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Peter v. Beblow, [1993] 1 S.C.R. 980

 

Catherine Peter                                                                                  Appellant

 

v.

 

William Beblow                                                                                  Respondent

 

Indexed as:  Peter v. Beblow

 

File No.:  22258.

 

1992:  November 12; 1993:  March 25.

 

Present:  La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory, McLachlin and Iacobucci JJ.

 

on appeal from the court of appeal for british columbia

 

Family law ‑‑ Trusts ‑‑ Constructive trust ‑‑ Long-term common law relationship ‑‑ Unpaid homemaker ‑‑ Homemaker maintaining and improving property ‑‑ Whether proprietary link necessary to constructive trust established ‑‑ Whether consideration to be given to the extent to which the remedy of constructive trust should be applied in terms of amount or proportion.

 


Trusts ‑‑ Constructive trust ‑‑ Long-term common law relationship ‑‑ Unpaid homemaker ‑‑ Homemaker maintaining and improving property ‑‑ Whether proprietary link necessary to constructive trust established ‑‑ Whether consideration to be given to the extent to which the remedy of constructive trust should be applied in terms of amount or proportion.

 

Appellant lived in a common law relationship with respondent for 12 years, doing the domestic work of the household and raising the children of their blended family without compensation.  Respondent had purchased the house occupied by the couple and appellant had undertaken a number of projects ‑‑ gardening, planting a hedge, painting ‑‑ to maintain or better it during the relationship.  During the course of the relationship respondent was able to pay off the mortgage on the house and to buy a houseboat and a van; appellant bought a lot with money earned outside the family unit.  The house lay vacant after the parties separated.

 

The trial judge found that the respondent had been enriched, that appellant had not been compensated, and that there was no juristic reason for the enrichment.  He awarded appellant the property.  The Court of Appeal allowed an appeal from this judgment.  At issue here was whether the provision of domestic services during 12 years of cohabitation in a common law relationship is sufficient to establish the proprietary link which is required before the remedy of constructive trust can be applied to redress the unjust enrichment of one of the partners in the relationship.  Further, consideration must be given to the extent to which the remedy of constructive trust should be applied in terms of amount or proportion.

 

Held:  The appeal should be allowed.

 


Per La Forest, Sopinka, McLachlin and Iacobucci JJ.:  The appropriate remedy--a monetary award or the imposition of a constructive trust--must only be decided once an unjust enrichment giving rise to restitution is established.  The constructive trust is available where monetary damages are inadequate and where there is a link between the contribution that founds the action and the property in which the constructive trust is claimed.

 

In determining whether an unjust enrichment exists, policy considerations are to be considered under the head of absence of juristic reason for the unjust enrichment.  Services given on the voluntary assumption of the role of wife and step‑mother give rise to a remedy based on unjust enrichment.  Generally, a common law spouse owes no duty at common law, in equity or by statute to perform work or services for the other party to the relationship. Homemaking and childcare services may, in a relationship, give rise to equitable claims against the other party.  It is not unfair for a recipient of indirect or non‑financial contributions to be forced to provide recompense for those contributions.  Domestic services cannot logically be distinguished from other contributions.  The test as to whether there is an unjust enrichment without juristic reason is flexible and the factors to be considered vary.  No obligation arose here from the parties' circumstances and the elements giving rise to a legal gift were not present.

 

Equity finds a role where an injustice without a legal remedy exists.  The courts can use the equitable doctrine of unjust enrichment to remedy the situation even though the legislature has chosen to exclude unmarried couples from the right to claim an interest in the matrimonial assets on the basis of contribution to the relationship.


A direct link between the contribution and the property is essential for a constructive trust to arise, whether the situation be commercial or family.  Unjust enrichment cases need not be categorized as commercial and family; no special rule exists for family cases.  Clarity and doctrinal integrity mandate that the basic principles governing the rights and remedies for unjust enrichment remain the same for all cases.  Even in a family situation, dispensing with the link between the services rendered and the property claimed to be subject to the trust would be inconsistent with the proprietary nature of the constructive trust.  Insufficiency of a monetary award in a family situation, however, is usually linked to the fact the claimant's efforts have given him or her a special link to the property and give rise to a constructive trust.  Although a minor or indirect contribution is insufficient to give rise to a constructive trust, the amount of the contribution governs the extent of the constructive trust once the threshold amount is met.

 

In assessing the value of a constructive trust, the "value survived" approach (the amount by which the property has been improved) is preferable to the "value received" approach (the value of the services which the claimant has rendered).  Where the claim is for an interest in the property, the portion of the value of the property claimed and attributable to the claimant's services must be determined.  The practical difficulty of calculating with mathematical precision the value of particular contributions to the family property favours a "value survived" approach.

 


Appellant's proper share of all the family assets ‑‑ the house, houseboat, van, War Veteran's Allowance and a lot purchased by appellant ‑‑ must be calculated.  Her contribution to the family enterprise was considerable for it saved the respondent large sums of money which were used to pay off the mortgage and to accumulate family assets.  The house reflected a fair approximation of the value of the appellant's efforts in acquiring the family assets.

 

Per L'Heureux‑Dubé, Gonthier and Cory JJ.:  An unjust enrichment requires an enrichment, a corresponding deprivation by the person who supplied the enrichment, and an absence of any juristic reason for the enrichment itself.  Given an enrichment, it almost invariably follows that there is a corresponding deprivation suffered by the person who provided the enrichment.  In a marriage or a long-term relationship, it should be taken, absent cogent evidence to the contrary, that the enrichment of one party will result in a deprivation to the other.

 

The constructive trust remedy may be applied where a spouse, including common law spouse, has contributed to the preservation, maintenance or improvement of property but not directly to its acquisition.  Respondent here conceded being enriched by appellant's work and contributions.

 


A person cannot be expected to forego compensation or an interest in the property in return for contributions made merely because that person loved the other person in the relationship.  There need not be any evidence of a promise to marry or to compensate.  "Spousal services" given by one party to the other in the relationship should be taken as being given with the expectation of compensation absent evidence to the contrary.  The nature and duration of the relationship, as well as the contribution made, should be considered.  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.

 

In a family relationship, the contribution need not be directly linked to a specific property in order to permit the imposition of a constructive trust.  This remedy need not be as rigorously limited in a family situation as it is in a commercial context because the expectations of the parties in the two situations are very different.  The constructive trust accords well in a family situation in that the parties to the relationship expect to receive on dissolution of the relationship not a fee for services based on market value but rather a fair share of the property or wealth accumulated through joint effort.  The grant of a constructive trust may be inappropriate, however, where the rights of bona fide third parties would be affected.

 

In a quasi‑marital relationship where the rights of third parties are not involved, the choice between a monetary award and a constructive trust will be discretionary and should be exercised flexibly.  The decision as to which property (if there is more than one) should be made the subject of a constructive trust is also a discretionary one.  It too should be based on common sense and a desire to achieve a fair result for both parties.

 


Situations may occur where an award for a monetary sum may be the most appropriate remedy.  A number of considerations exist:  (a) whether the plaintiff's entitlement is relatively small compared to the value of the whole property in question; (b) whether the defendant is able to satisfy the plaintiff's claim without a sale of the whole property in question; (c) whether the plaintiff has a special attachment to the property in question; (d) what hardship might be caused to the defendant if the plaintiff obtained the rights flowing from the award of an interest in the property.

 

Two methods can be used to evaluate the contribution of a party in a relationship:  value received (the amount the defendant would have had to pay for the services on a purely business basis) and value surviving (a portion of the assets accumulated by the couple on the basis of the contributions made by each).  Although value surviving has been traditionally employed in cases of constructive trust, the value received approach can be used to quantify the value of the constructive trust.  The remedy should be flexible.

 

The value surviving approach is often the preferable method.  It is usually more equitable and most closely accords with the expectation of the parties as to the division of jointly acquired assets.  It also avoids the difficult task of assigning a precise dollar value to domestic services.  Instead, the contributions of the parties can more accurately be expressed as a percentage of the accumulated wealth existing at the termination of the relationship.

 

Here, the imposition of a constructive trust was the more appropriate remedy because a monetary award would be impracticable since respondent was retired and living on a War Veteran's Allowance.

 

Cases Cited

 

By McLachlin  J.


Referred toWhite v. Central Trust Co. (1984), 54 N.B.R. (2d) 293; Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574; Pettkus v. Becker, [1980] 2 S.C.R. 834; Sorochan v. Sorochan, [1986] 2 S.C.R. 38; Peel (Regional Municipality) v. Canada, [1992] 3 S.C.R. 762; Grant v. Edwards, [1986] 2 All E.R. 426; Kshywieski v. Kunka (1986), 50 R.F.L. (2d) 421; Hougen v. Monnington (1991), 37 R.F.L. (3d) 279; Prentice v. Lang (1987), 10 R.F.L. (3d) 364; Hyette v. Pfenniger, B.C.S.C., December 19, 1991, unreported; Moge v. Moge, [1992] 3 S.C.R. 813; Rawluk v. Rawluk, [1990] 1 S.C.R. 70; Hunter Engineering Co. v. Syncrude Canada Ltd., [1989] 1 S.C.R. 426; Davidson v. Worthing (1986), 6 R.F.L. (3d) 113.

