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Unjust Enrichment
An Article by Len Fishman
(NOTE:
This article was written for a Law Society of Manitoba
Continuing Legal Education Seminar on March 5, 1996
and has not been updated)
F. Unjust Enrichment and The Marital Property Act
In light of Rawluk, it is possible, in theory, to piggy-back other claims or remedies such as the resulting trust, constructive trust, and restitution onto The Marital Property Act claim. Notwithstanding the equalization provisions of The Marital Property Act, Rawluk allows an equitable claim, such as one for unjust enrichment or constructive trust, to be heard independently of or in tandem with the possible claim under the Act. A constructive trust could clearly be claimed prior to separation and therefore can be claimed after the fact, as The Marital Property Act does not maintain exclusivity nor does it rule out the common law.
In Rawluk, dealing with Ontario's Family Law Act, 1986 Cory J., writing for the majority, says at p. 369:
The legislators must have been aware of the existence and effect of the constructive trust remedy in matrimonial cases when the Act was proposed. Yet neither by direct reference nor by necessary implication does the Act prohibit the use of the constructive trust remedy.
It is respectfully submitted that this is applicable with equal force in Manitoba.
McLachlin, for herself, La Forest and Sopinka JJ. wrote the dissent. Given the history of dissents in marital law, it cannot be ignored for it may very well be the rule next year. She reasoned that, absent the marital property legislation, Ms. Rawluk would have had a sustainable claim for a half interest by way of constructive trust. But, in light of her analysis that the constructive trust is not a property claim but rather a proprietary remedy for unjust enrichment, McLachlin J. held that it was incumbent on the court to canvass other available remedies for the unjust enrichment. She concluded that because the F.L.A., which she described as "a comprehensive statutory scheme", provides a remedy for the unjust enrichment, constructive trust should not be applied, although she allowed that a constructive trust might be available before, but not after, separation.
Since value is not the same as ownership, equality may not be sufficiently achieved by only dividing value. Ownership includes elements of control, legal responsibilities, may give priority in the case of bankruptcy, accrues the benefit of changes in value, and allows the psychological benefits that "pride of ownership" may bring. None of the Manitoba cases seem to have delved into the complications that this approach to value may create.
Where the court imposes ownership by means of a trust, if the ownership is joint then the asset is exempt from application of The Marital Property Act by s. 10. The parties will share the rights and obligations of ownership effective as of the date of the determination or another date the court might choose, most probably, the date of separation. They will share value, that is, the net proceeds of sale on disposition and a right to the income generated in the interim. There seems to be no logical reason why a McDonald analysis would not also apply in Manitoba to force the trust on an unwilling party who had been "deprived" of ownership so that the declines or losses would also be shared.
Practical problems are evident, some of which McLachlin J. alludes to in her decision. There does not seem to be much point duplicating the statutory remedy with an equitable one where the result would be the same. Further, it seems anomalous that where unequal division would not be found but that a constructive trust would.
While the statutory scheme should produce an efficient predictable result, the trust remedy may be uncertain and might be seen to promote expensive litigation on conduct and roles. Third party rights in property could also be affected. Notwithstanding the theory that Rawluk stands for, however, few cases seem to be decided expanding spousal rights beyond what the statutes provide.
