Court File and Parties

Newmarket Court File No.: FC-16-50654-00 Date: 20200501 Ontario Superior Court of Justice

Between: Lakmini Udeshika Liyange Jayawickrema, Applicant And: Aravinda Liyanage Jayawickrema, Respondent

Counsel: J. Wijesundera, Counsel for the Applicant E. Moaveni, Counsel for the Respondent

Heard: November 20, 21, 22, 25, 26, 27, 28, 2019

Reasons for Decision

JARVIS J.

Introduction

[1] The applicant (“the wife”) and the respondent (“the husband”) married on December 14, 2012. There is one child of the marriage SSL (“the child” or “SSL”) born on October 30, 2013. The parties dispute their date of separation: the wife claims that it was October 6, 2015 whereas the husband claims that it was December 28, 2015. This dispute impacts the determination of the equalization payment presumptively owed by one party to the other.

[2] Commendably, the parties resolved parenting of SSL before trial [1] and, shortly after the trial started on November 20, 2020, Rowsell J. made an Order disposing of the issue of spousal support. [2] Issues involving the husband’s income and child support were resolved during the trial. [3] Although the difference in the parties’ separation dates is modest (about two months, three weeks) there is a considerable difference in what each spouse claims is owed to them by the other spouse: the wife claims that the husband owes her $69,896.77 but is prepared to accept $50,000 to reflect a period of cohabitation less than five years; the husband claims that the wife owes him $92,361.54. Not all of this dispute is the result of significant fluctuations in the values of the parties’ assets and debts between their dates but rather their respective financial disclosure failures and their inability to consistently record those values and sensibly deal with their differences, often very modest.

[3] Each party testified. The wife called three experts to give opinion evidence about the husband’s income and value of his business interests in Canada and Sri Lanka. The husband called his father, and an expert on the value of the husband’s business interests.

[4] These are the trial issues: (a) The identification of the valuation date; (b) Determination of the equalization payment; and (c) Whether it would be unconscionable to equalize the parties’ net family properties and, if so, the amount of the award.

[5] Pertinent to the determination of these issues are the witnesses’ credibility and, as regards the experts, their qualifications, the scope of their respective engagements and the reliability of the information on which their opinions are based. I will address these in more detail below where appropriate.

Background

[6] The parties were born and raised in Sri Lanka.

[7] In 2009 the husband and his family immigrated to Canada under the Canada investor program. The husband’s family had a successful textile importing and distributing business in Sri Lanka whose majority shareholders were the husband’s parents: the husband and his sister were minority shareholders. The family planned to retain their business operations in Sri Lanka and to start a related business in Ontario. The husband’s parents bought a residence in Aurora, Ontario and frequented between there and Sri Lanka.

[8] After moving to Canada, the husband obtained an MBA from a highly-reputed business school in Ontario, then worked for a healthcare product company before working in the family’s start-up company in Ontario. By 2012, he had become a permanent resident of Canada. The wife was then living and working in the United States. Her parents lived in Sri Lanka.

[9] The parties’ marriage was arranged by their parents after the husband’s mother responded to an advertisement by the wife's parents about her marriage eligibility in a Sri Lankan newspaper. Among other things, the husband was represented as being an owner/director of a family company in the Greater Toronto Area. The husband was looking for an educated spouse willing to live in Canada. The wife was, in fact, very well-educated: she had obtained a Bachelor of Science degree from a University in the United Kingdom then moved to the southern United States where she earned a dual master's degree in project management and corporate finance. The parents met, the parties met, and, after a short courtship, the parties married in Columbo, Sri Lanka.

[10] After their marriage, the husband sponsored the wife’s February 2013 admission to Canada. The parties lived in the family home owned by the husband's parents who also resided there when not in Sri Lanka. This is the home where SSL lived after his birth in October 2013 until his parents separated. Also living there was the husband's younger sister. She returned to Sri Lanka in 2014 where she married and remains.

[11] The wife began to work with the husband in the family business, Luxmi Lotus Incorporated (“Luxmi”), the successor in name to a company that was incorporated in 2009 under the Canada Business Corporations Act. Its initial mandate was the importation and distribution of knitted fabrics. No shares were issued. [4] The company was inactive for about two years, changing its name to Luxmi in 2011 as well as changing its mandate to the manufacture and distribution of knitted goods. It operated from two industrial condominium units owned by the husband’s father.

[12] The units were joined together and operated as a warehouse/factory. The premises were unfinished in the sense that after machinery bought from Japan by the father arrived and had been installed steps had to be taken to properly acclimatize the interior to reduce the humidity caused by operating the machinery as it was damaging the yarn. These steps included painting the business interior and the installation of shelves for the storing and eventual packaging of the sweaters and scarves produced, efforts in which the wife said she equally participated with the husband. The parties worked six days a week, often fourteen hours a day, sometimes longer. The wife described a typical day as her doing household chores in the morning, then making the parties’ lunches and accompanying the husband to Luxmi. After SSL was born an upstairs portion of the premises was repurposed as a nursery where the child played and slept. The husband had received training in Japan on how to operate the machinery and, according to the wife, taught her their use. She also helped sew, wash and dry the manufactured products and package them. The parties were Luxmi’s only employees. In the two and a half years that she worked for the company the wife was not paid. [5]

[13] The husband testified that he designed the sweaters and scarves and painted the premises, including repurposing and painting SSL’s upstairs nursery. The wife mostly looked after the child, offering to help when the child was asleep. The parties’ disagreement about the nature and extent of the wife’s contributions to, and participation in the affairs of, Luxmi is less relevant to any of their financial issues than the overall assessment of their credibility, about which more will be said below.

[14] The parties’ evidence conflicted as to when serious challenges in their relationship first appeared. The husband said that after the parties had returned in late August 2014 from the wedding of his sister in Sri Lanka the wife began to pressure him to have his parents transfer their residence to him. The wife said that she was often criticized by the husband’s family, felt demeaned and insulted, and that the husband did not defend her. This treatment escalated after a disastrous visit from her parents with the parties and the husband’s parents in August 2015. Matters came to a head near the end of the visit when the families argued about financial issues, the details of which are unimportant to the trial issues. The wife’s parents abruptly decided to return early to Sri Lanka. The husband says that he had discovered the wife looking for outside employment and, according to her, he threatened to divorce her: he says that the wife threatened to divorce him when he told her that his parents’ residence was not his to transfer. Both parties acknowledged that the atmosphere in the home was strained.

[15] On or about September 20, 2015 the wife packed some clothes for her and SSL and took him to the Luxmi premises where there were sleeping accommodations. The husband followed there on September 22, 2015 and, after an argument with the wife, contacted the police. They attended, determined that the child was not in any danger and suggested family counselling. The wife then had an anxiety attack and was taken to a local hospital where she was treated, subsequently returning to the family residence. She claims that the parties separated on October 6, 2015 when the husband removed his personal belongings from their bedroom and went to sleep in another bedroom. This is her valuation date. There was no intimacy between the parties afterwards and, so it seems, little personal interaction. The atmosphere in the family residence grew progressively hostile.

[16] The husband acknowledged that the parties’ relationship was troubled in late 2015 and that he moved into the separate bedroom on October 6 because the wife would wake him up at night “nagging” him about the property transfer: he felt that he was “being bullied”, needed his sleep and wanted to give her “space”. He was sad and depressed about what was happening but didn’t think that the parties’ relationship had ended, that it was “still normal”. According to him, the parties continued to be intimate and socialized. Photographs of the parties and SSL on October 8, 2015 (the husband and child in a local park) and October 31, 2015 (the wife and child at a local mall) show the parties smiling as does a picture taken of the wife by the husband on October 21, 2015 when he took her to a local hospital for treatment of an injured finger. Pictures taken on November 1, 2015, the occasion of a second birthday party for SSL, show the parties and child together and the parties, SSL and the husband’ parents standing close together, all smiling. The husband also tendered a sampling of text exchanges between the parties that were respectful, almost affectionate, in one of which the wife texted that she loved him (November 7, 2015) and another when driving somewhere in her car that she and the child “missed” him (December 13, 2015). The wife challenged the inferential weight to be given to these photographs and texts as representing her efforts “to be nice”, to get along with the husband and his parents in the increasingly hostile atmosphere of their residence [6]. The parties interacted through texting in the house and had begun to cook their meals separately.

