Court of Appeal for Ontario

Date: March 3, 2017

Docket: C61541

Judges: Feldman, Epstein and Miller JJ.A.

Between

Jessica Reiter Applicant (Appellant)

and

Tiar Hollub Respondent (Respondent)

Counsel:

• J. Lester Davies, for the appellant
• Elissa C.M. Boyle, for the respondent

Heard: September 30, 2016

On appeal from: The order of Justice Andra Pollak of the Superior Court of Justice, dated December 9, 2015, with reasons reported at 2015 ONSC 6397.

Reasons by: Epstein J.A.

A. Overview

[1] The appellant, Jessica Reiter, appeals from the dismissal of her application for an interest in the increase in equity of a home owned by the respondent, Tiar Hollub, which she shared during their six year common law relationship.

[2] Ms. Reiter advanced her claim on the basis of unjust enrichment. She argued that she had contributed to the $410,000 increase in the net value of the home over the course of the relationship. She relied on contributions she made to common living expenses and to the maintenance and repair of the residence. She also relied on the fact that she had given Mr. Hollub a one-time payment of $5,000 toward the mortgage.

[3] Ms. Reiter also took the position that her relationship with Mr. Hollub amounted to a joint family venture as defined in Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269.

[4] The application judge held that Ms. Reiter was unable to establish a joint family venture to support the requested remedy. She found no evidence that would support a conclusion that Ms. Reiter's contributions had led to an increase in the value of the property. The application judge also found that the evidence did not support a joint family venture as defined in Kerr v. Baranow. As to Ms. Reiter's $5,000 payment toward the mortgage, the application judge held that although Mr. Hollub had been enriched to Ms. Reiter's detriment as a result of this contribution, his retention of the payment was justified by the parties' agreement to share living expenses.

[5] I see no reason to interfere with the application judge's rejection of Ms. Reiter's claim for a proprietary interest in the house. The application judge's conclusions about the circumstances of Ms. Reiter's contribution to expenses and about the nature of the relationship are entitled to deference. I would therefore dismiss that aspect of Ms. Reiter's appeal. However, I would allow the appeal on the treatment of the $5,000 lump sum payment to Mr. Hollub.

B. Facts

[6] The facts were largely presented through the parties' agreed statement. I summarize the relevant ones as follows:

• In October 2015, Ms. Reiter was 29 years old. Mr. Hollub was 53.
• The parties met in the spring of 2006.
• The parties earned a similar salary throughout the period of cohabitation.
• Mr. Hollub used $150,000 from the proceeds of sale of another house he owned to purchase the property. The balance came from a first mortgage on the property. Mr. Hollub took possession on July 31, 2006.
• The parties lived together in the property in a conjugal relationship from September 1, 2008 to November 29, 2014.
• Prior to moving in with Mr. Hollub, Ms. Reiter was paying more than $400 per month in rent.
• While the parties lived together, Ms. Reiter gave Mr. Hollub $400 monthly.
• Mr. Hollub had a monthly mortgage payment of $1,000.
• In 2013, Ms. Reiter gave Mr. Hollub $5,000 towards the mortgage.
• On September 1, 2008, the value of the property was $420,000 and the amount outstanding on the mortgage was $156,000. On November 1, 2014, the amount outstanding on the mortgage was $29,000.
• The increase in equity from September 1, 2008 to November 1, 2014 was $410,000.
• During the period of cohabitation, Ms. Reiter saved approximately $105,000, exclusive of her pension. In addition to the increase in equity of $410,000, Mr. Hollub saved approximately $112,000, excluding his pension.
• Ms. Reiter did not sacrifice her career in any way as a result of her relationship with Mr. Hollub.
• Ms. Reiter purchased the maximum amount of RRSPs each year during the relationship.
• At the time the application was heard, Ms. Reiter was paying more than double the $400 per month for her current rental residence.

C. The Application Judge's Reasons

[7] The application judge first considered whether the parties' relationship amounted to a joint family venture as defined in Kerr v. Baranow. The Supreme Court, in examining remedies available when unjust enrichment is found in the context of a domestic relationship, identified the new concept of joint family venture. To receive a monetary award on a value survived basis, the claimant must show that there was a joint family venture and that there was a link between his or her contributions to the joint family venture and the accumulation of assets and/or wealth. The court made it clear that a global analysis of all the evidence, rather than a checklist of conditions, is required to determine whether the parties were engaged in a joint family venture.

[8] The application judge reviewed the agreed facts and the parties' evidence on the issue of joint family venture, including that:

• Ms. Reiter had nothing to do with the acquisition of the house.
• The parties maintained their own accounts and had no joint accounts.
• The parties paid for their own utilities, groceries, and vacations.
• Mr. Hollub paid the mortgage, property tax, and insurance.
• The couple did not discuss their individual finances.
• Ms. Reiter had her own personal savings. The parties did not save together.
• Neither party named the other as the beneficiary of their RRSPs or included them as a beneficiary in their will.
• The parties specifically discussed marriage and Mr. Hollub was clear he did not want to get married.
• The parties used contraception to ensure that the relationship produced no children.
• The parties did not prioritize their relationship over their individual interests.
• There was no intention that Ms. Reiter would share a portion of Mr. Hollub's interest in the house.
• There was no detrimental reliance by Ms. Reiter for the sake of the relationship.
• The parties shared the domestic tasks.
• While Ms. Reiter contributed to repairs and improvements of the home, there was no record of how much Ms. Reiter spent on repairs and improvements.

