Difference between revisions of "Property and Debt in Family Law Matters"

==non-spouses==

Unmarried Couples and the Division of Assets

Where a couple are both on the title of an asset, whether the family home, a car or a bank account, they are each assumed to have an equal interest in the asset. When one party refuses to give the other his or her share of that asset, it is open to that person to make a claim under the principles of equity for either:

the sale of the asset and the division of the proceeds of the sale; or,

a payment in compensation for his or her interest in the asset.

This sort of claim can be handled by either the Supreme Court or the Provincial (Small Claims) Court, although Provincial Court has a limit on the value of the claim it can handle.

Where real property is jointly owned, it is possible to make a claim under the provincial Partition of Property Act. Section 2 of this act says that:

(1) All joint tenants, tenants in common, coparceners, mortgagees or other creditors who have liens on, and all parties interested in any land may be compelled to partition or sell the land, or a part of it as provided in this Act.

(2) Subsection (1) applies whether the estate is legal or equitable or equitable only.

This act allows a co-owner, including someone with only an equitable interest in the property, potentially including an interest under the law of trusts as discussed below, to apply for an order that the property be sold and the proceeds of the sale divided.

B. Individually Owned Assets

The Provincial Court does not have the jurisdiction to hear claims based on the law of trusts. Claims like this must be made in the Supreme Court.

The essential point of a trust claim is that the non-owning party has, or should be considered to have, a stake in property owned by the other party. The non-owning party's interest in that property is said to be held "in trust" for the non-owning party by the person who owns the property on paper. The non-owning party is the beneficiary of that trust and should be entitled to receive compensation for his or her interest in the property under the trust.

a constructive trust;

an express trust; and,

a resulting trust.

Put simply, a resulting trust arises when the conduct of the parties gives rise to or implies the trust relationship; an express trust is a trust relationship that people intentionally enter into; and, a constructive trust is imposed by the court where one party has gratuitously contributed to an asset and suffered a loss to the direct benefit of the other party. Resulting and constructive trusts are discussed in more detail below.

Needless to say, trust law can be complex. If you find yourself in a situation where your only claim to an asset or a share of an asset is through trust law, it is recommended that you hire a lawyer to handle your claim.

one party loans or gives money to the other party to allow in or her to buy an asset, and the person buying the asset owns the asset in his or her name alone; or,

one party transfers property to another without payment.

In each case, the person who transfers the money or asset to the other party is said to retain an interest (called a "beneficial interest") in the property, even though the property is held by the other party in his or her name alone. In an action for the division of property based on a resulting trust, the Claimant seeks compensation for his or her beneficial interest in the property owned by the Respondent. The Respondent, on the other hand, can rebut the Claimant's claim by showing that the Claimant transfered the money or the asset as a gift. If the Respondent can show that the Claimant made a gift, the Claimant's claim will likely be defeated.

D. Constructive Trusts

This form of trust is the more common trust claim in family law. It is called a "constructive" trust because the Claimant is asking the court to create or impose a trust on the Respondent. According to the Supreme Court of Canada's decision in the 1980 case of Pettkus v. Becker, the seminal case on constructive trusts, three facts must be proven for a constructive trust claim to succeed:

that there is no legal reason for the Respondent enrichment.

"Enrichment" means to have received a benefit or advantage, such as money or the benefit of unpaid labour. "Deprivation" means to have lost the value which might have been otherwise received for the benefit or advantage, such as the loss of the money or the wages which might have been paid for labour. The deprivation must "correspond" to the enrichment, in the sense that the Claimant was deprived of exactly the thing which the Respondent benefitted from. (Technically, if you can establish a deprivation with a corresponding benefit, you have established the Respondent's "unjust enrichment;" a constructive trust is the remedy imposed to cure an unjust enrichment.)

There is one other case from the Supreme Court of Canada which is critical in understanding constructive trusts, a 1993 case called Peter v. Beblow. To get a proper understanding of the law relating to constructive trusts, you should read both Pettkus v. Becker and Peter v. Beblow. These decisions are available online from the court's website, a link to which is provided in the section Resources & Links.

The following is an example of a typical situation in which a constructive trust could be found to try and explain this complex area of the law a little more plainly. Note that the circumstances in which courts have found there to be a constructive trust are fairly broad; this is just one example of a situation which might lead to a successful claim.

In this example, Partner B was "unjustly enriched" by A's labour in the home and her contribution to the web design company, as he didn't have to hire an office administrator or a housekeeper. Partner A, on the other hand, lost out on ten year's worth of wages as an office administrator, and ten year's worth of wages as a housekeeper. Partner B was enriched by exactly the thing A was deprived of: her labour, and the financial value and benefit of her labour.

In the example above, a concrete value can be attached to Partner A's contributions to the company and to her labour in the home: what would it have cost to hire a housekeeper and a bookkeeper for four years; or, how much did B's company grow in value as a result of A's efforts? This is the beginning of fixing a dollar value on Partner A's interest in the company and in Partner B's house. Note that the amount the courts typically award to unmarried persons, in cases where a trust relationship is found, is usually a lot less than 50% precisely because of this mathematical calculation of enrichment and deprivation.

 

Note also that the fact that a relationship was short may not prevent a decision that a party was unjustly enriched, particularly if the Claimant's contribution was substantial. In longer relationships, say more than six years or so, the courts have often awarded trusts equivalent to half the value of the assets, although there are exceptions where the awards have been both much lower and much higher.