How often have you heard someone in a relationship say, “It doesn't matter that we're not married — living together is the same thing”
Those people are likely right — until they separate.
Common law relationships in Canada are increasingly the norm: They have more than quadrupled in number between 1981 and 2011. And depending on where you live in Canada, your rights and obligations might well be different if you have not formally tied the knot.
Why Because under Canada's constitution, provinces have the right to legislate what happens to a spouse's property — and common-law spouses are not treated the same as married spouses in many provinces.
In Ontario, Alberta and New Brunswick, for example, unmarried spouses have no automatic right to share in their partner's property unless they hold title to property together. (Not so in B.C., though, where in 2011, the law changed and the same property rights were given to spouses who lived together in a “marriage-like relationship … for a continuous period of at least two years.”)
No “automatic” right to share your partner's property, however, does not mean “no” right. Equitable claims (ones not specifically set out in legislation) are often made against property owned by only the other spouse.
A recent case from the New Brunswick Court of Appeal, , provides a sharp reminder to common law couples about their limited rights to share accumulated property if their relationship breaks down.
The case involved a couple who had lived together for about 14 years but never married. Both were established in their careers when they met and were in their 50s when they separated. They had no children. They jointly owned a house on which the woman had put down the entire down payment. The man lost his job a few years before separation. Throughout the relationship, the woman did the vast majority of household tasks. The court proceeding was over how the woman's pension and the house proceeds would be divided.
As the man had no “automatic” right under the to share in the woman's pension, the trial judge analyzed the matter according to the equitable test of “unjust enrichment.”
First, the man had to prove he had provided a benefit to the woman by contributing money or labour to her property. He also had to prove he had given something up by making the contributions (for example, his money or his time). Finally, the Court had to find that there was no legal reason for the man to provide benefits to the woman (such as a tenancy or cohabitation agreement). Each part of the test had to be met before “unjust enrichment” could be found.
The trial judge decided that because the couple had shared expenses for the house after its initial purchase, the “most … equitable outcome” was the equal division of the sale proceeds from the home.
When it came to the pension, it was a different matter. The trial judge decided that there was not “anything tangible” that the man did to enable his spouse's work as a teacher, and that in fact, he was “more of a hindrance than a help.”
The man was left without a share of the woman's pension, unquestionably the parties' most valuable asset.
In a common law relationship, what contributions could the man have made that might have given him a share of the woman's pension
Usually the non-monetary contributions a spouse relies on to make an unjust enrichment claim is labour expended on household management, significant improvements to a home or to the parties' lifestyle. In , the court considered the labour each did.
The trial judge found that “… notwithstanding (the woman's) physical ailments and more regular and demanding work schedule, (she) attended to the majority of the household chores such as cleaning, grocery shopping, cooking, pet care, laundry, grounds maintenance and car repairs — (the man) accepted on cross-examination that (the woman) looked after these tasks 80 per cent to 90 per cent of the time during the course of their relationship.”
The denial of any compensation or share of the woman's pension given the 14 year-long relationship was unusual.
The trial judge also considered the fairness of the situation, and whether “it would be inappropriate to permit (the woman), whose actions had fostered and facilitated this relationship of dependency, to walk away from a fourteen year relationship with her pension intact” when (the man) was “in his late 50s, underemployed/unemployed and (had) significantly less financial assets.”
At the end of the day, however, the trial judge concluded that as the man was entitled to a significant inheritance, it would be inappropriate to divide any part of the woman's pension with her spouse.
The New Brunswick Court of Appeal upheld the trial judge, but felt compelled to add: ‘Had this couple been married, the result … would have unquestionably been different.”
In Canada, between 40 per cent and 50 per cent of all couples separate. Few provinces give common law couples the same “automatic” property rights as married couples. The New Brunswick Court of Appeal provides a stark reminder that it's important to know your rights.