Court of Appeal for Ontario

Date: 2025-07-15
Docket: COA-23-CV-0787
Panel: Huscroft, Harvison Young and Zarnett JJ.A.

Between:
Katherine Ann Mullin (Applicant/Respondent)
and
John Sherlock (Respondent/Appellant)

Counsel:
Heather Hansen and Zechariah Martin, for the appellant
Robert Halpern and Jessica Brown, for the respondent

Heard: January 17, 2025

On appeal from the order of Justice Ivan S. Bloom of the Superior Court of Justice, dated June 22, 2023, with reasons reported at 2023 ONSC 3744, and from the costs order, dated August 21, 2023, with reasons reported at 2023 ONSC 4769.

Harvison Young J.A.:

A. Overview

1This appeal challenges the result of a trial in a family law dispute that dealt with claims for unjust enrichment arising out of a joint family venture and spousal support. Further, this appeal raises the issue of the relationship between unjust enrichment and equalization, which has been addressed frequently by this court, and most recently in Iredale v. Dougall, 2025 ONCA 266, 97 E.T.R. (4th) 1.

2The parties have previously been before this court in relation to the same underlying family law proceeding: see Mullin v. Sherlock, 2018 ONCA 1063, 19 R.F.L. (8th) 1 (“Mullin (ONCA)”). The only relevant consequence from the previous appeal is that the appellant, John Sherlock, had his trial participation rights limited. At issue in this appeal is the result of the trial itself.

3At trial, the respondent, Katherine Ann Mullin, sought $3,000,000 in monetary damages based on unjust enrichment arising out of a joint family venture, a lump sum payment of spousal support consisting of both retroactive and prospective payments, and prejudgment interest pursuant to s. 128(1) of the Courts of Justice Act, RSO 1990, c C.43. In the somewhat unusual circumstances of this case, neither party sought equalization at trial. Indeed, Ms. Mullin sought an order that neither party owed any equalization payment. After an 11-day trial, the trial judge awarded Ms. Mullin $3,000,000 in monetary damages and $365,624 as lump sum spousal support. Ms. Mullin was also awarded $475,000 in costs payable by Mr. Sherlock.

4Mr. Sherlock appeals both the underlying order and the costs order.

B. Factual Background

5The facts may be briefly stated. The parties began living together in 2000 when Ms. Mullin was 35 years old and Mr. Sherlock was 47 years old. They were married on September 8, 2012 and had lived together for nearly twelve and a half years when they separated on June 28, 2013.

6Prior to the relationship, Ms. Mullin worked in the architectural field. From early on in the relationship, Ms. Mullin worked exclusively for Mr. Sherlock’s business, GS Medical Packaging Inc. (“GS Medical”), in a variety of roles. Ms. Mullin’s salary decreased steadily from 2009 to 2011 before eventually being laid off by Mr. Sherlock on September 9, 2011, though she continued working full-time without compensation until December 2011.

7Mr. Sherlock owned 50 percent of GS Medical when the parties met, but in approximately 2004 or 2005, when the parties were cohabiting, Mr. Sherlock acquired the remaining 50 percent of the company. GS Medical grew significantly during the parties’ relationship, expanding from five employees when they met to over 25 employees when they separated.

8Although Ms. Mullin commenced her claim shortly after the parties separated, the matter did not proceed to trial for many years. A significant reason for this was Mr. Sherlock’s failure to provide full and proper disclosure, particularly with respect to the value of his business interests.

9On May 15, 2017, Ms. Mullin brought a motion asking that Mr. Sherlock’s pleadings be struck for repeated non-compliance with court orders for disclosure. On November 10, 2017, Price J. struck Mr. Sherlock’s pleadings: see Mullin v. Sherlock, 2017 ONSC 6762. Mr. Sherlock appealed. In Mullin (ONCA), this court dismissed the appeal of that order, but varied it such that Mr. Sherlock was granted limited participatory rights related to the trial. Regardless, Mr. Sherlock did not provide any further financial disclosure, which significantly bore on the trial judge’s factual findings.