 

By Cory J.

 

ConsideredSorochan v. Sorochan, [1986] 2 S.C.R. 38; Chase Manhattan Bank N.A. v. Israel‑British Bank (London) Ltd., [1981] Ch. 105; Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574;  referred toMurdoch v. Murdoch, [1975] 1 S.C.R. 423; Pettkus v. Becker, [1980] 2 S.C.R. 834; Hunter Engineering Co. v. Syncrude Canada Ltd., [1989] 1 S.C.R. 426; Everson v. Rich (1988), 16 R.F.L. (3d) 337; Canadian Aero Service Ltd. v. O'Malley, [1974] S.C.R. 592; Moge v. Moge, [1992] 3 S.C.R. 813; Kshywieski v. Kunka (1986), 50 R.F.L. (2d) 421; Murray v. Roty (1983), 41 O.R. (2d) 705; Hussey v. Palmer, [1972] 1 W.L.R. 1286; Lawrence  v. Lindsey (1982), 28 R.F.L. (2d) 356; Herman v. Smith (1984), 42 R.F.L. (2d) 154.

 

Authors Cited

 


Farquhar, Keith B.  "Causal Connection in Constructive Trusts" (1986-88), 8 Est. & Tr. Q. 161.

 

Farquhar, Keith B.  "Causal Connection in Constructive Trust After Sorochan v. Sorochan" (1989), 7 Can. J. of Fam. L. 337.

 

Goff of Chieveley, Robert Goff, Baron and Gareth Jones.  The Law of Restitution, 3rd ed. By Lord Goff of Chieveley and Gareth Jones.  London:  Sweet & Maxwell, 1986.

 

Hovius, Berend, and Timothy G. Youdan.  The Law of Family Property.  Scarborough:  Carswell, 1991.

 

McLeod, James G.  Annotation in Everson v. Rich (1988), 16 R.F.L. (3d) 338.

 

McLeod, James G.  Annotation in Kshywieski v. Kunka (1986), 50 R.F.L. (2d) 421.

 

Narev, Ian.  "Unjust Enrichment and De Facto Relationships" (1991), 6             Auck.   U.L. Rev. 504.

 

Neave, Marcia.  "Three Approaches to Family Property Disputes -‑ Intention/ Belief, Unjust Enrichment and Unconscionability". In T. G. Youdan, ed. Equity, Fiduciaries and Trusts.  Toronto:  Carswell, 1989.

 

Palmer, George E.  The Law of Restitution, vol. 1.  Boston:  Little, Brown & Co., 1978.

 

Scane, Ralph E.  "Relationships `Tantamount to Spousal', Unjust Enrichment, and Constructive Trusts" (1991), 70 Can. Bar Rev. 260.

 

Scott, Austin Wakeman.  The Law of Trusts, vol. 5, 4th ed. By Austin Wakeman Scott and William Franklin Fratcher.  Boston:  Little, Brown & Co., 1989.

 

Simon,  Jocelyn Edward Salis, Sir.  "With All My Worldly Goods", Holdsworth Lecture, University of Birmingham, March 20, 1964.

 

Welstead, Mary.  "Domestic Contribution and Constructive Trusts:  The Canadian Perspective", [1987] Denning L.J. 151.

 

APPEAL from a judgment of the British Columbia Court of Appeal (1990), 50 B.C.L.R. (2d) 266, [1991] 1 W.W.R. 419, 29 R.F.L. (3d) 268, 39 E.T.R. 113, allowing an appeal from a judgment of Arkell L.J.S.C. (1988), 10 A.C.W.S. (3d) 229.  Appeal allowed.

 


G. William Wagner and R. C. Bernhardt, for the appellant.

 

Nuala J. Hillis and Jessie MacNeil, for the respondent.

 

//McLachlin J.//

 

The judgment of La Forest, Sopinka, McLachlin and Iacobucci was delivered by

 

McLachlin J. -- I have had the advantage of reading the reasons of Justice Cory.  While I agree with his conclusion and with much of his analysis, my reasons differ in some respects on two matters critical to this appeal:  the issues raised by the requirement of the absence of juristic reason for an enrichment and the nature and application of the remedy of constructive trust.

 


In recent decades, Canadian courts have adopted the equitable concept of unjust enrichment inter alia as the basis for remedying the injustice that occurs where one person makes a substantial contribution to the property of another person without compensation.  The doctrine has been applied to a variety of situations, from claims for payments made under mistake to claims arising from conjugal relationships.  While courts have not been adverse to applying the concept of unjust enrichment in new circumstances, they have insisted on adhering to the fundamental principles which have long underlain the equitable doctrine of unjust enrichment.  As stated by La Forest J.A. (as he then was) in White v. Central Trust Co. (1984), 54 N.B.R. (2d) 293, at p. 309 "... the well recognized categories of unjust enrichment must be regarded as clear examples of the more general principle that transcends them".

 

The basic notions are simple enough.  An action for unjust enrichment arises when three elements are satisfied:  (1) an enrichment; (2) a corresponding deprivation; and (3) the absence of a juristic reason for the enrichment.  These proven, the action is established and the right to claim relief made out.  At this point, a second doctrinal concern arises:  the nature of the remedy.  "Unjust enrichment" in equity permitted a number of remedies, depending on the circumstances.  One was a payment for services rendered on the basis of quantum meruit or quantum valebat.  Another equitable remedy, available traditionally where one person was possessed of legal title to property in which another had an interest, was the constructive trust.  While the first remedy to be considered was a monetary award, the Canadian jurisprudence recognized that in some cases it might be insufficient.  This may occur, to quote La Forest J. in Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574, at p. 678, "if there is reason to grant to the plaintiff the additional rights that flow from recognition of a right of property".  Or to quote Dickson J., as he then was, in Pettkus v. Becker, [1980] 2 S.C.R. 834, at p. 852, where there is a "contribution [to the property] sufficiently substantial and direct as to entitle [the plaintiff] to a portion of the profits realized upon sale of [the property]."  In other words, the remedy of constructive trust arises, where monetary damages are inadequate and where there is a link between the contribution that founds the action and the property in which the constructive trust is claimed.

 


Notwithstanding these rather straightforward doctrinal underpinnings, their application has sometimes given rise to difficulty.  There is a tendency on the part of some to view the action for unjust enrichment as a device for doing whatever may seem fair between the parties.  In the rush to substantive justice, the principles are sometimes forgotten. Policy issues often assume a large role, infusing such straightforward discussions as whether there was a `benefit' to the defendant or a `detriment' to the plaintiff.  On the remedies side, the requirements of the special proprietary remedy of constructive trust are sometimes minimized.  As Professor Palmer has said:  "The constructive trust idea stirs the judicial imagination in ways that assumpsit, quantum meruit and other terms associated with quasi-contract have never quite succeeded in duplicating" (George E. Palmer, The Law of Restitution, vol. 1, at p. 16).  Occasionally the remedial notion of constructive trust is even conflated with unjust enrichment itself, as though where one is found the other must follow.

 

Such difficulties have to some degree complicated the case at bar.  At the doctrinal level, the simple questions of "benefit" and "detriment" became infused with moral and policy questions of when the provision of domestic services in a quasi-matrimonial situation can give rise to a legal obligation.  At the stage of remedy, the trial judge proceeded as if he were making a monetary award, and then, without fully explaining how, awarded the appellant the entire interest in the matrimonial home on the basis of a constructive trust. It is only by a return to the fundamental principles laid out in cases like Pettkus v. Becker and Lac Minerals, that one can cut through the conflicting findings and submissions on these issues and evaluate whether in fact the appellant has made out a claim for unjust enrichment, and if so what her remedy should be.


1.  Is the Appellant's Claim for Unjust Enrichment Made Out?

 

I share the view of Cory J. that the three elements necessary to establish a claim for unjust enrichment -- an enrichment, a corresponding deprivation, and the absence of any juristic reason for the enrichment -- are made out in this case.  The appellant's housekeeping and child-care services constituted a benefit to the respondent (1st element), in that he received household services without compensation, which in turn enhanced his ability to pay off his mortgage and other assets.  These services also constituted a corresponding detriment to the appellant (2nd element), in that she provided services without compensation.  Finally, since there was no obligation existing between the parties which would justify the unjust enrichment and no other arguments under this broad heading were met, there is no juristic reason for the enrichment (3rd element).  Having met the three criteria, the plaintiff has established an unjust enrichment giving rise to restitution.

 

The main arguments on this appeal centred on whether the law should recognize the services which the appellant provided as being capable of founding an action for unjust enrichment.  It was argued, for example, that the services cannot give rise to a remedy based on unjust enrichment because the appellant had voluntarily assumed the role of wife and stepmother.  It was also said that the law of unjust enrichment should not recognize such services because they arise from natural love and affection.  These arguments raise moral and policy questions and require the Court to make value judgments.

