IN THE SUPREME COURT OF BRITISH COLUMBIA
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Citation: |
D.P.S. v. B.H.L., |
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2011 BCSC 327 |
Date: 20110318
Docket: 14327
Registry: Quesnel
Between:
D.P.S.
Plaintiff
And
B.H.L.
Defendant
Before: The Honourable Mr. Justice Willcock
Corrected Judgment: The Judgment was amended on March 21, 2011
Reasons for Judgment
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Counsel for the Plaintiff: |
W.J. Rempel |
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Appearing on her own behalf: |
B.H.L. |
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Place and Date of Trial/Hearing: |
Quesnel, B.C. September 28-29, 2010
and |
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Place and Date of Judgment: |
Quesnel, B.C. March 18, 2011 |
[1] D.P.S. and B.H.L. lived together in a common law relationship from March 1997 to January 28, 2009. During that period they supported each other financially and shared household and parental responsibilities. They designated each other as beneficiaries of RRSPs and pensions. They had a daughter, born on June 20, 1998. Theirs was a marriage-like relationship and essentially a joint-venture. D.P.S. now seeks an interest in the assets in B.H.L.’s name that were acquired, preserved, maintained or improved during the relationship. Because the parties were not married D.P.S.’s claim to an interest in such assets must be established at common law, as he is not entitled to seek the statutory remedies available to parties following the dissolution of a marriage. Nor is he entitled to rely upon the presumption that assets acquired during the relationship will be equally divided, as that presumption is created by a statute (the Family Relations Act, R.S.B.C. 1996, c. 128, s. 56(2)) and arises as a consequence of civil marriage. His claim is in unjust enrichment.
[2] D.P.S. is 53 years old. B.H.L. is 46. The parties met at their place of employment, in Quesnel. Soon after their relationship began D.P.S. moved to B.H.L.’s residence in south Quesnel (“the Quesnel house”). Before moving to the Quesnel house, D.P.S. lived northeast of Quesnel in a double-wide mobile home in good condition on one acre of land. He sold that property on October 20, 1997, for $117,000. After discharging the mortgage and paying fees and expenses D.P.S. received net proceeds of the sale of $41,488.95. Aside from those funds he then had about $1,600 in savings; RRSP investments in mutual funds with a value as of March 31, 1997 of $3,195; a snowmobile purchased on December 4, 1996, for $5,985; a truck; and personal effects, including some furniture.
[3] B.H.L. had lived in the Quesnel house since purchasing it on March 29, 1996, for $108,000. She obtained a mortgage of $89,760, and therefore had equity in the home of approximately $18,000 when it was purchased. She, of course, also had personal effects and some furniture.
[4] D.P.S. testified that before he moved into the Quesnel house the parties had discussed the advantages of combining their incomes. D.P.S. says they were having some trouble making ends meet individually and they agreed that he would move into the Quesnel house, B.H.L. would pay the mortgage and he would pay for groceries and utilities. D.P.S. says he and B.H.L. agreed that if their relationship should come to an end each would take from their assets what they brought into the relationship and divide the balance of their assets equally. He says that agreement was reflected by a proposal made to him by B.H.L. in December 2008, after the dissolution of their relationship, when she offered to buy his interest in the Quesnel house.
[5] D.P.S. says the net proceeds of the sale of his mobile home, $41,000, were deposited into his savings and chequing accounts and have been spent. I accept D.P.S.’s evidence that in December 1997 he used some of that money to pay 10% of the outstanding mortgage on the Quesnel house. B.H.L. acknowledges that she received $8,976 from D.P.S. shortly after the sale of his trailer, but denies that that money was used to pay the mortgage, despite the remarkable coincidence that the amount she received was exactly 10% of the initial balance of the mortgage. I reject her evidence on this issue as unworthy of credit.
[6] D.P.S. says lump sum payments were made on the mortgage on the Quesnel house, from time to time, while he was living with B.H.L. with the intention of retiring the mortgage as quickly as possible. The mortgage was in fact paid off in January 2003. Over about five years the debt of $89,760 was fully paid from the joint incomes of the parties. I accept D.P.S.’s evidence that, in part, this was accomplished by the redemption of Canada Savings Bonds purchased by D.P.S. through a payroll savings plan at work. I also accept D.P.S.’s evidence that when he and B.H.L. received annual vacation pay in the spring they used those funds to make lump sum payments on the mortgage, as well as his evidence that some portion of the parties’ income tax refunds were used to pay down the mortgage.
[7] While the documentary record of financial transactions is incomplete, the records produced at trial support D.P.S.’s testimony. For example, in January 2003 D.P.S. deposited approximately $4,600 into his bank account by cashing Canada Savings Bonds. Shortly thereafter he transferred the sum of $4,600 out of his account and at the end of that month the mortgage was reduced by 10% of its initial face value, $8,976.
[8] B.H.L. did not deny the inference from the record that D.P.S. paid $4,600 towards the mortgage in 2003 but claimed that she paid him back in cash increments of $100 to $200 at a time, over about five months. That testimony, in my view, is unreliable. It was vague and, in my opinion, intended to be difficult to verify. I find that the direct contributions by D.P.S. to reduction of the mortgage were not repaid.
[9] An incomplete mortgage history report was produced at trial. It demonstrated that between August 2, 2002, and January 31, 2003, the mortgage was reduced from $30,096 to $12,513 by periodic lump sum payments. It is not possible to reconcile mortgage payments with bank statements to determine how and when lump sum payments were made on the mortgage.
[10] D.P.S. believes that from the time he began living with B.H.L. until the end of the relationship that he directly paid approximately $17,000 toward reduction of the mortgage on the house. That is not significantly in excess of the specific record of two payments amounting to approximately $13,600 and is consistent with a number of additional smaller payments being made by D.P.S. over the years from 1997 to 2003.
