I. INTRODUCTION
Setting up home together is a major step in a relationship. Traditionally, couples took that step after their wedding. Today, however, in Western countries, more and more couples cohabitFootnote 1 and have children without getting married.Footnote 2 In Canada in 2006, 17.9 per cent of couples were cohabiting outside marriage, with the numbers in Quebec being particularly high (34.6 per cent).Footnote 3 In Germany in 2010, 11.01 per cent of couples cohabited without getting married (or registering a civil partnership).Footnote 4 In Great Britain in 2010, 15.3 per cent of cohabiting couples were unmarried.Footnote 5
With the rising number of cohabitants, the question of how the law should treat such relationships becomes more and more pressing.Footnote 6 There are rules to ensure the maintenance and wellbeing of children which apply to those born to both married and unmarried parents, for example, under the Children Act 1989 in England, or section 31 of the Ontario Family Law Act 1990, or in Germany under sections 1601, 1602 of the German Civil Code (BGB). However, the rules that govern the redistribution of the property of married couples on divorce are mirrored only rarely in the equivalent provisions for cohabitants.
In Canada, since the 1970s provincial legislation has granted rights to spousal support to cohabitants who have lived together for a certain period of time, as for example in the Family Relations Act of British Columbia of 1972, or sections 29, 30 of the Ontario Family Law Act 1990. Alberta only granted such rights in 2002.Footnote 7 Quebec is the last province not to introduce financial rights for former cohabitants. On 25 January 2013, by a majority of five, the Supreme Court of Canada held in Quebec (Attorney General) v A that the province is not constitutionally obliged to do so.Footnote 8 Some Canadian provinces, such as Manitoba and Saskatchewan, also introduced rules on the redistribution of family property.Footnote 9
Other legislatures, in England, Germany and some provinces in Canada, still hesitate, however, to provide statutory rules on the redistribution of property for cohabitants following the breakdown of the relationship. This hesitation is especially pronounced in English law; in September 2011, the government decided not to take forward the suggestions of the Law CommissionFootnote 10 for legislation.Footnote 11 However, questions of entitlement to jointly accumulated wealth need to be answered just as much when a cohabitational relationship ends as in the case of a divorce. With the increasing acceptance of unmarried cohabitation, many legal systems face the problem of how to untangle financial rights when such relationships break down.
No problems arise if the parties have established in an agreement, adapted to changing circumstances and which can be proven in court, who owns what and how a party who has helped the other accumulate or improve assets is to be rewarded. Only rarely, however, are such detailed agreements drawn up. Research shows that most couples, irrespective of whether they pool their resources, keep their funds separate or have a mixed arrangement,Footnote 12 fail to discuss financial matters or take legal advice.Footnote 13 When times are good, each partner might contribute according to his or her abilities and earning power towards living expenses and the acquisition of more valuable items, such as the family home, without thinking of the legal consequences. Parties in a happy relationship might regard precise calculations and distinguishing between each other in such ways as mean and pedantic.Footnote 14 Waite LJ in Midland Bank v Cooke said that, ‘For a couple embarking on a serious relationship, discussion of the terms to apply at parting is almost a contradiction of the shared hopes that have brought them together.’Footnote 15 Thus, for some couples, the relationship is a ‘law-free zone’,Footnote 16 into which courts are forced to inject some law in the event of crisis.
This article considers how courts in England, Canada and Germany have decided on the property rights and financial claims of former cohabitants. The article concentrates on the different doctrinal approaches that the courts have developed. It does not, however, discuss rights granted in favour of a couple's children, which might also benefit a former cohabitant, as, for example, provisions made under the Children Act 1989 Schedule 1,Footnote 17 or rights to support under section 1615 l BGB which enable a parent to take care of a child under three years old without working. The different provincial statutory regimes in Canada will not be addressed either, since the aim of the article is to identify how private law is used by courts in these three different legal systems to address the comparable problemFootnote 18 of what (if any) special rules should govern the acquisition of property rights by cohabitants. Such an approach, which focuses on the legal tools used in the different legal systems to adress essentially the same problem, might be described as the ‘functionalist approach’ of comparative law, as applied, for example, by Zweigert and Kötz.Footnote 19 This approach has been criticized for neglecting cultural and doctrinal peculiarities and concluding too easily that different legal systems essentially reach the same results.Footnote 20 In order to minimize this risk, cultural and social differences are cautiously addressed. Canada, England and Germany are Western countries with a broadly similar incidence of unmarried cohabitation as a social phenomenon. Germany is a traditional civil-law country with a civil code drafted in the nineteenth century, at a time when unmarried cohabitation was considered immoral. England and Canada, apart from Quebec, are common-law countries. Despite this common legal tradition, however, this article finds that the English and German approaches share more characteristics in their general approach to cohabitation than the English and Canadian courts. Canada, with its influential Charter of Rights and Freedoms, has taken a more liberal approach to cohabitation than the more conservative English and German courts.
Differences in the courts' doctrinal approaches and results are also stressed. England and Canada,Footnote 21 as common-law jurisdictions, rely on the constructive trust and the common-law conception of unjust enrichment respectively. In Germany, on the other hand, concepts of implied partnerships, family-specific contracts and unjust enrichment are drawn upon to address the problem. This article argues that, despite these doctrinal differences, English and German courts share a general approach to cohabitation which is significantly different from the approach adopted by courts in Canada. It identifies the choice faced by each jurisdiction as being between an autonomy-oriented approach, implementing intentions imputed or inferred from the parties' conduct, and an enrichment-oriented approach, awarding remedies in order to reverse contributions made towards the partnership that still enrich the former partner. However, in each jurisdiction, the private law conceptions of intention and enrichment used by the courts are shown to be ill-suited to resolve the specific problems of parties in intimate long-term relationships. It is concluded that the best way forward would be to introduce specific statutory schemes in all three legal systems, finding the right balance between party autonomy and the need to protect of the weaker party. The final section of the article offers some brief thoughts on how a legislative solution might strike such a balance.
II. THE ENGLISH CONSTRUCTIVE TRUST
In English law, the family home has special significance in cohabitational disputes. Home ownership is important in England. It conveys social status and often provides a very valuable investment. Especially in Greater London, the rise of house prices over the last decades has been striking,Footnote 22 a development that might have increased the willingness of former cohabitants to litigate.
English courts distinguish between cases of sole and joint registration of the family home:
(1) If only one partner of the (married or merely cohabiting) couple,Footnote 23 is the registered proprietor of title to the family home, the question is whether the other partner has a beneficial interest under a trust. If the acquisition of such a beneficial interest is established, the size of this interest needs to be determined (quantification).Footnote 24
(2) If both partners are registered as proprietors, the question is whether (acquisition) and if so to what extent (quantification) the terms of any trust of the family home are at variance with the legal title, eg, if the parties share equally or according to their contributions made to the purchase price.
