February 18, 2021 – Unjust Enrichment Remedies

“In my view, restricting the money remedy to a fee-for-services calculation is inappropriate for four reasons.  First, it fails to reflect the reality of the lives of many domestic partners.  Second, it is inconsistent with the inherent flexibility of unjust enrichment.  Third, it ignores the historical basis of quantum meruit claims.  Finally, it is not mandated by the Court’s judgment in Peter. For those reasons, this remedial dichotomy should be rejected. The discussion which follows is concerned only with the quantification of a monetary remedy for unjust enrichment; the law relating to when a proprietary remedy should be granted is well established and remains unchanged.

The remedial dichotomy would be appropriate if, in fact, the bases of all domestic unjust enrichment claims fit into only two categories — those where the enrichment consists of the provision of unpaid services, and those where it consists of an unrecognized contribution to the acquisition, improvement, maintenance or preservation of specific property.  To be sure, those two bases for unjust enrichment claims exist.  However, all unjust enrichment cases cannot be neatly divided into these two categories.

At least one other basis for an unjust enrichment claim is easy to identify. It consists of cases in which the contributions of both parties over time have resulted in an accumulation of wealth. The unjust enrichment occurs following the breakdown of their relationship when one party retains a disproportionate share of the assets which are the product of their joint efforts.  The required link between the contributions and a specific property may not exist, making it inappropriate to confer a proprietary remedy.  However, there may clearly be a link between the joint efforts of the parties and the accumulation of wealth; in other words, a link between the “value received” and the “value surviving”, as McLachlin J. put it in Peter, at pp. 1000-1001. Thus, where there is a relationship that can be described as a “joint family venture”, and the joint efforts of the parties are linked to the accumulation of wealth, the unjust enrichment should be thought of as leaving one party with a disproportionate share of the jointly earned assets.

There is nothing new about the notion of a joint family venture in which both parties contribute to their overall accumulation of wealth.  It was recognition of this reality that contributed to comprehensive matrimonial property legislative reform in the late 1970s and early 1980s.  As the Court put it in Clarke v. Clarke, 1990 CanLII 86 (SCC), [1990] 2 S.C.R. 795, at p. 807 (in relation to Nova Scotia’s Matrimonial Property Act), “. . . the Act supports the equality of both parties to a marriage and recognizes the joint contribution of the spouses, be it financial or otherwise, to that enterprise. . . . The Act is accordingly remedial in nature.  It was designed to alleviate the inequities of the past when the contribution made by women to the economic survival and growth of the family was not recognized” (emphasis added). 

Unlike much matrimonial property legislation, the law of unjust enrichment does not mandate a presumption of equal sharing.  However, the law of unjust enrichment can and should respond to the social reality identified by the legislature that many domestic relationships are more realistically viewed as a joint venture to which the parties jointly contribute.” 

Kerr v. Baranow, [2011] 1 SCR 269, 2011 SCC 10 (CanLII) at 58-62

February 17, 2021 – Sale of Jointly-Owned Property & Unconscionability Claim

“The relevant law applicable to this motion is that pertaining to an interim order for sale of jointly owned property, in conjunction with a consideration of the law developed under s. 5(6) of the Family Law Act, R.S.O. 1990, c. F.3.  With respect to the latter, even though this is an interim motion it bears keeping in mind that the onus will be on the respondent to satisfy the court that an equal division would be unconscionable. The law is clear that this is an exceptionally high threshold to meet, and that the focus is ultimately on the result of equalization: Serra v. Serra 2009 ONCA 105 (Ont. C.A.); Symmons v. Symmons 2012 ONCA 747 (Ont. C.A.). While the respondent does not have to demonstrate a potentially unconscionable result to defeat this motion, he does need to meet the onus of showing a prima facie case for his claim to an unequal division, as the matrimonial home and boat are the only significant assets owned by these parties from which any such payment could be satisfied: Goldman v. Kudeyla 2011 ONSC 2718 (S.C.J.) at para. 18; Zargar v. Zarrabian 2016 ONSC 2900 (S.C.J.) at para. 8; Bonnick v. Bonnick 2016 ONSC 657 (S.C.J.) at para. 3. As the party resisting the sale, the respondent must alternatively show that the applicant has engaged in malicious, vexatious or oppressive conduct: Latchman v. Latchman, 2002 CarswellOnt 1757 (Ont. C.A.), at para. 2. I use the word “alternatively” because s. 5(6) of the Family Law Act does not specifically require a party to show such conduct.  Failing proof by the respondent of an arguable case for unequal division, the applicant is entitled to exercise her prima facie right under s. 2 of the Partition Act, R.S.O. 1990, c. P.4 to obtain an order for partition and sale of the jointly owned home.”