[17] On December 14, 2015 the wife made an offer to purchase a residential condominium unbeknownst to the husband.

[18] According to the wife there was an argument on December 28, 2015 between her on the one side and the husband and his father on the other about her returning to them a car that had been purchased for her after the parties married or paying them its cash equivalent. Fearing for her safety the wife called 911, the police attended and after the wife contacted her father in Sri Lanka, she and SSL went to stay temporarily with a friend of her father. The parties have never lived in the same premises since.

[19] The husband said that he had no idea that the wife intended or wanted to end their marriage when she left the family residence. He claims that the parties separated on December 28, 2015 and that should be the valuation date.

Valuation date

[20] The identification of a valuation date is typically the first step in determining whether a spouse owes an equalization payment to the other spouse and, if so, its amount. Sections 4(1) and 5(1) of the Family Law Act [7] (“the Act”) set out, respectively, what “valuation date” means and its operative impact once the spouses’ net family properties have been calculated.

4(1) “valuation date” means the earliest of the following dates:

1. The date the spouses separate and there is no reasonable prospect that they will resume cohabitation.
2. The date a divorce is granted.
3. The date the marriage is declared a nullity.
4. The date one of the spouses commences an application based on subsection 5 (3) (improvident depletion) that is subsequently granted.
5. The date before the date on which one of the spouses dies leaving the other spouse surviving.

Equalization of net family properties

Divorce, etc.

5 (1) When a divorce is granted or a marriage is declared a nullity, or when the spouses are separated and there is no reasonable prospect that they will resume cohabitation, the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them. R.S.O. 1990, c. F.3, s. 5 (1).

[21] Sections 4(1) of the Act also defines “net family property”: section 4(2) of the Act identifies what is excluded from that calculation.

4(1) “net family property” means the value of all the property, except property described in subsection (2), that a spouse owns on the valuation date, after deducting, (a) the spouse’s debts and other liabilities, and (b) the value of property, other than a matrimonial home, that the spouse owned on the date of the marriage, after deducting the spouse’s debts and other liabilities, other than debts or liabilities related directly to the acquisition or significant improvement of a matrimonial home, calculated as of the date of the marriage;

Excluded property

(2) The value of the following property that a spouse owns on the valuation date does not form part of the spouse’s net family property:

1. Property, other than a matrimonial home, that was acquired by gift or inheritance from a third person after the date of the marriage.
2. Income from property referred to in paragraph 1, if the donor or testator has expressly stated that it is to be excluded from the spouse’s net family property.
3. Damages or a right to damages for personal injuries, nervous shock, mental distress or loss of guidance, care and companionship, or the part of a settlement that represents those damages.
4. Proceeds or a right to proceeds of a policy of life insurance, as defined under the Insurance Act, that are payable on the death of the life insured.
5. Property, other than a matrimonial home, into which property referred to in paragraphs 1 to 4 can be traced.
6. Property that the spouses have agreed by a domestic contract is not to be included in the spouse’s net family property.
7. Unadjusted pensionable earnings under the Canada Pension Plan. R.S.O. 1990, c. F.3, s. 4 (2); 2004, c. 31, Sched. 38, s. 2 (1); 2009, c. 11, s. 22 (5).

[22] Identifying the valuation date involves the determination of two issues: the date when the parties separated and the point in time when, as noted in s. 5(1) of the legislation, “there is no reasonable prospect that [the spouses] will resume cohabitation”. Most often these two events are the same but where a dispute about the choice of a valuation date arises it is invariably financially driven due to the consequences of the date selected. In cases where, as in this case, the parties continued to reside under the same roof after an alleged separation event and there are, also as in this case, differences (even though modest) to their respective net family properties depending on the valuation date, caution must be exercised by the court before concluding that the marriage cannot be salvaged. In Newton v. Newton (1995), 11 R.F.L. (4th) 251 [8] Czutrin J. observed:

… extreme caution should be exercised in fixing a valuation date. Parties may attempt to manipulate valuation dates to attempt to improve their financial position vis a vis a possible settlement or trial. (bolding added)

[23] Separation and valuation dates are not necessarily synonymous terms. This was made clear by the Ontario Court of Appeal in Oswell v. Oswell, 1992 CarswellOnt 306 [9]. In that case, the only issue in the appeal was the valuation date fixed by the trial judge: the husband claimed that the valuation date should be August 1984 when he said that the parties separated even though they continued to live under the same roof afterwards whereas the wife contended that the date should be March 1988 when she was served with a petition for divorce. The choice of date materially impacted the amount of the equalization payment that the husband presumptively owed. After a careful review of the evidence, the trial judge selected an earlier January 1988 date as being the valuation date, a selection that the Court of Appeal observed was “somewhat arbitrary, but the Act contemplates arbitrary decisions”. [10] Those decisions must, however, be supported by the evidence. [11]

[24] A thoughtful and comprehensive review of the general principles and indicia of “living separate and apart” and determining a valuation date was made by Chappel J. in Al-Sajee v. Tawfic, 2019 ONSC 3857 [12]. In that case the parties disputed their date of separation: this impacted the determination of their net family properties. The husband claimed a date about three and a half years earlier than the wife’s date. Chappel J. thoroughly reviewed the parties’ evidence, assessed their credibility and selected the husband’s date, concluding that despite evidence that the parties, among other things, had travelled together with their children internationally and occasionally spent overnights at the other’s residence there was no resumption of cohabitation having reconciliation as its primary purpose. Relevant to the analysis in the case before this court are the following observations:

… Determining the point at which there was no reasonable prospect of resumed cohabitation requires the court to carefully consider and weigh all of the relevant factors objectively. In this regard, Scott J. commented as follows in Hogarth v. Hogarth, 2018 ONSC 3580 (S.C.J.), at para. 9: The court must look at the specific facts related to each situation, as the determination of the valuation date is fact driven. The court must draw conclusions concerning the intentions of the parties with respect to their relationship. Intentions by necessity will be decided by a review of both the statements and actions of the parties and an analysis of the consistency of one with the other. [13]

Credibility

[25] Each party challenged the other’s credibility, mostly dealing with their financial disclosure. This relates to, and impacts, the court’s selection of the valuation date. The Trial Scheduling Endorsement flagged for trial that the wife was seeking an adverse inference to be drawn against the husband because he had not fully complied with earlier court-ordered disclosure. In response, the husband submitted that the parties were unable to properly prepare their net family property and comparative net family property statements because the wife had failed to disclose, and to disclose in a timely way, relevant financial information that hindered “the proper mechanics of the trial”. As for the adverse inference sought by the wife, he contended that the absence of more meaningful disclosure about his family’s company in Sri Lanka, some of which disclosure dealing, for example, with the company’s realty, and which had been provided to his expert but not to the wife, was her responsibility to pursue. The wife explained the absence of broader disclosure from her about, for example, her post-separation realty transactions (such as producing complete copies of reporting letters and bank statements) with the rationale that unless requested by the husband (which he said had been done) she didn’t provide it.

[26] In my view, neither party properly complied with the disclosure obligations which the issues in this case required of them: each appeared to have little sense of what was expected and even less willingness to accept responsibility for their non-disclosure behaviour. This failure affected the court’s assessment of their valuation date evidence and ultimately their overall credibility, although differently.

