Some of the hardest disputes to explain start with the phrase, “We never put anything in writing.” A brother-in-law spends three summers finishing a basement because he has been told he will eventually have a share in the house. A small business pays another company’s invoice by mistake and hears nothing but silence when it asks for the money back. A friend covers a tenant’s rent for six months on the understanding that it was a short-term advance, then is told it was a present.
The person out of pocket often assumes that without a contract, they have no case. That is not always true. Ontario law recognizes a claim called unjust enrichment, which can require someone to give back a benefit they have no legal justification for keeping. It is real and useful, but it is narrower than it sounds. It does not give courts a roving power to correct anything that seems unfair.
What follows is general information about Ontario law. It is not legal advice, and whether unjust enrichment fits your situation depends heavily on the details, particularly what was said and who expected what at the time.
The Three Questions a Court Asks
The Supreme Court of Canada has set out the test in decisions including Garland v. Consumers’ Gas Co., 2004 SCC 25, and Kerr v. Baranow, 2011 SCC 10. A claimant must show:
- The defendant was enriched.
- The claimant suffered a corresponding deprivation.
- There is no juristic reason for the enrichment.
The first two questions are usually practical. Enrichment means a tangible benefit: money received, an expense saved, or an increase in the value of something. Deprivation is the claimant’s matching loss. If you paid $14,000 to someone else’s creditor by mistake, the link between the two is simple. Labour can also count, so that a person who built something of value may have conferred a benefit even though no money changed hands.
The third question usually decides the case. “Juristic reason” means a legal reason that justifies the other person keeping the benefit. Its absence is what makes the enrichment unjust in a legal sense, as opposed to merely being disappointing.
How the Juristic Reason Test Works
The framework set out in Garland has two stages.
First, the claimant must show that none of the established categories of juristic reason applies. The main categories are a contract, a disposition of law such as a statute or court order, a donative intent (the benefit was a gift), and other valid common law, equitable, or statutory obligations. If one of those applies, the claim ordinarily ends there.
Second, if none of those categories applies, the claimant has a preliminary case. The burden then shifts to the defendant to show another reason the enrichment should stand. The court can consider the parties’ reasonable expectations and public policy at this stage.
That structure helps you predict where the argument will really be fought. A few patterns appear again and again:
The contract problem. If a valid contract covers the benefit, it is normally a juristic reason, so unjust enrichment is not a way to rewrite a bad bargain. A contractor who agreed to a fixed price cannot usually claim more because the job took longer than expected, unless there is a basis such as a change outside the contract’s scope. An existing contract often determines what you can claim, which is why contract-based claims and unjust enrichment are frequently pleaded together in the alternative. If you do have a written or oral deal, you may be looking at contractual litigation rather than this doctrine.
The gift problem. A parent who contributes to a child’s down payment may later be told that it was a gift. A claim will struggle if the evidence shows the benefit was freely given with no expectation of anything in return. Family members often have very different memories of what was intended. Bank memos, emails, and texts from that time, as well as a mortgage lender’s gift letter if one was signed, can become decisive. A signed gift letter given to a lender can be especially awkward for someone who later says it was a loan, although the context may still need to be explained.
The “you benefited too” problem. A defendant may argue that the claimant received something in exchange: free accommodation during the renovation, for example. Kerr v. Baranow indicates that mutual benefits should generally not, on their own, be treated as a juristic reason that defeats the claim. Instead, they are usually weighed at the stage of working out what remedy is owed, or in the rebuttal stage if appropriate.
Situations That Often Fit
Here are some hypothetical scenarios that might give rise to a claim, depending on evidence:
- A company mistakenly pays the same supplier invoice twice, and the supplier refuses to refund the duplicate.
- Someone makes a mistaken e-Transfer to a stranger or to the wrong account, and the recipient refuses to return it.
- A relative lives in a house owned by another family member and pays down the mortgage over several years, expecting an eventual share.
- A subcontractor does additional work at a homeowner’s direct request, without a contract with that homeowner, and the homeowner keeps the benefit.
- Business partners who never incorporated have a falling-out, and one holds equipment the other largely paid for.
Each of these has a counter-argument that may be strong. The subcontractor example raises the question of whether the homeowner already paid the general contractor, for instance. If they did, there may be a juristic reason, and the deprivation may belong elsewhere. The partner example might really be a partnership dispute. Precise facts make all the difference.
Spouses and common-law partners form a major branch of this law, and Kerr v. Baranow itself arose from claims between long-term partners. Disputes between former partners about property are often better addressed within a family law analysis, so people in that situation should get advice specifically on family law and should not rely on general commercial principles.
