Kerr v. Baranow

Kerr v. Baranow
Collection
Supreme Court Judgments
Date
2011-02-18
Neutral citation
2011 SCC 10
Report
[2011] 1 SCR 269
Case number
33157, 33358
Judges
McLachlin, Beverley; Binnie, William Ian Corneil; LeBel, Louis; Abella, Rosalie Silberman; Charron, Louise; Rothstein, Marshall; Cromwell, Thomas Albert
On appeal from
British Columbia
Subjects
Family law
Notes
SCC Case Information: 33358, 33157
Decision Content
SUPREME COURT OF CANADA
Citation: Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269
Date: 20110218
Docket: 33157, 33358
Between:
Margaret Patricia Kerr
Appellant
and
Nelson Dennis Baranow
Respondent
And Between:
Michele Vanasse
Appellant
and
David Seguin
Respondent
Coram: McLachlin C.J. and Binnie, LeBel, Abella, Charron, Rothstein and Cromwell JJ.
Reasons for Judgment:
(paras. 1 to 221):
Cromwell J. (McLachlin C.J. and Binnie, LeBel, Abella, Charron and Rothstein JJ. concurring)
Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269
Margaret Patricia Kerr Appellant
v.
Nelson Dennis Baranow Respondent
- and -
Michele Vanasse Appellant
v.
David Seguin Respondent
Indexed as: Kerr v. Baranow
2011 SCC 10
File Nos.: 33157, 33358.
2010: April 21; 2011: February 18.
Present: McLachlin C.J. and Binnie, LeBel, Abella, Charron, Rothstein and Cromwell JJ.
on appeal from the courts of appeal for british columbia and ontario
Family law — Common law spouses — Property — Unjust enrichment — Monetary remedy — Whether monetary remedy restricted to quantum meruit award — Whether evidence of joint family venture should be considered in conferring remedy — Whether mutual benefit conferral and reasonable expectations of parties should be considered in assessing award.
Family law — Common law spouses — Property — Resulting trust — Whether evidence of common intention should be considered in context of resulting trust — Whether resulting trust principles apply to property or monetary award in resolution of domestic cases.
Family law — Common law spouses — Support — Parties separating after living together for more than 25 years — Female partner commencing proceedings for a share of property and support — Whether support should be payable from date of trial or date on which proceedings commenced.
In the Kerr appeal, K and B, a couple in their late 60s separated after a common law relationship of more than 25 years. They both had worked through much of that time and each had contributed in various ways to their mutual welfare. K claimed support and a share of property in B’s name based on resulting trust and unjust enrichment principles. B counterclaimed that K had been unjustly enriched by his housekeeping and personal assistance services provided after K suffered a debilitating stroke. The trial judge awarded K $315,000, a third of the value of the home in B’s name that they had shared, both by way of resulting trust and unjust enrichment, based on his conclusion that K had provided $60,000 worth of equity and assets at the beginning of their relationship. He also awarded K $1,739 per month in spousal support effective the date she commenced proceedings. The Court of Appeal concluded that K did not make a financial contribution to the acquisition or improvement of B’s property that was the basis for her award at trial, and dismissed her property claims. A new trial was ordered for B’s counterclaim. The Court of Appeal further held that the commencement date of the spousal support should be the date of trial.
In the Vanasse appeal, it was agreed that S was unjustly enriched by the contributions of his partner, V, during their 12-year common law relationship. For the first four years of cohabitation, both parties pursued their respective careers. In 1997, V took a leave of absence from her employment and the couple moved to Halifax so that S could pursue a business opportunity. Over the next three and a half years, their children were born and V stayed at home to care for them and performed the domestic labour. S worked long hours and travelled extensively for business. In 1998, S stepped down as CEO of the business and the family returned to Ottawa where they bought a home in joint names. In 2000, S received approximately $11 million for his shares in the business and from that time, until their separation in 2005, he participated more with the domestic chores. The trial judge found no unjust enrichment for the first and last periods of their cohabitation, but held that S had been unjustly enriched at V’s expense during the period in which the children were born. V was entitled to half of the value of the wealth S accumulated during the period of unjust enrichment, less her interest in the home and RRSPs in her name. The court of appeal set aside this award and directed that the proper approach to valuation was a quantum meruit calculation in which the value each party received from the other was assessed and set off.