[11] In addition to making payments on the mortgage, D.P.S. says that he paid significant amounts for the furnishing and maintenance of the home. It was B.H.L.’s evidence that when D.P.S. moved into the Quesnel house he bought a bed and dresser and little else. I accept D.P.S.’s evidence that he used approximately $900 from the sale of his trailer to buy furnishings for the Quesnel house, which he described as sparsely furnished at the outset.
[12] In 1998 D.P.S. bought a ride-on lawnmower for $2,051. He says that is still at the Quesnel house and has a remaining value of $600.
[13] He bought a new washer and dryer for approximately $3,000 in 2004.
[14] He bought a truck on a line of credit in April 2004. That vehicle is registered in his name and remains in his possession.
[15] In June 2004 he bought a travel trailer for $20,000 on a line of credit shared by both parties. He says it was used for family holidays and camping. It is registered in D.P.S.’s name but remains at the Quesnel house.
[16] In May 2008 he bought a Lund boat for $2,462.
[17] In September 2005 the parties used a joint line of credit to buy a GMC Envoy for $38,142. The Envoy is registered in B.H.L.’s name and is still in her possession.
[18] D.P.S. believes he purchased a number of small appliances and pieces of equipment during the course of the relationship that remain with B.H.L. at the Quesnel house.
[19] There is no dispute that D.P.S. worked on the maintenance and improvement of the Quesnel house or that he invested money in those improvements. Together with B.H.L.’s father, he applied brick siding to the house. He bought bricks for this project at a cost of $1,000. With B.H.L.’s father and brother he put a new roof on the house. He installed an allen-block flowerbed. He worked on a concrete slab in front of the garage. He installed eavestroughs on the house. He helped to install hardwood floors, linoleum and carpets. Interior doors were replaced. A patio deck was replaced and treated. The garage door was replaced. New countertops were installed in the bathroom.
[20] B.H.L.’s father, C.L., testified at trial. C.L. is an accomplished craftsman. He described in detail the improvements to the Quesnel house that were done while the parties lived together. There was no major project that was conducted on the property which he did not supervise. He appears to have done most of the significant work, but also honestly acknowledged that D.P.S. assisted with almost every job done on the house.
[21] D.P.S. and B.H.L. accommodated each other by adjusting their shift-work at the mill to ensure that one of them was always home to take care of their daughter. Most frequently D.P.S. worked from midnight to 7:00 a.m. while B.H.L. worked a dayshift or an afternoon shift. There appears to have been a fairly equitable sharing of domestic chores, including child care.
[22] Following the birth of their daughter in 1998 B.H.L. took 17 weeks of maternity leave followed by a one-month leave of absence, and then a voluntary lay-off. D.P.S. believes she was off work for four to five months, during which she had little income. He says that there was an agreement between the parties that they could support themselves on the money he had left from the sale of his trailer.
[23] B.H.L. minimized D.P.S.’s role in looking after their daughter, even when that role was obvious. For example, she claimed that D.P.S. did little to look after their daughter while B.H.L. was away at work, but acknowledged that there was no other caretaker. When asked whether D.P.S. looked after feeding their daughter she acknowledged that he must have done so, when it was obvious that their daughter was fed and clothed.
[24] D.P.S. worked as a millwright at the same mill through a number of changes in ownership until he was laid off on December 20, 2008, when the mill shut down permanently. Upon being laid off, D.P.S. received employment insurance benefits for a period of time until regaining work at another mill on January 18, 2010. At the time of trial, in the fall of 2010, he was again unemployed.
[25] The parties have produced income tax returns documenting the following earnings from employment:
|
Year |
D.P.S.’s Income |
B.H.L.’s Income |
|
1997 |
$38,000 |
Not produced |
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1998 |
$48,960 |
Not produced |
|
1999 |
$55,922 |
Not produced |
|
2000 |
$63,416 |
Not produced |
|
2001 |
$66,153 |
$48,236 |
|
2002 |
$69,473 |
$50,447 |
|
2003 |
$67,227 |
$50,987 |
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2004 |
$66,832 |
$54,842 |
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2005 |
$65,925 |
$53,613 |
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2006 |
$72,938 |
$56,577 |
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2007 |
$72,737 |
$55,791 |
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2008 |
$72,121 |
Not produced |
[26] D.P.S. paid for groceries, utilities, entertainment, and some travel during the course of the relationship. He has produced a copy of a personal deposit account history from his bank account at the Royal Bank of Canada that provides a complete record of deposits and withdrawals from December 31, 2002, through to January 30, 2009. From that record he has attempted to prepare a comprehensive summary of the documented expenses incurred from 2003 to 2009. I accept his counsel’s submission that this record is likely indicative of the pattern of spending throughout the relationship. He has documented utility payments for the period of March 2006 to January 2009 in the total amount of $9,856. These payments suggest that the annual utility bills paid by D.P.S. amount to approximately $3,500. He has documented paying additional house expenses for improvements and maintenance in amounts in the range from $567 to $2,343 per annum, an average of approximately $1,200 per year. He has documented the payment of the cost of groceries, from one partial account of expenditures, of approximately $80,000 over 6 years.
[27] There was a significant dispute between the parties with respect to the amount spent on entertainment including, particularly, smoking, drinking, and gambling. That dispute was not productive. On the evidence it is difficult to give more credence to one version of events than the other. The only conclusion that I can come to is that both parties spent a significant amount on what might be regarded by some as entertainment and by others as vices. None of these expenditures can be said to have enriched the other party, or for that matter the party doing the smoking, drinking, or gambling. The amounts spent in this fashion do not factor into the unjust enrichment claim or the attempt to address appropriate set-offs that may be made against that claim.
