ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
jia lu lin, yongliang lin and hong yang
Applicants
– and –
chen Wen
Respondent
Haiyun Wang, for the Applicants
Wen Chin (Celia) Hu, for the Respondent
HEARD: November 23, 24, 25, 26, 29, 30, December 1, 2 and 3, 2021; written closing submissions January 7 to February 9, 2022
R. A. Lococo J.
REASONS FOR JUDGMENT
I. Introduction
1Jia Lu Lin (“Lillian”) and Chen Wen (“Vincent”) separated in January 2019, after being married for less than two years and cohabiting for five years in total. Lillian and Vincent (the “parties”) are both in their early thirties and have no children.
2The parties were born in China. Lillian immigrated to Canada with her parents in 2001. The parties met in 2013 when they were post-graduate (masters) students at Columbia University in New York City. They started dating and began living together. They married in March 2017 before moving to the Toronto area. Lillian is pursuing a Ph.D. in a full-time program at the University of Toronto. Vincent works as an engineer in software development.
3At the time of their separation, the parties lived in a house in Mississauga with Lillian’s mother, Hong Yang. Lillian and her mother continued to reside there after Vincent moved out. Wei Li owns and resides in the Mississauga residence. Mr. Li is a long-time family friend of Lillian’s father, Yongliang Lin. Mr. Lin currently resides principally in China, where he has business interests. Vincent’s parents also reside in China.
4Lillian commenced the current family proceedings in May 2019, a few months after the parties’ separation. The principal matters in issue are (i) property-related matters, (ii) equalization, and (iii) spousal support.
5The property-related matters relate to the ownership of and the source of funds for three Toronto-area real properties agreed to be purchased in Vincent’s name in the months following the parties’ move to Toronto in 2017. Those properties are (a) a pre-construction condo unit on Front Street in Toronto (transaction not yet closed), (b) a house on Harcroft Court in Oakville (closed September 2017), and (c) a pre-construction condo unit on Scott Street in Toronto (closed September 2018). None of those properties was the matrimonial home at the date of separation.
6The parties, their respective parents and Mr. Li were involved to varying degrees in events relating to the purchase of one or more those properties. In that regard, the parties’ parents and Mr. Li advanced funds that were used in making the property purchases. The matters in dispute include the nature those advances. Were they gifts? Were they loans? Who were the donees or borrowers? Who owns the properties? The answers to these questions are relevant to (among other things) the determination of each party’s net family property for equalization purposes.
7In these proceedings, Lillian seeks an equalization payment from Vincent of approximately $700,000. She advances a trust claim for a 50 per cent interest in the three real properties purchased in Vincent’s name. Related to that claim, her position is that advances from Mr. Li (totalling $171,100) and Lillian’s parents (totalling $72,953.80) that were used for property purchases were loans made to Vincent and Lillian jointly. Lillian also says that the advance from Vincent’s parents ($219,900) that was used for a property purchase was a gift to the parties jointly. Lillian also seeks an order that Vincent repay his share of the loans her parents made to the parties jointly, including amounts her parents paid to Mr. Li to repay Vincent’s share of loans Mr. Li made to the parties. As well, on a non-compensatory basis, Lillian seeks a lump-sum spousal support payment from Vincent.
8Vincent denies that Lillian has any proprietary or other interest in the three properties. He says that he is the properties’ sole beneficial owner, the value of which should be included in calculating his net family property at the date of separation to determine the amount payable to Lillian upon equalization. Vincent says that the approximate amount he owes Lillian to equalize their net family properties is $70,700. He says that any funds from his parents or Mr. Li that were used for property purchases were gifts to Vincent alone and not to Lillian. He acknowledges receiving loans from Lillian’s parents (and Lillian) for property purchases, which he says were to him alone and have been partially repaid. Vincent denies that any further amounts are owing to Lillian or her parents. He also argues that no amount is due to Lillian for spousal support.
9The matters to be determined are as follows:
a. Claims arising from real estate transactions: Does Lillian have a valid claim to a 50 percent beneficial interest in the three properties purchased in Vincent’s name? To answer that question, the following subsidiary issues will be determined.
i. Funds from Vincent’s parents: Was the advance of $219,900 from Vincent’s parents that was used to purchase the Oakville house a gift to Vincent alone or a gift to the parties jointly?
ii. Funds from Mr. Li: Was the advance of $171,100 from Mr. Li that was used to purchase the Scott Street condo a gift to Vincent or was it a loan to Vincent or the parties jointly?
iii. Funds from Lillian’s parents: Was the advance of $45,953.80 from Lillian’s parents that was used to purchase the Scott Street condo a loan to Vincent alone or a loan to the parties jointly? Was the advance of $27,000 from Lillian’s parents to fund a deposit payment for the Front Street condo a loan to Vincent alone or a loan to the parties jointly?
iv. Amounts owed to Lillian’s parents: How much is owed to Lillian’s parents to repay loans that were used for property purchases, including any amounts Lillian’s parents paid to Mr. Li to repay amounts he advanced?
b. Equalization: How much is Lillian entitled to receive from Vincent to equalize their net family properties? In making that calculation, is Vincent entitled to deduct notional real estate disposition costs?
c. Spousal support: Is Lillian entitled to spousal support from Vincent? How much spousal support should she receive?
10In the balance of these Reasons for Judgment, I will first set out further background information about the parties and events relevant to the matters in issue, including the various property purchases. I will then address each of the matters to be determined, as outlined above.
II. Background information
11The parties were born in China. In 2001, Lillian immigrated from China to Canada (the Toronto area) with her parents. In 2009, Vincent moved from China to the United States to attend college. His parents remain in China, where they continue to reside in a house registered in Vincent’s name. It is common ground that (a) Lillian has no proprietary or other interest in that property and (b) that property does not form part of either party’s net family property for equalization purposes.
12The parties met in New York and began dating in 2013. They were both pursuing post-graduate (masters) degrees at Columbia University, Vincent in electrical engineering and Lillian in health services. They began cohabiting in December 2013.
13The parties graduated in 2015 and began working full time in New York. Lillian was a program coordinator with a health care organization, with an annual salary of US$45,000. Vincent worked in the software development field and had a higher annual income. His 2016 U.S. Income Tax Return indicated his 2016 income as US$97,079 (before the standard personal deduction).
14The parties married in New York on March 23, 2017. The wedding guests included Vincent’s parents (who travelled from China), Lillian’s parents and their friend Mr. Li. The trial evidence indicated that when speaking to Vincent’s parents on that occasion, Lillian’s parents and Mr. Li advised them of their favourable experience investing in Toronto-area real estate and the potential profits to be made. They recommended Toronto-area real estate as a good investment.
15In May 2017, Lillian began a full-time Ph.D. program in health services at the University of Toronto. Lillian and Vincent both moved to Toronto at that time. Vincent continued to work (remotely from Toronto) with a U.S. firm in software development. He changed jobs later in 2017, working as a software engineer for a Canadian bank until August 2018. Since September 2018, he has worked (remotely from Toronto) as a software developer for a U.S. company.
16When the parties moved to Toronto in May 2017, they initially resided in a condo unit on Queens Quay that Lillian owns. Lillian’s parents purchased the Queens Quay condo unit in 2009 and transferred title to Lillian in 2010.
17In 2017, in the months following the parties’ move to Toronto, agreements were entered into to acquire three Toronto-area properties in Vincent’s name, as set out below.
A. Front Street condo
18In June 2017, a pre-construction agreement to purchase a condo unit on Front Street in Toronto, was entered into in Vincent’s name. As of the time of trial, that transaction had not closed. The condo project remained under construction. The agreed purchase price for the condo unit was $547,990. The parties agree that five deposit payments totaling $109,600 have been made to date, as set out below.
a. $5,000 in June 2017 (from Lillian’s bank account, in her sole name),
b. $22,400 in July 2017 (from Lillian’s bank account),
c. $27,400 in October 2017 (from the parties’ joint bank account),
d. $27,400 in August 2018 (from the parties’ joint bank account, funded by the transfer of $25,000 from Lillian’s line of credit), and
e. $27,400 in November 2018 ($27,000 of which came from Lillian’s parents’ joint line of credit).
19The parties also agree that (a) the value of the Front Street condo unit was $670,000 at the date of separation, and (b) the current value is $715,000, in each case as if the unit were built on the valuation date.
B. Oakville house
20In July 2017, an agreement to purchase a house on Harcroft Court, in Oakville, was entered into with the previous owner, with Vincent as the purchaser. The agreed purchase price was $770,000. The transaction closed in September 2017. The property was registered in Vincent’s sole name.
21The parties agree that the total amount of the down payment and closing costs (including the deposit) was $164,698.25, and that Vincent’s parents provided a total of $219,900 to purchase the property, consisting of (a) $30,000 in a bank draft payable to Lillian on May 11, 2017, and (b) a further $189,900 in wire transfers to the parties’ joint bank account, on June 21, 2017 ($65,000), July 22, 2017 ($62,500), and July 24, 2017 ($62,400). Funding was also provided by a mortgage against the property, with Vincent as mortgagee. Following renovations, the Oakville house was rented to a third party.
22The parties agree that (a) the value of the Oakville property was $845,000 at the date of separation, and (b) the current value is $1,330,000.
C. Scott Street condo
23In September 2017, an assignment of a pre-construction agreement to purchase a condo unit on Scott Street in Toronto was entered into, with Vincent as the assignee. The assignor was Ms. Dong Na, a friend of Mr. Li.
24The purchase price for the Scott Street condo was $515,800 (the amount the assignor had previously agreed to pay for the unit) plus approximately $90,000 to $100,000. The parties agree that Mr. Li advanced $171,100 toward the purchase price, of which (a) $110,000 was transferred to the parties’ joint bank account, and (b) a further amount was provided to the assignor’s designated agent.
25Construction of the condo unit was completed in late 2017. The final closing was in September 2018. The parties agree that the Lillian’s parents provided a loan of $45,953.80 for the final closing. The property was registered in Vincent’s sole name.
26The parties agree that (a) the value of the Scott Street condo unit was $820,000 at the date of separation, and (b) the current value is $900,000.
27During their marriage, the parties resided in only one of the three properties, the Scott Street condo unit. Following completion of construction (and a provisional closing), the parties moved to the Scott Street condo unit from Lillian’s Queens Quay condo unit in December 2017. The final closing of the purchase was in September 2018.
28In November or December 2018, the parties left the Scott Street condo unit and moved in with Lillian’s mother in Mississauga. A short time later, the parties separated (on January 2, 2019). Therefore, the Scott Street condo unit was not their matrimonial home on the date of separation.
