Unjust Enrichment Ontario: Protect Your Property Rights After a Common-Law Separation

In Ontario, a widespread and dangerous misconception exists among unmarried couples: the belief that after three years of cohabitation, “common-law” status grants the same property rights as a legal marriage. This assumption is legally incorrect. And when a common-law couple separates, it often leads to a devastating financial reality for one party.

Sure, three years of cohabitation may matter for spousal support entitlement, but it does not create automatic rights to share property.

Under Ontario’s Family Law Act (FLA), married spouses may be entitled to an equalization payment based on the increase in each spouse’s net family property during the marriage. Common-law partners, on the one hand, have no such automatic statutory right.

In simpler terms, the default rule for unmarried couples is generally separation of property: what is yours is yours, and what is mine is mine, unless an equitable claim (such as unjust enrichment) is proven.

However, the law recognizes that strict adherence to title can be fundamentally unfair, particularly where one partner has contributed significantly, whether financially or through labour, to property owned by the other.

To address this inequity, Ontario courts utilize the equitable doctrine of unjust enrichment. This legal mechanism allows a non-titled partner to seek compensation or a share of ownership (a constructive trust) by proving that their contributions enriched their partner without legal justification.

What is Unjust Enrichment in Ontario?

Unjust enrichment is an equitable claim that prevents one person from unfairly benefiting at another person’s expense. In common-law separations, it is often used when property is in one partner’s name, but the other partner contributed money, labour, or sacrificed opportunities in a way that helped build or preserve that property or wealth. In Ontario, if the court finds unjust enrichment, it can order compensation—sometimes including a share of the value created during the relationship.

The Legal Test: Proving Unjust Enrichment in Ontario

Unjust enrichment is not simply a vague appeal to “fairness.” It is a rigorous three-part legal test established by the Supreme Court of Canada in Pettkus v. Becker and refined in Garland v. Consumers Gas Co. To succeed, a claimant must prove all three of the following elements on a balance of probabilities:

1. Enrichment of the Respondent

The claimant must demonstrate that the other partner (the respondent) received a tangible benefit. This enrichment is not limited to direct cash payments. It encompasses:

• Direct Financial Contributions: Mortgage payments, funding renovations, or paying down property taxes.
• “Sweat Equity”: Unpaid labour that improved the property, such as framing a basement, landscaping, or managing a major renovation.
• Indirect Contributions: Domestic services, childcare, or household management that allowed the respondent to focus on their career and wealth accumulation, free from those domestic burdens.

2. Corresponding Deprivation of the Claimant

There must be a clear link between the respondent’s gain and the claimant’s loss. The claimant must show that they suffered a deprivation, whether it be a loss of money, time, or opportunity, that corresponds to the benefit the respondent received.

For example, a partner who leaves the workforce to raise children suffers a deprivation of income and career advancement, which corresponds to the other partner’s ability to maximize their earnings and acquire assets.

3. Absence of Juristic Reason

This is often the most litigated element. The claimant must prove there is no legal reason for the respondent to retain the benefit. The court conducts a two-stage analysis based on Garland v. Consumers Gas Co.:

• Established Categories: The claimant must show the enrichment does not fall into an established category such as a contract (e.g., a cohabitation agreement), a disposition of law, or a gift.
• Reasonable Expectations & Public Policy: If no established category applies, the defendant may point to the parties’ reasonable expectations or broader public policy considerations as a reason why the enrichment should not be reversed.

The “Joint Family Venture”: Maximizing the Claim

Historically, compensation for unjust enrichment in Ontario was calculated on a “fee-for-service” basis (quantum meruit) or paying the partner the going rate for a housekeeper or gardener. This often resulted in awards that failed to reflect the true partnership of the relationship.

In the landmark decision of Kerr v. Baranow (2011), the Supreme Court of Canada introduced the concept of the Joint Family Venture (JFV). If a JFV is established, the remedy is not merely back-pay for chores, but a share of the wealth accumulated during the relationship (the “value survived” approach). Whether a relationship qualifies as a joint family venture is highly fact-specific, and courts will not presume it simply because a couple lived together for many years.

To determine if a Joint Family Venture existed, courts examine four key indicators:

1. Mutual Effort

Did the parties work collaboratively toward common goals? Evidence includes pooling of resources, shared domestic labour, and raising children together.

2. Economic Integration

How intertwined were the finances? Look for joint bank accounts, a “common purse” for expenses, or one partner covering household costs while the other invests.

