The Distribution of Property of Common-Law Partners in Alberta
February 7, 2022
Family
For unmarried persons in domestic relations or Adult Interdependent Partners (Common-law partners) in Alberta before 2020, judge made law (common-law) was the only option for addressing the property consequences of the breakdown of their relationships. The main tools available then were Resulting Trust and action in Unjust Enrichment.[1]
Unlike married couples, common-law partners could not rely on the legislatively dictated property division under the Matrimonial Property Act that governed property division of formerly married or divorced couples.
A Resulting Trust arises from a gratuitous transfer of property from one partner to another partner without consideration, the joint contribution by two partners to the acquisition of property, title which is in the name of only one of them and from the “common intention” of the parties that the non-owner partner was intended to have an interest.[2] According to the Supreme Court of Canada, the theory of Resulting Trust is doctrinally unsound and should have no continuing role in the resolution of domestic property disputes.[3] The other legal mechanism used by unmarried couples is the law of Unjust Enrichment and the remedial Constructive Trust.
Unjust enrichment will occur when one party retains a disproportionate share of the assets that are the product of their joint efforts following the breakdown of their relationship.[4] Unjust Enrichment allowed the plaintiff to make recovery if they established an enrichment of the defendant by the plaintiff, a corresponding deprivation of the plaintiff, and the absence of a juristic reason for the enrichment. The Supreme Court of Canada considered that the law of Unjust Enrichment was better than resulting trust in resolving disputes, as it provided a much less artificial, more comprehensive, and more principled basis to address claims for the distribution of assets on the breakdown of domestic relationships. However, it was still fraught with problems. For example, it “sometimes result[ed] in homemakers and other low-income partners receiving less property than they would otherwise be entitled to if they had been married and the presumption of equal sharing under the Matrimonial Property Act applied”.
Family Property Act
The Matrimonial Property Act was significantly amended to include former common-law partners. The Act, renamed, the Family Property Act, “streamline[d] and simplifie[d] the process of property division among separated common-law partners by applying the same legislative framework to former partners as is already applied to divorced couples”. With the coming into force of this Act in 2020, former common-law partners no longer have to depend on the common-law doctrine of unjust enrichment, but on the legislatively dictated rules of division of property. For the Family Property Act to be applicable, certain conditions must be fulfilled.[5] The parties must have become former common-law partners; the Court must be satisfied that the common-law partners are living separate and apart at the time the application is commenced and the defendant common-law partner, has transferred or intends to transfer substantial property to a third party who is not a bona fide purchaser for value; or has made or intends to make a substantial gift of property to a third party, with the intention of defeating a claim to property a common-law partner may have; or if the Court is satisfied that the common-law partners are living separate and apart and one common-law partner is dissipating property to the detriment of the other common-law partner.
Adult interdependent partners
One is an Adult Interdependent Partner (common-law partner) if the person has lived with the other person in a relationship of interdependence for a continuous period of not less than 3 years, or, of some permanence, (i.e., less than 3 years) if there is a child of the relationship by birth or adoption, or the person has entered into an adult interdependent partner agreement with the other person.[6]
A Relationship of Interdependence is a relationship in which any 2 persons share one another’s lives, are emotionally committed to one another, and function as an economic and domestic unit. [7] To be an economic and domestic unit, circumstances of the relationship are taken into consideration, such as whether or not the persons have a conjugal relationship; the degree of exclusivity of the relationship; the degree to which the persons hold themselves out to others as an economic and domestic unit; the degree to which the persons formalize their legal obligations, intentions, and responsibilities toward one another; the degree of financial dependence or interdependence and any arrangements for financial support between the persons; and, the care and support of children, etc.
Former Adult Interdependent Partners
An adult interdependent partner becomes the former adult interdependent partner when the adult interdependent partners enter into a written agreement that provides evidence that the adult interdependent partners intend to live separate and apart without the possibility of reconciliation; the adult interdependent partners live separate and apart for more than one year and one or both of the adult interdependent partners intend that their relationship as adult interdependent partners not continue; one of the adult interdependent partners marries a third party; the adult interdependent partner enters into an adult interdependent partner agreement with a third party; and when one or both of the adult interdependent partners have obtained a declaration of irreconcilability.[8]
Distribution of property
The Family Property Act has simplified the division or distribution of the property of former common-law partners. Regarding property acquired by an adult interdependent partner by a gift from a third party, by inheritance, or acquired before the relationship of interdependence began, etc., the market value of that property on the date the relationship of interdependence began, or on the date the property was acquired by the adult interdependent partner, is exempted from a distribution.[9] The unexempted market value and the rest of the property of the relationship, will be distributed by the Court in a manner that it considers just and equitable,[10] (based on “equal sharing presumptions”[11]). In making the distribution, the Court takes into consideration amongst others the following:
– the contribution made by each common-law partner to the relationship of interdependence and to the welfare of the family, including any contribution made as a homemaker or parent;
– the contribution, whether financial or in some other form, made by each adult interdependent partner directly or indirectly to the acquisition, conservation, improvement, operation or management of a business, farm, enterprise or undertaking owned or operated by one or both adult interdependent partners or by one or both adult interdependent partners and any other person;
– the contribution, whether financial or in some other form, made directly or indirectly by or on behalf of an adult interdependent partner to the acquisition, conservation or improvement of the property;
– any contribution that was made during the relationship of interdependence;
– the income, earning capacity, liabilities, obligations, property and other financial resources that each adult interdependent partner had on the date the relationship of interdependence began, and that each adult interdependent partner has at the time of the trial; and
– the duration of the relationship of interdependence.
Limits of the applicability of the Family Property Act
The applicability of the Family Property Act is limited by agreements that common-law partners might have entered before the Family Property Act or entered after the Family Property Act. These are agreements that provide for the distribution of property between common-law partners in case there is a breakdown of the relationship. The provisions of the Family Property Act regarding the distribution of the property of former common law partners will not apply to property owned by either or both common law partners or that may be acquired by either or both common law partners, if, in respect of that property, the common-law partners have entered into a subsisting written agreement with each other that provides for the status, ownership and division of that property.[12] Such agreements entered into before the coming into force of the Family Property Act, remain enforceable after the coming into force of the Family Property Act to the same extent, if any, that it was enforceable immediately before the coming into force of this section.[13]
If you are facing the breakdown of your relationship and require the services of an effective Calgary Family Lawyer for the fair division of the family property, then call us today at 403-300-5297 or book a consult.
[1] Kerr v. Baranow 2011 SCC 10.
[2] Kerr v. Baranow 2011 SCC 10.
[3] Kerr v. Baranow 2011 SCC 10.
[4] Kerr v. Baranow 2011 SCC 10.
[5] Family Property Act, RSA 2000, c F-4.7, s 5.1(1).
[6] Adult Interdependent Relationships Act, SA 2002, c A-4.5, s 3(1).
[7] Adult Interdependent Relationships Act, SA 2002, c A-4.5, s 1(1)(f).
[8] Family Property Act,RSA 2000, c F-4.7, s 1.1(1).
[9] Family Property Act, RSA 2000, c F-4.7, s 7.2.
[10] Family Property Act, RSA 2000, c F-4.7, s 7.3.
[11] Family Property Act, RSA 2000, c F-4.7, s 8.
[12] Family Property Act, RSA 2000, c F-4.7, s 37.
[13] Family Property Act, RSA 2000, c F-4.7, s 40.