Held: In Kerr, the appeal on the spousal support issue should be allowed and the order of the trial judge should be restored. The appeal from the order dismissing K’s unjust enrichment claim should also be allowed and a new trial ordered. The appeal from the order dismissing K’s claim in resulting trust should be dismissed. The order for a new hearing of B’s counterclaim should be affirmed.
Held: In Vanasse, the appeal should be allowed and the order of the trial judge restored.
These appeals require the resolution of five main issues. The first concerns the role of the “common intention” resulting trust in claims by domestic partners. The second issue is whether the monetary remedy for a successful unjust enrichment claim must always be assessed on a quantum meruit basis. The third area relates to mutual benefit conferral in the context of an unjust enrichment claim and when this should be taken into account. The fourth concerns the role the parties’ reasonable expectations play in the unjust enrichment analysis. Finally, in the Kerr appeal, this Court must also decide the effective date of the commencement of spousal support.
For unmarried persons in domestic relationships in most common law provinces, judge‑made law is the only option for addressing the property consequences of the breakdown of those relationships. The main legal mechanisms available have been the resulting trust and the action in unjust enrichment. Resulting trusts arise from gratuitous transfers in two types of situations: the transfer of property from one partner to the other without consideration, and the joint contribution by two partners to the acquisition of property, title to which is in the name of only one of them. The underlying legal principle is that contributions to the acquisition of a property, which were not reflected in the legal title, might nonetheless give rise to a property interest. In Canada, added to this underlying notion was the idea that a resulting trust could arise based solely on the “common intention” of the parties that the non‑owner partner was intended to have an interest. This theory is doctrinally unsound, however, and should have no continuing role in the resolution of domestic property disputes. While traditional resulting trust principles may well have a role to play in the resolution of property disputes between unmarried domestic partners, parties have increasingly turned to the law of unjust enrichment and the remedial constructive trust. Since the decision in Pettkus v. Becker, the law of unjust enrichment has provided a much less artificial, more comprehensive and more principled basis to address claims for the distribution of assets on the breakdown of domestic relationships. It permits recovery whenever the plaintiff can establish three elements: an enrichment of the defendant by the plaintiff, a corresponding deprivation of the plaintiff, and the absence of a juristic reason for the enrichment. This Court has taken a straightforward economic approach to the elements of enrichment and corresponding deprivation. The plaintiff must show that he or she has given a tangible benefit to the defendant that the defendant received and retained. Further, the enrichment must correspond to a deprivation that the plaintiff has suffered. Importantly, provision of domestic services may support a claim for unjust enrichment. The absence of a juristic reason for the enrichment means that there is no reason in law or justice for the defendant’s retention of the benefit conferred by the plaintiff. This third element also provides for due consideration of the autonomy of the parties, their legitimate expectations and the right to order their affairs by contract.
There are two steps to the juristic reason analysis. First, the established categories of juristic reason must be considered, which could include benefits conferred by way of gift or pursuant to a legal obligation. In their absence, the second step permits consideration of the reasonable expectations of the parties and public policy considerations to assess whether particular enrichments are unjust.
The object of the remedy for unjust enrichment is to require the defendant to reverse the unjustified enrichment and may attract either a “personal restitutionary award” or a “restitutionary proprietary award”. In most cases, a monetary award will be sufficient to remedy the unjust enrichment but two issues raise difficulties in determining appropriate compensation. Where there has been a mutual conferral of benefits, it is often difficult for the court to retroactively value every service rendered by each party to the other. While the value of domestic services is not questioned, it would be unjust to only consider the contributions of one party. A second difficulty is whether a monetary award must invariably be calculated on a quantum meruit, “value received” or “fee‑for‑services” basis or whether that monetary relief may be assessed more flexibly, on a “value survived basis” by reference to the overall increase in the couple’s wealth during the relationship. In some cases, a proprietary remedy may be required. Where the plaintiff can demonstrate a link or causal connection between his or her contributions and the acquisition, preservation, maintenance or improvement of the disputed property, and that a monetary award would be insufficient, a share of the property proportionate to the claimant’s contribution can be impressed with a constructive trust in his or her favour.