[27] To be clear, disclosure is not transactional. It is obligatory for every party in a family law matter, irrespective of whether there is a case before the court or the other party’s disclosure efforts. Disclosure is automatic, immediate and ongoing. It must be proportionate to the importance and complexity of a case, reasonable in scope and provided in an intelligible format and timely way. It is the most basic of family law obligations, the casual observance or disregard of which strikes at the heart of the administration of family justice. It is far better for a party to err in favour of broader rather than more restrictive disclosure. Time and again, courts have emphasized, even noted as was done when this case was set for trial, that non-disclosure may negatively impact the court’s assessment of a party’s credibility.

[28] As has been frequently observed, the assessment of witness credibility is an inexact science, impossible to articulate with precision. For example, a witness may impress the court with the coherence and logic, or common sense, of their narrative but be unreliable due to their interest in the outcome of the case or the lack of probative information. Or a witness may be so interested in a case that they are incapable of making an admission or facilitating the disclosure of information that they perceive as helpful to the other party and harmful to their case. These affect the weight to be given to that evidence. There is, quite simply, no one-size-fits-all template. Several of the many considerations relevant to the weighing and assessment of witness credibility and reliability, and relevant to his case, were comprehensively reviewed in Al-Sajee by Chappel J. who aptly observed that,

… the judge is not required by law to believe or disbelieve a witness's testimony in its entirety. On the contrary, they may accept none, part or all of a witness's evidence, and may also attach different weight to different parts of a witness's evidence (see R. v. D.R., [1996] 2 S.C.R. 291, at paragraph 93; R. v. J.H., [2005] O.J. No. 39 at paragraphs 51-56; McIntyre v. Veinot, 2016 NSSC 8 (S.C.), at para. 22). [14]

[29] Such is this case. The wife’s evidence about her work at Luxmi had the ring of truth given her educational and vocational background before the parties married and the industry with which she, as a relative newcomer to Canada, obtained suitable accreditation for, and started, her own business after she left the matrimonial home. In my view, she wanted Luxmi to succeed and participated as much as reasonably possible in helping the husband make it operational and to produce and package its inventory. The husband’s efforts to minimize the wife’s contributions to Luxmi in circumstances where she had made no joint family venture or other proprietary claim to the company and his evidence that it had no value anyway was unpersuasive, and made no sense: even if there had been nothing of value contributed by the wife to Luxmi, there was no downside to admitting her efforts. The pictures taken of the business interior when it was being reconditioned and built-out and the wife’s evidence as to what they depicted and was being done support her evidence, and her general credibility in preference to the husband.

[30] As for the husband, there were several troubling examples of his willingness to make or permit others to make (with his knowledge) false, or misleading, representations where that suited his purpose. For example: (a) The husband’s mother represented to the wife’s parents when she responded to the newspaper notice about the wife’s eligibility for marriage that the husband was an “Owner/Director of our family company (located in Aurora, Ontario)”. Whether or not the husband knew or approved of this representation is less troubling than his May 21, 2013 representation in a letter to the US Consulate General in Toronto for a Visa that he was “employed as an Owner/Director of Luxmi…: a family owned manufacturer of high-end knitted goods”. In cross-examination the husband disclaimed having any ownership interest, saying that it was his “feeling” that he was an owner because he expected to inherit the business from his parents. This was a frequent refrain; (b) The husband approved of a December 18, 2012 letter sent by his sister to the High Commission of Canada in Sri Lanka in support of a Visa for the wife that represented that the husband was employed by Luxmi, was an Owner/Director and was being provided with a monthly living allowance of $3,000. This was false. The husband admitted that that the company had no funds to pay him anything and that this representation was made to show that he enjoyed an income from Luxmi to support his wife; (c) While the husband signed a disclosure authorization with respect to the family business in Sri Lanka of which he was a shareholder, he declined to do so for Luxmi because he said that he had no authority to do so. The irony of his submission that the wife could have done more to obtain Sri Lankan realty information for his family’s company there and which he had made available to his expert but not to the wife when he wasn’t prepared to do more to facilitate disclosure of financial information for Luxmi whose affairs he managed was noticeably lost on him, especially in light of his third-party representations as above; (d) In an August 29, 2018 letter addressed “To Whom It May Concern” signed by the husband’s parents after the wife had started this case and pleadings had been exchanged in which, among her other claims, the wife asked for support for the child and herself and the husband requested support for himself, his parents confirmed their son’s relationship with Luxmi. The letter was titled “Re: Financial Information Relevant to [the husband]”. It confirmed that he was the company’s operations and business manager and that he was entitled to, but had never drawn upon, the $3,000 monthly allowance available to him. The company had never been fully operational or profitable, never paid any dividends and paid no personal or discretionary expenses for their son. He denied that he had asked his parents for this letter. I don’t believe him. In the context of resisting the wife’s support claims and in furtherance of his own support claim, he was not credible.

[31] The wife is not free from censure with respect to her disclosure. Like the husband, she approached her disclosure obligations on a “need to know” basis, sometimes with her determining the need. The several financial statements which she swore were, among other things, deficient in not accurately disclosing and accounting for her realty in Sri Lanka and the purchase of her current residential condominium. Part 8 of her prescribed Form 13.1 financial statements sworn in April 2016, April 2017, March 2018 and even the May 2019 statement included in the Trial Record dealing with disposal of property in the two years immediately preceding the making of the statement was never completed despite the sale and purchase of four properties. The wife answered the complaint that she had not provided relevant bank account information to the husband by saying that she had given that to her lawyer, much like he answered.

[32] I am understandably wary of accepting either parties’ valuation date. When the husband moved out of the master bedroom and took his personal belongings on October 6, 2015 (the wife’s date), it could well have been with the intention of irretrievably ending the marriage but the wife’s texts to him afterwards (i.e. “I love you” on November 7, 2015), the parties’ interactions during October and into November, and the husband’s reaction to the disintegration of the marriage are more suggestive of a troubled and failing relationship than foreclosing any reasonable prospect of a resumption of cohabitation. Conversely, while the wife’s departure from the matrimonial home with the child on December 28, 2015 (the husband’s date) as a result of an argument with the husband and his father, which event the husband unconvincingly said surprised him, would definitively indicate the end of the marriage, the more nuanced reality is that at some point in time between November 7, 2015 and December 8, 2015 when the wife decided to arrange for funds to purchase separate accommodations for SSL and her and placed a deposit on a condominium (December 14, 2015), the parties were by then separated and there was no reasonable prospect of a resumption of their cohabitation.

[33] In my view, the valuation date is December 8, 2015. Admittedly, this may be an arbitrary choice, but one inferentially supported by the evidence. There is, however, little evidence about values for this date from the parties: some of their trial evidence did provide this information but the parties mostly directed their attention, and limited their documentary evidence, to their preferred date ignoring anything in-between. Given what the parties did disclose, the predominantly passive nature of their assets (savings and realty) and the brief duration between December 8 and 28, 2015 the values of the latter shall be used to calculate each party’s net family property except where a probative document or evidence references the former date.

Valuation of Land and non-business interests

[34] The calculation of each party’s net family property was complicated by the inconsistency with which they recorded the values of their Canadian and non-Canadian assets, their failure to transparently disclose the applicable forex [15] conversion rate where applicable and their indiscriminate combining of those values with non-adjusted values in the designated columns of the prescribed financial, and net family property, statement forms. In cases where a foreign currency conversion is needed to properly record the value of a party’s asset in Canadian currency it is the owner’s responsibility to disclose the value of the asset (or liability) in that currency and adjust for its Canadian equivalent, recording that value in the appropriate column in the prescribed form. The forex rate used must be identified. Any other approach distorts the calculation of a party’s net family property and a fair and efficient determination of the presumptive equalization payment.

