Court File and Parties

COURT FILE NO.: FS-20-15614

DATE: 20200915

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Xiang Li, Applicant

AND:

Xiang-E Li, Respondent

BEFORE: E.L. Nakonechny, J.

COUNSEL: Michael J. Stangarone / Alice Parama, for the Applicant Heng (Pandora) Du for the Respondent

HEARD: September 3, 2020

ENDORSEMENT

[1] The Respondent brings this motion for an order dismissing the Application for a declaration that the City of Kunming, Province of Yunnan, People’s Republic of China is the more appropriate forum to determine any issues outstanding between the parties arising from the breakdown of their marriage. This is not a summary judgment motion under Rule 16 of the Family Law Rules.

Background

[2] The Applicant and the Respondent met in China in about 2003. They married in China in April 2012. The Applicant is a Canadian citizen. The Respondent is a Chinese citizen. The Respondent held permanent resident status in Canada which expired in March 2019 and was not renewed.

[3] Both parties have children from their prior marriages who are now adults. The Applicant has two daughters and the Respondent has one son.

[4] The parties do not agree on their date of separation. The parties were both in China on the dates of separation put forward by each of them.

[5] The Respondent says the parties separated in April 2016 after an altercation in their home in Kunming City, China when the Applicant physically assaulted her. The Applicant denies the assault. He says the parties continued to reside together as a couple both in China and Toronto until at least March 2018.

[6] The Applicant alleges that the Respondent abused alcohol and was physically aggressive toward him during the marriage. The Respondent denies these allegations.

[7] The parties agree that on March 26, 2018, they attended together at the Kunming City Ministry of Civil Affairs Marriage Registry in China to apply for a divorce. They brought a handwritten document that read as follows:

“Both parties agree that their passion base has broken and are determined to divorce on their own wishes, with the following agreements:

1,both parties agree there will be no disputes on children;

2, both parties agree that all issues related to properties, debts and liabilities have been resolved through private negotiation.” (English translation)

[8] The registrar required a typed document and photographs of each of the parties. The Applicant typed and printed out a document with the same terms as the handwritten document. The parties had their pictures taken. They signed the document and added their fingerprints. The parties obtained a sealed divorce certificate from the registrar that day. The registrar put a stamp on the parties’ marriage certificate stating: “The parties are divorced and the marriage certificate is invalid, Kunming City Ministry of Civil Affairs Marriage Registry.”

[9] The Respondent says that the divorce certificate is valid and reflects negotiations and agreement between the parties.

[10] The Applicant says that the Respondent misled him. She told him this was not a real divorce and was only necessary to assist her in obtaining bank loans to operate her businesses. The Applicant says the Respondent threatened to harm herself if he did not agree to the divorce. The Respondent denies this.

[11] The Applicant asks that this court decline to recognize and/or enforce the Chinese divorce as it is against public policy.

[12] The Respondent states that the parties signed a Supplementary Agreement to the Divorce Agreement on March 26, 2018. In this document the Applicant waives his rights to any property or assets belonging to the Respondent. The document states that all property or assets in either party’s name belong to the Respondent except for a car and a debt owing by the Applicant which is his responsibility. The Respondent is responsible for all of her own debts. Each party is responsible for supporting their own children.

[13] The Applicant does not recall executing the Supplementary Agreement. He says he was distraught by the divorce and coerced by the Respondent. He was unaware of the existence of the Supplementary Agreement until December 2019. He admits that the signature on the document looks like his, but says the Respondent sometimes asked him to sign blank documents for business purposes because he was often in Canada.

[14] The Applicant says he and the Respondent registered a company together in China in 2010 called Wenshan Sunchee Ecommerce Corp. The Respondent worked as a general manager of Wenshan until about August 2019. He says he continues to do consulting work for that company for no wages.

[15] The Applicant states that the parties founded another company, Yunnan Hengyuan Industries, in 2008. He says he holds 17% of the shares of the company in trust for his mother, who resides in China, and the Respondent holds 43%. The Respondent says she no longer holds shares in Hengyuan.

[16] The Applicant states that he contributed 150,000 RMB as startup funds for a third company, Kunming Lexgis Corp. He says the Respondent’s sister “represents” him as a shareholder, but no shares are held in his name.

[17] The Applicant states that the Respondent leveraged assets from these family businesses to borrow funds to purchase real estate in her name alone.

[18] The Respondent says she owned corporations and real property in China before and during the marriage. She denies that the Respondent made any financial contribution to her assets in China or Toronto.