 


The first question is:  where do these arguments belong?  Are they part of the benefit -- detriment analysis, or should they be considered under the third head -- the absence of juristic reason for the unjust enrichment?  The Court of Appeal, for example, held that there was no "detriment" on these grounds.  I hold the view that these factors may most conveniently be considered under the third head of absence of juristic reason.  This Court has consistently taken a straightforward economic approach to the first two elements of the test for unjust enrichment:  Pettkus v. Becker, supra; Sorochan v. Sorochan, [1986] 2 S.C.R. 38; Peel (Regional Municipality) v. Canada, [1992] 3 S.C.R. 762, (hereinafter "Peel").  It is in connection with the third element -- absence of juristic reason for the enrichment -- that such considerations may more properly find their place.  It is at this stage that the court must consider whether the enrichment and detriment, morally neutral in themselves, are "unjust".

 

What matters should be considered in determining whether there is an absence of juristic reason for the enrichment? The test is flexible, and the factors to be considered may vary with the situation before the court.  For example, different factors may be more relevant in a case like Peel, supra, at p. 803, a claim for unjust enrichment between different levels of government, than in a family case.

 

In every case, the fundamental concern is the legitimate expectation of the parties:  Pettkus v. Becker, supra.  In family cases, this concern may raise the following subsidiary questions:

 


(i)        Did the plaintiff confer the benefit as a valid gift or in pursuance of a valid common law, equitable or statutory obligation which he or she owed to the defendant?

 

(ii)        Did the plaintiff submit to, or compromise, the defendant's honest claim?

 

(iii)  Does public policy support the enrichment?

 

In the case at bar, the first and third of these factors were argued.  It was argued first that the appellant's services were rendered pursuant to a common law or equitable obligation which she had assumed.  Her services were part of the bargain she made when she came to live with the respondent, it was said.  He would give her and her children a home and other husbandly services, and in turn she would look after the home and family.

 

This Court has held that a common law spouse generally owes no duty at common law, in equity or by statute to perform work or services for her partner.  As Dickson C.J., speaking for the Court put it in Sorochan v. Sorochan, supra, at p. 46, the common law wife "was under no obligation, contractual or otherwise, to perform the work and services in the home or on the land".  So there is no general duty presumed by the law on a common law spouse to perform work and services for her partner.

 


Nor, in the case at bar was there any obligation arising from the circumstances of the parties.  The trial judge held that the appellant "was under no obligation to perform the work and assist in the home without some reasonable expectation of receiving something in return other than the drunken physical abuse which she received at the hands of the Respondent."  This puts an end to the argument that the services in question were performed pursuant to obligation.  It also puts an end to the argument that the appellant's services to her partner were a "gift" from her to him.  The central element of a gift at law -- intentional giving to another without expectation of remuneration -- is simply not present.

 

The third factor mentioned above raises directly the issue of public policy.  While it may be stated in different ways, the argument at base is simply that some types of services in some types of relationships should not be recognized as supporting legal claims for policy reasons.  More particularly, homemaking and childcare services should not, in a marital or quasi-marital relationship, be viewed as giving rise to equitable claims against the other spouse.

 


I concede at the outset that there is some judicial precedent for this argument.  Professor Marcia Neave has observed generally that "[a]nalysis of the principles applied in English, Australian and Canadian courts sometimes fails to confront this question directly . . . Courts which deny or grant remedies usually conceal their value judgments within statements relating to doctrinal requirements." (Marcia Neave, "Three Approaches to Family Property Disputes  -- Intention/Belief, Unjust Enrichment and Unconscionability," in T. G. Youdan, ed., Equity, Fiduciaries and Trusts (1989), at p. 251).  More pointedly,   Professor Farquhar has observed that many courts have strayed from the framework of Sorochan for public policy reasons:  "the courts... have, after Sorochan, put up warning signs that there are aspects of relationships that are not to be analyzed in the light of unjust enrichment and constructive trust."  (Keith B. Farquhar, "Causal Connection in Constructive Trust After Sorochan v. Sorochan" (1989), 7 Can. J. of Fam. L. 337, at p. 343).  The public policy issue has been summed up as follows by Professor Neave, supra at p. 251:  "whether a remedy, either personal or proprietary, should be provided to a person who has made contributions to family resources."  On the judicial side, the view of the respondent is pointedly stated in Grant v. Edwards, [1986] 2 All E.R. 426 at p. 439, per Browne-Wilkinson V.-C.:

 

Setting up house together, having a baby and making payments to general housekeeping expenses ... may all be referable to the mutual love and affection of the parties and not specifically referable to the claimant's belief that she has an interest in the house.

 

Proponents of this view, Professor Neave, supra at p. 253 argues, "regard it as distasteful to put a price upon services provided out of a sense of love and commitment to the relationship.  They suggest it is unfair for a recipient of indirect or non-financial contributions to be forced to provide recompense for those contributions."  To support this position, the respondent cites several cases:  Kshywieski v. Kunka (1986), 50 R.F.L. (2d) 421 (Man. C.A.); Hougen v. Monnington (1991), 37 R.F.L. (3d) 279 (B.C.C.A.); Prentice v. Lang (1987), 10 R.F.L. (3d) 364 (B.C.S.C.); Hyette v. Pfenniger, B.C.S.C., December 19, 1991, unreported.

 


It is my view that this argument is no longer tenable in Canada, either from the point of view of logic or authority.  From the point of view of logic, I share the view of Professors Hovius and Youdan in The Law of Family Property, at p. 136, that "there is no logical reason to distinguish domestic services from other contributions".  The notion that household and childcare services are not worthy of recognition by the court fails to recognize the fact that these services are of great value, not only to the family, but to the other spouse.  As Lord Simon observed nearly 30 years ago:  "The cock-bird can feather his nest precisely because he is not required to spend most of his time sitting on it" ("With All My Worldly Goods," Holdsworth Lecture (University of Birmingham, March 20, 1964, at p. 32).  The notion, moreover, is a pernicious one that systematically devalues the contributions which women tend to make to the family economy.  It has contributed to the phenomenon of the feminization of poverty which this Court  identified in Moge v. Moge, [1992] 3 S.C.R. 813, per L'Heureux-Dubé J., at pp. 853-54.

 

Moreover, the argument cannot stand with the jurisprudence which this and other courts have laid down.  Today courts regularly recognize the value of domestic services.  This became clear with the Court's holding in Sorochan, leading one author to comment that "[t]he Canadian Supreme court has finally recognized that domestic contribution is of equal value as financial contribution in trusts of property in the familial context"  (Mary Welstead, "Domestic Contribution and Constructive Trusts: The Canadian Perspective", [1987] Denning L.J. 151, at p. 161).  If there could be any doubt about the need for the law to honestly recognize the value of domestic services, it must be considered to have been banished by Moge v. Moge, supra.  While that case arose under the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp .), the value of the services does not change with the legal remedy invoked.

 


I cannot give credence to the argument that legal recognition of the value of domestic services will do violence to the law and the social structure of our society.  It has been recognized for some time that such services are entitled to recognition and compensation under the Divorce Act  and the provincial acts governing the distribution of matrimonial property.  Yet society has not been visibly harmed.  I do not think that similar recognition in the equitable doctrine of unjust enrichment will have any different effect.

 

Finally, I come to the argument that, because the legislature has chosen to exclude unmarried couples from the right to claim an interest in the matrimonial assets on the basis of contribution to the relationship,  the court should not use the equitable doctrine of unjust enrichment to remedy the situation.  Again, the argument seems flawed.  It is precisely where an injustice arises without a legal remedy that equity finds a role.  This case is much stronger than Rawluk v. Rawluk, [1990] 1 S.C.R. 70, where I dissented on the ground that the statute expressly pronounced on the very matter with respect to which equity was invoked.

 

Accordingly, I would agree with Cory J. that there are no juristic arguments which would justify the unjust enrichment, and the third element is made out. Like him, I conclude that the defendant was enriched, to the detriment of the plaintiff, and that no justification existed to vitiate the unjust enrichment claim.  The claim for unjust enrichment is accordingly made out and it remains only to determine the appropriate remedy.

 

2.  Remedy -- Monetary Judgment or Constructive Trust?


The other difficult aspect of this case is the question of whether the remedy which the trial judge awarded -- title to the matrimonial home -- is justified on the principles governing the action for unjust enrichment.  Two remedies are possible:  an award of money on the basis of the value of the services rendered, i.e. quantum meruit;  and the one the trial judge awarded, title to the house based on a constructive trust.

 

In Canada the concept of the constructive trust has been used as a vehicle for compensating for unjust enrichment in appropriate cases.  The constructive trust, based on analogy to the formal trust of traditional equity, is a proprietary concept.  The plaintiff is found to have an interest in the property.  A finding that a plaintiff is entitled to a remedy for unjust enrichment does not imply that there is a constructive trust.  As I wrote in Rawluk, supra, for a constructive trust to arise, the plaintiff must establish a direct link to the property which is the subject of the trust by reason of the plaintiff's contribution.  This is the notion underlying the constructive trust in Pettkus v. Becker, supra, and Sorochan v. Sorochan, supra, as I understand those cases.  It was also affirmed by La Forest J. in Lac Minerals, supra.

 

My colleague Cory J. suggests that, while a link between the contribution and the property is essential in commercial cases for a constructive trust to arise, it may not be required in family cases.  He writes at p. 1022:

 

... La Forest J. concluded [in Lac Minerals, supra] that the constructive trust should only be awarded when the personal monetary award is insufficient; that is, when there is reason to grant to the plaintiff the additional rights that flow from recognition of a right of property.