The first family home cases addressed the first question. The starting point of the development of the trust of the family home was the presumed intention resulting trust.Footnote 25 If a person contributed to the purchase price of another person's property, it was presumed that a trust in favour of the contributing party came into existence unless evidence showed that the contributing party had intended a gift.Footnote 26 The family constructive trust developed after decisions such as Pettitt v Pettitt Footnote 27 and Gissing v Gissing.Footnote 28 The case law then distinguished between situations where a partner made direct contributions to the purchase price and was awarded an interest under a resulting trust, and those where a constructive trusts was imposed. A constructive trust,Footnote 29 the courts held, was based on the common intention of the parties and detrimental reliance based on the existence of a trust, demonstrated by indirect contributions to the purchase price or renovation work.Footnote 30 Home-making and caring for children alone, however, was not enough.Footnote 31 Whether the intention required of the parties needed to be expressed, inferred or even imputed in the light of the subsequent development of the relationship was clear neither in the case law nor the academic literature. In 1991, in Lloyds Bank v Rosset,Footnote 32 the House of Lords attempted to clarify the issue. Lord Bridge said that proof was required that the parties had, however unclearly, reached an ‘agreement, arrangement or understanding’ that the property was to be shared beneficially.Footnote 33 Absent an agreement, the only conduct of the parties which could be adjudged to show a common intention to share beneficially was direct contributions to the purchase price or payments of mortgage instalments.Footnote 34
The second question,Footnote 35 how to quantify the shares of a jointly registered couple, was addressed by the House of Lords in the decision of Stack v Dowden Footnote 36 in 2007. The question was whether the party who had made a greater contribution to the purchase price of the house could claim a beneficial interest which exceeded the equal sharing of the beneficial interest indicated by joint registration.Footnote 37 The House of Lords, by a majority, held that where the couple was registered jointly it would be only in exceptionalFootnote 38 situations that an interest under a trust would be different from the parties' legal interests. The law had ‘moved on’ from the traditional resulting trust in family home cases.Footnote 39 Nevertheless, Ms Dowden, who had undoubtedly made greater contributions to the purchase price, received a 65 per cent share. This decision was apparently based on a common intention of the parties. When explaining that many factors other than financial factors might be relevant when divining the parties' true intentions, Baroness Hale remarked that ‘in law, context is everything, and the domestic context is very different from the commercial world’.Footnote 40 She went on to say that ‘the search is to ascertain the parties' shared intentions, actual, inferred or imputed, with respect to the property in the light of their whole course of conduct in relation to it’.Footnote 41 Only Lord Neuberger, dissenting, disagreed with the idea of imputing an intention.Footnote 42 Thus, the question whether and what kind of agreement the parties had reached with respect to their property is of decisive importance for the court. This approach will be described as ‘autonomy-oriented’.
The academic response to Stack was mixed.Footnote 43 The decision was criticizedFootnote 44 by Swadling as abandoning established trust lawFootnote 45 in favour of imprecise, fictitious agreements.Footnote 46 Sir Terence Etherton,Footnote 47 now a Lord Justice of the Court of Appeal, regretted the lack of a principled approach, in contrast to cases in the commercial context such as Yeoman's Row Management v Cobbe.Footnote 48 Hopkins remarked that the decision had introduced a context specific, policy orientated approach.Footnote 49 McFarlane suggested that it would be preferable to apply the doctrine of proprietary estoppelFootnote 50 rather than use fictitious agreements.Footnote 51 Harding argued that Stack could be defended from a communitarian perspective. In focusing on the parties' intentions rather than developing a quasi-statutory scheme, which should be left to the legislator, the court observed its proper role in a democratic society.Footnote 52 Judged from a liberal rather than communitarian perspective, however, Harding argued that the decision was nevertheless flawed because it failed to provide claims in unjust enrichment to distribute the transferred wealth properly. All these commentators discussed the role the court places on the parties' agreements, arguing that an autonomy-oriented approach focusing on the consent of the parties requires there to be an agreement between the parties on the sharing of their property. This, however, was strongly doubted by many commentators. Pawlowski, for example, argued that the House of Lords should develop a quasi-statutory scheme that focused on the special requirements of family relationships rather than property law rules.Footnote 53
The lower courts acted cautiouslyFootnote 54 and gave permission to appeal in Jones v Kernott. Clarification, especially of the question whether Stack allowed the imputation of intention to share, was keenly awaited.Footnote 55 Gardner and Davidson claimed that if Stack's common intention could be invented for the parties, then the Supreme Court should expressly say so, and they suggested a new approach:Footnote 56 the court should differentiate between those couples who lived in a materially communal relationship and other couples who kept their money separate. The former couples should be essentially treated as if they were married.Footnote 57
In Jones v Kernott,Footnote 58 the couple had been registered as joint proprietors of the title when the property was purchased. Later, however, they separated and Mr Kernott acquired another property while Ms Jones paid off the mortgage on the first property so that effectively she had contributed 90 per cent of the purchase price. Fifteen years after their separation, the question of how their respective shares should be quantified reached the courts. The Court of Appeal decided Mr Kernott held a 50 per cent beneficial interest because the couple had intended to share the house in equal shares at the time of registration and had not changed their intentions later, despite their separation.
The Supreme Court allowed Ms Jones' appeal, upholding the decision of the trial judge and took the opportunity to revisit and clarify Stack. Baroness Hale and Lord Walker explicitly abandoned the presumed intention resulting trust for houses and flats registered in the joint names of a couple.Footnote 59 In such cases, there was a presumption that the parties intended to share the interest in land equallyFootnote 60 both at law and in equity, irrespective of the contributions each made to the purchase price. This ‘presumption of equal sharing’, however, could be rebutted by evidence of a contrary intentionFootnote 61 expressed or inferred.Footnote 62 However, to justify such a rebuttal, the facts had to be very unusual as parties in an intimate relationship did not normally intend to demand compensation for their contributions, which were also very difficult to keep track of. In Jones, the majority—Lady Hale, Lord Walker and Lord Collins—held that such an intention could be inferred from the actions of Ms Jones and Mr Kernott. The ‘ambulatory trust’Footnote 63 of equal shares established at the time of registration had changed over time with the parties' intentions. Lord Collins remarked that the distinction between inferring and imputing an agreement was, in any event, a small one.Footnote 64 The minority, Lord Wilson and Lord Kerr, concurred with the result but doubted that the evidence supported an intention not to share the beneficial interest equally. Such an intention had to be imputed in order to do justice.Footnote 65 The minority did not explain how a 90:10 split could be justified by means of imputation, an omission Gardener and Davidson explained by arguing that a materially communal relationship should essentially be treated like a marriage. Adding together the value of both the properties Ms Jones and Mr Kernott purchased, Ms Jones had received roughly a 50 per cent share, a result she might well have received in a divorce.Footnote 66
The majority, however, assumed that imputing an intention was permissible in relation to the quantification of the respective beneficial interests. Once the ‘presumption of equality’ established by joint registration had been rebutted by proof of a different intention, courts should look primarily for actual shared intentions, either expressed or inferred, to determine the relative shares.Footnote 67 If it was then impossible to infer an intention with respect to the relative shares, the court could impute such intention.Footnote 68
Whether, and, if so, to what extent, these principles are to be applied to cases where the title was in the name of one party alone, remains to be seen. In particular, it is unclear what role a contribution to the purchase price should play and whether the law as stated in Lloyds Bank v Rosset Footnote 69 is to be modified. Lady Hale and Lord Walker acknowledged the desirability of a single regimeFootnote 70 applicable to single-name as well as joint-name cases.Footnote 71 However, they went on to explain that the starting point in sole name cases was different because the non-registered party had to prove a beneficial interest while the jointly registered partner had only to bring proof that the beneficial interest should be shared in a different manner than would have been suggested by joint registration.Footnote 72 Nevertheless, it was argued that the two-step approach—of (1) proving an expressed or inferred intention to share a property interest either at all, or in manner different to that suggested by joint registration, and (2) quantifying according to an expressed, inferred or imputed intention—was essentially the same in both single-name cases like Oxley v Hiscock Footnote 73 and joint name cases such as Stack and Jones.Footnote 74 Mee criticized Jones for using two artificial forms of intention.Footnote 75 In his view, the law was not settled after Jones, since neither single-name cases nor the future of the resulting trust in non-domestic situations were clear yet.Footnote 76 Again, as with Stack, the details of the court's autonomy-oriented approach were discussed and questioned, with commentators differing on whether, and to what extent, a court might supplement the parties' intentions by reference to fairness-oriented factors derived from the parties' actual relationship.Footnote 77
III. CANADA—JOINT FAMILY VENTURES AND UNJUST ENRICHMENT
In Canada, as in England, the resulting trust formed the starting point of the case law on domestic disputes. Later, however, Canadian courts developed an approach that focused on the overall wealth accumulated by the cohabitants, and not merely on the family home, as was the case in England and Wales.
