BARRIE COURT FILE NO.: FC-10-937
DATE: 20121212
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ROLF MEESER
Applicant Husband
– and –
PEGGY MEESER
Respondent Wife
T. Pratt, for the Applicant Husband
K. Kieller and C. Ashbourne, for the Respondent Wife
JOSEF MEESER and KATHARINA MEESER
Respondents
T. Pratt, for the Respondents
HEARD: November 26-30, 2012, December 3, 2012, and written submissions thereafter
EBERHARD J.
[1] Josef Meeser came to Canada in 1964 with nothing. He worked hard, married Katharina and acquired several farm properties. Josef and Katharina Meeser had two sons, Frank the elder and Rolf.
[2] Rolf married Peggy in 1988. They had two children, Garrit (born July 5, 1989) and Emilee (born April 28, 1992) known sometimes as Jenna, are now age 23 and 20 respectively. The family first lived in a home in New Lowell. That home and the adjacent field are now rented out.
[3] There is no evidence about Frank. I do not know if he fits into the family constellation anymore. Initially the New Lowell home was purchased by Joe Meeser for Frank and Rolf but by the time Rolf and Joe built a house on it, title was in Rolf’s name alone.
[4] Rolf began working at his father’s firewood business “The Wood Stop” on the home farm near Creemore as he grew up. After a short stint trying outside school and work, he returned to the family farm. After helping his parents construct a home on a severed lot, Rolf moved with Peggy and their children into the home farm house adjacent to the business buildings and firewood inventory accessible to Airport Road traffic.
[5] Rolf’s involvement in the business increased commensurate with his age and experience. Josef renamed the business J & R Firewood in the “mid 90s”, a simple matter since the business was never registered. Joe just brought new signs one day.
[6] By its nature the business did not enter formal contracts. Seldom were the transactions recorded by invoice or receipt. For many years the revenue from sales, if deposited into the bank at all, simply went into one of the personal accounts: Rolf and Peggy’s joint account, Josef and Katharina’s joint account. A significant issue in the trial was whether, or how much, business revenue was neither reported nor deposited.
[7] Rolf was not paid a wage or salary. Income Tax Returns show that he and Josef Meeser divided the reported and deposited revenues between themselves for tax purposes based on the proportion of the work they thought each had contributed that year. Farming revenues were determined by Rolf marking, for their accountant, deposits into the bank accounts that were from the firewood business.
[8] Josef Meeser had other income from rentals and investments.
[9] Rolf had other income from rental of the New Lowell house and New Lowell field.
[10] Rolf and Peggy and their children lived in the home on the property owned by Josef and Katharina Meeser to facilitate the business. No rent was paid. Maintenance, renovations and improvements were paid from the comingled accounts. Josef Meeser and Rolf testified that the parents paid for these expenses with both Rolf and Josef doing much of the labour required. Peggy testified that Rolf paid and she helped with the labour. Her whole pay cheque went into their joint account.
[11] Joe testified “he does same work as me”. Asked if he paid Rolf, Joe said “yeah he needs some money for gas, food,… if business slow got less, if better, got more, … over time this has not changed.” Asked how do you pay him, Joe said “I give him cash so he can have something to spend on food”.
[12] Further complicating the comingled funds; the shared duties in the business and for the property; the benefit of living in a home owned by Josef and Katharina set against the advantage to the business of Rolf being present at the business; is the overarching context of rural self-sufficiency. Not all benefits come from payment. Rolf and Josef make and fix many things themselves. They trade (or pay at cost) services and supplies with friends. They use resources the land yields up. They use and expense resources the business generates.
[13] These factors create a circumstance that does not easily fit into conventions and procedures for income calculation or property rights this court must assess. The challenge is to find the essence of the financial circumstances to apply the law so that the just result is understood by analogy to the t4 employee for income; and the property rights by entitlement created by Family Law Act or trust law. The esoteric manner in which income is earned or property held cannot disentitle spouses of their just share which they would receive if the true essence of the income and property were arranged in more typical fashion.
[14] On the other hand, individuals who hold title to property who are not the spouses, are not the direct subjects of the Family Law Act.
[15] Josef and Katharina (and Rolf) share values of hard work and self-reliance. It has served them well. Josef has acquired property and a comfortable lifestyle from his own hard work. These values are admirable but in the present case rigid. Even with the very competent and potent Katharina, there is an underlying acceptance that the property belongs to the man. Even though she holds title with Joe she testifies he bought it. They are strangers to the sensibilities that inform the Family Law Act. They are bitter towards Peggy. Josef is transparent in his view that Peggy is lazy and wrongfully remains in occupation of his property. The generosity, with which the home and business were developed to share the benefit with Rolf and his family, remains now only to benefit Rolf.
[16] Rolf and Peggy have enjoyed a comfortable lifestyle with many acquisitions, pleasures and savings. Peggy freely acknowledges Rolf’s hard work.
[17] Family Law Act sensibilities recognize that spouses bring different contributions to a marriage. Peggy works part-time on the line at Creemore Breweries. Peggy took on most of the child rearing and homemaker duties. Her evidence was very typical of a contemporary mother who is largely dependent on a bread-winning spouse. She was intimately acquainted with the children’s past and current needs. Her circumstances fit very well into Family Law Act and Child Support Guidelines sensibilities.
[18] The worldviews don’t match.
[19] The Applicant Husband, and his added Respondent parents, assert that Rolf’s income is his line 150 Income Tax Return income. They assert that the Respondent Wife does not deserve any benefit arising from the business in which Rolf has worked with increasing responsibility and control since his youth or the home and 1 acre where she resided with Rolf and their children for 18 years. Acceptance of this position would require me to ignore everything I have learned of family law and family law litigants. It would require me to determine the rights of the spouses based on the structure of the Applicant Father’s financial circumstances rather than their reality.
