Common Law: Increase in Value of Property During Common-Law Period
In Alberta, common law couples are legally referred to as adult interdependent partners and prior to 2020 there was no legislation to govern the division of common law property. However, in 2020 the Family Law Act was amended and the Matrimonial Property Act was renamed to the Family Property Act. The new Family Property Act extends extends to adult interdependent partners. As such, if parties are found to be adult interdependent partners then there is the assumption of a 50/50 division of property upon the breakdown of the relationship.
Our family law lawyers explain the logistics below on dealing with a value increase of property for common law partners in Calgary.
Unjust Enrichment Claim
To prove an unjust enrichment, the Applicant must show:
- A benefit or enrichment on the Respondent;
- that the claimant suffered a corresponding loss or financial disadvantage due to the breakdown of the relationship; and
- That there is no juristic or legal reason to justify the financial gain.
To determine whether or not there is a juristic reason, the Court will do a 2-stage analysis.
- First, the onus is on the Plaintiff to show that no juristic reason is recognized. If the Plaintiff meets this onus, then the onus shifts;
- Defendant must show that there is a just reason arising from all the circumstances of the transaction and why he/she should retain the benefit.
In the second stage, the Court considers the reasonable expectations of the parties and public policy considerations.
Monetary Damages
Where a Court finds that an unjust enrichment claim was made out, the Court will award monetary damages. If the Claimant proves that monetary damages are inappropriate or insufficient, then the Court may award proprietary damages by way of a constructive trust or a resulting trust.
A monetary award may be calculated based upon the value received, by way of a payment of fee-for-services rendered (quantum meruit) or if the Court finds that the property was a joint family venture (after considering mutual effort, economic integration, actual intent, and priority of family), then the Court will grant a remedy awarding a share of the assets based upon the proportionate contribution by the claimant.
Constructive Trust
Where the Court finds that there has been an unjust enrichment, the Court will generally award monetary damages. If the Court finds that it is not appropriate or sufficient, then proprietary damages may be reasonable. Proprietary damages are typically by way of a constructive trust.
To prove a trust is appropriate, the claimant must demonstrate a sufficiently substantial and direct link, a causal connection or a nexus, between the claimant’s contributions and the property’s acquisition, preservation, maintenance, or improvement of the property subject of trust.
Resulting Trust
This is not used as often, but remains law in Canada. A resulting trust is a trust of a legal estate, whether in the names of the purchaser or others that “results” to the person who advances the purchase money. The “common intention resulting trust” is no longer good law.
Frequently Asked Questions
Who gets the increase in value in our home after a common law separation?
If both common law spouses are on the title, the increase in home value is likely to be shared equally. If one spouse wants to keep the house, they will need to buy out the other spouse for half of the fair market value of the house, subject to any adjustments for exemptions. If only one common law spouse is on the title, the increase in value is likely still shareable in some fashion as family property, subject to any adjustments for exemptions.
How are assets divided in a common law relationship?
Common law couples that have separated after January 1, 2020 will move forward with an equal division of Family Property, subject to exemptions. Common law couples that separated prior to January 1, 2020 will need to explore whether or not a trust claim should be made for a property that was accumulated during the relationship.
Is a common law partner entitled to half?
If your separation occurred prior to the new Family Property Act coming into effect on January 1, 2020 a common-law partner will likely need to pursue a trust claim to seek a division of property. However, if your separation occurred after January 1, 2020 the new Family Property Act will apply to your separation, and there will be a presumption of equal sharing of property, subject to any exemptions.
Disclaimer: The content provided in the blog posts of Jones Divorce & Family Law is general information and should not be considered legal advice. Please contact a lawyer for legal advice tailored to your specific situation. All articles are current as of their original publication date.
