When is Unjust Enrichment Established in a Common Law Relationship?

Written on behalf of Arbesman Hamilton LLP

In a recent case before the Ontario Court of Appeal, the court was asked to determine whether unjust enrichment had been established in the value of a home that a couple lived in before ending their common law relationship.

15 Years of Cohabitation

The male and female in the case lived together for 15 years, from 2000 to 2015, in a common law relationship. Upon their separation, the female claimed that she had a constructive trust interest in the home they shared, which was owned by her former partner.

The male had been married prior to entering into a relationship with the female. He acquired the title to the home they shared in 2000. There was no equity in the home at the time the male took title to it. The couple lived together in the female’s apartment from 2000-2002, at which time they moved into the house in question. The couple lived there until their separation in 2015.

By 2005, the couple had accumulated a significant amount of debt, which they consolidated through a loan in the amount of $57,290. The male was the borrower and the female was the co-signer on the loan. The male testified that paying back the loan became difficult, so he refinanced the loan through a mortgage on the house. The loan was paid back in full and the male was left with $19,000 from the mortgage. The female had no liability on the mortgage.

The Breakup

At the time of their breakup, the home was worth between $260,000 and $320,000 with about $157,000 owing on a mortgage, though the male made a $17,000 payment in the principal shortly after they broke up.

At trial, the female claimed a constructive interest in the home. Although the couple kept separate bank accounts and did not have joint savings, the female pointed out that she paid half of the monthly mortgage costs while also paying for the phone, internet, cable, and food. Additionally, she stated that she cleaned the home and worked in its garden – activities that benefitted the male. It was her argument that her contributions to the home amounted to an unjust enrichment for the male, and that she should be entitled to half of the home’s equity.

The Test for Establishing Unjust Enrichment

The Supreme Court of Canada established the law of unjust enrichment in a common law relationship in Kerr v. Baranow. In it’s decision, the court wrote that unjust enrichment occurs when the defendant has been enriched and the plaintiff has suffered a corresponding deprivation. If unjust enrichment has occurred, the court must then look to determine whether a joint family venture exists. The factors to be included in such a determination are:

  • Mutual effort – did the parties pool their efforts and work towards a common goal?
  • Economic integration – how extensively were the parties’ finances integrated?
  • Actual intent – did the parties intend to have their lives economically intertwined?
  • Priority of the family – to what extent did the parties give priority to the family in their decision-making?

The trial judge ruled that no unjust enrichment had been established, noting the female was never on title to the home and was not financially liable for it. She did not contribute to capital repairs, insurance or property taxes. While she did pay $500 per month, it was essentially a rent payment. While she did pay for phone, internet and cable, she and her daughter were the primary users of such services. Finally, the judge found that there was no evidence of an increased value in the home stemming from the gardening performed by the female. Despite not having to determine if there was a joint family trust, the trial judge did so anyhow. The trial judge stated that the wealth of the parties was not created from the fruits of their domestic or financial relationship. In fact, the parties did not pool their resources. Instead they kept separate bank accounts and showed no intention of integrating those areas of their lives.

The Court of Appeal dismissed the female’s appeal after finding no errors in the trial judge’s decision that no unjust enrichment had been established and that even if had been, the wealth of the parties was not created from the fruits of their domestic and financial relationship.

At Arbesman Hamilton LLP we help our clients through the stressful and confusing times that can arise from a separation, including property division. Contact us online or call us at 416-481-5604 to set up an appointment today.