[20] The Respondent Wife, on the other hand, asserts that Rolf has income not reflected in his deposited and reported income, that Rolf owns the business outright despite its history and Josef’s continuing involvement and she asserts a constructive trust on the home and one acre based against the added Respondents on principles applied between cohabitants as if the title were in Rolf’s name. In fact, Josef and Katharina Meeser hold title to the home, the 1 acre and the larger farm on which it is located.
[21] My task in this trial is to determine Rolf’s true financial circumstances and apply family law principles to those circumstances.
Income
[22] The spouses separated January 2010. To précis a long and bitter struggle, pitting Peggy against Rolf, Josef and Katharina, into one phrase I say merely this: Peggy has remained in the home.
[23] Rolf doesn’t earn income in a typical manner. In chief, he described how he is paid: I was paid, … never a formal structure, a need situation. If I needed money for anything, I would discuss it and Joe would give me money as my needs accumulated. Never changed to this day. No regular pay, no T4, no pay structure. Based on increased need. For example: if needed a new vehicle, asked Joe if he could help out, sometimes yes/no. Christmas 1993, needed minivan, second child, took Joe to see it and he bought it for us.
[24] Rolf’s line 150 income has been in 2007: $41,272; 2008 $36,364; 2009 $46,187; 2010 $37,868; 2011 $52,206.
[25] Rolf testified that each year he marked bank accounts used by the family (Josef and Katharina, Rolf and Peggy) to identify deposits from the wood business. He marked expenses for the wood business. The accountant then totalled those entries and added Joe and Rolf’s estimate of cash receipts to determine gross income from the farming business. Then income and expenses were apportioned between “partners”[^1] Rolf and Josef according to their view of who did the most work in the year: Rolf’s “partnership” percentages were 2007: 60%; 2008: 70 %; 2009: 85%; 2010: 75%; 2011: 75%.
[26] Rolf testified that the business did get cash that was not put into the bank but that they reported it. He described that he was not certain of the amount but ‘the accountant asks us if got cash and we tell how much we got’. He recalled that 2011 it was about “$30, 000- 40,000 and in 2012 it was more – around $40,000”.
[27] He insisted that “We do pay tax on it” so I surmise that Rolf thinks it is included in the gross farming income reported on the Income Tax Returns.
[28] This unconventional picture required informed analysis. David Holmes CA CBA (Chartered Business Valuator) provided expert evidence to assist in the determination of income. The method was basically to go through the bank statements and include unexplained deposits as business deposits. This was subject to error based on lack of information and he made corrections to this aspect of his analysis after hearing Rolf and Katharina testify as to the source of some deposits. Then, using Peggy’s information about what was paid for in unreported and undeposited cash profits and personal benefits expensed as business expenses, he supported estimates of either $15,000 or $30,000 additional income which he grossed up for tax.
[29] I found his method generally reliable despite a couple of inaccuracies exposed in cross-examination. It was basically what a court would have to do as a starting point but with predictably less inaccuracy than if this judge were required to do it alone. The cash component is coincidental with Rolf’s own testimony as to quantum though the reporting of the cash remains in dispute.
[30] I also note that I was not invited to otherwise pick through the Income Tax Return statements of business revenue and expense which are very often a fruitful source of personal benefits quite appropriately expensed for Income Tax purposes but included in income for family law purposes. With Rolf’s description of how he received no structured remuneration for his hard work, this vine is most probably ripe.
[31] Rolf also claimed $50,000 of loans from his parents and aunt & uncle in 2011. He supports this assertion only by recording these debts in his financial statement. This claim must fail on grounds of lack of documentation alone but, more than that, there is no commensurate account receivable on his parents’ financial statement, no evidence from the supposed creditors and a history in which he described that funds were given to Rolf on the basis of his need for funds rather than by way of structured earnings. There could be no basis for calling 2011’s contributions a loan what were in all years before separation merely the method by which he was paid.
[32] At law we would say that the Rolf’s and his parents finances were co-mingled. Speaking theatrically, counsel for the Respondent Wife intoned “All for One and One for All”. That is actually pretty close. In everything that Rolf was involved in (and there are certainly some discreet investments by the parents) there is an almost complete unity of interest. They did not conduct their affairs as two separate families. They conducted all financial affairs involving Rolf (the business, the farm home, the buildings, the wellbeing of the people), as one unit.
[33] I begin to assess Rolf’s income, as the expert Holmes did, with the line 150 reported income. I then follow the expert’s method to his revised conclusions at page 1 of 3 in Exhibit 7a. This supports incomes in 2010 of $51,006 – 72,434 and 2011 of $91,249 – $113,637. The range in each year depends whether unreported and undeposited cash profits are found by the court and thereby added into income.
[34] This takes me to analysis of Peggy’s testimony and her credibility as to cash required to support the lifestyle she describes. Rolf acknowledged cash profits but says they were added in to reported income based on his estimates each year and therefore were already part of the farming revenue from which his line 150 income was calculated.
[35] There could be some overlap of two truthful accounts.
[36] The Holmes scenarios that resulted in an inclusion of $15,000 or $30,000 were based on Peggy’s descriptions of what the family paid for in cash. Holmes then discounted each estimate by 30 – 30% “to account for valuation and occurrence uncertainty”. In argument counsel for Peggy uses $102,000 to approximate an average between $91,249 and $113,637 calculated for 2011. That average ignores a lower range in 2010. A review of line 150 income since 2007 shows considerable variation year to year, 2008 being much like 2010 and 2007, 2009 showing a trajectory similar to 2011. Precise forecasting simply is not possible. The only information I have about 2012 income was Rolf’s observation that it was a better year for cash.
[37] Rolf’s trial position and the written argument now received for the Applicant simply do not help much. The line 150 income asserted as the whole of Rolf’s income simply cannot be supported.
