Property Division for Unmarried Spouses in Ontario
In Ontario, the division of property following the breakdown of a relationship between unmarried, or common-law, couples can be a complex issue. Unlike for married couples, there is no governing legislation for property division when common-law partners separate. This often results in confusion and misunderstanding, making the process even more difficult. To help shed some light on this issue, let's delve deeper into what this entails.
How Legal Ownership and Equitable Claims Work
The primary principle in determining property rights for unmarried spouses is legal ownership. This is determined by who holds the "paper" title to an asset or liability. Essentially, the name on the deed, title, or contract will be the legal owner of the property.
However, this concept of legal ownership may not always result in a fair division of property. There are situations where one spouse might not hold the legal title of the property, but they have contributed significantly to the increase in its value or to the wealth of the other spouse.
In such circumstances, the law allows the spouse who feels the division is unfair to make an equitable claim. This claim is a request to the court to consider more than just the strict legal ownership. Instead, the court is asked to consider the claimant's contributions to the other spouse or their property.
Depending on the specifics of the situation, the claimant can assert a claim for a resulting trust or for unjust enrichment, both of which are equitable principles used to address instances of perceived unfairness.
Resulting Trust and Unjust Enrichment Claims
A resulting trust is a type of implied trust that can occur in two situations. The first is when a person directly contributes to the purchase of a property but does not have legal title, and the second is when they transfer property they owned to their spouse without receiving anything in return. The law assumes that the person did not intend to make a gift and that the property should be held in trust for them to the extent of their contribution.
On the other hand, an unjust enrichment claim is a legal principle designed to prevent one person from benefiting at the expense of another. In the context of family law, such a claim often manifests as a claim to a share in the ownership or value of property that is legally owned by the other spouse. This claim is based on contributions made to the relationship that directly or indirectly increased the value of the other spouse's property.
A classic example of this is where spouses have lived together for a significant period in a home owned by one spouse. If the non-owner spouse has, for instance, contributed to mortgage payments, or substantially improved the property, they may have an unjust enrichment claim if the homeowner refuses to share the ownership or value of the property after separation.
The Three-step Test to Prove Unjust Enrichment
Proving unjust enrichment is not a simple task. It requires establishing three core elements:
The defendant (the other spouse) received a benefit;
The claimant suffered a corresponding loss; and
There was no juristic (legal) reason for the benefit and the corresponding loss.
It's important to note that the law does not automatically presume an equal division of property or increase in value from the date of cohabitation to the date of separation. The mere fact of cohabitation does not give rise to an entitlement of one party to share in the other party's property. Each case is unique and evaluated on its own facts.
Possible Remedies for a Successful Unjust Enrichment Claim
If a claimant successfully proves an unjust enrichment claim, they can pursue a couple of remedies. They can ask the court to declare that they have an ownership interest in specific pieces of property. This is known as a constructive trust, where the other spouse is considered to hold a portion of the property in trust for the claimant.
Alternatively, they may ask for the other spouse to pay them a monetary amount that would remedy the unjust enrichment. This is often referred to as a monetary award or compensation in lieu of a trust.
The court will first consider making a monetary payment, and a constructive trust is only granted where there is a clear link between the contributions of the claimant and the specific property and where a monetary remedy is not enough to address the injustice.
The Joint Family Venture Analysis
A joint family venture refers to relationships where the parties have used their joint efforts to accumulate wealth and manage their affairs. This recent development in the law of unjust enrichment is often considered when a couple separates. If the court determines that the couple was engaged in a joint family venture, then the remedy for unjust enrichment could provide one party with a share of the accumulated wealth in proportion to their contributions.
This determination is based on four overlapping factors:
Mutual Effort: Did the parties work collaboratively towards common goals? This can be assessed by considering the pooling of effort, teamwork, the raising of children together, and the length of the relationship.
Economic Integration: What is the degree of economic interdependence and integration between the parties? This can be seen through shared expenses and joint accounts.
Actual Intent: Were intentions expressed directly or can they be inferred from conduct as to whether the parties intended to share in the wealth they jointly created? This can be determined by considering whether the parties presented themselves to the public as married, the stability and length of the relationship, and intentions expressed in wills or verbal discussions.
Priority of the Family: To what extent did the parties prioritize the family in their decision making? This can be examined by considering contributions to the domestic and financial partnership, financial sacrifices for the welfare of the family unit, and whether a party relied on the relationship to their detriment for the sake of the family.
Evidentiary Considerations
As you can see from the information above, significant evidence will need to be gathered and presented if you wish to assert a claim for unjust enrichment. I am enclosing a questionnaire for you to fill out in detail. We will then meet to review your responses and to gather further evidence, to see whether it is likely that your claim for a share to your spouse’s property will be successful. I ask that while you review the information above and the questionnaire, that you apply the information to your situation as best as you can, take notes and be prepared for our meeting. Please make a list of any questions you have that may arise from your review of the information below and we will discuss them in person.
Limitation Periods for Asserting Claims
Finally, it is necessary to be aware of the deadline for bringing these claims. There are different limitation periods with respect to unjust enrichment claims, depending on the relief sought. If a claim is made with respect to real property (i.e., house, cottage, land, etc.), such as a constructive trust claim and its alternative, monetary compensation, you have 10 years from the time the claim was “discovered”. You must assert the constructive trust claim if you are going to have the 10 years, a claim for a monetary payment alone will not be sufficient.
If the claim is asserted with respect to other property or monies, then you only have 2 years from the time the claim was discovered to bring the claim.
Conclusion
Navigating property division for unmarried couples can be challenging due to the lack of specific legislation and the reliance on equitable principles. However, with a clear understanding of your rights, legal ownership, equitable claims, and the legal mechanisms available, it is possible to navigate through this process and achieve a fair outcome.
This guide provides a basic overview of the complex issues surrounding property division for unmarried spouses in Ontario. It is always advisable to seek legal advice from a family lawyer who is familiar with these issues and can guide you based on your unique situation.
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