D. Events after separation and family proceedings
29In July 2019, Lillian attended at the Oakville home with her mother and Mr. Li to retrieve a bed. Vincent and his parents (who were visiting from China) were at the residence. There was a physical altercation between Vincent and Mr. Li, and police were called. Vincent was arrested and charged with assault. The charge was subsequently withdrawn after Vincent entered into a peace bond.
30Lillian commenced the current family proceedings against Vincent in May 2019. The application was amended in August 2019. The application and the amended application alleged (among other things) that Vincent was indebted to Lillian and her parents for loans that were used to purchase properties in Vincent’s name. In September 2021, upon Lillian’s unopposed Form 14B motion, Lillian’s parents were added as parties in order to allow the court to make an order in their favour if amounts are found to be owing to them. The application was further amended in November 2021 to add Lillian’s trust claims with respect to the three properties purchased in Vincent’s name.
31The trial of the application proceeded in person for nine days in November and December 2021, followed by written closing submissions, completed in February 2022 (after some health-related delays). Lillian’s trial witnesses were Lillian, her mother, her father, Wei Li, and Xin (Cindy) Zhang, a realtor involved in the Oakville house purchase. Vincent’s trial witnesses were Vincent and his father, Huafei Wen. All witnesses except Lillian testified in Mandarin Chinese, through interpreters. Lillian’s father and Vincent’s father both testified by video conference from China.
III. Claims arising from real estate transactions
32Does Lillian have a valid claim to a 50 percent beneficial interest in the three properties purchased in Vincent’s name?
33To support her trust claim to the properties, Lillian relies on equitable principles relating to resulting trust and unjust enrichment, including a remedial constructive trust. To determine the validity of Lillian’s claims, I will first summarize the legal principles she relies on. I will then consider each of the property purchases to determine the ownership issue for that property. To the extent relevant, I will also consider the source of funds for those purchases, including the nature of advances from the parties’ parents and Mr. Li that were used in the properties’ purchase as well as the legal consequences of those advances.
A. Legal principles
(a) Introduction
34In the closing submissions relating Lillian’s trust claims, her counsel relies on seminal decisions of the Supreme Court of Canada relating to resulting trust and unjust enrichment, including Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795 and Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269. To provide context, I will first briefly indicate the factual background of those decisions, before discussing the legal principles.
35Pecore involved a dispute between divorced parties with respect to funds held in a joint bank account in the names of the former wife and her father at the time of her father’s death. The funds had previously been held in accounts in the father’s name alone, prior to their transfer to the joint account. The former wife claimed the entire amount of the funds by survivorship. The former husband claimed half of the funds as a residual beneficiary under his former father-in-law’s will. In these circumstances, the court found that when determining the funds’ beneficial owner, it was appropriate to consider resulting trust principles, including the application of the appropriate presumption (as discussed further below). However, the outcome of the case was ultimately determined based on trial evidence as to the father’s intention when transferring the funds into the joint account, rather than by the application of a presumption: Pecore, at para. 75.
36As discussed further below, the court in Kerr considered the application of resulting trust principles in circumstances where one former common law partner held sole legal title to a property that the former partners had occupied during their relationship. The other former partner claimed an ownership interest in the property, based on her contribution during their relationship. As explained further below, the court determined that it was appropriate in those circumstances to apply unjust enrichment analysis to determine the ownership issue, building on previous Supreme Court decisions.
(b) Resulting trust
37A resulting trust arises when title to property is in one party’s name, but because the nominal owner “is a fiduciary or gave no value for the property,” the nominal owner holds the property in trust for the true owner and is under an obligation to return the property to the true owner: Pecore, at para. 20. The effect of a resulting trust is that “the beneficial interest ‘results’ (jumps back) to the true owner”: Kerr, at para. 16.
38A property transaction in which one party “gave no value for the property” is referred to in the case law as a gratuitous transfer. The traditional view is that gratuitous transfers generally arise in two types of situations: “the gratuitous transfer of property from one partner to the other, and the joint contribution by two partners to the acquisition of property, title to which is in the name of only one of them”: Kerr, at para. 17.
39In order to determine whether a gratuitous transfer gives rise to a resulting trust, the determining factor is the intention of the transferring or contributing party at the time the property is acquired: Kerr, at paras. 18, 25; Pecore, at paras. 43-44. In making that determination, the Supreme Court found that previous case law holding that “the resulting trust [arose] solely from the common intention of the parties … no longer has a useful role to play in resolving property and financial disputes in domestic cases”: Kerr, at para. 29.
40A gratuitous transfer generally gives rise to a rebuttable presumption of resulting trust, that is, that the nominal owner holds the property in trust for the transferring or contributing party. This presumption rests on the principle that “equity presumes bargains, not gifts”: Pecore, at para. 24. The onus is on the nominal owner to rebut the presumption of resulting trust by demonstrating, on a balance of probabilities, that the transferring or contributing party intended to make a gift to the nominal owner. Otherwise, the nominal owner holds the property in trust for the transferring or contributing party: see Pecore, at paras. 24, 43; Kerr, at paras. 19, 25.
41Based on traditional notions of dependency between the parties, there are exceptional circumstances in which there is a presumption of advancement (or gift) instead of a presumption of resulting trust. Historically, a rebuttable presumption of advancement applies to gratuitous transfers from parents to their children, other than independent adult children, based on the parents’ moral duty to “advance” their dependent children: see Pecore, at paras. 21, 28-41; Kerr, at para. 20.
42The presumption of advancement also applies where the transferring or contributing party is the husband and the nominal owner is the wife, that is, the husband is presumed to be making a gift to the wife: see Pecore, at para. 28; Kerr, at para. 20. However, where the husband is the nominal owner and the wife claims to be the beneficial owner as the transferring or contributing party, the presumption of resulting trust continues to apply, that is, the wife is presumed to be the beneficial owner, placing the onus on the husband to demonstrate that the wife intended to make a gift to him.
43In Barber v. Magee, 2015 ONSC 8054, the court applied resulting trust analysis to determine (for equalization purposes) whether money advanced by the father of one of the separated parties (and used in purchasing the matrimonial home) was a gift or a loan. In that case, at para. 42, the court suggested the following “factors to look to when determining a resulting trust claim” (citing B.C. case law, including Kuo v. Chu, 2009 BCCA 405, 97 B.C.L.R. (4th) 203):
a. Whether there were any contemporaneous documents evidencing a loan;
b. Whether the manner for repayment is specified;
c. Whether there is security held for the loan;
d. Whether there are advances to one child and not others or advances on equal amounts to various children;
e. Where there has been any demand for payment before the separation of the parties;
f. Whether there has been any partial repayment; and,
g. Whether there was an expectation or likelihood of repayment.
(c) Unjust enrichment
44In Kerr (as in previous decisions in Pettkus v. Becker, 1980 CanLII 22 (SCC), [1980] 2 S.C.R. 834; Peter v. Beblow, 1993 CanLII 126 (SCC), [1993] 1 S.C.R. 980), the Supreme Court addressed disputes between former common law partners relating to the ownership of property in the name of one party that the parties shared during their relationship. In Kerr, at para. 1, the Supreme Court noted that married spouses had access to “comprehensive matrimonial property statutes” (which includes the equalization regime in the Family Law Act, R.S.O. 1990, c. F-3) to address property disputes after separation, but for unmarried couples, “judge-made law was and remains the only option”: Kerr, at para. 1.
45In that context, the Supreme Court noted that “traditional resulting trust principles may well have a role to play in the resolution of property disputes between unmarried domestic partners”: Kerr, at para. 15. However, the court went on to point out the difficulties involved in applying those principles when a party claims an interest in property based on contributions made over time that were not “closely linked to its acquisition”, noting (among other things) that “the relevant time for ascertaining intention is the time of acquisition of the property:” Kerr, at para. 25.
46As a result of the difficulties applying traditional resulting trust principles in these circumstances, the Supreme Court (starting with Pettkus, in 1980) turned to the law of unjust enrichment, coupled where appropriate with the remedial constructive trust: see Kerr, at para. 23. The court characterized those equitable principles as “the more flexible and appropriate lens through which to view property and financial disputes in domestic situations”, noting that this approach “has become the dominant legal paradigm for the resolution of property disputes between common law spouses”.
47To establish an unjust enrichment (including in the domestic context), the claimant must establish (a) an enrichment of or benefit to the other party, (b) a corresponding deprivation of the claimant, and (c) the absence of a juristic reason for the deprivation: see Kerr, at paras. 32-33; Pettkus, at p. 848; and Peter, at p. 987.
48In Kerr, at paras. 36-45, the court provided guidance with respect to each of the three requirements to establish unjust enrichment, usefully summarized in Guertin v. Guertin, 2015 ONSC 1239, at paras. 40-42, as follows:
(40) To satisfy the first requirement, the Supreme Court of Canada indicates the applicant must show he or she gave something to the respondent that the respondent received or retained. The benefit must be tangible.
(41) In considering the second requirement, the Court notes that the applicant's loss is material only if the respondent has been enriched. That is why the applicant must establish the enrichment corresponds to a deprivation.
(42) The third requirement involves a two part analysis. The court must begin by applying established categories of juristic reasons (e.g., contract, gift or donative intent, disposition of law, or other valid common law equitable or statutory obligations). If no juristic reason exists from one of the established categories, the applicant has made out a prima facie case. However, the prima facie case is rebuttable. The second part of the analysis permits the respondent to show a reason why the enrichment should be retained. At this stage, the courts have regard to the reasonable expectations of the parties and public policy considerations.
49If an unjust enrichment is established, the next step is to determine the remedy. The remedies are restitutionary in nature, the object being to require the defendant to repay or reverse the unjustified enrichment: Kerr, at para. 46.
50The remedy for unjust enrichment may be either a monetary award or a proprietary interest in the form of a remedial constructive trust. A constructive trust may be considered only if a monetary award is inappropriate or insufficient to remedy the unjust enrichment: Kerr, at paras. 46-47, 50.
51A monetary award is often calculated based on the value of the unpaid services, referred to as the quantum meruit, “value received” or “fee-for-services” basis: Kerr, at para. 49. However, that calculation method is not always appropriate. In Kerr, at para. 100, the court summarized the following approach to calculation of a monetary award in circumstances in which there is a “joint family venture”, as follows:
The monetary remedy for unjust enrichment is not restricted to an award based on a fee-for-services approach.
Where the unjust enrichment is most realistically characterized as one party retaining a disproportionate share of assets resulting from a joint family venture, and a monetary award is appropriate, it should be calculated on the basis of the share of those assets proportionate to the claimant's contributions.