3. Actual Intent

Did the parties act as if they were a partnership? This includes holding themselves out as a couple to the public, long-term cohabitation, and wills naming each other as beneficiaries.

4. Priority of the Family

Did one party prioritize the family unit over their personal gain? Examples include relocating for a partner’s career or turning down a promotion to manage the home.

Recent Developments: Mullin v. Sherlock (2025)

Mullin v. Sherlock (2025) shows how these principles continue to evolve in Ontario. The Court of Appeal confirmed that unjust enrichment can still matter in exceptional cases (even for married spouses) where a long period of pre-marriage cohabitation makes the equalization result unfair.

In Mullin, the parties cohabited for over a decade before a brief marriage. The wife contributed significantly to the husband’s business during the cohabitation. The Court upheld a substantial award based on the “value survived” approach, reinforcing that where a Joint Family Venture exists, the claimant is entitled to a proportionate share of the value created by the partnership.

While Mullin involved a married couple, its reasoning was still helpful for common-law claims. It shows what courts look for when deciding whether a relationship was a joint family venture and how they may calculate a “value-survived” award, especially where one partner contributed to the other’s business or property.

Remedies: Money vs. Property Rights

Once unjust enrichment is proven, the court must determine the remedy. There are two primary forms:

1. Monetary Award (The Primary Remedy)

Courts prefer to award a cash payment. Under the Kerr v. Baranow framework, if a Joint Family Venture is found, the award is calculated as a share of the wealth accumulated (value survived) rather than a wage for services (value received).

• Calculation: If a couple’s net worth increased by $500,000 during the relationship due to their joint efforts, and the claimant contributed equally to the JFV, they might claim 50% of that increase ($250,000), regardless of who holds title to the assets.

2. Constructive Trust (The Proprietary Remedy)

In cases where a monetary award is inadequate, the court may impose a constructive trust. For example, if the respondent cannot pay cash, or if there is a specific, strong link between the claimant’s contribution and a specific property, such as a house.

• Effect: This gives the claimant a beneficial ownership interest in the property. They effectively become a co-owner, entitled to a percentage of the property’s current value and any future appreciation.
• Constructive Trust Requirements: To obtain a constructive trust, the claimant must generally show (1) that a monetary award is inadequate, and (2) a “sufficiently substantial and direct” link between their contribution and the acquisition, preservation, maintenance, or improvement of the specific property.

Limitation Periods: The Clock is Ticking

Potential claimants must act quickly. The general limitation period for civil claims in Ontario is two years from the date the claim is discovered—often, but not always, around the date of separation.

However, the Ontario Court of Appeal ruled in McConnell v. Huxtable that if the claim seeks a remedial constructive trust against real property (land), the limitation period is 10 years under the Real Property Limitations Act.

Warning: Relying on the 10-year period could be risky. If the court concludes the proper remedy is money rather than a claim to an interest in land, the claim may be treated as subject to the two-year limitation period, potentially barring recovery.

Defences: The Cohabitation Agreement

The most effective defence against an unjust enrichment claim is a valid Cohabitation Agreement (or domestic contract). A properly drafted agreement can explicitly state that neither party acquires an interest in the other’s property during the relationship, regardless of contributions. This contract serves as a “juristic reason” for the enrichment, effectively blocking the third step of the test.

Full financial disclosure and independent legal advice greatly increase the likelihood that the agreement will be enforced and reduce the risk of it being challenged later. This ensures that any waiver of rights is informed and voluntary.

In Summary

While the term “common law” suggests a degree of legal protection, Ontario’s property laws for unmarried couples are complex. There is no automatic 50/50 split. Instead, partners must navigate the nuanced and evidence-heavy terrain of unjust enrichment and Joint Family Ventures to secure their financial future. As illustrated by recent decisions like Mullin v. Sherlock, courts are willing to recognize the economic reality of long-term partnerships, but only when the evidence is clear and the legal arguments are precise.

Whether you are separating from a long-term partner and seeking your fair share or looking to protect your assets entering a new relationship, legal guidance is essential.

Take Control of Your Financial Future with Nihang Law

Don’t rely on myths to protect your assets. If you are navigating a common-law separation or want to draft a Cohabitation Agreement to prevent future disputes, contact us today. Our experienced family law litigators can assess your contributions, evaluate your potential claims for unjust enrichment, and help you achieve the resolution you deserve.

Call us at 416-321-0353 or visit nihanglaw.ca to schedule your consultation.