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Restitution (Specific) - Family. Chapman v. Ing
In Chapman v. Ing (Ont CA, 2025) the Ontario Court of Appeal dismissed an appeal, this from a trial judge's division of business assets where the parties had an "on-again, off-again" domestic relationship.
In the context of a restitution appeal argument, the appellant argued unsuccessfully [see para 23] that OBCA s.22(3)(b) ['Corporate Finance - Rights of shareholders'] constituted the juridical reason for enrichment:(2) Unjust Enrichment
[20] The first step in the unjust enrichment analysis asks whether the defendant has been enriched by the plaintiff. The second step asks whether the plaintiff has suffered a corresponding deprivation: Moore v. Sweet, 2018 SCC 52, [2018] 3 S.C.R. 303, at para. 41; Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at para. 36. Those steps are readily satisfied in this case.
[21] The third element of an unjust enrichment claim is that the benefit and corresponding detriment must have occurred without a juristic reason. This means that there is no reason in law or justice for the defendant’s retention of the benefit conferred by the plaintiff, making its retention “unjust” in the circumstances of the case: Kerr, at para. 40.
[22] Kerr elaborates further on the meaning of a “juristic reason”, at para. 41:Juristic reasons to deny recovery may be the intention to make a gift (referred to as a “donative intent”), a contract, or a disposition of law. The latter category generally includes circumstances where the enrichment of the defendant at the plaintiff’s expense is required by law, such as where a valid statute denies recovery. However, just as the Court has resisted a purely categorical approach to unjust enrichment claims, it has also refused to limit juristic reasons to a closed list. This third stage of the unjust enrichment analysis provides for due consideration of the autonomy of the parties, including factors such as “the legitimate expectation of the parties, the right of parties to order their affairs by contract”. [Internal citations omitted.] [23] In this case, s. 22(3)(b) of the OBCA does not offer a juristic reason for the appellant’s enrichment. By its terms s. 22(3)(b) addresses the relative rights of shareholders of the same class vis-à-vis the corporation. It does not purport to allocate the family law or equitable claims that one shareholder may have against the shares registered to another shareholder. There is therefore nothing in s. 22(3)(b) that can account for the enrichment of one shareholder to the detriment of another, even if linked to their corporate dealings. The provision is immaterial.
[24] This is not a situation in which the statute contemplates the very enrichment that is said to be unjust. Consider, for example, the operation of the Excise Tax Act, R.S.C. 1985, c. E-15, considered in Reference re Goods and Services Tax, 1992 CanLII 69 (SCC), [1992] 2 SCR 445 [“GST Reference”]. It required suppliers to collect and remit taxes and to incur expenses in the process. This requirement placed a burden on suppliers and conferred a benefit on the federal government. But since it was “precisely the burden contemplated by the statute”, the Act was a juristic reason that permitted the federal government to retain the benefit unless the statute itself was ultra vires: GST Reference, at pp. 476-77.
[25] This case is more like Moore. In that case, the deceased had named his wife the beneficiary of his life insurance policy. They agreed that the wife would pay the insurance premiums, and in exchange, the deceased would designate her as beneficiary of the policy. Unbeknownst to the wife, the deceased named his new common law spouse as the beneficiary before he died. The wife argued that the new spouse would be unjustly enriched if she retained the insurance proceeds. The common law spouse argued that the Insurance Act, R.S.O. 1990, c. I.8, entitled her to the proceeds and that this was a juristic reason for her enrichment.
[26] The Supreme Court disagreed, explaining at para. 70 that the Insurance Act would have to be much more explicit to deprive the wife of her common law entitlements:Nothing in the Insurance Act can be read as ousting the common law or equitable rights that persons other than the designated beneficiary may have in policy proceeds. As this Court explained in Rawluk v. Rawluk, 1990 CanLII 152 (SCC), [1990] 1 S.C.R. 70, at p. 90, the “legislature is presumed not to depart from prevailing law ‘without expressing its intentions to do so with irresistible clearness’”. [27] And further, at para. 73:Accepting that contractual rights to claim policy proceeds can exist outside of the Insurance Act, can an irrevocable designation under the Insurance Act nonetheless constitute a juristic reason for Michelle’s deprivation? In my view, it cannot. This is because the applicable statutory provisions do not require, either expressly or implicitly, that a beneficiary keep the proceeds as against a plaintiff, in an unjust enrichment claim, who stands deprived of his or her prior contractual entitlement to claim such proceeds upon the insured’s death. [Emphasis in the original.] [28] The facts of this case are obviously distinguishable from Moore. The point to be made is that a statutory entitlement may have to yield to equitable considerations.
[29] This is particularly so when the context involves family law litigation. In Wildman v. Wildman (2006), 2006 CanLII 33540 (ON CA), 82 O.R. (3d) 401 (Ont. C.A.), MacPherson J.A. was willing to pierce the corporate veil in a family law dispute, commenting that: “[t]his is matrimonial litigation, not commercial litigation”, at para. 48. He went on to note that “although a business person is entitled to create corporate structures and relationships for valid business, tax and other reasons, the law must be vigilant to ensure that permissible corporate arrangements do not work an injustice in the realm of family law”: Wildman, at para. 49.
