Case Comment: The Importance of Putting Agreements with Family Members in Writing

Contracts between family members are enforceable if the parties intended to create legal relations, just like any other contract. The problem is that communications in the family context are often no more than statements of intent or wishes, which do not rise to the level of a binding agreement. Arrangements between family members are often more casual, and may not be reduced to writing. The “agreement” may also be more akin to a gratuitous promise, where only one party is truly receiving a benefit form the “deal”. All of this creates problems when it comes time to try to enforce an alleged agreement with a family member.

The B.C. Supreme Court case of Siemens v. Munroe, 2020 BCSC 1862 is a recent example of this. In Siemens, a 31 year old son alleged that his mother breached an agreement that he would receive an interest in property registered in his mother’s name. The mother had approached her son and proposed that she move into a suite in her residence, and allow her son and his family to move into the main floor of the house. The mother would keep the equity she had built up in the property, and the mother and son would share the costs of the mortgage and utilities. Subject to the mother’s equity, the son would become a 50% owner in the residence.

The agreement was never reduced to writing.

The parties proceeded with the agreement. The son and his family moved in, and the son paid his share of the mortgage payments and utilities. However, there were difficulties adding the son’s name to title. The son became frustrated, and the relationship between mother and son deteriorated. The son sent a series of “unfortunate and hurtful” text messages to his mother.

First, the Court considered whether there was a binding agreement between the parties and concluded that there was no such agreement.   A promise that was made because of the familial relation of the parties, or out of “natural love and affection” cannot form the basis of a contract. There must be actual consideration exchanged between the parties. While both the son and the mother suggested they were entering into the arrangement to assist the other, the Court observed that the son really benefited more from the arrangement. His family got a larger home, for less than the cost of their smaller condominium, and they were able to rent and later sell their condominium.  There was also not sufficient certainty on all of the terms of the agreement to create a binding contract.

However, the son was entitled to a 50% interest in the property (after deducting the mother’s prior equity), on the basis of unjust enrichment. The mother was enriched through the son’s contribution to the mortgage payments.

The mother consistently (including at trial) acknowledged that subject to her equity she still considered her son to have a 50% interest in the property. Her statement that she was morally bound by the arrangements did not create a contract between the parties. However, it was an important factor when considering an equitable claim in unjust enrichment, where the court will look at the parties’ reasonable expectations.

A theme throughout the judgment was the emotional toll that this has taken on the relationship between the mother and son. The judge notes at the beginning of her reasons that the case cried out for a creative solution that the parties could unfortunately not reach. She deliberately refrained from repeating the text messages sent by the son to her mother in her reasons, “as doing so would serve no useful purpose.”

It can be awkward to insist that that arrangements with your own family members be reduced to writing, and we have an tendency to avoid uncomfortable discussions. This case is a good reminder that the failure to have those conversations up front may result in greater discomfort (and a lawsuit) down the road.