Court of Appeal for Ontario

Date: 2025-05-26
Docket: COA-24-CV-0600

Panel: Trotter, Thorburn and Wilson JJ.A.

Between:
Xiaoqun Qu
Applicant (Respondent/Appellant by way of cross-appeal)
and
Xuenong Zhang
Respondent (Appellant/Respondent by way of cross-appeal)

Appearances:
Michael H. Tweyman and Celeste Van Ameringen, for the appellant/respondent by way of cross-appeal
Ran Tao, for the respondent/appellant by way of cross-appeal

Heard: 2025-05-08

On appeal from the order of Justice Paul J. Henderson of the Superior Court of Justice, dated May 24, 2024.

Trotter J.A.:

A. Introduction and Background

[1] These appeals relate to the ownership and occupancy of a house held by the parties as joint tenants during their brief marriage.

[2] Mr. Zhang, the appellant on the main appeal, lives in Canada; the respondent, Ms. Qu, lives in China. Mr. Zhang immigrated to Canada from China. He earns money from a home renovation business and from two rental properties. Ms. Qu is employed in a senior management position with a large corporation in China.

[3] The parties met through Ms. Qu’s daughter, who was attending university in London, Ontario and renting a room in one of Mr. Zhang’s rental properties. They were married on July 3, 2016, after a brief courtship. They separated just over a year later, on August 1, 2017. During that time, Ms. Qu spent a total of nine weeks in Canada.

[4] Mr. Zhang added Ms. Qu to one of his existing bank accounts. She advanced a total of $312,342.50 into this account before they were married. There were various transactions that occurred in this account both before and after the parties were married. On October 4, 2016, $240,506.07 was paid from this account as a downpayment on the house. On June 26, 2017, shortly before the parties separated, Ms. Qu’s name was removed from the joint account and $10,000 was moved from this account to another joint account.

[5] The principal issue in this litigation related to the beneficial ownership of the house. Ms. Qu contended that she never intended to gift Mr. Zhang any of the funds that were subsequently used to buy the house. Instead, she wished to invest funds in Canada, ultimately in the house that was purchased with the money she deposited in the joint account. It was Mr. Zhang’s position that, despite the brief marriage and the little time that was spent together in Canada, he considered the money to be a gift and the house was owned by both of them.

[6] The application judge made detailed credibility findings. Overwhelmingly, he rejected the evidence of Mr. Zhang, whom the application judge viewed as a very poor witness. On the other hand, he found Ms. Qu was straightforward and consistent in her evidence, withstanding a lengthy cross-examination over the course of two days. The application judge accepted Ms. Qu’s claim that the monies she deposited in the joint account were for the purpose of investing in Canadian real estate. The application judge accepted Ms. Qu’s evidence that she was not familiar with the financial vehicle of a joint bank account and that they are not common in China. It was never her intention to gift her money or her interest in the house to Mr. Zhang.

[7] Based on these findings, the application judge concluded that, by way of a resulting trust, Ms. Qu was the 100% beneficial owner of the house. In the alternative, he found there was a constructive trust in favour of Qu. He ordered that title be transferred solely into her name.

[8] Further, the application judge ordered Mr. Zhang to pay occupation rent from the time the house was purchased, August 2017, until October 2023. The rent owing was offset by Mr. Zhang’s financial contributions (i.e., carrying costs) to the house. Lastly, he ordered that Mr. Zhang pay Ms. Qu a sum of money to repair damage to the house caused by a roof leak that happened when Mr. Zhang occupied the house by himself.

[9] Mr. Zhang appealed the application judge’s order. By way of cross-appeal, Ms. Qu asked that we vary the application judge’s order and require Mr. Zhang to pay a greater sum of money to repair the house. At the conclusion of the hearing, we dismissed both appeals with reasons to follow. These are my reasons.

B. The Main Appeal

[10] Mr. Zhang submits that the application judge erred in finding that Ms. Qu was the 100% beneficial owner of the house, whether by way of a resulting or constructive trust. He also submits that the application judge erred in ordering occupation rent.

(1) The Resulting Trust Claim

[11] As a general proposition, the law presumes that gratuitous transfers between individuals are not intended as gifts: Pecore v. Pecore, 2007 SCC 17, at para. 24. As Juriansz J.A. said in Belokon v. Krygyz Republic, 2016 ONCA 981, at para. 56: “The presumption of resulting trust flows from the principle that equity presumes bargains and not gifts.”