[30] Relying on Wildman in Lynch v. Segal (2006), 2006 CanLII 42240 (ON CA), 82 O.R. (3d) 641 (Ont. C.A.), this court affirmed the need for a flexible approach to corporate issues raised in the family law context. Blair J.A. noted this approach to be particularly important o where “the corporations in question are completely controlled by one spouse, for that spouse's benefit and no third parties are involved”: at para. 36.
[31] This case does not turn on piercing the corporate veil in the traditional sense. It does, however, call for the same degree of flexibility. If the court can pierce the corporate veil to avoid injustice in the family law context, it must also be at liberty to reorder shareholders’ rights. The OBCA contemplates that a court can reorder the ownership of shares through the statutory remedies of oppression and winding-up: see, e.g. BCE Inc. v. 1976 Debentureholders, 2008 SCC 69, [2008] 3 S.C.R. 560. Shareholders’ rights under s. 22(3)(b) are “equal” only until a court orders otherwise.
[32] Nor did the trial judge err in her consideration of the reasonable expectations of the parties. It was not reasonable for the appellant to expect to share in the value of the Wyandotte property, given the disintegration of the parties’ relationship, the appellant’s failure to contribute to the betterment of the property, and his own deliberate efforts to undermine the commercial viability of T.A.C. Canada.
[33] For all of these reasons, I conclude that s.22(3)(b) of the OBCA is not a juristic reason for the appellant’s enrichment vis-à-vis the Wyandotte property. . Iredale v. Dougall
In Iredale v. Dougall (Ont CA, 2025) the Ontario Court of Appeal dismissed a family law appeal, this from a final order "regarding the equalization of the parties’ assets ... ":[1] At the core of this appeal is the relationship between the equalization provisions governed by the Family Law Act, R.S.O. 1990, c. F.3 (“FLA”) and unjust enrichment arising out of a marriage’s joint family venture. This appeal raises issues similar to those addressed in Martin v. Sansome, 2014 ONCA 14, 118 O.R. (3d) 522, and McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401.
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LAW AND ANALYSIS
[17] At the outset, it is important to emphasize that a finding made with respect to an unjust enrichment and remedial constructive trust claim is very fact specific and that the applicable standard of review is generally that an appellate court should only intervene where there is a palpable and overriding error: Tsai v. Dugal, 2022 ONCA 81, at paras. 8 and 10; Djekic v Zai, 2015 ONCA 25, 329 O.A.C. 133, at para. 16. Additionally, an appellate court should only intervene on a review of a spousal support order “when there is a material error, a serious misapprehension of the evidence, or an error in law”: Hickey v. Hickey, 1999 CanLII 691 (SCC), [1999] 2 S.C.R. 518, at para. 12.
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[22] To begin with, it is important to remember that the express purpose of the equalization provisions of the FLA is to address the unjust enrichment that would otherwise arise upon marriage breakdown: s. 5(7) of the FLA. In McNamee, at para. 66, this court stated that, “in the vast majority of cases, any unjust enrichment that arises as the result of a marriage will be fully addressed through the operation of the equalization provisions under the Family Law Act”: see also Martin, at para. 64.
[23] In McNamee, at para. 66, Blair and Rouleau JJ.A. instructed that the court must first resolve questions of ownership, including beneficial ownership, before it determines each party’s net family property and calculates the equalization payment. It follows that, where a party is claiming a remedial constructive trust, as Kirk claims in the present case, the court is to determine the claim for unjust enrichment (and the appropriate remedy, if any) before determining the claim for equalization: Korman v. Korman, 2015 ONCA 578, 126 O.R. (3d) 561, at para. 29. Additionally, pursuant to s. 10(1) of the FLA, a person may apply to the court to determine questions of ownership between married spouses, including consideration of any beneficial interests in property arising pursuant to the imposition of a remedial constructive trust.
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[30] .... As discussed earlier in these reasons, it is well established that the determination of a party’s beneficial ownership through a constructive trust is a preliminary step which must be done before any determination of net family property and equalization: McNamee, at para. 66; Martin, at para. 47; Korman, at para. 29. That is why the assessment for unjust enrichment is conducted first.
[31] If a finding for unjust enrichment is made, a monetary remedy is the “default” remedy: Moore v. Sweet, 2018 SCC 52, [2018] 3 S.C.R. 303, at para. 89. The onus is on the plaintiff to establish that monetary damages would be insufficient: Kerr, at para. 52.
