Equalization AND Unjust Enrichment Claim?
1. Introduction
Schmutz v Schmutz[1] explores the question whether a surviving spouse, who successfully claimed an equalization payment of the parties’ net family properties, can also make a claim the value of an unjust enrichment claim on the basis of a joint family venture. The court held that she could not do so on the facts in this case. The decision is unexceptional, but it is worthwhile to consider the reasons in this blog, since the issue does not arise often.
2. Facts
The applicant, Susan Schmutz (‘Susan’) and Christian Schmutz (‘Christian’) began co-habitation in 1997 and were married in 1980. They had no children. They first separated in 2017 and after an unsuccessful attempt at reconciliation they separated on a final basis in 2020. A proceeding for divorce and resolution of their property issues was commenced in September 2018. Susan and Christian were joint tenants of the matrimonial home, and Christian also held title to another property (‘Black Walnut’). Christian died in 2023. The respondent was his estate trustee.
The parties agreed to the net family properties (‘NFP’) calculation in 2025. Pursuant to that calculation Christian’s estate paid Susan an equalization payment of $34,116.92. The matrimonial home was valued at $720,000. Susan claimed exclusive possession of it and that was granted. Black Walnut was valued as of the date of final separation at $870,000, with an assumed capital gains obligation of $178,034. It was eventually sold for $1,250,000. Susan sought a 50% share of the net increase in the value of the Black Walnut property, namely $97,106. The purchase of Black Walnut was financed with a bank loan jointly undertaken by the spouses. Susan’s father lent Christian $227,345.75 in 1996 to construct a building on the property at interest, but no interest was actually paid. The principal was paid back in 2017.
Christian earned a modest income, while Susan was the breadwinner. Her employment income and later her retirement income were paid into the spouses’ joint bank account. The majority of the household expenses as well as utilities at Black Walnut were paid from that account.
Susan argued that Black Walnut was part of a joint family venture because she contributed a substantial amount of money over the years to that property. Thus she claimed that Christian was enriched by it, that she was correspondingly deprived, and that there was no juristic reason for the enrichment. Further, she argued that since a monetary valuation of Black Walnut is possible, a finding of a constructive trust is unnecessary. The respondent argued that this was not a case to which a remedy of joint family venture flowing from unjust enrichment applies.
3. Analysis and Judgment
Justice Spurgeon noted that outside of marriage unjust enrichment on the basis of a joint family venture can certainly be raised. It is not impossible to raise it when the parties are married, but such a claim is unlikely to succeed. His Honour referred to a passage in McNamee v McNamee[2] in which the Ontario Court of Appeal said:
66 It must be 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;[3] the spouse who legally owns an asset will ordinarily share half its value with the other spouse as a result of the equalization provisions under the Act. However, a fair and contextual reading of the equalization and net family property provisions of the Family Law Act ensures that married spouses are not deprived of equitable remedies they would otherwise have available to them because, as noted above, ownership issues — equitable or otherwise — are to be determined before the net equalization payment exercise is undertaken.
Counsel for the respondent referred to Mullin v Sherlock[4] as such an exceptional case. In it the Ontario Court of Appeal held that the statutory equalization scheme would work an injustice, since the parties had cohabited for a long time and were married for only a short time. The family wealth was generated mostly during the period of co-habitation. Hence, in those circumstances the court should consider unjust enrichment and the remedy of a joint family venture.
Justice Spurgeon held that this was not such an exceptional case and thus there was no room for a separate unjust enrichment analysis. However, if he was wrong on that issue, he went on to consider whether Susan had proved unjust enrichment. He reproduced the well-known components of unjust enrichment: 1. the claimant must prove unjust enrichment; 2. the claimant must show a corresponding deprivation; and 3. The court must determine that there is no juristic reason for the enrichment. The third step consists of a two-part test: (a) whether there is a categorical juristic reason to allow the respondent to retain the benefit to the detriment of the applicant (gift, contract, disposition of law, other valid common law, equitable, or statutory obligation); and (b) if there is no categorical juristic reason, the court may consider the reasonable expectations of the parties and public policy considerations to determine whether recovery should be denied.
His Honour held that in step (a) of the juristic reason analysis, there was a categorical juristic reason to deny recovery to Susan, namely, the statutory obligation of NFP equalization. Thus, he concluded that Susan’s claim failed.
—
[1] 2026 ONSC 2024.
[2] 2011 ONCA 533, para 66.
[3] RSO 1990, c F.3.
[4] 2025 ONCA 511, para 23.
