Unjust Enrichment in Common Law Relationships: The Value of a Home

Written on behalf of Arbesman Hamilton LLP

The Ontario Court of Appeal recently had the opportunity to review the law of unjust enrichment when it dismissed a claim by a woman (the Plaintiff) seeking to share in the increase of the property she lived in with her partner (the Respondent) in a six-year common-law relationship

A Common Law Relationship

The Plaintiff and the Respondent shared a home purchased by the Respondent throughout their six-year relationship. The home was purchased with the proceeds from the Respondent selling his previous home and taking a mortgage on the balance of the house. While they lived together he made $1,000 monthly in mortgage payments while she paid $400/month in rent. She also contributed to the upkeep and maintenance of the home. Finally, during the relationship, she made a one-time payment of $5,000 towards the balance of the mortgage.

The value of the home increased by $410,000 during the time the couple lived together. When the relationship broke down, the Plaintiff sought an award of one-half of the $410,000 increase in value. Her claim was made on two grounds, the first being that the man benefited from an unjust enrichment in the increase of the value of the home. Additionally, she claimed she was entitled to half of the value because of a joint family venture.

The Principle of Unjust Enrichment

The Supreme Court of Canada summarized the principle of unjust enrichment in the 2011 case Kerr v. Baranow. The trial judge cited that decision, stating:

“[a]t the heart of the doctrine of unjust enrichment lies the notion of restoring a benefit which justice does not permit one to retain.”

The Supreme Court outlined three things that one must demonstrate to prove unjust enrichment:

  1. An enrichment of or benefit to the defendant;
  2. A corresponding deprivation of the plaintiff; and
  3. The absence of a juristic reason for the enrichment

The Plaintiff claimed the enrichment (the increase in the house’s value) came as the result of a joint family venture. The trail judge explained:

“To be entitled to a monetary remedy of this nature, the claimant must show both (a) that there was, in fact, a joint family venture, and (b) that there is a link between his or her contributions to it and the accumulation of assets and/or wealth.”

Decision at Trial Upheld on Appeal

The trial judge determined there was no joint family venture, mainly because:

  • The plaintiff did not help pick out the house or make a down payment;
  • The parties maintained their own bank accounts and paid for their own expenses, including groceries and vacations;
  • Neither party named the other as a beneficiary of RRSPs or wills;
  • The respondent was clear that he did not wish to marry the plaintiff;
  • The plaintiff did not contribute more than her fair share of household duties; and
  • The plaintiff’s financial contributions to home improvements were more than the increase in property value they provided.

Additionally, the trial judge found there was no deprivation to the Plaintiff other than the one-time payment of $5,000 and that there was no evidence that the Plaintiff’s contributions led to an increase in property value.

On appeal, the court found no reason to interfere with the trial judge’s rejection for a claim in the value of the home. However, the court did find the Plaintiff’s $5,000 should not be treated as a gift, and should instead be returned to the Plaintiff.

The lawyers at Arbesman Hamilton LLP work with our clients on all matters of separation and divorce, including property division. Contact us online or by phone at 416-481-5604 if you want to discuss your options around marriage agreements, or you find yourself at the end of a relationship.