COURT FILE NO.: FC231/18
DATE: May 18, 2022
ONTARIO
SUPERIOR COURT OF JUSTICE
FAMILY COURT
BETWEEN:
N.L.
N.L., in person
Applicant
- and -
X.C.
X.C., in person
Respondent
HEARD: May 9, 10, and 11, 2022
TOBIN J.
Introduction
[1] The applicant and respondent are spouses. They separated, formally, in 2011 after 25 years of marriage.
[2] In these reasons, the applicant will be referred to as the "husband" or "father" and the respondent as the "wife" or "mother." This is not meant in any way to disrespect the parties, but only for convenience of reference.
[3] The parties are the parents of three children, all of whom are independent. The oldest is 34 and the middle child is 23, lives on her own and attends university. The youngest child will be 22 in July 2022 and also lives on her own.
[4] The issues raised in this case are:
A request for a divorce;
The unequal division of the net proceeds of sale of their matrimonial home. Both ask for 60 per cent for themselves and 40 per cent of the net proceeds for the other;
The applicant asks for one-half of the money he claims the respondent withdrew from their joint bank account over a 12 year period and deposited into her own bank account. The amount he asks for is $24,000;
The applicant asks for one-half of the money on deposit in an RESP registered in the wife's name alone, on the basis that it is not being used and was funded by monies withdrawn by the respondent from the parties' joint bank account; and
The applicant claims that the respondent is to reimburse him for one-half of the costs of junk removal he incurred on the closing date of the matrimonial home. The amount in issue is one-half of $389.85 or $194.93.
[5] I am considering all these issues even though it is only the divorce and the division of the net proceeds of sale that were identified as issues in the parties' pleadings. I am doing so because no one was taken by surprise by these requests. The issues had been identified while this case was ongoing. This case was set for trial in 2019 and these issues were raised then.
The Evidence
[6] The first language of both parties is Mandarin. Both parties appeared in person and had the assistance of an accredited Mandarin/English interpreter throughout. While both parties were able to communicate in English, they were more comfortable and confident in their respective abilities to communicate effectively during the trial with this assistance.
[7] I thank the interpreters for their skill and patience in this family law trial where sensitive family dynamics were evident. They assisted in a most professional manner.
[8] In this trial, only the parties testified. Noncontentious evidence from third parties was admitted on consent through correspondence and other documents.
Facts
[9] The applicant husband was born on [...] 1956. He is now 65 years of age.
[10] The respondent wife was born on [...] 1963. She is now 58 years of age.
[11] Both parties made reference during this trial to their retirement years.
[12] The parties married on July 12, 1986 in China.
[13] In 1996, the wife left her employment in China and accompanied the husband to Canada.
[14] In 2002, the parties bought a home in London located at [...]. This is where they lived with and brought up their children.
[15] The parties became Canadian citizens in 2003.
[16] Also in 2003, the husband lost his employment as a post-doctoral student at the university.
[17] Beginning in September 2005, the wife went to Indiana University in Bloomington to obtain her Ph.D. and returned to Canada, as needed, to manage the property they owned and, eventually, on a permanent basis.
[18] When she left for the United States, the children remained in London with the husband from September 2005 until January 2006.
[19] The husband returned to China in January 2006 to start a business with his friends. When the father went to China, the middle child went with him. The youngest child stayed with the mother. Childcare arrangements changed on occasion, with the children being with the father and mother at different times.
[20] The father remained in China until 2017. He would return a few times for brief periods, usually two weeks at a time.
[21] In 2011, when the parties had been apart for approximately five years, the wife returned to China for a visit. While there, the parties entered into an "Agreement of Uncontested Divorce" that they made themselves. In part, the agreement as translated provides:
"They lived together until 2006 and since then, have lived separately in two places and it has been a full five years. Because of long time separation, the above parties have gradually lost their ground of love and shared languages in other areas for living together."
"Each party shall have half of the assets and real property co-owned by the parties when they lived together."
[22] An additional clause added by the wife was to ensure that the dental needs and expenses of their youngest child would be met by them.
[23] During the 12 years the husband was in China, he provided no direct financial support to the wife.