 

I agree with my colleague that there is a need to limit the use of the constructive trust remedy in a commercial context.  Yet I do not think the same proposition should be rigorously applied in a family relationship.


I doubt the wisdom of dividing unjust enrichment cases into two categories -- commercial and family -- for the purpose of determining whether a constructive trust lies.  A special rule for family cases finds no support in the jurisprudence.  Neither Pettkus, nor Rathwell, nor Sorochan suggest such a departure.  Moreover, the notion that one can dispense with a link between the services rendered and the property which is claimed to be subject to the trust is inconsistent with the proprietary nature of the notion of constructive trust.  Finally, the creation of special rules for special situations might have an adverse effect on the development of this emerging area of equity.  The same general principles should apply for all contexts, subject only to the demonstrated need for alteration.  Wilson J. in Hunter Engineering Co. v. Syncrude Canada Ltd., [1989] 1 S.C.R. 426, at p. 519 (adopted by La Forest J. in Lac Minerals, supra, at p. 675), warns against confining constructive trust remedies to family law cases stating that:  "to do so would be to impede the growth and impair the flexibility crucial to the development of equitable principles."  The same result, I fear, may flow from developing special rules for finding constructive trusts in family cases.  In short, the concern for clarity and doctrinal integrity with which this Court has long been preoccupied in this area mandates that the basic principles governing the rights and remedies for unjust enrichment remain the same for all cases.

 

Nor does the distinction between commercial cases and family cases on the remedy of constructive trust appear to be necessary.  Where a monetary award is sufficient, there is no need for a constructive trust.  Where a monetary award is insufficient in a family situation, this is usually related to the fact the claimant's efforts have given him or her a special link to the property, in which case a constructive trust arises.


For these reasons, I hold the view that in order for a constructive trust to be found, in a family case as in other cases, monetary compensation must be inadequate and there must be a link between the services rendered and the property in which the trust is claimed.  Having said this, I echo the comments of Cory J. at p. 1023 that the courts should exercise flexibility and common sense when applying equitable principles to family law issues with due sensitivity to the special circumstances that can arise in such cases.

 

The next question is the extent of the contribution required to give rise to a constructive trust.  A minor or indirect contribution is insufficient.  The question, to quote Dickson J. (as he then was) in Pettkus v. Becker, supra, at p. 852, is whether "[the plaintiff's] contribution [was] sufficiently substantial and direct as to entitle her to a portion of the profits realized upon sale of the ... property."  Once this threshold is met, the amount of the contribution governs the extent of the constructive trust.  As Dickson J. wrote in  Pettkus v. Becker, supra, at pp. 852-53:

 

Although equity is said to favour equality, as stated in Rathwell, it is not every contribution which will entitle a spouse to a one-half interest in the property.  The extent of the interest must be proportionate to the contribution, direct or indirect, of the claimant.  Where the contributions are unequal, the shares will be unequal.  [Emphasis added].

 


Cory J. advocates a flexible approach to determining whether a constructive trust is appropriate; an approach "based on common sense and a desire to achieve a fair result for both parties" (at p. 1023).  While agreeing that courts should avoid becoming overly technical on matters which may not be susceptible of precise monetary valuation, the principle remains that the extent of the trust must reflect the extent of the contribution.

 

Before leaving the principles governing the remedy of constructive trust, I turn to the manner in which the extent of the trust is determined.  The debate centres on whether it is sufficient to look at the value of the services which the claimant has rendered (the "value received" approach), or whether regard should be had to the amount by which the property has been improved (the "value survived" approach).  Cory J. expresses a preference for a "value survived" approach.  However, he also suggests, at p. 1025, that "there is no reason why quantum meruit or the value received approach could not be utilized to quantify the value of the constructive trust."  With respect, I cannot agree.  It seems to me that there are very good reasons, both doctrinal and practical, for referring to the "value survived" when assessing the value of a constructive trust.

 

From the point of view of doctrine, "[t]he extent of the interest must be proportionate to the contribution" to the property:  Pettkus v. Becker, supra, at p. 852.  How is the contribution to the property to be determined?  One starts, of necessity, by defining the property.  One goes on to determine what portion of that property is attributable to the claimant's efforts.  This is the "value survived" approach.  For a monetary award, the "value received" approach is appropriate; the value conferred on the property is irrelevant.  But where the claim is for an interest in the property one must of necessity, it seems to me, determine what portion of the value of the property claimed is attributable to the claimant's services.

 


I note, as does my colleague, that there may also be practical reasons for favouring a "value survived" approach.  Cory J., alludes to the practical problems with balancing benefits and detriments as required by the "value received" approach, leading some to question whether it is the least attractive approach in most family property cases (see Davidson v. Worthing (1986), 6 R.F.L. (3d) 113, McEachern C.J.S.C.; Hovius and Youdan, supra, at pp. 136 et seq.).  Moreover, a "value survived" approach arguably accords best with the expectations of most parties; it is more likely that a couple expects to share in the wealth generated from their partnership, rather than to receive compensation for the services performed during the relationship.

 

To summarize, it seems to me that the first step in determining the proper remedy for unjust enrichment is to determine whether a monetary award is insufficient and whether the nexus between the contribution and the property described in Pettkus v. Becker has been made out.  If these questions are answered in the affirmative the plaintiff is entitled to the proprietary remedy of constructive trust.  In looking at whether a monetary award is insufficient the court may take into account the probability of the award's being paid as well as the special interest in the property acquired by the contributions:  per La Forest J. in  Lac Minerals.  The value of that trust is to be determined on the basis of the actual value of the matrimonial property -- the "value survived" approach. It reflects the court's best estimate of what is fair having regard to the contribution which the claimant's services have made to the value surviving, bearing in mind the practical difficulty of calculating with mathematical precision the value of particular contributions to the family property.

 


I turn now to application of these principles to the case at bar.  The trial judge began by assessing the value received by the respondent (the quantum meruit). He went on to conclude that a monetary judgment would be inadequate.  The respondent had few assets other than his houseboat and van, and no income save for a War Veteran's Allowance.  The judge concluded, as I understand his reasons, that there was a sufficiently direct connection between the services rendered and the property to support a constructive trust, stating that "[the appellant] has shown that there was a positive proprietary benefit conferred by her upon the Sicamous property."  Accordingly, he held that the remedy of constructive trust was made out.  This approach accords with principles discussed above.  In effect, the trial judge found the monetary award to be inadequate on the grounds that it would not be paid and on the ground of a special contribution to the property.  These findings support the remedy of constructive trust in the property.

 

The remaining question is the quantification of the trust.  The trial judge calculated the quantum meruit for her housekeeping for 12 years at $350 per month and reduced that figure by 50 percent "for the benefits she received."  The final amount was $25,200.  He then reasoned that, since the services rendered amounted to $25,200 after appropriate deductions, it follows that the appellant should receive title to the respondent's property, valued at $23,200.  The missing step in this analysis is the failure to link the value received with the value surviving.  As discussed above, a constructive trust cannot be quantified by simply adding up the services rendered; the court must determine the extent of the contribution which the services have made to the parties' property.

 


Notwithstanding the trial judge's failure to make this link, his conclusion that the appellant had established a constructive trust entitling her to title to the family home can be maintained if a trust of this magnitude is supported on the evidence. This brings me to a departure from the methods used below.  The parties and the Court of Appeal appear to have treated the house as a single asset rather than as part of a family enterprise.  This led to the argument that the appellant could not be entitled to full ownership in the house because the respondent had contributed to its value as well.  The approach I would take -- and the approach I believe the trial judge implicitly to have taken-- is to consider the appellant's proper share of all the family assets.  This joint family venture, in effect, was no different from the farm which was the subject of the trust in Pettkus v. Becker.

 

With this in mind, I turn to the evidence on the extent of the contribution.  The appellant provided extensive household services, over a period of 12 years, including care for the children while they were living at the house and maintenance of the property.  The testimony of the plaintiff's son provides a general idea of her contribution to the family enterprise:

 

Q.   What sort of things did she do?

 

A.   She did all the motherly duties for all of us.

 

                                                                    ...

 

A.   When [the defendant's] two sons and my brother and I were there still, even when my sisters were there, that was quite a long time ago, I was quite young, so there was nothing really bad then, but after the sisters left, she took care of all the duties, cooking and stuff like that, cleaning, laundry.  She had her ringer washer, she would do the laundry, she'd worked in the garden, things like that.  She took care of all things around the house, when he was gone especially.


                                                                    ...

 

Q.   Do you remember what work your mother did in the yard outside?

 

A.   M'hm, they both got together doing the garden, he would do the roto-tilling, they would both take care of the planting and stuff; when he was gone, she would do all the weeding and keeping up.  They would share the watering of the garden.  She put together three or four flower gardens all herself, except for the hard heavy work, like lifting rocks, when she first started, that was shared by all of us, including the kids.