[9] The application judge considered the evidence in the context of the four factors outlined in Kerr v. Baranow to determine whether a joint family venture existed – mutual effort, economic integration, actual intent and priority of family. She held that, on the basis of a global consideration of the evidence and the principles set out in Kerr v. Baranow, Ms. Reiter was unable to demonstrate that she and Mr. Hollub were engaged in a joint family venture.

[10] After coming to this conclusion, the application judge, at para. 19, stated that "for this reason alone, [Ms. Reiter] is not entitled to the remedy she seeks even if she can establish her claim that [Mr. Hollub] has been unjustly enriched."

[11] The application judge went on, however, to consider Ms. Reiter's argument that Mr. Hollub had been unjustly enriched as a result of her contribution to expenses and her participation in various home maintenance and improvement projects, as well as through the $5,000 payment toward the mortgage.

[12] First, the application judge considered the $283,000 increase in equity in the house during the parties' cohabitation that was attributable to market forces. She concluded that the evidence did not support a finding that Ms. Reiter's (or Mr. Hollub's, for that matter) contribution to expenses and home maintenance and improvements efforts increased the value of the property.

[13] The application judge then considered the increase in equity of $127,000 that resulted from payments made towards the property's mortgage. The parties agreed that Ms. Reiter gave Mr. Hollub $400 monthly, an amount that was less than she had previously paid for rent, and that Mr. Hollub's monthly mortgage payments were $1,000. They also agreed that in 2013, Ms. Reiter paid $5,000 towards the mortgage. The application judge made no explicit finding about the $400 payments. She did, however, find that Mr. Hollub had been enriched and Ms. Reiter suffered a corresponding deprivation as a result of Ms. Reiter's $5,000 contribution toward the mortgage. The application judge then turned to whether there was any juristic reason for the enrichment. She found that the parties' agreement to share living expenses provided a basis for Mr. Hollub's entitlement to the $5,000.

[14] The application judge therefore concluded that Ms. Reiter had no claim against Mr. Hollub in unjust enrichment.

D. Issues

[15] On appeal, Ms. Reiter argues that the application judge erred in finding no unjust enrichment and in concluding that her relationship with Mr. Hollub did not amount to a joint family venture.

E. Analysis

(1) Applicable Principles

[16] In Kerr v. Baranow, at para. 31, Cromwell J. recognized that "[a]t the heart of the doctrine of unjust enrichment lies the notion of restoring a benefit which justice does not permit one to retain". Since the Supreme Court's 1980 decision in Pettkus v. Becker, [1980] 2 S.C.R. 834, unjust enrichment principles have been available to support claims made by domestic partners upon the breakdown of their relationship.

[17] The test for unjust enrichment is well-settled. To establish unjust enrichment, the person advancing the claim must prove three things:

1. An enrichment of or benefit to the defendant;
2. A corresponding deprivation of the plaintiff; and
3. The absence of a juristic reason for the enrichment.

[18] There are two steps to identifying whether there is a juristic reason for the responding party to retain the benefit incurred. First, the court must consider whether the case falls within a pre-existing category of juristic reason, including a contract, a disposition of law, donative intent, and other valid common law, equitable or statutory obligations: Kerr, at para. 43. If a case falls outside one of these established categories, the reasonable expectations of the parties and public policy considerations become relevant in assessing whether recovery should be denied: Kerr, at para. 44.

[19] In Kerr v. Baranow, at para. 46, the Supreme Court outlined two possible remedies where unjust enrichment is established – a monetary award or a proprietary award. The court counselled, at para. 47, that the first remedy to consider is always the monetary award and that, in most cases, a monetary award is sufficient to remedy the unjust enrichment.

[20] To obtain a proprietary award, the person advancing the claim based on unjust enrichment must demonstrate that monetary damages are insufficient and that there is a sufficiently substantial and direct causal connection between his or her contributions and the acquisition, preservation, maintenance or improvement of the disputed property: Kerr, at paras. 50-51. A minor or indirect contribution will not suffice.

[21] The court held that there are two different approaches to valuation for a monetary award: Kerr, at para. 55. First, a monetary award may be based on a quantum meruit, value received or fee-for-services basis. Second, a monetary award may be based on a value survived basis. This is where the joint family venture analysis becomes relevant.

[22] To receive a monetary award on a value survived basis, the claimant must show that there was a joint family venture and that there was a link between his or her contributions to the joint family venture and the accumulation of assets and/or wealth: Kerr, at para. 100. Whether there is a joint family venture is a question of fact to be assessed in light of all of the relevant circumstances, including the four factors noted above – mutual effort, economic integration, actual intent and priority of the family: Kerr, at para. 100.