[28] When it was suggested in cross-examination to D.P.S. that B.H.L. paid some of the family’s ongoing expenses he did not dispute the fact and responded that the arrangement between the parties was that they would live “like a normal family.”
[29] Although B.H.L. acknowledged that much of her income was used to make monthly mortgage payments on the house, she also claims to have paid for most of the materials used for the renovation of the house, and the reductions in the principal of the mortgage. She minimized the significance of D.P.S.’s contributions to the household, but did acknowledge there was an understanding between them that she would pay the mortgage on the house and D.P.S. was responsible for the payment of other household expenses.
[30] When the large discrepancy between the parties’ contribution towards payment for household expenses was put to her, B.H.L. denied that D.P.S. paid for more of the groceries or household expenses than she did, but acknowledged that she did not keep track and could not testify with respect to amounts she spent on these items. When it was suggested that D.P.S. paid most of the utilities B.H.L. said that she also paid utilities, but acknowledged that she did not add them up to determine who paid more.
[31] B.H.L. has produced a personal deposit account history for her account at the Royal Bank of Canada for the period from June 30, 2003, through to January 30, 2009, but has not prepared any detailed analysis of the expenses she has paid.
[32] The value of the Quesnel house was appraised as of September 14, 2010, at $192,000. For tax purposes the property was assessed under the Assessment Act, R.S.B.C. 1996, c. 20, in 2008 at $157,700, in 2009 at $157,700, and in 2010 at $164,600.
[33] B.H.L. takes issue with the appraisal of the property obtained by D.P.S. B.H.L.’s complaint is that the appraisal did not include an inspection of the interior of the premises and that there are defects in the property, particularly a crack in the foundation, which would not have been apparent on a drive-by appraisal. B.H.L., however, was in a position to have the interior of the property inspected and did not do so or obtain a competing appraisal. Further, when offered the choice between an order requiring the sale of the property and a division of the net proceeds and an order that she pay as compensation to D.P.S. a proportion of the appraised value of the property she expressed a clear preference to pay a portion of the appraised value in compensation.
[34] There was only one appraisal in evidence and, therefore, no competing assessment of the value of the property. I find that the value of the Quesnel house was $192,000 in September 2010.
[35] By March 31, 2009, D.P.S.’s RRSP had a value of $23,250.
[36] In January 2000 D.P.S. began making deposits to Canada Savings Bonds. By December 31, 2002, the value of the Canada Savings Bonds came to $5,108. There were redemptions from the Canada Savings Bonds in January 2003 of approximately $4,600 (which were used to reduce the mortgage on the Quesnel house), but regular deposits continued and by the end of 2005 D.P.S. had $5,200 in Canada Savings Bonds. Thereafter redemptions were made from the Canada Savings Bonds and by December 31, 2007, the closing balance was $1,831.31. The balance of the bonds was redeemed in 2008.
[37] B.H.L. has an RRSP consisting of investments in mutual funds. The value of the RRSP stood at $10,022 on December 31, 2002. With regular deposits it grew to $26,049.52 as of February 2, 2009.
[38] In a financial statement sworn on February 25, 2010, B.H.L. claims to own the following assets:
1) real estate with a value of $157,700;
2) a GMC Envoy with a value of $15,000;
3) minimal savings; and
4) a pension with the IWA Forest Industry pension plan.
She also claims to be the principal debtor on a Royal Bank credit line with an outstanding balance of $25,800.
[39] The parties are mutually liable for debt accumulated on a line of credit, the Royal Credit Line (“RCL”), used over the years of their relationship to purchase assets and pay expenses. Money borrowed on the line of credit to pay for the vehicles registered in their respective names has been repaid. B.H.L. acknowledged that she could not account for all of the payments on the line of credit but claimed to have made very significant payments on the line of credit and to have singlehandedly reduced the debt arising from the purchase of the GMC Envoy. She minimized the value of D.P.S.’s occasional payments on the line of credit.
[40] D.P.S. produced a copy of an online branch banking history report and RCL statements that collectively document activity on the line of credit from August 12, 2003, to February 28, 2009. Those statements record the growth and use of the line of credit used by both parties from an initial balance of $800 to a final balance of $27,000.
[41] B.H.L.’s evidence was evasive and argumentative. For example, when she was confronted with the fact that D.P.S.’s income was significantly more than hers and that at the end of their relationship neither had accumulated significant savings other than the repayment of the mortgage, B.H.L. suggested that D.P.S.’s income went to the liquor store. Her argumentative demeanour was, in my view, partially a result of the fact that she was examined in chief by Mr. L., with whom she is now living, who appears to have a considerable dislike for D.P.S. Mr. L., understandably, had some difficulty with the concept of examination of a witness in chief and frequently asked leading questions of B.H.L. Unfortunately, he led her to give testimony that did little for her credibility.
[42] By and large D.P.S. gave an accurate account of his role in the relationship and his financial contribution to it. His evidence appears to be supported by documentation wherever such documentation is available. He had a reasonable and non-combative demeanour and to his credit, he admitted errors and inappropriate acts on his part that a dishonest or reluctant witness would not have admitted.
[43] The Supreme Court of Canada has recently considered in detail the principles underlying unjust enrichment claims in family law cases in Kerr v. Baranow, 2011 SCC 10. The Court in that case recognized that attempts to deal with claims in equity arising out of the dissolution of common law relationships have given rise to unsatisfactory legal solutions and some controversy. The specific unsatisfactory solution identified by the court was the use of the “common intention resulting trust” as a mechanism to recognize the contribution of one common law partner to the acquisition of property by the other. The Court considered that the law of unjust enrichment had appropriately become the pre-eminent vehicle for addressing the financial consequences of the breakdown of domestic relationships and held, at para. 24, that “the time has come to say that the common intention resulting trust has no further role to play in the resolution of domestic cases”. The principles of unjust enrichment were considered to afford a flexible and appropriate lens through which to view property and financial disputes in the domestic context.
