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Common law couples deserve fair shares when separating, top court rule


Renegade

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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.

Common law couples deserve fair shares when separating, top court rules

The Complete SCC judgement is available here

On the surface this ruling seems fair and just, however there are a couple of things which bother me:


  1. The spouses enter into a financial joint-venture even though that has not been explicity agreed to by both parties. What it does is decide after-the-fact that two individuals are business partners.


  • It changes the rules on existing common-law relationships. If couples have entered into relationships based upon previous rules and precedents (ie that they by default are not in a joint financial venture) this now forces them into such a financial arrangement.


  • This now makes common-law arrangments pretty similar to formal marriage. There is no legal arrangment in which two individuals can simply co-reside but keep the rest of their lives separate. What would constitue "unjust enrichment" is going to be subject to intrepretation. It is going to make pre-cohabitation agreements just as important as prenuptual agreements.
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I'm not quite sure how this would be in second or more commonlaw living. I would hope that in the case of a second, each party keeps what they brought into the relationship and they split what they have together after they start living to together. In the case if one dies, I think their will takes over and if there are kids from another relationship, I think its half and half but I could be wrong.

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Thanks for bringing this one up, Renegade. I share your concerns, but this tends to satisfy those concerns:

“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.”

That's a HUGE difference from formal marriage.

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You are right that it is not like marriage, YET, however each ruling moves it closer to equivalent recognition. At this point one common-law spouse can claim spousal support from the other, and they can now claim a share of property which is in the other's name. In Ontario, they can even claim possession to the "family home" even if the home was paid for and owned by the other.

While there may not be a presumption of equal sharing, there is a presumption of joint ownership of wealth through a joint venture. Just because "many domestic relationships are more realistically viewed as a joint venture" doesn't mean that the couple themselves unanimously have agreed that their domestic relationship is a joint venture. It wasn't long ago that co-habitation relationships were viewed by society as simply a convenient sexual relationship, rather than a financial one. I believe that it is court rulings like this one which change society's opinion on what the obligations are of a cohabitation relationship rather than just being reflective of the current societal opinion.

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Mmm no, I can't agree with you on some things there.

there is a presumption of joint ownership of wealth through a joint venture. first demands that evidence of 'joint venture' be established, and simple cohabitation doesn't do it. "Many" isn't "all".

And on this: " I believe that it is court rulings like this one which change society's opinion on what the obligations are of a cohabitation relationship rather than just being reflective of the current societal opinion." I'd say you have the cart before the horse- that the courts are simply reflecting what's going on in the real world, not leading it.

I have to run away from this for now (darn it), but I will return to this conversation.

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there is a presumption of joint ownership of wealth through a joint venture. first demands that evidence of 'joint venture' be established, and simple cohabitation doesn't do it. "Many" isn't "all".

I would ageee with you, but that is not how I interpret the ruling. What evidence is required to establish a joint venture? I believe that the ruling PRESUMES a joint venture, then the onus is on the parties to prove it is not a joint venture. In the Vanasse vs Seguin case, what evidence is there to establish a joint venture? Does bring up kids in a domestic arrangment imply a joint venture on the business side? Does that make my nanny my business partner?

And on this: " I believe that it is court rulings like this one which change society's opinion on what the obligations are of a cohabitation relationship rather than just being reflective of the current societal opinion." I'd say you have the cart before the horse- that the courts are simply reflecting what's going on in the real world, not leading it.

I have two problems. First, why should a court's ruling depend upon public opinion? If you look at the issue of Same-Sex marriage, should the court only decide that SSM is ok, once the public opinion has come around, or should they determine the decision based upon the fundamentals of the case? If a court depends upon public perceptions to make a ruling that leaves open the possiblity that court will rule one way, and that same court can rule a different way once society opinion changes. Why rely on precedents then?

