Unjust Enrichment, An Encore
Hot on the heels of the BC Court of Appeal decision that Sharon Davis blogged on last Friday is the BC Supreme Court decision of Graham v. Ellard, 2011 BCSC 672 (CanLII).
There, a surviving spouse brought a claim against her late husband’s estate for a declaration that she is entitled to a beneficial interest in the estate’s half interest in the home on the basis of unjust enrichment.
The wife and the deceased were divorced in 1998. The divorce order required that their home be sold, and the proceeds divided equally. However, the order further provided that the home was not to be sold until the youngest child was no longer a child of the marriage. However, the home was never sold, even after the youngest child ceased to be a child of the marriage, or following the death of the husband.
The deceased died in 2001. After his death, his estate brought an application to sell the home, but the application was, for reasons that are not clear, dismissed.
From the date of the divorce until the trial, the wife paid all of the upkeep expenses associated with the home.
In response to the wife’s claim to the estate’s interest in the home, the estate raised a number of defences. The first was that the claim was barred by reason of cause of action estoppel. The estate argued that the sale of the home was ordered at the divorce trial, and thus it was not open to the wife to now raise the issue.
The court held that the wife could have raised the issue of the husband’s contribution to the carrying costs of the home, but didn’t. Her claim on the basis that she was entitled to contribution for carrying costs was therefore dismissed.
However, the court held that the wife’s claim for unjust enrichment was allowed to stand. The evidence was that the value of the home increased substantially: from $195,000 to $395,000. The wife’s claim for unjust enrichment was found to not be res judicata, as it did not exist at the time of the divorce trial. The court held that it was unforeseeable at the time.
The court went on to hold that the estate was unjustly enriched by the increase in the value of the home as a result of the wife paying the carrying costs over the years.
As to a remedy, the court ordered that the home was to be sold and the proceeds divided between the wife and the estate, subject to the estate being liable to the wife for half of the carrying costs paid by her, other than utilities. No set off for occupational rent was allowed. (The decision contains a good, concise summary of the equitable principles to be considered when considering a claim for occupational rent.)
Thank you for reading,
Paul E. Trudelle - Click here for more information on Paul Trudelle.
