Pursuing unjust enrichment in the Joint Family Venture context

Law360 Canada (September 25, 2024, 2:06 PM EDT) --

Jason Moore

Family assets and businesses are very often the product of the combined efforts of both members of a cohabiting relationship. This can be true whether the cohabiting spouses are legally married or not (i.e., common law). In recognition of this, beginning with the Supreme Court decision of Kerr v. Baranow, 2011 SCC 10, the court has recognized that remedies for unjust enrichment can be extended to situations where there are married or unmarried cohabitants who participate in what the court referred to as a Joint Family Venture (JFV) where only of them has legal ownership. How these claims are adjudicated involves a complex interplay between family law, the law of trusts and the law of tort.

The Joint Family Venture (JFV)

Like other claims for unjust enrichment, the claimant in a JFV claim must prove that their spouse has been enriched (this enrichment can be non-monetary), that the claimant spouse has suffered a corresponding deprivation and that there is no juristic reason for the enrichment. How the court determines what is an “enrichment” and a “corresponding deprivation” is often the focal point of these claims. Kerr recognizes, for instance, that a spouse who leaves the workforce to focus on raising children may suffer deprivation by caring for the children without pay while their spouse is enriched because they do not have to pay for childcare.

To establish that a JFV existed between the spouses, the claimant must prove that they and their spouse engaged in a mutual effort, that there was economic integration and that they intended to share the wealth they had jointly created. The claimant will also likely seek to establish that they prioritized family concerns, such as raising children, over their economic goals. This often involves the application of issues common to family law. What was the nature of the relationship in the eyes of the spouses? Did they hold joint title to any owned property? If they had children, who shouldered the caregiving and decision-making responsibilities?

The claimant must then prove that there is a causal link between their contribution and the acquisition, preservation, maintenance or improvement of the property in dispute. Questions arise, including whether non-monetary contributions qualify as a “causal link” or whether a claimant spouse is entitled to assets whose value is increased by reason of inflation and market forces.

If a claimant is able to establish all of these elements, the court may then determine that a resulting trust existed in favour of the claimant spouse. If there is no resulting trust, the court may order a constructive trust as a remedy. As a successful claim can entitle a claimant to a substantial amount of shared property, the importance of considering each of the aforesaid factors is clear.

JFV impact on estate litigation

Under the Family Law Act and the Succession Law Reform Act, common-law spouses do not have the same property and inheritance rights as people who have entered into a marriage. Even with respect to the dependant’s relief, there are time thresholds that must be met for a surviving partner to be eligible to claim support. Through the doctrines of unjust enrichment and JFV, the courts have provided an avenue for the disinherited spouse to obtain a fair division of family property collected in the course of their relationship with the deceased.

Pursuing an interest in an asset on the basis that it was the product of a JFV requires detailed knowledge of the law of trusts and the law of tort. For those who deal with these issues or who are interested in them, there is a lunch and learn seminar on this topic which will feature Gregory Sidlofsky and Hilary Ingle on Oct. 1, 2024, starting at 12 p.m. This seminar is an opportunity for new and experienced estate and family lawyers to learn about this rapidly evolving area of trusts and family law. For more information and to register, please access the following link.

Jason Moore is a lawyer at Wagner Sidlofsky LLP, practicing in the estate and commercial litigation groups.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the author’s firm, its clients, LexisNexis Canada, Law360 Canada or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

Interested in writing for us? To learn more about how you can add your voice to Law360 Canada, contact Analysis Editor Richard Skinulis at Richard.Skinulis@lexisnexis.ca or call 437-828-6772.