Married spouses in Ontario, and the other provinces, have enshrined legislated rights on how their rights and interests in property are determined in the event of a separation.  There is a specific formula that sets out each spouse’s monetary entitlement upon separation, with a few specific exceptions.

Unlike married spouses, unmarried partners have no such legislatively protected rights and they must therefore depend on judge-made decisions to provide them with a monetary or proprietary award in the event of a separation, unless the unmarried spouses were “lucky” enough to have a Cohabitation Agreement created during happier times in their relationship.

Because judge-made law can be highly idiosyncratic, advising a client who is exiting a common-law relationship as to their options is very problematic for family law lawyers.  Some broadly-based (judge-made) legal principles have developed  to guide common-law spouses as to their “rights” and “entitlements” or, more correctly, to establish what property or financial awards they may be (or may not be) entitled to. Courts and judges have interpreted these broad principles differently, however and have applied the principles differently to different fact situations and this has led to no small degree of confusion.

The Supreme Court of Canada has just released a decision in 2 cases heard together (Kerr v Baranow and Vanasse v Seguin found at 2011 S.C.C. 10) that attempts to clarify and simply the process for determining common-law spouses’ entitlements when separating.

The Court reasoned that “unjust enrichment” principles are to be the most appropriate mechanisms to re-dress possible inequities arising when common-law spouses separate.   If a spouse seeking such a remedy can satisfy 3 factors, then a Court will likely re-dress any inequity.  Those 3 factors are:

One spouse has received a benefit as a result of the other spouse’s actions (usually in the form of a transfer of a property or an increase in the value of the property);

The other spouse has suffered a deprivation as a result of their efforts in bestowing a benefit on the other spouse (usually in the form a lost opportunity to accumulate assets in their own name);

There is no reason in law requiring one spouse to have bestowed the benefit upon the other spouse.

In the past, courts have often required the claiming spouse to show a direct connection between their efforts (financial or otherwise) and the acquisition of the property that is now in the other spouse’s name.

The Supreme Court has now set out a more “common sense” analysis that may make it more straightforward for separating common-law spouses to determine if one spouse will have an obligation to compensate the other for their efforts or contributions during the relationship.

The Court states: “The legal consequences of the breakdown of a domestic relationship should reflect realistically the way people live their lives.  It should not impost on them the need to engage in an artificial balance sheet approach which does not reflect the true nature of the relationship”.  The decision places considerable importance in establishing whether there is a “joint family venture” and if so, to divide the net wealth that has survived during the “joint family venture” period of the relationship equitably (not necessarily equally) in a manner that fairly reflects the efforts of the partners.  Not every relationship will be found to be a “joint family venture”, but in examining the relationship at hand, the court will review the evidence under four broad headings:

Mutual Effort,

Economic Integration,

Actual Intent; and,

Priority of the Family

This Supreme Court of Canada decision will assist family law lawyers in advising common law spouses who are separating regarding their respective rights and obligations.

As always, if you find yourself in this type of situation you should seek out competent legal advice