The Supreme Court of Canada made it easier today for common law couples who split up to claim a fair share of property or assets they played a substantial role in building.
Ruling unanimously on two cases that involved estranged common law couples, the Court emphasized that when one partner has contributed substantially to a business, property or the success of the other's career, they should gain a benefit that properly reflects their contribution.
The Court stressed the importance of adopting a flexible approach when it comes to assessing the relative role of each partner and working out a dollar amount that reflects those roles.
"In my view, where both parties have worked together for the common good, with each making extensive, but different, contributions to the welfare of the other and, as a result, have accumulated assets, the money remedy for unjust enrichment should reflect that reality," Mr. Justice Thomas Cromwell wrote for the majority.
"The money remedy in those circumstances should not be based on a minute totting up of the give and take of daily domestic life, but rather should treat the claimant as a co-venturer, not as the hired help," he said.
The decisions pertained only to common law couples because asset divisions following marital separations is governed by strict formulae in each province.
Judge Cromwell strongly endorsed the use of a doctrine known as "unjust enrichment" to determine whether one party in a common law arrangement has retained a disproportionate share of the assets that are the product of their joint efforts.
"Unlike much matrimonial property legislation, the law of unjust enrichment does not mandate a presumption of equal sharing," he said. "However, the law of unjust enrichment can and should respond to the social reality identified by the legislature that many domestic relationships are more realistically viewed as a joint venture to which the parties jointly contribute."
Judge Cromwell said that it would be exceedingly difficult and "highly artificial" to attempt a detailed accounting of the contributions each partner made within a relationship, and to then parcel out benefits as if one of them were being paid on a fee-for-services basis.
"The legal consequences of the breakdown of a domestic relationship should reflect realistically the way people live their lives," he said. "It should not impose on them the need to engage in an artificial balance sheet approach which does not reflect the true nature of their relationship."
Stephen Grant, a family lawyer at McCarthy Tétrault LLP, said the rulings help move common law relationships toward a more equal footing when compared to laws governing the division of assets in a marriage.
"Common law is still more amorphous, especially when the judge has to approach it by looking at the competing equities," Mr. Grant said.
He said the rulings broaden the remedies available to separating common law spouses who seek an equitable share of the couple's accumulated assets. "As long as the property claimant can show a contribution to the asset or the growth of the assets, he or she will be entitled to share by way of a monetary award," Mr. Grant said.
He said that judges can take into account a host of other, indirect contributions that a claimant made, such as domestic work, "without having to show the minutiae of the contributions and measure it against what those services are worth on the market."
For example, if a common law couple built up a farming operation, a judge adjudicating the dissolution of their relationship would look at the contributions each made. If one of them primarily looked after the household and children, indirectly allowing the other spouse to enhance the operation, he or she could expect to receive fair monetary compensation for those contributions.
Mr. Grant said the rulings will also encourage judges to calculate current values of property in dispute, rather than trying to estimate the actual dollars an ex-partner contributed during the relationship.
"In short, this is more reflective of an 'equitable' approach, making it easier for a claimant not to have to show specifics of contribution but an overall fairness of what she or he has done that led to the value of the property at the end of the relationship," Mr. Grant said.
In the first case decided by the Supreme Court today, Margaret Patricia Kerr and Nelson Dennis Baranow - a Vancouver couple in their late sixties - separated after a common law relationship that lasted more than 25 years.
Both worked for most of that time and contributed to their common good in a variety of ways. After their separation, Ms. Kerr claimed support and a share of property that was in Mr. Baranow's name, claiming that he would be "unjustly enriched" if he was permitted to keep the lion's share of it.
Mr. Baranow counterclaimed that it was Ms. Kerr who benefited unjustly, since he was compelled to undertake most of the housekeeping after she suffered a debilitating stroke in 1991 that left her paralyzed.
Mr. Baranow, who took early retirement in 2002, refused to take Ms. Kerr back into their home after she was briefly hospitalized in 2005. She was transferred to an extended care facility, where she remains.
A trial judge awarded Ms. Kerr $315,000, which represented a third of the value of the home that was in Mr. Baranow's name. He concluded that Ms. Kerr had provided $60,000 worth of equity and assets at the beginning of their relationship.
The award was overturned on appeal on the basis that Ms. Kerr did not make a financial contribution to the acquisition or improvement of the property.
The Supreme Court ordered a new trial based on the complexity of the financial issues and the couple's living arrangements.
In the second case, Michele Vanasse and David Seguin, an Ottawa couple, split up in 2005 after 12 years together. At first, both had pursued their own careers - Ms. Vanasse with the Canadian Security Intelligence Service and Mr. Seguin with Fastlane Technologies Inc., marketing a network operating system he had developed.
After four years together, Ms. Vanasse took a leave of absence and they moved to Halifax so that Mr. Seguin could build his business. They had two children and Ms. Vanasse stayed at home to care for them, performing most of the domestic labour while Mr. Seguin worked long hours and travelled extensively on business.
In 1998, the family returned to Ottawa and bought a home in joint names. Two years later, Mr. Seguin sold his business and received approximately $11-million for his shares in the business he had built. He began to participate more in household chores until the couple split in 2005.
At their time of separation, Ms. Vanasse had a total worth of about $300,000, while Mr. Seguin was worth $8-million.
Their trial judge found no unjust enrichment for the first and last periods of their cohabitation, but held that Mr. Seguin had been unjustly enriched at his partner's expense during the period in which the children were born. He awarded Ms. Vanasse half of the value of the wealth Mr. Seguin had accumulated during the period of unjust enrichment.
The court of appeal overturned that in favour of another valuation, but the original award was restored today by the Supreme Court.
"I conclude that not only were these parties engaged in a joint family venture, but that there was a clear link between Ms. Vanasse's contribution to it and the accumulation of wealth," Judge Cromwell said. "The unjust enrichment is thus best viewed as Mr. Seguin leaving the relationship with a disproportionate share of the wealth accumulated as a result of their joint efforts."
Judge Cromwell said that the essential link in such cases involves the contribution and the accumulation of wealth. "Where that link exists...the monetary award should be fashioned to reflect the true nature of the enrichment and the corresponding deprivation," he said.
Judge Cromwell said that in determining whether there was a "true partnership," judges should take into account whether a couple pooled their efforts and teamwork; whether one spouse carried the domestic load in order to enable the other to build a career; whether they raised children together; and whether they jointly worked towards important mutual goals.
"The more extensive the integration of the couple's finances, economic interests and economic well-being, the more likely it is that they have engaged in a joint family venture," he said.
"Their conduct may show that they intended the domestic and professional spheres of their lives to be part of a larger, common venture, but may also conversely negate the existence of a joint family venture, or support the conclusion that particular assets were to be held independently."