[24] The wife rented out part of the matrimonial home and used the rent received and other sources of income to pay for the expenses associated with it, as well as living expenses for her and the child or children who were in her care. She continued with her education and assumed responsibility for renting and maintenance of the matrimonial home.
[25] In September 2017, the husband was able to return to Canada.
[26] He arrived at the matrimonial home after an absence of almost 12 years with his new partner. They took over what had been the wife's bedroom. The wife was very hurt by the husband's behaviour.
[27] The wife's evidence, which I accept, is that the husband wanted details on all the financial dealings and expenses she had while he was away. The wife called it an audit and she found the process very painful and difficult. Exhibit 7 was a document prepared by the husband detailing a number of the expenses and receipts he recorded as part of his review of the wife's income and expenditures.
[28] There was acrimony between the parties following the husband's return. Police were involved. The husband was charged and eventually placed on probation.
[29] In February 2018, the applicant started a divorce only application.
[30] The wife filed an answer seeking the sale of the family property.
[31] In December 2019, the court made an order regarding the sale of the matrimonial home.
[32] On April 3, 2020, the parties entered into an agreement for the sale of the matrimonial home in the amount of $388,000. The transaction closed on July 9, 2020. The net proceeds of sale received were $339,645.37. This sum has been held in trust since the closing.
Issue #1: Divorce
[33] The request for a divorce is not contested. The statutory requirements have been met. Consequently, a divorce order shall issue.
Issue #2: How Should the Net Proceeds of Sale Be Divided?
[34] The husband argues that 60 per cent should be paid to him because:
the wife did not maintain the property in good repair;
the wife and he could not agree on the costs of repairing the home before sale;
the matrimonial home was sold as is and did not bring the best price possible; and
the husband argues that the wife wanted to sell the home at a depressed price to reduce the amount of money he would have for his senior years.
[35] The wife argues that she should get 60 per cent of the net proceeds because:
when the husband moved to China in 2006, the parties had accumulated $100,000 in savings. These savings were in the husband's name. The husband used $30,000 of that sum for his expenses while in China. The only bank account the wife was left with was a joint one with the husband. In January 2006, the balance was $3,560. The husband never provided her with half of their $100,000 in savings. This, she argues, was the intent of their Agreement for Uncontested Divorce;
she was solely responsible for the care, upkeep and expenses of the matrimonial home from January 2006 until September 2017, when he returned from China. This was a complicated and stressful task for her;
the husband never paid anything toward the property while he was away;
through her efforts, the principal of the mortgage was reduced from $90,245 in 2006 to $36,776 when he returned;
when he returned to Canada for his two-week visits in 2011 and 2015, he accessed the funds in the joint account; and
the husband has not equalized all of the property owned by him. He is economically better off than the wife. He never provided spousal support to her to address her economic disadvantages arising due to the roles assumed by them during the marriage and after separation.
[36] The wife's claim for 60 per cent is the amount she claims would compensate her for all that she did, and did not receive from the husband.
[37] I direct that the net proceeds of sale of the matrimonial home, including all interest that has accumulated, shall be divided equally between the parties: that is, each will receive 50 per cent.
[38] I make this order for the following reasons.
[39] The property was jointly owned. There is no evidence that the property was other than equally owned by the parties. There was no agreement that they would share jointly owned property other than equally.
[40] There is no basis to order an unequal division of the asset based on the various claims made by the parties. These claims are better or more properly dealt with as individual claims or adjustments rather than justification for payment of a round number of 60 per cent. But this case was not argued or advanced in that way.
[41] Dealing with the husband's claim for compensation:
I find that the wife maintained the property to the best of her ability in the circumstances she faced. She had no financial support from the husband. She worked hard in keeping the property maintained and dealing with tenants, some of whom were difficult to deal with. This task was stressful for her.
The home was sold "as is" based upon the recommendations of two real estate agents. There is no evidence that this recommendation was unreasonable in the circumstances.
The parties followed a court order in having the property listed and sold in this manner. The order made on consent by Tranquilli J. on December 10, 2019 provided that, if the parties could not agree on what repairs were to be done and by a certain date, the home was to be sold as is. The evidence suggests that the amount needed to repair the property was more than the expected increase in the value to the property as a result.
