A November 2010 case from the Quebec Court of Appeal is dealing with the question if there should be legal recognition of a common-law spouse's rights to seek alimony payments when they split from their partner. This is an ever changing and fascinating area of family law and one that could have serious implications for the rights of individuals in Quebec. Below, we discuss some of a common-law spouse's other present rights as they relate to their claims for division of property that are receiving a lot of attention in the Courts:
Dependant Relief and Unjust Enrichment.
The death of a loved one may not only be a time for grief, but a time when conflict can arise between family members. In some cases family members, and particularly spouses, may feel short-changed when the estate's assets are distributed in light of their relationship and their contributions to the deceased while they were alive.
That's just what happened to Dolores.
Dolores was married once, when she was younger, but it never worked out. Soon after her divorce, though, she met Sam, another divorcee with two children of his own. After a brief courtship, the two soon moved in together and Dolores settled into her new life as a homemaker. Oh, Dolores would work the odd job every now and then – working as temporary office assistant to help out a friend, working one day a week just to get out of the house for a while – but ever since she met Sam she resolved to make her full-time job looking after her and Sam's household, so he would never have to worry about anything when he got home from work. Over the next 23 years, they lived happily under one roof, with Dolores looking after the household chores and Sam devoting himself full-time to earning enough money to support the both of them.
Then, shortly after he retired, Sam died suddenly. Sam's years of hard work made possible by Dolores's commitment to homemaking had left him with a sizeable estate that he dutifully distributed to his two daughters and his grandchildren – but not Dolores. So, not only did she have to endure the loss of her common law husband of more than twenty years but Dolores was left financially destitute having accumulated little in the way of her own personal savings, with her only income coming from government old age pensions.
We've acted on cases like this one, where a surviving spouse is trying to lay claim to a portion of the deceased's estate. There are usually two headings of losses the Courts will consider in cases like these: Dependent Relief & Unjust Enrichment.
Dependent Relief allocates to a spouse some amount out of the estate of the deceased for the proper support of their dependent(s)1.
Just what constitutes "proper" support largely depends on the fact specific to the case at hand, but the Courts have provided us some guidance on these issues.
With reference to a number of other cases2, the Ontario courts have established that a simple needs based analysis is insufficient; rather, the Courts should adopt a “judicious father and husband” test in determining the appropriate disposition. Essentially, this test forces us to consider:
(a) what legal obligations would have been imposed on the deceased had the question of provision arisen during his lifetime; and,
(b) what moral obligations arise between the deceased and his or her dependants as a result of society’s expectations of what a judicious person would do in the circumstances.
One of the objectives of the Succession Law Reform Act (“SLRA”) is to ensure that spouses and children receive a fair share of family wealth. In Cummings v. Cummings, for example, the concept of fairness in determining amounts for dependent relief was elaborated on as follows:
Society’s values and expectations change. In earlier times, the prevailing view was that on termination of a marriage the husband was obliged to maintain the wife, and nothing more. At present, however, the provisions of the Divorce Act, family property and family support legislation, and the law relating to constructive trusts,all reflect society’s expectations that children will be properly supported and that spouses are entitled not only to proper support but also to a share in each other’s estate when a marriage is over.
The SLRA advises the courts to consider the following – among several other – factors in determining the amount, if any, of dependent relief to award to an applicant:
(i) The contributions made by the dependant to the deceased’s welfare, including indirect and non-financial contributions;
(ii) The contributions made by the dependant to the acquisition, maintenance and improvement of the deceased’s property or business;
(iii) A contribution by the dependant to the realization of the deceased’s career potential;
(iv) The effect on the spouse’s earning capacity of the responsibilities assumed during cohabitation;
(v) Any housekeeping, childcare or other domestic service performed by the spouse for the family, as if the spouse had devoted the time spent in performing that service in remunerative employment and had contributed the earnings to the family’s support.
And so, a delicate balancing act is in order. In determining the amount to be paid out in a claim for dependent relief, we must consider not just what a spouse needs, but what they are fairly entitled to as a contributor to the family estate during the marriage. This fairness approach must also balance the entitlement of other dependents to the net family property.
Our experience in cases like these is that it's best to present the Courts with a variety of scenarios rather than just committing to a single calculation. This approach allows us to consider both the legal and moral obligations contemplated in previous court cases and the SLRA, and it allows us to provide calculations based on an economical consideration of what the surviving spouse requires on a needs based analysis. The Courts can then apply their own discretion in determining any award.
Being able to approach the problem from a number of different angles can also be advantageous in helping the Courts to understand a claim for Dependant Relief.