Three areas in the law of unjust enrichment require clarification. Once the choice has been made to award a monetary remedy, the question is how to quantify it. If a monetary remedy must invariably be quantified on a quantum meruit basis, the remedial choice in unjust enrichment cases becomes whether to impose a constructive trust or to order a monetary remedy calculated on a quantum meruit basis. This dichotomy of remedial choice should be rejected, however, as the value survived measure is a perfectly plausible alternative to the constructive trust. Restricting the money remedy to a fee‑for‑service calculation is inappropriate for four reasons. First, it fails to reflect the reality of the lives of many domestic partners. The basis of all domestic unjust enrichment claims do not fit into only two categories — those where the enrichment consists of the provision of unpaid services, and those where it consists of an unrecognized contribution to the acquisition, improvement, maintenance or preservation of specific property. Where the contributions of both parties over time have resulted in an accumulation of wealth, the unjust enrichment occurs when one party retains a disproportionate share of the assets that are the product of their joint efforts following the breakdown of their relationship. The required link between the contributions and a specific property may not exist but there may clearly be a link between the joint efforts of the parties and the accumulation of wealth. While the law of unjust enrichment does not mandate a presumption of equal sharing, nor does the mere fact of cohabitation entitle one party to share in the other’s property, the legal consequences of the breakdown of a domestic relationship should reflect realistically the way people live their lives. Second, the remedial dichotomy is inconsistent with the inherent flexibility of unjust enrichment and with the Court’s approach to equitable remedies. Moreover, the Court has recognized that, given the wide variety of circumstances addressed by the traditional categories of unjust enrichment, as well as the flexibility of the broader, principled approach, its development requires recourse to a number of different sorts of remedies depending on the circumstances. There is no reason in principle why one of the traditional categories of unjust enrichment should be used to force the monetary remedy for all present domestic unjust enrichment cases into a remedial strait‑jacket. What is essential is that there must be a link between the contribution and the accumulation of wealth. Where that link exists, and a proprietary remedy is either inappropriate or unnecessary, the monetary award should be fashioned to reflect the true nature of the enrichment and the corresponding deprivation. Third, the remedial dichotomy ignores the historical basis of quantum meruit claims. Finally, a remedial dichotomy is not mandated, as has been suggested, by the Court’s judgment in Peter v. Beblow.
Where the unjust enrichment is best characterized as an unjust retention of a disproportionate share of assets accumulated during the course of a “joint family venture” to which both partners have contributed, the monetary remedy should be calculated according to the share of the accumulated wealth proportionate to the claimant’s contributions. Where the spouses are domestic and financial partners, there is no need for “duelling quantum meruits”. The law of unjust enrichment, including the remedial constructive trust, is the preferable method of responding to the inequities brought about by the breakdown of a common law relationship, since the remedies for unjust enrichment “are tailored to the parties’ specific situation and grievances”. To be entitled to a monetary remedy on a value‑survived basis, the claimant must show both that there was a joint family venture and a link between his or her contributions and the accumulation of wealth.
To determine whether the parties have, in fact, been engaged in a joint family venture, the particular circumstances of each particular relationship must be taken into account. This is a question of fact and must be assessed by having regard to all of the relevant circumstances, including factors relating to mutual effort, economic integration, actual intent and priority of the family. The pooling of effort and team work, the decision to have and raise children together, and the length of the relationship may all point towards the extent to which the parties have formed a true partnership and jointly worked towards important mutual goals. The use of parties’ funds entirely for family purposes or where one spouse takes on all, or a greater proportion, of the domestic labour, freeing the other spouse from those responsibilities and enabling him or her to pursue activities in the paid workforce, may also indicate a pooling of resources. The more extensive the integration of the couple’s finances, economic interests and economic well‑being, the more likely it is that they have engaged in a joint family venture. The actual intentions of the parties, either express or inferred from their conduct, must be given considerable weight. Their conduct may show that they intended the domestic and professional spheres of their lives to be part of a larger, common venture, but may also conversely negate the existence of a joint family venture, or support the conclusion that particular assets were to be held independently. Another consideration is whether and to what extent the parties have given priority to the family in their decision making, and whether there has been detrimental reliance on the relationship, by one or both of the parties, for the sake of the family. This may occur where one party leaves the workforce for a period of time to raise children; relocates for the benefit of the other party’s career; foregoes career or educational advancement for the benefit of the family or relationship; or accepts underemployment in order to balance the financial and domestic needs of the family unit.