[35] Neither party in this case turned their mind to this approach, instead describing an asset, in the case of bank accounts and savings, for example, as “(USD)” or “(LKR)”, in the case of Sri Lanka accounts, and then recording value without reference to a disclosed forex rate. The basis for the value recorded was opaque. During the trial the parties were directed to, and ultimately did, agree on the prevailing forex rates for their non-Canadian assets: the experts also assisted. The parties’ dispute about the valuation date, complaints about disclosure and the court’s reservations about each party’s credibility complicated calculation of their net family properties. This was especially evident when dealing with the parties’ bank accounts.

Land

[36] The parties dispute the value of land owned by the wife on the valuation date. She owned two properties in Sri Lanka, a building lot and a rented residential condominium. Shortly after the valuation date, the wife sold the building lot for LKR 30,000,000 (“LKR” being the currency denomination in Sri Lankan rupees). [16] The proceeds of this sale were intended to fund the purchase of the condominium for SSL and the wife in Ontario. This transaction was completed on January 21, 2016. The condominium in Sri Lanka was sold later in August 28, 2017.

[37] No expert valuation date evidence was tendered by the wife for either property. She provided valuation reports for her choice of valuation date prepared by a Hilmy Farook from Sri Lanka who represented himself as a “Valuer and Property Consultant” neither of which reports even minimally complied with any of the Family Law Rules governing the admissibility of expert evidence. [17] After the evidentiary part of the trial concluded the wife produced two further valuation reports from Mr. Farook, each a single handwritten page dated November 22, 2019. The husband objected to the admissibility of this evidence. The wife had not led any evidence before this dealing with the values of either property as at the husband’s choice of valuation date. There was no evidence or any explanation from the wife why she had never undertaken proper valuations which would have included the husband’s choice of date even though she knew or should have reasonably suspected that this was a trial issue and her responsibility. There was no evidence that the husband had made any effort either. In my view, as the sale of the building lot was slightly less than five weeks after the valuation date, the agreed sale price of LKR 30,000,000 is the best marker of its value. As for the condominium, the husband agreed with the wife’s submitted value of LKR 33,000,000.

[38] In her submissions, the wife incorrectly applied a forex rate for converting Sri Lanka rupees to Canadian dollars. On the valuation date that rate was LKR 103.38 to $1 CAD. This was the rate upon which the parties’ experts agreed when valuing the husband’s business interests on the valuation date (as will be noted below). Accordingly, the value of the wife’s building lot was $290,019.52, say $290,020, and the value of the Sri Lanka condominium was $319,210.67, say $319,211 on the valuation date. [18]

General Household Items and Vehicles

[39] Neither side led any evidence about the value of their household goods and furniture on the valuation date: all the wife’s statements show no value or description for these items nor do any of the husband’s statements. Both parties, however, claimed but never testified about a deduction for them brought to the marriage, the wife her jewellery and the husband for furniture. No corroborating evidence was tendered or agreed.

[40] No value shall be included for household goods and furniture owned by either party on the valuation date and no deduction will be allowed to either party as of the date of marriage.

Bank accounts and Savings, Securities and Pensions #1

[41] The principal dispute between the parties involving this asset class was the value to be given to each party’s bank accounts, particularly those owned by the wife but some owned by the husband too. The unsatisfactory approach taken to recording reliable values (as already noted) was most troublesome and even though most values were proximate in the sense that there was little material difference between them despite the dispute about the valuation date, there remained other accounts having greater differences in value about which the parties complained but never challenged until after the evidence component of the trial had concluded, and only then in written closing submissions.

[42] In circumstances where there is some, but not entirely reliable, evidence of value, the court must estimate value as best it can. In Shaw v. Shaw, [2002] O.J. No. 2782 [19] Kiteley J. observed that “…[t]he calculation of net family property is not a science. It is not predicated on precision to the penny”. [20] In Lampron v. Lampron, [2003] O.J. No. 5167, 50 R.F.L. (5th) 98 [21], a case unlike this where the parties represented themselves, R. Smith J. estimated a range of undocumented asset and debt values on a balance of probabilities based on the preponderance of available evidence. An estimate of the value for realty brought to a marriage had to be made in Virc v. Blair, 80 R.F.L. (7th) 124, 2016 ONSC 49 [22].

[43] There was no dispute that when the parties separated the wife had substantially more in savings than the husband. Regardless of the ultimate choice of valuation date though, the wife was never able to provide a reliable value. For example, the aggregate value of her savings on her preferred choice of valuation date ranged anywhere from $98,195.19 (financial statement sworn on April 1, 2016) to $102,763.89 (trial financial statement sworn on May 3, 2019). This latter value was different from her nine-days earlier net family property statement dated April 24, 2019 ($94,693.51) and different again in the net family property statement that accompanied her written closing submissions ($104,594.57). All for October 6, 2015! The wife never delivered a financial statement using the husband’s choice of valuation date. She did provide an unsigned net family property statement as of December 28, 2015 suggesting that the aggregate value of her savings then was $87,296.48. The husband suggested that the more accurate figure was $121,978.11, [23] although that differed too from the $103,409.04 statement accompanying his closing submissions.

[44] As for the husband, whether the wife’s preferred valuation date was used or his date was used, the aggregate value of his savings totalled, respectively, $12,822.64 (on October 6, 2015) or, depending on which figure the husband was proposing be used for December 28, 2015, the figure of $12,699.99 as reflected in his October 15, 2019 trial financial statement or $14,896.86 as reflected in his net family property statement dated November 27, 2019 filed as Exhibit #20 at trial.

[45] The point is that the parties made little effort at trial to either explain the differences in their values or to verify them nor were they cross-examined about those differences except to show that the other party’s financial statements were inconsistent and, therefore, the other party not credible. There was no sense that the parties had made any serious effort to collaborate on disputed values before trial. Consequently, the court must estimate the values of the parties’ accounts under this asset class based on the available evidence, as was done in Lampron. Only those accounts whose differences were material will be analyzed below: the others will be estimated and are reflected in the net family property statement appended to, and forming part of, these reasons as Schedule A.

TD (Borderless) account (xxxx337)

[46] This was a USD account owned by the wife that she recorded in its USD denomination without forex adjustment until her closing submissions. She also used her October 6, 2015 choice of valuation date and represented that the value of the account then was $3,040 USD which, according to her closing trial submissions, represented $3,969.34 in Canadian funds when converted. In fact, the USD balance used was the balance in the account on August 28, 2015. [24]

[47] A November 26, 2015 statement indicated a balance of $5,985.38 USD. [25]

[48] The husband submitted that the value of the account on December 28, 2015 was $15,954.48, being $11,523.64 USD before a 1.3845 forex rate adjustment. This differed from his May 6, 2019 net family property statement contained in his Trial Record that reflected an unadjusted $11,367.90 value and differed yet again (although only marginally) from the $15,960.24 adjusted value recorded in his Exhibit #20 net family property statement.

[49] Neither party directed their, or the court’s, attention to any statement for this account for December 2015 although the wife suggested, and her disclosure response to the husband indicated, that a bank statement for that month had been produced. If the husband was seeking to attribute to the wife the value he submitted, he should have presented to her a statement as of his valuation date during the trial. He did not. Given that the account appears to have been mostly inactive from the two statements in evidence [26] except for mid-monthly wire credit transfers (most likely from the wife’s accounts in Sri Lanka although that is speculative) the best evidence in my view as to the balance in the account on December 8, 2015 was $5,985.38 USD being the balance as of November 28, 2015 or $8,140.11, say $8,140 (using a 1.36 exchange rate).

Bank of America account (USD account ending in 1486)

[50] The parties dispute the value of this account owned by the wife. The only document tendered in evidence about value was a bank statement showing a $26,015.51 USD balance on October 23, 2015. [27] It was from this account that the wife said she withdrew funds for the purchase deposit on her condominium ($17,000 CAD after forex conversion). These funds were transferred to her TD account (xxxx695).