Relying on Lord Diplock's speech in Gissing v Gissing, Martland J in 1975 in Murdoch v Murdoch, speaking for the majority, said that, absent financial contribution, a trust could also arise ‘where a court was satisfied by the words or conduct of the parties that it was their common intention that the beneficial interest was to be shared’.Footnote 78 The approach was followed by the majority in Rathwell v Rathwell, even though it was said that a contribution could evidence the common intention to share the property in question,Footnote 79 which slightly blurred the distinction between the classic resulting trust and the ‘common intention resulting trust’,Footnote 80 the Canadian term for the English constructive trust.
In 1980, in Pettkus v Becker Footnote 81 the development of the common intention resulting trust ended, however, and the law of unjust enrichment became the decisive legal tool in cohabitational disputes. The Canadian law of unjust enrichment began with a traditional common law ‘unjust factor’ approach, where a successful claim in restitution requires there to be a reason justifying restitution, for example, that the claimant made a mistake when transferring a benefit to the defendant.Footnote 82 In Pettkus v Becker,Footnote 83 where an unmarried couple had built a successful beekeeping business, however, the Supreme Court held that an obligation triggered by the defendant's unjust enrichment could arise where the defendant had been enriched, the plaintiff had suffered a corresponding deprivation and there was ‘no juristic reason’ for the enrichment.Footnote 84 This approach comes closer to the civilian approach to unjust enrichment than the unjust factor model.Footnote 85
In the 1993 decision of Peter v Beblow, where a woman moved in with her partner and took over the chores formerly performed by a professional housekeeper, the Supreme Court held that domestic services could constitute an enrichment in a claim for unjust enrichment, since neither a spouse nor domestic partner has a duty to provide home-making services. The Court rejected the view that such services were performed merely because of ‘natural love and affection’, since such a view would devalue such valuable contributions to the family economy.Footnote 86 Speaking for the majority, MacLachlin J (as she then was) stated that ‘since there was no obligation existing between the parties which would justify the unjust enrichment and no other arguments under this broad heading were met, there is no juristic reason for the enrichment.’Footnote 87
This approach was not confined to domestic disputes. In 2004 the Canadian Supreme Court declared in Garland v Consumers' Gas Co Footnote 88 that the ‘no juristic reason’ approach was the right approach for all unjust enrichment cases in Canadian law. Nevertheless, the debate over the general direction Canadian law should take was not completely over.Footnote 89 In the 2009 case of BMP Global Distribution Inc v Bank of Nova Scotia,Footnote 90 the Supreme Court did not allude to Garland nor to the notion of ‘juristic reason’ but resolved the case by applying the unjust factor of mistake and the English decision of Barclays Bank v Simms.Footnote 91 However, in Kerr v Baranow (2011), another domestic relationship case, the Supreme Court confirmed its commitment to the juristic reason approach. A claim in unjust enrichment required, first, an enrichmentFootnote 92 of the defendant which, second, corresponded to a deprivation of the claimant.Footnote 93 Third, there must be no reason in law or justice for the defendant's enrichment.Footnote 94 There was no continuing role for the common intention resulting trust in family home cases, the court held,Footnote 95 since unjust enrichment offered a more principled and less artificial basis to address the problems arising out of domestic partnership.
The remedies the Supreme Court awarded in Kerr v Baranow deserve special attention. Prior to that case, Canadian decisions had awarded monetary relief calculated on a quantum meruit basis, which meant that a cohabitant received a payment calculated in relation to the market value of services delivered during the partnership. The other remedy awarded by the courts was proprietary relief in the form of a beneficial interest under a remedial constructive trust of specific assets.Footnote 96 However, in Vanasse v Seguin, decided with Kerr v Baranow, the Supreme Court restored the decision of the trial judge to award the homemaker partner a monetary claim for half the wealth her partner had accumulated during the relationship, including the proceeds of the profitable sale of his business.Footnote 97 Cromwell J explained this unanimous decision by reference to the nature of the relationship. While there might be situations where the parties considered each other as essentially hired help, in which case a quantum meruit would be appropriate, in other relationships the parties created a ‘joint family venture’ in which to share life's benefits and burdens. Cromwell J named a number of non-exhaustive indicia to detect such joint family ventures including (1) mutual efforts for the relationship; (2) economic integration of the resources of both partners; (3) an actual intent to share property; and (4) priority given to the family over career opportunities in order to disburden the other partner.Footnote 98
The remedy had to respect the underlying premise of the relationship and thus award a proportional share of the wealth accumulated by joint efforts. As regards the legitimacy of this approach, Cromwell J said that
it is not the purpose of the law of unjust enrichment to replicate for unmarried partners the legislative presumption that married partners are engaged in a joint family venture. However, there is no reason in principle why remedies for unjust enrichment should fail to reflect that reality in the lives and relationships of unmarried partners.Footnote 99
Lower remarked that this approach focused on the actual relationship rather than the common intention stressed by English courts, and is close to what Gardner had suggested for English law. While the Canadian approach was less artificial than the English, however, it might not bring more certainty.Footnote 100 Though the court's reasoning might have merit from a fairness-oriented policy perspective, McInnes criticized it for not being justifiable from an unjust enrichment perspective. The function of unjust enrichment was to trigger restitution and to restore a specific benefit to the plaintiff. Therefore, unjust enrichment could not justify a share in the profits which a former partner had accumulated without there being proof of a causal link between the work constituting the benefit and the specific profits obtained.Footnote 101
IV. GERMAN PARTNERSHIPS, CONTRACTS AND UNJUST ENRICHMENT
The trust has no real equivalent in German law.Footnote 102 Cohabitants only have property rights in land when both are registered. With respect to chattels, however, joint financial contributions are an important indication that the parties have established a common title, with shares relative to their financial contributionsFootnote 103—an approach roughly comparable to the classic presumed intention resulting trust. Nevertheless, German courts have concentrated on the law of contract and unjust enrichment when deciding cohabitational disputes rather than on property law. German courts first developed a number of tools that allowed claims between spouses beyond the scope of the marital property regime. Only since 2008 have such tools been applied to both cohabitants and spouses.
A. Implied Partnerships
The first instrument used in cohabitational disputes was the ‘implied partnership’. In German law, a partnership is concluded by contractual agreement, which, like other contracts,Footnote 104 can be formed without the partners explicitly expressing their intentions. Unlike in England,Footnote 105 a partnership can be easily created for all economic and non-economic purposes. Thus, couples may create partnerships for various purposes, including the purchase of a house.
In its decision of 20 December 1952,Footnote 106 the Bundesgerichtshof, the highest court for civil cases, used partnership law as an interim solution for marital property law. Article 3(2) of the German constitution of 1949 required the law to respect gender equality. However, the marital property regime of 1900, which was still in force, gave the husband power to administer his wife's property. The Bundesgerichtshof held that a couple who ran a hotel together had concluded a partnership and were thus partners with equal rights to the management and profits of the hotel. It was not denied, however, that the parties had never thought of establishing a partnership or brought it to the attention of third parties, as business people would have done. Though creating a partnership which only the partners themselves know of is possible under German law (Innengesellschaft),Footnote 107 the decision can be interpreted as an act of judicial law-making rather than judicial interpretation, because the court assumed there to be an intention to form a partnership where it was obvious that the parties had never thought of establishing one.
After the introduction of the new marital property regime in 1958, the Bundesgerichtshof did not abandon the implied marital partnership.Footnote 108 In 1965, the Bundesgerichtshof decided the first case involving a cohabiting couple.Footnote 109 Like Janet Eves, who used a 14 lb sledgehammer to improve the house in which she lived with her partner,Footnote 110 the claimaint put considerable energy into land registered in her married partner's name alone, cleaning over 6000 stones from houses destroyed in air raids in order to use them to build a house. When he died, she sued his widow to whom the house had passed on intestacy for half the value of the house. The Bundesgerichtshof granted her claim, holding that the parties, in agreeing to pursue a joint purpose, had formed a partnership. The woman was thus entitled to the value of her share in the partnership.
