Common Law Spouses and Property Division in Ontario

Common law couples do not have the right to seek an equalization of family property under current Ontario legislation – this fact cannot be overstated.  As discussed in a previous post by my colleagues:

Division of property is dealt with in Part I of the Family Law Act. When married couples separate, generally speaking they are entitled to divide their property equally between the two spouses, regardless of who legally owns the property.  Under the Family Law Act, “spouses” are entitled to divide their property on the breakdown of the marriage. “Spouse” is defined as either (1) two people who are married to each other, or, (2) two people who entered into a marriage that is either void or voidable, in good faith. It does not include “common law couples” – even couples who have lived together for more than least 3 years, or are living together and are the parents of a child. So, what does that mean exactly? It means that common law couples cannot look to the Family Law Act to make a claim to a share of property that they do not own.

Though common law partners in Ontario who are separating cannot look to the Family Law Act to claim a share of the property owned by their spouses, they may be able to make an indirect claim for a share of those assets by establishing a claim for unjust enrichment, which is defined as receiving a benefit by another person, without offering reimbursement in circumstances where reimbursement is reasonably expected.

The Supreme Court of Canada in Kerr v. Baranow [2011] 1S.C.R. 269 clarified the application of unjust enrichment in the family law context.  Generally to establish a claim for unjust enrichment, the claimant must prove that:

1.     The defendant spouse has been enriched by the spouse making the claim;

2.     The claiming spouse has suffered a corresponding deprivation; and

3.     There is no juristic reason for the enrichment.

If this test is met, the claimant spouse has established that he or she has been unjustly enriched by the defendant spouse.   The court then has to determine which remedy it will apply as a result of the unjust enrichment.   In Kerr, the court indicated a strong preference for monetary remedies in unjust enrichment cases.  However, the court indicated that, in some cases, a constructive trust remedy may be more appropriate.    The topic of constructive trust – what it is and how it can be established – will be explored in a future posting.

A monetary remedy is often granted where the unjust enrichment is characterized as an unjust retention of a disproportionate share of assets accumulated during the course of a “joint family venture” to which both partners have contributed.   This means that where a joint family venture is found and there is a link between the contributions of the party claiming the unjust enrichment and the accumulation of wealth, the remedy for the unjust enrichment should be calculated on the basis of the share of those assets proportionate to the claimant’s contributions.

What exactly is a “joint family venture”?  To determine whether a joint family venture is present, the court will analyze the evidence of the parties’ relationship to determine how it fits into the four factors:

(a) mutual effort,

(b) economic integration,

(c) actual intent and

(d) priority of the family

It should be noted that making a successful claim for unjust enrichment can be a lengthy, arduous and expensive process, as the proof required to establish the claim is often extensive.  Unjust enrichment cases tend to be fact-driven which can lead to a great deal of uncertainty about the proper entitlement of a claimant spouse.  Such uncertainty can cause difficulty for parties trying to resolve cases before trial. 

Although the unjust enrichment/ joint family venture analysis provides a legal avenue through which common law couples can seek compensation for their contributions to a marriage-like relationship in some cases, the process is generally much simpler for married couples, who can rely on the equalization scheme contained in the Family Law Act. 

Some provinces, such as British Columbia, have made legislative changes to allow common law couples the right to the division of property upon separation. 

Until Ontario adopts similar legislation, common law couples in this province should bear in mind that they have no legislated right to make a claim to a share of property that they do not own.

- Michael D. Heikkinen for abblaw.ca


[The above article is for general informational purposes only and is not legal advice. If you live in the Ottawa area and would like advice about a legal issue please email us or call 613-569-9500 to speak with one of our lawyers or a member of our staff.]

Understanding Separation & Divorce

The term “divorce” has a very distinct legal meaning, yet many people fail to understand the difference between separation and divorce. Often the meanings of the two concepts are blurred together.

To illustrate, a conversation around a water cooler somewhere in Ontario might go as follows:

     MAURICE:   Did you hear the news? Moe from marketing and
                         Sylvie from accounting are separating!

     MARTHA:    That’s funny, I heard they got a divorce.

     MAURICE:   What’s the difference, all I know is that
                          she’s getting the house and he’s getting  
                          a lawnmower.

     MARTHA:    I don’t know the difference either…
                         at least it was one of those new cordless
                         mowers…

To alleviate the confusion between the terms ‘separation’ and ‘divorce,’ it is helpful to begin with section 8 of the Divorce Act, which allows either or both spouses to apply to the Court for a divorce when there has been a “breakdown of the marriage.”

Parties must apply to the court if they want to be divorced. So, if Moe and Sylvie are separating but are not applying to court, then it would be appropriate to say they are “separated” but not “divorced.”

To obtain a divorce, the parties must first be “spouses” within the meaning of the Divorce Act. This definition excludes people merely living together and “common law” spouses and means that the two persons must be legally married to one another. The issue of whether two people are legally married is an entirely separate, and sometimes complex, issue that will be canvassed in a future blog.