[38] So, in assessing Rolf’s reality I find that there are indeed unreported deposits that are business deposits; and I find there are indeed undeposited cash profits and personal benefits. Personal benefits are complicated by the absence of cash flow and by the fact that Rolf is so resourceful that he often realizes a greater benefit than money’s worth. I find that the loans are not supported by evidence. Applying those findings and with the assistance of the expert’s amended calculations I find Rolf’s income to be $100,000.
Property
[39] Counsel for the Respondent Wife presented a Net Family Property Statement “Updated with Agreed Values Nov 2, 2012”. She asserted that all the entries were agreed except the business. Counsel for the Applicant Husband did not contest this assertion though some items, such as loans to the Applicant Husband, were argued in the discussion of income. Those areas of dispute I could discern I have dealt with individually but I have taken the “updated” Net Family Property Statement as presented. Hereafter I address the disputed entry for the business. I also take the view that the interest in the farm house and one acre is a proper entry for the Net Family Property Statement for reasons explained hereafter. I have recalculated the Net Family Property Statement and attach it as a schedule to this judgment. Only the business and house entry are changed as a result of this judgment.
Property – The Business
[40] Counsel for the Applicant and added Respondents argues procedural irregularity in bringing the claim. There were no surprises despite pleadings. Family Law trials are rarely about the claim as originally pled. I don’t condone this but the issues having been adequately predicted by the conferencing phase, the interim motions and the Trial Management Conference, I do not refuse to consider them.
[41] Counsel for the Applicant Husband recognized that Rolf had a potential constructive trust in the business but that he was not compelled to assert it. I take a different view.
[42] Josef Meeser established the unregistered business The Wood Stop in 1988. If it were sold in January 2010 it was worth an agreed value of $190,000. At issue is whether any, some or all of that value is to be included on Rolf’s asset side of his Net Family Property Statement. In her calculations Peggy includes it on Rolf’s side at 100% of its 2010 value.
[43] The evidence before me does not include a breakdown of the agreed valuation. I have no evidence of the extent to which the value was determined by revenue potential. I have no evidence of the value over the years to assess a time when the ownership interest may have shifted. (As indicated and emphasized at trial, I go only to evidence referred to at trial. I do not search through omnibus exhibit books for evidence I am not directed to, so I do not know whether such evidence may be filed but not referred to.)
[44] Three witnesses, Paul Moir, Jason Pain and Doug Stephens, who have dealt with the business still regard Joe as the boss though their dealings have been increasingly with Rolf. They all thought they were paid by Joe but did not and could not possibly have the slightest idea about the source of funds in the co-mingled banking practices of the Meeser family. Cheques in evidence do not support payments were from Joe.
[45] I emphasize a central theme of my judgment here. Josef and Katharina Meeser do not owe Peggy anything directly. Rolf may owe her equalization under family law principles. That depends on what Rolf owns. My task is to determine his true financial circumstances.
[46] Josef and Katharina Meeser do come into the picture, not as being themselves obligated to Peggy, but because I cannot permit them to play the role of enablers, allowing Rolf to avoid his obligations by masking his true financial circumstances. I observe here that I am not talking about dishonesty. Rather, I must be realistic in assessing how a loyal family has acted in mutual benefit and their perfectly acceptable unity of interest may mask Rolf’s objective circumstances.
[47] Joe never gave over title to the business to Rolf. There was no title, no registration, no formality – just hard work. All witnesses describe the transition from father as sole operator, to 50/50 work and responsibility, to Rolf taking over all the banking and paperwork, to Rolf doing most of the work during Joe’s 2008/09 ill health and beyond.
[48] The share of the work is reflected in the above-noted percentages that Joe and Rolf themselves determined for Income Tax Return purposes.
[49] Each acted independently in accordance with this acknowledged transition: Joe came home one day with new signs, J & R Firewood replacing the earlier business name. Rolf needed to register the business so they could open a business bank account. Without discussion he registered himself as sole proprietor. This offended no-one.
[50] Did Rolf steal the business from his father? Heaven’s no! Since Rolf has been a grown up, they have worked side by side for the mutual benefit of their family: Josef and Katharina, Rolf and Peggy and children. Rolf and Joe are joint venturers. They are partners. Joe has not so much ceded his authority as boss as they have developed a mutual understanding, discussed and worked out any disagreements. Was there a transfer of value or a gift? No, nor would one expect such formality in the conventions of this family. Joe did it alone, then he did it with Rolf, now Rolf does most of it.
[51] The best subjective evidence of the current partnership responsibility is the annual income percentages that Rolf and Joe agree themselves. In 2008 and 2009 Joe’s percentage was lower due to his health. It was higher after the January 2010 date of separation but I have no evidence that regard for the legal impact of separation was a consideration.
[52] I ponder what remnant of enhanced share Joe should retain as founder of the enterprise. I have no evidence.
[53] I refer to The Partnership Act section 24 which suggests a 50% share if not otherwise specified by agreement.
[54] I find that Joe has not resigned from the partnership. The formality of Rolf registering as a sole proprietor does not persuade me in this instance that Joe has abandoned his interest to Rolf. However, in the “All for one and one for all” atmosphere of mutual benefit between Rolf and his parents, Rolf has become a full partner in fact. By current work and responsibility, his interest is no less than 75%. However, in the “All for one and one for all” atmosphere of mutual benefit between Rolf and his parents his interest remains mutual.
[55] In all the circumstances I find that of the business value of $190,000 Rolf owns 50% and $95,000 figure must be added to his Net Family Property Statement.
Property - The Home
[56] Josef and Katharina Meeser hold title to the farm where the home and business on the surrounding acre are located.
[57] Garrit, Emilee, Rolf and Peggy moved there for 18 years from a farm property in Rolf’s name.
[58] Rolf living in the home benefited the business and Joe wanted him there.
[59] Rolf and Peggy lived rent free and until recently even the utilities were said to be paid by Joe. However “paid by Joe” must be seen in the context of my findings about Rolf’s income. Everything was “paid by Joe” in Rolf’s description. However there was benefit to Rolf and Peggy in residing there.
