Case Analysis: Constructive Trusts Between Common Law Couples

Kamermans v. Gabor, 2018 ONSC 5241

The parties began cohabitating in September 2008, when the Applicant and her children moved into the Respondent’s home. She contributed $7,500 in improvements to that home. In July 2010, the parties bought a new home as joint tenants that required more extensive renovation. The house ended up costing them $240,000. The Respondent made a down payment of approximately $70,500 from the proceeds of the first home. Together, the parties obtained a mortgage for the rest of the purchase price and took title as joint tenants.

After sharing extensive renovation costs and living expenses equally, the parties separated in February of 2016. The home was sold for $307,000. Each party received $19,000, and the remainder was held in trust. The Applicant commenced a proceeding for division of property, among other things. The Respondent claimed that he was entitled to reimbursement for the down payment he made prior to any division, based on unjust enrichment and constructive trust.

Analysis of the Constructive Trust Claim

In first establishing which type of trust may apply to the matter, Justice Heeney pointed out that the resulting trust analysis focuses solely on the initial transaction, in order to determine whether there was an intention to make a gift. Alternatively, the constructive trust analysis allows the court to take into account the entire history of the couple in question, and includes a consideration of improvements made to the property by each party. He then proceeded to analyze the case as a constructive trust claim.

The Applicant argued that the fact that title was taken in joint names is, in and of itself, a juristic reason for the enrichment she received in the form of the $70,000 down payment, because the public requires confidence in how title is held. It was argued that the title should be clear and unequivocal, except in the most exceptional of cases.

Justice Heeney ultimately rejected this argument, because every single constructive trust case involves the claimant seeking an interest in land, or monetary compensation in lieu of an interest, in opposition to the manner in which legal title is already held. If the Applicant's argument were valid, no constructive trust claim would ever succeed. Justice Heeney found that despite the contradictory evidence, there was no agreement between the parties as to what would happen with the Respondent’s down payment in the event of relationship breakdown.

Property Division and Distribution

The analysis shows that the Respondent did contribute $55,000 more than his common law partner, and she was thereby unjustly enriched. There was no juristic reason for the enrichment and accordingly the Respondent got most of his deposit back. The judge also found that the parties were engaged in a joint family venture, insofar as the acquisition and improvement of the subject house was concerned.

He assessed their contributions to the improvement of the property to be roughly equal. In order to figure out how to deal with the contribution of the parties to the purchase of the property, the Court observed that the Respondent contributed $63,000 and the Applicant contributed $7,500 to the initial purchase price. This $7,200 contribution was the amount that the Applicant put into the first home, which the Respondent sold to purchase their joint residence.

Justice Heeney stated: Consistent with the same principle that the parties should share in their wealth proportionate to their contributions, the Respondent received 89.4 percent and the Applicant received 10.6 percent of the monies remaining in trust. Applying those percentages meant that the Respondent received $56,573.72, and the Applicant received $6,707.85.

Do you need assistance with division of assets after your legal separation or divorce? Contact our skilled Ontario divorce attorneys at Feldstein Family Law Group by calling (905) 581-7222 today. With more than 25 years of divorce and family law experience, we can provide you with high-quality legal counsel on these delicate family matters.

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