Judges and juries don't always easily understand the deep economic and financial issues that arise in cases like these; our experience suggests that presenting them with some variety increases the likelihood that they will find an argument that is more intellectually appealing and they'll ultimately be more open to providing some award. We have provided calculations for Dependant Relief using Statistics Canada census data, Spousal Support Advisory Guidelines, cross and sole dependency considerations and household budgets, to name a few. Since each individual case is different, having a variety of techniques at your disposal is essential in creating an effective argument.
Claims for Dependant Relief are often accompanied by claims for Unjust Enrichment. The doctrine of Unjust Enrichment is an equitable concept created to remedy injustices that occur where one person makes a substantial contribution to the property of another person without compensation. In estate disputes, the claim is usually advanced when one spouse foregoes employment in order to act as the homemaker allowing the other to devote more of their time to advancing their career, or provides financial support by contributing to the family expenses and is subsequently neglected in the provisions of the deceased's will.
Although claims for unjust enrichment are often advanced when one spouse dies, they can also apply to marriages and common law relationships that have come to an end.
In order to proceed with a claim for unjust enrichment, three elements must be satisfied. There must be:
I. an enrichment;
II. a corresponding deprivation; and
III an absence of juristic reason for the enrichment.
There are two commonly adopted approaches used to calculate the amount of enrichment provided throughout the course of a relationship.
There is the Value Received approach, which attempts to quantify the amount the deceased or other party would have been required to pay for the services provided by the surviving spouse on a purely business basis. Essentially, this approach attempts to calculate an award based on the value of what one party has 'put in' over the course of the relationship.
and
There is the Value Survived approach, which calculates the amount of enrichment as the portion of the assets accumulated by each spouse on the basis of the contributions made by each. The value survived approach will usually be the best choice for long term marriage-like relationships, because contributions in these partnerships usually cannot be measured with precision and because that approach is consistent with the expectations of both parties in this type of relationship, barring evidence of a contrary understanding. It is also usually more equitable. This approach attempts to calculate an award based on the value of what has 'come out' of the relationship, as a result of one party's contributions.
As societies have changed, women have entered the workforce in increasing amounts over the past several decades and are no longer expected to act exclusively as homemakers. As such, those who do make the choice to forego a career in order to provide their family with housekeeping and homemaking services contribute to the family estate by allowing their spouses to focus on advancing their careers and accumulating assets3.
Each approach has its own strengths and is fraught with its own weaknesses.
The value received approach is easily implemented, straightforward and easy to understand. But, is the value of the services provided truly a measure of the value added to the estate as a result?
The value survived approach is a direct calculation of the added value to an estate by the dependent spouse. The difficulty lies in demonstrating a clear link between the services provided and their effect on the size of the estate.
Arguing for Unjust Enrichment is typically more difficult than it is for Dependant Relief because the underlying claim is conceptually more difficult for people to comprehend. Let's consider Dolores's predicament as an example. Based on Statistics Canada census data, the cost to replace her full-time homemaking activities would run approximately $500,000 over the 20-years or so that she and Sam lived together. A substantial amount to be sure. However, census data also seems to suggest that families with one stay-at-home spouse tend to earn 33% more than single male households. If Sam has built up an estate worth $9 million, can Dolores really lay claim to $3 million – or one third of his estate?
And therein lies the difficulty. The two approaches need not reconcile, and can in fact be wildly different. These complex assessments rely on the material judgement and experience of the assessor. There is no 'smoking gun' that definitively provides an amount for the value of a spouse's contribution towards the family estate. However, experts with experience in the art of forensic and investigative accounting like the professionals at Krofchick Valuations can be a valuable asset towards resolving your claims.
We have dealt with cases involving succession and estates disputes, and employ the most up-to-date labour market statistics in order to provide our clients with the tools they need to help resolve their cases. We employ the skills of forensic economics, business valuation, investigative accounting, and actuarial science to assist in assessing and quantifying your clients' economic position. Let the experts at Krofchick Valuations help you resolve your case in a timely, efficient, and professional fashion and see why We Make The Difference.
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1Support of dependents is governed by the Succession Law Reform Act of Ontario.
2For example, Cummings v. Cummings 69 OR (3rd) 397 (O.C.A.) and Tataryn v. Tataryn Estate [1994] 116 DLR (4th) 193.
3The Courts have taken this intuitive argument and enshrined it as a legal principle. The decision in Peter v. Beblow, [1993] 1 S.C.R. 980 noted that:
Relief in the form of a personal judgment or property interest should adequately reflect the fact that the unpaid services of one party to the relationship enhanced the income earning capacity and the ability of the other to acquire assets.
And
The granting of relief in the form of a personal judgment or a property interest to the provider of domestic services should
adequately reflect the fact that the income earning capacity and the ability to acquire assets by one party has been enhanced by the unpaid domestic services of the other.
Krofchick Valuations is a firm of experts in damage quantification and assessment who utilize the skills of forensic economics, actuarial science, investigative accounting and business valuations.
