It must be said at the outset that common law spouses and married spouses do not enjoy the same legal rights in respect of their property. The purpose of this article is to explain some of the major differences.
When a marriage ends, the spouses equally share the property they have accumulated during the marriage with some exceptions. In Ontario, the Family Law Act specifically recognizes the contributions of both spouses and enables the equal sharing of the property they have accumulated during their marriage.
Common law spouses (either opposite or same-sex couples) who cohabit together, do not enjoy any presumption of equal sharing of property and the Supreme Court of Canada has decreed that this is because getting married is a matter of choice. According to the Court, if you choose to marry, you opt to share the value of assets that you and your spouse acquire during the marriage. If you choose not to marry, you effectively opt out of this system of legal rights that married spouses enjoy. Asserting this principle is not without controversy. Almost 10 years ago in the Supreme Court of Canada, the Court was divided on this issue. At that time, the dissenting Justice L'Heureux-Dubé stated as follows: "The right to the presumption of equal contribution, after all, only arises when the relationship comes to an end. Initial intentions are, therefore, of little consequence. In fact few people realistically believe that any significant number of human beings enter into relationships of love, affection and companionship in order to produce a particular legal outcome. If anything, some people are unaware or positively mistaken about their legal rights as married or unmarried cohabitants. Worse still, many heterosexual unmarried cohabitants cohabit not out of choice but out of necessity. For many, choice is denied them by virtue of the wishes of the other partner. To deny them a remedy because the other partner chose to avoid certain consequences creates a situation of exploitation. It certainly does not enhance the dignity of those who could not "choose" to cohabit." 1
One of the ways to overcome this inequality for common law couples is to acquire property jointly, which then gives them the rights of a legal owner. Alternatively, they can enter into a cohabitation agreement which requires them to agree on how they will share their property while they cohabit. This may prove very difficult if one of the parties is acting on exactly the opposite intent.
In February of 2011, the Supreme Court of Canada had the opportunity to examine the only other way for unmarried cohabiting couples to obtain assistance from the court when they have no agreement or jointly-owned property. In the Ottawa case of Vanasse v. Seguin, the rights of unmarried couples were expanded through the extension of the equitable remedy of unjust enrichment which allows for a more equitable sharing of the fruits of the relationship by examining the contribution of both parties and fully recognizing the domestic contribution of one of them while the other is enabled to accumulate assets by working outside the home.
It is impossible to provide a detailed analysis of a landmark case such as this one in a few short words, but its basic foundation is the creation of the concept of a joint family venture.
The Court will provide an equitable remedy where the contributions of both parties over time have resulted in an accumulation of wealth where, following the breakdown of their relationship, one party retains a disproportionate share of the assets that are the product of their joint efforts while cohabiting. There may not be a direct link between the specific property which is sought to be shared and the contribution of the other party, but there will be a link by virtue of the fact that the wealth which has been accumulated is derived from the efforts of both parties in the context of a joint family venture.
This "joint family venture" is established by the presentation of factual evidence of the mutual efforts of the parties, the economic integration of their affairs, their actual intent (declared or implied) and the priority given by the parties to family.
Evidence of all of these factors will support the finding by the Court of a joint family venture. Cases decided since Vanasse v. Seguin have demonstrated that most longer-term relationships of unmarried couples will manifest a pooling of efforts and the use of income for family purposes or the assumption of domestic responsibilities for the family by one of them, while the other goes off to work outside the home.
The integration of this partnership will also be evidenced by the declarations of the cohabitants of their intent to be partners to third parties. Once the joint family venture is established, then the evidence of the relative value of their respective contributions will be weighed in order to determine if one party’s share of these assets is disproportionate to their contributions to acquire them.
After the court reviews all of this evidence, it may make a monetary award to correct the disproportionate accumulation of wealth which has been caused by the unjust enrichment of one party and the corresponding deprivation of the other.
If there is an actual link between the contributions of one of the parties with an asset registered in the name of the other, then the court will award an interest in the asset to recognize this contribution. An example of this might be a family-run business owned by one of the parties.
This kind of evidence will require a lengthy and detailed look at the manner in which the parties have functioned as a domestic unit while cohabiting. It has been demonstrated in the past year that this will result in much lengthened legal proceedings for unmarried couples far in excess of the time required by married couples to assert their remedies under the Family Law Act.
There being no presumption of equal sharing of property for unmarried couples, the determination of their contributions required to rectify the unjust enrichment will depend upon the facts of each case and the value placed on those facts by different judges.
The cases that have been decided thus far have created results which are as varied and different as the circumstances of the parties. The reported cases reveal that there have been some unsuccessful litigants who sought a more equitable sharing of their property using the joint family venture formula and who came up short because of a court finding that they gained as much from the relationship as they lost. The court then awarded the legal costs of the successful party against the party who lost.
The real remedy is for the provincial government to create a new legislative formula to help define the parameters of the new rulebook for unmarried couples. It would be both helpful and practical to have legislative guidance as to the sharing of wealth between unmarried spouses instead of exposing them to expensive, uncertain, and unwarranted legal proceedings. Until this happens, the best advice is to get a cohabitation agreement signed before the unmarried couple moves in together.
John Johnson is a partner with the law firm of Nelligan O'Brien Payne LLP (www.nelligan.ca), with offices in Ottawa, Kingston, Vankleek Hill and Alexandria.
[This article was originally published in the October 2012 issue of Fifty-Five Plus Magazine.]
1 Nova Scotia (Attorney General v. Walsh) 2002 S.C.J. 84, paragraph 171 page 48