C. The Decision Below

(1) The Underlying Order

10The first part of the trial judge’s analysis addressed the unjust enrichment claim. The trial judge began his analysis on this issue by citing Martin v. Sansome, 2014 ONCA 14, 118 O.R. (3d) 522, at paras. 46-67, for the principle that while the equalization provisions of the Family Law Act, RSO 1990, c F.3 (“FLA”) are the appropriate remedy for unjust enrichment in the case of a married couple, there may be situations, such as the one at bar, where monetary damages for unjust enrichment cannot be adequately addressed by the equalization provisions.

11The trial judge went on to find that Mr. Sherlock was unjustly enriched at the expense of Ms. Mullin in the context of a joint family venture. In so finding, he reviewed the evidence before him in significant and specific detail, including the history of the relationship, Ms. Mullin’s role in the business, the fact that the parties had used the proceeds of a $1,000,000 loan secured by their matrimonial home to finance GS Medical, and the increased value of the business over the course of the relationship.

12Referencing two mortgage applications that had been signed by Mr. Sherlock, the trial judge concluded that Mr. Sherlock’s interest in GS Medical at the date of marriage was $6,000,000. He noted that Ms. Mullin had been “substantially hindered” from adducing expert evidence on the value of Mr. Sherlock’s interest in GS Medical at various times by his failure to provide proper financial disclosure.

13On the basis of the facts as he found them, the trial judge concluded that Ms. Mullin discharged her onus of proving the existence of unjust enrichment on a joint family venture basis. The trial judge concluded there was no juristic reason for the benefit conferred on Mr. Sherlock and the deprivation Ms. Mullin suffered.

14Finally, the trial judge imposed a monetary remedy, finding that the quantum should be 50 percent of Mr. Sherlock’s interest in GS Medical. In finding that Mr. Sherlock’s total interest in GS Medical was valued at $6,000,000, Ms. Mullin was entitled to $3,000,000.

15Turning to spousal support, the trial judge concluded that Ms. Mullin was entitled to support on a compensatory and non-compensatory basis. The parties agreed that any amount awarded should be in the form of a lump sum, and the trial judge considered that such an award was justified by the fact that Mr. Sherlock was unwilling to provide proper financial disclosure and this high conflict litigation required finality. The trial judge awarded a lump sum amount of $365,624 net of tax.

(2) The Costs Order

16In determining an award for costs, the trial judge noted that Ms. Mullin was substantially successful at trial and she did not conduct herself unreasonably during the proceedings. Mr. Sherlock’s bad faith conduct, however, impacted the trial by making proof of Ms. Mullin’s claim more difficult than it ought to have been.

17The trial judge fixed the quantum of costs payable by Mr. Sherlock at $475,000.

D. Issues

18Mr. Sherlock raises five issues on appeal: (1) the trial judge erred in law in his unjust enrichment analysis; (2) the trial judge erred in mixed fact and law in his conclusion and analysis on the joint family venture finding; (3) if the trial judge was correct in his unjust enrichment and joint family venture analysis, he erred in mixed fact and law in accepting incomplete evidence about the value of GS Medical; (4) the trial judge erred by equalizing the value of GS Medical, creating an inconsistent result with the current jurisprudence; and (5) the trial judge erred in his application of the Spousal Support Advisory Guidelines (“SSAGs”).

19In addressing the various grounds of appeal, the following analysis will explain why I would dismiss the appeal.

E. Standard of Review

20The starting point in any appeal is the standard of review. In Lesko v. Lesko, 2021 ONCA 369, 57 R.F.L. (8th) 305, at para. 5, leave to appeal refused, [2021] S.C.C.A. No. 290, this court held that significant deference is owed to orders resolving financial disputes in family law cases. Particularly, “[a]n appeal court should only intervene where there is a material error, a serious misapprehension of the evidence, or an error in law”: Lesko, at para. 5; Hickey v. Hickey, [1999] 2 S.C.R. 518, at para. 12.

21In citing Hickey, this court in Cronier v. Cusack, 2023 ONCA 178, at para. 9, summarized several principles that are instructive to the case at bar:

First, and most significantly, an appeal is not a retrial. Second, the findings of fact made by the trial judge are entitled to deference from this court unless the appellant establishes that the trial judge fell into palpable and overriding error. Third, this is a case that cries out for finality so that these parties can move on with their lives.