I am unable to find that the wife acted in a malicious manner intending to sell the property at less than its true value to disadvantage the husband. The evidence does not support a finding that the wife acted against her own self-interest by not trying to obtain the best price for the property. Both parties are at or near retirement and the funds received will comprise the majority of the savings they will have available for their respective retirements.
[42] With respect to the wife's claim for 60 per cent:
The husband's failure to share $70,000 in savings is no basis to award her more than half the value of the matrimonial home. This is a claim separate and distinct from entitlement due to ownership of the matrimonial home.
There is some merit to the claim that the husband should have contributed to the mortgage, insurance, and taxes of the matrimonial home. It was half his home, so he was responsible for half of these expenses. However, balanced against this was that the wife was able to reside in the property as well as use all of the rent proceeds paid. This was a benefit to her.
[43] As neither party had a compelling claim to a larger share of the net proceeds, legal ownership should determine the issue. That is why the net proceeds of sale are to be shared equally.
Issue #3: The Husband's Request for Half of the Money He Claims the Wife Took from the Joint Account
[44] The husband's request for half of the money he claims the wife took from the joint account is dismissed for the reasons that follow.
[45] The accounting provided by the husband was lacking in detail. I am not satisfied, on the balance of probabilities, that the wife did improperly take for herself the $24,000 he claims. The task of accurately setting out this claim that started in 2006 and lasted until 2017 has not been proved.
[46] On the husband's own evidence, he "only suspects" that the wife moved the money out of the account for her own benefit.
[47] The husband relies on the joint bank account statements. These joint account statements do not appear to cover all the expenses that were incurred by the wife in meeting monthly bills and other expenses. It is not unreasonable that a second account was used for this purpose.
[48] The wife explained that she had many expenses to pay that are not included in the husband's overpayment calculation. These expenses included rent cheques that were not honoured by the payors' bank, children's allowances, repairs to the home, and other living expenses that exceeded the rental income received. She also used the Federal childcare benefits provided to her based on her annual income and the child or children in her care, Trillium grants she received from the provincial government, also based on her income, and employment income she earned from time-to-time.
[49] There is no evidence that the wife has accumulated significant excess funds for her own use from the rent received from tenants. The child tax benefit payments were provided for the benefit of the children and meeting their needs.
[50] It is for these reasons that the husband's claim for $24,000 does not succeed.
Issue #4: Husband's Claim to Half the RESP
[51] The wife was able to open and accumulate an RESP for their daughters. The sum she was able to accumulate, including government contributions, was $40,000. One-half of this sum was used to fund the middle child's post-secondary education expenses.
[52] The youngest child did not attend post-secondary education and $21,000 remains in the RESP for this child's benefit.
[53] The father claims that he should receive one-half of the monies now in the RESP because the child, who is now 22 years of age, has not attended a post-secondary education institution and may not. He also argues for this entitlement on the basis that the monies used to fund the RESP came from the jointly owned bank account. This bank account, he claims, was funded by the rental income from the matrimonial home and government benefits. These are sources of income he claims he has a half interest in.
[54] He asks for these funds to help him meet his expenses now that he is a senior citizen.
[55] In his evidence, the husband stated that if the youngest child does pursue a post-secondary education, he would give her the money he received from the RESP. His fear is that if he does not receive one-half of the RESP funds, there is nothing stopping the wife from taking the money herself.
[56] Case law provides two different approaches to the nature of an RESP; one view is that it is property and the other is that it is the product of a trust relationship. I will consider the husband's argument based on both approaches.
[57] In C.S.M. v. W.S.L., 2015 BCPC 252, the court described the nature of an RESP, at para. 17, as follows:
17 The Canada Revenue Agency defines an RESP as a contract between an individual (the subscriber) and a person or organization (the promoter). The subscriber names one or more beneficiaries and the promoter agrees to pay educational assistance payments to the beneficiary who pays income tax on the payments. If the payments are not made to the beneficiary the promoter pays the subscriber. There is a reversionary interest vested in the subscriber.
