Spouse’s and Partner’s Property Rights Upon Separation

Separate and apart from “family property” is the concept of “unjust enrichment.”

Spouses’ Equal Share in The Family Property

Family property is an automatic right, meaning legislation provides that each married spouse automatically has the legal right to share equally in the family property. Said another way, upon separation, married spouses can refer to the legislation which provides a formula for dividing the wealth they accrued during the marriage.

In contrast, unjust enrichment is not an automatic right, because it is not prescribed by any legislation. Instead, it is a claim (a lawsuit) that a person can bring if, upon separation, they are not receiving a fair sharing of their partner’s wealth accrued during the relationship.

Common-law Partner Claims

Typically (though it depends on the province or territory), common-law partners will bring claims in unjust enrichment rather than married spouses, as married spouses already have protection under the family property regime.

Proving Unjust Enrichment

Proving unjust enrichment requires a person (let’s call him or her the “contributor”) to prove to a court:

• he or she contributed money or labour or both, directly or indirectly, which enabled their partner (let’s call them the “enriched partner”) to grow in worth;
• the contributor did not make these contributions under contract or as the hired help; and
• it would be unjust for the enriched partner not to share their wealth with the contributor upon the couple’s separation.

Unjust enrichment claims are claims “in equity”, meaning they are meant to make things fair, right, or equitable, particularly where a strict interpretation of the law would have an unfair result. For example, when common-law partners separate, in most Canadian jurisdictions, a strict interpretation of the law would result in them having no rights to their partner’s property, because the legislation provides no such property rights to common-law partners. In contrast, a claim in unjust enrichment (an “equitable” claim) allows the court to make things fair or equitable by awarding the contributing partner an ownership interest in property or money, if the court considers it just and equitable.

Classic Example of a Claim in Unjust Enrichment

For example, imagine a woman assisted her common-law partner over the course of their 20-year, traditional relationship in the following ways:

• she contributed labour 10 hours per week in his equipment-rental business doing the bookkeeping and clerical work;
• she contributed 15 hours per week on the farm feeding and caring for the livestock;
• she worked in the home full-time: cleaning and decorating, maintaining the house, doing yard work, cooking the meals, rearing the couple’s three children, and performing other duties that benefited the family unit such as hosting family events and celebrations.

Imagine that the woman did not perform these many services as the hired help (meaning she was not hired and paid for her labour).

Throughout the relationship, her partner was able to increase his own net worth in the following ways:

• the business which was in his name, grew in value;
• the farm operation, which was in his name, increased in value;
• the real property, which was in his name, increased in value;
• he was able to acquire vehicles and other toys (ATVs, RVs, motorbikes, and the like), which were in his name;
• because he wasn’t spending money on a bookkeeper, secretary, farm labourer, housekeeper, chef, and day care worker, he was able to pay off the house and put the profits from the business and farm into an RRSP and a self-managed investment portfolio.

It would be unjust if, upon the couple separating, her partner left the relationship enriched by owning the business, farm, real property, vehicles, RRSP, and investment portfolio, while the woman left the relationship with no interest in these assets.

In such situations, which are unfortunately common (particularly in farming families or other family businesses), the enriched partner (often the husband) benefited financially to the extent his net worth increased during the relationship, and the contributing partner (often the wife) was correspondingly deprived to the extent her net worth did not increase correspondingly.

In these cases, the courts often find that the value of the couple’s joint family venture should be divided either by awarding the contributing partner an interest in an asset like the family home or by requiring the enriched partner to pay the contributing partner for their contributions over the years.

As mentioned above, oftentimes, married spouses do not need to make a claim in unjust enrichment, as their family property rights are automatically recognized under the family property laws of the province or territory. However, in some jurisdictions, or in some situations, a married spouse may want to claim in unjust enrichment in addition to, or in the alternative to (at the same time as) seeking to divide net family property. An experienced family lawyer can advise a person whether claiming in unjust enrichment is a reasonable option.