F. Analysis

22At the outset, this is an appropriate case for the application of the principles of unjust enrichment, despite the fact that the parties were married. This approach is exceptional because the applicable legislative regime under the FLA fully addresses and remedies any unjust enrichment that would arise upon marriage breakdown in the vast majority of cases: see Iredale, at paras. 22-23; McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401, at para. 66; Martin, at para. 64. Indeed, that is the central purpose of Part I of the FLA.

23Unlike Iredale, however, this is an appropriate case for unjust enrichment between married spouses. The parties were involved in a long term, cohabiting relationship followed by a very short marriage. In these circumstances, the fundamental goal of the equalization provisions of the FLA could not be achieved: see FLA, s. 5(7). Without a finding of unjust enrichment, the end result would only consider the difference in the value of the parties’ assets as at the date of marriage in 2012 and separation in 2013, only ten months later. This would not account for the reality that GS Medical’s most significant growth took place over the years the parties were cohabiting.

(1) Unjust Enrichment

24Mr. Sherlock submits that the trial judge erred at virtually every stage of the application of the unjust enrichment analysis. He does not submit that the trial judge failed to consider the correct legal principles. Further, he submits that “[w]ithout unjust enrichment, there cannot be a joint family venture”. With respect, Mr. Sherlock’s argument is flawed.

25The trial judge meticulously set out and applied the well-established tests for determining whether there was unjust enrichment in the context of a joint family venture, as articulated by the Supreme Court in Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269.

26First, he found that Ms. Mullin gave Mr. Sherlock a benefit which could be restored in specie or in money. In so finding, the trial judge noted the following:

I find that the Applicant conferred on the Respondent a benefit. She worked constantly in the GS Medical business commencing in January of 2001 until the end of 2012. In 2012 she still did special projects for the business. She agreed with the Respondent to a salary reduction so that the business could hire more employees. From September 9, 2011 until December of 2011 she worked full time and received no salary.

Additionally, the Applicant ran the household of the parties so that the Respondent could devote himself to the business. She cooked; was responsible for the maintenance of their home; took care of their dogs; planned their many sailing-related trips; and prepared their sailboats for competition.

27Second, he found that Ms. Mullin had suffered a corresponding deprivation:

The Applicant suffered a deprivation corresponding to the benefit conferred on the Respondent. She gave up her architectural career once she commenced working full time at GS Medical. She provided underpaid and unpaid labour to GS Medical; and performed unpaid domestic services for the parties.

28Third, he found that there was no juristic reason for the benefit conferred on Mr. Sherlock and the deprivation suffered by Ms. Mullin. The trial judge also found that it took place in the context of a joint family venture:

The parties acted in [accordance] with their agreement that they would dedicate their efforts to building the GS Medical business, which would finance their retirement by its sale or operation. The Applicant sacrificed her career in architecture and dedicated approximately a decade to realizing the goals she and the Respondent shared.

29In summary, the trial judge’s analysis was diligent and thorough, engaging with both the facts and the applicable jurisprudence. His conclusions are owed deference on appeal.

30In essence, the heart of Mr. Sherlock’s appeal rests on the argument that the trial judge made a number of basic errors of fact. For example, he argues that there was insufficient evidence to conclude that Ms. Mullin was underpaid or unpaid at GS Medical, therefore there was no benefit provided with a corresponding deprivation. He also argues that Ms. Mullin did not give up architectural work to work for GS Medical because, despite a CV that claimed otherwise, she did not have a degree in architecture. These arguments are of no moment. The trial judge specifically addressed these issues in his reasons. He found that while Ms. Mullin was usually paid, she was effectively underpaid, on the basis of the mutual understanding that her contributions, both professional and domestic, were helping to build their nest egg for their comfortable retirement. There was ample evidence to justify these findings. I find it somewhat ironic that Mr. Sherlock raises the adequacy of the evidence when he repeatedly and chronically breached his obligations to disclose which resulted in the striking of his pleading.