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[37] Contrary to the appellant’s submission, the mere fact that the parties’ business relates to farming the land does not create a strict rule that both partners should receive a beneficial interest in the land. A constructive trust “should only be awarded if there is reason to grant to the plaintiff the additional rights that flow from recognition of a right of property”: Lac Minerals Ltd. v. International Corona Resources Ltd., 1989 CanLII 34 (SCC), [1989] 2 S.C.R. 574, at p. 678. In the context of a joint family venture, “the court may take into account the probability of recovery, as well as whether there is a reason to grant the plaintiff the additional rights that flow from recognition of property rights”: Kerr, at para. 52; Martin, at para. 59. This may be the case, for example, if there would otherwise be insufficient funds to pay the claimant the amount calculated as an equalization payment, or where the claimant’s efforts resulted in an unquantifiable or indeterminable increase in value for which the claimant should receive the benefit.
[38] It is also important to note that the existence of a causal connection between the benefit received and the detriment suffered does not lead inexorably to a 50:50 share. Such an assumption risks confusing equalization with unjust enrichment. This is not an exact science. The claimant party should be granted the percentage equal to the value of their contribution to the venture. That could be more or less than fifty percent: Lesko v. Lesko, 2021 ONCA 369, 57 R.F.L. (8th) 305, at para. 34, leave to appeal refused, [2021] S.C.C.A. No. 39804.
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[41] Further, the argument fails to follow the “order of operations” laid out in the case law for this analysis: McNamee, at para. 56; Martin, at para. 47, Green v. Green, 2015 ONCA 541, 387 D.L.R. (4th) 512, at para. 44; Townshend v. Townshend, 2012 ONCA 868, 113 O.R. (3d) 321, at para. 29.
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[44] Lastly, it should be noted that it is trite law that the FLA provides enhanced protection to spouses’ interests in a matrimonial home. In the case of farm properties, it may be difficult to draw distinctions between a matrimonial home and farm property in the broader sense. Section 18(3) addresses this:Residence on farmland, etc.
(3) If property that includes a matrimonial home is normally used for a purpose other than residential, the matrimonial home is only the part of the property that may reasonably be regarded as necessary to the use and enjoyment of the residence. [45] As Tellier J. wrote in White v. White, 2021 ONSC 6018, at para. 23, “[t]he separation of one piece of property based on use and purpose in section 18(3) supports the continuing functionality of a farm or other activity, without derogating from either spouse’s separate rights in relation to the matrimonial home.” The price of buying a farm is generally very high. Asking a party to pay for half of not just the home but large farm property would often result in selling the entire property. It is important to preserve farms in one piece and keep them in the hands of people who are more likely to farm the land. . Surridge v. Ross
In Surridge v. Ross (Ont CA, 2024) the Ontario Court of Appeal considered the interplay between the doctrines of resulting trusts and unjust enrichment - here in a family law context:[5] The respondent brought a motion for summary judgment pursuant to r. 16 of the Family Law Rules, O. Reg. 114/99 and the appellant brought a cross-motion for partial summary judgment. The motion judge granted summary judgment in favour of the respondent on the issue of unjust enrichment. He found that the parties had received legal advice before closing, that title was taken by them as equal owners, and that there is no suggestion that a mistake was made in how title was taken. He also found that the respondent had proven deprivation flowing from his unilateral payments toward the equity of the property, namely the down payment and all mortgage and property expenses, and that these payments enriched the appellant. The motion judge found that there was no contract between the parties that provided a juristic reason for the enrichment, nor was there any evidence of it constituting a gift from the respondent to the appellant. This prima facie case for an absence of juristic reason was not rebutted by the appellant. The motion judge also allowed the respondent credit for the installation of the new furnace and agreed with the respondent that the cost of the basement repairs ought to be shared equally by the parties.
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[8] In our view, the appeal must be dismissed. The motion judge did not err in his application of the law of unjust enrichment. The record supported his findings that the appellant had been enriched by the payments made by the respondent and that no juristic reason for this enrichment existed.
[9] The motion judge reviewed the relevant jurisprudence, including Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at paras. 31-43 and Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, at paras. 44-46, wherein the established categories of juristic reason are set out. As noted above, the motion judge found that the respondent established a prima facie case for absence of juristic reason and the appellant had not rebutted it. He explained that there was no evidence that the parties had turned their minds to the consequences of separating, particularly in respect of servicing the mortgage debt and the outcome of the property itself.
[10] The motion judge should have addressed in his reasons whether there was evidence of donative intent at the time the property was acquired in joint names and when the payments at issue were made. In gratuitous transfer situations, the actual intention of the grantor is the governing consideration: Kerr, at para. 18, referring to Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795.
[11] Further, as the Supreme Court states in Kerr, at para. 96:The title to property may also reflect an intent to share wealth, or some portion of it, equitably. This may be the case where the parties are joint tenants of property. [12] However, given the presumption of resulting trust where money or property is advanced by only one party, the onus is on the appellant to demonstrate donative intent: Pecore, at para. 25; Kerr, at para. 19. It is clear from the motion judge’s reasons as well as the record that the onus was not met in this case.
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