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Equalization of family property for married spouses will usually address any unjust enrichment arising from a marriage breakdown. However, in exceptional cases, equalization may not equitably redress the accumulation of family wealth during a relationship. Sometimes, a “joint family venture” may be the foundation for an unjust enrichment claim. A joint family venture can arise where the parties live, integrate their finances as a single unit, and work towards common goals. Spouses who cohabit for a significant period of time before their marriage may seek a finding that there was a joint family venture if equalization results in one party retaining a disproportionate amount of accumulated wealth.
Wife Makes Unjust Enrichment Claim Instead of Seeking Equalization
Mullin v. Sherlock dealt with the relationship between unjust enrichment and equalization for married spouses. In this case, the parties were married, but at the trial, neither party sought equalization; however, the wife was awarded $3,000,000 in monetary damages, $365,624 as lump sum spousal support, and $475,000 in costs. The husband appealed. Importantly, the parties had a short marriage of only ten months, but cohabited for nearly twelve and a half years before their separation. Throughout their relationship, the parties contributed to the growth of a business which they intended would finance their retirement. At the trial, the wife sought monetary damages for unjust enrichment based on a joint family venture for their cohabitation until the date of their marriage. She claimed this award was appropriate and that she should receive a share of the assets proportionate to her contribution. The trial judge found that the wife unjustly enriched the husband in the context of a joint family venture. The husband appealed.
The Court of Appeal quickly decided that this was an appropriate case to apply the principles of unjust enrichment, even though the parties were married. Courts have held that, usually, the process of equalization in the Family Law Act (FLA) will adequately address any unjust enrichment that arises in the case of a married couple. And the Court of Appeal here emphasized that the framework was central to Part I of the FLA. However, in Martin v. Sansome, the judge acknowledged that there may be cases “where the equalization provisions of the FLA cannot adequately address monetary damages for unjust enrichment arising out of marriage.” The trial judge determined that even though the concept of a joint family venture might only rarely be applied to married spouses, nothing was restricting the application of that concept, and there was such an unjust enrichment in the context of a joint family venture in this case.
Joint Family Venture is Rarely Applied to Married Spouses
The Court of Appeal agreed that this was an appropriate instance to apply the principle of unjust enrichment between married spouses. The parties had a long-term cohabiting relationship followed by a short marriage. In these circumstances, the court felt that the objective of the FLA’s equalization provisions could not be met. Section 5(7) of the FLA views that “inherent in the marital relationship there is equal contribution” to the spouses’ joint responsibilities, entitling each spouse to equalize the net family properties. However, in this case, an equitable sharing of family property could not result just from equalization. Since there was no finding of an unjust enrichment, and because of the short ten-month marriage, only the difference in the value of the parties’ assets at the marriage date in 2012 and separation in 2013 would be accounted for. However, the Court recognized this did not accommodate the fact that the business’s growth occurred over all the years that the parties cohabited.
While the respondent claimed that the trial judge erred throughout the unjust enrichment analysis, the court disagreed. The trial judge emphasized that the wife worked constantly for the business from 2001 until the end of 2012. She then continued to undertake special projects for the company. She also agreed to a salary reduction to help the business expand and hire additional workers. Later, she worked for several months and did not receive any salary. The trial judge also found that the wife ran their household while the husband devoted himself to the business. This constituted a benefit to the husband.
Additionally, the wife suffered a corresponding deprivation. Once she began working for the company, she gave up her career in architecture. As the trial judge said, she “provided underpaid and unpaid labour” to the company and unpaid domestic services. The next stage of the unjust enrichment analysis considers if there is any juristic reason for the corresponding benefit and deprivation experienced by the parties. Here, the trial judge determined that it took place within the context of a joint family venture. The judge concluded that the parties had agreed to dedicate their efforts to building the company to finance their retirement. And the wife sacrificed her career and “dedicated approximately a decade to realizing the goals” that the two shared.
Parties’ Relationship Met the Criteria for a Joint Family Venture
Part of the husband’s appeal was centred on the claim that there was insufficient evidence to conclude that the wife was underpaid or underpaid while at the company, and therefore that no benefit was conferred or that the applicant suffered a corresponding deprivation. But the Court of Appeal found that the trial judge addressed this, concluding that the wife was underpaid “on the basis of the mutual understanding that her contributions, both professional and domestic, were helping to build their nest egg for their comfortable retirement”. The trial judge’s analysis was thorough and was owed deference on the appeal.
The husband raised Derakhshan v. Narula in support of his argument. In that case, the court concluded that a lack of evidence as to the value of the work done and a failure to establish that the work performed was underpaid were fatal to the unjust enrichment analysis. Yet, the case was not helpful to the husband since the appeal court found the facts between the cases were very different. The court explained that in Derakhshan, the parties were not spouses, and the claimant was well-compensated for the services.
The husband also alleged that the trial judge made numerous errors in considering whether there was a joint family venture. The husband did not dispute the legal framework underlying the finding of a joint family venture as set out in Kerr v. Baranow. But he argued that the trial judge misapprehended the evidence. In particular, he claimed that the joint family venture claim could not succeed because there was insufficient evidence of a “substantial and direct link” between the wife’s efforts and the company’s success.
The appeal court did not agree. It was clear that the parties’ central goal throughout their relationship was to develop the company to fund their retirement, and the trial judge accepted that both parties worked hard to accomplish that goal. The parties did not otherwise invest or set funds aside for their retirement. Moreover, the decision in Kerr makes it clear that whether there is a joint family venture is a question of fact that can “be assessed by having regard to all of the relevant circumstances”. The conclusion that the evidence supported a joint family venture was available to the judge to make that finding. The Court of Appeal also noted that the evidence was sparse because the husband failed to disclose adequately. There was also a problem with the husband challenging the trial judge’s findings of fact, grounded in the evidence, when any limitations arose from his failure to provide adequate disclosure. The Court determined that there was no merit to the husband’s claims that the trial judge erred in applying the unjust enrichment and joint family venture tests. Instead, the judges reminded the husband that an appeal is not a retrial, which was what he was really seeking.
Unjust Enrichment Entitles Claimant to a Remedy
To find that a joint family venture applies, courts must determine that a relationship meets specific criteria and that there is a link between a party’s contributions and wealth accumulation. However, in rare cases, even parties entitled to equalization may bring an unjust enrichment claim.
Experienced Windsor Family Lawyers Providing Legal Guidance for Professionals and Business Owners
If you’re an entrepreneur or professional in the Windsor-Essex area, the division of business assets can be a complex part of a divorce. At Johnson Miller Family Lawyers, we have extensive experience in business valuation and asset division. To discuss your specific situation with one of our skilled family lawyers, contact us today for a consultation by visiting us online or by calling 519-973-1500. Many of our clients are referred to us by former clients and other professionals, so you can be confident you’re in good hands.