[19] The Respondent says that the Supplementary Agreement was discussed and agreed to between the parties before it was signed. It reflects the fact that the Applicant made no contributions to her corporations or real estate. It also accords with agreements signed by the parties during the marriage where the Applicant waived any claims to properties held by the Respondent in her name alone.

[20] On March 11, 2014, the parties signed a Marital Assets Agreement dealing with five properties the Respondent was purchasing in her name alone. In this Agreement the Applicant confirms that he has no property rights, financial rights or obligations to the properties and that they are solely the property of the Respondent.

[21] This Agreement was signed before a Notary Public in Kunming City. The Notarial Certificate attached to the Agreement confirms that the parties had capacity to sign the Agreement as required by law, that the content of the Agreement represented the true intentions of the parties, that the Agreement is in accordance with the Marriage Law of the People’s Republic of China, and that the signatures and fingerprints of the parties are genuine.

[22] On May 12, 2015, the Applicant signed a Letter of Commitment wherein he promised to forego ownership in 41 properties owned with the Respondent and gave the Respondent permission to sell or otherwise deal with the properties on her own. A list of the 41 properties including the value of each property is attached and initialed by the Applicant.

[23] The Applicant does not dispute the validity of the Marital Agreement or the Letter of Commitment. He says he signed the documents because the Respondent told him she needed sole control of the properties to borrow money from the bank. He says she also told him that they would share beneficial ownership of the properties.

[24] In 2012, just prior to the marriage, the Respondent purchased 220 Elmwood Avenue, Toronto in her name alone. The Respondent says she purchased Elmwood for her son to reside in while he attended school in Canada. In May 2016, Elmwood was sold, and the proceeds used to purchase 33 Bevdale Road, Toronto, also in the Respondent’s name alone.

[25] The Applicant says he found Bevdale and worked with the real estate agent to arrange the purchase. The Respondent came from China at the time of closing to finalize the purchase. He argues that the parties were not separated at that time.

[26] The Applicant states that both Elmwood and Bevdale were matrimonial homes where the parties and the children resided during the marriage. The Respondent says she only lived with the family in the Toronto homes for a few weeks each year during holidays and other times.

[27] The Respondent has a Royal Bank account in Toronto in her name alone which she used to pay the expenses of Elmwood and Bevdale. The Applicant made contributions to this account which were used to pay mortgage, taxes, utilities and other expenses of Bevdale. The Applicant claims a resulting and/or constructive trust interest in Bevdale. He says the Respondent is unjustly enriched by his money and money’s worth contributions to Elmwood and Bevdale.

[28] The Respondent has provided a translated record from the National Immigration Administration of China which shows the dates of her exit/entry to China between 2010 and 2020. Between the date of marriage in 2012, and the date of the divorce in 2018, the Respondent was in Canada for about 300 days. On questioning, the Respondent admitted that some visits she made to Toronto in 2015 may not appear in that record. However, even if there is some time missing, it is clear that the Respondent did not reside primarily in Ontario during the marriage.

[29] In 2019, the parties negotiated the terms of a repayment agreement for a 2,000,000 RMB loan made to the Respondent in 2008 by the Applicant, his mother, sister and brother-in-law. The amount of the repayment is 6,000,000 RMB.

[30] The first Loan Repayment Agreement was signed by the parties in China in January 2019. A second Loan Repayment Agreement with different payment terms but the same repayment amount was signed by the parties and the Applicant’s mother, sister and brother-in-law in China on September 6, 2019.

[31] The Respondent says the 6,000,000 repayment figure includes interest and an “equitable voluntary payment” by her to the Applicant of his “monetary interest” in their relationship. The Applicant says the repayment amount relates only to interest owing on the debt because the cost of borrowing in China is very high. He says the Repayment Agreement does not reference the parties’ divorce, the division of their marital property or the Supplementary Agreement. The loan repayment and the division of marital property are not related.

[32] In December 2019, the Applicant was residing in Bevdale with the Respondent’s son, J. The Applicant left the home to run some errands. When he returned, J. had locked him out of the house. The police were called, and the Applicant was not permitted to return to the home. He was able to remove some of his personal belongings from the home. He went to live temporarily with his daughter, S.

[33] The Applicant commenced this Application in February 2020 for a declaration that the Chinese divorce certificate not be recognized or enforced in Ontario, a declaration setting aside the Supplementary Agreement and a declaration that Ontario has jurisdiction to determine the corollary issues of equalization, spousal support and the Applicant’s trust claims to Bevdale.

[34] The Respondent has not attorned to the jurisdiction of this court. She has not filed an Answer or Financial Statement. The Respondent participated in a case conference before Akbarali J. and in questioning on the Affidavits filed for this motion only to facilitate this hearing. She continues to oppose this court’s jurisdiction to hear the Application.

