Property Distribution and Unmarried Couples (Trusts)

with Jason Isenberg

Property Distribution and Unmarried Couples (Trusts)

Hi my name is Jason Isenberg and I am an associate lawyer with the Feldstein Family Law Group. I would like to bring to your attention one of the key differences in Ontario between married couples and unmarried couples.

The property division sections of the Family Law Act in Ontario are limited to married couples and therefore unmarried couples cannot rely on the same property division sections as married spouses. Instead unmarried couples normally rely on the use of common law trusts, meaning that unmarried couples must depend on judge made law rather than legislation when it comes to division of property. This can lead to uncertainty and more litigation for unmarried couples trying to achieve a fair settlement of property issues.

For example, when you have an unmarried couple that has been together for a long period of time and there is a property that is solely owned by one spouse, who is the titled spouse, and the other spouse, or non-titled spouse, feels they should receive some compensation for that property, the best options in law available to the second spouse are through claiming:

1. Unjust Enrichment; or
2. Resulting Trust.

Starting with Unjust Enrichment, in the recent Supreme Court of Canada decisions of Vanasse v. Seguin and Kerr v. Baranow¹ this principle is best described as giving a benefit to an individual that justice does not give the same individual a right to keep. In family law the aforementioned can be accomplished if a claimant can show the following:

1. a benefit or enrichment of a respondent;
2. a related detriment to the claimant; and
3. absence of a juristic reason for the enrichment.

‘Absence of a juristic reason for the enrichment’ means that there is no evidence that the enrichment is justified, and there is no reason in law or justice to deny the non-titled spouse recovery for the non-titled spouse’s contribution to the property.

The normal remedy in cases of unjust enrichment is a monetary award as opposed to giving the claimant an interest in the property in question. The theory behind monetary awards being granted is that several, but not all common law relationships can be viewed as joint family ventures where both parties contribute to the wealth. In cases where a disproportionate amount of the wealth is held by one party, then there could be a readjustment. A non-titled spouse can be given a proprietary interest as a remedy when a monetary remedy is not appropriate.

With respect to Resulting Trusts, this type of trust is based on contribution to the property at issue and is not specific to family law. When an untitled common law spouse contributes to the acquisition of a property, but their contribution is not reflected in title to the property, the titled spouse may be deemed to hold some portion of the property in trust for the untitled spouse. This type of trust also looks at the intention of the parties and whether there was a common intention that the property be joint, despite how title is registered.

The onus of meeting the resulting trust test is on the party seeking the property interest.

With either one of these tests it is essential that there is a link between the contribution and the property at issue. That being said, even if there is a link that does not necessarily mean that the non-titled spouse will receive a proprietary interest in the property. A court may determine that a monetary award rather than a proprietary award is sufficient to remedy any deprivation or intention.

Many people are surprised to learn about the different property regimes for married and unmarried spouses, however in Ontario there has been a distinct line drawn. The act of getting married clearly carries some legal meaning that makes it different from common law relationships. Whether this is fair or makes sense could be the topic of a whole other session.

Thank you for your time.

^1.2011 SCC 10.