[60] The benefit for family law purposes is a two edged sword. It is speculative to wonder what the family would have done if they had not been residing on Joe’s property. While Rolf’s abilities and other acquisitions suggest that they might well have lived in a house in which Peggy would have acquired rights under the Family Law Act, it can only safely be observed that their Family Law Act position would not have been complicated by title being held by an owner whose interests and financial circumstances are so intimately co-mingled with Rolf’s that the respective contributions are virtually inseverable.
[61] The Respondent Wife claims a constructive trust against Josef and Katharina who hold title. She cites cases to capture Josef and Katharina into a joint family venture. I find that the argument casts the net of the cases too wide. Peggy’s claim is derivative. She has a claim for property interests Rolf has. Rolf does not make a claim against his parents based on constructive trust. Practically speaking, he doesn’t have to and it would not be in his interest in the current litigation to do so.
[62] However it would be a fiction to say Rolf does not have an interest in the home. He has poured money and money’s worth into it. In the context of comingled funds and the convention of his earning no income but getting money from Joe on the basis of need, I do not accept that Joe paid for improvements and renovations in the past several years.
[63] I do not accept that Josef and Katharina would ever evict Rolf or purport to sell the property out from under him. If they did, on the evidence before me, Rolf would have a claim in constructive trust. By determining the value of that claim I am, in turn, determining the first step in the value of Peggy’s claim against him.
[64] Peggy’s claim against Rolf, if more than the Family Law Act were required, would be well founded in the cases cited. Peggy helped a bit with the renovations and family work. More than that she managed the children and household in the manner recognized as freeing Rolf to do his work. Further, since 2000 they had a joint account and a joint line of credit from which family (and business) expenses were paid. Her wages from employment went into the joint account. It matters not that she earned less than Rolf. She contributed what she was able.
[65] All these factors form sufficient basis for a claim on Rolf.
[66] Rolf cannot resist her claim on him by refusing to claim against his parents and they cannot enable him to mask what he is entitled to. This is quite different than saying the parents are obligated to their son’s wife. He is obligated and they cannot help him mask it.
[67] Citing Kerr v. Baranow[^2] it is evident that Rolf has a trust claim to the home and acre:
Identifying Unjust Enrichment From a Joint Family Venture
87 My view is that when the parties have been engaged in a joint family venture, and the claimant’s contributions to it are linked to the generation of wealth, a monetary award for unjust enrichment should be calculated according to the share of the accumulated wealth proportionate to the claimant’s contributions. In order to apply this approach, it is first necessary to identify whether the parties have, in fact, been engaged in a joint family venture. …
89 In undertaking this analysis, it may be helpful to consider the evidence under four main headings: mutual effort, economic integration, actual intent and priority of the family. There is, of course, overlap among factors that may be relevant under these headings and there is no closed list of relevant factors. What follows is not a checklist of conditions for finding (or not finding) that the parties were engaged in a joint family venture. These headings, and the factors grouped under them, simply provide a useful way to approach a global analysis of the evidence and some examples of the relevant factors that may be taken into account in deciding whether or not the parties were engaged in a joint family venture. The absence of the factors I have set out, and many other relevant considerations, may well negate that conclusion.
Mutual Effort
90 One set of factors concerns whether the parties worked collaboratively towards common goals. Indicators such as the pooling of effort and team work, the decision to have and raise children together, and the length of the relationship may all point towards the extent, if any, to which the parties have formed a true partnership and jointly worked towards important mutual goals.
91 Joint contributions, or contributions to a common pool, may provide evidence of joint effort. For instance, in Murdoch, central to Laskin J.'s constructive trust analysis was that the parties had pooled their efforts to establish themselves in a ranch operation. Joint contributions were also an important aspect of the Court's analyses in Peter, Sorochan, and Pettkus. Pooling of efforts and resources, whether capital or income, has also been noted in the appellate case law (see, for example, Birmingham v. Ferguson, 2004 4764 (Ont. C.A.); McDougall v. Gesell Estate, 2001 MBCA 3, 153 Man. R. (2d) 54, at para. 14). The use of parties' funds entirely for family purposes may be indicative of the pooling of resources: McDougall. The parties may also be said to be pooling their resources where one spouse takes on all, or a greater proportion, of the domestic labour, freeing the other spouse from those responsibilities, and enabling him or her to pursue activities in the paid workforce (see Nasser v. Mayer-Nasser (2000), 2000 5654 (ON CA), 5 R.F.L. (5th) 100 (Ont. C.A.) and Panara v. Di Ascenzo, 2005 ABCA 47, 361 A.R. 382, at para. 27).
Economic Integration
92 Another group of factors, related to those in the first group, concerns the degree of economic interdependence and integration that characterized the parties' relationship (Birmingham; Pettkus; Nasser). The more extensive the integration of the couple's finances, economic interests and economic well-being, the more likely it is that they should be considered as having been engaged in a joint family venture. For example, the existence of a joint bank account that was used as a "common purse", as well as the fact that the family farm was operated by the family unit, were key factors in Dickson J.'s analysis in Rathwell. The sharing of expenses and the amassing of a common pool of savings may also be relevant considerations (see Wilson; Panara).
93 The parties' conduct may further indicate a sense of collectivity, mutuality, and prioritization of the overall welfare of the family unit over the individual interests of the individual members (McCamus, at p. 366). These and other factors may indicate that the economic well-being and lives of the parties are largely integrated (see, for example, Pettkus, at p. 850).
Actual Intent
94 Underpinning the law of unjust enrichment is an appropriate concern for the autonomy of the parties, and this is a particularly important consideration in relation to domestic partnerships. While domestic partners might not marry for a host of reasons, one of them may be the deliberate choice not to have their lives economically intertwined. Thus, in considering whether there is a joint family venture, the actual intentions of the parties must be given considerable weight. Those intentions may have been expressed by the parties or may be inferred from their conduct. The important point, however, is that the quest is for their actual intent as expressed or inferred, not for what in the court's view "reasonable" parties ought to have intended in the same circumstances. Courts must be vigilant not to impose their own views, under the guise of inferred intent, in order to reach a certain result.
