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Unjust enrichment and constructive trust claims

Region: Ontario Answer # 0143

Where one or both of the common-law spouses has made a significant contribution to the property of the other, there may arise a right in respect of property based on principals of constructive trust or unjust enrichment. Unjust enrichment is based on the concept that one person is enriched at the expense of another person’s actions, for example if one spouse stayed home to care for the children rather than receiving income from employment outside the home. Unjust enrichment may also arise when a couple is engaged in a joint family venture, but one partner gained an unfair share of the profits.

In family situations, a mutual exchange of benefits by the spouses will not, by itself, deprive a spouse of an unjust enrichment claim. Instead, the benefits received by the common-law spouse making the unjust enrichment claim (called the claimant) may be used to reduce the award to which they are entitled to.

To successfully claim unjust enrichment, three factors must be proved:

  1. One spouse received an enrichment,
  2. The other spouse has been deprived or suffered a loss because of it, and
  3. There is no legal reason for the enrichment.

Once the claimant has proved each of the three elements of unjust enrichment, then the remedy may be either a constructive trust or a monetary award. A constructive trust remedy gives the claimant an interest in the other spouse’s property.

For a judge to order a constructive trust remedy, the claimant spouse must show that:

  • there is a causal connection between their contributions and the acquisition (purchase), preservation, maintenance or improvement of the property in question, and
  • that a monetary award would not be sufficient.

If the claimant cannot demonstrate that a constructive trust is appropriate, then a monetary order is usually awarded instead. The Supreme Court of Canada has stated that in family situations, when determining the amount of a monetary award for an unjust enrichment claim:

  1.  the Court is not restricted to applying a fee-for-services approach, and
  2.  where the unjust enrichment is best characterized as one party retaining a disproportionate share of assets resulting from a joint family venture, it should be calculated on the basis of the share of those assets proportionate to the claimant’s contribution.

In other words, the Court recognizes that in family situations each spouse may have made extensive but different contributions to the welfare of the other. There is not, however, a presumption that unmarried couples operate as a joint family venture. Such a finding must be based on the specific facts and circumstances of the relationship. Once a claimant can show that the other spouse has been unjustly enriched by the claimant’s contributions, the court must then decide in what proportions to divide the wealth. Consequently, depending on the specific facts in each situation, calculating the value of the claimant’s contributions may not be restricted to considering the claimant to be a person hired on a fee-for-service basis (such as a nanny, cook or gardener) but rather, as a co-venturer or a partner in a joint family venture.

A claim may be made for a constructive trust, giving one partner the right to live in the family home or the right to divide property, if:

  • the couple share custody of a child and lived together in a relationship of some permanence, or
  • one partner contributed financially to the home by paying part of the mortgage, property taxes, repairs or upkeep, and so on.

Generally speaking, the longer the relationship between unmarried cohabitees or common-law partners the more likely there is a remedy. Obtaining these rights however, usually requires hiring a lawyer and often results in going to court. Division of property in a common-law relationship can be extremely complicated.

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