 

Of all the chores performed around the property, the son states that the various siblings had minor chores, such as chopping wood and making beds.  "Everything else, the major stuff, she would take care of."  Other evidence, including testimony from Catherine Peter and William Beblow, supports this picture of the appellant's contribution.  The trial judge held that while the respondent worked in the construction business,

 

...he would be away from home during the week and would return on the weekend whenever possible.  While he was absent, the Plaintiff would care for the property in the home and care for the children while he was away.

 

                                                                    ...

 

In effect, the Plaintiff by moving into the Respondent's home became his housekeeper on a full-time basis without remuneration except for the food and shelter that she and the children received until the children left home.

 

The respondent also contributed to the value of the family enterprise surviving at the time of breakup; he generated most of the family income and helped with the maintenance of the property.

 


Clearly, the appellant's contribution -- the "value received" by the respondent -- was considerable.  But what then of the "value surviving"?  It seems clear that the maintenance of the family enterprise through work in cooking, cleaning, and landscaping helped preserve the property and saved the respondent large sums of money which he was able to use to pay off his mortgage and to purchase a houseboat and a van.  The appellant, for her part, had purchased a lot with her outside earnings.  All these assets may be viewed as assets of the family enterprise to which the appellant contributed substantially.

 

The question is whether, taking the parties' respective contributions to the family assets and the value of the assets into account, the trial judge erred in awarding the appellant a full interest in the house.  In my view, the evidence is capable of supporting the conclusion that the house reflects a fair approximation of the value of the appellant's efforts as reflected in the family assets.  Accordingly, I would not disturb the award.

 

I would allow the appeal with costs.

 

//Cory J.//

 

The reasons of L'Heureux-Dubé, Gonthier and Cory JJ. was delivered by

 


Cory J. -- The issue in this appeal is whether the provision of domestic services during 12 years of cohabitation in a common law relationship is sufficient to establish the proprietary link which is required before the remedy of constructive trust can be applied to redress the unjust enrichment of one of the partners in the relationship.  Further, consideration must be given to the extent to which the remedy of constructive trust should be applied in terms of amount or proportion.

 

Factual Background

 

In April 1973, the respondent asked the appellant to come and live with him.  That same month, the appellant together with her four children moved into the respondent's home in Sicamous, B.C.   At the time, two children of the respondent were living in the home.  The parties continued to live together in a common law relationship for over 12 years, separating in June 1985.  During this entire time the appellant acted as the wife of the respondent.  She was a stepmother to his children until 1977 while they remained in the home.  As well, she cared for her own children, the last one leaving in 1980.

 

During the 12 years, the appellant cooked, cleaned, washed clothes and looked after the garden.  As well, she worked on the Sicamous property, undertaking such projects as painting the fence, planting a cedar hedge, buying flowers and shrubs for the property and building a rock garden.  She built a pig pen.  She kept chickens for a few years, butchering and cooking them for the family.  During the winters, the appellant shovelled snow, chopped wood and made kindling.  The respondent did not pay the appellant for any of her work.  Both the appellant and the respondent contributed to the purchase of groceries and household supplies, although the respondent contributed a greater share.

 


In the first year of the relationship the appellant did not undertake outside work and spent eight hours a day doing housework and work on the Sicamous property.  In subsequent years, she took part-time work as a cook from June to October.  During these months she worked some six hours a day at a rate of $4.50 per hour.  Except for one winter when she worked at a bakery, the appellant received unemployment insurance benefits in the winter months.

 

Throughout the relationship, the respondent worked on a more or less full-time basis as a grader operator.  His work frequently took him out of town to various locations in British Columbia.

 

Before he met the appellant,  the respondent had lived in a common law relationship with another woman for five years.  When she left his home he hired housekeepers.  The last housekeeper he had before the appellant came to his home was paid at a rate of $350 per month.

 

The trial judge accepted the appellant's testimony that the respondent had asked her to live with him because he needed someone to care for his two children.  This need arose when the welfare authorities expressed some concern that the respondent left the children alone when he was working away from home.

 


When the parties met, the appellant had savings of $100.  In 1976, she purchased a property in Saskatchewan for $2,500.  She sold this property in 1980 for $8,000 and purchased a property at 100 Mile House for $6,500.  She used the remainder of the sale proceeds for a trip to Reno.  At the time of trial, the appellant still owned the 100 Mile House property.

 

The respondent had purchased the Sicamous property in 1971 for $8,500.  Some $900 was paid in cash and the balance of $7,600 was secured by a mortgage.  The respondent was able to pay off the mortgage in 1975.  The estimated market value of the Sicamous property as of 1987 was $17,800.  The property's assessed value in that year was $23,200.  In that same year, the respondent rented the property.  The tenants were given an option to purchase it for $28,000.  The option was not exercised.

 

With the passage of time, the respondent began to drink heavily and became verbally and physically abusive to the appellant.  As a result, the appellant moved out of the Sicamous home on June 7, 1985.  At the time of the trial, she was on welfare and lived in a trailer court in Sicamous.  The respondent by that time had retired and was living on a houseboat in Enderby, B.C.  The Sicamous house and property were vacant.

 

The appellant brought an action claiming that the respondent had been unjustly enriched over the years of the relationship as a result of the work which she performed in his home without payment of any kind.  She sought to have a constructive trust imposed on her behalf in respect of the Sicamous property or in the alternative, monetary damages as compensation for the labour and services she provided to the respondent.

 

Courts Below


Trial Judgment

 

On the basis of Sorochan v. Sorochan, [1986] 2 S.C.R. 38, the trial judge determined that in order to establish an unjust enrichment, the plaintiff must prove:

 

(1)   enrichment;

 

(2)   a corresponding deprivation; and

 

(3)   the absence of any juristic reason for the enrichment.

 

He decided there must also be a clear causal connection between the spousal contribution founding the unjust enrichment and the property which is alleged to be the subject of the constructive trust.

 


The trial judge found that there had been an enrichment since the respondent had obtained the services of a housekeeper, homemaker and stepmother to his children without compensation.  He further found that the plaintiff was deprived of any compensation from her labour since she devoted the majority of her time and energy and some of the monies which she earned for the benefit of the respondent, his children and his Sicamous property.  Lastly, he found that there was no juristic reason for the enrichment, that is to say the appellant was under no obligation to perform the work and assist in the home without some reasonable expectation of compensation.  He found that she was entitled to receive something other than the drunken physical abuse to which she had been subjected by the respondent.  He concluded that the respondent ought to have known that the appellant would have a reasonable expectation that she would be compensated.  He also concluded that she had shown that there was a proprietary benefit conferred by her upon the Sicamous property.

 

The trial judge then considered what would be a fair and equitable compensation.  He took into account the realities of the relationship and the assets and income of the parties in order to fashion the appropriate relief.  He observed that if the appellant had been employed as a housekeeper for 12 years at $350 per month, the amount the respondent had paid his last housekeeper before the appellant moved in, she would have earned $50,400.  He allowed a 50 percent reduction for the benefits the appellant had received in the relationship and settled on the amount which should be paid to her as $25,200.

 

He then concluded that the fairest disposition of the case would be to award the Sicamous property to the appellant.  He noted that the respondent was living in Enderby, on a houseboat.  He noted that the respondent also had a van.  The respondent was living on a War Veteran's allowance and was retired.  It was obvious to the trial judge that a monetary judgment would be impracticable, probably unrealistic and would not be reasonable under the circumstances.  He therefore concluded that the fairest apportionment would be to have the house and land in Sicamous transferred to the appellant free and clear of encumbrances.

 

Court of Appeal (1990), 50 B.C.L.R. (2d) 266

 


The respondent on the appeal contended that, the trial judge had erred first in finding that there had been an unjust enrichment of the respondent, and secondly, that even if there had been an unjust enrichment, that he had erred in ordering the transfer of the Sicamous property to the appellant.

 

Macdonald J.A., writing on behalf of the court, observed that it had been conceded that the respondent had indeed been enriched by receiving the benefit of the appellant's labour and services.  Thus, the first condition of Sorochan had been met.  However, he found that the remaining conditions had not been fulfilled.  The Court of Appeal disagreed with the trial judge's finding that there had been any deprivation suffered by the appellant.  It found that the appellant had not been deprived as she and her children had lived in the respondent's home rent-free with the respondent's contributing more for the family's groceries than she had.  He noted that the appellant had been able to acquire property and he took this as evidence that the appellant had not suffered any deprivation.

 

Macdonald J.A. further concluded that even if there was an imbalance sufficient to support a finding of deprivation, the unjust enrichment claim did not meet the third condition, namely the absence of any juristic reason for the enrichment.  In his view, the appellant had failed to establish, as required by Sorochan, that she had prejudiced herself on the reasonable expectation of receiving something in return for her work and services.  He stressed that there was not, as in other cases, the holding out of a promise to marry.  Even though the respondent would, when he was drinking, ask the appellant to marry him, she never took those requests seriously.

 


Finally, even if all the conditions of unjust enrichment had been met, Macdonald J.A. disagreed with the trial judge's disposition.  In his view, there was not a sufficient nexus between the appellant's contribution and the Sicamous property to entitle the appellant to receive, by way of relief, the property itself rather than a monetary judgment.  He decided at p. 272 that the "relatively minor gardening activities and household tasks and expenditures over the 12 years of cohabitation" fell short of establishing a positive contribution to the acquisition, preservation, maintenance or improvement of the property.  As a result, it was held that there was no legal ground upon which an order could be made transferring the property to the appellant.  The appeal was allowed and the appellant's action was dismissed.