95 Courts may infer from the parties' conduct that they intended to share in the wealth they jointly created (P. Parkinson, "Beyond Pettkus v. Becker: Quantifying Relief for Unjust Enrichment" (1993), 43 U.T.L.J. 217, at p. 245). The conduct of the parties may show that they intended the domestic and professional spheres of their lives to be part of a larger, common venture (Pettkus; Peter; Sorochan). In some cases, courts have explicitly labelled the relationship as a "partnership" in the social and economic sense (Panara, at para. 71; McDougall, at para. 14). Similarly, the intention to engage in a joint family venture may be inferred where the parties accepted that their relationship was "equivalent to marriage" (Birmingham, at para. 1), or where the parties held themselves out to the public as married (Sorochan). The stability of the relationship may be a relevant factor as may the length of cohabitation (Nasser; Sorochan; Birmingham). When parties have lived together in a stable relationship for a lengthy period, it may be nearly impossible to engage in a precise weighing of the benefits conferred within the relationship (McDougall; Nasser).
96 The title to property may also reflect an intent to share wealth, or some portion of it, equitably. This may be the case where the parties are joint tenants of property. Even where title is registered to one of the parties, acceptance of the view that wealth will be shared may be evident from other aspects of the parties' conduct. For example, there may have been little concern with the details of title and accounting of monies spent for household expenses, renovations, taxes, insurance, and so on. Plans for property distribution on death, whether in a will or a verbal discussion, may also indicate that the parties saw one another as domestic and economic partners.
97 The parties' actual intent may also negate the existence of a joint family venture, or support the conclusion that particular assets were to be held independently. Once again, it is the parties' actual intent, express or inferred from the evidence, that is the relevant consideration.
Priority of the Family
98 A final category of factors to consider in determining whether the parties were in fact engaged in a joint family venture is whether and to what extent they have given priority to the family in their decision making. A relevant question is whether there has been in some sense detrimental reliance on the relationship, by one or both of the parties, for the sake of the family. As Professor McCamus puts it, the question is whether the parties have been "[p]roceeding on the basis of understandings or assumptions about a shared future which may or may not be articulated" (p. 365). The focus is on contributions to the domestic and financial partnership, and particularly financial sacrifices made by the parties for the welfare of the collective or family unit. Whether the roles of the parties fall into the traditional wage earner/homemaker division, or whether both parties are employed and share domestic responsibilities, it is frequently the case that one party relies on the success and stability of the relationship for future economic security, to his or her own economic detriment (Parkinson, at p. 243). This may occur in a number of ways including: leaving the workforce for a period of time to raise children; relocating for the benefit of the other party's career (and giving up employment and employment-related networks as a result); foregoing career or educational advancement for the benefit of the family or relationship; and accepting underemployment in order to balance the financial and domestic needs of the family unit.
99 As I see it, giving priority to the family is not associated exclusively with the actions of the more financially dependent spouse. The spouse with the higher income may also make financial sacrifices (for example, foregoing a promotion for the benefit of family life), which may be indicative that the parties saw the relationship as a domestic and financial partnership. As Professor Parkinson puts it, the joint family venture may be identified where [o]ne party has encouraged the other to rely to her detriment by leaving the workforce or forgoing other career opportunities for the sake of the relationship, and the breakdown of the relationship leaves her in a worse position than she would otherwise have been had she not acted in this way to her economic detriment. [p. 256].
The Correct Approach
109 As I noted earlier, my view is that mutual benefit conferral can be taken into account at the juristic reason stage of the analysis, but only to the extent that it provides relevant evidence of the existence of a juristic reason for the enrichment. Otherwise, the mutual exchange of benefits should be taken into account at the defence and/or remedy stage. It is important to note that this can, and should, take place whether or not the defendant has made a formal counterclaim or pleaded set-off.
110 I turn first to why mutual benefits should not be addressed at the benefit/detriment stage of the analysis. In my view, refusing to address mutual benefits at that point is consistent with the quantum meruit origins of the fee-for-services approach and, as well, with the straightforward economic approach to the benefit/detriment analysis which has been consistently followed by this Court.
111 An unjust enrichment claim based on a fee-for-services approach is analogous to the traditional claim for quantum meruit. In quantum meruit claims, the fact that some benefit had flowed from the defendant to the claimant is taken into account by reducing the claimant's recovery by the amount of the countervailing benefit provided. For example, in a quantum meruit claim where the plaintiff is seeking to recover money paid pursuant to an unenforceable contract, but received some benefit from the defendant already, the claim will succeed but the award will be reduced by an amount corresponding to the value of that benefit: Maddaugh and McCamus (loose-leaf), vol. 2, at s. 13:200. The authors offer as an example Giles v. McEwan (1896), 1896 108 (MB CA), 11 Man. R. 150 (Q.B. en banc). In that case, two employees recovered in quantum meruit for services provided to the defendant under an unenforceable agreement, but the amount of the award was reduced to reflect the value of benefits the defendant had provided to them. Thus, taking the benefits conferred by the defendant into account at the remedy stage is consistent with general principles of quantum meruit claims. Of course, if the defendant has pleaded a counterclaim or set-off, the mutual benefit issue must be resolved in the course of considering that defence or claim.