The unjust enrichment analysis in domestic situations is often complicated by the fact that there has been a mutual conferral of benefits. When the appropriate remedy is a money award based on a fee‑for‑services provided approach, the fact that the defendant has also provided services to the claimant should mainly be considered at the defence and remedy stages of the analysis but may be considered at the juristic reason stage to the extent that the provision of reciprocal benefits constitutes relevant evidence of the existence (or non‑existence) of a juristic reason for the enrichment. However, given that the purpose of the juristic reason step in the analysis is to determine whether the enrichment was just, not its extent, mutual benefit conferral should only be considered at the juristic reason stage for that limited purpose. Otherwise, the mutual exchange of benefits should be taken into account only after the three elements of an unjust enrichment claim have been established.
Claimants must show that there is no juristic reason falling within any of the established categories, such as whether the benefit was a gift or pursuant to a legal obligation. It is then open to the defendant to show that a different juristic reason for the enrichment should be recognized, having regard to the parties’ reasonable expectations and public policy considerations. Mutual benefit conferral and the parties’ reasonable expectations have a very limited role to play at the first step of the juristic reason analysis. In some cases, the fact that mutual benefits were conferred or that the benefits were provided pursuant to the parties’ reasonable expectations may be relevant evidence of whether one of the existing categories of juristic reasons is present. The parties’ reasonable or legitimate expectations have a role to play at the second step of the juristic reason analysis, where the defendant bears the burden of establishing that there is a juristic reason for retaining the benefit that does not fall within the existing categories. The question is whether the parties’ mutual expectations show that retention of the benefits is just.
In the Vanasse appeal, although not labelling it as such, the trial judge found that there was a joint family venture and that there was a link between V’s contribution to it and the substantial accumulation of wealth that the family achieved. She made a reasonable assessment of the monetary award appropriate to reverse this unjust enrichment, taking due account of S’s substantial contributions. Her findings of fact and analysis indicate that the unjust enrichment of S at the expense of V ought to be characterized as the retention by S of a disproportionate share of the wealth generated from a joint family venture. Several factors suggested that, throughout their relationship, the parties were working collaboratively towards common goals. They made important decisions keeping the overall welfare of the family at the forefront. It was through their joint efforts that they were able to raise a young family and acquire wealth. S could not have made the efforts he did to build up the company but for V’s assumption of the domestic responsibilities. Notably, the period of unjust enrichment corresponds to the time during which the parties had two children together, a further indicator that they were working together to achieve common goals. The length of the relationship is also relevant, and their 12-year cohabitation is a significant period of time. There was also evidence of economic integration as their house was registered jointly and they had a joint bank account. Their words and actions indicated that there was a joint family venture, to which the couple jointly contributed for their mutual benefit and the benefit of their children. There is a strong inference from the factual findings that, to S’s knowledge, V relied on the relationship to her detriment. She left her career, gave up her own income, and moved away from her family and friends. V then stayed home and cared for their two small children. During the period of the unjust enrichment, V was responsible for a disproportionate share of the domestic labour. There was a clear link between V’s contribution and the accumulation of wealth. The trial judge took a realistic and practical view of the evidence and took into account S’s non‑financial contributions and periods during which V’s contributions were not disproportionate to S and her judgment should be restored.
The Court of Appeal was right to set aside the trial judge’s findings of resulting trust and unjust enrichment in Kerr and in ordering a new hearing on B’s counterclaim. On the basis of the unsatisfactory record at trial, which includes findings of fact tainted by clear error, K’s unjust enrichment claim should not have been dismissed but a new trial ordered. The Court of Appeal erred in assessing B’s contributions as part of the juristic reason analysis and prematurely truncated K’s prima facie case of unjust enrichment. The family — property approach is rejected, and for K to show an entitlement to a proportionate share of the wealth accumulated during the relationship, she must establish that B has been unjustly enriched at her expense, that their relationship constituted a joint family venture, and that her contributions are linked to the generation of wealth during the relationship. She would then have to show what proportion of the jointly accumulated wealth reflects her contributions. With regard to B’s counterclaim, there was evidence that he made very significant contributions to K’s welfare such that his counterclaim cannot simply be dismissed. The trial judge also referred to various other monetary and non‑monetary contributions which K made to the couple’s welfare and comfort, but he did not evaluate them, let alone compare them with the contributions made by B. There are few findings of fact relevant to the key question of whether the parties’ relationship constituted a joint family venture. Further, the Court of Appeal ought not to have set aside the trial judge’s order for spousal support in favour of K effective on the date she had commenced proceedings. It is clear that K was in need of support from B at the date she started her proceedings and remained so at the time of trial. K should not have been faulted for not bringing an interim application in seeking support for the period in question. She suffered from a serious physical disability, and her standard of living was markedly lower than it was while she lived with B. B had the means to provide support, had prompt notice of her claim, and there was no indication in the Court of Appeal’s reasons that it considered the judge’s award imposed on him a hardship so as to make that award inappropriate.
