Family units are unique and can involve different forms of relationships. Some partners may decide not to get married, despite living together for a long period. They are typically referred to as common law spouses, and in Alberta, unmarried cohabitating partners are referred to as “adult interdependent relationships.” However, an adult interdependent partner is not entitled to division of property. This can pose a problem if both parties contribute to a joint family venture that becomes highly valued, but one partner is left without compensation.
However, there is a common law remedy referred to as “unjust enrichment,” which allows an adult interdependent partner to make a claim on the joint family venture.
In this article, we will discuss the law on unjust enrichment with respect to joint family ventures. We will examine a case example, McBride v. Bacovsky, 2022 ABQB 240, to illustrate an adult interdependent partner’s successful unjust enrichment claim. We will also provide important insights that will be helpful to adult interdependent partners who were involved in a joint family venture and are seeking a share of its value despite it being held by the other partner.
An unjust enrichment claim is when one party claims that the other was unjustly enriched by something to which they have an equitable claim. In other words, the enriched party receives a benefit without properly compensating the other party.
There are three elements for a claim of unjust enrichment to be made out:
All three elements must be established in order to find that there was unjust enrichment to warrant compensation.
Unjust enrichment in the family context is associated with a joint family venture, which we will discuss next.
A joint family venture can arise where both parties contribute to a business or other effort to accumulate wealth within the family.
There are several elements required for the court to find that there was a joint family venture:
There must also be a causal connection between contributions and wealth accumulation.
The parties were not married. Their relationship lasted approximately 10 years and began in 1999. In 2000, they decided to move in together after discovering that Ms. McBride was pregnant. The court found that they were in an adult interdependent relationship.
When their relationship began, Mr. Bacovsky owned, through his company, a chartered bus service, National Motor Coach (“NMC”). Ms. McBride assisted with some aspects of the company, including picking up the mail, emails, and typing. Later, Ms. McBride began a chauffeured limousine service company, Transprotection. At the time of separation, Mr. Bacovsky was leaving the relationship with assets valued at approximately $10.6 million.
Under the Adult Interdependent Relationships Act, SA 2002, c A-4.5, unmarried partners are not entitled to property division rights. This is based on the idea that unmarried partners can choose to get married, but if they choose not, they can maintain their property and interests during the relationship.
Therefore, to claim an interest in the property, Ms. McBride claimed that there was unjust enrichment and that she should be compensated.
During Ms. McBride’s maternity leave, she assisted with taking care of the children and a large project with NMC, the chartering of attendees for the G8 Summit. Her work involved hiring and organizing extra staff and drivers to facilitate the event. She also arranged for catering and set up a driver dispatch program. She was not paid for her contributions.
In exchange, Mr. Bacovsky paid for renovations to Ms. McBride’s mother’s home where they lived. However, the exchange of mutual benefits is relevant to the remedy stage and not the finding if there was unjust enrichment. The court concluded that Mr. Bacovsky benefitted from Ms. McBride’s efforts during this time, to her detriment.
After the G8 Summit, the court also found that Ms. McBride was primarily responsible for caring for the home and children, despite having a nanny. Due to her efforts, Mr. Bacovsky benefitted as his time was freed up to expand the business.
Mr. Bacovsky then provided some start-up capital for Ms. McBride to start her own business, Transprotection. This was done to provide her with more flexibility as their nanny was leaving. The court found that the relationship between Transprotection and NMC had benefitted both companies. Ms. McBride continued to care for their young child, who also had special needs issues. As she was primarily responsible for their child and the household, this benefited Mr. Bacovsky.
There was no juristic reason to deny Ms. McBride’s unjust enrichment claim. Shortly after separation, Ms. McBride refused to return $185,000 to Mr. Bacovsky and took some documents belonging to NMC. This was in reaction to her discovering Mr. Bacovsky’s affair with another woman. The court found that her actions were insufficient to deny her claim for unjust enrichment as her financial circumstances were uncertain at the time, and she depended on Mr. Bacovsky. Also, the money that was not returned would not have left Mr. Bacovsky out of pocket, as he had sufficient income.
The court also found that there was a joint family venture. There was a mutual effort as Ms. McBride took on most of the child and household labour, which allowed Mr. Bacovsky to expand the business. The court also found that Ms. McBride had contributed to the companies’ operations, including working overtime during the G8 Summit.
While the parties had separate bank accounts and property, and Ms. McBride was not involved in managing NMC, the court found some level of economic integration. Mr. Bacovsky had purchased two vehicles for Ms. McBride during the relationship, she listed him as her common-law partner when filing her taxes, and he listed her as his common-law spouse for his health benefits. She also assisted with setting up Transprotection, which benefitted the family unit.
There was also evidence that both parties considered themselves a family unit. He accepted her contributions to the business and her domestic labour. They also set up Transprotection to expand and work with NMC, which showed that they were working as a family unit.
Both parties prioritized the family. They moved in together once they found out she was pregnant. They also renovated their home together, and Mr. Bacovsky even paid for the divorce of her former spouse. Their families were integrated. They also set up Transprotection together for the family’s sake as a unit.
Ultimately, the court found that there was unjust enrichment. Ms. McBride was awarded 20% of the value of the joint family venture (approximately $1.78 million), as she left the relationship with the value of Transprotection, and NMC was also a well-established company before separation.
Sometimes, partners may work together to build a family business. For unmarried partners, one party may leave the relationship with significantly more due to the joint family venture, as property division rights do not apply. However, a partner may be able to make out an unjust enrichment claim and compensation.
As this is highly specific to the circumstances of the case, you should speak with one of our family law lawyers at Mincher Koeman, who are experienced in assisting business professionals and entrepreneurs with issues involving property division. Our Calgary family law lawyers are dedicated to finding your best resolution after separation.
To book a consultation, please contact us online or by phone at 403-910-3000.
707 7 Ave SW #1300,
Calgary, AB T2P 3H6
621 10 St #101
Canmore, AB T1W 2A2
© Mincher Koeman LLP 2024. All rights reserved.
Website designed and managed by Umbrella Legal Marketing