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June 20, 2011

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Law Times • June 20, 2011 An online resource 1.800.263.3269 Focus On FAMILY LAW SCC offers guidance on common law matters Pair of cases considers unjust enrichment claims between spouses BY ROBERT TODD Law Times T he Supreme Court of Canada has off ered lower court judges some crucial guidelines on the handling of certain property disputes between common law partners. Th e fi rst of the companion cases, Kerr v. Baranow, came to the top court from the Brit- ish Columbia Court of Appeal. It involved a couple in their late 60s that had split up af- ter a common law marriage of more than 25 years. Th e case saw Margaret Kerr claim sup- port and a share of property pursuant to resulting trust and unjust enrichment. Nelson Ba- ranow issued a counterclaim alleging Kerr was unjustly en- riched through his assistance after she suff ered a stroke. Th e trial judge awarded Kerr $315,000 — a third of the value of the home they shared — due to resulting trust and unjust en- richment. However, the appeal court set aside the property claims, determining that Kerr didn't make fi nancial contribu- tions to the acquisition or im- provement of the property. Th e Supreme Court, mean- while, allowed an appeal over the dismissal of Kerr's unjust enrichment allegations and or- dered a new trial. Th e companion case, Vanasse v. Seguin from the Ontario Court of Appeal, involved a couple that had split up after a 12-year common law rela- tionship. During the relation- ship, Michele Vanasse went on leave from her employ- ment and moved to Halifax while David Seguin pursued a business opportunity. Va- nasse later gave birth to their children and cared for them while Seguin travelled exten- sively until resigning from his CEO position. Th e family then returned to Ottawa and purchased a home in joint names. In 2000, Seguin re- ceived about $11 million for shares in the business and began helping out more with domestic duties. Th e trial judge ruled there were no grounds for unjust enrichment awards for the beginning and end of the couple's time living together but did fi nd Seguin was un- justly enriched over the period in which Vanasse gave birth. Accordingly, the trial judge ruled Vanasse was entitled to half of Seguin's wealth accu- mulated during that period. Th e appeal court, however, set aside that award and found valuation should be determined on the basis of a quantum mer- uit calculation, in which the value both parties received from the other was determined and set off . Th e Supreme Court restored the trial judge's order. MARMER PENNER INC. BUSINESS VALUATORS & LITIGATION ACCOUNTANTS BUSINESS VALUATION MATRIMONIAL & OTHER LITIGATION SUPPORT FORENSIC ACCOUNTING QUANTIFICATION OF DAMAGES SHAREHOLDER/PARTNERSHIP DISPUTES GOODWILL IMPAIRMENT TRANSFER PRICING 94 Cumberland Street, Suite 200 Toronto, Ontario M5R 1A3 Tel: (416) 961-5612 Fax: (416) 961-6158 2 Bloor Street West, Suite 2603 Toronto, Ontario M4W 3E2 Tel: (416) 961-5612 Fax: (416) 961-6158 Email our partners at: sranot@marmerpenner.com jdebresser@marmerpenner.com Email our partners at: sranot@marmerpenner.com jdebresser@marmerpenner.com of unjust enrichment," says Johnson. But he says the unani- mous decision from the top court authored by Justice Th omas Cromwell has cre- ated a remedy that's more ac- cessible to litigants and that provides more fl exibility. In addition, the decision staves off the necessity for courts to conduct an analysis of who did what over the course of the relationship. "Basically, what they're looking for now is what's de- scribed by justice Cromwell as a 'family joint venture,'" Johnson notes. Th ere are four diff erent Geoffrey Gomery fears a superficial interpretation of the cases that the court is looking for evidence of a joint family venture. John Johnson of Nelligan O'Brien Payne LLP in Ot- tawa, who represented Vanasse at the top court, says the ruling doesn't change the basic prin- ciple that common law spouses don't share property equally. "We're still left with the law aspects of the new test to determine whether there has been a family joint venture between the two parties. Th e court describes the fi rst part of the analysis as "mutual eff ort." "One set of factors concerns whether the parties worked collaboratively towards com- mon goals," Cromwell wrote. "Indicators such as the pool- ing of eff ort and teamwork, the decision to have and raise children together, and the length of the relationship may all point towards the extent, if any, to which the parties have formed a true partnership and jointly worked towards impor- tant mutual goals." Th e second consideration is "economic integration." "Th e more extensive the integration of the couple's fi - nances, economic interests, and economic well-being, the more likely it is that they should be considered as having been en- gaged in a joint family venture," the judge remarked. Th e third consideration is "actual intent." "Underpinning the law of unjust enrichment is an appro- priate concern for the autono- my of the parties, and this is a particularly important consid- eration in relation to domestic partnerships," wrote Cromwell. "While domestic partners might not marry for a host of reasons, one of them may be the delib- erate choice not to have their lives economically intertwined. 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