The Supreme Court of Canada's decision in Kerr v Baranow (2011 SCC 10) earlier this year changed the legal landscape for unjust enrichment claims in domestic relationships. While the case arose in a family law context, the principles in the Court's decision will also apply to unjust enrichment claims in estates.

The first major change resulting from this decision is the elimination of the "common intention" resulting trust, which was referred to as a "purely Canadian invention" by one scholar. Prior to this decision, a "common intention" resulting trust could be imposed over property, even in the absence of a financial contribution to its acquisition by the claimant, where the court was satisfied that it was the parties' common intention that the defendant was not to have the sole beneficial interest in the property, even if the defendant was the sole legal owner, but rather the beneficial interest was to be shared between the claimant and the defendant in some proportion.

The Court held that the "common intention" resulting trust no longer had a role to play in resolving domestic cases. The Court found that it was doctrinally unsound with the "common intention" requirement being inconsistent with the legal principles of resulting trusts, which do not require proof of the intention of both parties, and that it actually evolved from a misreading of early British authorities. Further, the Court held that the notion of "common intention" may be highly artificial, particularly in domestic cases. Finally, the Court held that the principles of unjust enrichment, with the possible remedy of a constructive trust, provide a more comprehensive and principled basis to address claims arising out of domestic partnerships.

The second notable aspect of this decision was its discussion of unjust enrichment arising from a "joint family venture". In domestic relationships, the parties often accumulate wealth through joint efforts. When the relationship breaks down, if one party retains a disproportionately large share of the assets that were accumulated through this "joint family venture", this would constitute unjust enrichment.

The Court noted that, when providing a remedy for unjust enrichment, the courts had gravitated to imposing one of two remedies: either a monetary remedy based on quantum meruit, or a constructive trust. It held that this "remedial dichotomy" was too rigid, as many unjust enrichments arising between domestic partners do not fit neatly into either mold. Calculating contributions on a "fee-for-services" basis is often a difficult and artificial inquiry.

The Court held that the monetary remedy for unjust enrichment was not restricted to awards based on a "fee-for-services" approach. Rather, where unjust enrichment results from a joint family venture and a monetary award is appropriate, such an award should be calculated by determining the value of the share of the assets in question that are proportionate to the claimant's contributions. To be entitled to such a monetary remedy, the claimant must show both that there was a joint family venture, and a link between her/his contribution to it and the accumulation of assets and/or wealth. Some portion of the value of the asset or wealth (or of the increase in value of the asset or wealth during the partnership, if appropriate) may then be awarded to the claimant.

In an estate involving a domestic partnership, which does not have all the same legislative rights as a marriage, the surviving partner may raise a claim for unjust enrichment against the estate. In such a case, the "joint family venture" approach may make obtaining a monetary remedy easier for the claimant, in contrast to the more rigid "fee-for-services" model. This case is an important read for anyone involved in an unjust enrichment claim.

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