Cases Cited
Applied: Peel (Regional Municipality) v. Canada, [1992] 3 S.C.R. 762; Peter v. Beblow, [1993] 1 S.C.R. 980, rev’g (1990), 50 B.C.L.R. (2d) 266, rev’g [1988] B.C.J. No. 887 (QL); Sorochan v. Sorochan, [1986] 2 S.C.R. 38; Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629; considered: Pettkus v. Becker, [1980] 2 S.C.R. 834; Rathwell v. Rathwell, [1978] 2 S.C.R. 436; Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795; D.B.S. v. S.R.G., 2006 SCC 37, [2006] 2 S.C.R. 231; referred to: Dyer v. Dyer (1788), 2 Cox Eq. Cas. 92, 30 E.R. 42; Murdoch v. Murdoch, [1975] 1 S.C.R. 423; Gissing v. Gissing, [1970] 2 All E.R. 780; Pettitt v. Pettitt, [1970] A.C. 777; Reference re Goods and Services Tax, [1992] 2 S.C.R. 445; Mack v. Canada (Attorney General) (2002), 60 O.R. (3d) 737; Nova Scotia (Attorney General) v. Walsh, 2002 SCC 83, [2002] 4 S.C.R. 325; Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574; Bell v. Bailey (2001), 203 D.L.R. (4th) 589; Wilson v. Fotsch, 2010 BCCA 226, 319 D.L.R. (4th) 26; Pickelein v. Gillmore (1997), 30 B.C.L.R. (3d) 44; Harrison v. Kalinocha (1994), 90 B.C.L.R. (2d) 273; MacFarlane v. Smith, 2003 NBCA 6, 256 N.B.R. (2d) 108; Shannon v. Gidden, 1999 BCCA 539, 71 B.C.L.R. (3d) 40; Herman v. Smith (1984), 42 R.F.L. (2d) 154; Clarke v. Clarke, [1990] 2 S.C.R. 795; Cadbury Schweppes Inc. v. FBI Foods Ltd., [1999] 1 S.C.R. 142; Soulos v. Korkontzilas, [1997] 2 S.C.R. 217; Pacific National Investments Ltd. v. Victoria (City), 2004 SCC 75, [2004] 3 S.C.R. 575; Birmingham v. Ferguson, 2004 CanLII 4764; McDougall v. Gesell Estate, 2001 MBCA 3, 153 Man. R. (2d) 54; Nasser v. Mayer‑Nasser (2000), 5 R.F.L. (5th) 100; Panara v. Di Ascenzo, 2005 ABCA 47, 361 A.R. 382; Ford v. Werden (1996), 27 B.C.L.R. (3d) 169; Thomas v. Fenton, 2006 BCCA 299, 269 D.L.R. (4th) 376; Giles v. McEwan (1896), 11 Man. R. 150; Garland v. Consumers’ Gas Co., [1998] 3 S.C.R. 112; Nance v. British Columbia Electric Railway Co., [1951] A.C. 601; MacKinnon v. MacKinnon (2005), 75 O.R. (3d) 175; S. (L.) v. P. (E.) (1999), 67 B.C.L.R. (3d) 254.
Statutes and Regulations Cited
Divorce Act, R.S.C. 1985, c. 3 (2nd Supp .).
Family Relations Act, R.S.B.C. 1996, c. 128, ss. 1(1) “spouse”, 93(5)(d).
Authors Cited
Birks, Peter. An Introduction to the Law of Restitution. Oxford: Clarendon Press, 1985.
Birks, Peter. Unjust Enrichment, 2nd ed. Oxford: Oxford University Press, 2005.
Davies, J. D. “Duties of Confidence and Loyalty”, [1990] L.M.C.L.Q. 4.
Fridman, G. H. L. Restitution, 2nd ed. Scarborough, Ont.: Carswell, 1992.