[44] The court underlined that the law of unjust enrichment should be founded upon principles applicable in all cases, and consistently applied in cases arising out of domestic and other claims. Those principles are reflected in the well established test for unjust enrichment, as restated by the Supreme Court in Garland v. Consumers’ Gas Co., 2004 SCC 25 at para. 30:
The cause of action has three elements: (1) an enrichment of the defendant; (2) a corresponding deprivation of the plaintiff; and (3) an absence of juristic reason for the enrichment (Pettkus v. Becker, [1980] 2 S.C.R. 834, at p. 848; Peel (Regional Municipality) v. Canada, [1992] 3 S.C.R. 762, at p. 784).
[45] The British Columbia Court of Appeal has also recently revisited the approach that should be taken in addressing unjust enrichment claims brought following the dissolution of common-law relationships. In Wilson v. Fotsch, 2010 BCCA 226, there is a comprehensive review of the appropriate analysis. In Hall v. Becker, 2011 BCCA 5, the court addresses the dissolution of a relationship in a case that bears many similarities to the case at bar. Although these cases both precede Kerr, their analysis is largely consistent with the Supreme Court of Canada’s ruling and at para. 104 of the judgment in Kerr the analytical framework described by Huddart J.A. in Wilson is expressly approved by Cromwell J.
[46] Given that in this case there are reciprocal claims for unjust enrichment, the court must be careful to follow the analysis set out in Wilson so as not to confound questions of whether there has been unjust enrichment with issues relating to the appropriate set-off of competing claims. The analysis which follows is based upon that framework, described at para. 11 of Wilson.
[47] In considering whether the parties to this action have conferred a benefit upon one another, the court may take account of positive benefits, such as the payment of money or delivery of services for the benefit of the other party, or negative benefits, such as the saving of an inevitable expense. The benefit must be conferred directly and specifically upon the defendant. It is rare for no benefit to be conferred in a marriage-like relationship.
[48] As long as there is a causal link between the contribution made by one party and the enrichment of the other there will usually be a deprivation to the party conferring the benefit. It may arise from a transfer of wealth or an infringement of an interest. The devotion of one’s labour and earnings without compensation or for less than complete remuneration can be viewed as a deprivation.
[49] In considering whether a benefit has been conferred and a detriment suffered the court must not evaluate the reciprocal exchange of benefits and engage in a process of setting off claims (Wilson at para. 19; Kerr at para. 104).
[50] As the Court of Appeal noted in Wilson, there is authority in the minority judgment of Cory J. in Peter v. Beblow, [1993] 1 S.C.R. 980, for the proposition that a finding of deprivation is virtually automatic if there is enrichment in a matrimonial or long-term common-law relationship.
[51] There is no unjust enrichment if the benefit is conferred upon the recipient for a juristic reason. In Garland v. Consumer Gas Co., 2004 SCC 25 at paras. 44-46, the Supreme Court of Canada held that in considering this issue the court should engage in a two-step analysis. First, the plaintiff must prove that no juristic reason from an established category exists to deny recovery. If the plaintiff does so, a prima facie case of unjust enrichment is made out. At the second step of the juristic reason analysis the defendant then bears a de facto burden of establishing another reason to deny recovery. At this stage the court can look to all circumstances of the transaction, with particular regard to the reasonable expectations of the parties and public policy considerations.
[52] Natural love and affection do not provide a juristic reason for enrichment, but the statutory obligation of parents to support their children may do so. To the extent that the benefits are conferred upon one party to a common-law relationship exclusively for the benefit of the child, that payment may not result in the recipient’s unjust enrichment. Otherwise, as the Court of Appeal noted in Wilson at para. 28:
... Because the necessity to off-set reciprocal benefits arises out of the inherent nature of a marriage-like relationship, receipt of those benefits is not suited to constitute a juristic reason for enrichment. The receipt of reciprocal benefits does not have the same juridical force as a contract, a disposition of law or a donative intent ... Any reciprocal benefit qualifying for the application of equitable setoff should be treated as such in an unjust enrichment analysis and brought into account after the enrichment has been valued.
[53] Although the exchange of mutual benefits is not in itself a juristic reason for enrichment, they may in some circumstances provide evidence of the reasonable or legitimate expectations. At para. 9 of Kerr, Cromwell J. summarized the role of reasonable or legitimate expectations in the unjust enrichment analysis:
[T]here is the question of what role the parties’ reasonable or legitimate expectations play in the unjust enrichment analysis. My view is that they have a limited role, and must be considered in relation to whether there is a juristic reason for the enrichment.
[54] The defences to an unjust enrichment claim are canvassed in Wilson. They include change of position, estoppel, laches and acquiescence, statutory defences, and equitable considerations.
[55] In short, none of these defences have any application in the case at bar.
[56] The plaintiff’s claim is advanced, alternatively, as a claim to a monetary or proprietary remedy. In Kerr at para. 47, Cromwell J. held that in unjust enrichment cases “The first remedy to consider is always a monetary award”. This is so whether the unjust enrichment is said to amount to the specific value contributed to an asset (a quantum meruit or “value received” calculation) or to a contribution to a joint-venture (a “value survived” calculation).
[57] The circumstances in which a proprietary remedy may be appropriate were described by the Court of Appeal in Wilson at para. 46:
... Only if a monetary award is inadequate and there is a “sufficiently substantial and direct” contribution to the acquisition, preservation, maintenance or improvement of the property in which the trust is claimed, may a proprietary interest be considered ...
