Court File and Parties

COURT FILE NO.: FS-20-97597 DATE: 2023-01-09

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

Li Jung Huang, Applicant Wen Chin Hu, for the Applicant

• and -

Tzu-Tsung Yang, Respondent Eva Mak, for the Respondent

HEARD: December 6, 7, 8, 9

REASONS FOR JUDGMENT

MANDHANE J.

INTRODUCTION

[1] The Applicant/Wife, Li Jung Huang, and the Respondent/Husband, Tzu-Tsung Yang, were married on December 3, 1991 in Taiwan. They have three Children who are now independent.

[2] The parties moved to Canada in 2006, first living in British Columbia and later in Ontario. They purchased the matrimonial home at 1265 Deer Run in Mississauga (“Deer Run”) in 2011 and lived there together until 2017. From 2017 onwards, the Husband lived in Taiwan at No. 2-3, 160 Lane, Gaomei Road, Tianliao Li, Qingshui District, Taichung City (“Gaomei”). Gaomei was attached to the factory from which the Husband operated his business. The Husband sent an average of $3,800 per month to the Wife, who remained in Canada with the Children in Deer Run.

[3] After 29 years of marriage, the parties separated on April 23, 2020. On the date of separation, the parties had a joint bank account at TD Canada Trust with a balance of $13,935. Other than that, the parties each held assets individually in Canada and Taiwan.

[4] The Wife commenced this Application on May 19, 2020. The only outstanding issue is equalization of each party’s net family property on the date of separation (NFP). In addition to their assets, both parties claim exclusions for gifts received during the marriage, and deductions for various debts and liabilities. Overall, the Wife says that the Husband owes her an equalization payment of $71,131, while the Husband claims that the Wife owes him an equalization payment of $856,019. Not surprisingly, the reality of the situation lies somewhere in between.

OVERVIEW

The Wife’s NFP

[5] The parties agree that the Wife held $53,875 in various bank accounts and owned a car worth $5,000. The Wife also had the following properties in her name:

• Deer Run;
• Gaomei; and
• No. 7, Lane 382, Section 1, Zhongxing Road, Dali District, Taichung City, Taiwan (“Zhongxing”).

[6] The parties agree that Deer Run was a matrimonial home and that it was worth $1,030,000. However, the Wife says that the total value of Gaomei (i.e. $163,818) should be excluded from her NFP because it was a gift from her father-in-law during the marriage. The parties agree that Zhongxing was worth $250,000 on the valuation date, and that the Wife paid a deposit on it prior to marriage for which she is entitled to a $4,680 exclusion.

[7] In terms of liabilities, the parties agree that the Wife had credit card debts totaling $4,311. However, the Wife also claims a deduction for money owed her mother, Yueh Kuei Kao, totalling $681,012. In relation to the Zhongxing property, the Wife claims a mortgage deduction in the amount of $43,954.

The Husband’s NFP

[8] The parties agree that the Husband held $13,747 in various bank accounts and owned a car. The Husband also operated a business in Taiwan called Shi Fong Co. Ltd. (the “Company”). The Company had capital worth $227,273, and the Husband and Wife were its two shareholders. The Father also owned a piece of vacant land in Taiwan: 1297 Section Gaoshi, Qingshui District, Taichung City (“Gaoshi”). The Husband says that he received Gaoshi as an inheritance during the marriage such that its total value of $327,635 should be excluded from his NFP.

[9] In terms of liabilities, the parties agree that the Husband had a mortgage on Gaoshi and other debts totaling $291,440. The Husband also claims a $45,811 deduction for a loan secured against his car. Finally, the Husband claims a further deduction of $187,220, which he says is the amount he owes his younger sister, Li Hung Yang.

