Have you ever heard of the terms ‘constructive trust’ or ‘unjust enrichment’? These legal terms may sound complicated, but they are important concepts if you are separating from your common-law (unmarried) partner. In common law relationships, you don’t automatically share in the growth of your partner’s wealth like you do when you’re married in Ontario. Instead, you have to claim that it’s only fair that you get some compensation. You can do this by claiming that a constructive trust exists or that your partner would be unfairly enriched if you’re not compensated.
A constructive trust is a way to make things fair when one person has gained something of value while the other person has lost something of value. In these cases, the court may order the person who has been enriched to give up the benefit they received or at least share it with the other partner.
For example, if a common-law partner has all the assets in their name and their partner helped them acquire the assets, they may have a claim. Maybe they contributed money to it but didn’t put the asset in their name. Maybe they supported their partner by providing care for their children so that their partner could build wealth. Maybe they invested in the asset with their own labor. One challenge is to prove that you helped acquire the asset and another is determining how much you should be compensated. .
Unjust enrichment is similar to constructive trust. It’s a legal claim used when one person has been unfairly enriched at the expense of another. The court may order the person who has been enriched to pay back the value of the benefit they received, or some of it.
So, how is the value of a constructive trust or unjust enrichment claim determined? This can be a difficult question to answer. In some cases, the court may use expert evidence to determine the value of the received benefit. In other cases, the court may look at the circumstances of the couple to determine what seems fair.
For example, in the case of Tomek v. Zabukovec, the court used the cost approach to determine the value of the claim. This means that the court looked at the cost of the land and the improvements that were made to it, to determine the value of the claim.
In other cases, such as Webb v Laforme, the court estimated the value of the claim based on each person’s contribution to the asset. What did each person contribute in sweat equity?
In Steele v. Doucet, the parties worked together on the renovation designs, obtained quotes, and commenced the renovations in phases. The court found that the overwhelming majority of the renovation work was done by Ms. Doucet’s father and his workers. Mr. Steele’s work contribution to the renovations was limited to tearing out, cleaning, and other minor work. Absent evidence from an expert, it was impossible to tell the extent to which Mr. Steele’s own efforts in the renovation work contributed to increasing the value of the property. No expert evidence was called so this claim failed. If an expert had testified as to range of value contributed by Mr. Steele, his claim may have succeeded.
In Karistinos v Karistinos, the respondent claimed he should be entitled to a credit for the labour he personally supplied concerning the installation of wood flooring and kitchen cabinets and miscellaneous related work at the property. The respondent valued this work at $8,433.38. However, the court did not credit the respondent with any amount for so-called “sweat equity”. The evidence consisted of a valuation made by the respondent based on consulting the websites of the Ontario Contractors Association and Home Depot. The court found that something more than an internet search by the respondent was necessary to prove this claim. For example, an estimate from an independent contractor could have been obtained at little cost. The court refused to consider this claim on the sole basis of the respondent’s own estimate of value.
In conclusion, constructive trust claims and unjust enrichment claims are important legal concepts that are used to ensure fairness in legal cases. The value of these claims can be difficult to determine, but the court will use various methods to ensure a fair outcome. This blog is based on the law in Ontario at this time. It may not be the same in other places.
If you feel you have a claim or your partner may be seeking a claim against you, don’t attempt to represent yourself. This area of the law is complicated. You need to put forward your best case. At Galbraith Family Law, we will be with you every step of the way. We can help.