[51] The husband contended that the value of this account on the valuation date was $21,289.14, referencing in his written submissions a December 23, 2015 statement never tendered in evidence by either party or mentioned by them when testifying.

[52] Despite the absence of value evidence from the wife for December 2015, I am unable to accept the husband’s value. The October 23, 2015 statement showed no activity. No evidence was led about the account’s use or, if used, the purposes to which it was typically put. The wife was never cross-examined about the account. Its value must therefore be estimated. Assuming that the balance on December 8, 2015 was, more or less, equal to its October 23, 2015 balance, say $26,016 USD [28] and backing out an amount totalling the CDN dollar equivalent of $17,000 (i.e. $12,400 USD using the applicable 1.3757 forex rate and discounting for a conversion fee) the result is a $13,706 USD value on December 8, 2015 or $18,855.34 CDN.

[53] The value to be attributed to this account shall be $18,855, rounded.

TD savings account (xxxx695)

[54] The parties disputed the value of this account owned by the wife. This was the account from which she withdrew $16,700 on December 12, 2015 for the deposit on her condominium leaving the account with a credit balance of $972.02 on December 8, 2015. While the husband contended that the value of the account should be $2,761.98, I prefer to rely upon the bank statement confirming value tendered in evidence. [29]

[55] The value for this account for equalization purposes is $972, rounded.

Bank of America (USD account ending in 621)

[56] This is a USD account owned jointly by the wife and her father. She valued the account at $12,978.54 (without disclosing its USD balance or forex rate) and without discounting its value to reflect its shared ownership: the husband submitted that its value was $7,783.60 representing one-half of the account’s adjusted value. A December 11, 2015 bank statement in the wife’s name disclosed a balance of $11,243.91 USD, one-half of which, or $5,621.96 USD, the wife should have recorded in her financial statements, not the higher figure. Converted (using a 1.36 forex rate) the balance is $7,645.86. This is the best evidence of value as of the valuation date.

[57] Accordingly, the value to be attributed to this account on the valuation date shall be $7,646, rounded.

Bank accounts and Savings, Securities and Pensions #2

[58] Schedule A attached to, and forming part of, these Reasons is a Net Family Property Statement prepared by the Court from the parties’ financial statements as modified by their testimony. Except for those bank accounts and other savings determined above, the overall differences between the parties were not significant although the parties were, in many instances, unable to agree - even if the difference was practically negligible. Where the evidence as reflected in the wife’s trial financial statement sworn on May 3, 2019 and the husband’s net family property statement dated November 27, 2019 agreed, that figure was used: where the differences were modest, a median figure was used and so noted.

[59] The aggregate value of the wife’s bank accounts and other savings on the valuation date is $89,461 and the value for the husband is $14,821. These values are inclusive of the balances for this category in #1 above.

Valuation of Business interests

[60] The principal dispute about the parties’ net family properties involved the valuation of the husband’s business interests in Sri Lanka and Ontario. The husband had interests on the marriage date and the valuation date in J. L. Industries (PVT) Ltd. (“JLI”), a privately-owned family business in Sri Lanka engaged in textile importing and distribution and, on the valuation date, Luxmi, although he denied having anything more than a precatory interest in the latter. The aggregate value attributed by the wife to those interests ranged between $659,000 and $1,608,000 on the valuation date: the husband valued them at $610,565. The range in the wife’s values related to two discrete issues: the first being the number of properties (one or four) owned by JLI and the second the husband’s exclusionary claim to gifted or inherited shares in the company.

JLI

[61] Both parties tendered expert opinion evidence. The husband’s father also testified about the history, organization and operations of both companies. The husband retained KPMG to provide an opinion about the value of his interests in JLI and Luxmi. Two reports were served, Luxmi (November 21, 2018) and JLI (December 6, 2018). One of the authors of those reports (Peter MacKenzie) was qualified as an expert witness. Shortly before the trial started the wife served a report prepared by ValuQuest (October 19, 2019) that valued the husband’s interest in JLI but not Luxmi. The author of that report (Monty Bhardwaj) was also qualified as an expert witness. Both experts testified. While the husband had objected to Mr. Bhardwaj being allowed to testify because the wife had not complied with the Family Law Rules dealing with the delivery time for expert evidence, Ms. Moaveni acknowledged that the objection was more technical in nature than representing a procedural or substantive disadvantage because Mr. Bhardwaj’s report had been reviewed by Mr. MacKenzie and the experts had discussed those areas upon which they agreed and identified those in dispute. All reports were Calculation Value reports. [30] Both experts agreed that the most appropriate approach to valuing JLI’s shares was the going-concern approach using an adjusted net asset methodology.

[62] The experts agreed that the value of JLI on the date of marriage was $1,360,000 and that subject to a determination whether shares gifted to the husband before marriage were excluded property the value of his interest in JLI then was $310,000. [31] Mr. Bhardwaj prepared a Scenario A and a Scenario B for valuing the husband’s interest in the company on the valuation date, the former assuming that JLI owned four properties and the latter assuming only one owned property. Although Mr. Bhardwaj used the wife’s choice of valuation date and Mr. MacKenzie the husband’s date there was no evidence of any material change impacting JLI’s value between those dates. The experts agreed that there was a difference of approximately $10,000 between them with respect to Scenario B which, according to Mr. MacKenzie, fell within the KPMG range of fair market values; [32] in other words, JLI ‘s value was between $2,340,000 and $2,330,000 on the valuation date.

[63] The experts could not agree on the value of the husband’s interest in JLI on the valuation date under Scenario A (Ownership of Properties) or whether a portion of the husband’s shareholding should be excluded as gifted or inherited (Excluded Shares) because those were factual determinations to be made by the court.

Ownership of Properties

[64] JLI Trading Company was a partnership between the husband’s parents and his paternal grandmother started in the early 1980s in Sri Lanka and which operated a bathmat and towel trading business from a property owned by the husband’s father (“45 Medapara”). Another property (“Galle Road”) was acquired in the mid-1980s and registered in the name of the husband’s mother. In 1991 the business of the trading company was rolled into JLI, newly incorporated by the husband’s parents. Its shareholders were the husband’s parents and his grandmother. JLI manufactured towels and related textile products and needed an outlet for its products so around or shortly after it was incorporated it acquired a two-storey building in Columbo (“Hanupitiya”). As the business prospered over the years two more storeys were added to the building. This is also where the family lived between 1996 and 2006.

[65] In 1998 the husband’s father bought another property (“Raigama”) on which was constructed a building that was used for importing and exporting and from which JLI also operated.

[66] The experts agreed that there was insufficient support for certain accounting entries in JLI’s financial statements relating to property ownership. The company operated from four properties registered in the names, respectively, of JLI (Hanupitiya), the husband’s father (45 Medapara and Raigama) and the husband’s mother (Galle Road), the last three of which on a rent-free basis. Galle Road was also JLI’s registered place of business. In Scenario A of his ValuQuest report, Mr. Bhardwaj assumed that JLI was the owner of the properties owned by the husband’s parents.

[67] The company’s 2015 audited financial statements reported that the cost of land was LKR 7,157,000 and LKR 31,196,040 for the building implying to Mr. Bhardwaj that unless there had been significant land development costs associated with the Hanupitiya property after its 1991 acquisition JLI might own more than one property. He noted that he did not have sufficient information to verify those costs or reconcile the detailed capital listing in JFI’s financial statement to the supporting documentation.

[68] Mr. MacKenzie relied on copies of registered deeds to the properties showing JLI as owner of Hanupitiya only and the other properties registered in the names of the husband’s parents. While there was some suggestion by the wife that she had never been provided with copies of those deeds, and Mr. Bhardwaj acknowledged that KPMG had documents allegedly confirming that the parent’s properties were not owned by JLI, neither the wife nor Mr. Bhardwaj took any steps to verify registered ownership.