The Issues

[35] The issues I must determine on this motion are:

a. Does the Ontario court have jurisdiction to determine the Applicant’s property and spousal support claims in his Application issued in February 2020?

b. Even if this court does have jurisdiction, is Ontario the appropriate forum to determine the issues?

Does the Ontario court have jurisdiction to determine the Applicant’s property and spousal support claims in his Application issued in February 2020?

Spousal Support

[36] The Applicant makes his claim for spousal support under the Divorce Act, R.S.C., 1985, C.3 (2nd Supp.) and the Family Law Act, R.S.O. 1990, c. F.3. This Court does not have jurisdiction to hear and determine a corollary relief proceeding under the DA following a valid divorce in a foreign jurisdiction. It does not have jurisdiction to hear and determine a support claim made by a former spouse under the FLA: Okmyansky v. Okmyansky, 2007 ONCA 427, 86 O.R. (3d) 587 at paras. 31 and 42.

[37] I have not been asked to determine the validity of the Chinese divorce on this motion. However, there is a presumption in favour of recognizing the validity of a foreign divorce. The onus is on the party alleging that the divorce is invalid to adduce some evidence to establish that the divorce was not properly obtained: Powell v. Cockburn, 1976 CanLII 29 (SCC), [1977] 2 S.C.R. 218. Only in very rare circumstances will a foreign divorce properly obtained pursuant to the laws of another jurisdiction not be recognized by Canadian courts: Martinez v. Basail, 2010 ONSC 2038 at para. 8.

[38] If the Chinese divorce certificate is valid, the Applicant cannot pursue a claim for spousal support in Ontario. The validity of the divorce does not determine his ability to claim equalization or make a resulting and/or constructive trust claim to Bevdale.

Equalization and Property Division

[39] Section 15 of the Family Law Act speaks to what law is to be applied to property rights between married spouses. It does not specify in what circumstances jurisdiction to determine property rights exists or should be exercised in Ontario. It reads as follows:

Conflict of laws

15. The property rights of spouses arising out of the marital relationship are governed by the internal law of the place where both spouses had their last common habitual residence or, if there is no place where the spouses had a common habitual residence, by the law of Ontario.

[40] The parties were present in China on both dates of separation. China may be their last common habitual residence. However, the parties travelled extensively between China and Canada during their marriage. The Respondent resided primarily in China. The Applicant returned to China from Canada just days before the parties obtained the divorce certificate.

[41] The Applicant argues that if the parties did not have a common habitual residence at the time of separation, the law of Ontario applies to their marital property rights pursuant to s. 15 of the FLA.

[42] In Okmyansky, the Ontario Court of Appeal held that Ontario has jurisdiction to determine equalization issues after a valid foreign divorce where the foreign judgment does not deal with property issues. This was confirmed in Cheng v. Liu, 2017 ONCA 104, 136 O.R. (3d) 172. The Court of Appeal held that even if the foreign divorce was valid, the wife could pursue claims for equalization and child support under the FLA where the foreign court had not dealt with those issues.

[43] In this case, the Applicant and the Respondent obtained a divorce certificate from the registrar. It is not a court order. The issues of spousal support and the division of the parties’ matrimonial property were not adjudicated by a court.

[44] In Wang v. Lin, 2013 ONCA 33, the Court of Appeal confirmed that the FLA does not specifically address the issue of jurisdiction simpliciter. Absent a statutory rule, the court may take jurisdiction simpliciter over a case if a defendant is present and served in the jurisdiction, attorns to the jurisdiction or if there is a real and substantial connection between the forum and the subject matter or the parties to the dispute: Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572.

[45] The burden of proving a real and substantial connection is on the party asserting the court’s jurisdiction. The test is met when there is a presumptive connecting factor that links the subject matter of the litigation to the forum. If none of the presumptive connecting factors apply, the court should not assume jurisdiction: Wang at para. 20, citing Van Breda, at paras. 82-94 and 100.

[46] In Knowles v. Lindstrom, 2014 ONCA 116, a claim between common law spouses, the Applicant wife, a Canadian citizen, claimed spousal support and an equitable interest in a property in Ontario owned by the Respondent husband, an American citizen. The husband said that the parties lived primarily in Florida and only spent summer vacations in Ontario. The husband argued Florida, not Ontario, was the proper jurisdiction for the litigation.

[47] The Court of Appeal upheld the finding of the motions judge that the location of the property in Ontario and the remedy of unjust enrichment sought based on work and money’s worth contributions made in Ontario by the wife to the property were presumptive connecting factors for jurisdiction purposes. The Court of Appeal confirmed that Ontario had jurisdiction over the case because there was a real and substantial connection between Ontario and the parties, issues and transactions in the case. at para. 21.