In a decision of 8 July 1996, the court went further, expressly holding that claims in partnership law could be brought even where no implicit intention to form a partnership could be found. The only precondition was the joint intention to purchase something of value that should belong to both partners economically, if not legally, for the duration of their relationship.Footnote 111
The implied partnership was heavily criticized by academic writers for disregarding established partnership law principles by inventing non-existent partnership agreements.Footnote 112 Responding to this criticism, the Bundesgerichtshof limited the scope of implied partnerships in 2005.Footnote 113 The mere intention to purchase or create something of joint economic value was not sufficient. Rather, an express or implied partnership agreement was required.Footnote 114 Moreover, there should be doubts about the conclusion of a partnership, the court held, if the parties pursue a purpose which many couples pursue as an essential part of their relationships, for example, building a family home.Footnote 115 If the couple runs a business together, it is more likely that the court will find that a partnership agreement has been concluded.
B. Family Specific Contracts and Unjust Enrichment
The Bundesgerichtshof developed further tools to allow claims between spouses outside of matrimonial property law, which, however, were not initially applied to cohabitants.
At first, property or money given by one spouse to the other was considered a gift.Footnote 116 The law of gifts provided a legal basis, so that claims in unjust enrichment were barred. Moreover, the law of gifts provides that gifts can only be recovered under very narrow sets of circumstances. For reasons to be discussed below, the court did not aim to allow restitution on the basis of unjust enrichment, but according to general contract law. To allow recovery of valuable benefits after the relationship had failed, the Bundesgerichtshof developed the doctrine of ‘marriage-related benefits’ (unbenannte or ehebedingte Zuwendung). This doctrine holds that if one spouse confers money, land or other valuable property on the other, such benefits are not gifts but are considered to be contributions to the security, preservation and organization of the parties' marriage, in accordance with an implied contractual agreement specific to marital relationships. Whether such an agreement created an enforceable claimFootnote 117 or whether it simply provided a legal basis for the benefits to be transferred and so bar a claim in unjust enrichmentFootnote 118 remained unclear. More important, however, was the conclusion that the general principles of contract law could be applied to such a contract, including Wegfall der Geschäftsgrundlage, a doctrine that can—though imperfectly—be compared to the doctrine of frustration in English law.
The principle of Wegfall der Geschäftsgrundlage, section 313 BGB,Footnote 119 states that a contract can be rescinded or adjusted if the circumstances or assumptions underlying the contract have developed differently than the parties thought. To allow the claim, this development must have put an unbearable burden on the claimant. The question of what constitutes an ‘unbearable burden’ is answered with regard to the individual circumstances of each case, such as, for example, how the parties distributed risks in their agreement, whether the development could have been foreseen and the general principle of Treu und Glauben, which basically says that a minimum standard of fairness must be respected in all contractual relationships.Footnote 120 Applying the Wegfall der Geschäftsgrundlage, described here as the ‘German doctrine of frustration’, courts were free to find evidence that the parties had transferred property because of the underlying assumption that their relationship would endure. If the marriage failed, this assumption underlying the contract was frustrated, and the benefit could be recovered, insofar as fairness required.Footnote 121
The legal construct of ‘marriage-related benefits’ is today applied with respect to transfers of land, valuable chattels, or cash, though not with respect to services.Footnote 122 To be able to give reimbursement for services, the courts developed something further, the ‘family specific cooperation agreement’ (familienrechtlicher Kooperationsvertrag).Footnote 123 If a spouse provides extensive services, for example, by building a house or working in the partner's business, such services are assumed to be provided as contributions to family life and delivered on the basis of an implied ‘family-specific cooperation agreement’. When the marriage fails, the purpose of this agreement was again frustrated and the value of the service could be recovered according to the same German principles of frustration described above. The amount of the spouse's claim is to be determined in the light of the individual circumstances of the case, including the character of the respective services, the duration of the marriage, and the financial circumstances of the couple. This way, the most that a spouse can receive is the market value of his or her services. Moreover, a claim will only to be granted where the distribution according to the marital property regime would cause an unacceptably unfair result, as, for example, might be the case if the couple had concluded a nuptial agreement that excluded a sharing of property.
C. (Almost) the Same Law for Cohabitants and Married Couples
Claims based on family-specific contracts were not allowed in favour of cohabitants for many years. Thus, in 1980 the Bundesgerichtshof held that, partnership law apart, no claims between cohabitants were possible. An unmarried couple did not form a legal union, since the couple had decided not to get married. To grant a claim for restitution in respect of expenses incurred for the couple would conflict with their wish to lead a personal, non-legal relationship.Footnote 124
Academic writers criticized this decision, arguing that the personal character of the relationship should not place it outside the law.Footnote 125 In its decision of 9 July 2008, the Bundersgerichtshof agreed and changed its case law.Footnote 126 As with married couples,Footnote 127 claims under the German doctrine of frustration should be possible for cohabitants.Footnote 128 Marriage was not necessarily any more stable than cohabitation, and the expectation that the unmarried relationship would endure could form an underlying assumption, which could be subject to frustration under section 313 BGB and thus justify restitution. Cohabitants and spouses alike could conclude family-specific contracts in order to make contributions for the joint purchase of valuable goods or houses with the underlying assumption that their relationship would last. In this context, however, marriage-related benefits (ehebedingte Zuwendung) were renamed community-related benefits (gemeinschaftsbezogene Zuwendung).Footnote 129 However, no restitution will be granted for contributions made in respect of the day-to-day expenses of the relationship, ‘which only make daily life possible’,Footnote 130 such as, for example, rent.Footnote 131 Courts distinguish between expenses that are spent and those which contribute to creating something of lasting financial value.Footnote 132 Under this approach, payments of the mortgage would trigger a claim, whereas expenditure on food and holidays or caring for the home and children do not. This approach is criticized as discriminating against the (usually female) homemaker.Footnote 133
The ‘German doctrine of frustration’ found in section 313 BGB allows restitution but is not part of the law of unjust enrichment, which is contained in sections 812–22 BGB. However, since 2008 a claim in unjust enrichment for restitution of the whole benefit transferred is considered possible (condictio ob rem, section 812(1) sentence 2, second alternative BGB)Footnote 134 in domestic disputes between former cohabitants. The German law of unjust enrichment generally follows an absence of basis approach. The condictio indebiti, governed by section 812(1) sentence 1st alternative BGB, provides that restitution is available when an enrichment is received without legal basis. So, for example, a payment made to satisfy a non-existent debt can be recovered. Contributions in the family context, however, are assumed to have a legal basis, whether it be a gift, which is understood as a contract in German law,Footnote 135 or a family-specific agreement, which would not cease or disappear retrospectively simply because the couple separated. Thus, recovery via the condictio indebiti was considered impossible. Moreover, such a contract also did not come to an end because of separation and divorce, so that a claim could not be granted under section 812(1) sentence 2, 1st alternative BGB, which allows the recovery of an enrichment received because of a legal basis that falls away later. The condictio ob rem allows the recovery of enrichments conferred on the basis of a shared purpose, or a purpose of which both parties were aware, and which failed.Footnote 136 Such a purpose can exist in relation to benefits transferred between cohabitants or between in-laws. Spouses, however, are assumed not to share such purposes since their joint life is regulated by matrimonial law. The condictio ob rem with its prerequisite of a joint assumption of both parties that later fails is roughly comparable to the unjust factor of failure of consideration in English law. However, while the condictio ob rem has its main or only applicationFootnote 137 outside contract law, failure of consideration is used in English law in both contractual and non-contractual relationships.Footnote 138
With its focus on agreements, German courts apply an autonomy-oriented approach. Commentators have long criticized the elaborate doctrinal constructions of the Bundesgerichtshofs as essentially fairness-orientated. Real agreements, it is argued, almost never exist. Gernhuber and Coester-Waltjen have argued that finding implied partnershipsFootnote 139 and family-specific contracts to be pure fictions.Footnote 140 Though cohabitants could, of course, establish partnerships and conclude contracts, it would be wrong for courts to imply they did so for reasons of fairness.Footnote 141 In almost all cases, the courts had ‘discovered’ partnerships to the surprise of the parties purely in order to ensure a fair result.Footnote 142 Leitmeier criticized restitution in accordance with the doctrine of frustration and the condictio ob rem as being all about good faith and fairness.Footnote 143
V. SIMILARITIES: PRIVATE LAW IN FAMILY CONTEXT
In all three legal systems, courts use legal devices usually applied outside family law in situations where people have combined their efforts and resources in a personal relationship without clear agreements. In the process, courts grapple with approaches which stress the intentions of the parties, which aim at ensuring fairness, or which try to provide compensation or restitution for contributions to the partnership that continue to enrich the other partner once the relationship has ended.
