COURT FILE NO.: CV-20-003641
DATE: 2021 12 17
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
LIU, THE ESTATE OF XIAONYANG
A. Wu, for the Plaintiff
Plaintiff
- and -
JING XU
M. Freeman, for the Defendant
Defendant
YANHONG LI,
In her Personal Capacity and in her capacity as the Estate Trustee of the Estate of Xiaoyang Liu
A. Wu, for the Applicant
Applicant
HEARD: December 1, 2021
REASONS FOR JUDGMENT
MANDHANE J.
OVERVIEW
[1] Xiaoyang Liu died in China on December 2, 2019 without a will. At the time of his death, he was married to the Respondent, Jing Xu, and she was the sole designated beneficiary of his $300,000 life insurance policy (the “Policy”).
[2] The Applicant, Yanhong Li, is Liu’s ex-wife. Li and Liu were married in 1998, separated in 2010, and divorced in 2014. They have two children: D. (born in 2002; he/him) and N. (born in 2005; she/her) (together, “the Children”). D. is in university while N. is in high school. Both Children live in Mississauga with their mother, Li.
[3] After his death, Li successfully applied on an ex parte basis to be made trustee for Liu’s estate (“the Estate”). In her personal capacity and as Estate trustee, Li asks me to order that the Policy be clawed back to support her and the Children: Succession Law Reform Act, R.S.O. 1990, c. S.26 at Part V. As the designated beneficiary, Xu opposes the application.
[4] For reasons that follow, I order that the Policy be clawed back in the amount of $150,000 to support N. and $100,000 to support D.
ISSUES
[5] I must decide whether Liu made adequate provision for the support of Li and the Children prior to his death; and, if not, whether the Policy should be clawed back to support them: Earl v. McAllister, 2021 ONSC 4050, at paras. 35‑38.
[6] In Earl, supra, the Divisional Court noted that my decision is largely discretionary. I am not limited to a conducting a “needs-based” approach and I am able to look more holistically at the legal and moral obligations of the estate: Tataryn v. Tataryn Estate, 1994 CanLII 51 (SCC), [1994] 2 SCR 807. To arrive at my determination, I must identify all dependants and non-dependants who have a claim; tentatively value their claims by considering the factors set out in the legislation; and then balance their competing claims, taking into account the size of the estate, the strength of the claims, and the intentions of the deceased: Quinn v Carrigan, (2014) ONSC 5682 (Div. Ct.).
[7] Below, I consider the relative strength of the legal and moral claims to the Estate made by the Children, Li, and Xu; and then go on to balance the various claims to determine whether the Policy should be clawed back to support Li and the Children.
analysis
What is the strength of the Children’s claim to support from the Estate?
[8] The Children have a strong claim to support from the Estate. As a preliminary issue, Xu properly conceded that Li and the Children are “dependents” within the meaning of the SLRA.
[9] The genesis of Li and the Children’s legal claim to the Estate lies in the separation agreement she and Liu signed on May 15, 2012 (“the Agreement”). The Agreement required Liu to pay ongoing spousal support of $500 per month until Li turned 51 years old (December 22, 2025); $800 per month in child support; and $200 per month towards the Children’s special expenses. He was required to pay 65% of the Children’s post-secondary expenses for their first degree. As part of the Agreement, Li became the sole owner of the matrimonial home in Mississauga, currently valued at over $1,000,000 (“Mississauga house”).
[10] In addition, immediately prior to his death, Liu wrote three post-dated cheques totaling $120,000 that he said were for the benefit of Li and the Children. The first cheque for $40,000 was cashed prior to Liu’s death, while the other two cheques, each for $40,000, were withdrawn from the Estate. These cheques were written by Liu in contemplation of death and the logical conclusion is that they were payments in satisfaction of his outstanding legal obligations to Liu and the Children. There is no other juristic reason for the payments.
[11] Even still, the Children have strong legal and moral claims to the Estate. Liu had ongoing child support obligations to the Children at the time of his death, including in relation to their reasonable post-secondary education expenses. The Children were Liu’s only progeny, are both full-time students, have both shown an aptitude for education, and will be financially dependent for at least the next few years (N. is a minor, and D. is in university).
[12] While the Children have a strong claim to the Estate, I do not agree with Li’s estimated value of their claim. She estimates that D.’s future education needs will total $175,000, while N.’s future educational needs will total $250,000. She does not, for example, deduct the $40,000 cheque that each child received from Liu prior to his death (and which was withdrawn from the Estate), nor does she deduct any amount for reasonable contributions from herself or the Children (including from available RESPs, and as contemplated in the Agreement). Li also includes in her calculations expenses that are not actually being incurred (i.e. for D. to live on‑campus while attending the University of Toronto). In my view, N.’s claim is more reasonably valued at $150,000, while D.’s claim is valued at $100,000 since he is further along in his studies.
