Property Division for Common Law Spouses
The property division rules for married spouses under the Ontario Family Law Act (“FLA”) do not apply to unmarried spouses. Instead, unmarried spouses must make a claim of unjust enrichment to pursue a property claim against their former spouse. There is some confusion on this issue because unmarried spouses may qualify as common law partners for other legal reasons, such as for federal income tax purposes if they have been living together continuously for one year. However, the same definition does not apply to cohabiting or common law spouses in family law matters.
Definition of “Spouse” Under the Family Law Act
Under Part I of the FLA, in order to be considered a “spouse” for the purposes of property division, spouses must be married. If spouses are not married, they do not qualify for the same property division rules. There are no provisions in the FLA that would allow common law spouses to bring claims for property against their former spouse. However, a “spouse” is defined differently in Part III of the FLA for the purposes of spousal support:
“spouse” means a spouse as defined in subsection 1(1), and in addition includes either of two persons who are not married to each other and have cohabited,
(a) continuously for a period of not less than three years, or
(b) in a relationship of some permanence, if they are the parents of a child as set out in section 4 of the Children’s Law Reform Act.
As a result of the above, cohabiting spouses cannot make a claim to equalize property in the same way as married spouses, but they may seek claims for spousal support if they have either been living together for three years or have a child together.
Property Claims for Common Law Spouses
Even though unmarried spouses cannot make property claims under the FLA, they may advance property claims through a claim for unjust enrichment. To successfully bring a claim for unjust enrichment, a spouse must establish:
- There has been an enrichment or benefit to the other spouse;
- There is a corresponding deprivation of the claimant spouse; and
- There is no juristic reason for the enrichment.
An example would be where two parties cohabit for five years and only one of them owns the home they are living in. If the spouse who does not own the home contributed money toward the purchase, it would be unjust if the owner were allowed to keep the total value of the home. In this case, the non-owner could advance a claim for unjust enrichment.
Monetary Awards and Constructive Trust Claims
If a claim for unjust enrichment is established, the court has several options to remedy the enrichment of one spouse. A court may order the payment of money. Alternatively, a court may impose a constructive trust and award the non-titled spouse an interest in the property. In most cases, the payment of money will suffice, and this is the first solution that a court will consider. In the case above, the court could award the return of money that was contributed by the non-titled spouse, with interest. If the payment of money does not fully address the enrichment, it is also possible to seek an order for a constructive trust. Rather than seeking the initial investment plus interest, the non-titled spouse may seek a proprietary interest in the property. To establish a proprietary interest in the home in the example above, the non-owner would need to demonstrate:
- a direct causal connection between their contributions and the acquisition, preservation, maintenance, or improvement of the disputed property; and
- that money would not suffice.
If the home has increased in value, and the non-titled spouse contributed significant funds to assist with purchasing and maintaining the home, it would be unjust for the owning spouse to keep the increase in value of the property without sharing any of it with their partner. If a constructive trust is determined to be the appropriate remedy, the non-titled spouse may be awarded a proprietary interest in the home.
It should be noted that even where a constructive trust is established, this must be based on the evidence presented and does not necessarily lead to the conclusion that there will be an equal interest in the property awarded. The level of contribution by the non-titled spouse must be determined, and the court will then determine the appropriate interest.
Joint Family Venture Claims
Seeking an interest in specific property due to financial or other contributions is not the only claim that common law spouses may bring against their former spouse. The provision of childcare and domestic services may also form the basis for a claim for unjust enrichment. [1]
With respect to spouses who cohabit in a marriage-like relationship where the spouses share assets, commingle finances, have children, and plan their future together, special considerations may apply. Courts have held that the law of unjust enrichment should recognize that there are common law spouses who are true partnerships and that the joint accumulation of wealth should be shared. [2] In those cases, there may be a finding of a “joint family venture.”
Cohabitation itself does not guarantee that a court will make a finding of a joint family venture. Courts will consider specific factors such as:
- a) whether wealth was accumulated through mutual effort;
b) whether there was economic integration during the relationship (joining of assets and accounts);
c) the actual intent of the spouses (i.e. whether they intended to form a partnership); and
d) the priority placed on the family.
Consider a long-term relationship of 30 years where the parties reside together but never marry. In this situation, if they join their efforts to earn income, acquire assets together and comingle funds, have children, and plan for their retirement, the relationship may appear to be a true partnership. If the assets happen to be in one spouse’s name, the non-owning spouse may seek a claim based on a joint family venture, as well as a division of those assets.
However, even in seemingly clear examples such as this one, there is no automatic equal division of assets. This is how married and non-married spouses differ: there is no presumption at the date of separation that non-married spouses should share equally in any assets acquired over the course of the relationship. It is possible for common law spouses to successfully claim a half interest in accumulated property in an appropriate case, but this is not a guaranteed outcome. The court would have to carefully consider the contributions of each spouse and the specifics of the relationship to determine an appropriate award.
Cohabitation Agreements and Property Rights
Because common law spouses do not have a predetermined set of rules for the division of property, cases involving common law spouses without cohabitation agreements in place may potentially be more expensive to litigate and may involve less certain outcomes.
It may seem discriminatory for spouses to be treated differently with respect to property division due to their marital status. The Supreme Court of Canada has held that although the exclusion of common law spouses from a province’s property division regime for married spouses is discriminatory, it does not offend the Canadian Charter of Rights and Freedoms.
As a result, and unless there is a change in Ontario legislation, if spouses do not marry, they will not have the ability to seek claims for the division of property in the same way that married spouses do.
A cohabitation agreement can assist in avoiding the pitfalls and uncertainty of property division in the event of separation. Common law spouses may choose how they wish to structure the division of their assets in the event of separation.
Conclusion
Although common law spouses do not enjoy the same rights to bring property claims as married spouses under the FLA, there are claims that may be brought to seek the division of property, as well as claims for child and spousal support.
Spouses who intend to cohabit and not marry should carefully consider entering into a cohabitation agreement to determine how assets will be divided in the event of separation.
