Case reference: Peter v. Beblow, [1993] 1 S.C.R. 980
This historical case summary discusses the decision identified above. Later decisions and legislative changes may affect how it applies today. Obtain legal advice about your circumstances.
Family law Trusts Constructive trust Long-term common law relationship Unpaid homemaker Homemaker maintaining and improving property Whether proprietary link necessary to constructive trust established Whether consideration to be given to the extent to which the remedy of constructive trust should be applied in terms of amount or proportion.
Trusts Constructive trust Long-term common law relationship Unpaid homemaker Homemaker maintaining and improving property Whether proprietary link necessary to constructive trust established Whether consideration to be given to the extent to which the remedy of constructive trust should be applied in terms of amount or proportion.
Appellant lived in a common law relationship with respondent for 12 years, doing the domestic work of the household and raising the children of their blended family without compensation. Respondent had purchased the house occupied by the couple and appellant had undertaken a number of projects gardening, planting a hedge, painting to maintain or better it during the relationship. During the course of the relationship respondent was able to pay off the mortgage on the house and to buy a houseboat and a van; appellant bought a lot with money earned outside the family unit. The house lay vacant after the parties separated.
The trial judge found that the respondent had been enriched, that appellant had not been compensated, and that there was no juristic reason for the enrichment. He awarded appellant the property. The Court of Appeal allowed an appeal from this judgment. At issue here was whether the provision of domestic services during 12 years of cohabitation in a common law relationship is sufficient to establish the proprietary link which is required before the remedy of constructive trust can be applied to redress the unjust enrichment of one of the partners in the relationship. Further, consideration must be given to the extent to which the remedy of constructive trust should be applied in terms of amount or proportion.
Held: The appeal should be allowed.
Per La Forest, Sopinka, McLachlin and Iacobucci JJ.: The appropriate remedy–a monetary award or the imposition of a constructive trust–must only be decided once an unjust enrichment giving rise to restitution is established. The constructive trust is available where monetary damages are inadequate and where there is a link between the contribution that founds the action and the property in which the constructive trust is claimed.
In determining whether an unjust enrichment exists, policy considerations are to be considered under the head of absence of juristic reason for the unjust enrichment. Services given on the voluntary assumption of the role of wife and step mother give rise to a remedy based on unjust enrichment. Generally, a common law spouse owes no duty at common law, in equity or by statute to perform work or services for the other party to the relationship. Homemaking and childcare services may, in a relationship, give rise to equitable claims against the other party. It is not unfair for a recipient of indirect or non financial contributions to be forced to provide recompense for those contributions. Domestic services cannot logically be distinguished from other contributions. The test as to whether there is an unjust enrichment without juristic reason is flexible and the factors to be considered vary. No obligation arose here from the parties’ circumstances and the elements giving rise to a legal gift were not present.
Equity finds a role where an injustice without a legal remedy exists. The courts can use the equitable doctrine of unjust enrichment to remedy the situation even though the legislature has chosen to exclude unmarried couples from the right to claim an interest in the matrimonial assets on the basis of contribution to the relationship.
A direct link between the contribution and the property is essential for a constructive trust to arise, whether the situation be commercial or family. Unjust enrichment cases need not be categorized as commercial and family; no special rule exists for family cases. Clarity and doctrinal integrity mandate that the basic principles governing the rights and remedies for unjust enrichment remain the same for all cases. Even in a family situation, dispensing with the link between the services rendered and the property claimed to be subject to the trust would be inconsistent with the proprietary nature of the constructive trust. Insufficiency of a monetary award in a family situation, however, is usually linked to the fact the claimant’s efforts have given him or her a special link to the property and give rise to a constructive trust. Although a minor or indirect contribution is insufficient to give rise to a constructive trust, the amount of the contribution governs the extent of the constructive trust once the threshold amount is met.
