Court of Appeal Decision of the Week

Pension Splitting in Common Law Relationships

Case: Noel v. Butler, 2016 NBCA 49

Keywords: unjust enrichment; common law relationship; relationship breakdown; division of assets

Synopsis:

Mr. Noel and Ms. Butler were in a 14-year common law relationship – never married, no children. Ms. Butler had been a teacher for over 25 years and accumulated a sizeable pension. In the last few years of their relationship, Mr. Noel had difficulty finding full-time employment and was increasingly dependent on Ms. Butler. On separation, Mr. Noel sought to divide Ms. Butler’s pension.

The parties also had bought a home together in New Brunswick. Ms. Butler paid for the down payment and the initial renovations, but they held the home as joint tenants. Although Ms. Butler suffered from various ailments and had full-time employment, she attended to the majority of the household chores.

There were two major issues to be resolved by the application judge:

  1. the division of proceeds from the sale of the home ; and
  2. whether the value of Ms. Butler’s pension should be divided.

The application judge decided the proceeds from the sale of the home should be divided equally because it was “the most just and equitable outcome”. The pension was a more complex issue involving a claim of unjust enrichment. The application judge decided against dividing it on the following basis:

  1. Noel made only minor contributions to household chores;
  2. At best Mr. Noel contributed equally to household expenses while he was employed (pre-2009); and
  3. Household expenses were predominantly paid for with Ms. Butler’s income (post-2009)

Mr. Noel appealed the application judge’s decision to deny a split of Ms. Butler’s pension. The Court of Appeal of New Brunswick dismissed the appeal.

Importance:

Unjust Enrichment

The Court of Appeal’s reasoning stemmed from the decision in Kerr v. Baranow, 2011 SCC 10, which discussed the doctrine of unjust enrichment. At its core, unjust enrichment prohibits one party to benefit unjustly at another’s expense. Three elements must be satisfied to claim unjust enrichment:

  1. an enrichment or benefit to one party;
  2. a corresponding deprivation to the other party; and
  3. the lack of juristic reason for the enrichment.

Noel maintained the position that he was entitled to share in the pension value. The Court examined the issue of the pension and unjust enrichment. The application judge was hard pressed to identify either benefit or deprivation elements. Ms. Butler accumulated the pension, paid for the majority of household expenses, and attended to the majority of the household chores. In contrast, the application judge found there was insufficient evidence that Mr. Noel contributed positively to the relationship: “Mr. Noel was more of a hindrance than a help.” (paras. 33 and 39)

It is clear from the reasoning that the principle of fairness is deeply rooted in the doctrine of unjust enrichment. Had Mr. Noel been awarded a share of the pension, depriving Ms. Butler the full amount, Mr. Noel would be profiting from a situation in which he did not fairly contribute.

In addition to considering benefits and deprivation, the Court also considered the impending medical costs of Ms. Butler’s health issues, Mr. Noel’s contribution to the relationship, and an inheritance (approximately equal to the pension value) that Mr. Noel received after the relationship breakdown.

Effect of Inheritance After Separation

The inheritance was an interesting complication to this matter. Mr. Noel claimed that upon the breakdown he was in a vulnerable position as he was in his late 50s, had limited prospects of employment, and had significantly less financial stability than Ms. Butler. He also argued that the inheritance could not be considered in this analysis because it was received after the relationship breakdown, however could not provide authority to support the claim.

The application judge cited Kerr as a directive allowing the Court to account for all circumstances relating to the matter. The application of the principles in Kerr allowed for the flexibility to include property acquired after the relationship breakdown in determining the position of both parties.

Common Law vs. Marriage

Although general principles under the Marital Property Act, S.N.B. 2012, c. 107 allow for an equal share of marital property to be divided upon separation, the parties were not married. The Pension Benefits Act in New Brunswick allows for a division of pension in relation to a breakdown in a common law relationship, but the division is not required to be in equal parts. The Court in the present case noted that “[h]ad this couple been married, the outcome for Mr. Noel would unquestionably have been different, but they were not married”.

Under common law relationship and property rights one does not have an automatic right to a share of property upon separation. In this situation, the onus is on the plaintiff to demonstrate they contributed in some way to warrant such a share. Mr. Noel did not provide evidence of monetary or domestic contribution to the household. And in light of Ms. Butler’s health issues and full time employment, Mr. Noel was more of a burden than a benefit:

The evidence reflects that Ms. Butler, notwithstanding her physical ailments and more regular and demanding work schedule, attended to the majority of the household chores such as cleaning, grocery shopping, cooking, pet care, laundry, grounds maintenance and car repairs – Mr. Noel accepted on cross-examination that Ms. Butler looked after these tasks 80% – 90% of the time during the course of their relationship. Ms. Butler also helped fund support payments and private school tuition for Mr. Noel’s daughter from a previous relationship.

Conclusion:

This case highlights key issues with regards to relationship breakdowns: unjust enrichment, effect of assets acquired after breakdown, and differences between the division of assets in a common law relationship and a marriage. The Court took a flexible approach in deciding the unjust enrichment claim by weighing relevant factors to ensure fairness. The Court also clarified that property acquired after a common law relationship breakdown can be considered in determining the parties’ financial positions when deciding on division of assets. Lastly, there is a greater burden on the plaintiff to prove significant contributions in a common law relationship than a marriage.

Counsel for Appellant: Carley Parish and Katherine McBrearty (Lutz Longstaff Parish, Hampton, NB)

Counsel for Respondent: Barry Morrison, Q.C. (Morrison Pierce, Saint John) and Jamie Feenan (Feenan Law, Saint John)

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Supreme Advocacy would like to thank and acknowledge Alim Jessa, LL.B. with assistance in preparing this summary.

Posted: Wednesday, October 19, 2016