Evidence When There Is No Contract
Without a signed document, your case is built from smaller pieces. Gather them before memories change:
- bank statements, e-Transfer confirmations, and cancelled cheques
- invoices, receipts, or material purchases that show what you contributed
- texts, WhatsApp messages, and emails that discuss expectations
- photos of the work before, during, and after
- estimates or appraisals showing what the work or benefit was worth
- the names of people who heard relevant conversations
The value of the benefit needs its own proof. Suppose you say your renovation labour was worth $30,000. A judge will want something other than your own estimate, perhaps a comparison quote from a licensed trade or evidence of the increase in the home’s value. A claim seeking a share of a property may need an appraisal.
Think carefully about your contemporaneous expectation as well. Messages from the time carry more weight than a story told after the falling-out. A text saying “We’ll sort out the money once the house is refinanced” can do more for you than a page of argument in a pleading. A text saying “Happy to help, don’t worry about it” could do the opposite.
What You Can Actually Recover
The usual remedy is money. The court will often assess the value of the benefit received or the service provided, sometimes on a basis described as quantum meruit, meaning a reasonable sum for work done. The amount is tied to the enrichment and the corresponding loss, not the claimant’s hopes. If you hoped for a half-interest but actually provided a modest contribution, the difference can be significant.
Where the claim relates to land, and money would be inadequate, a court may recognize a proprietary remedy such as a constructive trust. A claimant needs a sufficient link between the contribution and the property, and generally a reason why a money award will not do. Because such a claim asserts an interest in land, it may raise the question of whether a certificate of pending litigation is available, which brings its own risks and must be approached carefully.
Which Court in Peel
Where you sue depends on the remedy and the amount:
The Small Claims Court, sitting at 7755 Hurontario St. in Brampton, handles money claims up to $50,000 and the recovery of personal property of that value. Section 96(3) of the Courts of Justice Act says only the Court of Appeal and the Superior Court, exclusive of the Small Claims Court, may grant equitable relief unless otherwise provided. The Court of Appeal for Ontario confirmed in Grover v. Hodgins, 2011 ONCA 72, that the Small Claims Court can consider equitable claims where the remedy is a payment of money or the return of personal property. A straightforward unjust enrichment claim for money may therefore be heard there.
The Superior Court is needed for a claim above the limit, for an order recognizing an interest in land, and for other remedies outside the Small Claims Court’s jurisdiction. Remember that if you sue in the Superior Court and recover an amount within the Small Claims Court’s monetary limit, you may not get your costs, so the choice should be deliberate.
The Clock Starts Sooner Than You May Think
A common misstep with informal arrangements is waiting. The basic rule under section 4 of the Limitations Act, 2002 is that a proceeding cannot be commenced after the second anniversary of the day the claim was discovered. Section 5 says a claim is discovered when the person knew, or a reasonable person in their circumstances ought to have known, that loss occurred, that it was caused by an act or omission of the defendant, and that a proceeding would be an appropriate means to remedy it. You are presumed to have known those things on the day of the act or omission, unless you can prove otherwise.
For a mistaken payment, the discovery date might be when you noticed the error and the other party refused to return the money. For a long informal arrangement, the question is more difficult, and the other side may argue that you knew years ago that you would not be repaid. There may also be a separate limitation period where a claim concerns land, and there is an ultimate limit in section 15. If a dispute has been dragging on for some time, get advice soon and do not assume that an ongoing conversation has stopped the clock.
Try Direct Resolution, in Writing
Before suing, a clear demand can do a lot of work. In the case of a mistaken payment, a short letter that identifies the transaction, explains the error, and requests return by a specified date is often enough, since many people simply return the money once they understand their exposure. Where family is involved, a calm written proposal may allow everyone to save face, and mediation can give both sides room to discuss the real history without the pressure of a courtroom. Any settlement should be written down and signed.
If you are on the receiving end of a demand, do not ignore it, and do not spend funds that you know you received in error. Mistaken payments can create legal problems, and in some circumstances beyond a civil claim. Keep a record of anything you received and, if you think you have a right to it, of why.
Getting Advice Early
Unjust enrichment asks a court to look past the absence of a contract, so these claims rise and fall on evidence and timing. If you have paid for something, built something, or carried someone else’s expense, and now find yourself empty-handed, an early review can tell you whether you have a real claim, whether it is better framed some other way, and how long you have. The firm’s civil litigation work covers this type of dispute, and you can get in touch with our Brampton office if you have a timeline and documents ready.
The law will not reward every generous act, and it will not rescue every bad bargain. It can, however, step in where someone has kept a real benefit at your expense with no legal reason for doing so. Knowing which side of that line you are on is the first practical step.