Protecting A Business Stake Before Moving In Together

The situation

Shirin worked as a sales director for a mid-sized firm and, on the side, co-owned a small marketing consultancy with a business partner, Soo-jin. The two had built the consultancy over five years, splitting ownership 55/45 in Shirin's favour to reflect the extra client base she had brought in at the start. Shirin was also a single parent, raising a nine-year-old on her own since her previous relationship had ended, and the consultancy's income had become a meaningful supplement to her salary, one she managed carefully alongside her parenting responsibilities.

She had been living separately from her partner, Arman, an air traffic controller, for about eighteen months. They were planning to move in together the following spring. Arman worked rotating shifts and had told Shirin he wanted to cut back his overtime once they cohabited, freeing up weekends to help with her child and, he offered, to pitch in on the consultancy's client onboarding and scheduling work, something Shirin had been doing alone on evenings for years while trying to keep the business steady.

Shirin came to Treadstone Law not because anything had gone wrong, but because a friend who had gone through a difficult common-law separation warned her that moving in together and mixing a partner into a business could create problems later that were much harder to unwind than to prevent. She wanted to know, plainly, whether letting Arman help with the business could ever cost her part of it.

The legal problem

Ontario's Family Law Act gives married spouses a right to equalize the value of property built up during the marriage. Common-law partners do not get that automatic right, no matter how long they live together. That difference leads many people to assume their separate property, including a business, is simply safe from a partner's claim if they never marry. It is not.

Ontario courts have long recognized a separate legal route for common-law partners: a claim for unjust enrichment, sometimes described as a joint family venture claim. In plain terms, if one partner contributes labour, money, or time to the other partner's property or business over the course of the relationship, and receives nothing in return, a court can order compensation when the relationship ends, even if that partner was never on title or on the corporate records. The compensation can take the form of a cash payment or, in some circumstances, an actual share of the asset.

Arman's plan to work in the consultancy without pay, over what could end up being years of cohabitation, was exactly the kind of contribution that supports this type of claim later. It would not matter that the business predated the relationship or that Soo-jin, not Arman, was Shirin's formal business partner. What would matter is whether Arman's unpaid work meaningfully helped the business grow while he received no direct compensation for it.

There was a second layer to the risk. Shirin's ownership was itself governed by a shareholder arrangement with Soo-jin. If Arman later brought a claim against the business's value, it would draw Soo-jin's ownership stake, and possibly her cooperation, into a dispute that had nothing to do with her. A poorly protected relationship between Shirin and Arman could end up complicating a business partnership that had nothing to do with either of them.

What we did

1. Reviewed the business structure first. Before drafting anything, we asked to see the shareholder arrangement between Shirin and Soo-jin. It set the ownership split, valuation method, and buy-sell terms for the consultancy. Any protection we built for Shirin had to work alongside that document, not around it or in conflict with it.
2. Had the business informally valued. Shirin's accountant estimated the consultancy's value at roughly $260,000, making her 55 percent stake worth about $143,000. Having a number in hand mattered: it gave both partners a concrete sense of what was actually at stake and made the later conversation about protecting it feel real rather than theoretical.
3. Drafted a cohabitation agreement. This is a written contract between common-law partners that sets out how property, debt, and support will be handled during the relationship and if it ends. We used it to state clearly that the consultancy, including any growth in its value during cohabitation, was Shirin's separate property and excluded from any future claim connected to the relationship.
4. Built in paid compensation for Arman's contributions. A clause excluding the business from a future claim is weaker on its own than most people assume, because a court assessing an unjust enrichment claim looks at what actually happened, not just what a document said. So we recommended something more durable: Arman would be engaged under a simple part-time contractor agreement for the onboarding and scheduling work, paid a fair market rate of roughly $28 an hour. Being paid in real time for real work is one of the strongest defences to a later claim that the work was uncompensated.
5. Arranged independent legal advice for Arman. A cohabitation agreement in Ontario is far more likely to hold up if each partner had their own lawyer and full financial disclosure was exchanged before signing. We referred Arman to independent counsel, and both sides disclosed their income, assets, and debts before finalizing the agreement.
6. Coordinated with Soo-jin's side. With Shirin's consent, we confirmed with Soo-jin's own lawyer that nothing in the cohabitation agreement altered or conflicted with the existing shareholder arrangement. This kept the business partnership on its own separate, undisturbed footing.

The outcome

The cohabitation agreement was signed about six weeks before Shirin and Arman moved in together, with Arman's independent lawyer confirming he understood and freely agreed to its terms. Arman began working roughly six hours a week on the consultancy's client onboarding, invoicing through his contractor agreement at his agreed rate, which came to about $8,700 a year in additional income for him on top of his air traffic controller salary.

Because the arrangement was documented and paid from the start, there was no period where Arman's labour went uncompensated and unrecorded, which is precisely the gap that unjust enrichment claims are built on. Shirin's 55 percent stake in the consultancy, and her arrangement with Soo-jin, remained untouched by the new living situation. Combined household income, between Shirin's sales director role and Arman's air traffic controller salary, sat comfortably above $200,000, and both could plan their finances knowing the business's ownership was settled rather than an open question hanging over the relationship.

More than a year into cohabitation, no dispute has arisen over the business, and none was expected to. That was the point of doing the work early: the risk was real and well documented in family law, but it never had the chance to become a live problem because the compensation structure and the written agreement were both in place before Arman's contributions began. Soo-jin's ownership stake and the underlying shareholder arrangement were never touched by any of it, which is exactly what a partner in her position would want from someone else's living arrangement.

What you can learn from this