[12] However, the presumption may be rebutted, on a balance of probabilities, by evidence showing that the transferor intended the transfer, whether money or other property, to be a gift: Pecore, at paras. 24, 43; Kerr v. Baranow, 2011 SCC 10, at para. 18. This must be based on “sufficiently clear, convincing and cogent” evidence: F.H. v. McDougall, 2008 SCC 53, at para. 46. I return to the nature of the evidence required to rebut the presumption below.

[13] Section 14 of the Family Law Act, RSO 1990, c F.3 (“the FLA”) adds an important gloss to these principles. The provision states:

14 The rule of law applying a presumption of a resulting trust shall be applied in questions of the ownership of property between spouses, as if they were not married, except that,

(a) the fact that property is held in the name of spouses as joint tenants is proof, in the absence of evidence to the contrary, that the spouses are intended to own the property as joint tenants; and

(b) money on deposit in the name of both spouses shall be deemed to be in the name of the spouses as joint tenants for the purposes of clause (a). [Emphasis added.]

[14] The effect of this provision is that, if spouses hold property as joint tenants, or if money is on deposit in the name of both, that is sufficient to prove joint ownership in the absence of evidence to the contrary on a balance of probabilities. Thus, the presumption is reversed in these circumstances; the transferor must rebut the presumption that the property or funds were intended to be a gift.

[15] With these principles in mind, the application judge analyzed the financial arrangements between the parties during three time periods: (a) money deposited into the account before the marriage; (b) money deposited into the account during the marriage; and (c) the purchase of the house from the joint account during the marriage.

[16] In terms of the pre-marriage deposits, the application judge found that the onus in s. 14 of the FLA did not apply because Mr. Zhang and Ms. Qu were not spouses at the time. Consequently, the onus was on Mr. Zhang to rebut the presumption of a resulting trust. The application judge found that he failed to do so. The application judge said, at para. 21: “I find that [Ms. Qu’s] intention was always to use her funds to purchase real estate in Canada for investment purposes.”

[17] The application judge found that, in relation to funds deposited into the joint account during the marriage, Ms. Qu provided “sufficient evidence” to the contrary to rebut the presumption arising from s. 14 of the FLA. He reached the same conclusion in relation to the purchase of the house.

[18] Mr. Zhang submits that the application judge erred in a number of ways. First, he submits that the application judge erred in dealing with funds advanced before the parties were married by improperly reversing the onus of proof. He contends that the presumptions in s. 14 of the FLA applied because the parties did in fact become spouses, even though they were not at the time. Mr. Zhang submits that, once the parties are married, and s. 14 is engaged, the dates when the transfers took place are “irrelevant”.

[19] In making this submission, Mr. Zhang acknowledges that this court has not confronted the issue head on. However, he relies on Holtby v. Draper, 2017 ONCA 932, in which van Rensburg J.A. said the following, at para. 65:

The point of departure in considering the initial transfer to Ms. Draper is that the parties became joint registered owners of Lot 8, which, once they married in October 1995, created a rebuttable presumption in favour of joint tenancy. As such, Mr. Holtby was not entitled to rely on a presumption of resulting trust, and he had the onus of establishing, by evidence to the contrary, that his intention was not to transfer a beneficial interest to Ms. Draper. [Italics in original; underlining added.]

[20] It is not necessary to consider whether this passage stands for the broad proposition advanced by Mr. Zhang. As I will explain, the application judge concluded that Ms. Qu’s intention at all material times was not to transfer the property and funds as a gift. Thus, in the circumstances of this case, it does not matter whether the presumption was erroneously reversed with respect to the money deposited into the account before the marriage. Even if Ms. Qu carried the burden of proof, the application judge’s findings of fact necessarily lead to the conclusion that there existed a resulting trust.

[21] That brings me to Mr. Zhang’s overarching position, which is that the application judge’s finding that Ms. Qu rebutted the presumption created by s. 14 was unreasonable, tainted by error. He submits that the application judge’s approach to the evidence was misplaced. The application judge, according to Mr. Zhang, became side-tracked by matters relating to the credibility of the parties, when he should have been focused on the intention of Ms. Qu at the time the funds were advanced to purchase the house. Moreover, the application judge erred in finding that Ms. Qu did not intend to make a gratuitous transfer in the absence of sufficient evidence. I do not accept these submissions.