31Moreover, the cases Mr. Sherlock relies upon, such as Derakhshan v. Narula, 2018 ONSC 537, 51 E.T.R. (4th) 59, aff’d 2019 ONCA 742, 142 O.R. (3d) 535, leave to appeal refused, [2019] S.C.C.A. No. 494, are not helpful. For instance, Mr. Sherlock relies on Narula for the proposition that a lack of documentary evidence supporting non-payment for work was fatal in the context of the unjust enrichment analysis. However, Narula’s factual underpinnings are very different. In Narula, the parties were not considered spouses and the claimant was found to have been well-compensated for the services he provided. Additionally, in Narula, both parties testified. It was not a circumstance where there was an absence of evidence resulting in an order striking a pleading for non-disclosure.

32Finally, I see no error in the trial judge’s analysis on the issue of whether Ms. Mullin had shown that there was no juristic reason to deny her recovery.

33Mr. Sherlock argues that the existence of an oral employment contract between the parties and consideration of their mutual reasonable expectations causes the unjust enrichment analysis to fail at the juristic reason stage. I disagree. The parties agreed that they would dedicate their efforts to building GS Medical for their mutual benefit in retirement. As previously mentioned, the trial judge noted that Ms. Mullin sacrificed her career and devoted nearly a decade of her life to realizing the goals both parties shared.

(2) Joint Family Venture

34Similarly, Mr. Sherlock does not take issue with the legal test or “pillars” which premise the existence of a joint family venture as clarified in Kerr, at paras. 90-99, which include: (1) mutual effort of the parties; (2) economic integration of the parties’ finances; (3) actual intent of the parties; and (4) priority of the family. Instead, Mr. Sherlock argues that the trial judge misapprehended the evidence and gave some evidence insufficient weight. Specifically, Mr. Sherlock contends that a joint family venture claim cannot succeed on these facts because there was insufficient evidence about a substantial and direct link between Ms. Mullin’s efforts and GS Medical’s success.

35Again, the trial judge was not only alive to the four considerations underlying the joint family venture analysis, but expressly found that they were met on the basis of Ms. Mullin’s evidence. As I have already set out above, the parties’ joint and central goal throughout their relationship was to develop and expand GS Medical in order to contribute to the nest egg for their retirement. Both parties worked hard to fulfill this goal. They did not invest or otherwise set funds aside for their retirement. The finding that there was a joint family venture was well-grounded in the evidence and open to the trial judge.

36Further, there are two problems with Mr. Sherlock's arguments on this issue. First, according to Kerr, at para. 100, whether there was a joint family venture is a “question of fact” that “may be assessed by having regard to all of the relevant circumstances”. The trial judge accepted Ms. Mullin’s evidence on this point, as he was entitled to do.

37Second, and importantly, the evidence was sparse because Mr. Sherlock’s answer had been struck for his continuing failure to provide proper and full disclosure. It bears repeating that it is somewhat perplexing how Mr. Sherlock takes issue with the trial judge’s findings of fact as they are grounded in the record, particularly when any limitations in the record resulted from his longstanding failure to provide adequate disclosure.

38In short, there is no merit to Mr. Sherlock’s submission that the trial judge erred in his application of the unjust enrichment and joint family venture tests. An appeal is not a retrial which is, in essence, what Mr. Sherlock seeks.

(3) Remedy & the Value of GS Medical

39Mr. Sherlock submits that the trial judge erred in relying on mortgage statements to determine the value of GS Medical and in subsequently ordering that Ms. Mullin was entitled to 50 percent of the value of GS Medical at the time of separation. Even if one accepts the trial judge’s conclusions as to unjust enrichment and joint family venture, he argues, the choice of 50 percent was effectively arbitrary and not based in the evidence. Any monetary award should have been quantified on a quantum meruit or “value received” basis.

40I disagree. This court in Lesko, at paras. 15-16, provided the following guidance:

A monetary award is the default remedy and should suffice in most cases to remedy the unjust enrichment: Kerr, at para. 47; Moore, at para. 89. In Kerr, the Supreme Court of Canada clarified that monetary awards for unjust enrichment could be quantified in two ways. First, a monetary award may be calculated on a quantum meruit or “fee-for-service” basis – the value of the claimant’s uncompensated services. Second, a monetary award may be calculated on a “value survived” basis, by reference to the overall increase in the couple’s wealth during the relationship: Kerr, at paras. 49 and 55.