ISSUES

[10] To determine the parties’ respective NFPs, the factual issues that I must resolve are as follows:

a) How should the joint bank account be treated? b) Should the value of Gaomei be excluded from the Wife’s NFP? c) Is the Mother entitled to a mortgage deduction for Zhongxing? d) Did the Wife owe Kao money on the date of separation? e) Should the value of Gaoshi be excluded from the Husband’s NFP? f) How should the Company be equalized? g) How should the cheques made out to Li Hung Yang be treated? h) Is Husband entitled to a deduction for the loan secured against his car?

SHORT CONCLUSION

[11] I find that:

a) The joint bank account shall be treated as a joint asset. b) Gaomei was a matrimonial home and its value shall be included in the Wife’s NFP. c) The Wife may deduct the mortgage liability on Zhongxing. d) The Wife did not borrow money from Kao and shall not deduct any amount for debts owed to her. e) The value of Gaoshi shall be included in the Husband’s NFP. f) The Husband shall include half of the total value of the Company in his NFP. g) The cheques made out to Li Hung Yang do not factor into the equalization analysis. h) The Husband cannot claim a deduction for the loan secured against his car because he only disclosed the existence of the car during his testimony, and never disclosed its value.

ANALYSIS

[12] The Family Law Act requires that the spouse whose NFP is lesser of the two NFPs receive one-half of the difference between them: s. 5(1). The purpose of the equalization provisions is to “recognize that child care, household management and financial provision are the joint responsibilities of the spouses and that inherent in the marital relationship there is equal contributions, whether financial or otherwise…”: s. 5(7).

[13] Section 4(1) defines “net family property” as the value of all the property that the spouse owns on the valuation date, after deducting the spouse’s debts and other liabilities, as well as the value of property already owned on the date of the marriage: s.4(1)(a)(b).

[14] “Excluded property” does not form part of a spouse’s NFP and is defined in s.4(2) as “property, other than a matrimonial home, that was acquired by gift or inheritance from a third person after the date of the marriage.” “Matrimonial home” is defined in s.17(1) of the FLA as “every property in which a person has an interest and that…was at the time of separation ordinarily occupied by the person and his or her spouse as their family residence…” When considering whether a second property should be considered a “matrimonial home” for the purposes of equalization, the essential questions are whether the property is regularly being used by the spouses, and whether it is a “family residence:” Egan v. Burton, 2013 ONSC 3063 at para. 11.

[15] The person claiming the deduction or exclusion has the onus of proving it on a balance of probabilities: s.4(3). In deciding whether it is more likely than not that the claimed deduction or exclusion is genuine, I must scrutinize the evidence as a whole, consider any inherent improbabilities, address any inconsistencies that go to a central issue, and only rely on evidence that is clear, convincing and cogent: F.H. v. McDougall, [2008] 3 SCR 41, 2008 SCC 53, at paras. 40-73. Many of the considerations relevant to the weighing and assessment of witness credibility and reliability were reviewed in at Al-Sajee v Tawfic, 2019 ONSC 3857 at para. 42. In that case, Chappel J. observed that, “…the judge is not required by law to believe or disbelieve a witness’s testimony in its entirety. On the contrary, they may accept none, part or all of a witness’s evidence, and may also attach different weight to different parts of a witness’s evidence”: para. 42.

[16] Here, both parties testified on their own behalf with the assistance of Taiwanese translators. The Wife also relied on the evidence of Kao, who testified remotely from Taiwan with the assistance of a translator. The Wife and Kao had clearly discussed their anticipated trial evidence at length. Their position was generally diametrically opposed to the evidence provided by the Husband. They rarely agreed what happened and why. Moreover, their testimonies revealed gaps, inconsistencies, and improbabilities. Given the passage of time, the Wife admitted that she only a vague recollection of the events at issues. As will be discussed below, aspects of the witnesses’ testimony lacked credibility. Overall, I was very cautious about relying on the uncorroborated testimony of the parties or Kao.

[17] Fortunately, there were 55 exhibits entered at trial, including banking and property records from Canada and Taiwan, corporate documents, and an Agreed Statement of Fact. The business records were by far the most reliable evidence before me, and I placed significant weight on them. While the parties often disputed the context in which a particular record was made, neither party disputed the reliability of the third-party documents created in the regular course of business.

