Legislate property rights for common-law spouses: Nathens

By Patricia MacInnis, Senior Editor

Many Ontarians will be surprised to learn that common-law spouses do not have a legal right to share in the increase in value of property assets that accumulate in their partner’s name over the course of their relationship, Toronto family lawyer Ken H. Nathens writes in The Lawyer’s Daily.

When it comes to dividing assets after a relationship breaks down, common-law and married couples are treated much differently, says Nathens, partner with Nathens, Siegel Barristers LLP.

“The Family Law Act in Ontario provides that, except in limited circumstances, the value of all property accumulated during the marriage by both parties must be ‘equalized’ or split evenly on marital breakdown, regardless of how legal title to the property is held,” he says.

When it comes to how property rights are treated, Nathens says there is a vast legal disparity between married and common-law couples, especially in light of the fact that statistics show about one-fifth of all families include a common-law couple and most legislation provides equal treatment for married and unmarried spouses.

“For instance, pursuant to the Family Law Act (Ontario), common-law spouses (defined as those who have cohabited continuously for a period of not less than three years or are in a relationship of some permanence, or if they are the natural or adoptive parents of a child) are provided with the same right to claim spousal support from their former partner as married couples on relationship breakdown,” he says.

The Supreme Court of Canada has indicated that it will not strike down legislation on the basis that provincial property rights on separation do not extend to common-law spouses, Nathens writes, citing two relevant cases — one from Nova Scotia and another from Quebec.

“In both cases, the party seeking the division of property on the termination of their common-law relationship alleged that their constitutional right to equality pursuant to the Canadian Charter of Rights and Freedoms was infringed, as the provincial property laws in place at the time provided for the sharing of the value of property for married spouses on separation, but not for common-law spouses,” he says.

In the Nova Scotia Case, Nathens says the court did not find any Charter violation.

“In Quebec, the court found that even if there was an infringement by the provincial legislation of the equality provision of the Charter, such infringement was ‘saved’ by s. 1 of the Charter that provides that the infringement is proven to be ‘demonstrably justified in a free and democratic society,’” he writes.

According to the Supreme Court of Canada (SCC), couples who choose not to marry can create cohabitation agreements — civil unions in Quebec — that outline how property will be divided upon separation, Nathens says, adding the importance of choice regarding the marital relationship outweighed any potential breach of the Charter right to equality.

“In Ontario, equitable, as opposed to statutory, remedies exist to enable a common-law partner to claim property division from his or her spouse on relationship breakdown,” he writes. “The constructive trust/joint venture is the most common of these equitable remedies.”

A successful constructive trust claim is predicated on a common-law partner proving that he or she was engaged in a joint family venture, as defined by the SCC in another case, Nathens says.

“Pursuant to the joint family venture concept, a common-law spouse may be awarded a share in property held by the other spouse, if he or she is able to prove that he or she contributed to the value of the asset, either by financial contribution or otherwise and that the parties were engaged in a joint family venture with respect to the asset for their mutual or family benefit,” he writes.

Once the court accepts that a joint family venture exists, Nathens says it has the option to either award a sum of money or a share in the property to the non-titled spouse.

“In my view, the constructive trust and its related joint family venture are a poor substitute for statutory property rights,” he says, noting a recent case he was involved in, where the parties were in dispute over who owned the family residence, illustrates the point.

The parties lived as common-law spouses for 10 years in a jointly owned property, Nathens writes.

“Notwithstanding, the husband claimed a constructive trust interest on the wife’s share of the property, claiming she had ‘abandoned’ it during the relationship and that 95 per cent of the property was his as a result of his alleged over-contributions to the costs and improvements to the property,” he says.

Nathens says the wife had to endure an emotional four-day trial to prove she had been contributing financially from the beginning of the relationship.

“If the parties were married, the entire value of the home would be subject to equalization,” he writes. “Without marriage, the wife was required to spend $50,000 and suffer emotional trauma in order to prove her interest in the family home that was rightfully hers.”

Ontario must legislate property rights for common-law couples who, just like married couples, require certainty around the division of property assets when the relationship breaks down, Nathens says.

Other provinces, most recently British Columbia, have created legislation to govern property rights for common-law couples, he says.

“In British Columbia as of 2013, both common-law (defined as two years of cohabitation) and married spouses are treated the same for property division on breakup, meaning that absent a cohabitation or marriage contract that opts out of the regime, there will be a 50/50 split of shared assets and debts acquired during the marriage, with the exception of pre-relationship property, inheritances and gifts.”

Nathens questions whether the political will exists in this province to enact laws that govern property division for common-law couples.

“To date, there has been no progress in this regard, much to the detriment of the thousands of couples who reside common-law and to the Ontario court system that is already working past capacity,” he says.

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