Gordon, Marie L. “Blame Over: Retroactive Child and Spousal Support in the Post‑Guideline Era” (2004‑2005), 23 C.F.L.Q. 243.
Lord Goff of Chieveley and Gareth Jones. The Law of Restitution, 7th ed. London: Sweet & Maxwell, 2007.
Maddaugh, Peter D., and John D. McCamus. The Law of Restitution. Aurora, Ont.: Canada Law Book, 1990.
Maddaugh, Peter D., and John D. McCamus. The Law of Restitution. Aurora, Ont.: Canada Law Book, 2004 (loose‑leaf updated August 2010, release 6).
Matrimonial Property Law in Canada, vol. 1, by James G. McLeod and Alfred A. Mamo, eds. Toronto: Carswell, 1993 (loose‑leaf updated 2010, release 8).
McCamus, John D. “Restitution on Dissolution of Marital and Other Intimate Relationships: Constructive Trust or Quantum Meruit?”, in Jason W. Neyers, Mitchell McInnes and Stephen G. A. Pitel, eds., Understanding Unjust Enrichment. Portland: Hart Publishing, 2004, 359.
Mee, John. The Property Rights of Cohabitees: An Analysis of Equity’s Response in Five Common Law Jurisdictions. Portland: Hart Publishing, 1999.
Oosterhoff on Trusts: Text, Commentary and Materials, 7th ed. by A. H. Oosterhoff et al. Toronto: Carswell, 2009.
Parkinson, Patrick. “Beyond Pettkus v. Becker: Quantifying Relief for Unjust Enrichment” (1993), 43 U.T.L.J. 217.
Pettit, Philip H. Equity and the Law of Trusts, 11th ed. Oxford: Oxford University Press, 2009.
Scane, Ralph E. “Relationships ‘Tantamount to Spousal’, Unjust Enrichment, and Constructive Trusts” (1991), 70 Can. Bar Rev. 260.
Waters, Donovan. Comment (1975), 53 Can. Bar Rev. 366.
Waters’ Law of Trusts in Canada, 3rd ed. by Donovan W. M. Waters, Mark R. Gillen and Lionel D. Smith, eds. Toronto: Thomson, 2005.
Youdan, Timothy G. “Resulting and Constructive Trusts”, in Special Lectures of the Law Society of Upper Canada 1993 — Family Law: Roles, Fairness and Equality. Scarborough, Ont.: Carswell, 1994, 169.
APPEAL from a judgment of the British Columbia Court of Appeal (Levine, Tysoe and Smith JJ.A.), 2009 BCCA 111, 93 B.C.L.R. (4th) 201, 266 B.C.A.C. 298, [2009] 9 W.W.R. 285, 66 R.F.L. (6th) 1, [2009] B.C.J. No. 474 (QL), 2009 CarswellBC 642, reversing in part a decision of Romilly J., 2007 BCSC 1863, 47 R.F.L. (6th) 103, [2007] B.C.J. No. 2737 (QL), 2007 CarswellBC 3047. Appeal allowed in part.
APPEAL from a judgment of the Ontario Court of Appeal (Weiler, Juriansz and Epstein JJ.A.), 2009 ONCA 595, 252 O.A.C. 218, 96 O.R. (3d) 321, [2009] O.J. No. 3211 (QL), 2009 CarswellOnt 4407, reversing a decision of Blishen J., 2008 CanLII 35922, [2008] O.J. No. 2832 (QL), 2008 CarswellOnt 4265. Appeal allowed.
Armand A. Petronio and Geoffrey B. Gomery, for the appellant Margaret Kerr.
Susan G. Label and Marie‑France Major, for the respondent Nelson Baranow.
John E. Johnson, for the appellant Michele Vanasse.
H. Hunter Phillips, for the respondent David Seguin.
The judgment of the Court was delivered by
Cromwell J. —
I. Introduction
[1] In a series of cases spanning 30 years, the Court has wrestled with the financial and property rights of parties on the breakdown of a marriage or domestic relationship. Now, for married spouses, comprehensive matrimonial property statutes enacted in the late 1970s and 1980s provide the applicable legal framework. But for unmarried persons in domestic relationships in most common law provinces, judge-made law was and remains the only option. The main legal mechanisms available to parties and courts have been the resulting trust and the action in unjust enrichment.
