By Vanessa Lam, Strategic Advisor and Research Lawyer, Lam Family Law*

This post is part of our “Back to Basics” series, which provides an overview of key family law topics.

In Ontario, the law is often the same regardless of whether the parties are married. However, property rights differ significantly for married versus unmarried (common law) spouses.

In this post, we explain the framework and guiding principles for property division in Ontario. We outline the default regime for married spouses, and contrast it with equitable claims that may be made by unmarried spouses.

Married Spouses: Equalization

In Ontario, married spouses are subject to property equalization as set out in Part I of Ontario’s Family Law Act, RSO 1990, c. F.3 (“FLA”), unless they have contracted out of this default regime. Under this regime, each married spouse is presumed to be entitled to equal sharing of the value their property gained during the marriage. This sharing is through an equalization payment that is usually paid by the spouse who has more money to the spouse who has less money.

The purpose of equalization is to recognize that child care, household management, and financial provision are the joint responsibilities of the spouses and that inherent in the marital relationship there is equal contribution, whether financial or otherwise, by the spouses to the assumption of these responsibilities: FLA, s. 5(7).

This equalization is triggered upon separation, divorce, or the death of a spouse. To enforce it, a spouse must apply within the earliest of:

  • 6 years from separation;
  • 2 years from divorce;
  • 6 months from the other spouse’s death: FLA, s. 7(3).

Steps to Equalization

  1. Determine each spouse’s property and debts at the valuation date (note this is usually the date of separation).
  2. Subtract the value of assets owned on the date of marriage, except for the matrimonial home, which remains included in the valuation date assets.
  3. The result is each spouse’s net family property (“NFP”).
  4. Compare both spouses’ NFPs. The spouse with the higher NFP must make an equalization payment to the other of half the difference. E.g., if the husband’s NFP is $500,000 and the wife’s NFP is $100,000, the difference is $400,000. Half of $400,000 is $200,000, so the husband would owe the wife $200,000.

Exclusions and Special Rules
Certain property is excluded from a spouse’s NFP, such as:

  • Gifts or inheritances received during marriage (other than the matrimonial home),
  • Proceeds of life insurance,
  • Personal injury damages,
  • Unadjusted CPP earnings,
  • Property excluded by a domestic contract: FLA, s. 4(2).

Unequal Division
Under s. 5(6) of the FLA, a court may depart from equalization if applying it would be unconscionable. This is a very high threshold, requiring that equalizing net family properties would “shock the conscience” of the court: Serra v. Serra, 2009 ONCA 105 (CanLII), at para 47.

Examples include:

Unmarried Spouses: Unjust Enrichment and Other Equitable Claims

In contrast to the statutory scheme set out for married spouses, unmarried spouses are not presumed to be entitled to share in each other’s property gain during the relationship. Instead, the default is that each party keeps what is in their own name.

If one common-law spouse wants a share of the other’s property, they must rely on equitable claims, most commonly unjust enrichment. Note that there is no minimum amount of time that the couple must live together to be considered a common-law spouse who may make an equitable claim to share in the other spouse’s property.

The Test for Unjust Enrichment
An unjust enrichment claim requires the plaintiff to prove three elements:

  1. an enrichment of or benefit to the defendant;
  2. a corresponding deprivation of the plaintiff; and
  3. the absence of a juristic reason for the enrichment: Kerr v. Baranow, 2011 SCC 10 (CanLII), at para 32.

Courts have found unjust enrichment based on contributions such as:

Remedy for Unjust Enrichment
If unjust enrichment is established, the court must fashion a remedy. The primary objective is to reverse the unjust enrichment.

  • Monetary award: The first remedy to consider is always a monetary award. In most cases, a monetary award will be sufficient.
  • Proprietary remedy (constructive trust): When a monetary award is inappropriate or insufficient, a proprietary remedy may be required. Where the plaintiff can demonstrate a link or causal connection between his or her contributions and the acquisition, preservation, maintenance, or improvement of the disputed property, a proportionate share of the property can be impressed with a constructive trust in the plaintiff’s favour: Kerr v. Baranow, 2011 SCC 10 (CanLII), at paras 46-47 & 50.

In quantifying a monetary award, the court is not always limited to a fee-for-services basis. In the seminal case of Kerr v. Baranow (2011), the Supreme Court of Canada set out that the court may consider if the unmarried partners engaged in a joint family venture to accumulate wealth but, at the end of the couple’s relationship, one party retained an unfair share of the assets which are the product of their joint efforts: Kerr v. Baranow, ibid, at paras 55 & 60.

When the parties have been engaged in a joint family venture, and the claimant’s contributions to it are linked to the generation of wealth, a monetary award for unjust enrichment should be calculated according to the share of the accumulated wealth proportionate to the claimant’s contributions: Kerr v. Baranow, ibid, at para 87.

Summary

Ontario’s equalization regime provides married spouses with a formulaic process to share in the financial gains of the marriage. This offers predictability and an automatic presumption of sharing that does not exist for unmarried spouses.

Unmarried spouse must instead prove entitlement through equitable doctrines, most often unjust enrichment. This requires evidence of contributions and is assessed on a case-by-case basis.

While rare, married spouses may also attempt unjust enrichment claims. In the “vast majority” of cases, however, the FLA provides a complete property sharing regime. For a deeper dive into these types of claims, see our previous blog posts, A Successful Unjust Enrichment Claim Between Married Spouses: Mullin v Sherlock, 2023 ONSC 4769 and Married Spouses and Equitable Claims: Recent ONCA Decision Narrows Availability of Proprietary Estoppel in Family Cases.

*with thanks to Kayleigh Pink for her suggestions and edits.