[58] Further, at para. 49:
... Unless there is reason for a continued sharing of the rights, obligations and risks of ownership, there is no practical benefit to a proprietary award and there is a downside, not least of which is the need for an accounting between the owners on a continuing basis.
[59] As the British Columbia Court of Appeal noted in Wilson at para. 51:
In practice, the real issue in most family cases is the choice of a “value received” or a “value survived” approach to the quantification of an award. Commonly, factors that would permit the imposition of a constructive trust, were it appropriate for the parties to share continuing ownership, will support the value survived approach to quantification of the alternative monetary award ....
[60] At para. 53 the court noted that “Although the lines can get blurred between the two where cohabitation is long and the parties’ contributions are difficult to identify ... a court must identify which approach it is taking, explain why, and not confuse the two methods.”
[61] In Kerr the Supreme Court of Canada described the criteria that ought to be taken into account in the analysis of whether there was in fact a joint venture at paras. 88-89:
It is critical to note that cohabiting couples are not a homogeneous group. It follows that the analysis must take into account the particular circumstances of each particular relationship. Furthermore, as previously stated, there can be no presumption of a joint family venture. The goal is for the law of unjust enrichment to attach just consequences to the way the parties have lived their lives, not to treat them as if they ought to have lived some other way or conducted their relationship on some different basis. A joint family venture can only be identified by the court when its existence, in fact, is well-grounded in the evidence. 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.
In undertaking this analysis, it may be helpful to consider the evidence under four main headings: mutual effort, economic integration, actual intent and priority of the family. There is, of course, overlap among factors that may be relevant under these headings and there is no closed list of relevant factors. What follows is not a checklist of conditions for finding (or not finding) that the parties were engaged in a joint family venture. These headings, and the factors grouped under them, simply provide a useful way to approach a global analysis of the evidence and some examples of the relevant factors that may be taken into account in deciding whether or not the parties were engaged in a joint family venture. The absence of the factors I have set out, and many other relevant considerations, may well negate that conclusion.
[62] In Kerr the Court does not discount the value received approach to quantification of the remedy in domestic cases but concludes the value survived approach may more accurately reflect the nature and effect of the relationship that commonly exists between unmarried partners:
[84] It is not the purpose of the law of unjust enrichment to replicate for unmarried partners the legislative presumption that married partners are engaged in a joint family venture. However, there is no reason in principle why remedies for unjust enrichment should fail to reflect that reality in the lives and relationships of unmarried partners.
[85] I conclude, therefore, that the common law of unjust enrichment should recognize and respond to the reality that there are unmarried domestic arrangements that are partnerships; the remedy in such cases should address the disproportionate retention of assets acquired through joint efforts with another person. This sort of sharing, of course, should not be presumed, nor will it be presumed that wealth acquired by mutual effort will be shared equally. Cohabitation does not, in itself, under the common law of unjust enrichment, entitle one party to a share of the other’s property or any other relief. However, where wealth is accumulated as a result of joint effort, as evidenced by the nature of the parties’ relationship and their dealings with each other, the law of unjust enrichment should reflect that reality.
[63] At para 100 of the judgment in Kerr the proper approach to the assessment of a monetary award on a value-survived basis is described in the following terms:
1. The monetary remedy for unjust enrichment is not restricted to an award based on a fee-for-services approach.
2. Where the unjust enrichment is most realistically characterized as one party retaining a disproportionate share of assets resulting from a joint family venture, and a monetary award is appropriate, it should be calculated on the basis of the share of those assets proportionate to the claimant’s contributions.
3. To be entitled to a monetary remedy of this nature, the claimant must show both (a) that there was, in fact, a joint family venture, and (b) that there is a link between his or her contributions to it and the accumulation of assets and/or wealth.
4. Whether there was a joint family venture is a question of fact and may be assessed by having regard to all of the relevant circumstances, including factors relating to (a) mutual effort, (b) economic integration, (c) actual intent and (d) priority of the family.
[64] As observed by the Court at para. 69, this conclusion reflects the reality of many domestic relationships:
Relationships of this nature are common in our life experience. For many domestic relationships, the couple’s venture may only sensibly be viewed as a joint one, making it highly artificial in theory and extremely difficult in practice to do a detailed accounting of the contributions made and benefits received on a fee-for-services basis.
[65] With respect to the method to be employed, Huddart J.A. noted in Wilson at para. 61:
The key features of the assessment on the value survived approach are the identification of the value available for apportionment and the parties’ proportionate contributions to that value. There is no presumption of equality: Rathwell at 447-49.
[66] In Hall, the plaintiff, a party to a common-law relationship between the spring of 2005 and the summer of 2008, had contributed to a household and business owned and also operated by the defendant. The trial judge held that the plaintiff could reasonably have expected, and actually did expect, that if she operated the business for a reasonable period of time at a reasonably low salary she would earn an interest in the business and thus in the property. The Court of Appeal held at para. 23 as follows:
In these circumstances, it cannot be said the appellant is not entitled to a trust interest or equivalent damages determined on a survived value basis on the principles laid down in Peter v. Beblow, [1993] 1 S.C.R. 980, Pickelein v. Gillmore (1997), 30 B.C.L.R. (3d) 44 (C.A.); Shannon v. Gidden, 1999 BCCA 539; Medly v. Medly, 1999 BCCA 113; Wilson v. Fotsch, 2010 BCCA 226.
