In the recent decision of Chapman v. Ing, the Ontario Court of Appeal reaffirmed that equitable remedies, such as unjust enrichment, can override statutory entitlements—particularly in cases where personal and business relationships are closely intertwined. This case illustrates how Canadian courts may prioritize fairness over strict statutory rights.

Background

Chapman and Ing were involved in both a romantic and business relationship. Over the course of their partnership, they jointly acquired and managed multiple assets, including a 10-unit rental property on Wyandotte Street, which was held through a corporation—1961160 Ontario Inc. As their relationship deteriorated, disputes arose over ownership interests and the division of property.

At trial, the judge made the following key findings:

• The parties had a conjugal relationship, although it evolved to be more business-oriented.
• There was no joint family venture between them.
• Chapman was unjustly enriched by Ing’s financial and non-financial contributions to the Wyandotte property.
• The appropriate remedy was to require Ing to acquire Chapman’s shares in the corporation as of the date of separation—prior to the property becoming income-generating.

Although both parties were shareholders, the court held that Chapman’s claim to a 50% interest was unjustified, given his lack of meaningful contribution to the property’s acquisition, improvement, or value. Applying the legal test for unjust enrichment, the trial judge concluded:

1. Enrichment – Chapman was enriched through Ing’s efforts, which increased the property’s value.
2. Corresponding Deprivation – Ing suffered a financial and personal loss for which she was not compensated.
3. Absence of a Juristic Reason – There was no legal justification for Chapman retaining the benefit.

As a result, Ing was awarded 100% ownership of the property, subject to a payment of $39,000 to Chapman, representing half of the original purchase price minus the outstanding mortgage.

Appeal: Statutory Right Versus Equitable Remedy

On appeal, Chapman argued that as a shareholder under section 22(3)(b) of the Ontario Business Corporations Act (OBCA), he was entitled to an equal share in the property. He claimed this statutory provision constituted a juristic reason for the enrichment.

The Ontario Court of Appeal rejected this argument, reaffirming the three-part test for unjust enrichment as outlined in Moore v. Sweet and Kerr v. Baranow:

1. Enrichment of the defendant.
2. Corresponding deprivation of the plaintiff.
3. Absence of a juristic reason for the enrichment.

The key issue was whether Chapman’s reliance on s. 22(3)(b) of the OBCA amounted to a juristic reason. The Court held that it did not. The provision governs the relative rights of shareholders within the corporation but does not displace equitable or family law claims between individuals, even if they are shareholders. Therefore, it could not justify Chapman’s retention of the benefit.

The Court drew on Moore v. Sweet, emphasizing that statutes must explicitly exclude equitable or common law claims to serve as a juristic reason. Absent such clear legislative intent, equitable principles prevail.

The Court also reinforced that family law litigation requires flexibility, particularly when dealing with closely held corporations entangled in personal relationships. Citing Wildman v. Wildman and Lynch v. Segal, the Court noted that while piercing the corporate veil was not necessary in this case, the same flexible reasoning applied. Courts must be prepared to reorder shareholder rights to prevent unjust outcomes.

Conclusion

The Ontario Court of Appeal concluded that section 22(3)(b) of the OBCA did not provide a juristic reason for Chapman’s enrichment. As all three elements of unjust enrichment were satisfied, the equitable remedy in favour of Ing was upheld.

Chapman v. Ing serves as a clear reminder that formal legal title does not automatically confer equitable entitlement. Where personal and financial relationships intersect, Canadian courts remain committed to ensuring that equity and fairness guide outcomes—even when that means setting aside statutory or corporate rights.

Thanks for reading.

Mandana