Court File and Parties
Newmarket Court File No.: FC-17-54895 Date: 2019-03-04 Superior Court of Justice - Ontario
Re: Xiaojun Jiang, Applicant And: Yurong Zeng, Respondent
Before: The Honourable Madam Justice H. McGee
Counsel: P. Leung, Counsel for the Applicant A. Cheng, Counsel for the Respondent
Heard: February 27, 2019
Ruling on Motions
[1] Today’s amended motion and cross-motion can be found in Volume 5, Tabs 4 and 10 respectively of the Continuing Record. The Orders sought are extensive and interrelated. I will first set out the background relevant to the motions before me today, as presented within the parties’ pleadings, affidavits and factum.
Background
[2] 42 year old Mr. Yurong Zeng and 32 year old Ms. Xiaojun Jiang married in China on August 18, 2010. It was a second marriage for both, and each had a child from their first marriage.
[3] At the time of marriage, Mr. Zeng was a Canadian resident, and he soon began the process of sponsoring his new bride and her daughter to Canada. They subsequently had a daughter together: Heilok, born April 28, 2011. Ms. Jiang and the girls arrived in Canada in October 2012. Neither Ms. Jiang nor her older daughter spoke fluent English.
[4] Upon arrival, Ms. Jiang and her daughter joined Mr. Zeng and his son at the residence of his sister. At the time of this motion Ms. Jiang’s daughter is 13 years old and Mr. Zeng’s son is 25.
[5] Mr. Zeng is a home contractor and general tradesman. Ms. Jiang had no particular training at the time of marriage, but both parties were hard working, ambitious and eager to make money. Together, they invested in a window covering business and began buying and selling homes. From the record currently available to me, it appears that every real estate transaction conducted by either or both of them was put in Ms. Jiang’s name.
[6] In November of 2013 the parties purchased their matrimonial home: 41 Cathedral High Street, Markham, Ontario for $481,239. On title, it was financed with a down payment of $260,000 and a TD Bank mortgage for $364,000.
[7] The origin of the down payment will be in issue at trial. Ms. Jiang says that neither of them had any money at the time, and that the $260,000 down payment (and lesser, subsequent advances to maintain the property) were funded by her father and sister. After the property was purchased, she caused a collateral mortgage in their names to be placed on title to secure the $260,000. The existence of the family loan was not disclosed to the TD Bank at the time that the mortgage funds of $364,000 were advanced.
[8] Mr. Zeng says that the $260,000 did not come from his wife’s family, but rather, from Ms. Jiang’s own significant funds, and that the collateral mortgage is fraudulent. He claims that his father and sister-in-law are effectively impecunious.
[9] Meanwhile, Ms. Jiang’s father and sister – now parties to this action - claim to be the beneficial owners of 41 Cathedral as they advanced the purchase monies for the property placed in Ms. Jiang’s name. They are not participating in this motion which focusses on the sale of the property, with the proceeds to be paid into court.
[10] Mr. Zeng builds on his view of Ms. Jiang’s independent wealth through a number of confusing assertions that will need to be determined at trial. I cannot assess these assertions on a motion. I am not in a position to determine credibility, or the authenticity of documents, particularly untranslated foreign documents.
[11] What the parties do agree on, is that family life at 41 Cathedral proved most unpleasant. It was a three bedroom home above commercial premises. Mr. Zeng’s mother lived in one room, his son lived in another room, and he, Ms. Jiang and the two girls shared one cramped room.
[12] The window covering business was operated from the first floor. At some point, the business failed and to this day, the first floor remain empty.
[13] Ms. Jiang recounts that the space pressures lead the couple to purchase a second home: 38 Beasley Drive in Richmond Hill for $1,330,000. According to Ms. Jiang, the $489,000 down payment again came from her father and her sister. As evidence of the advance, a promissory note is included in Ms. Jiang’s materials. The balance of the purchase price: $864,000 was financed by the Bank of Montreal. Again, the Bank was not advised that the down payment monies were a family loan.