[67] After concluding that the trial judge had erred in using a quantum meruit approach to valuation, the court measured damages on a value survived basis on these principles, and made an order declaring that the defendant held an interest in the property for the plaintiff in trust, and permitting the defendant to purchase the balance of the plaintiff’s interest in the property for a set sum within 90 days of the release of the reasons, or such further period as the plaintiff might allow on such terms and conditions to which the parties might agree. The court ordered that if the defendant did not purchase the property it should be sold and the net proceeds divided in proportions equivalent to the parties’ interests in the property after making appropriate deduction for other claims.
[68] After a remedy has been chosen and the value of the claim quantified, the court may take into account the competing claim of the defendant to unjust enrichment.
[69] As the Court of Appeal noted in Wilson at para. 80:
Whether mutual claims of unjust enrichment are pleaded, equitable set-off is pleaded as a defence, or evidence of a reciprocal enrichment is led but not pleaded, they should all be treated in the same fashion. In principle, the amount of the set-off should be determined by the same analysis that would be applied to a counterclaim for unjust enrichment.
[70] This approach was expressly approved of by the Supreme Court of Canada in Kerr, where it was held that mutual benefit conferral should not generally be taken into account at the juristic reason stage of the analysis but should, rather, be considered in addressing the quantum of the award. As the Court noted at para 114:
The juristic reason analysis is intended to reveal whether there is a reason for the defendant to retain the enrichment, not to determine its value or whether the enrichment should be set off against reciprocal benefits.
Therefore, the conferral of mutual benefits should only be considered at the juristic reason stage for the limited purpose of providing relevant evidence of the reasonable expectations of the parties. Otherwise it should be considered later, in the calculation of an appropriate award or remedy.
ANALYSIS
Benefit or Enrichment
[71] A benefit was clearly conferred upon B.H.L. by D.P.S. During the course of the parties’ twelve year relationship D.P.S. contributed directly to payment of the mortgage on the house registered in B.H.L.’s name. He used most of his disposable income for the benefit of the family. He made indirect contributions to the value of the home by working on maintenance and renovation projects.
[72] Prior to the relationship with B.H.L., D.P.S. was living on his own property. He had some equity in that property and that equity stood to grow with real estate values. Upon taking up with B.H.L. he sold his property and used some of the proceeds of the sale to reduce the mortgage on her property. Thereafter, rather than using a portion of his own income to reduce his mortgage and thereby increase his equity in his own property he supported the family unit established with B.H.L., freeing up funds that permitted B.H.L. to reduce her mortgage. By doing so D.P.S. lost an opportunity to save and an opportunity to invest in real estate at a time when the market was rising.
[73] The labour that he invested in the improvement of the home might have earned income elsewhere. There was a clear detriment to him, in financial terms, arising from his investment in the common law relationship.
Absence of a Juristic Reason for Enrichment
[74] As noted above, there is no juristic reason from an established category for B.H.L.’s enrichment. Nor, in my view, is there any public policy reason or legitimate expectation that might stand in the way of an unjust enrichment claim on behalf of D.P.S.
[75] Similarly, there is no evidence of any defence to such a claim.
Choice of Remedy
[76] D.P.S.’s financial contribution to the relationship, and hence to B.H.L., included both direct and indirect contributions to the value of real property. As noted above, he made a direct contribution to payment of the mortgage on the property and he directly contributed to the property’s value by working on renovation and maintenance projects. He indirectly contributed to the acquisition of chattels by merging his finances with those of B.H.L. such that over the course of this relationship it is difficult to determine which party paid for which assets that they accumulated. I accept the evidence of D.P.S. that the parties had an informal agreement that B.H.L. would use her income to pay the mortgage on the house and D.P.S. would pay for other expenses of daily living including, particularly, groceries and that the parties would retain ownership of the assets that they brought into the relationship, but share the value of any assets accumulated during the course of their relationship.
[77] There is, in my view, a clear link between the contribution that founds the action and the property over which a constructive trust is claimed.
[78] D.P.S.’s claim is not small compared to the value of the whole property in question. It is unclear whether B.H.L. will be able to satisfy the plaintiff’s claim without a sale of the property in question. She is not currently employed and says that she will have difficulty obtaining a mortgage against her equity and the property despite the absence of any other charges and its substantial value.
[79] D.P.S. does not have any special attachment to the property in question whereas the defendant, B.H.L., does. She lives there with her daughter and wishes to maintain that family home for her daughter’s benefit. Hardship might be caused to the defendant if the plaintiff obtains the rights flowing from an award of an interest in the property. Neither party is opposed to a monetary award. Both wish to bring an end to the continued sharing of rights and obligations and risks of ownership that might arise from a constructive trust.
[80] In my view the ends of justice may be obtained and the parties’ interests served by an order such as that made in Hall v. Becker. The plaintiff made a direct and substantial contribution toward the acquisition of equity in the Quesnel house and the maintenance and preservation of the property. It may be necessary in order to protect his interest in the property to award him a proprietary remedy. On the other hand it is in the parties’ joint interests and in the interest of their daughter for me to afford the defendant an opportunity to make good a monetary award before making such a proprietary award. I will make an order describing the plaintiff’s trust interest in the property but permit the defendant to purchase that interest if she does so within a reasonable period of time.
Quantification of the Remedy
[81] Having regard to the mutual efforts of the parties to acquire equity in the Quesnel house and to preserve, maintain and improve it; having regard to the extent of their economic integration; accepting D.P.S.’s evidence of their actual intent to share in the increase in the value of their collective assets; and having regard to the priority they placed upon their family I have no difficulty in finding that their relationship constituted a joint venture.
[82] I accept D.P.S.’s evidence that there was an expectation that he would have an interest in the property in which he invested time and money. There was little equity in the property at the commencement of the relationship and the equity grew substantially through the efforts of the parties over the course of the relationship. In my view the value received approach to damages would be inadequate to reflect the efforts and investment of D.P.S. and would not reflect fairly the financial relationship between the parties during the course of the relationship.