[69] The husband’s father testified that the land development costs were, in fact, capitalized improvements made to the Hanupitiya property after its acquisition. In general, I found him to be a credible witness who was able to link together and account for certain deficiencies and inconsistencies in the financial information provided to the experts and which the parties either didn’t know or couldn’t satisfactorily explain with respect to both JLI and Luxmi. His evidence cohered with Note A to Exhibit 18 being an excerpt from JLI’s 2015 audited statements dealing with depreciation allowances. The Note identified two properties under “Land” whose recorded year of purchase corresponded with the Hanupitiya and Raigama purchase dates although no specific property identifiers were provided. The exhibit also listed what the husband’s father testified were improvements made to “Factory buildings”. While it is possible that some of those costs were incurred for other of the properties used by JLI (most likely Raigama on which a building was constructed after the property was bought) and those costs expensed through JLI, there was no evidence to suggest that was done or, even if done, that it impacted the KPMG valuation because it adopted a land value anyway that appears to have included Raigama. Accordingly, I am not prepared on the evidence to conclude that JLI owned more than one property on the valuation date. As the parties had agreed on the fair market value of Hanupitiya and the $10,000 difference between the expert’s valuation is so modest, the value of JLI on the valuation date shall be a $2,335,000, a mid-point value.

Excluded property

[70] The husband owned 1,608,000 shares in JLI when the parties married and 2,108,000 on the valuation date. These shares were acquired in three tranches: (a) 150,000 on April 7, 2004; (b) 1,458,000 on April 16, 2004; and (c) 500,000 on October 28, 2014.

[71] In 2004 the husband’s grandmother retired from the company and gifted her shares to the him and his sister. At the same time, JLI was restructured and further shares were issued resulting in the husband’s parents each owning 1,742,000 shares (or 26% each of the issued shares) and the husband and his sister owning 1,608,000 (or 24% each). Nothing was paid by the husband or his sister for the second tranche. In 2014, the company issued an additional 1,800,000 shares, 400,000 to each of the husband’s parents and 500,000 to each of the husband and his sister thereby fractionally reducing their parents’ ownership (to 25.2% each) and increasing the ownership of the husband and his sister (24.8% each). The parents continued to be majority shareholders of JLI.

[72] The experts and parties agreed that the value of the husband’s interest in JLI on the valuation date was $551,000 not accounting for any exclusionary claim. The husband claims that the 500,000 shares issued to him in 2014 were gifted and that $100,100 representing their value should be excluded from his net family property. The wife disagrees.

[73] Section 4(3) of the Act [33] provides that the onus of proving an exclusion is on the person claiming it, in this case the husband. He and his father testified about the circumstances surrounding the 2014 share issuance. Despite the husband not raising any exclusionary claim in his two financial statements sworn in 2016 and not quantifying the value claimed at trial until January 2019, it is clear from the evidence that he had little, if anything, to do with JLI’s operations in Sri Lanka at all times material to this case and even less involvement in its financial affairs. His father was the company’s managing director and only he and his wife handled its financial affairs. The husband had no corporate signing authority: he had paid nothing for the shares issued to him in 2004 and, at least until 2014, had never advanced any money to JLI. Excepting the parties’ attendance for the wedding of the husband’s sister in the summer of 2014, the husband lived and worked continually in Ontario before the parties’ marriage and after their separation. [34] There is little doubt that the husband’s living expenses in Ontario and those of the wife and SSL when the family was living together were paid through JLI and by the husband’s parents.

[74] The wife pointed to JLI’s audited 2014 and 2015 financial statements which showed (in 2014) an amount of LKR 5,155,188 due to the husband as director, this declining by LKR 5,000,000 (in 2015) to LKR 155,188. Different amounts are shown as due to the husband’s parents and his sister in 2014 with significant decreases as well in 2015. The wife speculated that since the husband had never been paid dividends or a salary from JLI (except for three years) and that since he was never paid anything when the Hanupitiya property was sold in 2017, two years after the valuation date, the shares must have been purchased by the husband from earnings and other funds due to him which had been retained in JLI.

[75] The husband’s father explained that JLI was expanding in 2014 and needed to purchase machinery and raise capital. In direct examination he said that he put LKR 11,000,000 of his own money into the company but in cross-examination stated that money came from another company that he owned and LKR 6,000,000 came from personal savings of his wife and himself. The 2014 financial statements revealed new borrowing of LKR 12,000,000. JLI’s stated capital was increased by LKR 18,000,000 to LKR 85,000,000. While the source (or sources) of the new funds borrowed was not disclosed in the statements nor was there documentary evidence tendered showing the personal funds allegedly advanced to JLI, it is not unreasonable to infer from this evidence that the father through his other company, and he and his wife personally, injected LKR 18,000,000 into JLI. [35] Subsequent to this, 1,800,000 new shares were issued by the company to the husband, his sister and their parents as set out in paragraph [71] above. The certificate issued for 500,000 JLI shares to the husband indicated that the fully paid value for each share was LKR 10 (i.e. LKR 5,000,000/LKR 10), hence the LKR 5,000,000 decrease in the amount due to him as reflected in the 2015 financial statements.

[76] The wife submitted, not without some justification, that the husband was not credible. For example, his Answer made no reference to any exclusionary claim nor did any of the two financial statements sworn in 2016. There was no corroborative document evidencing gift: the JLI statements tendered in evidence dealt with corporate financing and a restructuring of share capital. There was no evidence of a transfer of shares by the father to his son as a gift.

[77] The elements of a valid gift are well established. In McNamee v. McNamee, 2011 ONCA 533 [36] the issue before the Court of Appeal was whether shares acquired by the husband, in that case pursuant to an estate freeze, were a gift.

“Although the term “gift” is not defined in the Family Law Act, a gift, generally speaking, is a voluntary transfer of property to another without consideration: Black’s Law Dictionary, 7th ed. (St. Paul, MN: West Group, 1999), at p. 696; Birce v. Birce (2001), 56 O.R. (3d) 226, [2001] O.J. No. 3910 (C.A.), at para. 17. A transfer of property by contractual agreement involves a mutual exchange of obligations (“consideration”), but a transfer by way of gift involves a gratuitous, unilateral transaction: Mary Jane Mossman and William Flanagan, Property Law: Cases and Commentary, 2nd ed. (Toronto: Emond Montgomery Publications, 2004), at p. 439. As McLachlin J. observed in Peter v. Beblow, [1993] 1 S.C.R. 980, [1993] S.C.J. No. 36, at p. 991-92 S.C.R., “[t]he central element of a gift [is the] intentional giving to another without expectation of remuneration”.

The essential ingredients of a legally valid gift are not in dispute. There must be (1) an intention to make a gift on the part of the donor, without consideration or expectation of remuneration, (2) an acceptance of the gift by the donee and (3) a sufficient act of delivery or transfer of the property to complete the transaction: Cochrane v. Moore (1890), 25 Q.B.D. 57 (C.A.), at pp. 72-73 Q.B.D.; Mossman and Flanagan, supra, at p. 441, Bruce Ziff, Principles of Property Law, 5th ed. (Toronto: Carswell, 2010), at p. 157.”

[78] In McNamee, the trial judge had held that the means by which the husband had acquired his shares were inconsistent with a complete divestiture by the donor of power and control over the property transferred and that a commercial, as distinct from an altruistic, purpose disqualified the shares as being gifts. The Court of Appeal disagreed: it is less the means by which the property is transferred, or its form, so much as the absence of consideration associated with the transaction - a key in McNamee, as in this case, was the intentional act of giving without expectation of remuneration.

