By Benjamin Szalay-Anderson, Alberta Legal Coach
When a relationship ends, you might find yourself questioning whether you have a right to certain assets that the other person owns, whether theses assets were acquired before your relationship began or after it ended. This is where unjust enrichment comes into play.
Unjust enrichment can occur at any time, but it’s often seen when a relationship doesn’t fit neatly under the legislated rules set out in the Alberta Family Law Act or Family Property Act. This could be because the relationship is undefined – polyamorous relationships or common law couples who have been together for less than three years – or it could be because both parties contributed to the property either before living together or after the relationship ended. It can also occur when one person unfairly benefits at the other’s expense, like if you helped build a business without being paid, or if the other person takes financial benefits meant for your children.
This blog will walk you through the basics of unjust enrichment, offering clear examples and guidance to help you understand each step.
What Is Unjust Enrichment?
In Canada, equity is a broad legal concept that ensures fairness in our legal system. It helps courts make fair decisions, even when written laws don’t provide a clear answer.
Unjust enrichment falls under this concept of equity. It gives courts the power to transfer property or money from one person to another when it’s fair to do so. Simply put, unjust enrichment means that if you’ve significantly contributed to something but don’t legally own it, the court can step in to ensure you are compensated for your contributions.
When someone brings an unjust enrichment claim, the judge will look at the evidence and consider three things:
- Did the other person gain a benefit?
- Did you suffer a loss because of it?
- Is there a justified reason for things to stay the way they are?
If you can prove these three things, you will have met the legal test for unjust enrichment.
How To Prove Unjust Enrichment – An Example
Let’s use an example of unpaid household labour to further explain this.
Taylor and Jordyn were in a committed relationship, lived together for a time, and recently separating.
Before they started dating, Taylor purchased a rental property. The title of the property was listed in Taylor’s name alone, he is the sole owner.
When Taylor and Jordyn starting dating, before they moved in together, Jordyn helped Taylor with the rental property. She cleaned and maintained it, lined up new tenants, and set up showings. She also helped with the kitchen and bathroom renovation, ensuring everything looked nice and was up to code. Jordyn wasn’t paid for her contributions at the time. Later, when they moved in together, they shared the rental income, and they both saw it as supporting their relationship.
After the relationship ended, Taylor decided to sell the rental property and has no intention of sharing any portion of the sale proceeds with Jordyn.
In this situation, Jordyn might have a claim under the Family Property Act for the contributions she made to the rental property after she moved in with Taylor, if they were together long enough to qualify as a common law relationship. However, to be compensated for her contributions made before they lived together, or if their relationship was short, she would need to make a claim for unjust enrichment.
For Jordyn to prove she has a valid unjust enrichment claim, the courts will assess whether she meets the legal test:
- Did Taylor gain a benefit?
In our example, Taylor did gain a benefit from Jordyn’s work on the rental property in a number of ways. She cleaned and maintained it, improved the property through renovations, and handled administrative tasks like communicating with tenants and organizing showings. - Did Jordyn suffer a loss?
Jordyn’s work on the rental property wasn’t free. Courts generally assume that work done in a relationship isn’t a gift, unless there’s evidence to prove otherwise. The time and effort Jordyn put into the rental property is rightfully hers. However, she did receive some benefits in sharing the rental income while they were together. The court would need evidence to figure out how much effort Jordyn put into the property and how much she gained from it. - Is there any justification for the way things currently are?
During a relationship, things might be unequal. Couples manage their own affairs as they see fit, and the courts don’t usually interfere. But when the relationship ends, there’s no longer a reason for the imbalance, and an unjust enrichment claim can arise. Even after a breakup, there could be a reason for enrichment, like a contract or a gift. If that is the case, the other person would need to provide evidence to justify the enrichment.
How Is Unjust Enrichment Calculated?
There are three approaches the courts can take when calculating an unjust enrichment claim, and the approach taken depends on the facts of the case. Let’s use our example to explain clarify this:
Fee-for-service - Under a fee-for-service approach, the court will want to see evidence of the work Jordyn provided. They’ll consider the hours she spent maintaining and renovating the rental property.
Based on this, the court may decide she should have been paid a standard hourly rate for her work and award that amount. In cases involving a shared asset, like a family home where both parties are listed on the title, the other party might also claim they provided valuable labour, which could offset the amount awarded under this approach.
Constructive Trust – If Jordyn’s contributions significantly improved the rental property, the court might award her a constructive trust. A constructive trust means that the owner holds that property on your behalf. So, while Taylor would remain the legal owner of the rental property, he must ensure that Jordyn’s interest in the property is protected. When the rental is sold, Jordyn would then be entitled to receive a share of the value based on her contribution.
Joint Family Venture - In Kerr v Baranow, the Supreme Court of Canada introduced a new method for calculating unjust enrichment, recognizing that life is sometimes too complicated to fit neatly into the fee-for-service or constructive trust categories – especially in long-term relationships. This calculation is a bit more complicated, so let’s take a closer look at this approach.
What Is the Legal Test for a Joint Family Venture?
If an unjust enrichment claim doesn’t fit into the fee-for-service or constructive trust categories, the court will examine the nature of the relationship, how the parties lived their lives, and how they managed their finances. Essentially, the court is looking to see if the parties worked together as a partnership to create value for each other.
The courts consider four factors to determine whether a joint family venture existed:
- Mutual effort - Evidence that the parties worked together collaboratively toward common goals.
- Economic Integration - Evidence of how financially dependent the parties were on each other, such as joint bank accounts, shared expenses, and common savings or investments.
- Actual Intent - Evidence of the parties’ intentions, either explicitly stated or inferred based on their actions.
- Priority of the Family - Evidence of sacrifices made by either party for the benefit of the partnership or family unit, and the extent of those sacrifices.
In our example, Taylor and Jordyn worked together to make the rental property more valuable and intended to share in that value during their relationship. If Taylor were to keep all the proceeds from selling the property and the remaining income without sharing it with Jordyn, the court might find this to be unjust enrichment.
Is There a Time Limit to Bring an Unjust Enrichment Claim?
There’s a saying in law: “delay defeats equity.” This means that waiting too long to make a claim can hurt your chances.
Under the Family Property Act, you have a 2-year time limit to divide property, starting from the day of separation. For married couples, the cock starts ticking on the day one party files for divorce.
If you wait too long to bring up equitable claims like unjust enrichment, the courts may not be sympathetic. It is best to raise these claims early in the legal process. Speak to a lawyer or legal coach to understand your situation, whether you have a claim for unjust enrichment, and what the risks are if you delay.
Navigating unjust enrichment claims in Alberta can be complex and often requires the expertise of legal professionals to ensure you fully understand the law, gather the right evidence, and know how to proceed. At Coach My Case, our legal coaches include highly experienced family lawyers and paralegals, ready to help you manage your claim with confidence. Contact us today to book a free 20-minute consultation and make sure you’re putting your best foot forward in advancing your legal rights.