Lovie v. Lovie, 2017 ONSC 1186 (CanLII) at 4

February 16, 2021 – Retroactive Reduction of Support

“The applicable principles regarding the retroactive reduction of support and rescission of arrears are set out in Gray v. Rizzi, 2016 ONCA 152, in which the Ontario Court of Appeal adopted the analysis set out by Justice Chappel in Corcios v. Burgos, 2011 ONSC 3326. Ultimately, as stated by Justice Chappel, “the goal in addressing child support issues is to ensure that children benefit from the support they are owed when they are owed it, and any incentives for payor parents to be deficient in meeting their obligations should be eliminated.”

Where, as here, a payor can establish that a change in circumstances during the time that the arrears were accumulating, rendered him or her unable to make child support payments for a substantial period of time, the Court may provide relief by varying the child support order or rescinding arrears.” [Emphasis added.] See Corciossupra at para 55. In such a case the following factors must guide the Court:

1. The nature of the obligation for support, whether contractual, statutory, or judicial;

2. The ongoing needs of the support recipient and the child;

3. Whether there is a reasonable excuse for the payor’s delay in applying for relief;

4. The ongoing financial capacity of the payor, and in particular, his ability to make payments towards the outstanding arrears;

5. The conduct of the payor, including whether he has made voluntary payments, whether he cooperated with support enforcement authorities, and whether he has complied with obligations and requests for financial disclosure from the support recipientBehaviour that indicates willful non-compliance with the terms of the Order or a failure to work cooperatively to address the child support issue is a factor that militates against even partial rescission of arrears.

6. Delay on the part of a support recipient, even a long delay, in enforcing the child support obligation does not, in and of itself, constitute a waiver of the right to arrears;

7. Any hardship that may be occasioned by a retroactive order reducing or rescinding arrears, or by an order requiring the payment of substantial arrears.

See Gray, supra, at 61. [Emphasis added]

Full, frank, and timely disclosure of the basis for the request for a reduction in child support is an important consideration. As stated by Justice Chappel in Corcios, supra at 55:

[I]f a retroactive Order reducing child support would result in the child support recipient having to repay money to the child support payor, this may militate against making the order, particularly if the payor has not given the recipient notice of the change in their circumstances, has not provided appropriate disclosure to support their claim to an adjustment, or has delayed initiating court proceedings to change the Order.

In Gray, supra, Justice Brown of the Ontario Court of Appeal stressed that the payor seeking retroactive reduction or rescission of arrears must provide “reasonable proof” to support the claim so that the recipient can “independently assess the situation in a meaningful way and respond appropriately.” Justice Brown further noted that the obligation is ongoing and that the failure to comply with continuing disclosure obligations will “most likely… impact the remedy which the Court crafts.” See para. 63.”

Smith v. Davies, 2018 ONSC 920 (CanLII) at 81-84

February 12, 2021 – Minutes of Settlement

“Minutes of Settlement are a type of contract. The Supreme Court of Canada has provided guidance where there is an ambiguity or a question of interpretation regarding a contract. In BG Checo International Ltd. v. British Columbia Hydro and Power Authority, 1993 CanLII 145 (SCC), [1993] 1 S.C.R. 12, at para. 9, the Supreme Court stated:

It is a cardinal rule of the construction of contracts that the various parts of the contract are to be interpreted in the context of the intentions of the parties as evident from the contract as a whole.

