Jun

30

Common law breakdown in Alberta (Part 10): no cohabitation agreement?

Post image for Common law breakdown in Alberta (Part 10): no cohabitation agreement?

Common law breakdown in Alberta

Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to a cohabitation agreement in Alberta, you should seek professional assistance.

Alberta common law rights and obligations upon breakup

So what happens if there is NO cohabitation agreement or a Court sets it ASIDE (i.e. renders it invalid and unenforceable)? What are the rights and obligations of the common law couple upon breakdown of their relationship?

Family Law Act

Well, to begin, the Alberta Family Law Act COULD apply. Granted, that Act does not address the issue of ownership or division of property for cohabiting parties. That said, if the parties are not married and are considered to be “adult interdependent partners” (previously discussed on this blog), then SUPPORT obligations MAY be imposed. Furthermore, the Act gives “adult interdependent partners” certain rights to possess the Primary Home (also previously discussed in this blog).

Dependants Relief Act

If the “adult interdependent relationship” ends because one of the partners dies, then the Dependants Relief Act could impose financial obligations on the deceased partner’s estate. That Act applies when a partner dies, with or without a will, and fails to make adequate provisions for the maintenance and support of his/her dependants. The Court can divide the deceased person’s estate in such a way as to ensure the deceased’s dependants, including “adult interdependent partners”, are provided with adequate support.

Unjust Enrichment and Constructive Trust

Finally, with respect to ownership or division of property, one of the parties may be able to assert a right based on a doctrine of UNJUST ENRICHMENT and CONSTRUCTIVE TRUST. I’ll discuss these equitable doctrines in greater detail next.

UNJUST ENRICHMENT

The doctrine of unjust enrichment is not found in any statute. Rather, it is an old judge-made law that allows one party to claim compensation from another party on the basis of an unjust enrichment. Three requirements must be met in order for a common law spouse to claim unjust enrichment:

(1) an enrichment enjoyed by the other spouse;
(2) a corresponding deprivation suffered by the complaining spouse; and
(3) the absence of a juristic reason for the enrichment (no obligation at common law, no statutory requirement, no intention to make a gift, etc.).

The idea here is that something must have been given by the innocent party and received and retained by the non-innocent party without a juristic reason. If these three elements exist, then a common law spouse may be entitled to damages. The courts have used a flexible and common sense approach to applying the doctrine of unjust enrichment to resolve property disputes in the particularly sensitive area of family law: see Kerr v. Baranow, 2011 SCC 10. Importantly, where having the other spouse pay money is not enough, then the doctrine of CONSTRUCTIVE TRUST comes into play (discussed below).

Worth mentioning is that the legal framework of an unjust enrichment claims was discussed by A.B. Moen J. of the Alberta Court of Queen’s Bench in Rubin v. Gendemann, [2011] A.J. No. 248 as follows:

4. The legal framework for unjust enrichment

59 Justice Cromwell of the Supreme Court of Canada reminds us (Kerr at para. 31) about the essence of the equitable doctrine of unjust enrichment:

At the heart of the doctrine of unjust enrichment lies the notion of restoring a benefit which justice does not permit one to retain: Peel (Regional Municipality) v. Canada, [1992] 3 S.C.R. 762, at p. 788. For recovery, something must have been given by the plaintiff and received and retained by the defendant without juristic reason.

60 The principles that apply to the doctrine of unjust enrichment in domestic cases are the same principles that apply in all cases. Nevertheless, “the courts must apply those principles in ways that respond to the particular context in which they are to operate.” [Kerr at para. 34]

61 Rubin claims Gendemann has been unjustly enriched at her expense. A claim for unjust enrichment is established once three elements are proven (Garland v. Consumers’ Gas Co., 2004 SCC 25 at para. 30, [2004] 1 S.C.R. 629, Kerr, at para. 31):

a. An enrichment;
b. corresponding deprivation; and
c. the absence of a juristic reason for the enrichment.

62 Kerr makes it clear that the analysis a court must follow is to first establish there has been an enrichment, then to find a corresponding deprivation and finally to determine if there is no juristic reason for the enrichment. After the court determines that these three elements have been proved, the court must determine a remedy and assess any defences that are put forth by the defendant.

63 The determination of the enrichment and corresponding detriment is a straight forward economic analysis. Policy and moral questions are left to the consideration of the third element – juristic reason: Kerr at para. 37.

64 Only once those three things have been established must the court determine the remedy. Kerr, at para. 7, makes it clear that the old dichotomy of quantum meruit or constructive trust no longer exists where common-law spouses collaborate:

[W]here 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. 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.

a. An enrichment and corresponding deprivation

65 Here Rubin must first show that she gave something to Gendemann which he received and retained and by which he was enriched, and that the benefit she gave can be restored to Rubin in specie or by money. The benefit must be tangible. It may confer a benefit on Gendemann or spare him an expense he would have had to undertake. Second, Rubin must show a corresponding deprivation — that is that Gendemann has been enriched in a manner that corresponds to the deprivation which Rubin has suffered: Kerr, at paras. 38-39.

b. Absence of juristic reason

66 It is at this stage of the analysis that the court must consider whether the enrichment, if there is one, is unjust. Here the court does not evaluate the enrichment but determines if the defendant should keep that enrichment: Kerr, at para. 114.