[2] In the early cases of the 1970s, the parties and the courts turned to the resulting trust. The underlying legal principle was that contributions to the acquisition of a property, which were not reflected in the legal title, could nonetheless give rise to a property interest. Added to this underlying notion was the idea that a resulting trust could arise based on the “common intention” of the parties that the non-owner partner was intended to have an interest. The resulting trust soon proved to be an unsatisfactory legal solution for many domestic property disputes, but claims continue to be advanced and decided on that basis.
[3] As the doctrinal problems and practical limitations of the resulting trust became clearer, parties and courts turned increasingly to the emerging law of unjust enrichment. As the law developed, unjust enrichment carried with it the possibility of a remedial constructive trust. In order to successfully prove a claim for unjust enrichment, the claimant must show that the defendant has been enriched, the claimant suffered a corresponding detriment, and there is no “juristic reason” for the enrichment. This claim has become the pre-eminent vehicle for addressing the financial consequences of the breakdown of domestic relationships. However, various issues continue to create controversy, and these two appeals, argued consecutively, provide the Court with the opportunity to address them.
[4] In the Kerr appeal, a couple in their late 60s separated after a common law relationship of more than 25 years. Both had worked through much of that time and each had contributed in various ways to their mutual welfare. Ms. Kerr claimed support and a share of property held in her partner’s name based on resulting trust and unjust enrichment principles. The trial judge awarded her one-third of the value of the couple’s residence, grounded in both resulting trust and unjust enrichment claims (2007 BCSC 1863, 47 R.F.L. (6th) 103). He did not address, other than in passing, Mr. Baranow’s counterclaim that Ms. Kerr had been unjustly enriched at his expense. The judge also ordered substantial monthly support for Ms. Kerr pursuant to statute, effective as of the date she applied to the court for relief. However, the resulting trust and unjust enrichment conclusions of the trial judge were set aside by the British Columbia Court of Appeal (2009 BCCA 111, 93 B.C.L.R. (4th) 201). Both lower courts addressed the role of the parties’ common intention and reasonable expectations. The appeal to this Court raises the questions of the role of resulting trust law in these types of disputes, as well as how an unjust enrichment analysis should take account of the mutual conferral of benefits and what role the parties’ intentions and expectations play in that analysis. This Court is also called upon to decide whether the award of spousal support should be effective as of the date of application, as found by the trial judge, the date the trial began, as ordered by the Court of Appeal, or some other date.
[5] In the Vanasse appeal, the central problem is how to quantify a monetary award for unjust enrichment. It is agreed that Mr. Seguin was unjustly enriched by the contributions of his partner, Ms. Vanasse; the two lived in a common law relationship for about 12 years and had two children together during this time. The trial judge valued the extent of the enrichment by determining what proportion of Mr. Seguin’s increased wealth was due to Ms. Vanasse’s efforts as an equal contributor to the family venture (2008 CanLII 35922). The Court of Appeal set aside this finding and, while ordering a new trial, directed that the proper approach to valuation was to place a monetary value on the services provided by Ms. Vanasse to the family, taking due account of Mr. Seguin’s own contributions by way of set-off (2009 ONCA 595, 252 O.A.C. 218). In short, the Court of Appeal held that Ms. Vanasse should be treated as an unpaid employee, not a co-venturer. The appeal to this Court challenges this conclusion.
[6] These appeals require us to resolve five main issues. The first concerns the role of the “common intention” resulting trust in claims by domestic partners. In my view, it is time to recognize that the “common intention” approach to resulting trust has no further role to play in the resolution of property claims by domestic partners on the breakdown of their relationship.
[7] The second issue concerns the nature of the money remedy for a successful unjust enrichment claim. Some courts take the view that if the claimant’s contribution cannot be linked to specific property, a money remedy must always be assessed on a fee-for-services basis. Other courts have taken a more flexible approach. In my view, where both parties have worked together for the common good, with each making extensive, but different, contributions to the welfare of the other and, as a result, have accumulated assets, the money remedy for unjust enrichment should reflect that reality. The money remedy in those circumstances should not be based on a minute totting up of the give and take of daily domestic life, but rather should treat the claimant as a co-venturer, not as the hired help.
[8] The third area requiring clarification relates to mutual benefit conferral. Many domestic relationships involve the mutual conferral of benefits, in the sense that each contributes in various ways to the welfare of the other. The question is how and at what point in the unjust enrichment analysis should this mutual conferral of benefits be taken into account? For reasons I will develop below, this issue should, with a small exception, be addressed at the defence and remedy stage.
