Compensatory Allowance and Unjust Enrichment
Compensatory Allowance and Unjust Enrichment
Are you a married or common-law spouse in the separation process?
Are you in a divorce, legal separation, nullity of marriage case or another legal case with your former spouse?
You feel that you have contributed time, effort and energy during your relationship and enriched your spouse to your detriment?
You do not feel that the division of the family assets will adequately compensate you for the sacrifices you’ve made during your marriage.
What can you do about this under Quebec law?
Well, there may be a possible recourse for you.
In this article, we will discuss the recourse of compensatory allowance and unjust enrichment allowing you to legally ask for compensation for the enrichment of your spouse’s patrimony during your marriage or in common-law relationships.
Are you ready?
Let’s get right into it.
- What is a compensatory allowance recourse?
- What are the conditions to successfully obtain compensatory allowance?
- Does the division of assets affect my compensatory allowance recourse?
- How much will the court award in compensatory allowance?
- Is housework a reason I can invoke to get compensatory allowance?
- Can common-law couples invoke compensatory allowance or something similar?
- Unjustified enrichment recourse for common-law couples
- Conclusion on Compensatory Allowance and Unjust Enrichment
1- What is a compensatory allowance recourse?
The Quebec law defines a compensatory allowance to be a compensation for your contribution in property or service to the enrichment of the patrimony of your spouse who are married.
There is another recourse available for common-law partners called unjust enrichment that we will present later in this article.
Compensatory allowance’s objective is to compensate for the past actions resulting in a financial inequality between the spouses whereas spousal support and alimony have an objective to deal with the future needs.
2- What are the conditions to successfully obtain compensatory allowance?
For your compensatory allowance recourse to succeed, you must meet the legal conditions necessary to this effect.
There are four conditions that must be satisfied:
1- you must have put yourself in a financial disadvantage for the benefit of your spouse
2- your contribution in goods or services helped make your spouse become wealthier
3- there is a very close link between your contribution and the increase in wealth of your spouse
4- your contribution was to help your spouse and there was no other reason that benefited you
In other words, what you did for your spouse or the money you gave your spouse directly contributed in increasing his wealth at your expense.
3- Does the division of assets affect my compensatory allowance recourse?
Yes, the result of the application of the rules of the family patrimony and your matrimonial regime impacting the division of assets will be considered by the court when deciding on the recourse of compensatory allowance.
The court will also look at your marriage contract, if any, if your spouse is also obligated to make a donation or pay any sums on the basis of the marriage contract.
The objective of the court is to compensate you for the financial inequality that may have resulted during your marriage for offering goods and services to enrich your spouse.
If the overall division of the family assets and result of marriage contract appears to organically correct the financial inequality, the court will consider that in its judgment.
4- How much will the court award in compensatory allowance?
The amount of compensatory allowance that you can get depends on the facts of your case.
You must demonstrate that you contributed to enrich your spouse.
As a result, you must provide the court evidence showing your contribution in goods or services.
Goods can be money you gave your spouse, equipment or property you gave your spouse to help your spouse out.
Services can be time you spend helping your spouse free of charge or without any salary or compensation while your spouse was acquiring skills or assets allowing him or her to develop further wealth.
Demonstrate enrichment
You must then demonstrate how much your spouse was able to enrich himself or herself with your contribution.
For example, you gave your spouse $50,000 so he or she can qualify to get a business loan and use that money as working capital for his or her business entirely in your spouse’s name.
You then spent time helping with the accounting, answering calls and handling the operations all without any salary or compensation.
Ultimately, upon your divorce, your spouse keeps everything and you are left without any compensation for all this contribution in money and time.
In this case, you can show your contribution in money, you can show your contribution in time and you can show how much the business was worth when you filed for a divorce.
The court will then consider the business value to be the enrichment.
Overall advantages you benefited under the law
Once the enrichment is established, the court will then look at the advantages of the rules of the family patrimony and marriage contract that you may benefit from and ultimately decide on an amount that will compensate you for your loss but preventing you from double dipping in case you received specific advantages in the division of your assets.
