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Equity - Unjust Enrichment

Reiter v. Hollub (Ont CA, 2017)

In this case the court discusses principles of the equitable doctrine of unjust enrichment, particularly whether the remedy should be monetary or proprietary, in the context of a claim against the increased equity of a home owned by the other partner in a common law relationship:
(1) Applicable principles

[16] In Kerr v. Baranow, at para. 31, Cromwell J. recognized that “[a]t the heart of the doctrine of unjust enrichment lies the notion of restoring a benefit which justice does not permit one to retain”. Since the Supreme Court’s 1980 decision in Pettkus v. Becker, 1980 CanLII 22 (SCC), [1980] 2 S.C.R. 834, unjust enrichment principles have been available to support claims made by domestic partners upon the breakdown of their relationship.

[17] The test for unjust enrichment is well-settled. To establish unjust enrichment, the person advancing the claim must prove three things:

1. An enrichment of or benefit to the defendant;

2. A corresponding deprivation of the plaintiff; and

3. The absence of a juristic reason for the enrichment.

[18] There are two steps to identifying whether there is a juristic reason for the responding party to retain the benefit incurred. First, the court must consider whether the case falls within a pre-existing category of juristic reason, including a contract, a disposition of law, donative intent, and other valid common law, equitable or statutory obligations: Kerr, at para. 43. If a case falls outside one of these established categories, the reasonable expectations of the parties and public policy considerations become relevant in assessing whether recovery should be denied: Kerr, at para. 44.

[19] In Kerr v. Baranow, at para. 46, the Supreme Court outlined two possible remedies where unjust enrichment is established – a monetary award or a proprietary award. The court counselled, at para. 47, that the first remedy to consider is always the monetary award and that, in most cases, a monetary award is sufficient to remedy the unjust enrichment.

[20] To obtain a proprietary award, the person advancing the claim based on unjust enrichment must demonstrate that monetary damages are insufficient and that there is a sufficiently substantial and direct causal connection between his or her contributions and the acquisition, preservation, maintenance or improvement of the disputed property: Kerr, at paras. 50-51. A minor or indirect contribution will not suffice.

[21] The court held that there are two different approaches to valuation for a monetary award: Kerr, at para. 55. First, a monetary award may be based on a quantum meruit, value received or fee-for-services basis. Second, a monetary award may be based on a value survived basis. This is where the joint family venture analysis becomes relevant.

[22] To receive a monetary award on a value survived basis, the claimant must show that there was a joint family venture and that there was a link between his or her contributions to the joint family venture and the accumulation of assets and/or wealth: Kerr, at para. 100. Whether there is a joint family venture is a question of fact to be assessed in light of all of the relevant circumstances, including the four factors noted above – mutual effort, economic integration, actual intent and priority of the family: Kerr, at para. 100.

[23] Justice Cromwell was careful to note that cohabiting couples are not a homogenous group: Kerr, at para. 88. The analysis must therefore take into account the particular circumstances of each relationship. The emphasis should be on how the parties actually lived their lives, not on their ex post facto assertions or the court’s view of how they ought to have done so: Kerr, at para. 88.

[24] While the four factors identified above are helpful to determine whether the parties were engaged in a joint family venture, there is no closed list of relevant factors: Kerr, at para. 89. The factors Cromwell J. suggested were not a checklist of conditions, but a useful approach to a global analysis of the evidence and examples of relevant factors that a court may take into account: Kerr, at para. 89.

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