Unjust enrichment: How you live may determine it
From a legal perspective, relationships are varied and unpredictable. Some are governed by agreement; others are not. Some are marriage-based; others are not. Some (such as second marriages) are subsequent; others are not.
Written agreements, intended to cover matrimonial relationships, are in my view complicated, partly because they can be hard to make for a relationship that may last a long time. And the longer the relationship lasts, the more strength the agreement can lose. Without a written agreement, there is no guaranteed simplicity in a relationship.
In a matrimonial type of relationship, legal complexity arises when the relationship ends. The law provides remedies for spouses who are ending a relationship — one of which is unjust enrichment.
This remedy is most often pursued in a marital sort of relationship, and commonly where there is no written agreement covering it. A judgement rendered earlier this month examined this situation.
The two parties met in the early-1990s, through work, and started living together around 1995. The relationship ended in 2009.
The Defendant was a meticulous saver. She owned real estate and various liquid assets, such as RRSPs.
The Plaintiff, whose previous marital relationship had ended in the early-1990s, was not as good as record-keeping and saving. He was entrepreneurial, however, and had success in some business ventures. His assets were largely liquid ones, such as investments.
They had no children together, but the Plaintiff had two children from the prior marriage. As is common in a subsequent relationship, the parties kept their finances separate.
Still, the Defendant organized and monitored the finances and kept records (on her computer) of expenses and money spent for each of them. The Court commented that the records were good.
On occasion, the Defendant commented that the Plaintiff should save better for retirement, but apparently it did not bear fruit, and the Plaintiff’s financial circumstances at the end of the relationship were not strong — nor was his health.
The judgement included considerable discussion as to whether the payments that the Plaintiff made to the Defendant constituted rent or a contribution to household expenses. The Court concluded that the payments were rent.
Although the Plaintiff and the Defendant lived together, the Plaintiff did not make any significant contribution to the real estate other than rent payments.
Both parties earned high incomes (though variable, given the nature of their work) while they were together. Their collective income was also high, and it would seem they had a good lifestyle, even though the Defendant expressed concern that the Plaintiff was not saving well enough for retirement.
After they parted ways, in 2009, the Plaintiff sought spousal support and an interest in the Defendant’s real estate and other assets. The main remedy that the Plaintiff sought was unjust enrichment.
Court’s analysis and decision
The Court dealt with the support issue quickly, and found that the relationship was “marriage-like.” However, the Court also found no agreement (expressed or implied) that the Defendant would maintain the Plaintiff, and the Court felt the Plaintiff could work.
His claim for spousal support was denied. I wonder if that decision might be appealed.
To succeed in unjust enrichment, an applicant must provide evidence showing “an enrichment” of the other person and “a deprivation” of the applicant. There is another element involved, called “absence of juristic reason for the enrichment.”
Analyzing these three items is beyond the scope of a column, but what can be said is the following.
The Court considered the 14-year relationship, and held that the Plaintiff and Defendant lived financially separate lives, and whatever contributions the Plaintiff did make to the couple’s lifestyle and relationship did not “enrich” the Defendant.
In addition, the Plaintiff did benefit from the relationship. The Court found that the Defendant assisted the Plaintiff in keeping track of and organizing spending and income. It helped the Plaintiff. The claim in unjust enrichment therefore failed.
To me, the critical issue here is the (lack of an) “agreement.” Clearly, it would have been preferable for both parties to have had a Cohabitation Agreement made. It would have provided some certainty as to how to wind up the relationship, and might have averted litigation.
The other issue is, in my view, independence. This case may offer some insights into how Courts will consider and reach decisions based on parties’ behaviour.
Here, the parties behaved financially separately from each other. The Plaintiff tried to prove financial integration in the relationship, but the Court held that the parties were financially independent from each other (and for 14 years).
It may be that, if parties organize themselves in that way, they need to understand that the Court may well respect the “agreement” under which they lived.
Case name: Hannigan v. Yee (January 2013)
This column appeared in the Richmond News on January 25, 2013.