Written by: Albert Oosterhoff
Posted on: July 29, 2026
Categories: Commentary, WEL Newsletter
1. Introduction
Schmutz v Schmutz[1] explores the question whether a surviving spouse, who successfully claimed an equalization payment of the parties’ net family properties, can also make a claim the value of an unjust enrichment claim on the basis of a joint family venture. The court held that she could not do so on the facts in this case. The decision is unexceptional, but it is worthwhile to consider the reasons in this blog, since the issue does not arise often.
2. Facts
The applicant, Susan Schmutz (‘Susan’) and Christian Schmutz (‘Christian’) began co-habitation in 1997 and were married in 1980. They had no children. They first separated in 2017 and after an unsuccessful attempt at reconciliation they separated on a final basis in 2020. A proceeding for divorce and resolution of their property issues was commenced in September 2018. Susan and Christian were joint tenants of the matrimonial home, and Christian also held title to another property (‘Black Walnut’). Christian died in 2023. The respondent was his estate trustee.
The parties agreed to the net family properties (‘NFP’) calculation in 2025. Pursuant to that calculation Christian’s estate paid Susan an equalization payment of $34,116.92. The matrimonial home was valued at $720,000. Susan claimed exclusive possession of it and that was granted. Black Walnut was valued as of the date of final separation at $870,000, with an assumed capital gains obligation of $178,034. It was eventually sold for $1,250,000. Susan sought a 50% share of the net increase in the value of the Black Walnut property, namely $97,106. The purchase of Black Walnut was financed with a bank loan jointly undertaken by the spouses. Susan’s father lent Christian $227,345.75 in 1996 to construct a building on the property at interest, but no interest was actually paid. The principal was paid back in 2017.
Christian earned a modest income, while Susan was the breadwinner. Her employment income and later her retirement income were paid into the spouses’ joint bank account. The majority of the household expenses as well as utilities at Black Walnut were paid from that account.
Susan argued that Black Walnut was part of a joint family venture because she contributed a substantial amount of money over the years to that property. Thus she claimed that Christian was enriched by it, that she was correspondingly deprived, and that there was no juristic reason for the enrichment. Further, she argued that since a monetary valuation of Black Walnut is possible, a finding of a constructive trust is unnecessary. The respondent argued that this was not a case to which a remedy of joint family venture flowing from unjust enrichment applies.
3. Analysis and Judgment
Justice Spurgeon noted that outside of marriage unjust enrichment on the basis of a joint family venture can certainly be raised. It is not impossible to raise it when the parties are married, but such a claim is unlikely to succeed. His Honour referred to a passage in McNamee v McNamee[2] in which the Ontario Court of Appeal said:
66 It must be 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;[3] the spouse who legally owns an asset will ordinarily share half its value with the other spouse as a result of the equalization provisions under the Act. However, a fair and contextual reading of the equalization and net family property provisions of the Family Law Act ensures that married spouses are not deprived of equitable remedies they would otherwise have available to them because, as noted above, ownership issues — equitable or otherwise — are to be determined before the net equalization payment exercise is undertaken.
Counsel for the respondent referred to Mullin v Sherlock[4] as such an exceptional case. In it the Ontario Court of Appeal held that the statutory equalization scheme would work an injustice, since the parties had cohabited for a long time and were married for only a short time. The family wealth was generated mostly during the period of co-habitation. Hence, in those circumstances the court should consider unjust enrichment and the remedy of a joint family venture.
Justice Spurgeon held that this was not such an exceptional case and thus there was no room for a separate unjust enrichment analysis. However, if he was wrong on that issue, he went on to consider whether Susan had proved unjust enrichment. He reproduced the well-known components of unjust enrichment: 1. the claimant must prove unjust enrichment; 2. the claimant must show a corresponding deprivation; and 3. The court must determine that there is no juristic reason for the enrichment. The third step consists of a two-part test: (a) whether there is a categorical juristic reason to allow the respondent to retain the benefit to the detriment of the applicant (gift, contract, disposition of law, other valid common law, equitable, or statutory obligation); and (b) if there is no categorical juristic reason, the court may consider the reasonable expectations of the parties and public policy considerations to determine whether recovery should be denied.
His Honour held that in step (a) of the juristic reason analysis, there was a categorical juristic reason to deny recovery to Susan, namely, the statutory obligation of NFP equalization. Thus, he concluded that Susan’s claim failed.
—
[1] 2026 ONSC 2024.
[2] 2011 ONCA 533, para 66.
[3] RSO 1990, c F.3.
[4] 2025 ONCA 511, para 23.
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