What is the strength of Li’s claim for support from the Estate?
[13] Li’s claim for dependant support form the Estate is relatively weak.
[14] She bases her legal claim on the terms of the Agreement related to spousal support. She says that she is owed approximately $35,000 for support that would have been payable until her 51st birthday. I find that Liu did not have any outstanding support obligations to Li at the time of his death. Li received $40,000 from Liu prior to his death in full satisfaction of his outstanding support obligations.
[15] Applying the factors set out in the SLRA, I find that Li’s moral claim to further support from the Estate is also weak.
a) Li and Liu were divorced in 2014 and she received monthly spousal support payments until Liu’s death,
b) Liu made provisions for Li’s future support by giving her $40,000 prior to his death;
c) Li is in her 50s, in good health and self-sufficient;
d) Li is currently working full-time and earning $60,000 per year; and
e) Li lives in the matrimonial home, which she owns exclusively, and which is worth over $1,000,000.
What is the strength of Xu’s claim to the Estate?
[16] Xu has a relatively strong claim to the Estate. Despite Li’s arguments to the contrary, I have no trouble concluding that Xu was dependent on Liu at the time of his death. While theirs was a short marriage (2017-2019), it was also a traditional one where Xu was entirely financially dependent on Liu.
[17] Xu has a clear legal and moral claim to the Estate based on the following factors:
a) Xu was married to Liu immediately prior to his death and was financially dependent on him;
b) Xu is not employed and is currently caring for her elderly parents in China; and
c) Liu intended to provide for Xu by designating her as the sole beneficiary of his Policy.
[18] In terms of quantifying Xu’s claim, I note that she does not have any dependent children; that, prior to Liu’s death, she received approximately $40,000 from the sale of their jointly-owned condo; and that she will likely be entitled to Liu’s survivor benefits from his Chinese employer (worth about $90,000).
[19] I refuse to find that Xu has a diminished moral claim to the Estate because of an alleged breakdown in her relationship with Liu prior to his death. While Xu admits that Liu stayed with Li and the Children in Mississauga while he was receiving cancer treatment in Canada between October and December 2018, she says that it was his wish to spend his last days in the company of his Children, and that Li would only allow him to stay at the Mississauga house if he signed an Application for Divorce in relation to Xu.
[20] The uncontroverted evidence supports Xu’s version of events. The divorce application was signed just days before Liu arrived in Canada, was never issued, and the beneficiary of the Policy was never changed to reflect his supposed reconciliation with Li. Moreover, Xu continued to travel back and forth with Liu throughout the Fall to attend to his treatment. The fact that Xu and Liu may have been considering separation after Liu recovered from his cancer treatments is speculative, remote, and largely based on unreliable hearsay.
[21] The simple fact that Li helped to care for Liu during his cancer treatments in Canada and travelled with him to China towards the end of his life does not take away from my findings about Xu’s moral entitlement. Clearly Liu had an independent relationship with both Li and Xu such that both women provided him comfort in his last days. Each woman clearly also had their own reasons for wishing to remain by his side, whether love, opportunity, or both.
How should the competing claims be balanced?
[22] When balancing the competing claims to the Estate, in addition to the factors set out in s. 62 of the SLRA, I must also consider the size of the Estate, the strength of the claims, and the intentions of the deceased.
[23] The parties agree that, at this point, the Estate has limited funds. The funds that were in the Estate have been used to pay for funeral and travel expenses, to satisfy the cheques that Liu wrote to Li prior to his death, and to pay for litigation costs.
[24] All things considered, I find that the Children have the strongest legal and moral claim to support from the Estate and, given the size of the Estate, their support must be prioritized. As between the competing claims between Liu and Xu, I find that Xu’s claim is most consistent with the intentions of the deceased.
ORDER
[25] The Policy shall be clawed back to provide support to the Children: D. shall receive $100,000; and N. shall receive $150,000. The remaining amount should be distributed to Xu.
[26] The survivor benefits available through the Chinese employer shall be distributed according to Chinese law.
[27] Given that the parties were equally successful, no costs shall be paid.
Mandhane J.
Released: December 17, 2021
COURT FILE NO.: CV-20-003641
DATE: 2021 12 17
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
LIU, THE ESTATE OF XIAONYANG
Plaintiff
- and -
JING XU
Defendant
- and -
YANHONG LI
Applicant
REASONS FOR JUDGMENT
Mandhane J.
Released: December 17, 2021