The unjust enrichment of an ex-spouse can pose significant financial challenges after separation. This article explores the remedies available to restore economic balance between common-law partners, based on the provisions of the Civil Code of Québec.
Despite the imminent coming into force of the new provisions of the Civil Code of Quebec providing for the introduction of the parental union regime (which will include the possibility for one spouse to claim a compensatory allowance from the other), the unjust enrichment remedy currently remains the main pecuniary recourse that one spouse can assert against the other following a separation.
This remedy is essentially designed to balance the finances between de facto spouses after their separation, provided certain criteria are met.
APPLICATION CRITERIA
The unjust enrichment remedy is codified in article 1493 of the Civil Code of Québec. To claim unjust enrichment, the financially aggrieved spouse must prove :
(a) Enrichment: It must be proven that one of the spouses has been enriched during the union, either through an increase in the patrimony of the enriched spouse, or through services rendered by the impoverished spouse to the enriched spouse;
(b) Impoverishment: You must prove that you became impoverished during the union, which may take the form of a loss of earnings;
(c) A correlation between enrichment and impoverishment: you became poorer because your spouse became richer, and vice versa;
(d) Lack of justification: the enrichment must be without legal reason, i.e. without legal or conventional justification;
(e) Absence of other remedies: For an action for unjust enrichment to be brought, the injured party must have no other contractual means or remedy available to him or her.
Insofar as the financially injured spouse can prove all the above criteria, he or she will be entitled to compensation for his or her contribution to the enriched person’s patrimony.
There are two main methods of calculating enrichment:
1. that based on the value received, corresponding to the amount the enriched party would have had to spend to receive the service, and
2. The accumulated value method, which seeks to determine the contribution of the financially aggrieved spouse to the overall wealth of two parties built up through their joint efforts.
VALUE RECEIVED VS. ACCUMULATED VALUE
In the case of value received, the impoverished will be awarded an amount typically representing what the impoverished should have received as remuneration for the services received. In the case of accumulated value, which is based more on Common Law principles, instead of paying an indemnity as provided for in the Civil Code of Québec, the party who has contributed to the enrichment of the other receives, as compensation, a right of ownership in property.
For accumulated value, the Supreme Court of Canada ruled in Kerr v. Baranow[1] that the parties must have been involved in a joint family venture. Those alleging its existence must show that (1) the parties participated in a joint effort to achieve important objectives, (2) the high degree of integration of the parties’ finances, (3) that they intended to share the wealth they created together, and (4) the priority given to the family.
If the de facto union has been of long duration, there will be a simple presumption both of the correlation between enrichment and impoverishment, and of the absence of justification. These presumptions may be rebutted by the spouse who has become enriched.
EXAMPLES OF COMPENSATION IN CASE LAW
As an example, in a case where the accumulated value method was adopted, the Court of Appeal in Droit de la famille – 201878[2] upheld a trial decision awarding the ex-wife of a multimillionaire businessman the sum of $2.4 million, in recognition of the fact that her presence at home, with the children, while they were living common-law, had enabled her to devote herself to the business project that made him a millionaire. The businessman in question had assets of $17 million at the time of separation.
In other judgments adopting the accumulated value method, we find awards to the financially injured spouse often ranging from 15% to 30% of the wealthier spouse’s net assets. For example, in Peter v. Beblow[3], the Supreme Court determined that compensation representing 25% of the wealthier spouse’s net assets was fair, given his spouse’s contributions to the family. In another case, where the wife was destined to provide for the family’s needs while devoting a good part of her time to the husband’s transport business (in particular, keeping the books and registers, washing the trucks and shopping for spare parts), the Superior Court awarded her compensation representing approximately 20% of the husband’s net assets[4].
In terms of value received, the indemnity to which the financially injured spouse would be entitled corresponds to the amount that, from a purely commercial point of view, the enriched party would have had to pay another person to obtain the services he received from the impoverished party. For example, in Débigaré v. Boudreau[5], the Court of Appeal awarded the respondent an indemnity of $300,000, given the nature of the goods and services rendered and the duration of their union (12 years), i.e. $25,000 per year for the 12 years during which the respondent was significantly involved in family life, the care and education of the children and household chores from the birth of their child to the end of their life together.
TIME LIMIT AND PRESCRIPTION
Finally, it is important to note that unjust enrichment claims are subject to a limitation period of three (3) years from the date on which the spouses ceased living together.
FIND OUT ABOUT YOUR RIGHTS
If you have any questions about the unjust enrichment remedy, or would like to know more about your potential rights in this regard, we invite you to contact our family law experts. Our team will be able to advise you on your potential rights and remedies, counsel you accordingly and represent your interests in any such action.
[1] Kerr v. Baranow, 2011 SCC 10 (CanLII), [2011] 1 SCR 269
[2] Droit de la famille – 201878, 2020 QCCA 1587 (CanLII)
[3] Peter v. Beblow, 1993 CanLII 126 (SCC), [1993] 1 SCR 980
[4] Lefebvre v. Therrien, 2015 QCCS 1437 (CanLII)
[5] Débigaré v. Boudreau, 2019 QCCA 928 (CanLII)