What you need to know about dividing property between common law couples

By Jason Wilkins

Jake and Megan* had been living together for 10 years when their relationship came to an end. They had one child together – Molly.  Jake worked full time at a good job and Megan, in addition to primarily looking after Molly, worked part time and took care of the home that was in Jake’s sole name. It was a home he had just purchased before the two of them started living together.

In 2011, the Supreme Court of Canada decision on common law couples Kerr v. Baranow, was delivered. The case focused on dividing common law partners’ property. Jake and Megan will need to look to this decision and those cases that follow it, to determine how to divide their property fairly.

Not all common law couples are created equally 

The judgment in Kerr identified that not all common law couples are created equally.  Living together, even for 10 years like Jake and Megan did, does not, in itself, entitle one party to a share of the other’s property.

Some couples engage in a “joint family venture” and create wealth by joint effort, while some do not.  Some couples do both, just in different stages of their relationship. This timing can affect how much wealth is created and later shared—according to that timeline.

In some couple situations, one party will enrich the other and that enrichment will be compensated for, upon the breakdown of the relationship.  As for Jake and Megan, they had lived their lives together for 10 years and after applying the factors outlined in Kerr: Mutual Effort; Economic Integration; Actual Intent; Priority of the Family to their lives, it was reasonably clear that they would be considered to be engaged in a joint family venture.

Joint family venture

When there has been a joint family venture and enrichment of one person, then the whole of the wealth created by the couple will be looked at and a division of this wealth may occur.

Megan wanted to know if this meant that she was entitled to an interest in the family home owned by Jake. In this instance she was. In Alberta, the Courts would rarely order that her name be placed on title. Instead, Megan and Jake would have to calculate how much the equity in the house had grown during the 10 years they were together.

It turned out it had increased $100,000 over the 10 years. If they did not divide that equity in some reasonable fashion, Megan would walk away after 10 years with nothing. Jake would keep the $100,000 even though Megan had done a great deal of the parenting while he worked full time. There also had to be some recognition that if Jake had not owned the house already, there would be no increase in equity over the 10 years they were together.

How much were they each entitled to out of the $100,000?

In Alberta, the Courts generally:

• Look at the efforts of the family in the joint venture and determine globally what interest each party may have. They do not try and figure out who did what exactly and whether someone washed more dishes than the other person;
• Assess the evidence against the following factors:
  • Find that if a joint family venture exists, any party leaving the relationship with an unfair portion of the joint family wealth will be required to transfer some back to the complaining party (if there is no significant reason to deny this).
  • Recognizing  that all assets are potentially up for grabs, not just those where a connection can be made directly between the contribution and the wealth generated.
  • Apply absolutely no presumption that the sharing in all these assets will be done 50-50.

Alberta awards in common law cases

Using the above approach by the Alberta Courts and knowing that those same Courts often award people in situations like Megan 30% of the wealth generated by the family joint venture, they decided that Megan would take $30,000 and Jake would keep $70,000.

Sometimes people receive more than Megan did here (30% of the wealth). People can achieve a result of 30-50% when the relationships are significantly longer, children are involved, or both parties have contributed significant funds to some or all of the property involved in the joint family venture.

Sometimes people receive less than 30%, even zero. That happens when both people were equally enriched by living with the other person or the relationship is of a shorter duration.

Wondering about your rights?

Have you separated from your common law wife or husband and are wondering what your rights are to the family property?  Get in touch with Jason Wilkins to find out more about your rights and obligations.

*Not their real names