The primary goal of contractual interpretation is to ascertain the objective intent of the parties as expressed in the written agreement. The interpretation must be grounded in the text. A judge should interpret a plainly worded document by presuming that the parties intended the legal consequences of their words: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at paras. 47, 55, 57.

In Sattva, at para. 47, the Supreme Court held that when interpreting a contract, the courts should have regard to the surrounding circumstances of the contract – the factual matrix, while “giving the words used in the contract their ordinary and grammatical meaning, consistent with the circumstances known to the parties at the formation of the contract.”

The factual matrix of a contract includes objective evidence of the background facts at the time of the execution of the contract. The scope of the factual matrix evidence is limited to objective facts and does not include the subjective intention of the parties: Sattva, at para. 58.

In Union Carbide Canada Inc. v. Bombardier Inc., 2014 SCC 35, [2014] 1 S.C.R. 800, the Supreme Court held that the common law exception of confidentiality in mediation proceedings is displaced to enable the parties to produce evidence of communications made in the mediation process in order to prove the terms of settlement.

Evidence of post-contractual conduct is admissible to assist in contractual interpretation, but “only if the contract remains ambiguous after considering its text and its factual matrix:” Shewchuk v. Blackmont Capital Inc., 2016 ONCA 912, 404 D.L.R. (4th) 512, at para. 46.”

Gelb v. Gelb, 2020 ONSC 760 (CanLII) at 27-32

February 11, 2021 – Tracing & Equalization

“There is no principle of which I am aware in the family law context that limits the application of tracing by number of transactions or mere changes in the form of the asset.  Nor can such limitations be implied into the language of the marriage contract.  At each stage, the question is whether the beneficiary can show that the subsequent property or proceeds were acquired, or partially acquired, with assets traceable to the trust property.

Thus, it is not the transformation of the asset that brings tracing to an end.  Rather, it is the inability of the beneficiary to prove the necessary connection or nexus between the trust property and the subsequently acquired asset.  For example, tracing may reach its limit when an asset is spent or dissipated or where it is used to pay down debt or otherwise becomes co-mingled with other assets such that the original trust property can no longer be discerned.

I have found no case which suggests that the excluded nature of property begins to “peter out” merely because it is exchanged for equally identifiable property or through the effluxion of time. Where there is clear documentary evidence of the transformation of an excluded asset into other identifiable property, the exclusion is preserved.” 

Ludmer v. Ludmer, 2013 ONSC 784 (CanLII) at 85-87

February 10, 2021 – Section 9(1) of the Family Law Act

“Section 9(1) of the Family Law Act clothes the court with its statutory authority to grant remedies in the context of an equalization of net family property application under s. 7 of the Family Law Act. It sets out a series of options and, as Walsh J. observed, in Marsham v. Marsham (1987), 1987 CanLII 4041 (ON SC), 59 O.R. (2d) 609, [1987] O.J. No. 440 (H.C.J.), at pp. 622 and 625 O.R., equips the court with “a most extensive and comprehensive choice of powers”, and “the flexibility required to enable it to choose the most appropriate method of satisfying the equalization entitlement the court has previously determined”. This does not mean, however, that s. 9(1) contemplates an indiscriminate resort to the enhanced remedies it provides for. In my view, as I shall explain, it does not.

In summary, the choices available under s. 9(1) are (a) that the whole amount be paid; (b) that, in addition, security may be imposed, or the property transferred to or in trust for, or vested in, the receiving spouse absolutely, for life or for a term of years; and (c) if necessary, to avoid hardship, the whole amount may be paid in instalments, not to exceed a period of ten years.

Indeed, lower courts have recognized the need for a principled approach to the application of an enhanced s. 9(1) remedy. Such orders are to be made only where there is a real need for them, after all relevant considerations have been taken into account, and not as a matter of course. As Whalen J. stressed, in Colquhoun v. Colquhoun, [2007] O.J. No. 9, 2007 CarswellOnt 18 (S.C.J.), at para. 168, “[t]here must be a proven concern that payment [of an ordered equalization payment] will not be honoured” (emphasis added) before the court can order the transfer or partition and sale of property under s. 9(1).