[79] In this case, I accept the evidence of the husband’s father that the money injected into JLI which led to the issuance of 500,000 company shares did not come from the husband or reflect an asset to which he had contributed or, as the wife contended, represented earnings or other money owed to him by JLI. There was no evidence that there were strings or conditions attached to the funds injected into JLI by the husband’s parents or to the shares issued or that the attributes of the shares’ ownership were any different from the share tranches a decade earlier about which there was no dispute were the husband’s sole property. Although there was no documentary evidence from the husband’s father corroborating the funds’ advance, the financial statements inferentially, and reasonably, supported the father’s testimony. While the wife was justifiably suspicious of the husband’s claim, her challenge was speculative.

[80] Accordingly, the husband shall be allowed to exclude 500,000 JLI shares from the calculation of his net family property but the value of $100,100 claimed for them in his submissions is not supported by the evidence. Mr. MacKenzie testified that the value of the gifted shares on October 28, 2014, the date they were issued, was $110,000 and that between then and December 28, 2015 their value increased by $20,600 to $130,600. [37] This evidence was not challenged in cross-examination: the wife did not call any Reply evidence either. I accept Mr. MacKenzie’s evidence.

[81] The husband shall be allowed an exclusion of $130,600.

Luxmi

[82] Throughout these proceedings the wife has sought to attribute to the husband an ownership interest in Luxmi. As already noted, the company was incorporated in 2009 as part of a government investment program for persons wishing to immigrate to Canada. It was incorporated by the husband’s sister and she, the husband and their parents were its first directors: unlike the others, the husband never appears to have been an officer. No shares in the company were ever issued despite third party representations by the husband and his parents that he was an owner. The unchallenged evidence is that Luxmi was inactive for about two years after incorporation and that the husband’s father funded between $800,000 and $1,000,000 in start-up costs, mostly involving the purchase of machinery from Japan, raw material and inventory.

[83] In his three financial statements sworn in 2016 and 2017 the husband said that he had no ownership interest in the company. That changed with, and after, his May 6, 2019 statement (and statements afterwards) in which he qualified his acknowledgement of a 25% fair market value interest in Luxmi as being “imputed to him” by the wife. He claimed in that event a decrease in the value of his interest between the marriage and valuation dates. In his closing submissions, he recorded a $122,500 value for the valuation date on the assumption of shares being allocated to him. There is no evidence shares were ever allocated or issued to any family member. The father testified that he intended to have shares issued once the company turned a profit. It never did.

[84] The wife pointed to advertisements for Luxmi in local trade and business publications between 2016 and 2018. These, together with what she viewed as inadequate disclosure efforts by the husband that also involved JLI, fueled her suspicions that the company was operating. But suspicions are not evidence. Although he was engaged by the husband, Mr. MacKenzie accepted that the company did not operate after the valuation date and was never profitable: the company’s financial statements and income tax returns filed in evidence confirmed this. There is no credible evidence to the contrary or that Luxmi in the several years after the valuation date was doing anything other than likely disposing of unsold inventory.

[85] In my view, based on documentary and testimonial evidence, the husband had no ownership interest in Luxmi at any time. The company was a start-up that never succeeded. Accordingly, no business interest value shall be attributed to the husband at either the marriage date or the valuation date.

Deductions

[86] The parties disputed the net value of their respective properties on the date of marriage. In many instances, the differences were negligible but, perhaps indicative of the acrimony between the parties and their apparent disregard for needless expense and waste of the court’s time, no difference between the values of the deductions claimed was too small to dispute. For example, the husband filed a Net Family Property Statement dated November 27, 2019 [38] in which he adopted the wife’s figure of $199,325.15 for the value of the building lot she owned when the parties married. In the Comparison of Net Family Property Statements that accompanied his closing submissions he disputed that figure and claimed that it should be $199,341.26, a difference of $16.11! So too with the value of the wife’s condominium. In his closing submissions the husband disputed the $230,061.35 value she claimed and asserted that it should be $230,079.94, a difference of $18.59! Unbelievable.

[87] The wife’s approach was equally disappointing: in her closing submissions she claimed that she and her husband agreed to a lesser value for her property than her sworn evidence reflected in her trial financial statement. Obviously, he didn’t agree.

[88] A mid-point value shall be used for the building lot ($199,333.20, say $199,330) and for the condominium ($230,570.64, say $230,570). These values do not account for any disposition or possible income tax costs although it was likely they were incurred: the wife was given an opportunity before the evidentiary part of the trial was concluded to present such evidence even though that would have involved an adjournment of the trial. She declined because, according to her lawyer, they were “minimal” anyway.

[89] As with the dispute about the values for the wife’s realty owned on the marriage date, so too with the value of the bank accounts and savings each owned then. Although the value of several accounts was agreed, the disputed differences (of which there was over a dozen) were mostly nominal.

[90] The deductions recorded in Schedule A adopt the same approach as with this asset category for the valuation date, adjusted, where appropriate, to the corroborative documentary evidence filed.

Determination of equalization payment

[91] Based on the foregoing, the wife’s net family property is $258,079 and the husband’s net family property is $125,919.07. The wife presumptively owes the husband an equalization payment of $66,079.97, say $66,080.

Unconscionability

[92] Section 5(6) of the Act allows a court to deviate from making an Order equalizing the parties’ net family properties where the court determines that making such an award would be unconscionable.

Variation of share

5(6) The court may award a spouse an amount that is more or less than half the difference between the net family properties if the court is of the opinion that equalizing the net family properties would be unconscionable, having regard to, (a) a spouse’s failure to disclose to the other spouse debts or other liabilities existing at the date of the marriage; (b) the fact that debts or other liabilities claimed in reduction of a spouse’s net family property were incurred recklessly or in bad faith; (c) the part of a spouse’s net family property that consists of gifts made by the other spouse; (d) a spouse’s intentional or reckless depletion of his or her net family property; (e) the fact that the amount a spouse would otherwise receive under subsection (1), (2) or (3) is disproportionately large in relation to a period of cohabitation that is less than five years; (f) the fact that one spouse has incurred a disproportionately larger amount of debts or other liabilities than the other spouse for the support of the family; (g) a written agreement between the spouses that is not a domestic contract; or (h) any other circumstance relating to the acquisition, disposition, preservation, maintenance or improvement of property. R.S.O. 1990, c. F.3, s. 5 (6).

[93] In her pleadings and closing submissions the wife never addressed the possibility that it could be her, and not the husband, who owed an equalization payment even though she was aware that the husband was claiming one from her. The husband claimed that the wife owed him an equalization payment in excess of that now determined and, in his closing submissions, submitted that the court should disregard any unequal division claim (he had not made one): the parties “should share in all increases in the value of the assets/debts where applicable given that the parties had a partnership for the almost 3 years of marriage, that resulted in one child”. [39] The wife did not respond to this in her reply submissions.

[94] In this case much of each party’s net family property consists of increases in the value of property owned before marriage, the wife her realty in Sri Lanka (an increase of $179,331) and the husband his interest in JLI ($110,400, excluding the gifted shares). None of these assets played any part in the parties’ marital partnership except possibly (in the wife’s case) some rental proceeds from her property in Sri Lanka being used for her or family expenses although the evidence about this from the wife was practically non-existent.

[95] The wife testified that she used the proceeds from the sale of her condominium in Sri Lanka and a mortgage on her Richmond Hill condominium residence to purchase a commercial property in Markham to start a student education business. Its shareholders were her and her father. It appears that this was successful because the wife agreed to refund to the husband an amount for the spousal support she had been paid.