To be entitled to a monetary remedy of this nature, the claimant must show both (a) that there was, in fact, a joint family venture, and (b) that there is a link between his or her contributions to it and the accumulation of assets and/or wealth.
Whether there was a joint family venture is a question of fact and may be assessed by having regard to all of the relevant circumstances, including factors relating to (a) mutual effort, (b) economic integration, (c) actual intent and (d) priority of the family.
52If the claimant establishes that a monetary award would be insufficient in the circumstances, the court may impose a propriety remedy in the form of a remedial constructive trust: Kerr, at para. 52. The court, at para. 50, described a constructive trust as follows:
Imposed without reference to intention to create a trust, the constructive trust is a broad and flexible equitable tool used to determine beneficial entitlement to property …. Where the plaintiff can demonstrate a link or causal connection between his or her contributions and the acquisition, preservation, maintenance or improvement of the disputed property, a share of the property proportionate to the unjust enrichment can be impressed with a constructive trust in his or her favour …. [T]hese principles apply equally to unmarried cohabitants, since ‘[t]he equitable principle on which the remedy of constructive trust rests is broad and general; its purpose is to prevent unjust enrichment in whatever circumstances it occurs’ …. [Citations omitted.]
53In Straub v. Straub, 2012 ONSC 3819, 32 R.F.L. (7th) 415, aff’d 2013 ONCA 721 (a decision that Vincent’s counsel relies on), the court declined to impose constructive trusts claimed by married parties against each other that would have provided the other party with a share in the increased value since the date of separation of property held by the other party (real property and a stock portfolio). The court found that it would be inappropriate to do so in circumstances in which both parties had taken title to substantial assets that had increased in value since the date of separation: Straub, at para. 107. The court went on to state as follows:
I believe that one of the underlying reasons for the statutory framework for equalization of matrimonial assets is to provide a consistent and understandable approach for the equalization of matrimonial property following separation. The use of constructive trust, in my view, should not be routinely applied where the parties have the benefit of equalization under the Family Law Act.
54At para. 109, the court also expressed the view that there should be a high threshold before departing from the statutory framework for equalization.
55To support its position, the court in Straub, at para. 108, relied on Serra v. Serra, 2009 ONCA 105, 93 O.R. (3d) 161, a case in which the Court of Appeal addressed the court’s authority under s. 5(6) of the Family Law Act to make an unequal division of the parties’ net family properties where an equal division would be unconscionable. The court held that for this purpose, the threshold of unconscionability is “exceptionally high”, that is, an equal division must “shock the conscience of the court”: Serra, at para. 47. The court found that interpretation to be consistent with “the essential characteristic of present-day family law legislation in Ontario, namely, the promotion of certainty, predictability and finality in the determination of support obligations and property division and the removal of judicial discretion in those areas to the extent possible”: Serra, at para. 39.
56In its subsequent decision in Martin v. Sansome, 2014 ONCA 14, 118 O.R. (3d) 522, at para. 66, the Court of Appeal indicated that an unequal division of net family properties under s. 5(6) may be invoked, if appropriate, if there is a finding of unjust enrichment arising from a marriage and it has been determined that a monetary award would be a sufficient remedy. In these circumstances, the court expressed the view that the aggrieved party’s entitlement under equalization should be calculated first and then the party’s entitlement to an unequal division based on unconscionability should be considered. At para. 67, the court concluded the unjust enrichment in that case was addressed through the equalization process and left for another day “the question of what should be done in those rare cases where monetary damages for unjust enrichment arising out of marriage cannot be adequately addressed by the equalization provisions of the FLA.”
57Constructive trust claims between married parties were also addressed by the Court of Appeal in McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401. In that case, the respondent wife made a constructive trust claim for beneficial ownership in shares of a family company that were given to the appellant husband by his father. The appeal court found that trial judge erred in failing to consider the respondent wife’s constructive trust claim before determining the exclusions for equalization purposes under s. 4(2) of the Family Law Act, relying on the Supreme Court of Canada decision in Rawluk v. Rawluk, 1990 CanLII 152 (SCC), [1990] 1 S.C.R. 70: see McNamee, at paras. 56-65. At para. 66, the court went on to state as follows:
It must be stated that, in the vast majority of cases, any unjust enrichment that arises as the result of a marriage will be fully addressed through the operation of the equalization provisions under the Family Law Act; the spouse who legally owns an asset will ordinarily share half its value with the other spouse as a result of the equalization provisions under the Act. However, a fair and contextual reading of the equalization and net family property provisions of the Family Law Act ensures that married spouses are not deprived of equitable remedies they would otherwise have available to them because, as noted above, ownership issues – equitable or otherwise – are to be determined before the net equalization payment exercise is undertaken.
58As a result, the Court of Appeal in McNamee ordered a new trial to determine the ownership issue by adjudicating the respondent wife’s constructive trust claim before undertaking the equalization calculation.
B. Oakville house
(a) Introduction
59Does Lillian have a valid claim to a 50 percent beneficial interest in the Oakville house? Was the advance of $219,900 from Vincent’s parents a gift to Vincent alone or a gift to the parties jointly?
60The agreement to purchase the Oakville house was entered into in July 2017, about two months after the parties moved to Canada. The purchase price was $770,000. Vincent’s parents advanced funds totalling $219,900 toward the purchase price. Funding was also provided by a mortgage against the property, with Vincent as mortgagee and sole obligor.
61As part of the $219,900 advance from Vincent’s parents, a bank draft payable to Lillian for $30,000 from a bank in China was deposited into Lillian’s Canadian bank account, the only Canadian bank account either party had at that time. Vincent’s parents provided that bank draft when they visited Canada in May 2017, after the parties’ wedding. A further $189,900 was deposited into the parties’ newly-opened joint Canadian bank account in June and July 2017 through three wire transfers from banks in China. Each wire transfer was sent from the account of a different member of Vincent’s family.
62The Oakville purchase closed in September 2017. Title was taken in Vincent’s name alone. Following renovations, the Oakville house was rented to a third party. Prior to their separation, the parties never resided in the Oakville house.
63The parties agree that (a) the value of the Oakville property was $845,000 at the date of separation, and (b) the current value is $1,330,000.
(b) Lillian’s position
64Lillian claims a 50 percent trust interest in the Oakville house. Lillian says the property was a joint investment by Vincent and her. The funds that Vincent’s parents advanced for the property’s purchase constituted a gift to the parties jointly. The initial payment of $30,000 was a bank draft payable to her, and the balance of $189,900 was paid into their joint bank account, evidencing an intention to make a gift to both of them.
65The additional evidence that Lillian relies on to support her position also includes the following:
a. Lillian’s mother testified that when in New York for the parties’ wedding, she heard Vincent’s parents discussing buying a house for the parties in Toronto. Mr. Wei Li also testified that he heard Vincent’s parents discuss gifting money to the parties to buy a house in Toronto after the wedding.
b. Vincent testified that he told Lillian that the funds his parents provided were for the purpose of buying a house, without telling her that they were a gift to him alone. He explained that it would be unkind to say that to his wife. Lillian’s counsel argued that if the funds were for him alone, he would have made that clear to Lillian to avoid any misunderstanding.
c. When the Oakville real estate search was in progress, a “WeChat” group was set up for Chinese-language text communications among the parties, Lillian’s mother and Cindy Zhang, the Oakville realtor involved in the property search and ultimate transaction. Those text messages referred to finding a property for the “young couple” or the “kids”. Ms. Zhang promised she would find them a good house and a good tenant. These messages were not consistent with Vincent’s position that the property was for him alone.
d. Lillian contributed her time and effort to the Oakville house transaction. She was actively involved in the real estate search. She reviewed listings and attended showings. Lillian and her mother arranged for the bank draft for the deposit and dropped it off at the real estate office. After the purchase closed, Lillian and her mother were involved in the renovation process, including materials and prices and addressing problems arising with the work done.
e. While title was in Vincent’s name alone and he was the sole obligor under the mortgage, he acknowledged discussing mortgage options with Lillian. He testified that it would not have been helpful for Lillian to be on the mortgage since her credit was already maxed out. He also acknowledged that because the property was in his name alone, he was entitled to a land transfer tax rebate as a first-time buyer. He would not have qualified for the rebate if Lillian has been on title since she already owned real estate (the Queens Quay condo).
66If the court finds that the funds advanced by Vincent’s parents were a gift to Vincent alone rather than to the parties jointly, Lillian argues that the evidence supports a finding of unjust enrichment against Vincent, entitling her to a 50 percent interest in the property by way of constructive trust. She also argues that Vincent should not be allowed any gift amount deduction when making the equalization calculation, on the basis that allowing the deduction would create an inequitable result.
(c) Vincent’s position
67Vincent says that the investment in the Oakville house was made by him alone, using funds his parents gifted to him and funds secured by mortgage that he borrowed on his own credit. Since “equity presumes bargains, not gifts”, Vincent submits that the onus is on Lillian to demonstrate that funds that Vincent’s parents advanced constituted a loan, not a gift. Lillian has failed to meet that burden. According to Vincent, the Oakville house should be equalized as part of his net family property.
68The evidence that Vincent relies on in support of this position includes the following:
a. Vincent’s father testified that after his son’s wedding, he and his wife wanted to give money to Vincent to purchase property in the Toronto area. Vincent’s father understood that doing so would be a good investment. To raise money for that purpose, they sold a property they had purchased for retirement purposes, realizing about $200,000. Vincent is their only child. The gift was intended for him alone. It was not a gift to Vincent and Lillian jointly. They never promised to buy a property for the parties jointly.
b. Vincent’s father also understood that Lillian already owned property in Toronto (the Queens Quay condo), acquired with her family’s assistance. He testified that he did not want Lillian’s family to “look down on” Vincent’s family because Vincent did not own real estate as well.
c. Vincent’s father provided the funds in the way he did on Vincent’s instructions. The initial bank draft of $30,000 was made out to Lillian for deposit in her bank account, his understanding being that Vincent did not have a bank account in Canada at that time. He arranged the subsequent wire transfers of $189,900 for payment into the account that Vincent instructed. He was unfamiliar with the nature of a joint account.
d. Prior to the wedding, Lillian’s parents visited Vincent’s parents in China. At that time, Vincent’s parents provided a modest monetary gift for Lillian’s family of ¥10,000 (approximately $2,000 in Canadian currency). There was no intention to provide a further gift to Lillian.
e. Vincent testified that after the parties moved to Canada, they set up a joint bank account. As the principal breadwinner, Vincent deposited his own income into the account and the parties used it to pay their living expenses. Some expenses relating to Lillian’s Queens Quay condo were also paid from their joint bank account. In setting up a joint account, the parties followed the practice they had in New York before they were married, where they had a joint bank account.
f. Vincent testified that he did not represent to Lillian at any point that the Oakville house was to be jointly held. He bought it for investment purposes only and not based on the parties’ lifestyle or future plans. Mortgage financing was arranged in his name based on his own credit. The parties did not live together in the Oakville house at any time.
g. After the parties separated in January 2019, Lillian did not make any inquiries about the Oakville house, including carrying costs and maintenance. Since the separation, Vincent has managed the property and paid the mortgage and other expenses.