 

Position of the Respondent

 

The respondent, conceded that there was an unjust enrichment, but contended that there was no corresponding deprivation suffered by the appellant.  It was said that she was adequately compensated for her services by the respondent's provision of free shelter and a large portion of the groceries.

 

Second, it was argued that the domestic services provided by the appellant did not establish any causal link to or proprietary interest in the Sicamous property.

 

The Court of Appeal clearly agreed with the respondent on these issues.  With respect, I believe they erred in reaching these conclusions.

 

Should the Doctrines of Unjust Enrichment and Constructive Trust be Applied to `Common Law' Relationships?


It may be helpful to review once again the application and extension of the doctrine of constructive trust.  In Scott, The Law of Trusts, vol. 5 (4th ed. 1989), at p. 304, the following definition appears:

 

A constructive trust arises where a person who holds title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it.

 

This definition, which appeared in the same form in earlier editions, was cited with approval in the dissenting reasons of Laskin J. (as he then was) in Murdoch v. Murdoch, [1975] 1 S.C.R. 423.  In later decisions of this Court the definition has provided a basis for the application of the constructive trust remedy in matrimonial situations.

 

In Pettkus v. Becker, [1980] 2 S.C.R. 834, Dickson J. (as he then was) writing for the majority, applied the doctrine of constructive trust to a common law relationship.  He noted that a court must first determine whether a claim for unjust enrichment has been established.  If it has, then a court must determine whether, in the circumstances presented, a constructive trust is the appropriate remedy to apply to redress the unjust enrichment.  In order to determine that there has been an unjust enrichment, the following three conditions must be fulfilled:

 

(1)   there has been an enrichment;

 

(2)   a corresponding deprivation has been suffered by the person who supplied the enrichment; and


(3)   there is an absence of any juristic reason for the enrichment itself.

 

The importance of Pettkus v. Becker, was emphasized in Hunter Engineering Co. v. Syncrude Canada Ltd., [1989] 1 S.C.R. 426.  There at p. 471 Dickson C.J. wrote:

 

The constructive trust has existed for over two hundred years as an equitable remedy for certain forms of unjust enrichment ....  Until the decision of this Court in Pettkus v. Becker, the constructive trust was viewed largely in terms of the law of trusts, hence the need for the existence of a fiduciary relationship.  In Pettkus v. Becker, the Court moved to an approach more in line with restitutionary principles by explicitly recognizing constructive trust as one of the remedies for unjust enrichment.

 

Subsequently, this Court made it clear that the constructive trust remedy may also be applied in circumstances where the spouse has contributed not to the acquisition of property but rather to its preservation, maintenance or improvement.  In Sorochan v. Sorochan, supra, Dickson C.J. gave the reasons for a unanimous Court.  There the parties had never married but had cohabited on a farm in Alberta from 1940 to 1982.  It is significant that before the parties began living together the defendant was, together with his brother, the owner of the farmland.  Thus the lands were not acquired during the period of cohabitation.  During the time they lived together the parties had six children.  The plaintiff did all the domestic work associated with running the household and caring for the children.  Both parties worked on the farm.  It was conceded that the plaintiff did substantial and arduous work.  For many years the defendant worked as a travelling sales representative and during those periods the plaintiff frequently assumed sole responsibility for the work on the farm.

 


It was held that the defendant had been unjustly enriched.  That enrichment resulted from his receiving the benefit of the plaintiff's years of labour in the home and on the farm.  This obviously resulted in valuable savings.  It was pointed out that through the plaintiff's years of labour, the farm was maintained and preserved and did not deteriorate through neglect or disuse.  It was found that the plaintiff's maintenance and preservation of the land coffered a significant benefit to the defendant.

 

Thus, it can be seen that the remedy provided by the constructive trust may, in appropriate cases, be applied to common law relationships where the plaintiff's contribution to the land was directed only to its maintenance and preservation.  Those contributions which have been considered sufficient to justify the application of a constructive trust have been indirect financial contributions as in Pettkus v. Becker, supra, and work on the property which contributed to its maintenance as in Sorochan.

 

Should the Remedy of Constructive Trust be Applied to the Case at Bar?

 

1.   Enrichment

 

It should not be forgotten that the trial judge specifically found that there had been an enrichment to the respondent "since he obtained the services of the Plaintiff as a housekeeper, homemaker and in fact stepmother without compensation." Indeed, it was conceded before us that the respondent was enriched by the work and contributions of the appellant.

 

2.  A Corresponding Deprivation


It is again important to first consider the finding of the trial judge on this issue.  He stated:

 

... the Plaintiff was deprived of any compensation for her labour since she devoted the majority of her time and energy and some of the monies she earned towards the benefit of the Respondent, his children and his property.

 

That finding would seem sufficient  in itself to warrant the conclusion that the appellant suffered a deprivation which corresponds to the enrichment of the respondent.

 

Indeed, I would have thought that if there is enrichment, that it would almost invariably follow that there is a corresponding deprivation suffered by the person who provided the enrichment.  There is ample support for the proposition that once enrichment has been found, the conclusion that the plaintiff has suffered a corresponding deprivation is virtually automatic.  In Sorochan, supra, Dickson C.J. suggested that benefit and deprivation are essentially two sides of the same coin.  He wrote at pp. 45-46:

 

Moreover, the case law indicates that the full-time devotion of one's labour and earnings without compensation can readily be viewed as a deprivation.  In Murray v. Roty (1983), 41 O.R. (2d) 705 (Ont. C.A.), for example, a case involving a joint business and farm operation, Cory J.A., commented (at p. 710):  "For eight years of her life she devoted all of her time and energy and almost all of her wages for the benefit of Roty.  The deprivation is obvious".

 

In Everson v. Rich (1988), 16 R.F.L. (3d) 337, the Saskatchewan Court of Appeal, applying Sorochan, stated at p. 342:


The spousal services provided by the appellant were valuable services and did constitute a benefit conferred upon the respondent.  The provision of those services was a detriment to the claimant by virtue of the use of her time and energy.

 

I agree with this reasoning.  As a general rule, if it is found that the defendant has been enriched by the efforts of the plaintiff there will, almost as a matter of course be deprivation suffered by the plaintiff.  As Professor James McLeod pointed out ((1988), 16 R.F.L. (3d) 338) in his annotation of Everson v. Rich, supra, "the deprivation requirement is satisfied by showing the plaintiff expended effort or does not have what he/she had or might have had".  Particularly in a matrimonial or long-term common law relationship it should, in the absence of cogent evidence to the contrary, be taken that the enrichment of one party will result in a deprivation of the other.

 


Business relationships concerned with commercial affairs may, as a result of the conduct of one of the corporations involved, result in a court's granting a constructive trust remedy.  The constructive trust has been appropriately used to redress a gain made through a breach of trust in a commercial or business relationship (See for example:  Canadian Aero Service Ltd. v. O'Malley, [1974] S.C.R. 592).  Yet how much closer and trusting must be a long-term common law relationship.  In marriages or marriage-like relationships commercial matters and a great deal more will be involved.  Clearly, parties to a family relationship will, in a commercial sense, share funds and financial goals.  More importantly, couples such as the parties to this case will strive to make a home.  By that I mean a place that provides safety, security and love and which is as well frequently the place where children may be cared for and nurtured.  In a relationship that involves living and sleeping together, couples will share their worst fears and frustrations and their fondest dreams and aspirations.  They will plan and work together to achieve their goals.  Just as much as parties to a formal marriage, the partners in a long-term common law relationship will base their actions on mutual love and trust.  They too are entitled, in appropriate circumstances, to the relief provided by the remedy of constructive trust.

 

This remedy should be granted despite the fact that family will seldom keep the same careful financial records as business associates.  Nonetheless, fairness requires that the constructive trust remedy be available to them and applied on an equitable basis without a minute scrutiny of their respective financial contributions.  Indeed, in a situation such as the one presented in this case, it may be very difficult to assess the value of making a house a home and of sharing the struggle to raise children to become responsible adults.

 

In the present case, although there was no formal marriage, the couple lived and worked together in the most intimate of relationships.  They shared work and the monies which they earned.  The amount of the contributions may have been varied and unequal.  Yet the very fact that in addition to her household work the appellant contributed something of the income from her outside employment indicates that there was a real sharing of income.  As a result of the relationship, the Sicamous property was looked after and maintained.  None of this could have been achieved without the efforts of the appellant.

 


Certainly, it cannot be said that the relationship was so short lived that it should not give rise to mutual rights and obligations.  Twelve years is not an insignificant period of time to live in a relationship based on mutual trust and confidence.  In those circumstances, there is a strong presumption that the services provided by one party will not be used solely to enrich the other.  Both the reasonable expectations of the parties and equity will require that upon the termination of the relationship, the parties will receive an appropriate compensation based on the contribution each has made to the relationship.

