family venture is a question of fact considering the relevant circumstances between the parties. Also, the party claiming a joint family venture carries the burden of convincing the court. In Kyriacou, Justice Kimmel noted that this remedy can be used by claimants who are unable to prove the value of their contributions to a specific asset or property but maintain that they contributed to the “overall accumulation of wealth and assets of the family over the duration of a relationship and that they should be entitled to an award of damages as a result”.

Importantly, weighing the parties’ respective contributions over the course of their relationship should not devolve into a bookkeeping exercise. In Gonsalves v. Scrymgeour, the Court warned that domestic relationships are often viewed as a joint venture, making a detailed accounting of benefits received and contributions conferred an artificial exercise.

Spousal Relation Not Required to Find a Joint Family Venture

In Derakhshan v. Narula, the Ontario Court of Appeal remarked on the relationship status between the parties in a claim for a joint family venture. The Court noted that while a joint family venture claim becomes stronger when the relationship resembles that of spouses, a spousal relationship is not required. The original trial judge also carefully examined the financial decisions the couple made and their treatment of property.

Generally, the more extensive the integration of finances, the more likely it is that the parties were engaged in a joint family venture. However, the judge in Derakhshan recognized that some financial overlap will be common among couples in a relationship, but in this case, it fell far short of showing economic integration. There was no pooling of funds, no financial intertwining, and no amassing a common pool of savings. Where there was some financial overlap, such as their car and health insurance, the judge accepted this stemmed from their desire to save money and taxes and not because they were acting as a married couple in a financial way. Consequently, there was no joint family venture.

Couples Can Choose to Keep Their Property Separate

In Auciello v. Yao, Ms. Yao claimed a constructive trust and joint family venture claim over 50% of Mr. Auciello’s investment properties. The parties had a short relationship together but had a child. The judge looked at each of the four hallmarks of a joint family venture.

Looking first at whether the parties exercised joint efforts towards common goals, Justice Steele found that Mr. Auciello occasionally borrowed money from Ms. Yao when he had financial difficulties. However, the parties understood that these funds were borrowed and would be repaid. This was not indicative of the parties engaging in a joint family venture. There were similar findings respecting their economic integration. The parties each had their own businesses. They kept a joint bank account for only a short time before it was closed. There was no common purse, and the pair kept their finances separate. The parties occasionally helped each other out financially, but their common understanding was that money was lent and intended to be paid back.

The judge did not accept that the intent of the parties was to participate in a joint family venture. Ms. Yao suggested that evidence of this intention was found in their attendance at social and professional events together, travelling together, and the congratulations they received for the birth of their daughter. However, the Court reminded her that people can choose to live together while staying unmarried and keeping their property separate.

Previous cases have found that the mere appreciation of one of the cohabitant’s assets will not, by itself, create an unjust enrichment. Looking at the circumstances of Ms. Yao and Mr. Auciello’s relationship, the Court found that there was no intention to create a joint family venture. This was not a case where the parties fell into a wage earner/homemaker division. Both worked and cared for their child without sacrificing future economic opportunities. Ultimately, they had a short relationship and did not marry. Justice Steele noted that while there are cases where the parties do not marry but become economically intertwined with an intention to be treated as a family unit and share property, this was not such a case:

“When people choose to marry, they choose to enter into a regime where the law requires sharing of property accumulated during the marriage.  By contrast, if people choose to not marry, they ought to be able to keep property separate if they so choose.”

Cohabitation Alone Does Not Create Entitlement to Share Property

A trust remedy based on unjust enrichment can be appropriate in some cases where there is an inequitable property division. However, courts have also stated that while there does not have to be a spousal relationship, the domestic arrangements must demonstrate that a joint family venture was present such that the unmarried parties jointly worked as a partnership and accumulated property. If this is absent, cohabitation by itself does not entitle one party to a share of the other’s assets.

Contact Bortolussi Family Law in Vaughan for Knowledgeable Advice on Common-Law Separation

The skilled family lawyers at Bortolussi Family Law frequently work with clients in common-law relationships who are facing separation. We provide focused legal solutions that fit your personal family situation, including property issues and parenting matters (including decision-making responsibility/custody and parenting time/access). Our firm proudly serves clients in Vaughan and throughout the Greater Toronto Area. To schedule a consultation, please reach out online or call us at 416-987-3300.

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