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What is Unjust Enrichment and Why Is It Important?

By Michelle Volkmann, Vancouver Family Lawyer & Legal Coach

When a marriage or common law relationship ends, disputes about spousal support or property division are often issues that arise in a family law matter. In British Columbia, court applications for spousal support and property division are usually brought under the provisions of the BC Family Law Act. In addition, or as an alternative to the BC Family Law Act, a party may also make a claim for unjust enrichment as part of their application.

What is unjust enrichment?

Unjust enrichment is a legal term that refers to situations where one party has been unjustly enriched at the expense of another. In other words, it occurs when a person has received a benefit or enrichment from another person, without any valid legal reason, and as a result, the first person has become richer, while the other has become poorer.

An unjust enrichment claim within the context of a family law matter, may arise when one spouse in the relationship has benefited from the other spouse’s contributions, without providing any compensation or acknowledgment for the value of those contributions. 

Some examples include: 

  1. One spouse has built up a successful business during the relationship or advanced in their educational and career while the other spouse contributed to that success by providing them with financial support, assistance with their business operations, or being the primary caretaker of the children without advancing their own educations or career opportunities.
  2. One spouse has made contributions to the acquisition, preservation, or maintenance of property owned by the other, without receiving fair compensation for those contributions.

Who is eligible to make an unjust enrichment claim in a family law matter?

Upon the breakdown of a relationship, either party may bring a claim for unjust enrichment, regardless of whether they qualify as a “spouse” or not. Under the Family Law Act, only spouses may make a claim for spousal support and property division. Section 3 defines the term “spouse” as follows:

Spouses and relationships between spouses

(1) A person is a spouse for the purposes of this Act if the person
 (a) is married to another person, or
 (b) has lived with another person in a marriage-like relationship, and
  (i) has done so for a continuous period of at least 2 years, or
  (ii) except in Parts 5 [Property Division] and 6 [Pension Division], has a child with the other person.   

(2) A spouse includes a former spouse.

(3) A relationship between spouses begins on the earlier of the following:
 (a) the date on which they began to live together in a marriage-like relationship, or
 (b) the date of their marriage.

If a person is not considered a spouse under this section, they do not have an entitlement to spousal support and property division, but they may still have an unjust enrichment claim for compensation for contributions they made to their partner's career, assets, or finances, even if their relationship was short lived.

What are the limitation periods for bringing an unjust enrichment claim in a family law matter?

Another important aspect of unjust enrichment in a family law claim relates to limitation periods that exist under the Family Law Act for spousal support and property division claims:

Time limits
198    (1) Subject to this Act, a proceeding under this Act may be started at any time.
(2) A spouse may start a proceeding for an order under Part 5 [Property Division] to divide property or family debt, Part 6 [Pension Division] to divide a pension, or Part 7 [Child and Spousal Support] for spousal support, no later than 2 years after,
 (a) in the case of spouses who were married, the date
  (i) a judgment granting a divorce of the spouses is made, or
  (ii) an order is made declaring the marriage of the spouses to be a nullity, or
 (b) in the case of spouses who were living in a marriage-like relationship, the date the spouses separated.

Unjust enrichment claims are subject to a different limitation standard, known as the date of discovery. Upon the date of discovery, a claimant will usually have 2 years to bring an application for unjust enrichment.

The date of discovery in an unjust enrichment claim is typically the date that a spouse/partner knew or ought to have known about the unjust enrichment claim. For example, if a claimant made contributions to their partner's property or finances, but only discovered several years later that their partner had sold the property for a significant profit without sharing any of the proceeds with the claimant, the date of discovery for the unjust enrichment claim would be the date when the claimant first became aware of the sale and the lack of compensation.

It's important to note that the date of discovery can be a complex issue and may depend on the specific facts of each case. In some cases, the date of discovery may be earlier or later than the date of the actual event that gave rise to the unjust enrichment claim.

What is the test for establishing an unjust enrichment claim?

To successfully claim unjust enrichment in a family law matter, a claimant needs establish the following: 

  1. That the other party received a specific benefit
  2. That the benefit received by the other party was a result of efforts or work done by the claimant which deprived them
  3. That there was no legal reason for the benefit or enrichment of the other party. 

What factors are considered when determining unjust enrichment in family law?

In family law cases, the court will consider a range of factors when determining whether unjust enrichment has occurred, including the duration of the relationship, the nature of the contributions made by each spouse, and the value of those contributions. The court will also consider whether there was an expectation of compensation for those contributions, and whether the enriched party has been unjustly enriched to the detriment of the other party.

What are the potential remedies for an unjust enrichment claim?

Once a party has successfully proven their unjust enrichment claim, the next step is to determine the appropriate remedy. This can either be a monetary award (the value the other party received, or the value survived), or a proprietary award (a constructive trust). In Kerr v. Baranow, 2011 SCC 10, the Supreme Court of Canada provided a comprehensive analysis on these concepts, briefly discussed below:

Monetary Award

A monetary award is a payment made to the claimant as compensation for the unjust enrichment. The payment can be based on the value received or value survived, and it is not restricted to an award based on a “fee-for-services approach”. Value received refers to the value that one person has received from the other person's contributions, while value survived refers to the value that the other person has retained as a result of those contributions. The court will consider four factors when making a monetary award for unjust enrichment:

  1. Whether there was a joint family venture
  2. The mutual effort of the parties
  3. The economic integration of the parties
  4. The actual intent and priority of the family

Propriety Award

A proprietary award on the other hand can be made where the court finds that a monetary award is inappropriate or insufficient. Proprietary awards are made in the form of a constructive trust. A constructive trust is a broad and flexible equitable tool used to determine beneficial entitlement to property.

When a claimant in a family law dispute can demonstrate a causal connection between their contributions and the acquisition, preservation, maintenance or improvement of the disputed property, their entitlement or share of that property can be protected with a constructive trust.

When a family law claim for spousal support or property division is not available to a party under the Family Law Act, an unjust enrichment claim may be a more suitable alternative.
 
Therefore, if you were in a relationship and your work enriched the other person, you may have a claim to be compensated for your work, even if you were not spouses. However, unjust enrichment remains available in spousal situations as well, and is most commonly used when an unmarried spouse misses the limitation date to file a claim under the Family Law Act by not filing within two years of separation.
 
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