For instance, your spouse has kept the company but renounced his or her shared in the family residence and where this renunciation compensates you for the contribution you had made during your marriage.
5- Is housework a reason I can invoke to get compensatory allowance?
Above normal housework
While regular housework is not considered as a valid reason to be awarded compensatory allowance or unjustified enrichment, if you did housework over and above what’s a normal level of household work that helped contribute to your spouse’s enrichment, this may be considered by the court as a valid reason to award compensatory allowance or unjust enrichment.
Court discretion
The court has discretion to decide what may be excessive or normal level of housework, so there is no specific formula that is available to make this determination.
Consider the example where you were taking care of four children by yourself and one of them being a special need child requiring a lot of effort on your part and imagine that your spouse was constantly away where you were the only one who had to arrange for the children’s school, pay the bills, handle the house chores and so on while your spouse was only advancing in his or her career.
This may be a situation where your contribution in service and time to the household and housework can be considered above what’s normal and a judge may award compensatory allowance.
At the end of the day, the facts of the case are important and you must still be able to show the four legal conditions underpinning the compensatory allowance recourse.
6- Can common-law couples invoke compensatory allowance or something similar?
The legal remedy of compensatory allowance is only available to married couples and can be awarded in divorce, legal separation and nullity of marriage cases.
As a result, this specific recourse is not possible for common-law couples separating.
However, just because you did not get married, it does not mean that you did not contribute to enrich your spouse and where upon separation, there is a significant financial inequality and injustice.
What can be done?
Is there a recourse for common-law partners?
Yes, the good news is that there is the concept of unjustified enrichment available in the contractual and extracontractual regime that could provide us with some remedy.
The law does not specifically provide for a recourse like the compensatory allowance for common-law couples and so the Quebec courts have taken contractual obligation remedies and adapted it to help protect common-law partners.
7- Unjustified enrichment recourse for common-law couples
Article 1493 of the Civil Code of Quebec establishes the recourse for unjust enrichment, stating the following:
A person who is enriched at the expense of another shall, to the extent of his enrichment, indemnify the other for the latter’s correlative impoverishment, if there is no justification for the enrichment or the impoverishment.
This notion has been used by the Quebec courts to provide remedy to de facto spouses or common-law couples separating and where there is a case of enrichment of one spouse at the expense of the other.
In fact, the Quebec courts will not hesitate to award an indemnity for unjust enrichment if a de facto spouse was enriched at the expense of the other.
In 2018, a woman who was in a sixteen year relationship with her de facto spouse and with whom she had two children took a recourse for unjust enrichment and succeeded in being awarded 20% of the value of her spouse’s total net worth.
In this case, she had helped her spouse for many years in developing his company and shortly before their separation he sold his company for several millions of dollars becoming a millionaire while she ended up with nothing.
The court had no problem in awarding an indemnity forcing the spouse to pay 20% of the value of his net worth to compensate her for her time and effort in building up the company.
8- Conclusion on Compensatory Allowance and Unjust Enrichment
The compensatory allowance recourse for married couples and the unjustified enrichment for de facto couples allows for the balancing of financial inequalities that may have been caused by the contribution of one spouse to the enrichment of the other.
This recourse is not one that should be taken if you are not happy with the standard application of the rules of the family patrimony and matrimonial regime or to compensate you for poor decisions that you may have made during your relationship.
However, it’s a powerful recourse when in fact there was a significant contribution that impoverished you while enriching your spouse.
The courts also have a duty to ensure that a decision made is equitable when considering the overall nature of the case and financial consequences of the separation on the couple.
As a result, the compensatory allowance or the unjust enrichment recourse is analysed closely before a ruling is made.
We hope that this article helped clarify this recourse for you.
Should you need a family lawyer or a divorce lawyer to guide you and assist you in this regard, we are happy to assist you.
Our divorce lawyers and family lawyers know the intricate details of compensatory allowance and unjust enrichment and you can reach out to us at any time for support.
We wish you the best of luck.