My second problem is that in many cases public opinion follows the court decision. (ie the SCC says it is ok, so it must be ok). The answer is neither one side not the other. It is a chicken and egg story, people's change somewhat with time, even when there isn't concensus, a court decision will legitimize a position, which will cause further opinion to swing toward that position.

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How does one enter a co-habitation domestic relationship where it is clear that both parties agree that they are not joint-venture financial partners? It would seem to me that the only way is by putting a pre-cohabitation agreement in place, and even then it is subject to challenge.

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This now makes common-law arrangments pretty similar to formal marriage. There is no legal arrangment in which two individuals can simply co-reside but keep the rest of their lives separate. What would constitue "unjust enrichment" is going to be subject to intrepretation. It is going to make pre-cohabitation agreements just as important as prenuptual agreements.

Agreed. This interpretation of this SC ruling by lower courts will create as many injustices as it seeks to repair. I know at least two couples who have not married so as to keep their assets separate. This will complicate things, they will need to spend the time and money on forming binding contracts that deal with assets, and be very careful with their wills too as there are children from previous marriages involved.

It is a major bonanza for family law lawyers.

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I would ageee with you, but that is not how I interpret the ruling. What evidence is required to establish a joint venture? I believe that the ruling PRESUMES a joint venture, then the onus is on the parties to prove it is not a joint venture. In the Vanasse vs Seguin case, what evidence is there to establish a joint venture? Does bring up kids in a domestic arrangment imply a joint venture on the business side? Does that make my nanny my business partner?

Beginning at the bottom of page 10: "To determine whether the parties have, in fact, been engaged in a joint family adventure, the particular circumstances of each relationship must be taken into account. ..." Read from there.

Earlier on, it points out that the principle of Resulting Trust cannot be triggered by Common Intention on its own. It even explains the elements required for a ruling of Unjust Enrichment.

It looks to me (so far) that the largest part of the ruling here is the validity and preference for a 'value survived' valuation of assets after, and only after, 'joint venture' has been established.

I do, however, still have a lot of wading to do.

Perhaps you should should be pointing out the bits that make you believe that they've moved to a presumption of joint venture. I still see no evidence of it in spite of looking, but in any case, the onus should not be on me to guess what you've seen. You are making the assertion. Show me.

Edited by Molly
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How does one enter a co-habitation domestic relationship where it is clear that both parties agree that they are not joint-venture financial partners? It would seem to me that the only way is by putting a pre-cohabitation agreement in place, and even then it is subject to challenge.

If there's any chance that the question might arise, or might matter anyway, where's the problem in doing so? You wouldn't let a mechanic fix your car (and you wouldn't take on fixing someone elses) without a work order specifying what's to be done and what rate of compensation is to be used... It's pretty darned slap-happy to leaves omething so much more important to guess and whimsy.

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Agreed. This interpretation of this SC ruling by lower courts will create as many injustices as it seeks to repair. I know at least two couples who have not married so as to keep their assets separate. This will complicate things, they will need to spend the time and money on forming binding contracts that deal with assets, and be very careful with their wills too as there are children from previous marriages involved.

It is a major bonanza for family law lawyers.

If anything, 'value survived' would reduce litigation (a LOT), not increase it... and honest-to-God, guys, I really don't see a presumption of joint venture.

Show me what you are seeing that says that.

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If there's any chance that the question might arise, or might matter anyway, where's the problem in doing so? You wouldn't let a mechanic fix your car (and you wouldn't take on fixing someone elses) without a work order specifying what's to be done and what rate of compensation is to be used... It's pretty darned slap-happy to leaves omething so much more important to guess and whimsy.

There is no problem in doing so. With the current ruling the question pretty much now is always a possiblity. In your analogy, you are right that I wouldn't let a mechanic fix my car without some kind contract, but in this analogy, I can't even let my mechnically proficient friend touch my car without some kind of contract.

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If anything, 'value survived' would reduce litigation (a LOT), not increase it... and honest-to-God, guys, I really don't see a presumption of joint venture.

Show me what you are seeing that says that.

