Monthly Archives: June 2009

Property Division for Unmarried Spouses and the Doctrine of Constructive Trust

Posted in: "All, Family Law, Legalese Dictionary by Admin | No Comments Wednesday, June 17, 2009

In Monday’s blog I wrote about property division between married spouses at the breakdown of their relationship, as governed by Part I of the Ontario Family Law Act. Unfortunately, this part of the act doesn’t apply to cohabiting spouses. therefore, property division between unmarried spouses is generally done through alternative dispute resolutions (ADR).

At the same time, it’s not entirely hopeless for unmarried spouses. There are remedies at common law for a spouse who feels that he or she is entitled to share the properties accumulated during the relationship. While there are various ways in which the courts may declare that the plaintiff spouse is entitled to properties of the other, the most common approaches are based on the principle of trust law, particularly through the doctrine of constructive trust.

The Supreme Court of Canada has explained that the concept of constructive trust is based on the doctrine of unjust enrichment. The court ruled in Pettkus v. Becker *that there are three requirements before a plaintiff can establish constructive trust: (1) an enrichment, (2) a corresponding deprivation, and (3) the absence of juristic reason for the enrichment.

In this case Pettkus had benefited from 19 years of unpaid labour while Becker received little or nothing in return.

The court found that there was no reasonable expectation that Becker was providing the labour on a gratuitous basis. Hence, the court found that Pettkus was unjustly enriched by Becker’s contribution and it would be unfair to allow Pettkus to retain the benefts.

However, because the doctrine of constructive trust lacks a legislative frame work, the plaintiffs often find it burdensome to establish the claim. As such, costs often become a great concern. A viable option may lie in ADR methods, such as mediation and/or arbitration.

*[1980] 2 S.C.R. 834

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Property Division for Married Spouses – Equalization Payments

Posted in: "All, Family Law, Legalese Dictionary by Admin | No Comments Monday, June 15, 2009

Under the Ontario Family Law Act, separating spouses who are married to each other are entitled to divide their properties accumulated during the marriage through a process called equalization.

Equalization is only applicable to spouses who are married to each other. Co-habiting (i.e. common law) couples are not entitled to the equalization process.

Contrary to popular belief, equalization doesn’t transfer title of the property between the spouses. Rather, at the end of the marriage, each spouse calculates his or her own networth increase during the marriage, called net family property or NFP. At the end, the equalization process calls for a lump-sum payment half of the difference in the two NFPs to be made by the the spouse with the higher NFP to the other.

For example, if A had $10,000 immediately before marriage and has $400,000 at the time of separation, A’s NFP is assessed at $400,000 – $10,000 = $390,000. If the NFP of B (A’s spouse) is $100,000, then A would owe B ($390,000 – $100,000)/2= $145,000. In other words, A has to make an equalization payment of $145,000 at separation to fulfill his statutory obligations.

If a person’s networth actually decreases during the marriage, the NFP is calculated as $0. In other words, you can’t have a negative NFP for equalization payment purposes.

Although in theory the NFP is only concerned with a person’s net increase in properties, there are exceptions to this rule. Perhaps the most important one is the matrimonial home, which may not be deducted from the NFP even if it was acquired before the marriage.

If you require assistance on equalization and related matters, please call me at 416-433-5531.

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Duty to Rescue

Posted in: "All, Legalese Dictionary by Admin | No Comments Thursday, June 11, 2009

Please note: This article does not constitute legal advice. It is provided solely for educational purposes. Readers must obtain independent legal advice with respect to any civil and/or criminal liability concerning the withholding of aid and rescue.

If you see someone who is seriously injured on the street, do you have the duty to aid or to seek rescue, for example, by calling 911?

While most people feel strongly that they must do what they can to help an injured person, the common law suggests otherwise.

According to the trial judge of a modern case, later affirmed by the Supreme Court of Canada, “the law is clear that there is no general duty to come to the rescue of another person … the law leaves the remedy to a person’s conscience.”

When the case was appealed to the Court of Appeal, Jessup J.A. boldly stated “despite the moral outrage of the text writer, it appears presently the law that one can, with immunity, smoke a cigarette on the beach while one’s neighbour drowns and without a word of warning, watch a child or blind person walk into certain danger.”*

This is indeed quite outrageous. In many civil law countries, particularly in Europe, it is often an offence to withhold aid when it is needed.

At the same time, this common law rule of “no duty to rescue” is not absolute. Professor Klar, a prominent tort law professor, suggested five main categories in which the duty to assist is imposed:

  1. relationship of economic benefits
  2. relationship of control or supervision
  3. creators of dangerous situations
  4. reliance relationships
  5. statutory duties

While the above exceptions are seemingly quite limited in our day-to-day living, the application of the exceptions is actually broader than one may anticipate.