(d) Analysis and conclusion
69For the reasons below, I have concluded that Lillian does not have an ownership interest in the Oakville house. In that regard, I find that (i) the funds totalling $219,900 that Vincent’s parents advanced for the purchase of the Oakville house were a gift to Vincent alone, (ii) all or substantially all the balance of the purchase price was funded by borrowed funds secured by a mortgage obtain based on Vincent’s credit alone, and (iii) there has been no unjust enrichment that would entitle Lillian to a monetary or proprietary remedy against Vincent. I make those findings based the preponderance of the evidence, without the need to consider which party had the legal or evidentiary burden of proof. I also find that Vincent is entitled to deduct the gifted funds as an exclusion under s. 4(2) of the Family Law Act when calculating his net family property for equalization purposes.
70In the parties’ Statement of Agreed Facts relating to the Oakville house, the parties agreed that Vincent’s parents advanced a total of $219,900 to purchase a property, as outlined previously. Those funds were used in the purchase of the Oakville house. I am satisfied on the evidence that those funds constituted a gift to Vincent alone and not to the parties jointly. That conclusion is consistent with Vincent’s parents’ intention, as Vincent’s father stated in his evidence outlined above, which I accept. Those funds flowed through the parties’ joint bank account and (in the case of the initial $30,000) through Lillian’s bank account, in accordance with Vincent’s instructions, but I do not see how that has any bearing on the donative intent of Vincent’s parents. The funds were used for their intended purpose in the property’s purchase, in accordance with their wishes.
71As well, I do not find the communications between the Lillian, her mother, the realtor Ms. Zhang and others to be of assistance in determining whether Vincent’s parents intended to make a gift to Vincent alone. In any case, Ms. Zhang’s testimony indicated her understanding from Vincent that he was the sole purchaser, consistent with his position at trial.
72As noted above, Vincent admitted discussing mortgage options with Lillian. Such a discussion may have been useful in determining whether having Lillian as a co-obligor for the mortgage debt would have been helpful in obtaining financing. However, I do not see it as indicating an ownership interest on her part. In any case, there was no dispute that Lillian’s participation in the credit assessment would not have been helpful in obtaining the mortgage.
73In addition, I do not consider Vincent’s entitlement to a land transfer tax rebate (as a first-time real estate purchaser) to be a significant factor in determining the ownership issue. As well, the fact that Vincent has been solely responsible for the property’s management (including payment of mortgage and other expenses) since the separation, without any inquiries or input from Lillian, supports his position that he is the sole beneficial owner.
74As noted previously, Lillian argued that if the court finds that the funds advanced by Vincent’s parents were a gift to Vincent alone, the evidence supports a finding of unjust enrichment against Vincent, entitling her to a 50 percent interest in the property by way of constructive trust. I do not agree.
75Given the finding that the funds that Vincent’s parents advanced were a gift to Vincent alone, the only basis for a claim for unjust enrichment would be Lillian’s time and effort relating to the Oakville house transaction, including her involvement in the search, viewings, purchase, renovations and rental of the property. The evidence indicated that those efforts occurred over a period of weeks starting in July 2017. Once the closing occurred in September 2017, Lillian testified that she assisted in directing renovations to the property prior to its rental, with a modest budget of $10,000, although the amount ultimately spent may have been double that.
76Based on the evidence, I am not satisfied that the elements of unjust enrichment have been established in this case. Vincent does not dispute that Lillian was involved in the Oakville house transaction. However, I consider her involvement to be consistent with would be expected of a spouse when a transaction of this nature is undertaken irrespective of whether title is being taken by both parties or by one of them. While the parties were together, Lillian would enjoy the economic benefits associated with her husband’s ownership of the property. After their separation, his ownership interest would be equalized in the normal course under the Family Law Act. To the extent that Vincent was enriched by or benefited from Lillian’s efforts relating to the property’s purchase, I do not see a corresponding deprivation that would justify a finding of unjust enrichment. As well, even if unjust enrichment were established, her equalization entitlement would be sufficient compensation for her involvement unless she met the threshold of establishing that there should be an unequal division of net family properties under s. 5(6) of the Family Law Act.
77Lillian also argues that Vincent should not be allowed any gift amount deduction when making the equalization calculation, on the basis that the result of allowing the deduction would create an inequitable result. I see two significant issues with this submission.
78Although not explicit in Lillian’s submission, in order to depart from the calculation method for equalization provided for in the Family Law Act, it would be necessary to find that equalizing the parties’ net family properties would be unconscionable in accordance with s. 5(6). The claims that Lillian pleaded in the various iterations of her application evolved over time, but she did not plead an unequal division of the parties’ net family properties. It is not appropriate to advance such a claim without leave, especially when doing so for the first time in written submissions after all the evidence is in.
79Secondly, even if s. 5(6) were invoked, the threshold of unconscionability is “exceptionally high”, that is, an equal division must “shock the conscience of the court”: Serra, at para. 47. As explained further below under “Equalization”, I am not satisfied that threshold has been met in this case.
C. Scott Street condo
(a) Introduction
80Does Lillian have a valid claim to a 50 percent beneficial interest in the Scott Street condo? Was the advance of $171,100 from Mr. Li a gift to Vincent or was it a loan to Vincent or the parties jointly? Was the advance of $45,953.80 from Lillian’s parents a loan to Vincent alone or a loan to the parties jointly?
81A pre-construction agreement to purchase the Scott Street condo was assigned to Vincent as sole assignee in September 2017. The assignor was Ms. Dong Na, a friend of Mr. Li. The parties agree that the purchase price for the property was $515,800 (the purchase price under the pre-construction agreement) plus approximately $90,000 to $100,000.
82Mr. Li advanced $171,100 toward the purchase price, of which he transferred $110,000 to the parties’ joint bank account and provided an additional amount to the assignor’s designated agent. Vincent also obtained a mortgage loan (with him as sole obligor) in the amount of $386,550 to finance the balance of the purchase price. Following completion of the unit’s construction and a provisional closing, the parties moved into the Scott Street condo (from Lillian’s Queens Quay condo) in December 2017. The final closing was in September 2018. The property was registered in Vincent’s name.
83The parties continued to reside in the Scott Street condo until November or December 2018, when they moved in with Lillian’s mother in Mississauga (Mr. Li’s residence). A short time later, the parties separated (on January 2, 2019).
84The parties agree that (a) the value of the Scott Street condo unit was $820,000 at the date of separation, and (b) the current value is $900,000.
(b) Lillian’s position
85Lillian claims a 50 percent trust interest in the Scott Street condo, alleging unjust enrichment against Vincent. She says that the funds provided by Mr. Li ($171,100) and her parents ($45,953.80) for the property’s purchase were loans to Vincent and her jointly. She therefore contributed to the property’s purchase, both financially (as co-obligor under those loans) and by assisting Vincent with the mortgage application and other logistics relating to the property’s purchase. She also says that Vincent is liable to her parents for repayment of his share of the amounts borrowed from Mr. Li and her parents (less repayments already made), her parents having repaid Mr. Li for the funds he advanced.
86Mr. Li’s trial testimony provided background as to how the Scott Street condo assignment came about. Mr. Li testified that the assignor’s plans to move to Canada had changed and she no longer wanted to purchase the Scott Street condo. She offered to assign the pre-construction purchase agreement to Mr. Li, which would allow him to purchase the condo unit for its original purchase price of $515,800. Mr. Li stated that he declined the opportunity because the property’s value had appreciated and he did not feel comfortable accepting a benefit from the assignor. Instead, he suggested that the transaction be offered to Lillian’s father at a higher price, but one that would still be favourable to the assignee relative to the property’s market value. Mr. Li’s evidence (and that of Lillian and her father) was that at Lillian’s father’s suggestion, the opportunity was offered instead to the newly-wed parties jointly, who were then residing in Lillian’s Queens Quay condo.
87Mr. Li’s testimony (supported by Lillian) was that the $171,100 he advanced for the property’s purchase was a loan to the parties jointly, for the purpose of assisting them in the joint purchase of the Scott Street condo. He also testified that his primary relationship with the parties was with Lillian, whom he had known since her childhood since he was a long-time friend of her parents. He would not have gifted funds to Vincent to purchase the property for his sole benefit. Mr. Li acknowledged that in the WeChat text messages between Vincent and him, Mr. Li used the words “loan to you [Vincent]” (and Vincent used the words “borrow from uncle Li” and “borrow from uncle Li and [Lillian’s] father”) but Mr. Li considered the loan to be to the parties jointly since the parties were married and one family unit. He also said that he had a commitment from Lillian’s father that if Mr. Li needed repayment of the loan and the parties were unable to do so, Lillian’s father would provide the funds. He acknowledged that there was no formal loan documentation relating to either the $171,100 advance or Lillian’s father’s commitment to provide repayment funds if necessary, stating that none was necessary given his close association with the Lin family.
88Mr. Li also acknowledged email communications with Vincent in November 2017 about a “gift letter”, which Vincent requested in connection with his mortgage application relating to the Scott Street condo purchase. Mr. Li testified that he agreed to help with the mortgage application but did not recall signing the gift letter and denied that he had any intention of providing a gift to Vincent.
89Mr. Li also testified (supported by Lillian’s parents) that in 2018, he found himself in need of funds and asked for repayment of the $171,100 loan, which was repaid with funds provided by Lillian’s parents. He acknowledged going directly to Lillian’s parents for repayment rather than demanding repayment from the parties. As evidence of the repayments, Mr. Li relied on bank records that included two transfers to him in March 2018 from Lillian’s parents’ joint lines of credit totalling over $383,000. Mr. Li testified that those transfers repaid the $171,100 loan to parties and that the balance of approximately $210,000 was a further loan to Mr. Li from Lillian’s parents, which was repaid three months later by Mr. Li’s deposit of $210,000 into Lillian’s parents’ joint line of credit.
