Constructive Trust Claims and “Joint Family Venture”

By Cindy Lee of Kirk Montoute LLP posted in Family Law on Tuesday, September 10, 2013.

Common law spouses cannot rely on the same presumption of equal interest property rights afforded to married couples under the Matrimonial Property Act. If you are in a common-law relationship, any right you may have to your partner’s property is not presumed. Instead, a common-law spouse must to prove that he or she made contributions to their partner’s assets and satisfy the test for “unjust enrichment”. A spouse who makes a claim for unjust enrichment must prove:

1. his or her partner was enriched by the claimant’s contributions;

2. he or she was deprived by making that contribution;

3. there is no reason in law (e.g., a Cohabitation Agreement where the parties set out their entitlement to property in a contract) for their spouse to keep the benefit conferred on them.

If this test is met a “constructive trust” has been created and the claimant spouse will be compensated for his or her contributions to their partner’s assets. Cash, labour or provision of domestic services are three forms of contribution often found by the courts to result in establishment of a constructive trust.

The Supreme Court of Canada decision of Kerr v. Baranow, further expanded constructive trust law and introduced the concept of a “joint family venture”. Unmarried couple who are considered to participate in a “joint family venture” may be awarded a remedy even if the traditional forms of contribution are not present.

For an unmarried couple to qualify as engaging in a joint family venture, the following four-part test must be satisfied:

1. Mutual effort – a claimant must show that the parties in the relationship were working collaboratively toward common goals.

2. Economic integration – the more extensive the integration of the couple’s finances, economic interests and economic well-being, the more likely the court will decide that they were operating as a joint family venture.

3. Actual intent – the court considers what the intentions of the parties were during the relationship. The intentions of the spouses may be express or implied.

4. Priority of the family – the court considers the extent that the couple prioritized their family when making decisions. For this part, whether the couple had children together and what roles each spouse has played in supporting the family becomes relevant.

Contact Kirk Montoute LLP for advice and representation if you have a potential claim or are faced with a claim for constructive trust and joint family venture.