The onus is on the party seeking such an order, and as a general rule the court’s discretion will only be exercised in favour of a s. 9(1) order where it is established — based on the targeted spouse’s previous actions and reasonably anticipated future behaviour — that the equalization payment order granted will not likely be complied with in the absence of additional, more intrusive provisions: Kennedy v. Sinclair, 2001 CanLII 28208 (ON SC), [2001] O.J. No. 1837, 18 R.F.L. (5th) 91 (S.C.J.), at para. 45; Lynch v. Segal (2006), 2006 CanLII 42240 (ON CA), 82 O.R. (3d) 641, [2006] O.J. No. 5014 (C.A.), at para. 32; [page174] Raymond v. Raymond, 2008 CanLII 68138 (ON SC), [2008] O.J. No. 5294, 64 R.F.L. (6th) 160 (S.C.J.); Alldred v. Alldred, [1998] O.J. No. 3606, 82 A.C.W.S. (3d) 512 (Gen. Div.); McDonald v. McDonald, 1994 CanLII 7435 (ON SC), [1994] O.J. No. 1644, 5 R.F.L. (4th) 215 (Gen. Div.), affd 1997 CanLII 14551 (ON CA), [1997] O.J. No. 4688, 33 R.F.L. (4th) 425 (C.A.).

Accordingly, in my view, an order providing that an equalization payment to one spouse is to be made out of the payor spouse’s share of the proceeds of the sale of the matrimonial home, without more, does not create “property rights” in the payee spouse — equitable, securitized or otherwise. Absent clear language pointing to the trier of fact’s intention to order the transfer or vesting of a payor spouse’s assets, or the creation of security, or the imposition of a trust-like obligation, in satisfaction of the equalization payment, courts should be wary of giving effect to a proprietary right form of disposition, lest (a) what the legislature has clearly decided is to be an equalization regime is inadvertently transformed into a division of property regime under the guise of protecting a payee spouse’s right to receive the equalization payment awarded, and (b) otherwise legitimate claims of third parties be subverted and bankruptcy priorities reversed.”

Thibodeau v. Thibodeau, 2011 ONCA 110 (CanLII) at 31-32, 41-43

February 9, 2021 – Declaratory Judgments

A declaratory judgment is “a formal statement by a court pronouncing upon the existence or non-existence of a legal state of affairs”: Zamir & Woolf, The Declaratory Judgment, 3rd ed. (London: Sweet & Maxwell, 2002) at para. 1.02. Courts have jurisdiction to grant declaratory relief under their inherent jurisdiction and pursuant to s. 97 of the Courts of Justice Act, R.S.O. 1990, c. C.43. The nature of the relief was articulated in detail by the Supreme Court of Canada in Solosky v. R., [1980] 1 S.C.R. 821 (S.C.C.). There, Dickson J. said at pp. 830-832:

Declaratory relief is a remedy neither constrained by form nor bounded by substantive content, which avails persons sharing a legal relationship, in respect of which a ‘real issue’ concerning the relative interests of each has been raised and falls to be determined.

The principles which guide the court in exercising jurisdiction to grant declarations have been stated time and again. In the early case of Russian Commercial and Industrial Bank v. British Bank for Foreign Trade Ltd, [[1921], 2A.C. 438] in which parties to a contract sought assistance in construing it, the Court affirmed that declarations can be granted where real, rather than fictitious or academic, issues are raised. Lord Dunedin set out this test (at p. 448):

The question must be a real and not a theoretical question, the person raising it must have a real interest to raise it; he must be able to secure a proper contradictor, that is to say, someone presently existing who has a true interest to oppose the declaration sought.

In Pyx Granite Co. Ltd. v. Ministry of Housing and Local Government, [[1958 1 Q.B. 554], (rev’d [1960] A.C. 260, on other grounds), Lord Denning described the declaration in these general terms (p. 571):

.. if a substantial question exists which one person has a real interest to raise, and the other to oppose, then the court has a discretion to resolve it by a declaration, which it will exercise if there is good reason for so doing.

. . .

