Family Law: Unjust Enrichment, Joint Family Ventures, and the Foundations of Parenting Law

Shift in Remedies: Unjust Enrichment to the Joint Family Venture

• Historically, remedies for property division in common law relationships were siloed between damages and constructive trusts based on specific valuations.
• The "siloed approach" to remedies has been rejected. Courts can now use either "value received" ($VMC$ - value maintained/contributed) or "value survived" for either damages or a constructive trust.
• The court showed a strong preference for the "value survived" approach because "value received" often treats a domestic partner like "hired help," involving demeaning calculations such as the market cost of a "husband birth."
• The concept of "teamwork" underlies the typical $50/50$ division of assets for married couples. This recognizes that both parties put in proportionately equal efforts toward the family, even if their roles (domestic vs. financial) differ.

Case Study: Kerr v. Baranow ($2011$ SCC)

• Relationship Duration: This case involved a $26$-year common law relationship.
• Background: Both parties were in their $40s$ at the start of the relationship; it was the second significant relationship for both. Both worked at the Port of Vancouver. Kerr was a secretary, and Baranow was a longshoreman.
• Financial Dynamic: Baranow was consistently better off financially. Kerr entered the relationship following a bitter and financially devastating divorce.
• The Wall Street Property: Baranow rescued Kerr's home from foreclosure early in the relationship. He bought it, sold it at a loss, used the proceeds to demolish a property he owned on Wall Street in Vancouver, and built what became their family home.
• Contributions:
  • Kerr's Contributions: Done some decorating and landscaping, picked out and paid for some furniture, paid for utilities and insurance, paid for half of the groceries, and performed almost all housekeeping and cooking.
  • Baranow's Contributions: Paid the mortgage, property taxes, and major upkeep; provided rescue of previous asset.
• The Turning Point: After $10$ years, Kerr suffered a massive stroke, leaving her with significant disabilities. Baranow acted as her primary caregiver until he could no longer keep her at home. He placed her in a nursing home, believing the relationship would continue. Kerr felt betrayed and commenced litigation to end the relationship.
• Asset Distribution at Separation:
  • The Wall Street Property ($1,000,000$ value) was in Baranow's name alone.
  • Baranow held $500,000$ in savings and $250,000$ in RRSPs.
  • Kerr held $100,000$ in savings, a vehicle worth $20,000$, and $171,000$ in RRSPs.
• Judicial History:
  • Trial Judge: Found unjust enrichment and awarded Kerr a $1/3$ interest in the Wall Street property.
  • Court of Appeal: Overturned the award, giving Kerr nothing.
  • Supreme Court of Canada: Remanded the case. At retrial, a "joint family venture" was found, and Kerr was awarded a $25\%$ interest in the Wall Street property, valued as of $2007$.

Case Study: Vanasse v. Seguin ($2011$ SCC)

• Background: The couple began cohabitating in their late $20s$ with modest assets. Vanasse was an intelligence officer; Seguin incorporated a software company called "Fastlane."
• Integration: Finances were initially separate. Integration occurred when they started a family and moved to Halifax for Seguin’s business. Vanasse left her job to become a full-time parent (described as the "CEO of the kids"), while Seguin worked long hours as the CEO of the business.
• Wealth Accumulation: "Fastlane" was sold for $100,000,000$. Seguin's personal share was $11,000,000$. He retired afterward, claiming they were "set for life."
• Separation ($2005$): Seguin's net worth was $8,500,000$ with investment income of several hundred thousand dollars per year. Vanasse had a net worth of $330,000$ with no current income.
• Judicial Outcome:
  • Trial: The judge divided the relationship into periods, finding unjust enrichment only in the middle period (Halifax). He awarded $1,200,000$ (roughly $14\%$ of the total assets) to Vanasse using a "value survived" approach smoothed over the relationship length.
  • Court of Appeal: Overturned, suggesting a "value received" approach and remanding the matter.
  • Supreme Court of Canada: Confirmed the existence of a joint family venture and found the trial judge's award of $1,200,000$ to be a reasonable outcome.

The Joint Family Venture (JFV) Doctrine

• Definition: A new concept of unjust enrichment occurring when joint efforts by parties lead to a joint accumulation of wealth, but upon separation, one party is left with a disproportionate share.
• No Presumption: Unlike marriage, a JFV is not presumed. Mere cohabitation, length of relationship, or the existence of children do not automatically create a JFV; it must be proven with evidence.
• Shift in Proof: Instead of an "asset-by-asset" analysis (proving contribution to every specific house or account), a JFV allows the court to look at all assets together as a accumulated pool of wealth.
• Remedies: Remedies are flexible. Courts can use damages (monetary) or a constructive trust. Damages are preferred for small entitlements; constructive trusts are for when damages are inadequate.

