Living in a multi-generational family home can make home ownership more affordable. The parent likely purchased the home at a time when homes were more affordable. As the parent(s) ages and retires, the adult children take on more of the responsibility for maintenance, upkeep, and expenses of the property. While pooling resources in this way can work well, a breakdown in the relationship may result in disputes over selling the property and distributing the proceeds. Such was the case in Sidhu v Sidhu, 2023 ONSC 4618.
Background
In 2004, Sukhminder purchased a home following the death of her husband. Sukhminder financed the purchase through the sale of her former home and a mortgage. Sukhminder paid the mortgage with the income from her full-time employment.
Sukhminder’s three adult sons moved into the new home with her. When two of her sons married, their wives moved into the home with them. The married sons were expected to contribute financially to the home and a “family” bank account was set up to facilitate the payment of common expenses (insurance, utilities, and groceries, for example). Sukhminder’s son, Parminder, acted as de facto house manager and oversaw the joint bank account.
Parminder and his wife, Amandeep, ran a real estate business out of the family home. They also had two children who lived with them.
In 2008, Sukhminder sought to remortgage the property to help pay for one of her son’s upcoming marriages. With the assistance of counsel, Sukhminder transferred 1% ownership of the property to Amandeep for the sole purpose of enabling Amandeep to co-sign for the mortgage. Sukhminder received the proceeds from the new mortgage.
In 2014, Sukhminder was diagnosed with cancer. As a result of her illness, her financial contributions towards the home decreased significantly and she relied more on her children to remain living in the home.
In 2015, Parminder and one of his brothers got into an argument and the brother (and his wife) moved out of the property. Parminder’s relationship with his mother also began to break down and, in 2020, Sukhminder asked Parminder and Amandeep to move out. When they refused, Sukhminder brought an application for partition and sale of the property.
The Court Applications
As part of her application, Sukhminder claimed that Amandeep held her 1% interest in the property in trust for Sukhminder. In response, Parminder and Amandeep advanced a constructive trust claim for 50% of the net sale proceeds from the home based on their contributions towards the mortgage, maintenance, and upkeep of the home.
The court found that it was clear that Amandeep held her 1% interest in the property in trust for Sukhinder: neither party intended for Amandeep to have a beneficial interest in the home or to be financially responsible for the mortgage at the time the transfer occurred.
Unjust Enrichment and Constructive Trust
With regards to the claim of unjust enrichment, the court noted that the test for unjust enrichment is well settled:
- Was the defendant enriched?
- Did the plaintiff suffer a corresponding deprivation?
- Was there a juristic reason for the benefit and corresponding detriment?[1]
The first two prongs of the test are largely economic while the third prong engages legal and policy issues.[2]
Unfortunately, the court was faced with a difficult task: how to recreate the financial contributions of each of the parties towards the home in the absence of fulsome financial records. Based on the limited records available, a determination of the credibility of the parties, and what was most likely to have occurred on a balance of probabilities, the court was able to assign a monetary value to Parminder’s and Amandeep’s contributions to the home. However, the court found that their monetary contributions were provided in consideration for their use of the home, not to acquire an interest in it.
Furthermore, Parminder and Amandeep were never the sole financial contributors to the home: Sukhminder and her other married son also pooled their resources to pay for the property. The amount of their financial contributions fluctuated over the years based on their financial circumstances at the time. The parties also received non-financial benefits: Sukhminder benefited from some of the cooking and cleaning Amandeep did for her husband and children, and Amandeep and Parminder benefited from Sukhminder’s care of their children while they worked.
What was clear to the court was that all parties received a benefit from living in the shared home. As a result, given that Parminder and Amandeep benefited from living in the home, they failed to show that they suffered the necessary loss to give rise to a claim for unjust enrichment.
Conclusion
What this case drives home is that a determination of unjust enrichment is going to depend on the unique circumstances in each case. In most cases, proving unjust enrichment requires solid financial documentation and contemporaneous records. Absent those records, it will be difficult to show how one party living in the family home benefited more than any other.
[1] Moore v Sweet, 2018 SCC 52 and Kerr v Baranow, [2011] 1 SCR 269 (SCC).