[48] The Court of Appeal also considered the question of the parties’ “ordinary residence” in the context of the ratio of Thomson v. Minister of National Revenue, 1946 CanLII 1 (SCC), [1946] S.C.R. 209. The Court of Appeal held that although the parties’ primary home was Florida, it was possible for individuals to be ordinarily resident in more than one location (citing Thomson). The Court of Appeal agreed with the motions judge who found that because the parties resided in Ontario for part of every year and for months at a time, Ontario was also their ordinary residence. at paras. 31 and 32.

[49] The Applicant in this case argues that the parties were ordinarily resident in Ontario on both dates of separation. The Respondent was a permanent resident of Canada and the Applicant was a Canadian citizen. The parties and the children lived in Ontario as a family. They owned vehicles and bank accounts in Ontario. Their children attended public schools and, later, post-secondary education in Canada. Both the Applicant and the Respondent travelled to China to work and operate their businesses but maintained their ordinary residence in Ontario.

[50] In Rubio v. Joslin, 2018 ONCJ 167, 7 R.F.L. (8th) 240, at para 41, O’Connell J., (referring to Muscutt v. Courcelles (2002), 2002 CanLII 44957 (ON CA), 60 O.R. (3d) 20 (C.A.), set out the factors the court must consider in determining whether there is a real and substantial connection which gives the court jurisdiction to hear a corollary relief claim under the FLA when there is a valid foreign divorce:

a. The connection between the forum and the Applicant’s claim.

b. The connection between the forum and the Respondent.

c. Unfairness to the Respondent in assuming jurisdiction.

d. Unfairness to the Applicant in not assuming jurisdiction.

e. Involvement of other parties to the suit.

f. Whether the case is interprovincial or international.

[51] Having reviewed and applied the jurisdictional factors in the above cases, I conclude there is a real and substantial connection between the parties, the issues being litigated and Ontario. This court has jurisdiction to hear the Applicant’s property claims for the following reasons:

a. The Applicant is a Canadian citizen. He resided primarily in Canada during the marriage and since separation (on either date alleged by the parties). He claims a resulting and/or constructive trust interest in Bevdale based on contributions made in Ontario by him. The parties and the children resided in Elmwood and Bevdale as their family homes during the marriage.

b. The Respondent made regular trips to Ontario each year for blocks of time and resided with the Applicant and their children. The children continue to reside in Canada. The Respondent applied for and obtained Canadian Permanent Resident status during the marriage. In her application she expressed her desire to make Canada her home. The Respondent purchased two homes and has bank accounts in Ontario.

c. There may be unfairness to the Applicant if Ontario does not assume jurisdiction. The Applicant has put forward as evidence a legal opinion from Ze Chen of the Yunnan Bingjian Law Firm in Kunming, China. The opinion states that the Applicant is out of time to make a claim for property division under the relevant laws of the People’s Republic of China, because litigation concerning division of matrimonial property must be filed within one year of the date of the joint divorce. The opinion does not state whether the Applicant can challenge the validity of the divorce or the Supplementary Agreement and, if they are set aside, whether the Applicant could then bring a claim for division of property.

The Respondent has put forward as evidence the opinion of Wenqing Qiu and Qian Zhao from the City Development Law Firm in Kunming, China. This opinion states that the joint divorce certificate was obtained by the parties in accordance with the relevant laws of the People’s Republic of China and is valid. It also states that the Supplementary Agreement was entered into in accordance with the relevant law and is valid. However, if the Applicant was under a serious misunderstanding or there was coercion, fraud or unfairness in the making of the Supplemental Agreement (which is denied by the Respondent), the Applicant may bring an application to the appropriate court to amend or void the Supplemental Agreement and seek further remedies (presumably division of marital property).

These opinions were produced as exhibits to each party’s Affidavit. They are not tested by cross-examination. I do not prefer one opinion over the other in determining jurisdiction, other than to find that there may be unfairness to the Applicant if he is out of time to bring his property claim in China.

d. There are relevant documents and witnesses in both China and Ontario. However, the evidence relating to the Applicant’s claim for a trust interest in Bevdale based on his contributions to that property will be primarily in Ontario. Some of the evidence relevant to determine the date of separation will also be in Ontario because the Applicant claims the parties resided together, attempted to conceive a child through in vitro fertilization and travelled as a couple with others after the Respondent’s proposed April 2016 date of separation.

Even if this court does have jurisdiction, is Ontario the appropriate forum to determine the issues?