Commentators in all three countries have criticized the courts for using purely fairness-oriented tools and for having introduced case law that provides quasi-statutory regimes for failed unmarried relationships. Karsten Schmidt criticized the implied partnership as simply a substitute for a marital property regime for unmarried couples (Güterrechtssurrogat).Footnote 144 Lower has pointed out that the Canadian focus on the specific relationship hints at an attempt to create a judicially fashioned regime to replicate what is available at divorce.Footnote 145 Mee argued that Jones was imposing a special regime on ‘domestic’ relationships which used two artificial forms of intentions.Footnote 146 The UK Supreme Court in Jones praised the valuable work of the Law Commission while realistically stating that no action should be expected from the legislature, with the result that courts themselves had to find answers to the pressing problems.Footnote 147 Thus, in all three legal systems, it could be argued that the case law developed by the courts was a substitute for a non-existence of a family law regime for cohabitants.
As appealing as this argument is, however, it must be taken with a pinch of salt. Though the case law might function as substitute for a statutory regime, it is doubtful whether all judges working on domestic disputes had such far-reaching ideas. Moreover, in Germany, as we have seen, the legal tools used for cohabitants are also used for married couples. In England, the constructive trust is used between married couples who are not divorcing, in order to ascertain the rights of third parties, such as, for example, the debtors of one spouse.Footnote 148 Thus, courts have adopted special private law rules for intimate relationships in general. Where there is a lack of specific family-law rules, or where their application leads to results which judges consider unfair, be it for cohabitants or married partners who have concluded a nuptial agreement, the courts step in. It might be suggested, however, that the assumption of both the courts and legal scholars that cohabitation and marriage require the same private law rules has formed an important step in the legal recognition of unmarried relationships. The fact that German courts grant claims in unjust enrichment only to cohabitants and not spouses might suggest that the development is not yet complete in Germany.
The use of private law in the family law context is an interesting phenonmenon, given that our legal systems usually consider family law to be a distinct area of law.Footnote 149 In all three legal systems, however, the courts have applied the law slightly differently in the family context than they would have done in the commercial context.Footnote 150 In Stack v Dowden Baroness Hale remarked that ‘in law, context is everything, the domestic context is very different from the commercial world.’ Commentators have claimed that Stack has a ‘weak communitarian flavour’Footnote 151 and adopts a ‘context-specific approach’.Footnote 152 At least at the quantification stage, considerations of fairness and the whole course of dealings of the parties in relation to the property is used to infer or impute an agreement.
The Canadian Supreme Court has also held in Peter v Beblow Footnote 153 and Kerr v Baranow Footnote 154 that the family context required a different approach than the commercial context.
Even the German Bundesgerichtshof, which seldom engages in discussions of a non-doctrinal character and never acknowledges sociological research, applied a context-specific approach by developing family-specific contracts and partnerships.
VI. DIFFERENCES
Despite similarities in function and approach, the doctrinal approaches used in England, Canada and Germany differ considerably when studied in detail. The differences start with remedies. While German and Canadian courts prefer to provide monetary remedies, English courts concentrate on beneficial interests in specific rights to land. Thus, while a successful English claimant has a beneficial interest that is relatively secure should the former partner become insolvent, German and most Canadian claimants do not have the same security. While German claims are calculated in relation to the value of specific contributions to the partnership and fairness-orientated considerations, the Canadian approach of the ‘joint family venture’ allows the taking of a broader picture of the relationship and the wealth accumulated together.
The legal instruments used also vary considerably. German courts refer to a dazzling arsenal of contracts, agreements and joint intentions,Footnote 155 while English and Canadian courts use only one legal instrument each, the constructive trust and unjust enrichment. German and English courts, on the one hand, focus on the parties' intentions, requiring contracts and shared purposes, as in Germany, or joint intentions to share a beneficial interests in a piece of land, as in England. Canadian courts on the other hand concentrate on the actual relationship of the coupleFootnote 156 and benefits provided by one partner that still enrich the other.
The distinction between civil and common law first comes to mind to explain such differences. Germany is a civil law system. England is the ‘motherland’ of the common law. Canada has absorbed influences from both systems, especially in Quebec. Outside Quebec, there is a strong common law influence. In relation to the discourse on cohabitation in Canada, Leckey has cautiously observed that common law systems adopt a more functionalist approach, focusing on the realities of cohabitational relationships and their functional similarities with marriage, while civil law Quebec takes a more formalist, autonomy-oriented approach to cohabitation, focusing on the couple's decision not to get married.Footnote 157
The cautious approach to cohabitation in Germany fits this description of a civil law approach. The assumption that granting rights to cohabitants would infringe the autonomy of parties who choose not to get married is common in Germany as well. At first, German courts even moved cohabitants out of the legal arena altogether in order to respect their (alleged) decision not to form a legally relevant union. This might reflect German legal culture. Contracts and private autonomy in the marital context have always been considered important.Footnote 158 Moreover, Article 6 of the German constitution, the Basic Law, states that ‘marriage and family shall enjoy the special protection of the state.’Footnote 159 Though ‘special protection’ does not constitute a constitutional duty to treat other legitimate family forms necessarily worse than married couples,Footnote 160 this is frequently interpreted to mean that it would be unconstitutional to grant cohabitants the same rights as spouses.Footnote 161 The constitution, does not, however, forbid the courts or the legislator to grant cohabitants certain rights in order to provide some degree of protection.Footnote 162 In this context, the decision of the Bundesgerichtshof to apply private law almost equally to cohabitants and spouses is a big step towards bridging the gap between marriage and cohabitation.
Though a common law country, the English legislature is almost as hesitant as its German counterpart to introduce rights to spousal support and property distribution for cohabitants. In Jones and Stack, the focus was primarily on the parties' intentions. Their specific relationship is given more consideration than in German courts when it is looked at to determine those intentions.
In Canada, the background of the decisions discussed in this article is different again to that in England and Germany. There is extensive legislation on cohabitation in all provinces except Quebec. Moreover, unlike in Germany, where constitutional law might bar treating spouses and cohabitants alike, in Canada, where constitutional law also profoundly influences the legal system,Footnote 163 the exclusion of cohabitants from spousal rights has been discussed as a possible instance of discrimination for a long time.Footnote 164 In the 2013 decision of Quebec (Attorney General) v A, a mere five to four majority considered the exclusion of de facto spouses from any spousal rights constitutional.Footnote 165 This legal environment might encourage Canadian courts today to adopt a bolder, more functional approach than courts in Germany and England, as well as focusing on the realities of the relationship rather than on allegedly autonomous agreements.
It is doubtful whether it is appropriate, however, to describe an approach, such as the Canadian, that focuses on contributions as necessarily more functionalist and relationship-orientated. In Jones,Footnote 166 the contribution-oriented approach of the resulting trust was considered adequate only for a business relationship, where partners keep track of their contributions in order not to be short-changed. Moreover, the doctrinal tools developed in the three countries are not as clear-cut. German and English courts pay attention to contributions as well. Nevertheless, the destinction between autonomy-oriented approaches and enrichment-oriented approaches provides a useful starting point for discussing the doctrinal solutions more thoroughly.
