By Rebecca Winninger, Senior Associate Lawyer, Lam Family Law*

In Martin v. Sansome (2014), the Court of Appeal for Ontario (“ONCA”) held that in the “vast majority” of cases, unjust enrichment between married spouses will be fully addressed by the equalization provisions of the Family Law Act, including unequal division under s. 5(6). The ONCA left “for another day” the issue of how courts should address “rare cases” where the equalization provisions will not adequately unjust enrichment: Martin v. Sansome, 2014 ONCA 14 (CanLII), at paras 64-67.

That day has not yet arrived for the ONCA, but it did for the Ontario Superior Court of Justice in Mullin v Sherlock (2023). In this case, the applicant wife successfully claimed $3,000,000 in monetary damages for unjust enrichment, calculated on a joint family venture basis. The wife argued that she gave up her career in architecture to work for the husband’s company. She contributed to the company’s growth, but her pay was not commensurate with the value of her work. She relied on the husband’s assurances that “she was investing in their joint retirement.” The wife also maintained the parties’ properties, and attended to other domestic responsibilities: Mullin v Sherlock, 2023 ONSC 3744 (CanLII), at paras 11-15.

Conversely, the husband argued that the wife was a salaried employee and was compensated for her time and effort. She did not help “build” his company, and it was “exceedingly rare” for a married spouse to prove a joint family venture: at paras 37-39 & 41.

The wife was not claiming equalization, due to the husband’s failure to provide necessary financial disclosure. For his part, the husband could not claim equalization because his Answer had been struck for non-disclosure: at paras 18 & 71. His failure to disclose was confirmed by the ONCA in 2018 when it upheld the decision to strike his Answer – Justice Pepall noted in that decision that the husband had failed to provide information required “to assist in establishing…the wife’s equalization of net family property claim”: at paras 71-72, citing Mulllin v. Sherock, 2018 ONCA 1063 (CanLII), at para 51. [Note: Vanessa Lam has previously written about the ONCA’s decision here: Mullin v. Sherlock: ONCA Provides Framework for Motions to Strike Based on Non-Disclosure and Encourages Alternative Remedies].

Justice Bloom observed that in Martin v. Sansome (2014), the ONCA allowed that there may be situations where equalization is not a sufficient remedy for unjust enrichment. This was such a case, given that the wife could not pursue equalization due to the husband’s non-disclosure: at para 72.

Justice Bloom went on to hold that the wife had discharged her onus to prove an unjust enrichment, and ordered a monetary remedy of $3,000,000 based on 50% of the value of the husband’s company: at paras 122 & 128-129. The wife’s contributions (both domestic and non-domestic) were equal to those of the husband in creating the company’s $6,000,000 value: at para 129.

The breadth of Justice Bloom’s holding is open to debate, but a reasonable interpretation is that if there is no equalization claim before the court through no fault of the party claiming unjust enrichment, then the court may quantify damages on a joint family venture basis. Cases of this kind will likely continue to be rare, but Mullin v Sherlock (2023) is a useful reminder to pursue exceptional relief where there is a principled basis for it.

*with thanks to Vanessa Lam and Maria Golarz for their suggestions and edits.