[52] Having found Ontario has jurisdiction, the court may decline to exercise jurisdiction if it is persuaded there is another forum that is “clearly more appropriate” for determining the issues in the case. The burden is on the Respondent to convince the court to decline jurisdiction: Van Breda.

[53] Both Van Breda and Muscutt set out factors the court should consider in determining whether another forum is clearly more appropriate. The factors include the location of the parties, key witnesses and evidence, any contractual terms governing applicable law or jurisdiction, avoidance of multiple cases, the applicable law and its weight in relation to the factual questions to be decided, geographical factors suggesting the natural forum and whether declining jurisdiction would deprive the applicant of a legitimate juridical advantage: Van Breda at para. 103 and 108-110; Muscutt, at para. 41.

[54] The Respondent argues that China is clearly the more appropriate forum to determine the case for the following reasons:

a. The parties married and divorced in China. The majority of the property to be divided exists in China. The Applicant and the Respondent both worked in China during the marriage for Chinese corporations.

b. All of the agreements and documents the parties signed during their marriage relating to property were entered into under Chinese law, in the Chinese language and in Chinese currency. The Respondent would have to produce and translate financial documents, real estate documents, real estate appraisals and business valuations for her assets and debts owned at the date of marriage and date of separation (or two dates if date of separation cannot be resolved) into English and into Canadian dollars.

c. The evidence relating to the real estate and corporations owned by the Respondent, including valuations, would come from witnesses in China in the Chinese language.

d. The Respondent does not speak English. She and the other relevant witnesses would have to travel to Ontario or attend court proceedings virtually with an interpreter and a twelve hour time difference.

[55] The Applicant’s claim to Bevdale is based on his alleged contributions to both Elmwood and Bevdale in Ontario. These alleged contributions include locating the properties, working with real estate agents to assist the Respondent in purchasing them, making direct payments to the mortgage, utilities and other expenses of the properties and maintaining the properties through work in the home and caring for the children while the family resided there. All the witnesses and evidence relating to these events, except the Respondent’s evidence, would be in Ontario.

[56] The “natural forum” for a claim to an interest in an Ontario property is Ontario. The Applicant does not claim an interest in properties or corporations located in China, only in the money payment resulting from the equalization calculation.

[57] Some of documents in China will require translation and witnesses from China will require interpreters. However, all of the documents filed as evidence on this motion by both parties were translated into English and values recalculated into Canadian currency. Both parties were questioned on their Affidavits by Zoom due to the pandemic. The Respondent was present for the Applicant’s questioning and her own questioning, with an interpreter, despite the time difference. While there were some technical issues, the questioning was completed. The Respondent was also present for the argument of this motion via Zoom with an interpreter. In my view, the Respondent has demonstrated that she will be able to present her case and participate in the litigation in Ontario without significant difficulty.

[58] The Applicant asks that the Ontario court not recognize or not enforce the Chinese divorce. If he is successful, he can pursue his claim for spousal support. Some witnesses and documents relevant to that claim will be in Ontario because the Applicant spent more time residing here than in China. The Applicant filed tax returns in Canada. There will also be witnesses and evidence in China because the parties earned income in that jurisdiction.

[59] If this court declines jurisdiction, the Applicant may be out of time to pursue a claim for division of marital property in China. The expert evidence from two Chinese law firms is conflicting. The Applicant may be able to set aside the Supplementary Agreement, but it is not clear that even if that Agreement is set aside, he will be able to pursue the remedy of division of marital property if the divorce is valid and the one year time period has expired. If this court declines jurisdiction, the Applicant could lose a legitimate jurisdictional advantage if he cannot bring his claim for division of property in China.

[60] In assessing all the relevant factors for this court to decline jurisdiction, I find the Respondent has not met the burden of showing that China is a “clearly more appropriate” forum for this case. Ontario has jurisdiction and is the appropriate forum to determine the Applicant’s property and spousal support claims in his Application issued in February 2020.

Decision

[61] The Respondent’s motion is dismissed.

[62] At the end of the argument on the motion, counsel suggested they would try to resolve the issue of costs between them once they received my Reasons.

[63] If the parties cannot agree on costs, the Applicant shall serve and file his submissions for costs within 7 days from the date of this decision. The Respondent will have 7 days thereafter to serve and file her submissions. The submissions shall be no more than three pages, exclusive of any costs outline, case law and offers to settle. The Applicant may serve and file Reply submissions of two pages 7 days thereafter. All submissions shall be served and filed by email and sent to my assistant at Patrizia.Generali@ontario.ca.

E. L. Nakonechny, J.

Date: September 15, 2020