VII. AUTONOMY
In England and Germany, courts use legal rules that are based on the parties' joint intention to share. Enforcing a common intention or contractual agreement to share despite their not being married, however, does not disrespect the (allegedly conscious) decision not get married but shows respect for the parties' autonomy. As Gardner and Davidson put it, the attraction of referring to the genuine agreements of the parties is that ‘it accords the parties control over their own affairs.’Footnote 167
Courts in both Germany and England have looked for indications that the parties have come to an agreement even where they fail to express it, orally or in writing. Contracts, partnerships and trusts can, of course, be created even by laymen who do not know what they are doing but have a clear idea of what they want. This is difficult in domestic situations, however, where the partners have no or very different, often unexpressed and changing ideas. Research has shown that couples do not often discuss financal or legal matters at allFootnote 168 and only rarely form agreements and common intentions. Even when it comes to decisions of considerable importance, for example, the purchase of a house, cohabitants often seem unable to discuss the issue at all and do not take legal advice.Footnote 169 These findings cast serious doubt on all autonomy-oriented solutions. The less clear the understanding of the couples in question, the more the courts tend to impute intentions that the parties never actually had, rather than infer their real intentions from their conduct. The search for actual agreements becomes overshadowed by the search for fairness. As discussed above, this phenomenon has been criticized by commentators in Canada, England and Germany.
In both England and Germany, courts oscillate between approaches which either stress the importance of the parties' actual intentions or assume intentions to share with an eye to fairness and the way the parties actually lived and organized their relationship. The German arsenal of contracts, partnerships and underlying assumptions seems so artificial that hardly any couple could form the necessary intentions without the retrospective help of a court. The problem of how to infer the ‘right’ intention is also evident in the English decisions of Stack v Dowden and Jones v Kernott, especially in the dissenting opinions in both decisions. Problems with an autonomy-orientated approach were also expressed in the Canadian case Kerr v Baranow. The notion of a common intention, Cromwell J held, could be highly artificial and the search for such an intention ‘easily become a mere vehicle and formula for giving a share of an asset, divorced from any realistic assessment of the actual intention of the parties’.Footnote 170
Moreover, if courts focused on the parties' true intentions, those would have to be enforced even if they were terribly unfair. However, so far, courts have not detected unfair intentions, which might suggest that the sincerity of the courts' commitment to autonomy in this area can be doubted. Indeed, Gardner and Davidson have questioned the importance of genuine common intentions in the domestic setting generally. In cases of an enduring economic partnership, the family constructive trust could give effect to the ‘implications of the parties' relationship’.Footnote 171 A genuine intention should not prevail over the implications of the actual family relationship.Footnote 172
The problem with the approach of Gardner and Davidson, however, is that it allows judges to modify contract and trust law to create a non-marital property law for cohabitants based on something that is not an agreement according to classical contract or trust law. Something like that, as desirable as it might be, might better be introduced by the legislator, rather than the courts.Footnote 173
VIII. ENRICHMENT
Another way of justifying claims is to allow for the recovery of contributions made to the partnership which continue to enrich the former partner after separation. This approach can be detected in parts of the classic resulting trust analysis as well. In Germany and Canada, as well as in ScotlandFootnote 174 and Australia,Footnote 175 the law of unjust enrichment is a well-established solution to cohabitation disputes. By contrast, in England, the law of unjust enrichment has yet to make an appearance in this area. However, following Stack v Dowden, Gardner and Sir Terence Etherton have argued that unjust enrichment should be used as a new doctrinal basis for family homes cases.Footnote 176 For a court to hold that the unjust enrichment of one partner could trigger an interest under a trustFootnote 177 is alien to a German lawyer, but is thought possible by many English commentators.Footnote 178 In Canada, remedial constructive trusts are granted by the courts. However, even if English and Canadian courts would only award claims in money rather than decide on beneficial interests, it is unlikely that the law of unjust enrichment could form a new universal as well as doctrinally sound justification for domestic relationships. First, neither an ‘absence of basis’ nor an ‘unjust factor’ approach can be adequately applied to domestic cases. Moreover, unjust enrichment cannot provide adequate solutions for long-term relationships.
A. Absence of Basis?
While English law traditionally follows an unjust factor approach, which requires a reason for restitution, such as, for example, that a payment was made because of a mistake, the late Peter Birks argued that English law had developed its own absence of basis approach.Footnote 179 Sir Terence Etherton argues that an absence of basis approach could easily explain a family constructive trust, because contributions to the family and the family home were clearly made without legal basis and we have seen how, the Supreme Court of Canada held in Peter v Beblow Footnote 180 that there was no juristic reason for these contributions since cohabitants were not obliged to provide services to the family. However, the question of what the juristic reason might have been was not even discussed. The German experience, however, shows that the doctrinal character of such contributions and their legal bases cannot be left at large. Otherwise, the law of unjust enrichment could be turned into a purely fairness-oriented device.
As long as transfers between spouses were considered gifts in Germany, restitution due to absence of basis was not possible purely because the relationship had broken down. In England, even those academics who support an absence of basis approach consider ‘gift’ to be a legal basis.Footnote 181 When the gift-analysis was abandoned in Germany, another legal basis had to be found, otherwise each contribution would have been recoverable the moment it was made. Such an analysis would, for example, have led to problems with respect to limitation periods. As long as the couple was living together, the claim would constantly change with every service each party provided for the other, creating a kind of ‘ambulatory enrichment claim’. Moreover, a debtor of one partner could claim those rights in unjust enrichment against the other partner in court to cover debts. It will be interesting to see whether the question of when and how the claim in unjust enrichment arises will ever be relevant for a Canadian court.
To avoid such a free-floating claim, in Germany, the family-specific contract was developed, not only to allow for the application of the principle of frustration but also to provide a legal basis for relationship-related benefits and services. Under this principle, restitution is only possible once the relationship has broken down because only then is the assumption underlying the contract frustrated. It is doubtful that the German analysis of a contribution made because of a family-specific agreement would be convincing for an English or Canadian lawyer, however. English law does not easily assume that members of a family have concluded contracts, on the ground that they usually lack the intention to create legal relations.Footnote 182 Moreover, it would be difficult to detect consideration in such cases. Finally, it cannot be denied that this construction is highly artificial and might, rather, form an argument for English law not to move to an absence of basis approach at all. Though the German construction might not be attractive from a Canadian perspective either, it should help raise the question of what a juristic reason between cohabitants should be. With an eye to the overall concept of unjust enrichment, it should be discussed if there is no juristic reason from the beginning or if there is one that falls away later.
B. Unjust Factor?
If a traditional unjust factor approach as used in England and formerly used in Canada was applied to cohabitation cases, a suitable unjust factor would have to be articulated. General ideas of fairness would certainly not be enough and provide no advantage compared to the established constructive trust analysis in England, even if courts awarded monetary claims in the future and not discover beneficial interests.
It is unlikely that the relevant contribution to the purchase of a home could be said to have been made by mistake, because cohabitants usually know that their partner has no right to their payments. Rather, they are made in the shared hope that the relationship will endure and that both parties will benefit from the investment. If the relationship fails, it cannot be said that a mistake in the legal sense was made. Even if one agrees with the English approach that gifts should be easier to recover than payments made under a contract,Footnote 183 it would give the law of unjust enrichment a precariously broad scope to protect mere hopes.
German law provides the condictio ob rem to allow restitution for an enrichment that the claimant was not legally obliged to make but which was made because of an expectation that later failed.Footnote 184 Though the scope of the claims is slightly different, the condictio ob rem is comparable to the English unjust factor of failure of consideration, which shows that even German law does not follow a pure absence of basis approach. Restitution according to section 313 BGB, the doctrine of frustration, is not considered a response to unjust enrichment in German law. In England, failure of consideration has so far not been considered in the family context. However, even if it was, such analysis of the family constructive trust, as a response to failure of consideration, would run into serious problems. On the one hand, Birks, who argued that interests under trusts can be triggered by the trustee's unjust enrichment, only did so where the enrichment was unjust from the moment of receipt (initial, not subsequent failure).Footnote 185 However, under a failure of considerationFootnote 186 analysis, the enrichment becomes unjust only later, at the point when the relationship fails. Burrows, on the other hand, asks if the claimant had taken the risk of the defendant's insolvency.Footnote 187 Applying this analysis, an interest under a trust should also be denied because, at the time contributions were made, the claimant assumed that a durable relationship existed which involved sharing expenses and risks. In that situation, one must assume that a risk of the other's insolvency was taken on as well.