[22] Mr. Zhang relies on MacIntyre v. Winter, 2021 ONCA 516, in which Nordheimer J.A. held that the application judge became unduly focused on the credibility of the parties and, in the process, failed to address the central issue of the intention of the transferor; instead, the application judge erroneously inquired into the intention of both parties: at para. 24. In this case, determining the credibility of the parties, and Ms. Qu’s credibility in particular, was crucial to the resolution of this legal dispute. There was little else to go on beyond the evidence of the parties and various banking documents generated through their financial dealings.

[23] This leads to Mr. Zhang’s further submission that the application judge erred in finding that Ms. Qu had rebutted the presumption in the absence of evidence that corroborated or confirmed her stated intentions. Mr. Zhang relies on the words of Rothstein J. in Pecore, at para. 41, where he said that the presumption must be rebutted by “bringing evidence to support his or her claim”. He submits that, in this case, the testimony of Ms. Qu, standing alone, was incapable of being “sufficiently clear, convincing and cogent” evidence of her intent, as contemplated by Rothstein J. in F.H., at para. 46.

[24] I do not accept these submissions. In a perfect world, at least for litigation purposes, people would more carefully document their financial affairs, especially in relation to important purchases and transfers. Confirmatory evidence may make it easier for a trier of fact to resolve property disputes; however, it is not always available: MacIntyre, at para. 38; Chao v. Chao, 2017 ONCA 701, at para. 54.

[25] I do not take Rothstein J.’s reference in Pecore to “bringing evidence” to mean that the testimonial evidence of the party who carries the burden, standing alone, will necessarily be deficient for this purpose. Indeed, as Rothstein J. subsequently wrote in F.H., at para. 46:

Similarly, evidence must always be sufficiently clear, convincing and cogent to satisfy the balance of probabilities test. But again, there is no objective standard to measure sufficiency. In serious cases, like the present, judges may be faced with evidence of events that are alleged to have occurred many years before, where there is little other evidence than that of the plaintiff and defendant. As difficult as the task may be, the judge must make a decision. If a responsible judge finds for the plaintiff, it must be accepted that the evidence was sufficiently clear, convincing and cogent to that judge that the plaintiff satisfied the balance of probabilities test. [Emphasis added.]

See also Eileen E. Gillese, The Law of Trusts, 3rd ed. (Toronto: Irwin Law Inc., 2014), at p. 117: “Any admissible evidence, writing or parol, may be adduced to rebut the resulting trust, including circumstantial evidence.”

[26] In any event, the application judge did look for confirmation in the evidence. He observed that, back in China, Ms. Qu was an experienced investor in real estate, having bought and sold 10 properties. Ms. Qu testified that she told her daughter that she wished to buy an investment property in Canada and vest title in her daughter’s name. However, her daughter consistently refused because she wanted to concentrate on her studies. The application judge found that this assertion was confirmed by the testimony of Ms. Qu’s daughter. This was circumstantial evidence that assisted in bolstering Ms. Qu’s evidence of her intention at the time she advanced the funds to purchase the house.

[27] Mr. Zhang characterizes Ms. Qu’s evidence as mere “narrative” and submits that this is the type of self-serving evidence that the courts need to guard against (citing MacIntyre, at para. 41). But the evidence of parties to a legal dispute is always self-serving to an extent; the question is whether it is genuine, capable of being believed. Similarly, characterizing Ms. Qu’s evidence as “narrative” is not helpful to Mr. Zhang’s cause. Her stated intention at the time that the house was purchased was the culmination of a series of events that transpired between the two parties. Her narrative account shed light on her intentions at the time. The application judge accepted her evidence on this issue as genuine, a finding that is entitled to considerable deference on appeal.

[28] Lastly, Mr. Zhang submits that, in finding that Ms. Qu did not intend her transfer of funds and the subsequent acquisition of the house to be gratuitous, he overlooked evidence that pointed in the opposite direction. He relies upon aspects of Ms. Qu’s evidence in which she used the expression “we” in relation to buying furniture, purchasing the house, and calculating how much money in rent could be derived from renting rooms in the house.

[29] I am not persuaded by this submission. The application judge set out in detail his reasons for accepting Ms. Qu’s evidence of her intention at the relevant times. He was not required to refer to every piece of evidence in his reasons, especially if it was not important. Moreover, this evidence was more probative of an intention to live in the house and build a life together, rather than an intention by Ms. Qu to gift substantial assets to Mr. Zhang.