112 Refusing to take mutual benefits into account at the benefit/detriment stage is also supported by a straightforward economic approach to the benefit/detriment analysis which the Court has consistently followed. Garland is a good example. The class action plaintiffs claimed in unjust enrichment to seek restitution for late payment penalties that had been imposed but that this Court (in an earlier decision) found had been charged at a criminal rate of interest: see Garland v. Consumers' Gas Co., 1998 766 (SCC), [1998] 3 S.C.R. 112. The company argued that it had not been enriched because its rates were set by a regulatory mechanism out of its control, and that the rates charged would have been even higher had the company not received the late payment penalties as part of its revenues. That argument was accepted by the Court of Appeal, but rejected on the further appeal to this Court. Iacobucci J., for the Court, held that the payment of money, under the "straightforward economic approach" adopted in Peter, was a benefit: para. 32. He stated at para. 36: "There simply is no doubt that Consumers' Gas received the monies represented by the [late payment penalties] and had that money available for use in the carrying on of its business... .We are not, at this stage, concerned with what happened to this benefit in the ongoing operation of the regulatory scheme." The Court held that the company was in fact asserting the "change of position" defence (that is, the defence that is available when "an innocent defendant demonstrates that it has materially changed its position as a result of an enrichment such that it would be inequitable to require the benefit to be returned": para. 63). This defence is considered only after the three elements of an unjust enrichment claim have been established: para. 37. Thus the Court declined to get into a detailed consideration at the benefit/detriment stage of the defendant's submissions that it had not benefitted because of the regulatory scheme.
113 While Garland dealt with the payment of money, my view is that the same approach should be applied where the alleged enrichment consists of services. Provided that they confer a tangible benefit on the defendant, the services will generally constitute an enrichment and a corresponding deprivation. Whether the deprivation was counterbalanced by benefits flowing to the claimant from the defendant should not be addressed at the first two steps of the analysis. I turn now to the limited role that mutual benefit conferral may have at the juristic reason stage of the analysis.
114 As previously set out, juristic reason is the third of three parts to the unjust enrichment analysis. As McLachlin J. put it in Peter, at p. 990, "It is at this stage that the court must consider whether the enrichment and detriment, morally neutral in themselves, are 'unjust'." The juristic reason analysis is intended to reveal whether there is a reason for the defendant to retain the enrichment, not to determine its value or whether the enrichment should be set off against reciprocal benefits: Wilson, at para. 30. Garland established that claimants must show that there is no juristic reason falling within any of the established categories, such as whether the benefit was a gift or pursuant to a legal obligation. If that is established, it is open to the defendant to show that a different juristic reason for the enrichment should be recognized, having regard to the parties' reasonable expectations and public policy considerations.
115 The fact that the parties have conferred benefits on each other may provide relevant evidence of their reasonable expectations, a subject that may become germane when the defendant attempts to show that those expectations support the existence of a juristic reason outside the settled categories. However, given that the purpose of the juristic reason step in the analysis is to determine whether the enrichment was just, not its extent, mutual benefit conferral should only be considered at the juristic reason stage for that limited purpose.
121 The need to engage in this analysis of the claimant’s reasonable expectations and the defendant’s knowledge thereof with respect to domestic services has, in my view, now been overtaken by developments in the law. Garland, as noted, mandated a two-step approach to the juristic reason analysis. The first step requires the claimant to show that the benefit was not conferred for any existing category of juristic reasons. Significantly, the fact that the defendant also provided services to the claimant is not one of the existing categories. Nor is the fact that the services were provided pursuant to the parties’ reasonable expectations. However, the fact that the parties reasonably expected the services to be provided might afford relevant evidence in relation to whether the case falls within one of the traditional categories, for example a contract or gift. Other than in that way, mutual benefit conferral and the parties’ reasonable expectations have a very limited role to play at the first step in the juristic reason analysis set out in Garland.
[68] Rarely could one find the “four main headings: mutual effort, economic integration, actual intent and priority of the family” so strongly present. In the in the “All for one and one for all” atmosphere of mutual benefit between Rolf and his parents, these factors are amply demonstrated.
[69] I wondered at the dearth of cases put before me for claims relating to extended family, particularly those on farms where multiple residences often house several family units. The Respondent Wife did cite some BC cases which are not directly applicable but show other judges thinking about similar dilemmas. One observed, as I have, that the daughter in law’s claim is derivative.[^3] The judge found an unjust enrichment of the parents by the efforts of the son. The court noted that the son and daughter in law had lived in the property rent free and there was an offsetting benefit.
[70] Counsel for the Applicant cites an earlier passage in the Kerr v. Baranow judgement:
(1) Enrichment and Corresponding Deprivation
36 The first and second steps in the unjust enrichment analysis concern first, whether the defendant has been enriched by the plaintiff and second, whether the plaintiff has suffered a corresponding deprivation.
37 The Court has taken a straightforward economic approach to the first two elements -- enrichment and corresponding deprivation. Accordingly, other considerations, such as moral and policy questions, are appropriately dealt with at the juristic reason stage of the analysis: see Peter, at p. 990, referring to Pettkus, Sorochan v. Sorochan, 1986 23 (SCC), [1986] 2 S.C.R. 38, and Peel, affirmed in Garland v. Consumers' Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, at para. 31.
38 For the first requirement -- enrichment -- the plaintiff must show that he or she gave something to the defendant which the defendant received and retained. The benefit need not be retained permanently, but there must be a benefit which has enriched the defendant and which can be restored to the plaintiff in specie or by money. Moreover, the benefit must be tangible. It may be positive or negative, the latter in the sense that the benefit conferred on the defendant spares him or her an expense he or she would have had to undertake (Peel, at pp. 788 and 790; Garland, at paras. 31 and 37).
39 Turning to the second element -- a corresponding deprivation -- the plaintiff's loss is material only if the defendant has gained a benefit or been enriched (Peel, at pp. 789-90). That is why the second requirement obligates the plaintiff to establish not simply that the defendant has been enriched, but also that the enrichment corresponds to a deprivation which the plaintiff has suffered (Pettkus, at p. 852; Rathwell, at p. 455).
[71] Looking to what the titled owners gained by way of “enrichment” and the corresponding “deprivation” to Rolf, I am again met with their unity of interest to complicate the analysis.