[96] Neither party affirmatively dealt with the issue of unconscionability in their evidence even though it was a trial issue. No case law was provided to the Court. The wife seems to have been oblivious to the possibility that she could be exposed to such a claim and the husband dismissed it entirely. This is especially concerning for a couple of reasons: (a) Since the trial concluded, the COVID-19 pandemic has decimated the global economy. It was inferentially clear from the wife’s evidence that her business involved students and, quite possibly, people in close contact with each other. Public Health guidelines and restrictions have likely impacted the wife’s ability to operate her business, pay the mortgage on its premises and thus fund any equalization payment; (b) In Serra v. Serra, 2009 ONCA 105 [40], the Court of Appeal accepted that a market-driven downward impact on a party’s asset could be an appropriate “unconscionability” consideration. In that case, the value of Mr. Serra’s most significant asset (his textile business) decreased so substantially after the valuation date for reasons beyond his control that the business was worth less than the equalization payment he owed. A difference between that case and this is that Mr. Serra continued to own his business after the valuation date (but could not sell it) and the wife in this case owned realty that was sold after the valuation date and the proceeds used, in part, to fund a business likely affected by the global health and economic crisis.

[97] I am not prepared to order that an equalization payment be made without further evidence and submissions from the parties. The order below contains directions for the parties in that regard. Given my views about the parties’ credibility, consideration may be given after delivery of their material to a brief oral hearing on the issue whether requiring the wife to pay the full or any part of the equalization payment would be unconscionable.

Miscellaneous matters

[98] As part of her case the wife sought to call, and have qualified as an expert witness, Mr. Val Purushothaman. It was proposed that he would testify about the value of the husband’s business interests in JLI and the husband’s income for support purposes. Following a voir dire, I ruled that Mr. Purushothaman would not be qualified to express an opinion about the husband’s interest in JLI but that he could assist the court as an expert with respect to determining the husband’s income. After this witness testified but before the trial concluded, the wife accepted an offer from the husband settling the issue of the husband’s income for 2016 to 2019 and his child support obligations for those years, and (as already noted), a ruling was made to that effect; this is reflected in the Disposition section below. Consequently, it became unnecessary to deal with, or review, Mr. Purushothaman’s evidence. The terms of the parties’ settlement are set out below with such modifications as are necessary or desirable.

[99] Mr. Bhardwaj had relied extensively on Mr. Purushothaman’s work product dealing with the husband’s interest in JLI and the latter’s speculations about the ownership of the realty in Sri Lanka other than as disclosed by registered title. His evidence was not reliable in that regard: the court’s direction that he and Mr. MacKenzie collaborate in identifying those areas upon which they agreed and those in dispute were of great assistance to the court and helped identify deficiencies in each of their reports and testimony.

Disposition

[100] The following is ordered: (a) The parties are divorced effective 31 days after the date of this Order; (b) The husband shall pay basic child support to the mother for SSL born October 30, 2013 in the amount of $654 a month from and after January 1, 2016. This amount is based on a $70,000 a year income agreed by the parties and imputed to the husband for 2016 to 2019; (c) The husband shall pay to the mother $5,483 child support arrears due from January 1, 2016 to November 26, 2019. These arrears shall be paid by adding $200 each month to the monthly support otherwise payable until fully paid.

[101] A Support Deduction Order shall issue.

[102] The parties are directed to file with the Court the following: (a) The wife shall deliver her submissions dealing with the issue whether it would be unconscionable to equalize the parties’ net family properties by May 22, 2020; (b) The husband shall deliver his response to the wife’s submissions by June 5, 2020; (c) The parties’ submissions shall be no longer than five pages, double-spaced; (d) The wife shall deliver her Reply, if any, by June 12, 2020. It shall not exceed three pages, double-spaced; (e) In their submissions the parties should consider whether Serra v. Serra, 2009 ONCA 105 and the current COVID-19 pandemic should impact the court’s determination of unconscionability and, if so, in what respects; (f) The parties shall file properly completed and up-to-date Form 13 statements with their submissions by the deadlines set out in (a) and (b) above; (g) All submissions may be filed electronically with the court offices; (h) Any authorities upon which either party may wish to rely and not already filed with the court shall be filed by the deadlines set out in (a), (b) and (d) above; (i) No other issue than as set out in (a) above shall be considered by the court; and, (j) Depending on the court’s review of the parties’ submissions and their financial statements, the parties may be required to reattend for a hearing in which case directions will be given.

[103] Directions with respect to the costs of these proceedings will be given after consideration of the parties’ submissions, and hearing if necessary, on the unconscionability issue.

Justice David A. Jarvis Date: May 1, 2020

[1] Order of MacPherson J. dated October 25, 2019.

[2] The applicant had accepted certain paragraphs of an Offer to Settle made by the husband dealing with spousal support. The husband disputed the settlement. For oral reasons given, Rowsell J. granted the wife’s motion that her acceptance constituted a binding settlement of that issue.

[3] The parties disputed whether the applicant had accepted other paragraphs of the respondent’s Offer to Settle during a trial adjournment and I ruled that there was acceptance. That will be reflected in the Disposition section of these Reasons below.

[4] The Canada Business Corporations Act does not require shares to be issued on incorporation.

[5] This does not include July and August 2014 when the parties went to Sri Lanka for the wedding of the husband’s sister.

[6] The husband’s mother returned to Sri Lanka in November 2015.

[7] R.S.O. 1990, c. F.3 as am.

[8] (1995), 11 R.F.L. (4th) 251 (Ont. U.F.C.) at paras. 48 and 49.

[9] 1992 CarswellOnt 306.

[10] Ibid, para. 1.

[11] As per Lococo J. in Di Francesco v. Di Francesco, 2011 ONSC 3844 at para. 38.

[12] 2019 ONSC 3857 at paras 12-26 and 32-40.

[13] Ibid, at para. 39.

[14] Ibid at para. 42.

[15] Foreign exchange.

[16] Exhibit 1A, Tab 15. An LKR 1,000,000 purchase deposit is recorded for the sale on December 18, 2015.

[17] The reference to “report” is for convenience only.

[18] LKR 30,000,000 /103.38 and LKR 33,000,000 /103.38.

[19], [2002] O.J. No. 2782 (S.C.).

[20] Ibid at para. 37.

[21], [2003] O.J. No. 5167, 50 R.F.L. (5th) 98; additional reasons at [2004] CarswellOnt 2517 (S.C.J.); aff’d, 50 R.F.L. (5th) 98, 12 R.F.L. 391 (Ont. C.A.).

[22] 2016 ONSC 49, 80 R.F.L. (7th) 124, at para. 208; aff’d, 2017 ONCA 394.

[23] Exhibit 20, father’s net family property statement signed November 27, 2019.

[24] Exhibit #1B, Tab 10.

[25] Ibid.

[26] August and November 2015.

[27] Exhibit 1A, Tab 27 D.

[28] The statement produced noted that the interest paid year-to-date was $3.57 USD.

[29] Exhibit 1A, Tab 27 F.

[30] This is the lowest type of valuation report prescribed by the Canadian Institute of Chartered Business Valuators and involves minimal review and analysis of relevant information and little or no corroboration of significant relevant information: see Practice Bulletin No. 3.

[31] Based on 1,608,000 JLI shares.

[32] Exhibit 23.

[33] Supra #4.

[34] The husband had travelled to Japan to learn how to operate the machines acquired for Luxmi but the evidence was unclear as to when that occurred and its duration.

[35] The husband sought to produce in his re-examination a document from his father allegedly showing monies advanced by his father to JLI but never disclosed before then, even though he said that he had given it to his lawyer. I ruled that the document would not be admitted. The husband knew from the Trial Scheduling Endorsement not only that he risked an adverse inference being drawn for non-disclosure, but the prescribed form signed by him acknowledged that risk too. Given his disclosure obligations, his awareness well before trial that documents upon which he intended to rely needed to be disclosed and his close relationship with his father (as both he and his father had testified) it was incomprehensible and, quite frankly, unacceptable for the husband to disclose the existence of such a document only at trial.

[36] 2011 ONCA 533.

[37] Mr. MacKenzie performed this calculation during his trial testimony at the court’s request.

[38] Supra #19.

[39] Paragraph 143 of the husband’s closing submissions.

[40] 2009 ONCA 105.