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The law of pension division upon separation of unmarried or common law couples

While un-married or “common law” couples in New Brunswick are not subject to division of marital property under the Marital Property Act, this does not mean that unmarried couples have no rights at all in one another’s property. As the term “common law” implies, rather than being governed by specific legislation, these relationships are subject to judge-made law, or common law. Among those common law principles include the law of unjust enrichment and constructive trust, which has for decades been used by judges to order the division of the assets of unmarried couples upon separation. However, this law is not very well understood, even by some lawyers. I recently had a judge thank me for the lengthy brief I had filed in one matter which had helped clear up the law for her in this regard.

One mistake sometimes made is that statutes like the New Brunswick Pension Benefits Act, SNB 1987, c P-5.1, (which regulates the pensions of provincial government employees) the Canada Pension Act, (for members of our armed forces) or the Royal Canadian Mounted Police Superannuation Act, (applicable to RCMP pensions), create an automatic entitlement for common-law spouses to a division of those pensions. However, the New Brunswick Court of Appeal in Noel v. Butler, 2016 NBCA 49, has made it clear that these acts do not create any entitlement, but rather provide instructions on how to divide those pensions after a judge finds the entitlement to exist. In Wills v. Kennedy, 2015 NBCA 31, Justice Larlee, of the Court of Appeal confirmed that “there are no family assets in a common-law relationship and no automatic equal division”.

In the decision of Kerr v. Baranow, [2011] 1 S.C.R. 269, the Supreme Court of Canada confirmed that the three elements of unjust enrichment are:

(a)          an enrichment of or benefit to the defendant;

(b)          a corresponding deprivation of the plaintiff’; and

(c)           the absence of a juristic reason for the enrichment.

A common claim made is that one party staying home, keeping the house, and raising the children contributed to the ability of the other party to earn their pension. While it is true that domestic services can constitute a contribution, the judge must find that those services did in fact contribute to the asset in some tangible way in the sense that this asset would likely not be what it is but for these contributions.  There is no presumption that because one spouse stayed home and did the lion’s share of domestic household chores and child-raising, that the other would not have been able to earn that income and pension but for that choice. Some careers may require the other spouse to sacrifice their own income earning ability, but that is a matter of evidence to be proven. Evidence that the earning spouse never requested the non-earning spouse to stay home, or even that he or she was asking the non-earning spouse to find employment and the non-earning spouse was choosing to not seek employment for other reasons of personal choice and preference, may be highly important.

Another relevant consideration may include what the earning spouse lost through their employment. A lifelong workplace injury, for example, may very well lead a judge to the conclusion that there was no actual enrichment and the gain of the pension is offset by the loss of future income earning ability. The earning spouse may also have given up employment opportunities because of the demands or needs of the non-earning spouse, so that there was no enrichment. Likewise, the court will also be interested in the financial situation and income earning ability of the non-earning spouse both at the start and at the end of the relationship. Information including their age, employment prospects, and the extent to which they materially benefitted from the work of the earning party during and at the end of the relationship, will also be relevant.

The case law also suggest that non-discretionary pensions will not be treated the same way as discretionary pensions. The rationale is that if the earning spouse had no choice but to contribute to their pension, the non-earning spouse cannot claim that the money that went to the pension is money that would otherwise have been spent on the family and which he or she would have benefited from. It will therefore be generally easier to resist a claim on one’s pension if the pension was non-discretionary.

Conclusion: When it comes to the division of property upon separation of unmarried couples, the law is not straightforward and is often misunderstood even by judges and lawyer. It is important to consult with an experienced family law practitioner who will give your case the time and attention required. Our office is ready and able to help you navigate complex family property division issues.