67 The Plaintiff, Rubin, must show no reason in law or justice for Gendemann to retain any benefit conferred by Rubin, if there is one, thereby making the retention of the benefit unjust in the circumstances of this case: Kerr, at para. 40.

68 There are established categories of juristic reason available to deny recovery of a benefit bestowed which include contracts, valid common law, equitable or statutory obligations or an intention to make a gift. If there is no established category the court may consider other juristic reasons to deny recovery for any benefit bestowed such as the reasonable expectations of the parties and other public policy considerations. For example, in a domestic partnership, one of the partners may have provided domestic services for the other. As is explained in Kerr, at para. 42, Canadian courts have for some time recognized this constitutes value to the family because the other partner benefits from such services. Therefore, there is no juristic reason to deny recovery for domestic services. Further such services obviously provide the concomitant deprivation to the spouse that provides them.

69 Cromwell J., in Kerr at para. 43, explains the process to determine if there is an absence of a juristic reason. The court must undertake a two step analysis:

1. Determine if one of the established categories applies; then
2. if it does not, consider the legitimate expectations of the parties and whether there is any other moral or public policy reason to deny recovery.

70 It is the plaintiff in the first step of the analysis that has the burden of showing that there is no juristic reason falling under the established categories to deny recovery of the benefit given to the defendant. Once the plaintiff has shown a benefit has been conferred on the defendant, that there has been a concomitant deprivation on the part of the plaintiff and that there exists no juristic reason under the established categories, then the plaintiff has made out a prima facie case for unjust enrichment: Kerr at para. 43.

71 At the second step of the juristic reason analysis, the defendant may rebut the prima facie case by establishing that there is a juristic reason for him/her to retain the benefit that does not fall within the existing categories. This analysis may take into account whether the parties legitimate expectations and other moral and policy-based arguments to show that the retention by the defendant of the benefits is just: Kerr at para. 44.

72 In this step of the unjust enrichment analysis, that the court may consider conferral of mutual benefits. This is a consideration of the extent to which the defendant has provided reciprocal benefits to the plaintiff. Justice Cromwell explains that reciprocal benefits would usually be considered at the defence and remedy stages of the analysis. Consideration of mutual benefit conferral has a limited role to play in the juristic reason analysis, but is not excluded. It should “only be considered to the extent that it provides relevant evidence of a juristic reason for the enrichment”: Kerr at para.104 and 109.

CONSTRUCTIVE TRUST
If there was an unjust enrichment and there was a link between the contribution that founds the action and the property in which the constructive trust is claimed, then the complaining spouse may receive an ownership interest in that property. To recap, the idea behind a constructive trust is as follows. The common law relationship ends. Only one spouse holds title to property. If there was an unjust enrichment and monetary damages would not be a sufficient remedy, then the complaining spouse may receive an ownership interest in the other spouse’s property.

So, there you have it: UNJUST ENRICHMENT and CONSTRUCTIVE TRUST.

Next, some Alberta cases will be reviewed to show how courts have denied unjust enrichment claims in real life cases.

FYI, if you’re looking for a Cohabitation Agreement for Alberta that avoids creating financial obligations, then you’ve come to the right place:

Cohabitation Agreement – Terminates Upon Marriage

This legal form can be used by non-married couples in Alberta who wish to avoid creating obligations through their cohabiting (i.e. living together) with each other. This particular cohabitation agreement waives support obligations and divides property according to legal ownership (in other words, what’s mine is mine; what’s yours is yours). This cohabitation agreement terminates when the parties get married to each other. Here’s a sneak peak of the video guide that comes with this legal form:

If you want the cohabitation agreement to continue past marriage (i.e. continue to be valid and enforceable past marriage), then you can check out the cohabitation agreement below:

Cohabitation Agreement – Continues Past Marriage

This legal form can be used by non-married couples in Alberta who wish to avoid creating obligations through their cohabiting (i.e. living together) and their marriage to each other. It essentially becomes a Prenuptial Agreement or Marriage Contract when the parties marry each other. This particular cohabitation agreement waives support obligations and divides property according to legal ownership (in other words, what’s mine is mine; what’s yours is yours). This cohabitation agreement continues to be valid and enforceable past marriage.

Remember: all of our legal forms are lawyer-prepared, customizable (they come in .doc, .wpd, and .rtf formats), and affordable (prices range from $17 to $97, depending on the legal form packages). The legal forms are regularly updated. Best of all, they come with guidance in the form of a video tutorial (watch an example of how to customize the legal form) and two written guides (one that addresses the legal issues you should be aware of and a second which is entitled “Is My Legal Form Valid and Enforceable?”).

All of our legal form packages are backed by our 30 day 100% money back guarantee! If for whatever reason you’re not completely satisfied with our legal form, we’ll refund your money no questions asked.

written by admin \\ tags: , , , , ,

Comments on this entry are closed.