There are cultural and economic factors behind the increase in multi-generational living arrangements where several generations of a family live within a single residence. This enables the residents to pool their resources and also benefit from having family nearby at all times. However, if the family members have not thought about their financial responsibilities, allocated obligations, and clarified expectations around the property ownership, the living arrangements may become unmanageable, creating conflict between the family members.
In Sidhu v. Sidhu, the Ontario Superior Court of Justice was asked to consider how the remedy of unjust enrichment might apply to a multi-generational family that lived together and pooled funds to maintain the household. In 2004, Sukhminder Sidhu (the “applicant”) purchased the property and lived there with her unmarried sons. One of her sons, Parminder, married Amandeep (the “respondents”), and the couple lived in the property with the applicant. The couple also managed and ran their business from the property.
By 2008, the applicant took equity out of the property and transferred 1% interest in the property to Amandeep for $2.00. A new mortgage was registered on title and the applicant received the funds in her account. The relationship between the parties deteriorated, and when the property was sold, the applicant claimed that she was entitled to 100% of the proceeds from the sale. However, respondents argued they were entitled to 50% of the proceeds due to their contributions.
On looking at the multigenerational family arrangements, the judge found that both parties benefited from the joint living situation and intentionally organized it to meet their own needs. There was a “meeting of the minds” regarding this bargain that underpinned their joint living arrangements. Looking at the parties’ contributions to the household, it was agreed that Parminder acted as the household financial manager and was solely responsible for managing the parties’ pooled resources to meet their everyday needs and expenses. Contributions to a family account were made by the applicant and any other family members who were living in the property at the time. These funds were used for communal expenses such as the mortgage payments and internet connection. Parminder also managed the home’s basement tenancy, maintained the property, and received $850 each month from the rental unit.
In 2015, the parties began to argue about the property. Parminder threatened to move out of the property and stop making payments and claimed that the applicant promised him that she would only retain an interest of $250,000 in the property if the respondents stayed. However, the applicant denied making that promise. The parties’ relationship deteriorated further and the applicant asked the respondents to leave the house. The respondents, however, refused to do so and claimed a 50% interest in the property.
Turning to the question of whether there was unjust enrichment, the judge had to consider whether the applicant was enriched through the respondent’s contributions to the property. The test for an unjust enrichment required determining:
Turning to the jurisprudence, the Court explained that in Peter v. Beblow, establishing an enrichment and a corresponding deprivation are related and are “essentially two sides of the same coin.” According to the Supreme Court of Canada in Kerr v. Baranow, to establish that one party was enriched and the other correspondingly deprived, there must be something of value, or a tangible benefit that passes from one party to the other.
Parminder estimated that over the years, the respondents contributed $439,578 to the property through housekeeping, renovations, and contributions to the family account. They also estimated that their housekeeping was worth $20,000. Yet, there was no evidence outlining the amount of time spent on such tasks or how to value them, and this could not support a finding that the applicant benefitted from the respondents’ housekeeping. The respondents also claimed they contributed $29,396 in renovations and maintenance. However, there were no receipts or accounts to substantiate these claimed expenses. The Court decided that it was likely that the renovation costs were paid out of the family account instead of personal accounts, and overall, was not satisfied that the applicant was enriched by the respondents’ contributions to the property.
When it came to contributions to the family account, it was accepted that the pair paid $348,726 to the account which were then used for the benefit of the household. However, because they were not the only ones contributing to the family expense account, it was impossible to determine how much their contribution amounted to in proportion to the total amount pooled. The judge found that the applicant paid most of the costs in the early years of the respondents’ marriage and continued to contribute after she stopped working. Ultimately, the respondents were found to not have suffered “a deprivation equal to the amount that they deposited into the family account.” Instead, they benefited from the pooling of resources. They kept their living costs low, ran their business from the property at a low cost, and claimed corporate tax credits, which saved them a significant amount of money. The judge also accepted that their childcare costs were low because the applicant was able to care for the children.
The Court found the applicant also benefited from the arrangement, as she relied on Parminder to maintain the property After she injured herself and stopped working, she continued to live in the house but made minimal contributions to the family account. When Justice Mandhane accounted for these benefits, Parminder’s claim was reduced due to the monthly rent of $850 that he collected from the basement apartment. These funds were not transferred to the applicant or deposited into the family account. Consequently, between 2004 and 2022 he would have collected $183,600 in rent payments. Furthermore, the respondents did not pay occupation rent for their share of the property. Justice Mandhane imputed a benefit of living rent free that was at least equal to $183,600 in value. Further, Parminder claimed some of his contributions to the family account as business expenses, as the majority of his deposits into the account came from his corporate account, and this was beneficial for tax purposes. The judge valued this as a benefit to the corporation of $145,946, being the total amount that flowed from the corporation into the family account.
Ultimately, while Parminder contributed $348,726 into the family account, he was not found to have been deprived at all. He benefited from the multigenerational living arrangements, and the applicant was not unjustly enriched.
The judge also considered whether the 2008 transfer of title created a trust in the applicant’s favour. A review of the financial documents supported Parminder’s version of events. Amandeep was added to the title to ensure that the applicant could obtain a second mortgage, and those funds were deposited into the applicant’s account. She also admitted to signing numerous legal documents to facilitate the transactions and received independent legal advice. There was no indication of any wrongdoing by Amandeep.
However, reviewing all the evidence, it was clear that Amandeep was holding her 1% interest in the property as a resulting trust on behalf of the applicant. Justice Mandhane found that Amandeep “did not pay adequate consideration for her share of the [p]roperty” and, according to her own evidence, only went on title to enable the applicant to obtain a second mortgage. Neither party intended that Amandeep “would have a beneficial interest in the property or to be legally responsible for the mortgage.”
Accordingly, Amandeep held her 1% interest for the benefit of the applicant.
Multi-generational living arrangements can provide benefits to the family members. However, the parties should set out the rights and responsibilities of the members, otherwise there can be legal uncertainty when circumstances change. Ownership and financial interests in the home should always be clear to the family members to avoid disputes among family members.
The knowledgeable family lawyers at NULaw in Toronto regularly advise clients on their options when it comes to separation, divorce, property disputes, and support entitlements. Our lawyers will provide you with valuable and practical information tailored to your unique situation so that you understand how the law applies to your situation, along with your rights and obligations. To discuss your matter further or arrange an initial consultation with one of our family lawyers, please contact us online or call us at (416) 481-5604.