90In cross examination, Mr. Li acknowledged that he was involved in other significant real estate-related transactions with the Lin family (confirmed by the testimony of Lillian’s parents). Mr. Li stated that in the summer of 2017, Lillian’s father agreed to provide Mr. Li with significant financial support if necessary (up to $1,000,000) when, two weeks before the scheduled closing of a real estate transaction, Mr. Li had not yet received a mortgage approval required to fund the transaction. To secure Lillian’s father’s commitment, Mr. Li entered into agreements to sell two condo units, one to Lillian’s father (for $393,000) and the other to Lillian (for $760,000). In the event, the mortgage came through and the condo sales to Lillian and her father did not proceed.
91Lillian says that the foregoing evidence supports the conclusion that the funds provided by Mr. Li and her parents for the Scott Street condo purchase were loans to the parties jointly. Those funds provided a significant portion of the purchase price for the Scott Street condo. Lillian also assisted Vincent with the mortgage application and other logistics relating to the property’s purchase. On that basis, Lillian claims that Vincent holds a 50 percent interest in the Scott Street condo in trust for her. She also claims that Vincent should be responsible (before equalization) for the entire amount of the loan outstanding to Lillian’s parents, including the funds they provided to repay Mr. Li’s $171,100 advance.
(c) Vincent’s position
92Vincent says that the investment in Scott Street condo was made by him alone. Lillian has no claim to the property except as part of the equalization calculation. He also says that the $171,100 that Mr. Li provided for the property’s purchase was a gift to him alone. He disputes that the evidence establishes that Lillian’s parents repaid that amount to Mr. Li, given the other dealings between them. In the alternative, if the court finds that the advance was a loan from Mr. Li that was repaid by Lillian’s parents, Vincent submits that the advance was a loan to him alone and not to the parties jointly. Vincent acknowledges receiving a loan of $45,953.80 from Lillian’s parents (which he has partially repaid) but says the loan was to him alone and not to the parties jointly.
93To support his position that Mr. Li’s $171,100 advance was a gift to Vincent and not a loan, Vincent makes the following submissions:
a. Vincent had a close relationship with Mr. Li prior to the parties’ separation. Vincent visited Mr. Li’s home (where Lillian’s mother lived) almost every week to chat with him and help around the house. He helped Mr. Li with management of the tenants of his investment properties. He also assisted Mr. Li when he had business clients visiting from China. Prior to the parties’ separation, Mr. Li’s close relationship with Lillian’s family extended to Vincent as Lillian’s spouse. Vincent saw Mr. Li as being almost like a father-in-law given that the Lillian’s father resided primarily in China.
b. The gift to Vincent to purchase the property was consistent with Mr. Li’s desire to assist his friend the assignor in finding someone to take over the pre-construction contract. The gift therefore benefited both Vincent and the assignor.
c. Mr. Li could well afford to make a generous financial gift. He owns five investment properties in the Toronto area in addition to his home in Mississauga. He also has clients and business interests in China.
d. There were no discussions with Mr. Li about repayment terms. No repayments (or demands for repayment) were made.
e. There was no documentation evidencing a loan between Vincent and Mr. Li.
f. At Vincent’s request, Mr. Li provided Vincent with a signed “gift letter” to assist Vincent in obtaining mortgage financing. That letter confirmed that the recipient (Vincent) received a financial gift of $171,100 from the donor (Mr. Li) that was a genuine gift that did not have to be repaid, and that no part of the gift was being provided by a third party with a direct or indirect interest in the transaction.
94Vincent disputes that the evidence establishes that Lillian’s parents repaid that amount to Mr. Li. However, if the court finds that the $171,100 advance was a loan from Mr. Li that was repaid by Lillian’s parents, Vincent submits that the court should find that the amount due under the loan is payable by Vincent alone, rather than being the joint obligation of the parties (as Lillian claims). Among other things, Vincent relies on (a) the lack of any evidence of a joint loan, including any loan documentation, and (b) the lack any evidence that a corresponding demand for repayment has been made to Lillian or that she has made any repayments. Vincent also submits that given Lillian’s limited income as a Ph.D. student and her expectation that he would pay her living expenses, it would not be reasonable to conclude that the intention was for Lillian to incur such a large debt.
95Vincent also submits that there is no merit to Lillian’s claim that she has a beneficial interest in the Scott Street condo. The property’s purchase price was paid with funds provided primarily by a gift from Mr. Li and borrowed mortgage funds obtained on Vincent’s own credit. He was also solely responsible for repayment of the loan of $45,953.80 from Lillian’s parents to pay the amount due on final closing. Any non-monetary contribution that Lillian made to the property’s purchase was consistent with what would be expected of a spouse when a transaction of this nature is undertaken irrespective of whether title is being taken by both parties or by one of them. To the extent that Vincent was enriched by or benefited from Lillian’s involvement, he argues that there is no corresponding deprivation that would justify a finding of unjust enrichment.
(d) Analysis and conclusion
96As explained below, I have concluded as follows:
a. Lillian does not have a beneficial interest in the Scott Street condo. Vincent is the sole beneficial owner. In the normal course, the value of the Scott Street condo on the date of separation will be included when calculating Vincent’s net family property for equalization purposes.
b. Mr. Li’s advance of $171,100 toward the property’s purchase price was not a gift to Vincent, but rather was a loan to Vincent. Lillian’s parents have repaid that loan. Vincent is liable to Lillian’s parents for the amount outstanding less any payments Vincent has already made. In the normal course, the amount of that debt on the date of separation will be deducted when calculating Vincent’s net family property for equalization purposes.
c. Vincent is indebted to Lillian’s parents for the full amount of their $45,953.80 loan to pay the amount due on the final closing of the Scott Street condo transaction, less any repayments Vincent has made. In the normal course, the amount of that debt on the date of separation will be deducted when calculating Vincent’s net family property for equalization purposes.
97The preponderance of the evidence does not support the conclusion that Mr. Li intended to make a gift to Vincent when Mr. Li advanced a total of $171,100 toward the purchase of the Scott Street condo. I do not doubt that Vincent and Mr. Li had a cordial, mutually supportive relationship while the parties were together, which evidently did not survive the parties’ separation. However, I accept Mr. Li’s evidence that he did not intend to make a gift to Vincent when he advanced the funds for the property’s purchase. Mr. Li had a close, longstanding relationship with the Lin family, including Lillian (whom he had known since childhood), not with Vincent. Mr. Li initially offered the opportunity to purchase the Scott Street condo to Lillian’s father, not to Vincent. There was no evidence that the Mr. Li had even met Vincent until the parties’ wedding in New York City less than two years before the parties’ separation.
98In making the finding that the advance was not a gift to Vincent, I considered the contrary evidence relating to the “gift letter” that Mr. Li provided at Vincent’s request, which caused me some concern. While Mr. Li’s testimony relating to that letter was ambivalent, he testified that he agreed to assist Vincent in obtaining the mortgage and acknowledged email correspondence relating to the gift letter. Mr. Li is an experienced real estate investor, but it may well be that he did not fully understand the letter’s import, given his limited knowledge of English. In any case, I am satisfied that Mr. Li signed the letter (as Vincent testified), but I do not consider the gift letter to be determinative of his intent in advancing the funds. A contrary intent is indicated in WeChat text messages between Mr. Li and Vincent in which both of them refer to the advance as a loan from Mr. Li to Vincent. Considering the evidence as a whole, I am satisfied that Mr. Li did not intend the advance to be a gift to Vincent.
99Vincent argues (in the alternative) that if Mr. Li’s advance is found not to be a gift to Vincent, the court should find that the advance was a loan to Vincent alone. Consistent with Mr. Li’s testimony, Lillian’s position is the advance was a loan to the parties jointly. However, Lillian’s closing submissions arguably disclose some ambiguity on that point.
100As noted previously, as part of her submissions relating to her trust claim for an equal interest in the Scott Street condo, Lillian argues that Vincent should be responsible (before equalization) for the entire amount of the loan outstanding to Lillian’s parents, including the funds they provided to repay Mr. Li’s $171,100 advance. However, she does not provide an adequate explanation as to why Vincent should repay the entire amount outstanding, rather than his portion of what she says is a joint debt. It may be that she is arguing for an unequal division of the parties’ net family properties under s. 5(6) of the Family Law Act. However, as noted previously, a claim for unequal division has not been pleaded or otherwise raised prior to the written closing submissions. To succeed would require a finding of unconscionability, the threshold for which is exceptionally high.
101Considering the evidence as a whole, I am persuaded that Mr. Li’s advance of $171,100 and Lillian’s parents’ advance of $45,953.80 were loans to Vincent alone rather than to the parties jointly. While there is no loan documentation indicating either a loan to Vincent or to the parties jointly, the finding of a loan to Vincent is consistent with how Mr. Li and Vincent characterized Mr. Li’s advance in their text communications. I also agree with Vincent’s submission that given Lillian’s limited income as a Ph.D. student and her expectation that her husband would be paying her living expenses, it would not be reasonable to conclude that the intention was for Lillian to incur joint responsibility for a debt totalling over $217,000 for those advances. The balance of the purchase price was funded by a mortgage of $386,550 (over 60 percent of the purchase price), with Vincent as sole obligor. As in the case of the mortgage on the Oakville house, Lillian’s participation in the credit assessment would not have been helpful in obtaining financing.
102As noted previously, in the event that I find (as I have) that Mr. Li’s advance was a loan to Vincent alone, Vincent calls into question whether he is liable to Lillian’s parents for the amount they say they paid to Mr. Li by way of repayment of the $171,100 advance. Vincent disputes that the evidence establishes that Lillian’s parents repaid that amount to Mr. Li. Among other things, he argues that other transactions between Mr. Li and the Lin family involving large sums of money call into question the real nature of the monetary transfers between Mr. Li and Lillian’s parents that they rely on.
103I disagree. Relying on the evidence of Mr. Li and Lillian’s parents, supported by the bank records they provided, I am satisfied that Lillian’s parents repaid Mr. Li’s $171,100 advance, as Lillian’s father undertook to do if necessary when the advance was made. Vincent is liable to Lillian’s parents for the full amount, less any payments he has already made.
104Turning now to Lillian’s claim to a trust interest in the Scott Street condo, I agree with Vincent that Lillian does not have a beneficial interest in the property. Lillian did not provide any financial contribution to the property’s purchase price. Over 60 percent of the purchase price was funded by a mortgage on the property obtained on Vincent’s sole credit. All or nearly all the balance was funded by loans to Vincent from Mr. Li and Lillian’s parents, most of which Mr. Li initially provided. Lillian’s non-financial contribution consisted primarily of assisting Vincent with the mortgage application and other logistics relating to the property’s purchase, consistent with what would be expected of a spouse when a transaction of this nature is undertaken irrespective of whether title is being taken by both parties or by one of them. Prior to the parties’ separation, Lillian benefited from Vincent’s ownership of the property by residing with him in the condo unit for a period of time and will also benefit in the normal course from Vincent’s ownership interest upon equalization. I agree with Vincent that to the extent he was enriched by or benefited from Lillian’s involvement in the purchase, there is no corresponding deprivation that would justify a finding of unjust enrichment.
