BACKGROUND
In 2004, Ms. Francis (Respondent) and Mr. Douglas (Applicant) began cohabiting in a home owned by Ms. Francis alongside her two children. Mr. Douglas asserts that Ms. Francis has been unjustly enriched by his (1) renovations to the home; (2) assistance with the property’s purchase; and (3) ongoing mortgage contributions. He seeks financial compensation, or alternatively, a constructive trust in the property. Contrastingly, Ms. Francis disputes Mr. Douglas’ unjust enrichment claim against her.
The parties’ first point of contention concerns the $8,000 deposit for the home. Mr. Douglas alleges he contributed $5,000 from his RRSP and later paid $3,000, whereas Ms. Francis claims she paid two $4,000 installments over two years.
Second, the parties disagree over Mr. Douglas’ monetary contributions during cohabitation. Although the mortgage was solely in Ms. Francis’ name, Mr. Douglas claims that his payments went towards it. Meanwhile, Ms. Francis maintains that Mr. Douglas simply paid for room and board expenses.
Finally, the parties disagree over the value of Mr. Douglas’ renovations. While she acknowledges Mr. Douglas’ work, Ms. Francis testifies that she bore the majority of its completion costs. Meanwhile, Mr. Douglas contends that he not only provided his labor and contributed to some material expenses, but that his repair efforts significantly increased the property’s value.
At trial, the court concluded that Mr. Douglas had unjustly enriched Ms. Francis through the time and money he devoted to renovating the property. As such, the court awarded $18,000 in compensation to Mr. Douglas. However, Mr. Douglas failed to prove any unjust enrichment related to the deposit or his ongoing financial contributions.
THE LAW
In Kerr v Baranow, 2011 SCC 10, the Supreme Court sets out a three-part test for unjust enrichment claims:
- An Enrichment: Mr. Douglas must demonstrate that he provided a tangible benefit to Ms. Francis.
- A Corresponding Deprivation: Mr. Douglas must have suffered some loss as a result of Ms. Francis acquiring the alleged benefit.
- Absence of a Juristic Reason for the Enrichment: There must be no juristic reason for Ms. Francis to retain the benefit given to her by Mr. Douglas.
In order to satisfy the third element, the court must consider established categories of juristic reasons in favor of denying recovery, such as the existence of a contract or the intention to make a gift. If no established juristic reason exists, Ms. Francis faces the burden of proving why her enrichment should be retained.
If Mr. Douglas is successful in establishing a claim for unjust enrichment, he may be entitled to a monetary award, such as compensation for the value of his services to Ms. Francies, or where appropriate, a constructive trust. Entitlement to a proprietary remedy requires a clear link between the claimant’s contributions and the property’s value.
Additionally, if it is established that the parties’ joint efforts, or “joint family venture,” resulted in an accumulation of wealth that was disproportionately retained by one party, there may be an unjust enrichment. Whether or not the parties engaged in a joint family venture requires a consideration of the parties’ mutual efforts, economic integration, actual intentions, and family priorities.
ANALYSIS
Did Mr. Douglas Contribute $8,000 Towards the Purchase of the Home?
Due to Mr. Douglas’ limited knowledge regarding the property’s expenses, the court deemed it unlikely that he depleted his RRSP savings to place a deposit on the home. Instead, as title holder to the property, and having paid approximately $10,000 in closing costs, Ms. Francis’ claim was deemed more credible. Therefore, the court ruled that Mr. Douglas failed to demonstrate that Ms. Francis was unjustly enriched by his financial contributions to the acquisition of the home.
Did Mr. Douglas Contribute to the Mortgage on an Ongoing Basis?
Mr. Douglas claimed that his biweekly payments to Ms. Francis were mortgage contributions, while Ms. Francis stated they covered board and living expenses.
Although Mr. Douglas made ongoing payments to Ms. Francis, the court deemed that he failed to establish that his contributions were assigned exclusively to the mortgage. Therefore, whilst he often paid $1,000 per month - over half of the monthly $1,600 mortgage – the court concluded that these were standard household expenses, and did not amount to a deprivation. Ultimately, since Mr. Douglas enjoyed full access to the property, the court ruled that no unjust enrichment occurred.
Did Mr. Douglas Perform Renovations to the Home? If So, What Was Their Value?
Mr. Douglas completed various renovations to improve the property, including lawn care, driveway expansion, and hardwood floor installation. Although both parties invested money into the renovations, the court acknowledged that Mr. Douglas’ labor increased the property’s value from $234,000 to $670,000. As such, the court declared that Mr. Douglas’ labor unjustly enriched Ms. Francis as the titled owner of the property.
If Ms. Francis Has Been Unjustly Enriched, What is the Remedy Owed to Mr. Douglas For His Contributions?
Since Mr. Douglas spent time and money improving the property, and Ms. Francis (as title owner) retains the benefit of an increased property value, the court decided that a monetary award of $18,000 (based on comparable renovation costs that Ms. Francis had incurred) was justified. Consideration of a proprietary award was unnecessary, since a monetary award was sufficient to remedy the unjust enrichment.
Were the Parties Engaged in a Joint Family Venture?
The parties maintained separate finances, never filed joint tax returns, and did not combine their assets. Moreover, Ms. Francis assumed sole financial responsibility for the home and its maintenance costs. Ultimately, Mr. Douglas failed to demonstrate that he and Ms. Francis intended to blend their assets and wealth. Therefore, the court concluded that the parties were not engaged in a joint family venture.