In assessing the value of a constructive trust, the “value survived” approach (the amount by which the property has been improved) is preferable to the “value received” approach (the value of the services which the claimant has rendered). Where the claim is for an interest in the property, the portion of the value of the property claimed and attributable to the claimant’s services must be determined. The practical difficulty of calculating with mathematical precision the value of particular contributions to the family property favours a “value survived” approach.
Appellant’s proper share of all the family assets the house, houseboat, van, War Veteran’s Allowance and a lot purchased by appellant must be calculated. Her contribution to the family enterprise was considerable for it saved the respondent large sums of money which were used to pay off the mortgage and to accumulate family assets. The house reflected a fair approximation of the value of the appellant’s efforts in acquiring the family assets.
Per L’Heureux Dubé, Gonthier and Cory JJ.: An unjust enrichment requires an enrichment, a corresponding deprivation by the person who supplied the enrichment, and an absence of any juristic reason for the enrichment itself. Given an enrichment, it almost invariably follows that there is a corresponding deprivation suffered by the person who provided the enrichment. In a marriage or a long-term relationship, it should be taken, absent cogent evidence to the contrary, that the enrichment of one party will result in a deprivation to the other.
The constructive trust remedy may be applied where a spouse, including common law spouse, has contributed to the preservation, maintenance or improvement of property but not directly to its acquisition. Respondent here conceded being enriched by appellant’s work and contributions.
A person cannot be expected to forego compensation or an interest in the property in return for contributions made merely because that person loved the other person in the relationship. There need not be any evidence of a promise to marry or to compensate. “Spousal services” given by one party to the other in the relationship should be taken as being given with the expectation of compensation absent evidence to the contrary. The nature and duration of the relationship, as well as the contribution made, should be considered. Relief in the form of a personal judgment or property interest should adequately reflect the fact that the unpaid services of one party to the relationship enhanced the income earning capacity and the ability of the other to acquire assets.
In a family relationship, the contribution need not be directly linked to a specific property in order to permit the imposition of a constructive trust. This remedy need not be as rigorously limited in a family situation as it is in a commercial context because the expectations of the parties in the two situations are very different. The constructive trust accords well in a family situation in that the parties to the relationship expect to receive on dissolution of the relationship not a fee for services based on market value but rather a fair share of the property or wealth accumulated through joint effort. The grant of a constructive trust may be inappropriate, however, where the rights of bona fide third parties would be affected.
In a quasi marital relationship where the rights of third parties are not involved, the choice between a monetary award and a constructive trust will be discretionary and should be exercised flexibly. The decision as to which property (if there is more than one) should be made the subject of a constructive trust is also a discretionary one. It too should be based on common sense and a desire to achieve a fair result for both parties.
Situations may occur where an award for a monetary sum may be the most appropriate remedy. A number of considerations exist: (a) whether the plaintiff’s entitlement is relatively small compared to the value of the whole property in question; (b) whether the defendant is able to satisfy the plaintiff’s claim without a sale of the whole property in question; (c) whether the plaintiff has a special attachment to the property in question; (d) what hardship might be caused to the defendant if the plaintiff obtained the rights flowing from the award of an interest in the property.
Two methods can be used to evaluate the contribution of a party in a relationship: value received (the amount the defendant would have had to pay for the services on a purely business basis) and value surviving (a portion of the assets accumulated by the couple on the basis of the contributions made by each). Although value surviving has been traditionally employed in cases of constructive trust, the value received approach can be used to quantify the value of the constructive trust. The remedy should be flexible.
The value surviving approach is often the preferable method. It is usually more equitable and most closely accords with the expectation of the parties as to the division of jointly acquired assets. It also avoids the difficult task of assigning a precise dollar value to domestic services. Instead, the contributions of the parties can more accurately be expressed as a percentage of the accumulated wealth existing at the termination of the relationship.
Here, the imposition of a constructive trust was the more appropriate remedy because a monetary award would be impracticable since respondent was retired and living on a War Veteran’s Allowance.
*source: Lexbox
