Common-law couples – Has the law regarding property changed?

October 21, 2011

Division of property among common-law spouses has traditionally been a very murky area of family law.

The starting point, with an unmarried but cohabiting couple is that, upon a breakdown of their relationship, each common-law spouse is entitled to retain ownership and possession of the property in his or her name and possession.

Even the definition of “common-law” when it comes to division of property, is unclear.

As an aside, division of property for married spouses, or “equalization of property”, is relatively straightforward, in that spouses equalize their respective “net worth” as at the date of separation, after deducting their “net worth” as at the date of marriage, and after excluding the present date value of any property which either of them may have acquired during the marriage from an external source (for example, a gift or inheritance).

As for spousal support for non-married spouses, the Family Law Act (the governing legislation for common law spouses in Ontario, given that the Divorce Act does not apply to non-married couples), includes in the definition of a “spouse”, individuals who have cohabited for a period of not less than three years or, if they are the parents (biological or adoptive) of a child or children, individuals who have cohabited in a relationship of “some permanence”. To be sure, there has still been litigation over such issues as the period of cohabitation (start and end dates, when someone has still maintained his or her previous residence), whether they are even cohabiting (for example, whether someone just “stays over from time to time”), and over the issue of what amounts to “some permanence”.

Therefore and although family law is somewhat more straightforward when it comes to the determination of “spouse” in common-law situations for support purposes, there is still plenty of room for disagreement in this area!

With respect to the division of property, family law has undergone some fairly significant changes over the past several years, culminating in the Supreme Court of Canada cases in 2011 of Kerr v. Baranow and Vanasse v. Seguin.

Very briefly, the history of division of property laws can be traced, as follows:

Petkus v. Becker

A 1980 Supreme Court of Canada case in which the court found that, in regards to property, if a common-law spouse was “unjustly enriched”, with the other spouse being “deprived” and without there being a “juristic” reason for the enrichment, then the non-titled spouse may be entitled to either an interest in the property or monetary compensation for financial or non-financial (labour) contributions towards the property.

There had to be a connection between the property at issue, and the contribution, and the contribution had to be towards the acquisition of the property.

A typical example would be a financial contribution (towards the down payment, for example) by one spouse towards a home purchased solely in the other spouse’s name.

Otherwise and if unjust enrichment was not found, each spouse was entitled to retain ownership and possession of the property in their respective names and possession.

Sorochan v. Sorochan

In the 1986 case of Sorochan, the Supreme Court of Canada expanded the necessary contribution towards property, to include contributions not only towards the acquisition of property, but also towards the “preservation, maintenance or improvement” of property.

Therefore, non-financial contributions such as helping to renovate a house, paint a garage, etc, might be deemed to “unjustly enrich” the spouse who is the sole owner of the house.

Peter v. Beblow

In 1993, the Supreme Court once again expanded the principles of unjust enrichment. However, the court clarified the circumstances under which monetary compensation, as opposed to an interest in property, would be awarded to the non-titled spouse.

Vanasse v. Seguin

As Kerr v. Baranow was sent back to the British Colombia trial court for a new trial, I will focus on the Vanasse v. Seguin case.

In this 2011 case, the Supreme Court of Canada once again expanded the principles of unjust enrichment, by finding that in cases of a “joint family venture”, the court can award:

A share of accumulated assets;
An ownership interest in specific property (rather than a share of all accumulated assets) in cases where the non-titled spouse can prove a direct or indirect contribution towards the acquisition, maintenance or improvement of such property; or
A monetary compensation on a “fee-for-service” basis.

A “joint family venture” must be proven, taking into account four factors: mutual effort, economic integration, actual intent, and priority of the family. Clearly, the longer the period of cohabitation, the more likely a court will find it to be a “joint family venture”, unless both parties worked, had no children and kept their finances totally separate.

If it is a clear case of joint family venture, the court is more likely to award a sharing of the accumulated assets of the parties.

CONCLUSION

Clearly, the Supreme Court has expanded property entitlement for non-married (common-law) spouses, but only in cases where a “joint family venture” is found.

Please feel free to contact me to discuss your case, if you have any questions about your common-law situation.