Trust Principles and Sharing a Home in a Common Law Relationship
Reiter v Hollub 2017 ONCA 186
In this case, the Court of Appeal of Ontario explored the application of trust principles, namely unjust enrichment, of the shared home of a couple during their six-year common law relationship.
Ms. Reiter and Mr. Hollub shared a home owned by Mr. Hollub during their six year common-law relationship. Mr. Hollub purchased the home in which they lived. He paid for the home from the proceeds of the sale of a prior home he had owned and paid the balance from a first mortgage on the property. Mr. Hollub made monthly mortgage payments in the amount of $1,000. Ms. Reiter paid Mr. Hollub $400 monthly in rent; this was less than she was paying prior to moving in with Mr. Hollub and considerably less than she was paying in rent after she moved out. In addition to monthly rent, in 2013, Mr. Reiter gave Mr. Hollub $5,000 towards his mortgage. During the period of cohabitation, the home’s net value increased in the amount of $410,000. Notably, during the relationship, Ms. Reiter and Mr. Hollub did not have a joint bank account, they did not pool their money, and they did not share domestic tasks. Furthermore, Mr. Hollub, paid the mortgage, property tax, and insurance on the home.
Upon careful consideration all of the evidence presented, the trial judge found that there was no joint family venture and no unjust enrichment. The trial judge held that while there was a significant increase in the value of the home during the parties’ relationship, this was due to Mr. Hollub’s paying down the mortgage and the significant increase in the value of the property. The Court of Appeal agreed.
The issue before the Court of Appeal was the $5000 lump-sum that Ms. Reiter gave to Mr. Hollub during the relationship that he used to pay down the mortgage. The trial judge treated this $5000 as part of the parties’ common expense agreement and as a result rejected Ms. Reiter’s claim for unjust enrichment. The Court of Appeal disagreed.
In this case, the Court of Appeal stated that “since the Supreme Court’s 1980 decision in Becker v Pettkus, unjust enrichment principles have been available to support claims made by domestic partners upon the breakdown of their relationship” (para 16). The test to establish unjust enrichment is well established; the person advancing the claim must prove three things:
- An enrichment of or benefit to the defendant;
- A corresponding deprivation of the plaintiff; and
- The absence of a juristic reason for the enrichment
With respect to the third prong of the test, there are two steps to identifying whether there is a juristic reason for the responding party to retain the benefit incurred:
- The court must consider whether the case falls within a pre-existing category of juristic reason (e.g., contract, a disposition of law, donative intent, and other valid common law, equitable or statutory obligations);
- If it falls outside of these established categories, the court must consider the reasonable expectations of the parties and public policy considerations.
Notably, it was determined in Kerr v Baranow that if unjust enrichment is established, there are two possible remedies: monetary awards or proprietary awards.
The Court of Appeal found, that with the exception of the $5000 payment, Ms. Reiter “suffered no corresponding deprivation” and as a result, there was no unjust enrichment (para 27).
With respect to the $5000, Ms. Reiter held that the money was a contribution to the mortgage, and as such lump-sum resulted in Mr. Hollub’s unjust enrichment. However, Mr. Hollub argued that the money was a gift given to him as a gift to help pay down the principal on the mortgage, “no strings attached” (para 34). He argued that the lump-sum was given with donative intent, and as such did not constitute unjust enrichment.
The Court of Appeal, citing Pecore v Pecore, held that “given the law’s presumption against a gift and the absence of any evidence of donative intent, the payment should simply be returned”. The basis for returning the $5000 is odd as neither the Trial Court, nor the Court of Appeal found that the payment constituted unjust enrichment. Further, Mr. Hollub presented evidence that the $5000 was a donative gift.