For example, under the relationship of economic benefits, there may exist a duty for the barkeep to prevent customers from driving home while intoxicated.

Under the Ontario Highway Traffic Act and the Criminal Code, there are also statutory duties imposed on drivers who are involved in an accident to render all possible assistance and remain at the scene of  accident . Other statutory duties may be applicable to certain professionals, such as physicians and nurses.

*Horsley et al. v. MacLaren et al. “The Ogopogo” [1969] 2 O.R. 137, revd [1970] 2 O.R. 487, (C.A.); affd, [1972] S.C.R. 411

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Compensation Before the Landlord and Tenant Board

Posted in: "All, Administrative Law by Admin | No Comments Wednesday, June 10, 2009

While the Landlord and Tenant Board and the Small Claims Court have the same monetary jurisdiction at the moment (both can award up to $10,000), they are by no means substitutes of each other.

The legislative purpose of the Landlord and Tenant Board is to “to balance the rights and responsibilities of residential landlords and tenants and to provide for the adjudication of disputes and for other processes to informally resolve disputes.”

In other words, the Board is mainly concerned with the rights and obligations between the landlord and the tenant. While the Board has the power to award compensation, it’s actually quite restricted.

For matters concerning maintenance standards, the Board has limited discretion in awarding compensation under the frame work of the Residential Tenancies Act. For instance, under section 30 of the RTA, if the Board has found the landlord in breach of its obligation regarding property maintenance, the Board may order one or more of the following:

  1. termination of the tenancy
  2. an abatement (reduction) of rent
  3. authorizing or ordering the tenant to complete the repairs and seek costs from the landlord
  4. reasonable costs and out-of-pocket expenses of the tenant
  5. prohibiting further rent increases until the property is repaired
  6. any other order that the Board considers appropriate

As you can see, under this example the Board’s power is limited to what we lawyers call “special damages,” i.e., reasonable costs incurred or expected to be incurred, and compensation in the form of abatement of rent. Other types of damages, such as punitive damages and economic losses, are not available.

Although the statute allows “any other order” that the Board considers appropriate, the Board exercises this power vary cautiously. For example, the Board rarely awards compensation for “hurt feelings” and “upset.” (I’ve never seen one instance yet.) For claims involving replacement of personal properties, the Board takes factors such as depreciation into consideration.

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You’ve Given the Landlord Move-Out Notice… Now What?

Posted in: "All, Administrative Law by Admin | No Comments Tuesday, June 9, 2009

If you’re a tenant, what happens after you’ve given your move-out notice?

If you’re trying to “break a lease” by moving out before the termination date, you may be in trouble. Your obligation to pay rent does not end until the landlord consents to the termination or the tenancy is terminated by the landlord and Tenant board.

You will have to find someone to take over your lease and ask for your landlord’s approval. You  may also be responsible for the landlord’s reasonable out-of-pocket expenses.

If your move-out notice is given at the end of your tenancy, or with the landlord’s consent to terminate the tenancy, you should be OK.

The landlord may request an inspection of the unit and conduct repairs, etc., upon 24 hours of written notice. The notice of entry should specify reason for entry, day of entry, and a time of entry between the hours of 8 am and 8 pm.

The landlord may also enter your unit to show it to prospective tenants without notice, if the entry is between the hours of 8 am and 8 pm and reasonable efforts are made to inform the tenant of the intention.

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PSWLaw Now Accepts Credit Card Payments

Posted in: "All, Business Development by Admin | No Comments Monday, June 8, 2009

I’m pleased to announce that PSWLaw now accepts credit card payments by MasterCard and Visa.

You can now pay a retainer in trust or a balance on rendered accounts through your credit card and earn points. You can also choose whether to make a lump-sum payment or pay through instalments.

Restrictions apply.

PSWLaw is a Toronto-based law firm providing legal advice in corporate commercial law, contract law, and civil litigation.

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Unsconscionability in Family Law and Setting Aside a Domestic Agreement

Posted in: "All, Family Law, Legalese Dictionary by Admin | No Comments Monday, June 8, 2009

The Supreme Court of Canada discussed the law pertaining to setting aside a domestic agreement in its recent judgment Rick v. Brandsema*.

After a long and difficult marriage, the parties had negotiated and signed a separation agreement. The husband allegedly took advantage of the wife’s vulnerable and fragile emotional state and obtained a financially favourable agreement. About a year after the execution of the agreement, the wife realized the financial consequences and sought to have the agreement set aside.