D. Front Street condo
(a) Introduction
105Does Lillian have a valid claim to a 50 percent beneficial interest in the Front Street condo? Was the advance of $27,000 from Lillian’s parents to fund a deposit payment for the Front Street condo a loan to Vincent alone or a loan to the parties jointly?
106As previously noted, the interest in the Front Street condo is through a pre-construction contract that has not closed. The contract was entered into in June 2017, shortly after the parties’ move to Canada the previous month. Deposits paid to date (in the period from June 2017 to November 2018) total $109,600, in partial payment of the agreed purchase price of $547,990.
107The parties agree that (a) the value of the Front Street condo unit was $670,000 at the date of separation, and (b) the current value is $715,000, in each case as if the unit were built on the valuation date.
(b) Lillian’s position
108Lillian argues that resulting trust principles support her position that she has an equal interest with Vincent in the Front Street property.
109The evidence indicates that funds provided by both parties were used to fund the deposit payments. The first two deposit payments totalling $27,400 came from a bank account in Lillian’s sole name. The third and fourth deposit payments of $27,400 each came from the parties’ joint bank account, the latter of those amounts funded by a $25,000 transfer from Lillian’s line of credit. For the fifth deposit payment of $27,400, the sum of $27,000 came from Lillian’s parents’ line of credit, which Lillian says was a loan made to the parties jointly.
110Lillian says that the use of funds from accounts in Lillian’s sole name and from the parties’ joint bank account (funded in part from Lillian’s line of credit and a loan from her parents) gives rise to a presumption of resulting trust. Therefore, Vincent has the burden of demonstrating that Lillian intended to make a gift to Vincent that would make him the property’s sole beneficial holder. She also says that the parties’ WeChat communications about pooling resources were consistent with an intention that both parties be beneficial owners of the property. According to Lillian, Vincent has not met his burden of establishing that Lillian intended to make a gift in his favour or that funds she advanced were by way of loan.
(c) Vincent’s position
111Vincent submits that the evidence does not support Lillian’s position that she has a 50 percent trust interest in the Front Street condo.
112Vincent testified that the first and second deposits totalling $27,400 paid from the bank account in Lillian’s sole name constituted a loan to him in that amount. He says that he has made payments on that loan during the marriage and immediately after separation, leaving a balance of $17,394.97. He also notes that until Lillian amended her application in November 2021, her claim was for repayment of amounts she advanced for the purchase of the property, undermining her belated trust claim to the property.
113Vincent also testified that the $27,000 advanced from Lillian’s parents’ joint line of credit was a loan to him alone, not a loan to Lillian and him jointly (as Lillian alleges). He notes that Lillian’s mother has accepted amounts in repayment of the loan, leaving an outstanding balance of $21,838.80.
(d) Analysis
114For the reasons below, I have concluded that the purchase of the Front Street condo was a joint investment of the parties, and that Lillian has a 50 percent beneficial interest in the property.
115I agree with Lillian that a presumption of resulting trust applies with respect to the Front Street condo purchase. As outlined further below, both parties provided the funds to make the five deposit payments totalling $109,600. The property was purchased in Vincent’s name only. Therefore, there has been a gratuitous transfer, giving rise to the presumption that Lillian has an ownership interest in the property. I agree with Lillian that Vincent has not rebutted that presumption.
116As stated previously, of the deposits totalling $109,600, the first and second deposits totalling $27,400 were funded from a bank account in Lillian’s sole name. Vincent does not dispute that those funds were Lillian’s alone, but Vincent says that she loaned him that amount. However, there was no documentary or other persuasive evidence to corroborate Vincent’s position that the Lillian intended that amount to be a loan to Vincent, rather than a financial contribution to the property’s purchase.
117To support his position that the amount advanced was a loan, Vincent says that Lillian has accepted amounts in partial repayment of the loan, relying on bank transfers he made to Lillian totalling $4,900 in November and December 2018 (before the parties separated) and amounts totalling $5,105.03 that Lillian withdrew from their joint bank account from January to July 2019 in the weeks following their separation. Vincent also relies on the inconsistency between Lillian’s current position and the position she took in the first two iterations of her application (prior to the most recent amendment in November 2021), in which she claimed repayment of personal loans she made to Vincent, rather than a trust interest in the properties.
118I do not find those arguments of assistance to Vincent. The transfer of funds from one spouse to another while they are cohabiting is the expected course of events. Such transfers do not provide persuasive evidence of a debt or of debt repayments. Similarly, I find of little assistance inter-party transfers of funds in a still-existing joint bank account in the first few months following separation. Once again, that would be expected when a joint account remains active while the parties are disentangling themselves financially following separation. Vincent’s evidence was that for some weeks after separation, he was hopeful the parties would reconcile, providing further justification for the parties’ continued use of a joint bank account for a period of time.
119As well, I am not persuaded that reliance on amendments to the pleadings are of assistance to Vincent. I do not find it surprising that the factual and legal basis for the parties’ positions may evolve as the case progresses, taking a party’s position beyond the scope of the existing pleadings. The appropriate course of action in those circumstances is to amend the pleadings. Lillian did so (albeit belatedly) on an unopposed basis. I am not prepared to draw an adverse inference from that amendment, as Vincent suggests.
120Turning now to the fifth deposit payment of $27,400 (before addressing the third and fourth deposit payments), $27,000 of the fifth deposit payment was funded by a transfer from Lillian’s parents’ joint line of credit. It is common ground that the $27,000 advance was a loan to fund the fifth deposit. The dispute is whether the loan was to the parties jointly (as Lillian argues) or whether the loan was to Vincent alone (as Vincent alleges). I accept the evidence of Lillian and her parents that the $27,000 advance was a loan to the parties jointly to assist in funding their joint purchase of the property and not a loan to Vincent alone to fund his sole purchase. Consistent with Lillian’s limited financial resources, Lillian’s exposure under that loan was a modest amount, as compared to Vincent’s far greater exposure under the loans from Mr. Li and Lillian’s parents to purchase the Scott Street condo. I see no significance to subsequent payments Vincent made to Lillian’s parents, since (i) a repayment obligation would be consistent with a loan either to Vincent alone or to the parties jointly, and (ii) Vincent had other loan exposure to Lillian’s parents relating to the Scott Street condo purchase.
121The remaining deposit funds for the Front Street condo (totalling approximately $55,000 for the third and fourth deposits) were paid from the parties’ joint bank account. The evidence indicated that the parties generally used their joint bank account for everyday living expenses, the payment of which was dependent on Vincent’s income as the principal breadwinner, since Lillian had only a modest income of approximately $20,000 annually as a full-time Ph.D. student. However, after December 2017, when the parties moved out of Lillian’s Queens Quay condo and into the Scott Street condo, Lillian earned income (and also incurred mortgage and other expenses) relating to the Queens Quay condo. As well, the parties agree that the source of funds for the fourth installment of $27,400 (which flowed through the parties’ joint account) was a $25,000 transfer from a line of credit in Lillian’s sole name.
122Taking the forgoing evidence into account, I find that the parties each have an equal beneficial interest in the Front Street condo. The evidence establishes that a gratuitous transfer to Vincent occurred when he entered into the pre-construction contract in his own name and made the deposit payments with funds provided by both parties. Therefore, a presumption of resulting trust arose in Lillian’s favour. The onus was on Vincent to rebut that presumption by demonstrating that she intended to make a gift to him. He has not done so. I am also satisfied on the evidence that the funds that Lillian advanced to Vincent to fund the first two installments were not a loan to him to purchase the property in his sole name, as he alleges.
123In reaching those conclusions, I also considered Vincent’s argument that if I find Lillian had a valid claim to an ownership interest, the remedy should be a monetary award in Lillian’s favour, rather than awarding Lillian a trust interest in the property. Vincent’s counsel relies on Kerr, at paras. 46-47, 50, and other case law that indicates that a constructive trust remedy should be imposed only if a monetary award is inappropriate or insufficient to remedy Vincent’s unjust enrichment. He also argues that since Vincent’s equity in the Front Street condo will be included in his net family property, the equalization payment that Lillian will receive is sufficient monetary compensation.
124I disagree. The legal basis for my findings relating to the Front Street condo is a resulting trust, not unjust enrichment. The situation in this case lends itself to consideration based on resulting trust principles, since the determining facts relate to the parties’ contribution of funds at the time the deposits are made. Unlike in Kerr and similar cases, the issues do not relate to the parties’ contributions to the property over the period of their relationship that would render it preferable to consider unjust enrichment.
125With respect to the argument that equalization provides an adequate monetary remedy (and assuming it would be appropriate to apply unjust enrichment analysis), the answer lies in McNamee, at paras. 65-66. The Court of Appeal indicated that ownership issues are to be determined before the equalization process is undertaken so as not to deprive the parties of equitable or other remedies that may be available to them. In determining that Lillian has an ownership interest in the Front Street condo, I applied resulting trust principles, rather than the considering the imposition of a constructive trust based on a finding of unjust enrichment. Consistent with McNamee, I am not satisfied on the evidence that it would be appropriate in this case to undertake the equalization process without determining the ownership issue relating to this property.
D. Amounts owed to Lillian’s parents
126How much is owed to Lillian’s parents to repay loans that were used for property purchases, including any amounts Lillian’s parents paid to Mr. Li to repay the amounts he advanced?
127As set out above, I have found that loans were made to Vincent or the parties jointly for property purchases, as follows:
a. In September and November 2017, Mr. Li loaned a total of $171,100 to Vincent for the Scott Street condo purchase, repaid by Lillian’s parents in March 2018;
b. In September 2018, Lillian’s parents loaned $45,953.80 to Vincent for the amount due on the final closing of the Scott Street condo purchase; and
c. In November 2018, Lillian’s parents loaned $27,000 to Vincent and Lillian jointly for the fifth deposit payment for the Front Street condo purchase.
128Accordingly, without taking into account any repayments, the principal amount due to Lillian’s parents would be $217,053.80 from Vincent and $27,000 from the parties jointly.