[14] The purchase of 38 Beasley closed on July 29, 2016 and was registered in the name of Ms. Jiang. But only she and the girls moved into the home. She asserts that the parties separated the day before closing.
[15] Mr. Zeng says that he began the move to 38 Beasley, but never finished transferring his and his mother’s belongs due to an argument over the allocation of rooms in the new residence. His son and his mother remained at 41 Cathedral, where they live to this day. He pleads an August 4, 2016 date of separation.
[16] Ms. Jiang and her daughters live at 38 Beasley to this day. Much of the premises are rented in order to assist with finances. Ms. Jiang operates a business from the garage.
[17] Litigation began with the issuing of this Application on November 16, 2017. Ms. Jiang asked for a divorce, child and spousal support, custody, an equalization payment, exclusive possession, the freezing of assets, sale of 41 Cathedral, and occupancy rent for 41 Cathedral or the payment of expenses.
[18] She discloses annual income of $35,000 and calculates a negative net family property, deducting from the value of property not only the mortgages, but the family loans.
[19] Mr. Zeng answered the Application on all points, and in addition sought a restraining Order, an Order that Ms. Jiang holds seven properties on a constructive or resulting trust basis and oddly, an Order adding CRA as a party to the action. He wants CRA to know that Ms. Jiang has never paid capital gains on any of her property transactions. [1]
[20] Mr. Zeng’s Financial Statements filed to date shows annual income in the range of $20,000 per year and under, and net family property of $12,287. He is paying table child support for Heilok based on imputed minimum wage of $30,000 per year. His counsel emphasized during submissions that $30,000 is much more than he actually earns.
[21] On the face of things, there is no range for Mr. Zeng to pay spousal support after the payment of child support; and Mr. Zeng owes Ms. Jiang a nominal equalization payment. There is no prospect that either party can maintain the costs of home ownership in York Region.
Mr. Zeng’s December 18, 2018 Notice of Motion
[22] This twice amended motion is found at Volume 5, Tab 4. All prior motions are dismissed. I make the following Orders.
Order Changing Mr. Zeng’s Access
[23] When too many items for relief are claimed in a one hour motion, not every claim can be successfully advanced. The relief sought is simply spread too thin. Such is the situation with the father’s claim for a change in access. Ms. Cheng made only cursory submissions and none were received from Ms. Leung. I have reviewed the written materials, and there is an insufficient basis to determine the request. No Order is made changing access.
Interim Disbursements
[24] Mr. Zeng asks for $50,000 in disbursements. His counsel offers no analysis per Rule 24(18) or the relevant case law. I have no proposed litigation budget, nor do I see any manner in which Ms. Jiang could fund such a request. The claim is dismissed.
Disclosure and Questioning
[25] On consent, Order to go that Mr. Zeng has until March 31, 2019 to comply with my consent Order of December 13, 2018.
[26] Order to go that Mr. Zeng’s Questioning shall proceed on April 12, 2019 for a full day.
Restraining Order
[27] Mr. Zeng asks for a restraining Order against his former spouse.
[28] Section 46 of the Family Law Act allows the court to make a temporary restraining Order if the moving party has reasonable grounds to fear for his or her safety. Restraining Orders are serious and should not be ordered unless a clear case has been made out. [2] There are criminal consequences for a breach, it can adversely affect a person’s ability to work and it can limit one’s liberty. It is not sufficient to argue that there would be no harm in granting the Order, or that there was a prior justification. [3]
[29] Before the court can grant a restraining Order, it must be satisfied that there are imminent and reasonable grounds for the person to fear for his or her own safety or for the safety of their child. [4]
[30] Ms. Cheng relates no recent incidents sufficient to the making of a restraining Order against Ms. Jiang personally. A Peace Bond between the parties has run its course without incident. I decline to make an Order for a restraining Order.
Exclusive Possession
[31] Mr. Zeng asks for an Order for exclusive possession of 41 Cathedral, the ability to rent the ground floor and that he retain the income. He proposes that with the rental income he will pay all utilities, mortgage payments and realty taxes on the building, or in the alternate, $1,500 per month.