The Divorce Act also states that to be granted a divorce order, there must be a “breakdown of the marriage.”

According to the Divorce Act, a “breakdown of the marriage” can only be established where:

1. the spouses have lived separate and apart for at least one year immediately preceding the determination of the divorce proceeding and were living separate and apart at the commencement of the proceeding;

or

2. the spouse against whom the divorce proceeding is brought has, since celebration of the marriage,

(i) committed adultery, or

(ii) treated the other spouse with physical or mental cruelty of such a kind as to render intolerable the continued cohabitation of the spouses.

It is not possible to be divorced unless the parties fit into one of the above three categories.

While separation is necessary to establish first ground of marital breakdown, it is not relevant to the less commonly used grounds of adultery or cruelty.

“Separation" under the Divorce Act doesn’t just mean physical separation. The Act states that “spouses shall be deemed to have lived separate and apart for any period during which they lived apart and either of them had the intention to live separate and apart from the other…”.

Therefore, in addition to living apart for one year, the Divorce Act adds the additional element that at least one of the parties must have had the intention to live separate and apart from the other.*

Of interest, subsection 8(3)(ii) of the Divorce Act allows spouses to resume living together with the intention of trying to resolve their marital differences without interrupting the 1 year period, so long as it doesn’t last longer than 90 days. This subsection is consistent with other sections of the Divorce Act designed to encourage the spouses to reconcile. For example, the Divorce Act places duties on legal advisors and the courts to advise and assist spouses in reconciliation where appropriate.

The distinction between separation and divorce can also be relevant to the division of family property. In fact, determining the date of separation is often crucial for dividing marital property under the Family Law Act.

“Separation” is given the following meaning by the Family Law Act:

     The date the spouses separate and there is no reasonable prospect

     that they will resume cohabitation.

This definition implies that equalization of family property can occur whether or not the spouses are divorced. Going back to the water cooler conversation, just because Moe and Sylvie seem to have sorted out their property issues doesn’t necessarily mean that they are divorced or that they will ever get divorced in the future. Perhaps the two had settled all of the issues stemming from their separation in a separation agreement and were content not to apply for a divorce.

It is helpful to remember that while the concept of separation is often relevant to obtaining a divorce and to the determination of the valuation date for the purposes of equalization, it is legally distinct from divorce.

Who knows when this distinction might come in handy around the water cooler!

*[While there is an entire body of case law examining what constitutes living separate and apart for the purpose of establishing marital breakdown, a review of such law is outside the ambit of this blog posting. For an extensive review of the factors courts in Ontario use to determine whether parties are living separate and apart, the decision of Greaves v. Greaves [2004] CanLII 25489 (ON SC) provides a helpful starting point.]

- Michael D. Heikkinen for abblaw.ca

[The above article is for general informational purposes only and is not legal advice. If you live in the Ottawa area and would like advice about a legal issue please email us or call 613-569-9500 to speak with one of our lawyers or a member of our staff.]

Support for Common Law Spouses under the Succession Law Reform Act

When a person dies, his or her common law spouse is usually entitled to make a claim for support against the estate of the deceased partner, much like the situation between living spouses after a separation.

Where the true nature of the relationship is in dispute, whether or not a person qualifies as a common law spouse can be a difficult issue. The issue is even more difficult when one of the parties to the relationship has died and therefore is not available to describe how the parties felt about each other.

Like many aspects of common law relationships the guidelines that the courts have developed in these kinds of cases might surprise many people.

Entitlement

In order to qualify for support from the estate, the claimant must establish that he/she is a dependent and that the person who died, with or without a will, has not made adequate provision for the proper support of the claimant.

If the claimant can establish this the Court has broad powers to order that the estate pay such support as the Court considers adequate out of the estate of the deceased for the proper support of the claimant. The court can make this support order attach to a wide variety of assets, including many that would not normally be considered part of the estate.

A “Dependant” includes the spouse of the deceased, to whom the deceased was providing support or was under a legal obligation to provide support immediately before his or her death.

A “Spouse” includes people legally married, divorced, or who are not married to each other but have cohabited continuously for a period of not less than three years, or in a relationship of some permanence, if they are the natural or adoptive parents of a child.

“Cohabit” means to live together in a conjugal relationship, whether within or outside marriage.

The courts have struggled with the meaning of “cohabit in a conjugal relationship“ in this estate context. Whether or not a couple has cohabited is said to be both a subjective and objective test. What were the intentions of the parties as gleaned from the facts and how were they regarded by others?