The Supreme Court affirmed the lower courts’ findings that the transaction was unconscionable, i.e., grossly unfair, because of one party’s disabilities.

Citing Miglin v. Miglin,^ another case decided by the Supreme Court of Canada, the court ruled that if there were any circumstances of oppression, pressure, or other vulnerabilities, and if one party’s exploitation of such vulnerabilities during the negotiation process resulted in a separation agreement that deviated substantially from the legislation, the agreement need not be enforced.

Given the unique environment of negotiating a separation agreement, the court decided that a duty to make full and honest disclosure of all relevant financial information is required, so that the separating spouses may genuinely decide for themselves what constitutes an acceptable bargain that’s also legally enforceable.

*[2009] S.C.C. 10

^[2003] S.C.C. 24, 1 S.C.R. 303

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Preparing for Mediation

Posted in: "All, Administrative Law by Admin | No Comments Tuesday, June 2, 2009

Most people think of mediation as a side dish during the long course of litigation – it’s nice to have, but by no means necessary. Today i suggest otherwise.

As most civil litigation cases are settled before trial, I believe that mediation can be an invaluable opportunity for the parties to resolve the matter on mutually acceptable grounds. Hence, it’s important to prepare for mediation if you want to gain an edge over the opposing party during the settlement process.

To prepare for mediation, first you need to know your facts. If you don’t know the facts well, you’ll likely be seen as not credible or untrustworthy, which can hinder your position.

Besides knowing the facts well, you need to know your bottom line. In doing so, you will know your worst alternative and be prepared to walk away if anything less is offered.

At the same time, you should be conscious of what your legal costs may be if the matter is not settled in mediation. Even a follow-up mediation session can cost you additional hundreds or thousands of dollars. If the mediation fails, further negotiation between lawyers or litigation can be very expensive.

You should be realistic about the outcome. If you attend mediation with unreasonably high expectations, you’re wasting everyone’s time. You may also be seen as insincere or arrogant. Neither perception helps your case.

At the mediation, you should focus on solving the problem, rather than placing the blame. Once parties start blaming each other, the mediation quickly breaks down. You should focus on your needs and objectives – and not “whose fault is it?”

Finally, you should be open to suggestions. Unlike adversarial litigation, mediation is about finding a solution that works for everyone. You may be surprised to learn that the opposing party is not as unreasonable as you thought.

Child Support: The 40% Access Time Myth

Posted in: "All, Family Law by Admin | No Comments Monday, June 1, 2009

Section 9 of the Child Support Guidelines *states the following:

9. Where a parent or spouse exercises a right of access to, or has physical custody of, a child for not less than 40 per cent of the time over the course of a year, the amount of the order for the support of a child must be determined by taking into account,

(a) the amounts set out in the applicable tables for each of the parents or spouses;

(b) the increased costs of shared custody arrangements; and

(c) the condition, means, needs and other circumstances of each parent or spouse and of any child for whom support is sought.

This provision has lead to a mini-industry through which individuals comes up with various methods of calculation to reach the 40% threshold, hoping that they will be relieved from paying child support.

Alas, even if the 40% threshold is reached, it doesn’t necessarily mean that the support amount will be reduced. As the primary residential parent’s expense (e.g. housing costs) are more or less fixed, the increased time spent with the other parent doesn’t lead to reduction of costs. Rather, the overall parenting costs may nonetheless increase as both parents have to incur substantial expenses on housing, clothing, food, and entertainment.

Therefore, the court will have to go beyond the mathematical approach and consider all circumstances, following steps such as these:^

  1. Start out with the simple set-off amount under the Guidelines.
  2. Inquire whether shared custody results in an overall increase in costs and the portion shared by each parent.
  3. Take into account the resources and needs of the parents and children and consider the ability to bear the increased costs of shared custody.
  4. Investigate whether the standard of living for the children in each household is comparable.

If there’s a great income disparity between the spouses – for example, one spouse is a stay-at-home parent, while the other is a highly skilled professional – the high income earner will often end up paying the full table amount or very close to it.

Finally, the potential reduction in support payable applies to the prescribed table amount only. The extraordinary expenses that often constitute the majority of the support payable, are generally not affected.

Hence, it’s wise to conduct a comprehensive analysis before bringing a motion under s.9. It may not be worth it.

* O. Reg. 391/97

^ Contino v. Leonelli-Contino, [2005] S.C.C. 63, for applications of the rule, see e.g. Daulby v. Daulby, [2007] CanLII 52431 (ON S.C.)


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