[32] This is a wholly untenable request, as it rests on the premise that Mr. Zeng has the legal ability to enter into a lease for 41 Cathedral and to enforce the terms of such a lease. He does not. He is not the owner of the property.
[33] Despite full argument, I remain unclear whether Ms. Cheng proposes that Mr. Zeng’s continued occupancy continues so long as he pays certain expenses, or, that he would rent the premises to cover those expenses. Because the latter is not available to him, I must assess his request in terms of his own finances. In that regard, his counsel has been clear that his actual income no more than $20,000 per year.
[34] Mr. Zeng provides no evidence that his mother, or his son are able to contribute to the costs of 41 Cathedral. He says they are dependent on him.
[35] Ms. Cheng asserts that her client has had de facto exclusive possession as a result of the Peace Bond. Perhaps, but this does not equate to an Order for exclusive possession.
[36] Exclusive possession is an Order only available pending the sale of a matrimonial home. An Order for exclusive possession cannot be used to frustrate an owner’s prima facie right to the sale of the home. The sale of the matrimonial home can be ordered prior to Trial on a motion, or at Trial. Ms. Jiang asks in her motion for the immediate sale of the home. Mr. Zeng asks that a sale not be considered until after Trial.
[37] The sale of a matrimonial home will generally be ordered on a motion unless there are children residing in the home, per section 24(3) (a) of the Family Law Act, or, an entitlement under the Act that would be otherwise defeated.
[38] The purpose of section 24(3) is to preserve stability and continuity in the lives of children while their parents’ legal issues are determined. In these circumstances, the dependent children are in Ms. Jiang’s care and are not resident in the former matrimonial home. Mr. Zeng’s son is an adult of 25 years.
[39] The test then rests on section 24(3) which reads:
(3) In determining whether to make an order for exclusive possession, the court shall consider,
(a) the best interests of the children affected;
(b) any existing orders under Part I (Family Property) and any existing support orders;
(c) the financial position of both spouses;
(d) any written agreement between the parties;
(e) the availability of other suitable and affordable accommodation; and
(f) any violence committed by a spouse against the other spouse or the children.
[40] Mr. Zeng asserts that he has nowhere else to live and that he and his elderly mother will be “out in the cold” should the property be sold. Such a proposal, even if made genuinely, conflates the issues of sale and possession. Ms. Jiang does not propose vacancy pending a sale, only that a sale proceed in the ordinary course.
[41] The appropriate analysis in these circumstances is 24(3) (c); the financial position of the parties. On his own evidence, Mr. Zeng cannot afford to pay the utilities, mortgage payments and realty taxes, or even the alternate proposed amount of $1,500 per month. Neither can Ms. Jiang. Bank sales of both properties in her name are on the horizon, with or without rental income from the first floor of 41 Cathedral. [5]
[42] I must emphasis the impossibility of Mr. Zeng’s position. He vigorously asserts that he earns $20,000 or less a year. He cannot at the same time claim the ability to pay child support and $1,500 a month to Ms. Jiang for occupancy costs. The property is not his to rent. He cannot compel his former spouse to rent the property when it is her desire to sell the property.
[43] I have reviewed Ms. Jiang’s most recent Financial Statement deposed January 8, 2019. She shows annual income of $8,517 and property costs of $7,627 per month. Although her financial circumstances also bear careful scrutiny, it is uncontroverted that she alone is responsible for the two bank mortgages: TD Bank and Bank of Montreal. These two instruments exceed $1,340,000 in outstanding debt.
[44] It is not unreasonable for Ms. Jiang to sell 41 Cathedral. 38 Beasley is the children’s residence and generates some rental income. It is also the location of her business which generates income necessary to the family given Mr. Zeng’s lack of earnings.
[45] I find no basis to grant Mr. Zeng exclusive possession of 41 Cathedral. The parties have been separated for two and a half years, it is reasonable for Ms. Jiang to sell the property and Mr. Zeng cannot afford to meet the expenses of 41 Cathedral pending trial. [6] The residence of his mother and adult son are outside the scope of a claim for exclusive possession. Ms. Jiang states that Mr. Zeng’s sister’s residence remains available to him, his mother and his son.