129In closing submissions, Lillian’s counsel argues that Lillian’s parents should also be awarded interest on the amounts outstanding. Lillian’s counsel submits that Mr. Li did not charge interest on the amount he advanced, but Lillian’s parents were entitled to interest on the amounts they advanced (including the amount they paid to repay the loan from Li) at a rate based on the amount they were paying on their own lines of credit.
130I have decided not to award interest to Lillian’s parents, other than interest from the date of judgment at the post-judgment statutory rate. As previously noted, there was no loan documentation or other evidence contemporaneous with the advances relating to repayment terms, including any interest payable. I am not persuaded that there was any meeting of the minds relating to the payment of interest. I also note that Lillian’s parents’ claim for loan repayment was not advanced in these proceedings until the application was amended on an unopposed basis to add Lillian’s parents as parties in September 2021, over two years after the application was commenced.
131Both Vincent and Lillian claim to have made payments on loans due to Lillian’s parents, supported by bank records showing transfers to Lillian’s mother or to accounts in the name of Lillian’s parents. In Lillian’s case, the transfers started in April 2018 and totalled $28,208. In Vincent’s case, the transfers occurred in the period from August 31, 2018 to January 27, 2019, and totalled $51,100. Two of Vincent’s transfers to Lillian’s mother totalling $5,000 occurred on August 31 and September 1, 2018, a matter of days before Lillian’s parents’ transfer of $45,953.80 to pay the amount due on the final closing of the Scott Street condo. Two further transfers from Vincent totalling $5,000 occurred after the date of separation (which was January 2, 2019).
132The various fund transfers to Lillian’s parents provide some evidence that loan repayments have been made. However, the tangled web of the real estate-relating activities involving Vincent, Lillian, Lillian’s parents and Mr. Li provides reason for caution in accepting that all of the fund transfers to Lillian’s parents constituted loan repayments.1 Nevertheless, I am prepared to accept that at least some of those transfers were made to repay the loans due to Lillian’s parents.
133In particular, except for two transfers totalling $5,000 made on August 31 and September 1, 2019 (the nature of which I am unable to determine), I am prepared to accept that the balance of Vincent’s transfers (totalling $46,100) were loan repayments to Lillian’s parents. I am also prepared to accept that the joint loan to the parties of $27,000 has been fully repaid, that is, $13,500 by each of them. Taking those repayments into account, the amount that Vincent owes to Lillian’s parents is $184,453.80. Since Vincent made repayments totalling $5,000 after the date of separation, the total amount of the loan on the date of separation was $189,453.80.
134Accordingly, the final order will require Vincent to pay Lillian’s parents $184,453.80 to repay his debt to them. As well, for purpose of calculating Vincent’s equalization payment to Lillian, the amount of Vincent’s debt to Lillian’s parents on the date of separation was $189,453.80.
IV. Equalization
A. Introduction
135How much is Lillian entitled to receive from Vincent to equalize their net family properties? In making that calculation, is Vincent entitled to deduct notional real estate disposition costs?
136As explained below, the final order will require Vincent to make an equalization payment to Lillian in the amount of $72,080.16.
137During the trial, each of the parties provided a completed Net Family Property (NFP) Statement setting out the calculations underlying each party’s position on equalization. The entries in each party’s NFP Statement were largely consistent except on a few key issues, including (i) real property ownership, (ii) whether notional costs of disposition of real estate should be deducted in calculating Vincent’s net family property, and (iii) amounts owed to Lillian’s parents, including the status of Mr. Li’s advance of $171,100.
138Vincent’s counsel also helpfully provided several additional versions of the NFP Statement, based on varying assumptions relating to the court’s findings on key issues. In making the equalization calculation, I started with Vincent’s version of the NFP Statement that was based on assumptions that most closely corresponded to the findings I have made in these Reasons for Judgment (being Schedule B to the respondent’s Reply Written Submissions). I then made the adjustments required by the findings I have made, taking into account the parties’ written submissions. Those adjustments are set out in the mark-up of the Respondent’s schedule attached as Appendix 1 to these Reasons for Judgment. In making those adjustment, I generally did not attempt to reconcile relatively minor differences between the figures in the NFP Statement proposed by each party except to the extent that the parties’ extensive written submissions referred to a point of contention. By way of exception, under “Part 4(e): Business Interests”, I included $25,000 as the value of Vincent’s interest in his personal consulting company, which was approximately midway between the values that each party proposed.
139An explanation of key aspects of the equalization calculation is set out below.
B. Land
140In the NFP Statement under “Part 4(a): Land”, I accepted the real property values set out below for each of the relevant properties.
141As set out in Vincent’s NFP Statement, the value of the Queens Quay condo is set at $720,000 and is included as Lillian’s asset. That value is consistent with the appraised value as of the date of separation, as set out in the Certificate of Appraisal addressed to Lillian’s counsel. The property’s value proposed in Lillian’s NFP Statement was $700,000, without adequate explanation.
142As set out in Vincent’s NFP Statement, the values of the Scott Steet condo and the Oakville house are set at $820,000 and $845,000, respectively, and are included as Vincent’s assets. Those values are the amounts that the parties have agreed are the properties’ values on the date of separation. In Lillian’s NFP Statement, those properties were valued at the higher current market values of $900,000 and $1,330,000, respectively. The effect of doing so would be to depart from the equalization calculation prescribed in s. 5 of the Family Law Act. The result would be an unequal division of the parties’ net family properties, which is permitted in limited circumstances by s. 5(6) based on unconscionability. Lillian has not pleaded an unequal division of marital assets, nor has she demonstrated that the high threshold for unconscionability has been met, as explained further below.
143The value of Front Steet condo is set at $231,610. Half of that amount (being $115,805) is set as the value of each party’s share of that property. In Vincent’s NFP Statement, the Front Street condo was valued at $109,600, the total amount of the deposit payments. In Lillian’s NFP Statement, she proposed adding $167,010 to the deposit amount (for a total of $276,610), reflecting the difference between the pre-construction contract price in June 2017 ($547,990) and property’s current market price upon completion ($715,000). I agree with Lillian’s counsel that an additional amount should be added to the deposit amount to address the property’s appreciation since June 2017, but only to the date of separation (when the parties agree the value was $670,000), consistent with the equalization calculation methodology prescribed by s. 5. The amount of the appreciation is therefore $122,010, bringing the property’s value to $231,610. I considered whether that amount should be adjusted downward to reflect the risk of non-completion, but I agree with Lillian’s counsel that there is no evidence before me to determine the existence or extent of any such risk.
C. Notional disposition costs
144In Vincent’s NFP Statement, included under “Part 5: Debts and Other Liabilities” are notional amounts for the cost of disposition of the Oakville house and the Scott Street condo. In Vincent’s trial testimony, he indicated that once the family law proceedings are completed, his intention is to sell his Canadian properties and move back to the U.S., the ongoing source of his work as a software development engineer and where he continues to have friends. He plans to use the proceeds to make the required equalization payment to Lillian and purchase property in the United States.
145Lillian challenges the deduction of notional disposition costs in calculating Vincent’s net family property. Among other things, she questions whether it would be necessary for Vincent to dispose of the properties to make the equalization payment and notes that Vincent has not taken substantive steps to implement such plans (such as applying for a U.S. visa or looking to list the properties for sale). Alternatively, Lillian argues that the notional disposition costs should be reduced by 50 percent, to reflect the uncertainty relating to the properties’ sale.
146In Bortnikov v Rakitova, 2016 ONCA 427, 350 OAC 123, at para. 11, the Court of Appeal indicated that it is appropriate to deduct notional disposition costs from net family property “if there is satisfactory evidence of a likely disposition date and if it is clear that such costs will be inevitable when the owner disposes of the assets”, citing Sengmueller v. Sengmueller (1994), 1994 CanLII 8711 (ON CA), 17 O.R. (3d) 208 (C.A.), at pp. 216-17. In Sengmueller, at p. 214, the Court of Appeal also stated that the principle of sharing disposition costs upon equalization should be departed from only where the timing of the disposition (and thus the disposition costs) is so speculative that the costs can safely be ignored. In Baiu v Baiu, 2014 ONSC 216, at para. 132, rev’d in part on other grounds, 2015 ONCA 288; leave to appeal refused, [2015] S.C.C.A. No. 245, in circumstances in which the court found that the disposition was likely but not imminent, the trial judge permitted deduction of notional disposition costs but at a reduced rate of 50 percent, on the basis that the property’s sale was not “speculative to the point where disposition costs can be ignored.”
147I agree with Vincent’s counsel that it is appropriate to deduct notional disposition costs relating to the Oakville house and the Scott Street property but at a reduced rate of 50 percent of the amount proposed, as Lillian’s counsel alternatively suggests. I agree that the evidence establishes that disposition of the properties is likely and would inevitably result in disposition costs. I see no sufficient reason to doubt Vincent’s intention to return to the U.S., the source of his professional income. However, his departure is not imminent and there are steps that must be taken to permit him to move to the United States.
148In Vincent’s NFP Statements, he also includes notional costs of $30,000 relating to the closing of the Front Street condo purchase. Since I have found that the parties jointly own the Front Street condo, any additional costs would be shared equally rather than allocated to Vincent alone. However, other than Vincent’s speculative estimate, there was no evidence to indicate the extent of any such costs. Therefore, no deduction will be made for such costs related to that property.
D. Amounts owed to Lillian’s parents
149In the NFP Statement under “Part 5: Debts and Other Liabilities”, I have included $189,453.80 as Vincent’s debt, being a “Personal Loan” from Lillian’s parents to him in connection with the purchase of the Scott Street condo.
150As indicated above, I have found that Vincent owed $189,453.80 to Lillian’s parents on the date of separation. That amount includes the $171,100 advance from Mr. Li to Vincent. I found that the $171,100 advance was not a gift to Vincent, but rather a loan to him that Lillian’s parents repaid in March 2018. Therefore, to the extent it is still outstanding, it should be deducted in the calculation of Vincent’s net family property.2
151The $189,453.80 amount also includes Lillian’s parents’ loan of $45,953.80 to pay the balance due on final closing of the Scott Street condo. Therefore, the $189,453.80 loan amount replaces the amounts set out under the two entries labeled “Personal Loan” in that section of Vincent’s attached NFP Statement labeled Schedule B (in the amounts of $152,750.61 and $42,746, respectively).
E. Calculation of equalization payment
152Taking into account the adjustments to the entries in the NFP Statement referred to above, I have concluded that Vincent is required to pay $72,080.16 in order to equalize the parties’ net family properties, as explained further below.