To help Courts decide difficult cases judges of Ontario have developed a series of questions that should be considered. These questions are organized into seven descriptive components. These are as follows:

        a. Shelter:

            i. Did the parties live under the same roof?

            ii. What were the sleeping arrangements?

            iii. Did anyone else occupy or share the available
                 accommodation?

        b. Sexual and Personal Behaviour:

             i. Did the parties have sexual relations? If not, why not?

             ii. Did they maintain an attitude of fidelity to each other?

             iii. What were their feelings towards each other?

             iv. Did they communicate on a personal level?

             v. Did they eat their meals together?

             vi. What, if anything, did they do to assist each other
                  with problems or during illness?

             vii. Did they buy gifts for each other on special occasions?

        c. Services:

             i. What was the conduct and habit of the parties in relation to:

                 1. preparation of meals;

                 2. washing and mending clothes;

                 3. shopping

                 4. Household maintenance; and

                 5. any other domestic services?

        d. Social:

            i. Did they participate together or separately in neighbourhood
               and community activities?

           ii. What was the relationship and conduct of each of them toward
               members of their respective families and how did such
               families behave towards the parties?

        e. Societal:

            i. What was the attitude and conduct of the community toward
               each of them and as a couple?

         f. Support (economic):

            i. What were the financial arrangements between the parties
               regarding the provision of or contribution towards the
               necessaries of life (food, clothing, shelter, recreation,

               etc.)?

           ii. What were the arrangements concerning the acquisition and
               ownership of property?

          iii. Was there any special financial arrangement between them
               which both agreed would be determinant of their overall
               relationship?

         g. Children:

            i. What was the attitude and conduct of the parties concerning
               children?

Judges and Courts have recognized that “The extent to which the different elements of the  relationship will be taken into account must vary with the circumstances of each case.” For example:

        Cohabitation does not necessarily depend upon whether there is
        sexual intercourse.

        Cohabitation does not require that the parties were even living
        under the same roof. They might have maintained separate
        residences throughout their relationship.

        How the parties describe their relationships in income tax returns
        and other government documents is not determinative.

        The three year period of cohabitation does not have to continue
        up to the time of death.  In a perhaps extreme example a man
        was found to be entitled to support from the estate of another
        man with whom he had lived in a same-sex relationship for
        some years, even though the claimant had met, become
        intimate with and married a woman before the death of the
        other man, and was charged and later acquitted with the murder
        of the other man. [Romero v Estate of Naglic et al, 2009
        CarswellOnt. 3193]

Interim support

The Court also has the power to make an order for interim support before the trial. The test for interim support is for the claimant to establish some degree of entitlement to, and the need for, interim support. On an interim motion a court can weigh and assess the evidence, to the extent permitted by the nature of the evidence and any pre-hearing testing of it. If, after such assessment, the motions court concludes that the record contains credible evidence from which one could rationally conclude that the applicant could establish his claim for support, then an order for interim support may issue.

Amount of Support

If the claimant can establish an entitlement to support from the estate the Court will then decide how much and for how long support should be paid. The statute sets out a long list of factors to be considered. Some of these factors are:

        the dependant’s current assets and means;

        the assets and means that the dependant is likely to have in the
        future;

        the dependant’s capacity to contribute to his or her own support;

        the dependant’s age and physical and mental health;

        the dependant’s accustomed standard of living;

        the proximity and duration of the dependant’s relationship with the
       deceased;

        whether the dependant has a legal obligation to provide support
        for another person;

        any agreement between the deceased and the dependant;

        if the dependant is a spouse,

            a course of conduct by the spouse during the deceased’s
            lifetime that is so unconscionable as to constitute an
            obvious and gross repudiation of the relationship,

            the length of time the spouses cohabited,

            the effect on the spouse’s earning capacity of the
            responsibilities assumed during cohabitation,

            whether the spouse has undertaken the care of a child

            any housekeeping, child care or other domestic service
            performed by the spouse for the family,

       any other legal right of the dependant to support, other than out
       of public money.

The reference to the claimant’s “accustomed standard of living” means the standard of living established by the deceased while the parties cohabited.

Paying the Support – the Estate

The court can order such a support order to be paid out of a wide variety of assets, including many that would not normally be considered part of the estate. These assets might include:

        (a) certain gifts that the deceased made to other people before
        death;

        (b) money deposited in an account in the name of the deceased in
        trust for another person;

        (c) joint bank accounts;

        (d) jointly owned homes, cottages or other real property;

        (e) monies held in a trust fund;

        (f) insurance policies, group insurance; and other monies normally
        governed by a designation of beneficiary

Timing

Perhaps the last but very important consideration is a matter of timing, because the statute states that …”No application for a [support order] may be made after six months from the grant of letters probate of the will or of letters of administration.”

SO if you think you might make such a claim, don’t wait too long !!

  - Craig M. Bater for abblaw.ca

[The above article is for general informational purposes only and is not legal advice. If you live in the Ottawa area and would like advice about a legal issue please email us or call 613-569-9500 to speak with one of our lawyers or a member of our staff.]