[30] Given my conclusion on this ground of appeal, it is not necessary to consider Mr. Zhang’s submissions on the application judge’s finding of a constructive trust in favour of Ms. Qu.

(2) Occupation Rent

[31] The application judge awarded Ms. Qu occupation rent to account for the period of time that Mr. Zhang lived in the house. He occupied the house from January 2017 until October 2023 and was ordered to pay rent from August 1, 2017 (the date of separation) until he vacated the property. Except for a total of nine weeks, Ms. Qu lived in China.

[32] Based on the evidence of a real estate expert, who estimated that the house could be rented at $3,000 per month, the application judge calculated occupation rent at $204,000. He then credited Mr. Zhang for payments made towards property taxes, the mortgage, home insurance, repairs, and utilities, totaling $216,641.66. He therefore set the occupation rent owed off against Mr. Zhang’s expenditures and determined that he was owed $12,641.66.

[33] Mr. Zhang submits that this was not an appropriate case for occupation rent. The application judge referred to Non Chhom v. Green, 2023 ONCA 692, in which the court held, at para. 8, citing Griffiths v. Zambosco: “While it is settled law in Ontario that an order for occupation rent be reasonable, it need not be exceptional”. The court further stated, at para. 9, citing Griffiths:

The relevant factors to be considered when occupation rent is in issue in a family law context are: the timing of the claim for occupation rent; the duration of the occupancy; the inability of the non-resident spouse to realize on their equity in the property; any reasonable credits to be set off against occupation rent; and any other competing claims in the litigation.

[34] Applying these factors, the application judge found that Mr. Zhang’s occupancy of the house deprived Ms. Qu of the use of the property. She could not reside at the house because she lived in China and never took steps to move to Canada. She could not rent it out to someone because Mr. Zhang lived there rent-free. This enabled Mr. Zhang to rent out his own investment properties.

[35] Mr. Zhang submits that another factor that weighs against the award of occupation rent is the increase in the value of the house. Mr. Zhang claims that he contributed to the value of the house through improvements that he made. He claims that the increase in value will amount to an unfair windfall for Ms. Qu.

[36] I do not accept this submission. As the 100% beneficial owner of the property, Ms. Qu is entitled to any increase in value, subject to the carrying cost credits that the application judge awarded to Mr. Zhang. As for the renovations or improvements to the house, the application judge found that the arrangements between the parties as to how Mr. Zhang would be compensated were vague. In any event, Mr. Zhang halted his renovation efforts soon after the marriage failed. The application judge considered this to be some evidence that, at least as far as Mr. Zhang was concerned, he did not consider himself to have a beneficial interest in the house.

[37] I would dismiss the main appeal.

C. The Cross-Appeal

[38] Ms. Qu submits that the application judge erred in not requiring Mr. Zhang to pay $30,000 into court to cover the potential costs involved in repairing water damage to the house.

[39] At some point during Mr. Zhang’s occupancy of the house, the house sustained damage from a leak in the roof. At trial, Ms. Qu tendered the evidence of a structural forensic engineer, Blake Schoffer, who estimated that the cost to repair the known damage was between $6,000 to $9,000. Mr. Schoffer noted that there was potentially more damage to the house; however, this could not be determined without removing existing interior finishes. The application judge awarded the lesser of $6,000 to $9,000 for repairs. He refused to order that $30,000 be paid into court to cover the costs of potential future repairs.

[40] In my view, the application judge made no error in restricting his award to the actual damage established by the evidence, and not a larger amount for latent damage, a claim that was speculative. Ms. Qu can point to no error in the application judge’s analysis. His finding was supported by the evidence of Mr. Stoffer, to which he referred in his reasons.

[41] I would dismiss the cross-appeal.

D. Conclusion

[42] The appeal is dismissed, as is the cross-appeal. The parties are agreed on costs for each appeal: $10,000 payable to Ms. Qu on the main appeal and $1,500 payable to Mr. Zhang on the cross-appeal. Accordingly, Mr. Zhang shall pay Ms. Qu costs of $8,500, inclusive.

Released: 2025-05-26

“G.T.T.”
“Gary Trotter J.A.”
“I agree. Thorburn J.A.”
“I agree. D.A. Wilson J.A.”