[9] Fourth, there is the question of what role the parties’ reasonable or legitimate expectations play in the unjust enrichment analysis. My view is that they have a limited role, and must be considered in relation to whether there is a juristic reason for the enrichment.
[10] Finally, there is the issue of the appropriate date for the commencement of spousal support. In my respectful view, the Court of Appeal erred in setting aside the trial judge’s selection of the date of application in the circumstances of the Kerr appeal.
[11] I will first address the law of resulting trusts as it applies to the breakdown of a marriage-like relationship. Next, I will turn to the law of unjust enrichment in this context. Finally, I will address the specific issues raised in the two appeals.
II. Resulting Trusts
[12] The resulting trust played an important role in the early years of the Court’s jurisprudence relating to property rights following the breakdown of intimate personal relationships. This is not surprising; it had been settled law since at least 1788 in England (and likely long before) that the trust of a legal estate, whether in the names of the purchaser or others, “results” to the person who advances the purchase money: Dyer v. Dyer (1788), 2 Cox Eq. Cas. 92, 30 E.R. 42, at p. 43. The resulting trust, therefore, seemed a promising vehicle to address claims that one party’s contribution to the acquisition of property was not reflected in the legal title.
[13] The resulting trust jurisprudence in domestic property cases developed into what has been called “a purely Canadian invention”, the “common intention” resulting trust: A. H. Oosterhoff, et al., Oosterhoff on Trusts: Text, Commentary and Materials (7th ed. 2009), at p. 642. While this vehicle has largely been eclipsed by the law of unjust enrichment since the decision of the Court in Pettkus v. Becker, [1980] 2 S.C.R. 834, claims based on the “common intention” resulting trust continue to be advanced. In the Kerr appeal, for example, the trial judge justified the imposition of a resulting trust, in part, on the basis that the parties had a common intention that Mr. Baranow would hold title to the property by way of a resulting trust for Ms. Kerr. The Court of Appeal, while reversing the trial judge’s finding of fact on this point, implicitly accepted the ongoing vitality of the common intention resulting trust.
[14] However promising this common intention resulting trust approach looked at the beginning, doctrinal and practical problems soon became apparent and have been the subject of comment by the Court and scholars: see, e.g., Pettkus, at pp. 842-43; Oosterhoff, at pp. 641-47; D. W. M. Waters, M. R. Gillen and L. D. Smith, eds., Waters’ Law of Trusts in Canada (3rd ed. 2005) (“Waters’”), at pp. 430-35; J. Mee, The Property Rights of Cohabitees: An Analysis of Equity’s Response in Five Common Law Jurisdictions (1999), at pp. 39-43; T. G. Youdan, “Resulting and Constructive Trusts”, in Special Lectures of the Law Society of Upper Canada 1993 — Family Law: Roles, Fairness and Equality (1994), 169, at pp. 172-74.
[15] In this Court, since Pettkus, the common intention resulting trust remains intact but unused. While traditional resulting trust principles may well have a role to play in the resolution of property disputes between unmarried domestic partners, the time has come to acknowledge that there is no continuing role for the common intention resulting trust. To explain why, I must first put the question in the context of some basic principles about resulting trusts.
[16] That task is not as easy as it should be; there is not much one can say about resulting trusts without a well-grounded fear of contradiction. There is debate about how they should be classified and how they arise, let alone about many of the finer points: see, e.g., Rathwell v. Rathwell, [1978] 2 S.C.R. 436, at pp. 449-50; Waters’, at pp. 19-22; P. H. Pettit, Equity and the Law of Trusts (11th ed. 2009), at p. 67. However, it is widely accepted that the underlying notion of the resulting trust is that it is imposed “to return property to the person who gave it and is entitled to it beneficially, from someone else who has title to it. Thus, the beneficial interest ‘results’ (jumps back) to the true owner”: Oosterhoff, at p. 25. There is also widespread agreement that, traditionally, resulting trusts arose where there had been a gratuitous transfer or where the purposes set out by an express or implied trust failed to exhaust the trust property: Waters’, at p. 21.
[17] Resulting trusts arising from gratuitous transfers are the ones relevant to domestic situations. The traditional view was they arose in two types of situations: the gratuitous transfer of property from one partner to the other, and the joint contribution by two partners to the acquisition of property, title t