The case Lesko v. Lesko, 2021 ONCA 369 presented a very interesting case where Husband bought a fixer upper property before marriage. Wife contributed no monies towards purchase of the property but contributed her labour etc. towards extensive gutting and renovation to the property. Post marriage, she contributed towards mortgage payments. Wife made a trust claim for the property prior the marriage and was successful. The court allowed her to deduct 50% of the property value (her trust claim) on her Net Family Property, thus increasing her Equalization payment significantly.
The court of Appeal dismissed the husband’s appeal of an order that awarded an equalization payment to the wife, based on her unjust enrichment claim that she had a 50% interest in a property the husband acquired prior to their marriage. That unjust enrichment finding permitted the wife to deduct 50% of the marriage date value of that property in her net family property calculation. Before the parties married, they agreed the husband would purchase a “fixer upper” (the Taplow property), where they resided together while doing extensive renovations on the home. The wife did not contribute to the purchase price, but she contributed to the cost of over half of the mortgage for six years until the parties’ first child was born. Four years after the parties married, the Taplow property was sold and the parties put the full sale proceeds into another ‘fixer upper,” with the intention of renovating it and selling it for a profit.
The court held the trial judge did not err in concluding that the wife established a claim for unjust enrichment. The evidence showed the parties jointly planned to purchase the Taplow property, renovate it and sell it at a profit. The wife made significant monetary and other contributions to the acquisition, preservation, maintenance and improvement of the property. There was a sufficient connection between the wife’s contributions and the property to impose a constructive trust in her favour. There was no juristic reason for the husband’s enrichment. The court rejected the husband’s contention that prior to their marriage, the parties’ relationship was one of landlord and tenant. When they moved into the Taplow property, it was barely liveable and not a situation in which one party would pay rent. The parties selected the property together with the intention of gutting and renovating it for a profit, with both parties expecting to benefit.
The trial judge was not required to consider any entitlement that the wife would acquire post-marriage under the Family Law Act equalization scheme as a remedy to the unjust enrichment claim. The wife’s claim that she was entitled to an interest in a property owned at the date of marriage, based on unjust enrichment arising prior to marriage, required an analysis under the common law framework.
The evidence supported the judge’s finding that the wife was entitled to deduct 50% of the net value of the Taplow property on the date of marriage, for the purposes of calculating her net family property, as a reasonable and fair equitable remedy. This finding was supported by evidence that the husband applied the full proceeds from the sale of that property to acquire another property and put the wife on title as a co-owner: Lesko v. Lesko, 2021 ONCA 369 (Strathy C.J.O., Brown and Miller JJ.A.).
They key take away is that trust claims are powerful tools at equity to remedy unjust enrichment of one party at the expense of the other. It always helps to document parties’ true intentions to avoid such claims down the road.