How should the joint bank account be equalized?

[18] The joint bank account should be treated as a joint asset, with each party including half of the value in their NFP. The fact that the Father did not regularly access the account does not change the fact that he knew that funds were being held in a joint bank account for the benefit of the family, and that he had a legal entitlement to access them should he have wished to do so.

Should the value of Gaomei be excluded from the Wife’s NFP?

[19] The Wife provided an appraisal for Gaomei and I accept that was worth $163,818 on the date of separation. However, the Wife says that Gaomei should be excluded from her NFP because it was a gift from her father-in-law. At trial, the Wife recalled that her father-in-law was not well, and that he wanted to distribute his assets to his beneficiaries while he was still alive. She says that he gave her Gaomei as a token of appreciation for her loyalty and devotion as a daughter-in-law. She said that her father-in-law gifted the adjoining property to her sister-in-law (i.e. one of the Husband’s three sisters). In support of her position, the Wife relies on a Taiwanese Building Registration dated March 1, 2004, wherein the “Building Ownership” was updated to name the Wife as the legal owner of the property. Under “Reason for Registration,” it states “gifting.”

[20] The Husband’s his father died on January 31, 2006. The Husband admits that his father wanted to distribute his assets prior to his death and that he began sorting out his affairs in and around 2004. The Husband says that his father gave him Gaomei, and that he decided to register it in the Wife’s name for “tax purposes.” The Husband says that his late father would not have given Gaomei to the Wife because it was his childhood home and adjoined the family business. Even still, I reject the Husband’s claim for a deduction for Gaomei. The Husband offered no documentary evidence to corroborate his version of events. He did not call any family members as witnesses. Moreover, his version of events is not supported by the reliable records before me that show that Gaomei was a “gift” to the Wife.

[21] That all being said, on the evidence as a whole, I am prepared to find that Gaomei was a matrimonial home and is subject to equalization. In the final years of their marriage, through mutual agreement, the parties had settled into the following living arrangements: the Wife and Children stayed at Deer Run in Canada, while the Husband stayed at Gaomei in Taiwan. On the date of separation, the Husband was living in Gaomei with his mother, and that one of his sisters was operating a factory in the adjoining unit. And while the Wife never lived in Gaomei, she visited it regularly, including in 2018 and 2019. In short, in light of their mutual decision to maintain homes in both Canada and Taiwan, I find that the parties treated Gaomei as a family residence. I am prepared to find that both Deer Run and Gaomei were matrimonial homes within the definition of s. 17(1) of the Family Law Act.

Who is entitled to a deduction for the mortgage liability on Zhongxing?

[22] The parties agree that the Zhongxing was worth $250,000 on the valuation date, and that the Wife is entitled to a $4,680 deduction for a deposit that she paid on the property prior to marriage. While the Husband says that he was responsible for paying the mortgage on Zhongxing throughout the marriage, he produced no records showing such payments being made. He has not satisfied me on a balance of probabilities that he is entitled to a deduction for the mortgage on Zhongxing. On the other hand, the Wife has satisfied me that she is entitled to deduct $43,954 for the outstanding mortgage on Zhongxing. The Wife produced real estates and banking records to show that Kao advanced her the funds to discharge the mortgage in May 2022, that the property was sold on June 20, 2022, and that the Wife substantially repaid Kao on July 11, 2022.

Has the Wife proven that she owed debts to Kao?

[23] The Wife says she is entitled to a deduction for $681,013 for loans that she received from Kao during the marriage. She says the financial support that she received from the Husband during the marriage was insufficient to meet the family’s needs and that she turned to Kao for help. To support her position, the Wife relies on various banking documents that show that Kao and another family member, Li Yen Chang, transferred various amounts to her between 2011 and the date of separation. There was one transfer in 2011, three transfers in 2016 prior to the Husband’s return to Taiwan, and regular transfers in 2017, 2018, 2019, and 2020. The Wife says that Kao advanced her the money to help her with the maintenance of Deer Run and other living expenses, and that Kao expected to be repaid if and when Deer Run was sold.

