BC Common law couples in a marriage like relationships of greater than 2 years are treated the same as married couples for purposes of property division by our new BC Family Law Act. However, a claim for constructive trust and the joint family venture analysis are still powerful weapons that can be used to protect a party who has not yet lived together with their spouse for two years or to allow freezing of certain company assets pending trial. Our highly rated constructive trust family lawyers act across BC and in select cases in Calgary, Alberta. Call us toll free at 1 877 602 9900.
The effect of the law related to constructive trusts was recently clarified by our Supreme Court of Canada in Kerr v Baranow.
In Ibbotson v Fung , our Court of Appeal explored the issue of whether a joint family venture for unmarried couples can be restricted to a single asset when the parties kept all other assets separate. The BC Court of Appeal held it could and also explained how you measure the award in these cases taking into account the costs and benefits to each party.
The Court upheld an award in favour of the wife of 25 percent of the value of the property but on two different approaches:
[79] Turning to this appeal, Dr. Fung says it was not open to the trial judge to “disregard” the benefit received by Ms. Ibbotson through rent and mortgage free living for more than two decades. He argues the judge in turn did not consider the resulting benefit of her ability to spend what otherwise would have been money for rent or the mortgage on the Surrey Property. He was obliged to consider the mutual benefits and reduce her award accordingly. The failure to do so, Dr. Fung says, was an error.
[80] It is clear the trial judge was alive to the benefits Ms. Ibbotson received. At paras. 50–53, he considered the mutual benefits conferred:
[50] I disagree with the claimant, however, that these circumstances should give rise to a 50% proprietary interest, or a 50% interest after the deduction of the difference in the parties’ initial contributions. The respondent’s contribution to the initial purchase was far higher. Lindsay benefited from the fact they had no mortgage to pay.
[51] On the other hand, I reject the respondent’s assertion that the fact Lindsay was able to invest in less valuable real estate in Surrey, arose from this fact. The evidence of Lindsay, which I accept, is that she worked the equivalent of two or more jobs during this period. This was while Henry worked less than full time, 1 to 4 days a week, a pattern that continued throughout their cohabitation.
[52] While it is true that Lindsay has had the benefit of living in the home since separation, she has also had the day-to-day tasks of keeping an older home maintained on her own. The appraisal report in evidence states it to be in average condition. I note that Henry has lived elsewhere without paying rent, although this has nothing to do with Lindsay. But Lindsay caring for the home has also been of other benefit to Henry.
[53] Henry has been able to pursue business interests overseas without having to care for or secure the Property while its value grew. That business interest allows him to draw $5000 a month from a business in which he has an equity interest. During their period of conjugal life Henry experimented with skin creams, although this provided no income. He is now a partner in a business that manufactures creams although little information was forthcoming about such business.
[81] He concluded at para. 55 that the “equities” offset between the parties.
[82] In other words, the trial judge accepted that Ms. Ibbotson’s investment in the Surrey Property arose as a result of her diligence and efforts working two jobs, not through her enjoyment of free rent and no mortgage. But there is more to this analysis. The trial judge made a global assessment of the evidence, drawing on the fact that Ms. Ibbotson made contributions to the Property in terms of maintenance, while Dr. Fung was able to reap the benefits of not only the inflation, but her maintenance of the Property.
[83] When conducting the analysis of mutual benefit conferral, it is clear that a court is to make a general approximation based on the evidence of the “balance of equities” on both sides. In Kerr, Cromwell J. makes this point at para. 102:
Once the claimant has established his or her contribution to a joint family venture, and a link between that contribution and the accumulation of wealth, the respective contributions of the parties are taken into account in determining the claimant’s proportionate share. While determining the proportionate contributions of the parties is not an exact science, it generally does not call for a minute examination of the give and take of daily life. It calls, rather, for the reasoned exercise of judgment in light of all of the evidence. [Emphasis added.]
[84] I see no error of principle in the trial judge’s approximation of the proportionate contributions based on the evidence. The trial judge took into consideration Ms. Ibbotson’s free rent, but considered it in all the circumstances less important than her hard work. He also considered the considerable benefits that Dr. Fung received as a result of her stewardship of the Property. In the end, he found at para. 55 that the available evidence did not allow for an exact quantification of the “balance of equities”. I see no error inviting appellate intervention from the judge’s assessment of the evidence and I would not interfere with the trial judge’s assessment that the mutual benefits offset.
VI Conclusion and Disposition
[85] On my reading of Kerr, a joint family venture is capable of incorporating a single asset to the exclusion of others. The principles of unjust enrichment in family cases, the concept of a joint family venture and the convergence in the practical reality of monetary and proprietary remedies, point to this conclusion. The trial judge’s decision to only include the Property in the joint family venture in this case was not an error. His conclusion could have also been supported with resort to the traditional principles of remedial constructive trusts. Finally, the trial judge made no error that would require intervention from this Court in his analysis of the exchange of mutual benefits.
[86] I would dismiss the appeal.
Mr Justice Chiasson concurred in the result but on a different basis:
[102] The judge resolved the dispute in favour of a proprietary interest, stating at para. 49:
In these particular circumstances, in my opinion, a proprietary remedy is appropriate. As noted by the Court of Appeal in Wilson v. Fotsch, 2010 BCCA 226, a monetary award may be inadequate, where there is a “sufficiently substantial and direct” contribution to the acquisition, preservation, and maintenance or improvement of the property in which the trust is claimed (para. 46). Although Wilson predates Kerr, Kerr approves of this reasoning in Wilson. In my opinion this is just such a case.
[103] The judge recognized that, post-Kerr, the law of unjust enrichment remains the “primary vehicle” for addressing most common law division of property claims. The judge stated that the principles of unjust enrichment and the remedial constructive trust will provide a “comprehensive and principled” basis to resolve most claims. I agree.
[104] In the present case, the appellant conceded that he had been enriched unjustly. Relying on Wilson v. Fotsch, 2011 BCCA 226, 286 B.C.A.C. 276, the judge concluded that a proprietary interest was appropriate. In Kerr, at para. 50, the Court stated:
The Court has recognized that, in some cases, when a monetary award is inappropriate or insufficient, a proprietary remedy may be required. Pettkus is responsible for an important remedial feature of the Canadian law of unjust enrichment: the development of the remedial constructive trust. Imposed without reference to intention to create a trust, the constructive trust is a broad and flexible equitable tool used to determine beneficial entitlement to property (Pettkus, at pp. 843-44 and 847-48). 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, a share of the property proportionate to the unjust enrichment can be impressed with a constructive trust in his or her favour (Pettkus, at pp. 852-53; Sorochan, at p. 50). Pettkus made clear that these principles apply equally to unmarried cohabitants, since “[t]he equitable principle on which the remedy of constructive trust rests is broad and general; its purpose is to prevent unjust enrichment in whatever circumstances it occurs” (pp. 850-51).
[105] I am satisfied that the respondent is entitled to a constructive trust.
