Useful review of the principles of constructive trust and unjust enrichment provided in recent joint family venture decision
Epstein’s This Week in Family Law
By:Philip Epstein
Constructive Trust - Unjust Enrichment - Joint Family Venture
Thew v. Nichol, 2015 CarswellAlta 1633 (Alta. Q.B.) - S.J. Greckol J. This is a very useful contribution to the growing body of case law about constructive trust, unjust enrichment and joint family venture penned by Madam Justice S.J. Greckol of the Court of Queen’s Bench of Alberta.
The parties lived together for ten years. The relationship produced no children, but each had other children that lived with the couple. About a year after the parties began cohabiting, Mr. Nichol gave Ms. Thew a promissory ring which the trial judge found demonstrated his intention that the couple would live together as though they were married and build a future together. That, indeed, they did. Ms. Thew had a beauty salon franchise which ultimately grew into four locations after very hard work by Ms. Thew working in the salons and by Mr. Nichol helping with both construction and all financial aspects of running the business. They clearly pooled their resources and ran their household as though they were a married couple. Ms. Thew let Mr. Nichol run the finances and she was generally ignorant of how he took care of financial matters, and in particular, how he distributed dividends from their company.
They were able to acquire a property and fairly significant assets. However, by the end of the relationship, Mr. Nichol ended up considerably better off financially than Ms. Thew. She argued that there was patent unjust enrichment which should be measured by the difference in the assets each acquired during the course of the relationship. Ms. Thew valued that claim as $614,000, or as Justice Greckol put it, “an amount that would be akin to an equalization payment in a divorce context”.
Mr. Nichol seemed to accept that there was some unjust enrichment, but he would have limited it to one half of the current value of their home with some minor adjustment at an amount of $176,000.
Justice Greckol does a careful analysis of the law of constructive trust and unjust enrichment that has emanated since Kerr v. Baranow, 2011 CarswellBC 241 (S.C.C.). Accordingly, this is an extremely good refresher case about Kerr, and in particular, a very good précis of the important legal principles arising from Kerr. Thus, Justice Greckol covers enrichment and corresponding deprivation, absent juristic reason and remedy. More importantly for the reader, she discusses in some detail the jurisprudence after Kerr, and in particular, Rubin v. Gendemann, 93 R.F.L. (6th) 130 (Alta. Q.B.), Lemoine v. Griffith, 41 R.F.L. (7th) 114 (Alta. C.A.), Ibbotson v. Fung, 27 R.F.L. (7th) 280 (B.C. C.A.), Thomas v. Florkow, 2011 CarswellBC 1512 (B.C. S.C.), McKenzie v. Perestrelo, 43 R.F.L. (7th) 255 (B.C. C.A.), Wills v. Kennedy, 61 R.F.L. (7th) 1 (N.B. C.A.), Djekic v. Zai, 54 R.F.L. (7th) 1 (Ont. C.A.).
The trial judge had no difficulty in finding that, owing to Ms. Thew’s background in the beauty industry, she was able to obtain a franchise while her personal relationship with Mr. Nichol allowed him the opportunity to be involved in the franchise. Thus, Ms. Thew gave Mr. Nichol the benefit of her financial contributions to the franchise as well as her professional know-how, the benefit of her wages earned from the business and her contribution of labour to the housework and maintenance required to run those homes. Those financial and other benefits have enriched Mr. Nichol says Justice Greckol and there has been a corresponding deprivation to Ms. Thew.
That is:
Ms. Thew contributed her personal finances, her efforts, and her time to the two homes, to the family, and the chatters business during the relationship with Mr. Nichol. She was deprived of her contributions as he was correspondingly enriched by them.
The overall financial picture of Ms. Thew and Mr. Nichol shows that Mr. Nichol enjoyed a significant financial advantage over Ms. Thew at the conclusion of their relationship . . . that disproportionate share of the fruits of their labours is tangible and measurable by looking at the respective value of the assets that each owned at the commencement and conclusion of the relationship.
Justice Greckol finds no juristic reason to support a denial of the remedy that Ms. Thew seeks. The parties had reasonable expectations that they would benefit equally from the contributions made by each to their business, homes and their savings.
Justice Greckol finds that the parties were engaged in a joint family venture but that Mr. Nichol retained a disproportionate share of the assets which can be remedied by a payment of money from Mr. Nichol to Ms. Thew.
If there ever was a case of joint family venture this must be it, and Mr. Nichol would be hard-pressed to deny it. Thus, the Court found that Ms. Thew was entitled to an equal share of the value of the assets acquired during her cohabitation with Mr. Nichol and an equal share of any increase in value to the parties’ pre-existing property that has accrued during cohabitation together with interest. A specific amount has not been determined and it was reserved to the Court to deal with the implementation of this award.
As I said at the beginning, this is an extremely useful review of the principles of constructive trust and unjust enrichment.
It should be obvious to all concerned that if this case had taken place in British Columbia under the present statute the result would have been virtually identical because common law spouses would be treated the same as married spouses. These cases take an enormous amount of time, are very costly to the parties and are beginning to clog up the courts. It’s time for the remaining provinces who are offside on this issue to consider going down the British Columbia path or the Manitoba path and treating common law spouses as married spouses for the purposes of property division.