BC Court of Appeal denies unjust enrichment claim over house subject to tenancy agreement

A tenancy agreement between a woman’s ex-husband and her former father-in-law – the purchaser of the property – executed before their marriage was a juristic reason to deny recovery of her alleged interest in the property based on unjust enrichment, the BC Court of Appeal has ruled.

In Gill v. Gill, 2022 BCCA 264, a man and a woman married in 2014 and lived in a home in Delta, BC, until their separation in 2017.

The present proceedings focused on the Delta property. The man’s father bought it in March 2012, advanced around half of the purchase price, and financed the rest via a mortgage. The mortgage payments came from an account that the father and his wife jointly held. In April 2012, the man signed a residential tenancy agreement in which he bound himself to pay his father monthly rent and utilities. The man moved into the Delta property the following month.

In 2018, following the parties’ separation, the man initiated a family law proceeding asking for a divorce and a division of family property and debt.

His former wife filed a counterclaim seeking, among other things, an equitable interest in the Delta property based on the doctrine of unjust enrichment. She alleged that she contributed post-marital financial expenses for the property’s maintenance and upkeep.

In 2021, the BC Supreme Court dismissed the woman’s counterclaim. The judge ruled that the case was suitable for disposition via summary trial, that a tenancy agreement was in place between the man and his father at the time of the marriage, and that the father and his wife rented the property to their son at below-market value and took care of the mortgage payments.

Unjust enrichment claim rejected

The woman took the case to the BC Court of Appeal, which dismissed her appeal.

First, the appellate court held that the judge properly exercised his discretion to proceed by way of summary trial and prudently reserved his decision to digest the evidence, consisting of approximately 900 pages worth of affidavits. The judge was entitled to conclude that most of the basic facts were not in dispute and that he could make a decision on the merits based on the record.

The judge had clear evidentiary basis to find that the tenancy agreement was valid and subsisting from the beginning of and throughout the marriage. This was a valid juristic reason to deny the woman recovery based on unjust enrichment, the appellate court said.

On the other hand, there was no evidence showing that the woman made any meaningful contribution to renovation costs for the property during the marriage or communicated with the realtor before or after the property was listed for sale, the appellate court noted.

Next, the appellate court rejected the woman’s argument that the judge committed a legal error by misapplying the third branch of the unjust enrichment analysis– specifically, whether she conferred a benefit upon her former father-in-law in the absence of a juristic reason.

As the appellate court explained, the judge’s juristic reason analysis never went beyond the first stage because the woman failed to meet her burden to show that there was no juristic reason to deny recovery.