Functional Factors for Assessing a Joint Family Venture

• Mutual Effort: Working toward common goals. Indicators include pooling labor, coordinating roles (e.g., one earner, one home manager), and using "family funds" for "family purposes."
• Economic Integration: The degree to which financial lives are intertwined. Indicators include joint bank accounts, joint property ownership, shared savings, and shared responsibility for bills. A high degree of expense tracking and reimbursement suggests low integration.
• Actual Intention: This is a subjective test (not a reasonable person test). Did the parties intend to share wealth? Indicators include referring to themselves as a union or equivalent to marriage, providing for each other in wills, or making shared long-term plans (e.g., "we are set for life").
• Priority of the Family: Sacrifices made for the unit. Indicators include leaving the workforce, relocating for a partner's career, or "underemployment" (choosing a flexible job with lower pay to manage childcare).

Mutual Conferral of Benefits and Remedial Flexibility

• The Problem: Previously, if both parties benefited each other, courts often ruled there was no unjust enrichment (the benefits "canceled out").
• The Fix: The SCC ruled that "mutual conferral of benefits" should not be considered when determining if unjust enrichment exists. Instead, it is considered at the remedy stage to quantify the proportionate share of assets.
• Proportionate Sharing: The remedy is not an automatic $50/50$ split. It is a "proportionate sharing" based on the evidence of contributions. Statistics show that post-Kerr, $80\%$ of cases with children and long-term stability find a JFV, with $60\%$ of those resulting in an equal division of assets.

Legislative Responses and Registered Domestic Partnerships in Nova Scotia

• Walsh v. Bona Response: In response to the SCC ruling that excluding common law couples from the Matrimonial Property Act (MPA) was constitutional, Nova Scotia created the "Registered Domestic Partnership" (RDP).
• Mechanism: Under the Vital Statistics Act, common law couples can "opt-in" to the same rights as married spouses. If registered, the MPA is triggered immediately with no minimum cohabitation period.
• Statistics: Low adoption rate; only $40$ to $50$ couples register per year, compared to $4,200$ marriages in Nova Scotia. Factors for low uptake include difficult conversations about relationship breakdown and general lack of public awareness.
• Termination: RDPs end via a joint statement, living apart for $1$ year, marriage, or a registered separation agreement.

Proposed Reforms to the Matrimonial Property Act (MPA)

• The Law Reform Commission has proposed several changes to the MPA:
  • Including common law partners after $2$ years of continuous cohabitation.
  • Presumptively excluding pre-cohabitation assets and debts.
  • Removing the exclusion for business assets.
  • Creating a presumption of full division for matrimonial debt.
• Public Education: The commission emphasizes the need for public legal education so couples can make informed decisions about how they organize their lives and the legal implications of those choices.

Introduction to Parenting Law

• Legislation:
  • Divorce Act: Applies to married couples seeking a divorce.
  • Parenting and Support Act (PSA): Applies to non-married couples or married couples not seeking a divorce.
• Order of Operations: Parenting arrangements are decided first in family law proceedings. This is because parenting status (e.g., primary care) influences property division (who gets the house) and child support, which then affects spousal support.
• Terminology Shift:
  • Old: "Custody" (legal authority) and "Access" (time spent by non-custodial parent).
  • New: "Decision-making responsibility" and "Parenting time."
• Legal Standard: Parenting is governed by Standards and Factors, not rigid rules. The central principle is the "Best Interest of the Child."

Philosophical and Practical Implications of Parenting Litigation

• The "Nuclear Weapon": Parenting litigation can be the "poison in the well," ruining the ability of former partners to cooperate. Evidence often focuses on the faults of the other parent.
• Individualized Solutions: Because every child and family is different, courts avoid presumptions. This leads to "bespoke" solutions but also creates uncertainty and higher costs.
• Incentive to Settle: $90\%$ to $95\%$ of cases settle outside of court. Uncertainty regarding a judge's decision acts as an incentive for parents to maintain control over their schedules (e.g., specific holiday traditions).
• Historical Evolution:
  • 19th Century: Father as natural guardian.
  • Early 20th Century: "Tender Years Doctrine"—young children stayed with the mother unless she was "unfit" (e.g., adultery).
  • Current: Move toward shared parenting (joint decision-making and near-equal time).

Questions & Discussion

• Question on Tiers of Relationships: A student asked if legislation distinguishes between common law lengths (e.g., $2$ years vs. $26$ years). The instructor noted that once defined as common law, they are typically treated under one category, but section $13$ of the MPA (unequal sharing) provides a "safety hatch" where courts can deviate from equal division if a short-term relationship makes it "unfair or unconscionable."
• Discussion on Economic Safety: The class discussed how people often stay in unhealthy relationships because they cannot afford the "financial consequences of disentangling lives," such as the cost of maintaining two households.
• Practical Strategy for Common Law Partners:
  • To Protect Assets: Use cohabitation agreements, keep finances strictly separate, avoid joint asset ownership, and avoid underemployment/leaving the workforce.
  • To Seek Security: Marry, enter an RDP, or own assets jointly.
• Discussion on Logistics: The instructor and students discussed the high cost of litigation ($50,000$ for a relocation case) and upcoming weather events (snow day predictions from snowdaypredictor.com showing a $90\%$ chance), affecting class schedules and study habits.