[46] I will include in this section a comment on Mr. Zeng’s claim for the sale of 46 Glen Cameron, Markham, Ontario found at paragraph 7 of his Notice of Motion. He proposes this as an alternative to the sale of 41 Cathedral and says that it is a property owned by Ms. Jiang. I was not directed to any evidence of ownership of 46 Glen Cameron. It does not appear in Mr. Zeng’s Financial Statement, or Ms. Jiang’s. On this motion it is a mystery to me; and even if it is owned by Ms. Jiang, there is no basis upon which he can compel its sale prior to trial.
Ms. Jiang’s January 8, 2019 Notice of Motion
[47] Ms. Jiang asks for Orders to lift the designation of matrimonial home on 41 Cathedral, that Mr. Zeng, his mother and son move from the property and that she be permitted to sell the property in 90 days. She then asks for Orders governing the conduct of the sale, including dispensing with Mr. Zeng’s consent to its listing and closing.
[48] In the alternative, she asks for an Order that Mr. Zeng pay the mortgage, property taxes, utilities, insurance and all other expenses. As determined above, Mr. Zeng has no ability to meet any expenses for the home. I will not consider the alternative relief further.
[49] It is proposed that the sale proceeds, net only of the TD mortgage be paid into court. This will allow the trial judge to determine the validity of a collateral mortgage in favour of Ms. Jiang’s father and sister, and/or their trust claim; the equalization claim, as well as Ms. Jiang’s claim to occupation rent.
Sale of 41 Cathedral
[50] An owner of property has a prima facie right to sale.
[51] A matrimonial home may be sold without spousal consent when the evidence does not support a realistic need to maintain the house as a home for the benefit or stability of the children pending trial; [7] unless the sale would defeat a meritorious claim by the other party.
[52] Mr. Zeng’s claim in these circumstances is for a payment of equalization. [8] If he is successful in demonstrating that the down payment for 41 Cathedral came from the wife’s personal funds, and not from her father and sister, an equalization payment may result, depending on the balance of property findings.
[53] Because Ms. Jiang has agreed that the sale proceeds inclusive of the contested down payment, and any post-separation increase in value are to be paid into court, Mr. Zeng’s claim will not be defeated by a sale. In fact, it may be facilitated by a sale. If he is successful in his claim for equalization there are no funds to realize upon, but for sale proceeds.
[54] I find that 41 Cathedral must be sold as soon as possible. The parties cannot afford to maintain it. It is a significant source of conflict and the proceeds of sale have the potential to provide vital advance funding, or to fund a settlement, or to secure an equalization payment.
[55] I will not make an Order compelling Mr. Zeng to give vacant possession of the premises pending the closing of the sale, provided that he, his mother and son are cooperative with the listing, showing and sale; and that he continue to pay all utilities associated with their use of the premises until sale. Should any of these terms be breached, Ms. Jiang is at liberty to return the matter for an Order for vacant possession pending sale.
[56] Order to go that 41 Cathedral High Street, Markham, Ontario be sold and that the closing date shall not be before June 30, 2019 unless the parties otherwise agree in writing.
[57] Order to go that Mr. Zeng shall cooperate in all respects with the showing and maintenance and availability of 41 Cathedral necessary to its showing and sale.
[58] Order to go that the whole of the sale proceeds, but for the outstanding TD Bank mortgage, realty taxes, real estate legal fees, realtor commission and sale adjustments shall be held in trust by the real estate lawyer, pending a court Order to pay the exact proceeds to the Accountant of the Superior Court of Justice.
Dispensing with Mr. Zeng’s Spousal Consent
[59] Pursuant to section 21 of the Family Law Act, the spouse who owns a matrimonial home requires either the other spouse's consent or a court Order to sell the matrimonial home. A court Order is generally sought when a spouse is unreasonably withholding consent, or is unavailable, or no longer capable of providing consent.