[72] I do find that Rolf’s direct work on the home and acre increased their value and further that payments from comingled funds are in essence payments by Rolf. I do find that the comingled funds, in part Joe and Katharina’s and Joes continuing labour, were also increasing the value. I find that living there rent free is a benefit to Rolf and Peggy that must be weighed against Rolf’s contributions.
[73] I find that the value of the home and acre that is Rolf’s by constructive trust are in reality his asset and should appear on his Net Family Property Statement. I do not require the mechanism of constructive trust through unjust enrichment to entitle Peggy to her share of that which occurs through the equalization of property. Were it necessary I could also find that she has a derivative interest as her funds contributed to their joint account, her work with home and children freeing Rolf to contribute his direct effort and her own modest direct efforts.
[74] The constructive trust cases cited tended to award a one-quarter interest to the daughter–in-law in similar circumstances. That would yield one-quarter of the agreed value of $320,000, namely $80,000 as claimed directly from the added parent Respondents by Peggy. However Rolf and Peggy did enjoy an offsetting benefit of living in the home for 18 years. Rolf had offsetting benefits from an overarching comingling of finances such that he has reaped the benefits that his mother and father have sewn.
[75] There is no specific number for this.
[76] I fix Rolf’s beneficial interest in the home and acre at $100,000. This I add to his assets in his Net Family Property Statement.
Support
[77] There is no dispute that Peggy is entitled to spousal support. The quantum remains in issue until findings of fact are made as to her income and potential for self-sufficiency, Rolf’s income, and the law is applied as to duration and the interplay with child support.
[78] There is dispute about son Garrit’s entitlement to child support and concern about receiving information from Emilee to assess her continuing entitlement.
[79] So, I pause to say a word about Rolf’s relationship with his children.
[80] I am told there is current estrangement with Emilee and I heard about some communication between Garrit and his father to the effect that by exhausting his RESP Garrit could then apply for OSAP. Little evidence was led about the children except a précis of Emilee’s post secondary education costs which emanated from Emilee upon which Peggy commented.
[81] I feel moved to observe that in his testimony Rolf‘s focus was to respond to evidence of lifestyle spending for the kids prior to separation and to resist claims for enhanced child support. This demonstrated one of the stark risks of domestic litigation. Parents are backed into their corners defending the contest and in doing so lose the very relationships that make family life, even post separation, worth fighting for.
[82] Rolf lost regular contact with the children, and is thereby uninformed of their needs and intransigent about payment because of disappointment that they did not include him in their planning. He heard their needs in the context of litigation demands of their mother. So he resists payment temporarily or at all. It becomes a vicious circle which is quite silly when the intransigent parent does truly care about the well-being of his children as I believe Rolf does. Silly but sad because it often takes a long time for the wounds to heal. Even when the parent is ready to understand, the child may not be. This is so whether the child is 2 or 22.
[83] To avoid continuing section 7 expenses (other than what he gives his kids voluntarily) and to refute the assertion that lifestyle during the marriage bespoke a larger income than reported, Rolf testified dismissively of his children’ activities and accomplishments while growing up. This was really sad. I can only hope that once judgment is given, he can better untangle the financial issues from his interaction with his kids. Both he and they should know that responsibilities imposed by the Child Support Guidelines are mathematical, not moral. He must pay what he must pay and that will be based on my findings as to income, nothing more.
[84] By evidence and argument I had understood that no claim is being made by Peggy for ongoing support for Garrit. That relieved me from comment on whether Garrit would be entitled. I note in the proposed endorsement presented by counsel for the Respondent Mother that a lump sum claim is made for Garrit’s needs since separation. The argument appears to be based on the assertion that Garrit did require support and that Peggy has herself given him funds after the January 2010 separation. She proposes a final payment to Garrit of $10,000 of which she would pay $3000 and the Applicant Father pay $7,000.
[85] I simply did not receive evidence sufficient to calculate Garrit’s need. I received information about his living circumstances that are somewhat neutral since it matters little to your financial picture who your roommate is in University, even if it is a girlfriend. It is significant that Garrit has a good paying job. No calculation of his own ability to contribute is placed before me. There is evidence that RESP contributions were made sufficient to exhaust that fund for Garrit. It is troubling to ponder how insufficient money, the need to work and the turmoil in the family may have disadvantaged Garrit in his studies. However, I don’t have sufficient evidence to make a finding that he continues to be a dependent child of the marriage with specified post secondary education expenses.
[86] Peggy claims spousal support for herself, child support for Emilee including s.7 post secondary education expenses and the ongoing expense of her three horses. Currently the horses are cared for by Peggy at the home and 1 acre and are accessible to Emilee there. When Peggy is no longer at the home some other solution must be crafted since care of the horses must be attended to and Emilee’s current relationship with Rolf may make the horses inaccessible to Emilee if they remain on the farm.
[87] I have made a finding about Rolf’s income.[^4]
[88] Peggy reports income from employment at $15,000 in her 2011 Income Tax Return, $40,795.20 in September 2012 financial statement less 24,000 received in spousal support such that her income from sources other than spousal support should be noted at $16,788. She has a duty to work towards self-sufficiency but the Applicant’s argument ignores several objectively supported factors:
a. Line work at the brewery is the kind of work Peggy always had in addition to her role in the household. It is not the same quality of work as Joe and Rolf have done. They have both been remarkably entrepreneurial and industrious. Efforts for self sufficiency demand an objectively reasonable standard, not a heroic one. Joe’s harsh criticisms are not shared by the community at large as to how hard a person must work.
b. Peggy has a high school education and married Rolf at 19. She has a hearing loss that she manages well. She is learning forklift operation to increase her chances of better hours. She resides in a part of Simcoe County that is remote from job opportunities available in larger centers. Even with the considerable competence that she demonstrated in managing her own litigation for a time, she cannot expect employment in pursuits that generally require educational certification or related experience.
c. She is 43 years old, 40 at the date of separation. She does indeed have years of working life ahead. But it is unlikely, having regard to a. and b. that she will find employment that will approach that which she would require to achieve parity with Rolf or any approximation of the lifestyle they enjoyed together. After a lengthy marriage, spousal support principle does not envision one spouse carrying on in similar lifestyle while the other is much reduced.