[24] The Husband admits that Kao sent the Wife the funds but disputes the Wife’s characterization of the funds as loans. He says that there was no enforceable loan agreement between the parties. In Chao v. Chao, 2017 ONCA 701 at para. 55, the Court of Appeal held that, when determining whether the amount transferred by a parent to an adult child is a loan, I must focus on the intention of the parent making the advance. The key question is whether the parent intended to retain a hold on the amounts advanced. The Court of Appeal emphasized at para. 56 that, “The legal test is intent at the time of the transfer. Evidence of intention that arises subsequent to a transfer must be relevant to the intention of the transferor at the time of the transfer. The court must assess the reliability of such evidence and determine what weight it should be given, guarding against evidence that is self-serving or tends to reflect a change in intention.”

[25] At paragraph 54, the Court of Appeal identified some of the factors that I must consider to determining whether Kao intended to create a debt obligation when she advanced the funds to the Wife, including:

• whether there [are] any contemporaneous documents evidencing a loan;
• whether the manner for repayment is specified;
• whether there is security held for the loan;
• whether there are advances to one child and not others, or advances of unequal amounts to various children;
• whether there has been any demand for payment before the separation of the parties;
• whether there has been any partial repayment; and
• whether there was any expectation, or likelihood, of repayment.

[26] Based on these factors, the Wife has not established on a balance of probabilities that she owed Kao money on the date of separation. First, there are no contemporaneous loan documents—informal or otherwise. The Wife relies on a document entitled “Loan Agreement” dated March 26, 2020, which states that Deer Run is collateral for the monies loaned, that Kao’s consent is required to sell Deer Run, and that interest will accrue at the bank rate. However, this “Loan Agreement” was not an agreement at all, since it was only signed by the Wife. Moreover, the Wife never registered Kao’s interest in Deer Run on title. The timing is also curious. The Wife signed this document about nine days after Kao’s last transfer of funds and only one month before the parties’ separation. The inescapable conclusion is that the Wife created this “Loan Agreement” after-the-fact, in anticipation of separation, and to support her position in this litigation. I refuse to give it any weight.

[27] Indeed, there was very little evidence before me regarding Kao’s intention when she transferred money to the Wife. At trial, Kao explained that she felt sorry for the Wife because the Husband was not adequately supporting her. Neither Kao nor the Wife could not explain how the terms of the loan were negotiated, how interest was to be calculated, or when and how the debt obligation was to be enforced. The Wife was not even certain about the principle owing. She admitted that she arrived at the amount in her NFP Statement through analysis of historic bank records obtained for the purposes of litigation.

[28] The first time Kao asked the Wife to repay the loans was one month prior to separation, when she demanded that the Husband transfer his interest in Deer Run to the Wife. For her part, the Wife testified that she had no intention of selling Deer Run unless and until Kao demanded the money. And while Kao said that she expected the loan to be repaid because she “needed the money”, she also admitted that she would not force the Wife and the youngest child to leave the matrimonial home. Under cross-examination, Kao also claimed that the loan was meant to be a joint obligation of both the Husband and Wife.

[29] Overall, the Wife has not proven on a balance of probabilities that she owed any debt to Kao on the date of separation. Kao’s payments to Wife were more in the nature of support than a loan or gift. Kao had no genuine expectation of repayment, except perhaps to be cared for in her old age. While the Wife might feel a moral obligation to repay Kao, a moral obligation is not debt for which she can fairly claim a deduction.

Should the value of Gaoshi be excluded from the Husband’s NFP?