From the judgement on page 50

Relationships of this nature are common in our life experience. For many domestic relationships, the couple’s venture may only sensibly be viewed as a joint one, making it highly artificial in theory and extremely difficult in practice to do a detailed accounting of the contributions made and benefits received on a feefor-services basis.

However it adds some caveats:

Of course, this is a relationship-specific issue; there can be no presumption one way or the other. However, the legal consequences of the breakdown of a domestic relationship should reflect realistically the way people live their lives. 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.

So while the judgement indicates that there is no presumption of a joint venure, I don't see how it percribes that in a domestic relationship, which is not a joint-venture, how a cople should live their lives to show this. It used to be clearer, if property was in one person's name, only that person had claim to that property. IMO many couples in a common-law relationship have separate finances and would be more aligned with a "value received" basis. How does such a couple demonstrate this? I see no definitive way to do so other than a formal agreement between the couple.

In Vanasse/Seguin case what did the couple do to indicate that they were in a joint-venture situation rather than a "fee-for-service" arrangement?

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Of course, this is a relationship-specific issue; there can be no presumption one way or the other.
Like I said, this judgement will be a major bonanza for family law/divoprce lawyers. When you are married and in the abscence of a pre-nuptial there is the presumtion of joint venture, it is the default position.

From here on in, one side in common law relationships will argue there was presumption, the other will argue there wasn't, and every hour is billable.

The Dower Act is most if not all provinces protects property interests in marriages, there will be a presumption and soon there will be case law to apply the same standard to common laws. Big impact. Its gonna take the love out of a lot of loving.

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Like I said, this judgement will be a major bonanza for family law/divoprce lawyers. When you are married and in the abscence of a pre-nuptial there is the presumtion of joint venture, it is the default position.

From here on in, one side in common law relationships will argue there was presumption, the other will argue there wasn't, and every hour is billable.

The Dower Act is most if not all provinces protects property interests in marriages, there will be a presumption and soon there will be case law to apply the same standard to common laws. Big impact. Its gonna take the love out of a lot of loving.

This would only be following on the footsteps of most Federal and Provincial legislation which has been making common law equivalent to married. This simply extends that notion to the termination of the common law relationship. It's been coming for a while.

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This would only be following on the footsteps of most Federal and Provincial legislation which has been making common law equivalent to married.
I don't know what legisation you are referring to.... most provinces have a Dower Act or equivalent , it provides legal protection on real estate but only for legally married couples.

At present, common law partners must fight for property rights which come automatically to married persons.

I don't agree with Molly that no presumption of joint venture will come, it is inevitable in my opinion and not just for real estate. It is a can of worms, and the lawyers shall feast.

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Beginning at the bottom of page 10: "To determine whether the parties have, in fact, been engaged in a joint family adventure, the particular circumstances of each relationship must be taken into account. ..." Read from there.

The key if you read on is that it depends upon each relationship. IOW, it is open to subjective interpretation on intent, there is no set of clear rules which indicates when a joint venture is entered into. I agree that in the ruling they do give some guidelies on how to construe intent. For example a joint venture situation may "occur where one party leaves the workforce for a period of time to raise children" but I don't see how the court can read into that my intent of whether I intend to hire my parner as a baby-sitter or if that act means I'm agreeing to make her my business partner.

Perhaps you should should be pointing out the bits that make you believe that they've moved to a presumption of joint venture. I still see no evidence of it in spite of looking, but in any case, the onus should not be on me to guess what you've seen. You are making the assertion. Show me.

I'm going to agree with you that the ruling itself doesn't state that the presumption is for joint venture, further the ruling goes out of its way to state that neither joint venture nor value received is the presumed arrangment, BUT, it also states that the arrangement is interpreted based upon each circumstance. That means as a person going into such an arrangement you have to assume that your relationship MAY BE INTERPRETED as a joint venture even if you did not intend it to be so because any one of a number of actions can trigger such an interpretation.

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