[83] Damages in this case should be assessed by looking for the value created in the assets in question by the plaintiff’s contributions. I do so, in part, because of the degree of economic integration and the difficulty of calculating with mathematical precision the value of particular contributions to the family property. That is particularly so in a case such as this where neither party is able to clearly establish the extent of their contribution because of the absence of some financial records.
[84] The parties are able to describe their financial position at the start of their relationship and at the end of their relationship. They are able to document the income they earned during the course of the relationship. And they are, further, able to document specific investments in property and to provide the court with a reasonably complete description of their expenses during the last years during which they lived together.
[85] Mr. Rempel, for the plaintiff, suggests that it would be appropriate to assume that the pattern of the parties’ spending and their contributions toward expenses was consistent throughout their relationship and to infer that income was used in the first few years of their relationship in the same way in which it was used in the last few years of their relationship. In my view, that is a reasonable inference to draw from the evidence and I adopt that approach in describing the parties’ respective contributions toward their assets.
[86] Because of the merging of resources and because the approach I will take to examine D.P.S.’s contribution requires an analysis of B.H.L.’s contribution, It is unnecessary to separately analyse B.H.L.’s contribution to the accumulation of assets. Instead, I will look at all of the income available to both parties and all expenses incurred and then describe their relative contributions to the assets accumulated during the course of the relationship.
[87] Before doing so I should address one argument made by Mr. L. on behalf of B.H.L. Mr. L. suggests that D.P.S. has not made full disclosure of financial information. He says that D.P.S. has significant undisclosed assets. Mr. L. says when he left the Quesnel house D.P.S. took two jars full of gold weighing from 6 ounces to 8 ounces and five truck loads of goods. He argued that D.P.S. has cash and investments that he has not disclosed and assets in a safe deposit box. There was no evidence from B.H.L. with respect to the quantity of gold removed from the house, the type or value of goods D.P.S. removed, D.P.S.’s investments elsewhere, or the nature of the assets that may be kept in a safe deposit box. D.P.S. gave the only evidence with respect to these issues. He says that there were a few flakes of gold with little value in a jar that he removed from the house. He denies that he took much of any value out of the house when he left aside, from clothing and personal effects. He denies that he has any investments elsewhere. There is no basis to challenge D.P.S.’s evidence with respect to any of these items.
[88] In her testimony, B.H.L. did not challenge D.P.S.’s evidence with respect to his assets at the time of the dissolution of the relationship. In cross-examination it was not suggested to D.P.S. that he had investments elsewhere. B.H.L. should have been in a position to know what D.P.S. took from the home when he left, having lived with him so long and being familiar with the contents of the home. However, she said little about what he removed and did not testify with respect to the removal of anything of value by D.P.S. I have a high degree of confidence that the financial documents produced at trial accurately describe the financial position of the parties at the dissolution of the relationship.
[89] When D.P.S. began living with B.H.L. he had about $45,000 in equity in his mobile home and property, approximately $2,000 in Canada Savings Bonds, a boat, an old truck and a snowmobile. After living with B.H.L. and working steadily from 1997 through to 2008 he had his RRSP worth approximately $26,000, a snowmobile, the boat and the trailer to his name. His net worth had decreased by approximately $15,000. B.H.L., on the other hand, had approximately $200,000 in equity in the Quesnel house, a relatively new vehicle and approximately $30,000 in savings. Her net worth had increased dramatically during the course of the relationship. Mr. Rempel says that is a measure of her enrichment. He says D.P.S. anticipated reapportionment would occur on the dissolution of the common-law relationship with B.H.L. and that is fair in the circumstances.
[90] During the course of their years together D.P.S. earned approximately $780,000. B.H.L. earned an amount in the range of $600,000. It is clear that both parties consumed similar portions of their own income but devoted most of the income to common expenses of the household. Those expenses included the cost of the accumulation of assets which for the most part are in B.H.L.’s name. I accept D.P.S.’s evidence that he contributed approximately $18,000 in direct payments to reduction in the mortgage on the family home. I am also satisfied that D.P.S. made a substantial indirect contribution to the equity in the house by working on maintenance and improvement projects including the installation of a new roof, the replacement of flooring, and other interior and exterior improvements. I further accept that he entered into an informal agreement with B.H.L. that would see him pay household expenses and free up income for her to reduce the mortgage. The benefit conveyed upon B.H.L. is difficult to measure precisely but I am satisfied that D.P.S. contributed an amount at least equal to that contributed by B.H.L. toward reduction and eventual discharge of the mortgage against the title to the property.
[91] I accept Mr. Rempel’s submission that, bearing in mind the length of the relationship between the parties and the direct and indirect contributions of D.P.S., this case bears some similarity to Fuscaldo v. Stewart, 2010 BCSC 1585, where the Court found the plaintiff to be entitled to a 50% interest in the properties and assets to which an indirect contribution had been made. D.P.S. will be entitled to a 50% interest in the property to the acquisition and maintenance of which he contributed after certain deductions, further described below.
[92] In coming to this conclusion I place considerable weight upon the fact that the mortgage, which must have stood in the range of $84,000 when the parties started living together in March 1997 was fully paid off between then and January 2003. Given their other expenses, this reduction in the mortgage, equivalent to payments of $1,300 per month toward the principal of the mortgage, could not have been accomplished by B.H.L. without D.P.S.’s payment of other expenses. I am also satisfied that D.P.S. contributed an amount to household income, from which the parties jointly paid the debt on the line of credit and for the purchase of the chattels accumulated by the parties during the course of the relationship, including the motor vehicle and the specific equipment identified by D.P.S.
