The number of couples choosing to live together outside the bonds of matrimony is steadily increasing. Many of the benefits and legal protections afforded to married couples are now being extended to couples living common law. One of the main exceptions to this rule however, is in the case of the relationship ending.
When a marriage breaks down, there are a number of laws, including the Divorce Act and the Family Law Act, that govern the dissolution. The same cannot be said for the demise of a common law relationship. This difference has been most keenly felt when it comes to dividing property accumulated during the relationship. Following the breakdown of a marriage, the spouse whose net family property is the lesser of the two, is entitled to onehalf the difference between them. (A person’s net family property is the value, at the date of separation, of all property he or she acquired during the marriage less debts, liabilities, the value of property owned prior to the marriage, gifts from third parties and inheritances.) This concept of net family property does not apply to unmarried couples.
Instead, the common law spouse seeking a fair share of the property has to go to court and argue that the other party has been unjustly enriched, an uphill battle to be sure. Two recent unanimous rulings by the Supreme Court of Canada have now made it easier for common law spouses to get a more equitable division of property. A common law spouse must still base his/ her argument on the legal concept of unjust enrichment, however, the high court has set out a number of factors that provide for a new way of looking at property division. To successfully argue in favour of unjust enrichment generally, a person needs to show that the other party was enriched and that it was at the expense of the claimant. In the family law context, a common law spouse had to show a specific link between his/her contribution, either through money or some form of services, and the specific asset to be shared.
As a result of the Supreme Court’s recent ruling, if a party can show that the common law couple functioned as a “family joint venture” the relationship will fall within this new way of looking at property division. The Court set out four non-exhaustive criteria for determining whether a couple functioned as a family joint venture.
While this ruling makes things easier for common law couples in the event their relationship breaks down, it is certainly not a magic formula for dividing property. Each case will still be based on its own set of circumstances. If a couple chooses not to marry they need to consider a cohabitation agreement.
Contact our experienced family law team to discuss your situation.Share