Even if English courts only awarded monetary remedies, an unjust enrichment analysis would not provide a convincing solution. For failure of considerationFootnote 188 and for the German condictio ob rem,Footnote 189 it is not enough that the claimant alone hopes that the defendant behaves in a particular way. There must instead be a shared understanding which links the benefit to the expectation. Because some sort of agreement or understanding must be detected in order to fulfil this requirement, this brings us back to the problems of the ‘autonomy-approach’ discussed above. This precondition was stressed by the Bundesgerichtshof in 2009.Footnote 190 A general hope and trust in the stability of the relationship was not sufficient for the court to find an understanding of such a nature as to justify a claim in unjust enrichment. Thus, Lieb forcefully argued that the condictio ob rem is unsuitable for ordering restitution in family cases since, in the majority of cases, such an understanding would not be present.Footnote 191 An understanding or agreement specific enough to justify the application of the condictio ob rem in Germany, or to allow for a monetary claim because of failure of consideration would probably be enough for an English court to find in favour of the creation of a family constructive trust. This analysis explains not only why an unjust enrichment approach would not be preferable for English law but also why the German condictio ob rem might not lead very far either.
C. Remedies and Long-Term Relationships
There are even more problems with an unjust enrichment approach. The first is that it requires courts to determine what should count as a valuable contribution worthy of recovery. In England, following the retirement of Lord Denning in 1982, courts have not awarded beneficial rights in response to home-making.Footnote 192 In Germany, only direct contributions to the purchase price of property that continue to enrich the other party after separation trigger claims for reimbursement. German law does not allow restitution for contributions for everyday expenses or for home-making.Footnote 193 Canadian law, on the contrary, considers home-making a valuable benefit.Footnote 194 The Canadian perspective seems more convincing, at least in cases where the value of home-making can be quantified. The German approach discriminates against the homemaker and devalues services essential to the family. That they might have been done ‘for love’ does not mean they are worthless. But even if that problem could be overcome, we would still need to assign an adequate economic value for home-making. As in matrimonial law, this could be determined in relation to the income of the breadwinner. This would reflect the notion of a partnership of equals but would mean that the home-making of a billionaire's partner would be much more valuable than that of a poor person's partner. In order to achieve a more objective result, courts could look at the market prices for such services. This, however, would treat the partner as a hired nanny, cook, or cleaning person, a result that would fail to recognize the parties' joint efforts.Footnote 195 Moreover, applying this approach would not always help homemakers, since courts would have to allow counter-claims for the breadwinner's expenses for rent and food as well. If the couple led a luxurious lifestyle and the homemaker's services were evaluated like those of a cleaner, she might accumulate debts despite her services during the relationship.
Moreover, it is questionable whether the rules of unjust enrichment are fit to be applied to long-term relationships. Cohabitation can be like marriage, a long-term relationship during which parties contribute and consume according to their changing needs and abilities. The partner who contributed money to buy a house might need intensive care after a stroke, as in Kerr v Baranow. A partner who has paid all family expenses may lose her job so that the homemaker needs to go back to work. The longer the partnership lasts, the more difficult it is to trace different contributions and translate them into claims and counter-claims. The ‘joint family venture’ of the Canadian Supreme Court dispenses with the ‘artificial balance sheet approach’Footnote 196 by allowing a claim to a proportionate share of the accumulated wealth. However, under the established law of unjust enrichment, it is not possible to award a share in the partner's wealth; rather, a specific enrichment needs to be given up.Footnote 197 This shows again that unjust enrichment is not fit to be used in a long-term relationship. The joint family venture, as meritorious as the subject is from a policy perspective, seems alien from a doctrinal perspective and moves the law of unjust enrichment too much into a direction of fairness.
IX. WHERE NOW? LEGISLATIVE SOLUTIONS
The solutions developed by German, Canadian and English courts vary considerably in their doctrinal approach and it seems unlikely that adopting the approach of another legal system would improve the situation. Each approach is deeply entrenched in the legal and social culture and reflects in some way the general approach to cohabitation—either stressing the autonomous intentions of the parties or their contributions to the relationship.
To date, a completely convincing doctrinal solution has not been found. The reason might well be that the private law rules presently applied were not developed to fit the characteristics and needs of long-term personal relationships. The private law rules applied by the courts so far focus on agreements truly concluded and enrichments actually conferred, but it is the development of the relationship over time and its economic effects which need to be in the spotlight.
Courts could develop specific rules for family relationships, making it clear that they are modifying the traditional rules of trusts, contracts and unjust enrichment in order to meet the needs of unmarried cohabitants. It is questionable, however, if such an approachFootnote 198 is the best way forward. It would be preferable for legislatures to provide specific statutory rules outside the established common law rules of trusts, contract and unjust enrichment, and the nineteenth-century contract and unjust enrichment rules of the German civil code.
This is not to say that in the absence of legislative actionFootnote 199 courts must not address the problem. In the three jurisdictions considered in this article, courts do not violate constitutional law and the rights of the legislature by developing case law on the property rights of former cohabitants. In Canada and England, both common law systems, case law is an important source of law. Though it was formerly assumed that judges do not create but rather pronounce the law,Footnote 200 it seems the universal position in common law jurisdictions today that judges are meant not only to resolve the particular dispute before them but also to create law when doing so.Footnote 201
Germany, however, is a civil law jurisdiction that does not accept that judicial decisions constitute binding precedents.Footnote 202 Nevertheless, developing private law by the interpretation of statutory rules in de facto binding precedents is considered an important function of Germany's highest courts. In a decision of 11 July 2012, the German Constitutional Court held that the development of the law by the courts is not an infringement of constitutional law as long as courts do not contradict legislative intent.Footnote 203 The older a statute, the more necessary an adjustment by means of case law.Footnote 204 It is a matter of debate, whether the rules the courts create by interpreting statutory law can be considered ‘law’Footnote 205 and if, given the absence of a rule of binding precedent, people may rely on previous decisions.Footnote 206 Whatever label one may put on the case law on cohabitation, and whatever position one might take with respect to its doctrinal quality,Footnote 207 however, it is submitted that it does not violate constitutional law. Given that the German Civil Code was drafted in the nineteenth century, at a time when unmarried cohabitation was considered unacceptable, developing rules for cohabitants can be regarded as a constitutionally acceptable adjustment to modern developments.
However, although the courts' creation of case law relating to unmarried cohabitants is not an unconstitutional usurpation of the legislature's power, it is argued that a specific statutory regime would be preferable to judge-made law in all three legal systems. Judges are not ideal lawmakers. Their decision-making is focused on deciding the case before them.Footnote 208 Only the legislature can properly weigh the different values, policy options and their implications for individuals and the community.Footnote 209 Moreover, research rightly stresses the diversity of cohabiting couples.Footnote 210 For some couples, informal cohabitation constitutes a functional equivalent of marriage, for others it is a precursor to the commitment of marriage. It would be desirable for the law to provide a comprehensive framework of rules covering such different cases, informed by consultation and research—something that a court lacks the resources to do and to which the procedural constraints of bilateral litigation do not readily lend themselves. Moreover, though there is no constitutional duty for parliamentarians to legislate on the specific issue of cohabitation,Footnote 211 politically, it seems desirable that the people's elected representatives engage in important issues themselves.Footnote 212 Unmarried cohabitation is such an important issue. It is time for the legislator to tackle the problem of unmarried cohabitation as a whole, ensuring the public debate necessary in a democratic society. Marital property, maintenance and child custody is regulated by statute in Canada, Germany and England. The law of unmarried cohabitants should also be regulated by specific statutory provisions.