[93] While each party cared for the child of their relationship while the other was at work, I am of the view that such care was not provided for the benefit of the other party. Aside from caring for their child neither can be said to have contributed to the other party’s employment or income earning capacity in a manner that should be reflected in a trust interest in the increase in the growth in the other’s pension during the course of the relationship. That growth was unaffected by the existence of the relationship or the parties’ relative contribution to the shared household. I will therefore make no order in relation to the growth and the value of the parties’ pensions.
[94] D.P.S. says that he contributed directly and indirectly to the purchase of specific assets other than the Quesnel house. Similarly, Mr. L. says on behalf of B.H.L. that she has paid and is still paying for certain assets that are registered in the name of D.P.S. in which she should have an interest. The specific assets in question are:
1. a reasonably new GMC Envoy said to have a value of $15,000;
2. a 1990 truck bought in 2004 said to have a value of $7,000;
3. the fifth wheel or travel trailer said by D.P.S. to have a current value in the range of $10,000;
4. a Lund boat purchased in 2008 said to have a value of $2,000;
5. a patio set;
6. a barbeque;
7. a washer and dryer;
8. a Food Saver Sealer and food processor;
9. a pressure washer;
10. a rototiller; and
11. significant other household furniture not further described.
[95] D.P.S. has estimated the value of the vehicles. The estimates are unchallenged but there is evidence that in a violent dispute each party did significant damage to the other’s vehicle. The fifth wheel and truck are both registered in D.P.S.’s name. The Envoy is registered in B.H.L.’s name. I am unable on the evidence to accurately measure the value of the damage to the vehicles. D.P.S. says that if each party retains the vehicles registered in their own name that an adjustment payment of $2,000 to B.H.L. would be sufficient to recognize each party’s one-half interest in the vehicle registered in the other’s name. Given that the Envoy is a new vehicle and that the damage done to it may have more significantly affected its value, I am of the view that an adjustment payment of $5,000 would adequately compensate B.H.L. for the offsetting claims of each party to an interest in vehicles.
[96] I am unable to adjudicate upon D.P.S.’s claim that fair compensation to him for his contribution to the chattels that remain at the Quesnel house would be accomplished by conveying title in certain chattels to him. I therefore order that each party shall have an equal share in the assets listed below. B.H.L. is declared a trustee of D.P.S.’s 50% interest in these assets. Neither party shall be entitled to sell any of the assets without the consent of the other. The parties have liberty to apply for directions, including an order for partition and sale. I invite the parties to bring an end to disputes arising out of joint ownership of these items by agreeing to a suitable compromise, whether that be an exchange of items or sale and distribution of proceeds:
1. Lund boat;
2. patio set;
3. barbeque;
4. washer and dryer;
5. Food Saver Sealer and food processor;
6. pressure washer; and
7. rototiller.
Line of Credit
[97] There was $27,000 owing on the line of credit at the time of separation. D.P.S. acknowledges responsibility to pay one half of the amount owing on that line of credit. There will be an order that the debt on the line of credit be paid from the proceeds of the sale of the Quesnel house before distribution of the net proceeds of sale. In the event B.H.L. purchases D.P.S.’s interest in the home within 90 days of these reasons, she may deduct $13,500 from the amount required to purchase that interest upon repaying the amount owing on the line of credit.
[98] Otherwise, no further order is required in relation to B.H.L.’s claims to set off. The most substantial asset (the house), the Envoy, and other chattels are registered in her name. An equal division of the assets recognises B.H.L.’s substantial contribution to the purchase of those assets. Credit is given to her for the substantial asset she brought into the relationship. There is no basis in my view for her argument that a claim to a set off may be advanced in relation to the value of room and board received by D.P.S. during the course of the relationship. As noted above, he made substantial financial contributions to the running of the household.
SUMMARY
[99] There will be an order that the defendant holds a 50% interest in the value of the Quesnel house in excess of her initial investment of $20,000, in trust for the plaintiff. I accept D.P.S.’s evidence that he always regarded B.H.L.’s initial equity in the property as an asset which he was not entitled to share and to which he had not contributed.
[100] The defendant may purchase the plaintiff’s interest in the Quesnel house within 90 days of the release of these reasons or within such further period as the plaintiff may allow on such terms and conditions as the parties may agree, by paying the outstanding balance on the line of credit and paying to the plaintiff the sum of $67,500, calculated as follows:
|
Appraised value of Quesnel house: |
$192,000 |
|
Less Defendant’s initial down payment: |
$20,000 |
|
Net: |
$172,000 |
|
50% of net: |
$86,000 |
|
Less 50% of joint liability on line of credit ($13,500) |
$72,500 |
|
Less $5,000 adjustment for motor vehicles: |
$67,500 |
[101] If the defendant does not purchase the plaintiff’s interest in the property it shall be listed for sale and sold. The line of credit shall be paid in full from the proceeds of sale. The net proceeds in excess of the costs of sale and the defendant’s $20,000 initial equity in the house shall be divided equally between the plaintiff and the defendant. From his share of the net proceeds the plaintiff shall pay the defendant $18,500 to account for his share of the debt on the line of credit accumulated during the relationship and as an adjustment for the differential value of motor vehicles.
[102] Each party shall have a 50% share or interest in the assets listed below:
1. Lund boat;
2. patio set;
3. barbeque;
4. washer and dryer;
5. Food Saver Sealer and food processor;
6. pressure washer; and
7. rototiller.
[103] The defendant is declared a trustee of the plaintiff’s 50% interest in these assets. Neither party shall be entitled to sell any of the assets without the consent of the other. The parties have liberty to apply for directions including an order for partition and sale of these assets. The parties also have leave to speak to costs.
“Willcock J.”