 

The respondent asserts that because the appellant loved him she could not have expected to receive compensation or an interest in the property in return for the contributions she made to the home and family.  However, in today's society it is unreasonable to assume that the presence of love automatically implies a gift of one party's services to another.  Nor is it unreasonable for the party providing the domestic labour required to create a home to expect to share in the property of the parties when the relationship is terminated.  Women no longer are expected to work exclusively in the home.  It must be recognized that when they do so, women forgo outside employment to provide domestic services and child care.  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.  Marcia Neave in "Three Approaches to Family Property Disputes -- Intention/Belief, Unjust Enrichment and Unconscionability", in T. G. Youdan, ed., Equity, Fiduciaries and Trusts (1989), lucidly sets out the position in this way at p. 254:

 


The characterization of domestic services as gifts reflects a view of family relationships which is now out-dated and has a differential impact on women, since they are the main providers of such services.  Women no longer work exclusively in the home.  Those who do so sacrifice income that could otherwise be earned in paid work.   Couples who decide that one partner, usually the woman, will forgo paid employment to provide domestic services and provide child care, presumably believe that this arrangement will maximize their economic resources.  Grant of relief, whether personal or proprietary, to the provider of domestic services would recognize that the income-earning capacity of one partner and his ability to acquire assets have been enhanced by the unpaid services of the other and that those services were only provided free because it was believed that the relationship would continue.

 

This same reasoning has been recently applied in the context of divorce in Moge v. Moge, [1992] 3 S.C.R. 813.  It is appropriate to recognize that the same principle should be applied to long-term common law relationships.

 

In the present case it cannot be said, as the respondent suggests, that the contributions of the appellant were minor or that they were compensated by the provision of free accommodation.  It is true that the appellant did not devote all of her energy to the home or family business as did Mary Sorochan or Charlotte Murray.  However, the mere fact that the appellant was able to engage in part-time employment does not detract from the fact that she provided extensive and valuable services to the respondent for which she was not compensated.

 


It cannot be forgotten that the trial judge recognized that the appellant worked to create a "home" for the respondent.  The nature and extent of her efforts were clear from the evidence, but one rather touching indication of her dedication is that she helped the children to make Christmas gifts.  The value of the commitment of a homemaker such as the appellant should not be underestimated.  The partner who  provides domestic services often works far in excess of 40 hours per week in order to provide a "home".  Women who work in the home may have given up a career or a type of work which would enable them to improve their earning capacity.  These are matters which should be taken into account when considering both the benefits conferred and the deprivation suffered by a claimant who has been a partner in a long-term common law relationship.

 

The balancing of benefits conferred and received in a matrimonial or common law relationship cannot be accomplished with precision.  Although it may well be essential in a commercial relationship to closely scrutinize the contributions made by each of the business partners to the acquisition of property, such an approach would be unrealistic and unfair in the context of a family relationship.  Ordinarily, the trial judge will be in the best position to assess all the evidence presented and to estimate the contribution made by each of the parties.  The nature of the relationship, its duration and the contributions of the parties must be considered.  Equity and fairness should form the basis for the assessment.  There was ample evidence presented in this case to justify the finding of the trial judge that there had been a deprivation suffered by the appellant.

 

Absence of Juristic Reason for the Enrichment

 

In Pettkus v. Becker, supra, Dickson J. had this to say at p. 849 with regard to juristic reasons for the enrichment:

 


...I hold that where one person in a relationship tantamount to spousal prejudices herself in the reasonable expectation of receiving an interest in property and the other person in the relationship freely accepts benefits conferred by the first person in circumstances where he knows or ought to have known of that reasonable expectation, it would be unjust to allow the recipient of the benefit to retain it.

 

The test put forward is an objective one.  The parties entering a marriage or a common law relationship will rarely have considered the question of compensation for benefits.  If asked, they might say that because they loved their partner, each worked to achieve the common goal of creating a home and establishing a good life for themselves.  It is just and reasonable that the situation be viewed objectively and that an inference be made that, in the absence of evidence establishing a contrary intention, the parties expected to share in the assets created in a matrimonial or quasi-matrimonial relationship, should it end.

 

Kshywieski v. Kunka (1986), 50 R.F.L. (2d) 421, is a decision of the Manitoba Court of Appeal.  It determined that, in the absence of evidence of a promise of marriage, a promise of compensation or an expectation on the part of the plaintiff that she would be remunerated for her services, it was not unjust for the defendant or his estate to retain the benefit of the spousal service conferred upon him by the plaintiff.  Professor McLeod in his annotation ((1986), 50 R.F.L. (2d) 421) summarized the conclusion in this case in these words at p. 422:

 

Without some prejudicial conduct such as request, inducement, acquiescence or the holding out of future benefit, no restitutionary relief could be awarded.

 


In the case at bar the British Columbia Court of Appeal relied on the  Kshywieski decision.  It concluded that because the respondent's promises to marry the appellant were made when he was drunk, she could not have taken them seriously.  As a result, it was found that there was no prejudice occasioned by the appellant.  In my view, the Court of Appeal was in error in this conclusion.

 

It is not necessary that there be evidence of promises to marry or to compensate the claimant for the services provided.  Rather, where a person provides "spousal services" to another, those services should be taken as having been given with the expectation of compensation unless there is evidence to the contrary.  This was the approach properly taken by the Saskatchewan Court of Appeal in Everson v. Rich, supra.

 

In the case at bar, the trial judge appropriately drew the inference that, in light of the duration of the relationship and the appellant's contribution to the home and property, she would reasonably have had an expectation of sharing the wealth she helped to create.  He concluded that:

 

... there was no juristic reason for the enrichment.  She was under no obligation to perform the work and assist in the home without some reasonable expectation of receiving something in return other than the drunken physical abuse which she received at the hands of the Respondent.

 

When a claimant is under no obligation contractual, statutory or otherwise to provide the work and services to the recipient, there will be an absence of juristic reasons for the enrichment.  See Murray v. Roty (1983), 41 O.R. (2d) 705; Pettkus v. Becker, supra; Sorochan v. Sorochan, supra.

 


In summary then, there was unjust enrichment of the respondent by the work of the appellant.  The appellant suffered a corresponding deprivation.  There was no juristic reason for the enrichment, that is to say there was no obligation of any kind upon the appellant to provide the services to the respondent.  It follows that the trial judge was correct in his finding that there had been an unjust enrichment, a corresponding deprivation and no juristic reason for providing the enriching services.  It remains to be considered what remedy should have been provided in the circumstances.  Would a monetary judgment have been appropriate or should the remedy of constructive trust have been granted?

 

The Appropriate Remedy

 

In Sorochan v. Sorochan, it was noted that although the constructive trust provides an important judicial means of remedying unjust enrichment, there are other remedies available, such as monetary damages.  The first question to be resolved is which remedy is appropriate in the circumstances of this case?  In Sorochan it was said that:  the court must consider whether there is a causal connection between the deprivation suffered by the plaintiff and the property in question, because in order to justify the imposition of a constructive trust a court must be satisfied that there is a "clear proprietary relationship" between the services rendered and the disputed assets.  The same case confirmed that a flexible approach should be taken in applying the constructive trust remedy and specifically approved of the position adopted by other courts in Murray v. Roty, supra; Hussey v. Palmer, [1972] 1 W.L.R. 1286; Lawrence v. Lindsey (1982), 28 R.F.L. (2d) 356.  At p. 50, Dickson C.J. wrote:

 


In my view, the constructive trust remedy should not be confined to cases involving property acquisition.  While it is important to require that some nexus exist between the claimant's deprivation and the property in question, the link need not always take the form of a contribution to the actual acquisition of the property.  A contribution relating to the preservation, maintenance or improvement of property may also suffice.

 

In addition to the causal connection requirement Dickson C.J. stated that the claimant must have reasonably expected to receive an interest in the property and that the respondent ought to have been aware of that expectation.  He also observed that in considering whether a constructive trust is the appropriate remedy the duration of the relationship should be taken into account.

 

The difficulty of establishing a causal connection between unjust enrichment arising from the provision of domestic services and the property has been the subject of scholarly debate (See for example: Ralph E. Scane "Relationships `Tantamount to Spousal', Unjust Enrichment, and Constructive Trusts" (1991), 70 Can. Bar Rev. 260;  Keith B. Farquhar, "Causal Connection in Constructive Trusts" (1986-88), 8 Est. & Tr. Q. 161; Berend Hovius and Timothy G. Youdan, The Law of Family Property (1991); Ian Narev, "Unjust Enrichment, and De Facto Relationships" (1991), 6 Auck. U.L. Rev. 504).  As Professor Ralph Scane (supra, at p. 289) put it the difficulty with looking for a causal connection in such cases is "that unjust enrichment created by receipt of the benefit of [domestic] services ... seeps throughout all of the assets of the defendant".  Thus, the contributions which indirectly created accumulated family wealth for the parties cannot be traced to any one property.  However, I do not think that the required link between the deprivation suffered and the property in question is as difficult to establish as it may seem.

 


This Court has specifically recognized that indirect financial contributions to the maintenance of property will be sufficient to establish the requisite property connection for the imposition of a constructive trust.  In Pettkus v. Becker, supra, the fact that Ms. Becker paid the rent, purchased the food and clothing and looked after other living expenses, enabled Mr. Pettkus to save his entire income, a goodly amount of money which he later used to purchase property.  Even though Ms. Becker's financial contributions did not directly finance the purchase of the property, it was held that her indirect financial contribution was sufficient to entitle her to a proprietary interest in the property purchased by Mr. Pettkus upon the dissolution of the relationship.