[60] Section 23 provides in part:
The court may, on the application of a spouse or person having an interest in property, by order,
(b) authorize the disposition or encumbrance of the matrimonial home if the court finds that the spouse whose consent is required,
(iii) is unreasonably withholding consent, subject to any conditions, including provision of other comparable accommodation or payment in place of it, that the court considers appropriate.
[61] In the ordinary course, a motion to dispense with consent is a secondary motion that follows a party’s breach of a court Order, or other inappropriate behaviour which has frustrated the sale. [9]
[62] Because Mr. Zeng’s counsel focussed her advocacy on other concerns, I am not assured of Mr. Zeng’s conduct should the home be ordered sold. When there is no evidence that a party will not cooperate with the sale of a matrimonial home, it is not appropriate to make an Order under section 23 of the Family Law Act dispensing with consent for the sale and listing of the home. [10]
[63] At the same time, Rule 2 requires me to deal with cases in a manner that saves time and expense. I do not want to see the parties back in a number of weeks because Mr. Zeng is not cooperating with the listing of the property. The listing can be a substantial undertaking. The quality of photos, MLS information and accessibility have real effects on the sale price and length of the listing.
[64] I will only make the Order sought at paragraph 5 of Ms. Jiang’s Notice of Motion, and will decline making further Orders in the expectation of Mr. Zeng’s reasonable conduct on the sale, particularly in regard to paragraph 56 above. Order to go that Mr. Zeng’s spousal consent to the listing, and listing terms for 41 Cathedral High Street, Markham, Ontario is hereby dispensed.
[65] Should Mr. Zeng, his son or his mother in any manner frustrate the sale, Ms. Jiang may renew her motion for vacant possession pending sale, and/or to dispense with Mr. Zeng’s consent to sale, with costs to follow.
Division of Sale Proceeds
[66] I decline to make any Orders at this time with respect to the sale proceeds. It is premature and outside the scope of a one hour motion.
Costs
[67] If the parties are unable to agree on costs, the applicant’s costs submissions shall be served and filed by March 14, 2019; the respondent’s costs submissions shall be served and filed by March 25, 2019; the applicant’s Reply, if any, shall be served and filed by April 4, 2019. Costs submissions shall not exceed three typed pages plus copies of any Offers, or Bills of Costs to be filed in the Continuing Record. Once the parties have filed their costs submissions in the Continuing Record, please confirm that you have done so by emailing my assistant at nurit.suzana@ontario.ca.
Justice H. McGee Date: March 4, 2019
Footnotes
[1] If true, those taxes owing will reduce Ms. Jiang’s net family property as actual or anticipated tax liabilities are debts on the date of separation. [2] Ciffolillo v. Niewelglowski, 2007 ONCJ 469 [3] Edwards v. Tronick-Wehring 2004 ONCJ 195 [4] McCall v. Res, 2013 ONCJ 254 [5] This concern is particularly acute now that Ms. Jiang has deposed in this public proceeding that both down payments: 41 Cathedral and 38 Beasley were from family loans – compounded by her father and sister’s assertion that she is not the beneficial owner of 41 Cathedral. What realizable security do either the TD Bank or the Bank of Montreal have in the respective properties? [6] Trial is presently targeted for November 2019. The parties have agreed on a Trial Scheduling Conference date of June 17, 2019, after the May sittings. [7] Goodman v. Goodman, 2014 CarswellOnt 7931, 2014 ONSC 3466 [8] Which he asserts in his pleadings includes a claim for variation of share. He also asserts a constructive trust, but in a manner that is inconsistent with case law. In any event, a rectified trust claim would still be protected by the payment into court of all net proceeds but for the TD Bank mortgage, realty arrears and closing costs. On this possible trust claim, parties should be forewarned that there is presently no evidence that the value of the property has increased post-separation. Given the date of separation, and current market conditions, it is not impossible that the property has decreased in value. [9] Davidson v. Davidson, 2018 CarswellOnt 15448, 2018 ONSC 5463 [10] Miller v. Miller, 2016 ONSC 3027, 2016 CarswellOnt 7234