[23] Justice Cromwell was careful to note that cohabiting couples are not a homogenous group: Kerr, at para. 88. The analysis must therefore take into account the particular circumstances of each relationship. The emphasis should be on how the parties actually lived their lives, not on their ex post facto assertions or the court's view of how they ought to have done so: Kerr, at para. 88.

[24] While the four factors identified above are helpful to determine whether the parties were engaged in a joint family venture, there is no closed list of relevant factors: Kerr, at para. 89. The factors Cromwell J. suggested were not a checklist of conditions, but a useful approach to a global analysis of the evidence and examples of relevant factors that a court may take into account: Kerr, at para. 89.

(2) Principles Applied

[25] As previously indicated, I see no reason to interfere with the application judge's disposition of the application except in her treatment of the $5,000. I will deal with that issue in a separate section below.

[26] That said, in my view, it would have been preferable to first establish whether there was any unjust enrichment before considering the possibility of a joint family venture. The joint family venture inquiry concerns remedy. In Martin v. Sansome, 2014 ONCA 14, at para. 52, this court set out the appropriate analysis for determining an unjust enrichment-based claim for an interest in property within the context of a domestic relationship and following the Supreme Court's decision in Kerr v. Baranow:

1. Have the elements of unjust enrichment — enrichment and a corresponding deprivation in the absence of a juristic reason — been made out?;

2. If so, will monetary damages suffice to address the unjust enrichment, keeping in mind bars to recovery and special ties to the property that cannot be remedied by money?;

3. If the answer to question 2 is yes, should the monetary damages be quantified on a fee-for service basis or a joint family venture basis?; and,

4. If, and only if monetary damages are insufficient, is there a sufficient nexus to a property that warrants impressing it with a constructive trust interest?

[27] In keeping with the approach identified in Martin, I start by considering the application judge's holding that with the exception of the $5,000 payment, Ms. Reiter suffered no corresponding deprivation. That is, in the application judge's view the parties' shared expense arrangement resulted only in financial enrichment on both sides.

[28] This fact-based holding is entitled to deference: Wharry v. Wharry, 2016 ONCA 930, [2016] O.J. No. 6408, at para. 32; Simonin Estate v. Simonin, 2010 ONCA 900, [2010] O.J. No. 5626, at para. 13. Absent palpable and overriding error, there is no basis to intervene.

[29] The finding that the parties had a mutually beneficial agreement to share living expenses was available to the application judge on the record. The parties paid for their own utilities, their own groceries, and their own vacations. Ms. Reiter gave Mr. Hollub monthly payments of $400, which Ms. Reiter testified was paid toward rent. Ms. Reiter also agreed that this $400 was less than she paid for rent either before or after the relationship. Mr. Hollub made monthly mortgage payments of $1,000, and paid the property taxes and insurance. Given their annual incomes, both parties also had considerable savings at the relationship's end.

[30] I would not interfere with the application judge's rejection of Ms. Reiter's unjust enrichment claim advanced on this basis.

[31] A conclusion that there is no reason to interfere with this finding would render it unnecessary to proceed further with the analysis: Martin, at para. 52. As Martin shows, a finding of unjust enrichment is fundamental to Ms. Reiter's entitlement to any form of relief.

[32] However, for completeness, I will comment on Ms. Reiter's other ground of appeal – the application judge's finding that the parties were not involved in a joint family venture.

[33] This finding is also fact-based and entitled to deference: Kerr, at para. 100. In the light of factors such as the lack of integration of the parties' finances, lack of combined contribution to a future together and lack of evidence of prioritizing family over individual interests, the application judge was entitled to conclude that there was no joint family venture in this case.

(3) Treatment of the $5,000 Lump-Sum Payment

[34] I now turn to the $5,000 payment Ms. Reiter made toward the mortgage. I consider this payment separately only because the application judge herself did. In relation only to this particular lump sum payment made in 2013, the application judge concluded that, unlike the other contributions to shared expenses which were beneficial to both sides, this payment did in fact constitute an enrichment and corresponding deprivation.

[35] Ms. Reiter's position was that the $5,000 constituted a contribution to the mortgage. Mr. Hollub argued that the money was outside the shared expense arrangement – it was given to him as a gift to help pay down the principal on the mortgage, with no strings attached.

[36] With respect, on this record, I am of the view that the application judge erred by characterizing the $5,000 as having been paid as part of the common expense agreement – a characterization not advanced by either party and not supported by the evidence.

[37] Given the law's presumption against a gift (Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, at para. 24) and the absence of any evidence of donative intent, the payment should simply be returned.

F. Disposition

[38] For these reasons, I would allow the appeal, in part. I would order Mr. Hollub to return to Ms. Reiter the $5,000 payment made to him in 2013, with interest.

[39] I would strongly urge the parties to resolve the issue of costs, here and below. If a resolution cannot be reached, brief submissions as to costs (no more than 5 pages in total) may be made within 10 days of the release of these reasons.

Released: March 3, 2017

"Gloria Epstein J.A."

"I agree. K. Feldman J.A."

"I agree. B.W. Miller J.A."