 

It seems to me that in a family relationship the work, services and contributions provided by one of the parties need not be clearly and directly linked to a specific property.  As long as there was no compensation paid for the work and services provided by one party to the family relationship then it can be inferred that their provision permitted the other party to acquire lands or to improve them.  In this case the work of the appellant permitted the respondent to pay off the mortgage and, as well, to purchase a houseboat and a cabin cruiser.  In the circumstances, the trial judge was justified in applying the constructive trust to the property which he felt would best redress the unjust enrichment and would treat both parties in a just and equitable manner.

 


Goff and Jones support the imposition of a constructive trust in family  situations where the plaintiff's contributions cannot be traced to a particular property (The Law of Restitution (3rd ed. 1986)).  They rely on the case of Chase Manhattan Bank N.A. v. Israel-British Bank (London) Ltd., [1981] Ch. 105, where the plaintiff paid under a mistake of fact over $2 million to the defendants, who discovered the mistake within two days, did nothing to correct it and went into liquidation some four weeks later.  Goulding J. held that the defendant was a constructive trustee of the money paid under mistake.  But he left open the question whether equity's traditional tracing rules should be applied in order to identify the plaintiff's payment.  Goff and Jones maintain that if the tracing rules were applied then it is extremely unlikely that the plaintiff's claim would succeed.  Yet, as they point out, it would seem unjust to allow the defendant's general creditors to benefit from the mistaken payment when the defendant knew of the mistake and did nothing to correct it.  Therefore, the authors argue on p. 80 of their book that:

 

To protect a plaintiff the court will have to impose a trust on, or a lien over, the defendant's unencumbered assets for the plaintiff's benefit even if those assets cannot be "identified" through the application of traditional equitable tracing rules.  If a court reaches this conclusion it will do so because it recognises that a trust or lien should be imposed simply because the defendant's assets were swollen by the mistaken payment.

 


In Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574, it was determined that the constructive trust is not reserved to situations where a right of property is recognized.  As a remedy, the constructive trust may be used to create a right of property and this obviates the need to find a pre-existing property right by means of equitable tracing rules.  However, La Forest J. indicated that a restitutionary proprietary remedy should not automatically be granted.  He found that, since proprietary rights give the plaintiff priority over the legitimate claims of third party creditors, further guidance was needed for determining those situations in which it would be appropriate to award a proprietary remedy.  Thus, La Forest J. concluded that the constructive trust should only be awarded when the personal monetary award is insufficient; that is, when there is reason to grant to the plaintiff the additional rights that flow from recognition of a right of property.

 

I agree with my colleague that there is a need to limit the use of the  constructive trust remedy in a commercial context.  Yet I do not think the same proposition should be rigorously applied in a family relationship.  In a marital or quasi-marital relationship, the expectations the parties will have regarding their contributions and interest in the assets acquired are, I expect, very different from the expectation of the parties engaged in a commercial transaction.  As I have said, it is unlikely that couples will ever turn their minds to the issue of their expectations about their legal entitlements at the outset of their marriage or common law relationship.  If they were specifically asked about their expectations, I would think that most couples would probably state that they did not expect to be compensated for their contribution.  Rather, they would say, if the relationship were ever to be dissolved, then they would expect that both parties would share in the assets or wealth that they had helped to create.  Thus, rather than expecting to receive a fee for their services based on their market value, they would expect to receive, on a dissolution of their relationship, a fair share of the property or wealth which their contributions had helped the parties to acquire, improve, or to maintain.  The remedy provided by the constructive trust seems to best accord with the reasonable expectations of the parties in a marriage or quasi-marital relationship.  Nevertheless, in situations where the rights of bona fide third parties would be affected as a result of granting the constructive trust remedy it may well be inappropriate to do so.  (See Berend Hovius and Timothy G. Youdan, The Law of Family Property, supra, at p. 146.)

 


It follows that in a quasi-marital relationship in those situations where the rights of third parties are not involved, the choice between a monetary award and a constructive trust will be discretionary and should be exercised flexibly.  Ordinarily both partners will have an interest in the property acquired, improved or maintained during the course of the relationship.  The decision as to which property, if there is more than one, should be made the subject of a constructive trust is also a discretionary one.  It too should be based on common sense and a desire to achieve a fair result for both parties.

 

There will of course be situations where an award for a monetary sum may be the most appropriate remedy.  For example where the relationship is of short duration or where there are no assets surviving its dissolution, a monetary award should be made.  Professors Berend Hovius and Timothy G. Youdan (The Law of Family Property, supra, at p. 147) provide the following list of factors which I think are helpful in determining that a monetary distribution may be more appropriate than a constructive trust:

 

(a)   is the "plaintiff's entitlement...relatively small compared to the value of the whole property in question";

 

(b)   is the "defendant...able to satisfy the plaintiff's claim without a sale of the property" in question;

 

(c)   does "the plaintiff [have any] special attachment to the property in question";


(d)   what "hardship might be caused to the defendant if the plaintiff obtained the rights flowing from [the award] of an interest in the property".

 

In this case the appellant contributed to the maintenance and the preservation of the home.  She painted the fence, planted the cedar hedge, installed the rock garden and built the chicken coop.  Nevertheless, her principal contribution was made through the provision of domestic services.  Her work around the house and in caring for the children saved the respondent the expense of hiring a housekeeper and someone to care for the children.  As a result he was able to use the money which he had saved to purchase other property and to pay-off the mortgage on the Sicamous property.

 


The trial judge found, that since the respondent was now retired and living on a War Veteran's Allowance, a monetary award would be "impracticable, probably unrealistic and would not be reasonable under the circumstances" and imposed a constructive trust upon the Sicamous property.  I think he was correct in doing so.  It could reasonably be inferred that given the work she had done, the appellant would expect to receive a share in the Sicamous property when the relationship ended.  Further, although there was no specific evidence that the appellant had formed an emotional attachment to the property, it would not have been unreasonable for the trial judge to have inferred this in light of the work which she had done on the property.  In addition, the property was vacant at the time of the trial and the respondent was retired and living on his veteran's pension in another community.  Clearly, he has no particular attachment to the property.  A monetary award would be meaningless.  Therefore, it was both reasonable and appropriate to choose the Sicamous property as the object of the constructive trust.  In the circumstances of this case, the application of the constructive trust remedy was eminently suitable.

 

Was the Amount of the Appellant's Interest Reasonably Determined?

 

There are, generally speaking two methods of evaluating the contribution of a party in a matrimonial relationship.  The first method is based upon the value received.  This can be thought of as quantum meruit, that is the amount the defendant would have had to pay for the services on a purely business basis to any other person doing the work that was provided by the claimant.  Alternatively, it can be based upon what is termed "value surviving" which apportions the assets accumulated by the couple on the basis of the contributions made by each.  Value surviving is the approach that has been traditionally employed in cases of constructive trust.  However, there is no reason why quantum meruit or the value received approach could not be utilized to quantify the value of the constructive trust.  The remedy should be flexible so that it can be readily adapted to the situation presented in any given case.  In many cases the cost of retaining and presenting expert evidence as to the value of the property may be beyond the reach of the parties and at times clearly impractical.  This in itself indicates the need for maintaining flexibility in the remedy.

 


Here, the trial judge undertook the same type of quantum meruit analysis employed in Herman v. Smith (1984), 42 R.F.L. (2d) 154 (Alta. Q.B.).  That is, he calculated the appellant's contributions on the basis of what the respondent would have been required to pay a housekeeper.  It has to be noted that his calculations were favourable to the respondent in that he used the amount paid prior to the commencement of the common law relationship as a basis for the calculation and then reduced it by 50 percent to allow for the value of the accommodation that the appellant received from the respondent.  This was a fair means of calculating the amount due to the appellant.

 

Nonetheless, I would observe that the value surviving approach will often be the preferable method of determining the quantum of a claimant's share.  This method will usually be more equitable and will more closely accord with the expectation of the parties as to how the assets, which they have accumulated should be divided upon termination of the relationship.  Further, the utilization of the value surviving method will avoid the difficult task of assigning a precise dollar value to the services provided by someone who has dedicated him or herself to raising children and caring for a home.  Instead, the contributions of the parties can more accurately be expressed as a percentage of the accumulated wealth existing at the termination of the relationship.  Thus, for pragmatic reasons, the value surviving method may be the preferable one in many cases.  No matter which method is used, equity and fairness should guide the court in determining the value and contributions made by the parties.  In this case awarding the Sicamous property to the appellant reflected a fair assessment of her contribution to the relationship.

 

Disposition

 


In the result, I would allow the appeal, set aside the order of the Court of Appeal and restore the judgment of the trial judge.  The appellant should have her costs throughout these proceedings.

 

Appeal allowed with costs.

 

Solicitors for the appellant:  Nixon, Wenger, Vernon.

 

Solicitors for the respondent:  Schroeder, Pidgeon & Company, Vancouver.

 

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