[58] From this analysis, it may be concluded that the RESP is property and belongs to the parent in whose name it is registered. The exception to this would arise if the other parent can make a trust claim in relation to the RESP.
[59] In this case, the RESP is registered in the wife's name alone. She is the subscriber. In order to find that the husband has a trust interest in the RESP, it is necessary to find, in the circumstances of this case, that he was a joint contributor of the funds deposited into the RESP.
[60] The husband argues that the source of funds from the RESP was money on deposit in the parties' joint bank account and that he had a half interest in all those funds. The funds he refers to are the rent received from the matrimonial home and government benefits.
[61] As set out above, I do not accept the husband's evidence that all the money used to fund the wife's and the children's expenses, including the RESP, were derived solely from rent and government benefits. The same considerations applied with respect to his claim for the $24,000 apply with respect to the RESP claim. I find that the RESP was not funded with money derived solely from sources claimed by the husband. He had no interest in the government benefits paid to the wife for her and the children in her care. As well, there is evidence that the wife had on occasion other sources of income from employment. There is insufficient evidence to find that the husband had a trust interest in the RESP.
[62] In the Ontario case of McConnell v. McConnell, 2015 ONSC 2243, the court held, at para. 118, that an RESP is not property belonging to or in the possession of either spouse. The RESP is the product of a trust relationship (para. 122). The RESP is a trust fund held by a trustee who is to administer it on behalf of the children who are the beneficiaries (para. 122). Under this analysis, the RESP funds no longer belong to the parent/subscriber but are impressed with a trust in favour of the child/beneficiary. Therefore, the wife is not at liberty under the terms of the trust to withdraw the funds from the RESP to give to the husband. They are to be used for the child's education. See also Elias v. Elias, 2018 ONSC 3466.
[63] This result accords with the wishes of both parties. They want the funds to be used by the daughter should she choose to pursue a post-secondary education.
[64] In her evidence, the wife stated that she wants the RESP funds to benefit the child, whether she attends for a post-secondary education or not. In order to ensure that this occurs, an order will go requiring the wife to advise the husband, in writing, about the details of any withdrawals from the RESP and confirmation that the funds have been provided to the youngest child.
[65] The husband's request for one-half of the RESP funds is therefore dismissed.
Issue #5: Reimbursement of Costs Incurred to Remove Junk on Closing Day
[66] In order to ensure that the purchasers were content with the state of the matrimonial home at the time of closing, the husband paid $389.85 to remove junk that remained. I accept that this was a reasonable and necessary expense for him to incur for the benefit of the parties. The wife objected to this claim, not on the basis that it was not reasonable or necessary, but because she paid for expenses to repair the property as well. This she did, but based on the receipts filed in evidence, these repairs were part of the upkeep of the home in the years long prior to the closing.
[67] The wife shall pay to the husband one-half of the expense, being $194.93, out of her share of the net proceeds of sale of the matrimonial home.
Order
[68] For these reasons, the following order shall issue:
A divorce order in respect of the parties, who were married on [...] 1986 at Beijing Haidian District, shall issue.
The net proceeds of sale and accumulated interest of the parties' jointly owned property at [...] London, Ontario, now held in trust by Nu-Vista Premier Realty Inc., shall be paid out as follows:
a. to the wife, one-half less $194.93; and
b. to the husband, one-half plus $194.93.
The husband's claim for $24,000 on account of his interest in money expended from the parties' joint Scotiabank account #xxxx8923 is dismissed.
The husband's claim for a payment to him of one-half of the funds in Bank of Nova Scotia RESP #xxxx629 is dismissed.
The wife shall advise the husband, in writing, within 14 days of all withdrawals from the Bank of Nova Scotia RESP #xxxx629, including when the withdrawal was made and in what amount, and confirm that the funds were provided to their youngest child.
"Justice B. Tobin"
Justice B. Tobin
Released: May 18, 2022
COURT FILE NO.: FC231/18
DATE: May 18, 2022
ONTARIO
SUPERIOR COURT OF JUSTICE
FAMILY COURT
BETWEEN:
N.L.
Applicant
- and -
X.C.
Respondent
REASONS FOR JUDGMENT
TOBIN J.
Released: May 18, 2022