In Canada, after the decision in Quebec (Attorney General) v A Footnote 213 was handed down on 25 January 2013, legislative action, not a court decision, will set out the way forward as well. The former partner of a wealthy entrepreneur argued that the exclusion of cohabitants from spousal rights in Quebec law amounts to discrimination under section 15 of the Canadian Charter of Rights and Freedoms. While a majority of five justices considered the exclusion of de facto spouses from spousal rights to be an infringement of section 15 of the Charter, a majority of five justices decided that the Quebec law was constitutional. McLachlin CJ, who considered the approach of Quebec an infringement of section 15 but justified under section 1 of the Charter, was the only justice who voted with the majority on both issues. The majority, accepting freedom of choice and party autonomy as important policy considerations,Footnote 214 considered Quebec law that leaves it to cohabiting couple to create rights by marriage or the conclusion of a cohabitation agreement, constitutional. However, the decision does not make legislative action in Quebec unnecessary, quite the opposite. Abella J, speaking for the minority, raised important problems about the actual limits of freedom of choice and the economic disadvantages many cohabiting partners, especially women, face.Footnote 215 Such economic disadvantages made the introduction of marital rights and constructive trusts in favour of divorced women necessary and were just as important after the breakdown of an informal relationship.Footnote 216 Now, however, the legislature, not the Supreme Court should decide on the rights of cohabitants in Quebec.Footnote 217
Many suggestions have already been made as to how to regulate the rights of unmarried cohabitants.Footnote 218 In some legal systems, statutory rules are already in force, as for example in New Zealand,Footnote 219 New South Wales in Australia,Footnote 220 Scotland,Footnote 221 and Ireland.Footnote 222 Only some brief thoughts will be added here. The first problem faced by legislation on unmarried cohabitants is determining the point at which a statutory regime should become applicable. Unlike married couples or civil partners, informal cohabitants do not register their union and would probably not do so even if an alternative regime, like the French PACS,Footnote 223 were to be offered. The birth of a child, however—a crucial turning point for any relationship—might be taken as a starting point. If the couple has no children, legislation could become applicable after the couple has lived together for a minimum number of years, as the Law Commission has suggested.Footnote 224 However, some legal regimes, such as the Scottish Family Law (Scotland) Act 2006, lack such a minimum duration requirement and have not experienced any problems because of it. Properly tailored requirements for financial remedies seem to be enough to ensure that a regime is not applied too broadly.Footnote 225
Next, the rights cohabitants should enjoy need to be discussed. One could apply the same regime for married and unmarried couples. In Germany, as discussed above, it would be doubtful if such a statute would be constitutional. Leaving German constitutional law aside, the most common argument brought forward against applying marital law to cohabitants is that if couples have decided not to get married it would be wrong to force them into the same legal framework. In the Supreme Court of Canada decision in Miron v Trudel,Footnote 226 by Abella J in Quebec (Attorney General) v A Footnote 227 as well as in recent research, serious objections against this ‘autonomy argument’ have been expressed. Couples often make no conscious choice not to get married, or are mistaken about the rights of unmarried cohabitants.Footnote 228 Sometimes, the economically stronger partner, often the man, refuses to get married.Footnote 229
As important as these findings are, however, autonomy should not be disregarded completely. The ability to decide one's own affairs responsibly and independently is not only important in all areas of law, including family law, but in human life in general.Footnote 230 To treat cohabitants and spouses alike in every situation would fail to respect the fact that for whatever reason unmarried partners have not chosen to marry. In Quebec (Attorney General) v A, the majority also stressed the importance of freedom of choice and party autonomy as policy considerations.Footnote 231 In order to strike the right balance between necessary protection and party autonomy, it is crucial to determine the situations in which unmarried cohabitants require protection. In this context, again, the diversity of cohabiting couples needs to be kept in mind.
Two areas can be identified where the legislature should, however, step in. First, the question of whether a couple is married should not affect their children.Footnote 232 Thus, for example, rights to maintenance or the right to stay in the family homeFootnote 233 should be the same for married and unmarried parents as long as the couple's children benefit directly from it.
Second, autonomy cannot justify the exploitation of a weaker party. How this protection should be ensured, is a matter of debate. The same principles as in marital property law—compensation, needs and sharingFootnote 234—must be considered with regard to cohabitation. Barlow has favoured an approach that provides rights in order to fulfil the former partner's needs.Footnote 235 The Law Commission for England and Wales,Footnote 236 section 28 of the Family Act (Scotland) 2006,Footnote 237 and also Schwenzer and DimseyFootnote 238 proposed a legislative scheme that focuses on compensating economic advantages and disadvantages caused by the relationship. Relevant disadvantages could, for example, be losses in income and pension rights suffered because one cohabitant, typically the woman,Footnote 239 reduced her paid work in order to concentrate on raising children and home-making. The birth of a child often results in a loss of income and financial independence for the mother.Footnote 240 This burden should be borne by both parents. Moreover, couples often start pooling their financial resources when a child is born,Footnote 241 acting like an economic unit in the same manner as spouses. This responsibility assumed during the relationship should not end completely when the relationship breaks down. A person who made contributions to the joint home, be it in buying food, taking care of the home or family or financial contributions, should receive some compensation for this expense because his or her partner derived an economic advantage from the relationship.
However, it is questionable whether someone who cannot work due to ill health should be supported by their former partner in situations where the person would have fallen ill anyway, irrespective of any question of advantage or disadvantage as a result of the relationship. Caring for people who can no longer work is the responsibility of the community rather than a former cohabitant, who might have a moral but not a legal obligation to help. With their marriage vows, spouses promise to take care of each other and can thus be asked to support each other even after a divorce. Cohabitants, for whatever reason, have not taken this step.
Thus, the approaches of the Family Act (Scotland) 2006 and the Law Commission seem promising. They allow an adequate allocation of the economic risks of the partnership by preventing the exploitation of the other partner, while acknowledging some differences between marriage and cohabitation. This approach acknowledges the worth of financial contributions as well as taking care of children or a sick partner, something that would be very difficult to achieve through the application of unjust enrichment or trust law. In order to resolve cases concerning jointly bought property, financial expenses on the purchase or renovation of that property that still enrich the other partner could also be compensated.
However, not every disadvantage and financial contribution to the relationship requires compensation. They are also extremely difficult to calculate correctly. Thus, as in marriage law in England, the judge requires some discretion when making a decision. Still, this discretionary decision-making would be different from today's case law. Fair compensation could be granted according to a number of factors as in the schemes in force not only in many Canadian provinces but also in New South Wales in Australia,Footnote 242 Scotland,Footnote 243 and Ireland.Footnote 244 Such discretionary schemes are widely accepted in common law systems. In Germany, where judicial discretion in family law is less common, such a scheme would probably be described as alien to German legal tradition. However, such criticism would not be accurate. The case law applied in Germany today has already introduced a quasi-discretionary scheme. A scheme that set out some relevant factors for judges to take into account when deciding cases, rather than leaving them with contracts and unjust enrichment, would be a big step forward.
Another important question would be whether the new legislative scheme should provide for the possibility of opting out. Marital property agreements become increasingly important for married couples in England,Footnote 245 CanadaFootnote 246 and Germany.Footnote 247 It would seem that cohabitants, just like spouses, should have the opportunity to negotiate the terms of their relationship. However, as with marital property agreements, adequate protection of the weaker party is necessary to ensure that new safeguards are not bargained away.
X. CONCLUSION
Canadian, English and German courts have developed different approaches when deciding cases on the property rights of cohabitants. The law of unjust enrichment, trusts, partnership and contract are all applied. The comparison given above may make us more aware of the similarities between, and difficulties of, the approaches that have been taken. A completely convincing doctrinal solution has not yet been found. Though the development of the law by courts is accepted not only in common law systems such as Canada and England but also in Germany, the time is ripe for a legislative solution in the form of a specific statutory scheme that ensures a proper balance between party autonomy and the function and needs of the relationship. It is time that not only our courts, but also our societies accepted their responsibilities to regulate cohabitation by specific statutory regimes drafted and agreed upon by our elected representatives.