[89] Counsel for the Applicant submits that I should not give judgment “formulaic to the Spousal Support Advisory Guidelines” in amount or duration, citing Fisher[^5] for the premise that the SSAGs “must be considered in context and applied in their entirety, including the specific consideration of any applicable variables and, where necessary, restructuring”. He particularly references the interrelation between amount and duration. Then he seeks a lower amount and shorter duration than shown in the Supportmate calculations generated by the Respondent.
[90] He also uses an income figure for Rolf which I have rejected. I note that Fisher also mandates that a Trial Judge articulate reasons for departing from SSAGs if so doing. I do not intend such a departure in the present case as the SSAGs give me a tool for measuring what quantum and length of support is commensurate with the Canadian ranges researched more thoroughly than can be accomplished in an individual case. Sensitivity to context and the variables at issue in this trial is the subject of my reasons as a whole.
[91] However, I find the Respondent Wife’s income to be somewhat higher than calculated by her counsel and expect modest improvement as a catalyst to effort to move closer to self-sufficiency.
[92] I have recalculated the DIVORCEmate calculations with income for Rolf at $100,000, as I have found, a slight moderation based on the variation in his income line 150 income year to year. I have used an income of $20,000 for Peggy, greater than she now earns but in recognition of the principle that she must diligently seek to move towards self-sufficiency to the extent she is able and a confidence that she can and will. My purpose in finding these figures is to foresee some progress or variability in the next few years as Rolf and Peggy settle into their new circumstances resulting from this judgment. I hope that litigation over any modest change will be avoided.
[93] I am leaving spousal support for Peggy at $2,000 which is between the mid and high range at the income figures I have found.
[94] There is an RESP for Emilee. I order that it be paid in the amount of $5,000 for each of the 2012/13, 2013/14 and 2014/15 school years unless the fund is sooner exhausted (or unless she does not attend school that year). The RESP should be paid before the date in summer when tuition is due. (In the current 2012/2013 year, immediately.)
[95] Emilee has income of approximately $8,500 this year and a similar income can be expect in the three years of her post secondary education program. She also has three horses. While they are on the home farm the cost of maintaining the horses is shared: Rolf paying $300 and Peggy doing the work and paying a similar amount for feed and services. She estimated a $900/month cost for three horses boarded elsewhere.
[96] A typical contribution from the income of a student is $2,000 for 2^nd^ year, $3,000 for 3^rd^ year and $4,000 for 4^th^ year. Emilee’s estimate of post secondary education expense does not include clothing, or entertainment of any sort. This naiveté produces an underestimate of need.
[97] Horses were an activity the family endorsed while together. Where Emilee has income of her own, and claims no expenses for just living the life of a 20 year old, it is not unreasonable that she should devote a proportion of her income to her horses. That leaves a greater share of her education for her parents to address for the three years remaining in her college program.
[98] For section 7 expenses for Emilee, including both post secondary education and horses, I fix Rolf’s monthly payment at $520 together with table support of $300 for a total of $820 commencing December 1, 2012 to August 1, 2015. This gives Emilee a few months of transition time after her expected graduation date.
[99] At the end of Emilee’s post secondary education period the issue of spousal support will change to a without children formula. Again I look between the mid and high range and fix continuing spousal support at $2500 from September 1, 2015.
[100] I see no grounds for imposing a review or a fixed duration in advance having regard to the length of co-habitation and the disparity of income.
[101] On the issue of retroactive support I have begun by recalculating the figure put forward by counsel for the Respondent consistent with my income findings.
[102] Secondly I have taken into account that Peggy has lived rent free in the farm home. By orders of this court she was entitled to spousal support of $2,000 from November 2010 and she was to pay hydro, phone and TV satellite from February 2011. The issue of retroactivity was specifically left to me as Trial Judge.
[103] Thirdly I have looked at withdrawals of $3,563.65 from the joint account made by Peggy. I do not account for cash back withdrawals at Wal-Mart that may have occurred from time to time. That is merely speculative.
[104] I also consider the evidence of assistance, particularly to fund post secondary education expenses at the times when schools require payments, Peggy gave to the children during phases of Rolf’s intransigence.
[105] My judgment would result in a greater overpayment of child support and no significant underpayment of spousal support since November 2010 as argued. I find the difference between the two figures is adequately justified in the period before the commencement of monthly support. It is a wash. No retroactive order is made.
(1) Order to go for support as follows:
(2) Spousal support: $2000/month continues to Sept 1, 2015 when it is $2,500/month;
(3) Child support: $820 month December 1, 2012 to August 1, 2015 together with payments from the RESP of $5000 annually for this school year and the next two years.
(4) Retroactive support: none
(5) Equalization payment Applicant Husband to Respondent Wife: $285,862.24
(6) The Respondent Wife will vacate the home and 1 acre within 60 days of payment to her of $270,700 and proof that she is released from the Joint line of credit shown in the Net Family Property Statement at $15,155.11. The Certificate of Pending Litigation is lifted forthwith. Interest on the equalization amount ordered commences at the Courts of Justice Act rate upon the release of these reasons.
[106] The parties may address costs in writing submitted to the judicial secretary in Barrie as follows:
(a) No more than two pages argument together with bill of costs and any offers;
(b) Respondent Wife by January 4, 2013, Applicant Husband and added Respondents by January 15, 2013 and reply by January 20, 2013.
EBERHARD J.
Released: December 12, 2012
[^1]: as noted in Income Tax Returns
[^2]: 2011 SCC 10, [2011] S.C.J. No. 10
[^3]: Russo V. Russo [2002] B.C.J. No. 886
[^4]: Supra at paragraph 38
[^5]: 2008 ONCA 11