The concept of joint family venture helps courts to quantify the monetary remedy where a claim of unjust enrichment has been made out. Where the evidence shows that the domestic arrangements under which the unmarried parties have lived amounted to a joint family venture, monetary damages should be calculated on the value survived basis, namely on the basis of a share of the wealth generated in the joint family venture proportionate to the claimant’s contributions: Kerr, at para. 102. If there was no joint family venture, monetary damages calculated on a quantum meruit basis are likely appropriate.

41The trial judge specifically found that there was a joint family venture and that there was “no evidence of bars to recovery of a monetary award or of special ties of [Mr. Sherlock] to GS Medical” that would impact the monetary remedy in this case.

42The trial judge’s factual findings provide a solid foundation for his conclusion that the measure should be “value survived”. Ms. Mullin’s contributions could fairly be regarded as equal to those of Mr. Sherlock, in light of the fact that they were both domestic and non-domestic. As for the 50 percent award, there was little evidence before the trial judge that could have assisted him in coming to a lesser or more precise amount. The only evidence he had as to the value of Mr. Sherlock’s interest in GS Medical was Ms. Mullin’s expert who gave opinion evidence on Mr. Sherlock’s income and business interests and two mortgage applications that Mr. Sherlock had signed which valued GS Medical between $6,000,000 and $6,200,000. In considering this issue of value, the trial judge cited the following passage from Meade v. Meade, at para. 81:

Where disclosure is inadequate and inferences are to be drawn, they should be favourable to the spouse who is confronted with the challenge of making sense out of financial disclosure, and against the spouse whose records are so inadequate or whose response to the obligation to produce is so unhelpful that cumbersome calculations and intensive and costly investigations or examinations are necessary.

43The trial judge was entitled to rely on the signed mortgage applications as a basis for finding the value of GS Medical. Again, had Mr. Sherlock provided proper disclosure, the court may have had more evidence about the value of his interest in GS Medical. He has no one but himself to blame for the absence of such evidence before the trial judge. For this reason, the cases cited by Mr. Sherlock on this point do not assist him. None were cases where answers had been struck for non-disclosure.

(4) Spousal Support

44The trial judge awarded $365,624 in lump sum support net of tax. Mr. Sherlock submits that the trial judge erred in mixed fact and law in his application of the SSAGs. There is no merit to this submission.

45In finding that Ms. Mullin was entitled to both compensatory and non-compensatory support, the trial judge was alive to all the relevant considerations. He found that she gave up her own career to devote herself to the family and GS Medical. The couple lived a “privileged” lifestyle, with a 5,400 square foot home in Port Credit and a condominium in Key West, Florida. They were keen and competitive sailors, spending roughly $100,000 annually on the sport. The parties also golfed, spending significant funds on a club membership. As well, the parties travelled extensively.

46In quantifying the quantum of support, the trial judge imputed $30,000 to Ms. Mullin from 2023 onward. Mr. Sherlock’s income was difficult to determine because of the disclosure issues already discussed. The trial judge quite properly relied on Ms. Mullin’s expert for evidence on Mr. Sherlock’s income. The parties agreed that any spousal support order should be in the form of a lump sum. The parties submitted a number of SSAGs calculations of the appropriate amounts.

47Mr. Sherlock submits that the trial judge erred in failing to consider the property award of $3,000,000 in considering the amount of spousal support awarded. I disagree. The trial judge was alive to this. His analysis of the unjust enrichment and joint family venture claims preceded his analysis of the spousal support claim in his reasons and they form a clear backdrop to them. For example, while Ms. Mullin sought support based on a 12-year duration, the trial judge based his calculations on a ten-year duration.

(5) Costs Awarded by the Trial Judge

48Mr. Sherlock takes issue with the costs awarded by the trial judge in the amount of $475,000. I see no basis for interfering with this amount. The trial judge made this award, which was significantly less than the $848,408.89 amount sought by Ms. Mullin, on the basis of his finding that Ms. Mullin had been substantially successful and that Mr. Sherlock acted in bad faith throughout the proceedings.

G. Disposition

49I would dismiss the appeal. As agreed by the parties, costs in the amount of $20,000, inclusive of tax and disbursements, are payable by Mr. Sherlock to Ms. Mullin.