153As a result of the above adjustments to the value of the parties’ real property, the total amount in “Part 4(a): Land” under “15. Totals: Value of Land” would be $835,805 for Lillian and $1,780,805 for Vincent. Also taking into account the above adjustment to the value of Vincent’s personal consulting firm, the total amount under “22. Value of Property Owned on the Valuation Date (Total 1)” would be $852,292.82 for Lillian and $1,842,213 for Vincent.
154As a result of the adjustments to the notional disposition costs and the amount of Vincent indebtedness to Lillian’s parents, the total amount in “Part 5: Debts and other Liabilities” under “23. Totals: Debts and Other Liabilities, (Total 2)” would be $290,878.92 for Lillian and $1,231,529.63 for Vincent.
155After taking into account the amounts set out under “Total 3: Property Owned on the Date of Marriage” and “Total 4: Value of Excluded Property”, the total amount to be deducted in calculating the parties’ net family properties is $679,978.35 for Lillian and $1,525,738.21 for Vincent. After deducting those amounts, Lillian’s net family property is $172,314.47 and Vincent’s is $316,474.79. Half of the difference between those numbers is $72,080.16, the amount Vincent owes Lillian to equalize their net family properties.
156Having determined the amount payable to Lillian by way of equalization as provided for in s. 5(1) of the Family Law Act, I see no justification for awarding a different amount under s. 5(6). As noted previously, a claim for unequal division has not been pleaded or otherwise raised prior to the written closing submissions. An unequal division would require a finding of unconscionability, the threshold for which is exceptionally high, that is, an equal division must “shock the conscience of the court”: Serra, at para. 47.
157The parties are still young and have accumulated significant assets (and accompanying liabilities) in their real estate investment activities. Going forward, Vincent has the benefit of any appreciation in value of the Oakville home and the Scott Street condo, a potential benefit both parties enjoy with respect to the Front Street condo. In Vincent’s case, along with his equalization obligation to Lillian, he also has a significant debt payable to Lillian’s parents.
158In all the circumstances, I see no reasonable basis for concluding that the high threshold for unconscionability has been met in this case. In my view, the parties’ net family properties accrued during their relatively short domestic relationship have been appropriately equalized by the application of s. 5, without resort to an unequal division of net family property under s. 5(6).
V. Spousal Support
159Is Lillian entitled to spousal support from Vincent? How much spousal support should she receive?
160Upon application, the court may make an order requiring a spouse to pay a lump-sum or periodic sums for the support of the other spouse: Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), s. 15.2(1). In making a spousal support order, the court is required to consider the condition, means, needs and other circumstances of each spouse, including (a) the length of time the spouses cohabited, (b) the functions performed by each spouse during cohabitation, and (c) any order, agreement or arrangement relating to support of either spouse: s. 15.2(4).
161The objectives of a spousal support order include the following:
a. Recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown: s. 15.2(6)(a);
b. Relieve any economic hardship of the spouses arising from the breakdown of the marriage: s. 15.2(6)(c); and
c. In so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time: s. 15.2(6)(d).
162The law recognizes three conceptual grounds for entitlement to spousal support: (a) compensatory; (b) non-compensatory; and (c) contractual: Bracklow v. Bracklow, 1999 CanLII 715 (SCC), [1999] 1 S.C.R. 420, at para. 15. Compensatory spousal support is generally intended to provide the recipient spouse with compensation for the loss of economic opportunity arising from the marriage or its breakdown, including the roles adopted during the marriage.
163The obligation to pay non-compensatory spousal support may arise when one spouse has the capacity to pay support and the other spouse needs support. For example, a need-based spousal support award may be appropriate where the recipient spouse is unable to become self-sufficient by reason of illness or disability, but a non-compensatory award is not restricted to such situations: Bracklow, at para. 45. Depending on the circumstances, the obligation may arise out of the marriage relationship itself rather than being compensatory or contractual: Bracklow, at para. 49.
164Lillian seeks a lump-sum spousal support award from Vincent. She concedes that she does not have a compensatory basis for her claim but seeks a non-compensatory lump-sum payment based on the decline in her standard of living following the separation. Until shortly before the parties’ separation, she resided with Vincent in the Scott Street condo and was supported by him as the principal breadwinner while she pursued her Ph.D. program. After separation, she has resided with her mother and depends on her financial assistance, given Lillian’s limited income from her graduate student stipend and net rental income from the Queens Quay condo. She needs short-term transitional support to “get back to her feet and live independently” (to quote her closing submissions).
165Assuming a finding of spousal support entitlement, Lillian has provided a “DivorceMate” calculation for a lump-sum payment under the Spousal Support Advisory Guidelines, using the “Without Child Support” formula for a five-year relationship. Based on Lillian’s 2020 income of $22,836 and Vincent’s income of $185,940 (his estimated annual income set out in his Form 13.1 Financial Statement dated September 24, 2019), the lump-sum payment would range from a low of $26,664 to a high of $35,961. Lillian seeks a lump-sum spousal support payment at the midpoint of $31,390.
166Vincent submits that Lillian has not established entitlement to spousal support on a non-compensatory basis. According to Vincent, her standard of living has not been impacted by the parties’ separation. Even though she claims that her expenses have dramatically increased since separation, her debt has not increased, according to her latest Financial Statement. Lillian already has a graduate degree in her field and is capable of earning a higher income. Vincent also argues that the court should take into account the economic disadvantage Vincent has suffered from the marriage by moving to Toronto to support Lillian’s career plans, to the detriment of his own career. In contrast, Lillian’s career path and earning capacity have been enhanced as she completes her Ph.D. program.
167If spousal support is found to be payable, Vincent argues that his income should be adjusted to recognize his increased expenses working remotely from Canada, including home office and travel expenses necessary for his work. According to Vincent’s notices of assessments from the Canada Revenue Agency, his Line 150 net income was $72,513 in 2018, $66,811 in 2019 and $41,124 in 2020.
168In cross examination, Vincent did not dispute that income was retained in his wholly-owned consulting company that, if paid out to him, would result in a higher personal income for tax purposes. However, he disagreed that his annual income would amount to more than $180,000. He also acknowledged that his September 2019 Form 13.1 Financial Statement estimated his annual income as being over $185,000 but disputed that it is fair to consider that amount to be his income for support purposes, given his additional expenses working from Canada.
169Having considered the parties’ submissions, I have concluded that Vincent should make a lump-sum spousal support payment to Lillian in the amount of $26,864. That award is being made on non-compensatory basis.
170I am satisfied that Lillian should be awarded spousal support based on her need for support following the parties’ separation and Vincent’s financial capacity to provide it. Prior to the parties’ separation, Lillian relied on financial support from Vincent as she pursued her Ph.D. program in Toronto. That was the parties’ arrangement when they moved to Canada shortly after their wedding. While her general debt level has not increased since the separation, I accept her evidence that she has relied on financial support from her mother to make ends meet. I find that it is appropriate in the circumstances for Vincent to provide transitional support as Lillian completes her graduate program and moves forward with her career. While Vincent’s career path may have been disrupted by his move to Canada, the evidence does not support the view that his earning capacity has been negatively impacted. Given the financial assistance he received from his parents and Lillian’s extended family, he now has significant real estate holdings, with accompanying liabilities. In these circumstances, it is not at all clear that he has been economically disadvantaged by the marriage or the separation, as his counsel alleges.
171In order to calculate Vincent’s lump-sum spousal support obligation, I am satisfied that it is appropriate to use the estimated annual income set out in his September 2019 Form 13.1 Financial Statement, consistent with Lillian’s DivorceMate calculation. Vincent did not provide an alternative calculation, arguing that there was no entitlement. The income specified in Vincent’s Financial Statement is stated to be after expenses of $5,000 per month. I therefore see no justification for a downward income adjustment due to higher expenses because he is working remotely from Canada. While Vincent disputed that his annual income was more than $180,000, I am satisfied that his actual income for support purposes is higher than his declared personal income, taking into account income retained in his personal corporation. Taken as a whole, the evidence does not justify calculating spousal support based personal income for support purposes that is lower than indicated in Vincent’ September 2019 Financial Statement.
172I also consider it appropriate to use Lillian’s actual income for calculation of spousal support (as set out in Lillian’s DivorceMate calculation), rather than imputing a higher income based on her earning capacity if she were not pursuing her Ph.D. The parties’ arrangement was that Vincent would pay their living expenses while she was pursuing her degree. However, as her graduate program comes to an end and her earning capacity increases, I consider it appropriate that the lump-sum payment be at the low end of the range indicated in the DivorceMate calculation, rather than the midpoint. In addition to Lillian’s enhanced earning capacity, her youth and the short duration of the parties’ relationship are also relevant factors in setting the level of support.
VI. Disposition
173Accordingly, a final order will issue as follows:
a. Either party may proceed in writing to obtain a divorce on an uncontested basis.
b. A declaration will issue that (i) Vincent holds in trust for Lillian a 50 percent beneficial interest in the Front Street condo, and (ii) Lillian does not have a beneficial interest in the Oakville home or the Scott Street condo.
c. Vincent shall pay $72,080.16 to Lillian to equalize the parties’ net family properties.
d. Vincent shall pay $26,864 to Lillian as lump-sum spousal support. Support deduction order to issue.
e. Vincent shall pay $184,453.80 to Lillian’s parents to repay his indebtedness to them.
f. Vincent shall pay post-judgment interest at the statutory rate on the amounts owing under this final order.
g. Unless settled between the parties, costs will be determined based on written submissions.
h. Any other claim advanced in the pleadings is dismissed.
174If the parties cannot agree on costs, each party may serve and file brief written submissions (not to exceed three pages) together with a bill of costs within 21 days. Each party may respond by brief written submissions within 14 days. If no submissions are received within the specified timeframe, the parties will be deemed to have settled costs.
R. A. Lococo J.
Released: May 25, 2022
COURT FILE NO.: FS-19-10044 (Toronto)
DATE: 20220525
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Jia lu lin, yongliang lin and hong yang
Applicants
– and –
chen wen
Respondent
REASONS FOR JUDGMENT
R. A. LOCOCO J.
Released: May 25, 2022
Footnotes
- In the case of Lillian and her father, those real estate-related activities also included Lillian’s apparent involvement in the financing back-stop arrangements that her father was prepared to provide to Mr. Li in 2017. Lillian also indicated that her mother was charging her rent for an apartment she no longer resided in during the COVID-19 pandemic.
- To the same effect, had I found that the $171,100 advance to Vincent was a gift rather than a loan, that amount would have been deducted in the normal course in calculating Vincent’s net family property, but as excluded property under s. 4(2) of the Family Law Act (as a gift after marriage traceable to real property) rather than as Vincent’s liability.