As Hudson suggests in his article, “Declaratory Judgments in Theoretical Cases: The Reality of the Dispute” (1977), 3 Dal.L.J. 706:

The declaratory action is discretionary and the two factors which will influence the court in the exercise of its discretion are the utility of the remedy, if granted, and whether, if it is granted, it will settle the questions at issue between the parties.”

G.(R.) v. G.(K.), 2017 ONCA 108 (CanLII) at 47

February 8, 2021 – Foreign Divorce and Corollary Relief Proceedings

Okmyansky is clear and unequivocal authority that an Ontario court does not have jurisdiction to hear and determine a corollary relief proceeding under the Divorce Act following a valid foreign divorce. Simmons J.A. held, at para. 38, that without a divorce granted in Canada, a support order could not properly be viewed as “corollary relief.”

Various superior court cases have followed Okmyansky in the last ten years. Thus the court in Stefanou v. Stefanou, 2012 ONSC 7265 (CanLII)47 R.F.L. (7th) 385, held, at para. 170, that “[i]f the divorce is not granted pursuant to the Divorce Act, then there is no divorce to which corollary relief may be incidental.” The British Columbia Court of Appeal came to the same conclusion in L.R.V. v. A.A.V., 2006 BCCA 63 (CanLII), 52 B.C.L.R. (4th) 112, holding that the Supreme Court of British Columbia has no jurisdiction under the Divorce Act to grant corollary relief founded upon a foreign divorce. 

In my view, the trial judge erred in law when he attempted to distinguish this case from Okmyansky. That case was binding authority, and nothing in the unique circumstances of this case serves to confer jurisdiction where the statute does not provide jurisdiction. Simply put, there is no jurisdiction for an Ontario court to grant corollary relief under the Divorce Act after a foreign court has validly issued a divorce. 

Cheng v. Liu, 2017 ONCA 104 (CanLII) at 28-30

February 5, 2021 – Bad Faith

“In Hendry v. Martins, [2001] O.J. No. 1098 (S.C.J.) at para. 4, Campbell J. stated that bad faith involves “…the conscious doing of a wrong because of a dishonest purpose or moral obliquity.”  In S.(C.) v. S.(M.) (2007), 2007 CanLII 20279 (ON SC), 38 R.F.L. (6th) 315 (Ont. S.C.J.) at paras. 16-18, Perkins J. commented that “in order to come within the meaning of bad faith in subrule 24(8), behavior must be shown to be carried out with intent to inflict financial or emotional harm on the other party or other persons affected by the behavior, to conceal information relevant to the issues or to deceive the other party or the court.” In Chomos at para. 45, Pazaratz J. stated that “bad faith involves intentional duplicity, obstruction or obfuscation.” 

Hill v. Gregory, 2019 ONSC 904 (CanLII) at 33

February 4, 2021 – Section 5(6) Analysis

The steps to be taken when s. 5(6) is engaged are well- established. The court must first ascertain the net family property of each spouse by determining and valuing the property each owned on the valuation date (subject to the deductions and exemptions set out in s. 4). Next, the court applies s. 5(1) and determines the equalization payment. Finally — and before making an order under s. 5(1) — the court must decide whether the equalization of net family properties would be unconscionable under s. 5(6), having regard to the factors listed in paras. 5(6)(a) through (h): see Rawluk v. Rawluk, 1990 CanLII 152 (SCC), [1990] 1 S.C.R. 70, [1990] S.C.J. No. 4, at pp. 93-94 S.C.R.; Berdette v. Berdette (1991), 1991 CanLII 7061 (ON CA), 3 O.R. (3d) 513, [1991] O.J. No. 788 (C.A.), at pp. 525-26O.R.; Stone v. Stone (2001), 2001 CanLII 24110 (ON CA), 55 O.R. (3d) 491, [2001] O.J. No. 3282 (C.A.), at para. 39; LeVan v. LeVan (2006), 2006 CanLII 31020 (ON SC), 82 O.R. (3d) 1, [2006] O.J. No. 3584 (S.C.J.).” 

Serra v. Serra, 2009 ONCA 105 (CanLII) at 37