Law Times

Page 8 February 11, 2013 Law Times • Focus On Family Law/Trusts & Estates Joint family ventures New concept trickling through estates bar BY JuDY VAN RHIJN For Law Times T he Supreme Court of Canada coined a new term in the family law lexicon by introducing the concept of "joint family ventures" when considering an unjust enrichment claim in early 2011. Family lawyers have adopted the new approach for apportioning assets between unmarried couples as a powerful negotiation tool while estates lawyers are yet to fully incorporate the decision into their knowledge base. For untitled, unmarried spouses, the position remains unchanged and will stay that way until legislation echoes the decision. As a result, they still face with the necessity of litigation to obtain their rights. Through the joint decisions in Kerr v. Baranow and Vanasse v. Seguin, issued on Feb. 18, 201l, Supreme Court Justice Thomas Cromwell modernized the law with respect to unjust enrichment and thereby achieved a more dignified and equitable result for unmarried couples facing the dissolution of their relationship. He introduced the concept of the "joint family venture" as an economic partnership evidenced by mutual effort, economic integration, actual intent, and the priority of the family. A finding that such a venture exists opens the door to a claim for property division and spousal support. Steven Benmor of Benmor Family Law Group in Toronto recalls that for several decades, people entering a common law partnership were under the impression that if they were going to buy property together, they should do so in joint ownership or recognize that they were taking a chance if they split up. "There are couples who have been together for 20 years. They have kids and property and the white picket fence — the works. If everything was in one spouse's name, we would use trust law and equitable doctrines such as the doctrine of constructive trust and resulting trust found in common law. We would begin a lawsuit where we bore the onus of proving that a trust existed. Each case was very different, 'It brought to the forefront that these are real, valid, and important relationships and there should be remedies to the untitled party,' says Steven Benmor of Kerr. very fact-based. We would often settle on 50 cents on the dollar to avoid the cost of litigation." The last time the Supreme Court tackled the issue in 2002 in Nova Scotia (Attorney General) v. Walsh, it took the attitude that if people don't marry, they don't intend to do so. As such, they don't intend to engage their property rights. Benmor believes this wasn't an accurate depiction of many common Separation Agreements and Marriage Contract ative ollabor eement C Agr aration Sep Easy-to-use Comprehensive Based on current case law Regularly updated Ask us about our 30-Day FREE Trial! 1.800.653.0925 or 416.718.3461 ext: 407 | sales@divorcemate.com www.divorcemate.com Divorcemate_1/4_LT_Feb11_13.indd 1 www.lawtimesnews.com 9:36 AM 13-02-07 law relationships. "Sometimes only one person doesn't want to marry," he says. "It's not a mutual, joint decision. They are not choosing to not share property." As a result, Benmor believes Kerr represents a significant change to this attitude. "It brought to the forefront that these are real, valid, and important relationships and there should be remedies to the untitled party. It said that if you bought a house, it was a business decision as well as a family decision. For settlement purposes, you treat the relationship as an economic partnership." However, lawyers are wondering if this means anything without legislative backup. Benmor believes that from the perspective of the client, not much has changed. "The statute in Ontario does not grant property rights. Untitled common law spouses still have to pay a lawyer and do more work to accomplish their goal than a married person. But from the perspective of the lawyer, I now have something powerful to use. The decision says if you look like a couple and you act like a couple and appear as an economic unit, then you should be treated as one. This gives increased bargaining power to unmarried, untitled parties." It's where the parties can't settle that the lack of statutory rights comes to the fore. Says Benmor: "Then the parties must litigate because the guy who owns everything comes to court and says, 'I don't think it was a joint family venture. I did not offer to be her husband. Her contribution was less than mine. Don't strip me of my assets.'" Toronto estates lawyer Edward Olkovich believes legislation will be necessary to allow non-litigious outcomes to occur. While the family law bar is very familiar with the decision, it hasn't filtered down to many in the estates law bar even though it's just as vital for estate planning purposes. Olkovich worries that the misconception that an unmarried spouse has no property rights continues to prevail. "I explain it to clients who come in to make a will and to other lawyers. It frequently surprises me that the lawyers on the other side don't know of it or understand it." But Olkovich concedes that even an informed lawyer has many questions. "How does a joint family venture alter the position?" he asks. "How does it affect spousal support? How does it affect property rights? These concepts are foreign to people dealing with estate planning." A recent client consultation highlighted the uncertainty in the area. "The client wanted to leave nothing to the common law spouse and everything to the children from the first marriage, apparently with the common law spouse's consent," says Olkovich. "I pointed out that in three to five years from now, she might want the house and she'll have a right to go after the property if there is an allegation of a joint family venture. How do the children disprove that, and if he does leave her something, how do I know it's sufficient?" Olkovich agrees that the decision has given welcome guidance on how to approach these difficult cases. "Cases pre-Kerr would take five to six years. People would fight over who paid for the toothpaste and say, 'She lived in my house rent-free.' There's no way to do that sort of nickel-and-dime analysis fairly and equitably. The Supreme Court said to just recognize that if a common law spouse needs support, they get support." Olkovich believes there's an urgent need to incorporate the decision into mainstream estate planning. "We need more decisions like Kerr to make the government see the need to act," he says. Benmor agrees. "These have been problem cases for decades. They will continue to be problem cases until such time as there is legislation." LT

• Cover