- Because common-law partners fall outside the Family Law Act's equalization scheme, there's no automatic mechanism that shares in the value or growth of a business the way there can be…
- A common-law partner without an ownership interest generally has to build a claim on the doctrine of unjust enrichment, which requires showing three things: 1.
- - Unpaid or underpaid work performed directly for the business - Money invested into the business from personal funds - Taking on a disproportionate share of household or child-rearing…
You built your business before your relationship started, or grew it during years your partner spent supporting the household so you could focus on it. If that relationship ends, can your partner walk away with a share of what you built? For married spouses, Ontario's equalization rules would generally bring the business's growth into the numbers. For common-law partners, there's no equivalent automatic rule — but that doesn't mean a common-law partner's claim to a share of your business is impossible. It has to be proven, not assumed.
Why Business Ownership Isn't Automatically Shared
Because common-law partners fall outside the Family Law Act's equalization scheme, there's no automatic mechanism that shares in the value or growth of a business the way there can be for a married spouse. Ownership of the business itself stays with whoever legally owns it — through shares, a sole proprietorship, or a partnership interest — unless a partner successfully brings a separate legal claim against it.
The Legal Route: Unjust Enrichment
A common-law partner without an ownership interest generally has to build a claim on the doctrine of unjust enrichment, which requires showing three things:
- The business owner was enriched — received a benefit of some kind.
- The partner was correspondingly deprived — gave up money, unpaid labour, or a foregone opportunity in connection with that benefit.
- There's no legal reason — such as a gift, or being compensated another way — that justifies the business owner keeping that benefit without compensating the partner.
If a court is satisfied all three elements are present, it can order a remedy. That remedy is not automatically the same thing as awarding a share of the business itself.
Contributions That Can Support This Kind of Claim
- Unpaid or underpaid work performed directly for the business
- Money invested into the business from personal funds
- Taking on a disproportionate share of household or child-rearing responsibilities that freed up the other partner to build the business
- Giving up a career opportunity, or reducing paid work, in a way connected to supporting the business's growth
What a Successful Claim Can Actually Result In
A monetary award reflecting the value of the partner's contribution is a common outcome. In some circumstances, a court may recognize a proportionate interest in the property or business itself — but this depends heavily on the specific facts, and outcomes vary significantly from one situation to the next. No outcome is guaranteed, and any specific figure would need to be assessed by a lawyer based on your own circumstances.
Why Timing and Documentation Matter So Much
Unjust enrichment claims tend to succeed or fail based on evidence assembled long after the fact, which is exactly what makes contemporaneous documentation so valuable. A business owner who can show, from early on, how a partner's contributions were compensated — a wage, a repaid loan, a clearly defined arrangement — is in a far stronger position than one relying on memory alone once the relationship has already ended. Equally, a partner who kept careful records of their own unpaid contributions is in a stronger position to bring a claim than one who didn't. Whichever side of this you're likely to be on, the time to start documenting is now, not after a separation is already underway.
Protecting a Business From This Kind of Claim
- [ ] Put a cohabitation agreement in place that specifically addresses the business
- [ ] Keep the business's finances separate from household and personal finances
- [ ] Pay a partner who genuinely works in the business a fair, documented wage rather than relying on informal "sweat equity"
- [ ] Keep clear corporate records and documentation of ownership from before the relationship began
- [ ] Revisit the agreement if a partner's role in the business changes significantly over time
Frequently asked questions
Does it matter if I started the business before we moved in together?
It's relevant, since a business's value at the start of the relationship is generally easier to separate from later growth. But starting the business first doesn't automatically protect it if your partner made significant contributions during the relationship.
If my partner never worked in the business, can they still make a claim?
Potentially, yes. A claim doesn't require having worked directly in the business. Contributions like unpaid household labour that freed up your time to build the business can also support an unjust enrichment claim.
Is a cohabitation agreement enough to fully protect my business?
It significantly reduces the risk and uncertainty, and courts generally respect a properly made agreement. But no agreement can guarantee against every possible future claim, especially if circumstances change significantly over time.
How is this different from what happens to a business in a married couple's divorce?
A married spouse's business is generally captured, at least in value, by the Family Law Act's equalization process. Common-law partners fall outside that scheme entirely, so any claim has to be built through unjust enrichment principles instead.
Does a written agreement guarantee my business is safe from any claim?
No agreement removes every theoretical risk, but a properly drafted, independently reviewed cohabitation agreement that specifically addresses the business substantially reduces the likelihood of a successful claim and gives both partners clarity from the outset.
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