[30] Based on real estate appraisal obtained by the Husband, I find that Gaoshi was worth $327,635 on the date of separation. The Husband testified that he received Gaoshi as a gift from his father such that the total value should be deducted from his NFP. In support of his position, the Husband produced a document showing that title was registered to his name on July 11, 2014. The document, however, does not indicate from whom title was transferred or the reason for the transfer. When asked in chief why Gaoshi was only registered in his name eight years after his father’s death, the Husband answered that title could only be registered in his name after the other estate beneficiaries (his sisters) approved the distribution, which did not happen until 2014. However, the Husband did not produce the father’s estate planning documents, nor any documents showing the beneficiary consent. He did not call any of his sisters to corroborate his testimony. Furthermore, in cross-examination, when asked about the same topic, the Husband testified that his father originally intended to gift Gaoshi to the parties’ two sons, but that title was transferred from the two children to his name in 2014 so that he could borrow against the land. In short, on the Husband’s own evidence, Gaoshi was not a gift to him but rather a gift to two of his Children. Overall, the Husband has not established on a balance of probabilities that he received Gaoshi as a gift from his Father. The value of Gaoshi must be equalized.

How should the company be equalized?

[31] The Company manufactures caps and plastics for export. The parties agree that the Company was founded by the Husband’s father, who ran it until he died in 2006. Between 2006 and 2017, one of the Husband’s sisters ran the Company. When the Husband returned to Taiwan in 2017, he and his sister were both involved in the Company. On the date of separation, I find that the Father remained involved in the Company because its income statements list him as the “President” in 2018, 2019, and 2020.

[32] The Husband says that the Wife holds 90% of the shares in the Company and that the book value of the shares should be attributed to each party based on their respective shareholdings, such that she holds $225,415 and he holds $15,929. In support of his position, the Husband relies on a Roster of Shareholders dated May 6, 2019 which sets out their respective shareholdings, and the total registered capital of the Company.

[33] The Wife says that the Company was worth $241,621 on the date of separation, and that the total value should be included in the Husband’s NFP. The Wife testified that despite her shareholdings, she was never involved in any aspect of the Company’s operations or oversight, and never received any dividends or income. Indeed, the Husband admitted that he put the Company shares in the Wife’s name after he was elected as a town mayor in Taiwan because of strict rules prohibiting municipal politicians from holding more than 10% of the shares in any single company.

[34] Based on the evidence as a whole, I find that the Husband and one of his sisters were the de facto joint owners and operators of the Company, and the sole beneficiaries of its income. In this context, the Roster of Shareholders bears very little resemblance to the actual operations of the Company. On the date of separation, I find that the Husband had a one-half interest in the Company, totaling $120,811, which must be included in his NFP.

How should the cheques payable to Li Hung Yang be treated?

[35] The Wife says that the Husband loaned his sister, Li Hung Yang, $187,220 in 2019, and that this should be considered money owed to him and included in his NFP. In support of her position the Wife relies on two cheques made out to Li Hung Yang. The Husband says that he never lent his sister money, and the cheques were provided to her as “collateral” on loans that she had advanced to him. He says the cheques were never cashed and that the amount of $187,220 should be considered a debt owed to his sister and deducted from his NFP.

[36] I am not satisfied on a balance of probabilities that the cheques establish either a debt owing to or owed by the Husband, or a debt. It was entirely unclear whether the cheques were cashed, and neither party called Li Hung Yang as a witness. In short, there was insufficient evidence to make a determination about the significance of the cheques.

Is the Husband entitled to a deduction for a loan secured against his car?

[37] The Husband claims a deduction of $45,811 for a bank loan secured against his 2015 Audi A6 vehicle. He produces documentation to support existence of the loan. However, I agree with the Wife that it would be unfair to permit the Husband to claim a deduction for a loan secured against the car because the Husband did not disclose the existence of the car until trial and has never provided an accurate value for it. In general, one would imagine that the car is worth more than the loan secured against it. In any event, as a matter of fairness, the Husband shall not claim a deduction for the loan secured against the car.

FINAL ORDER AND COSTS

[38] Based on my findings of fact herein, the parties shall endeavour to come to an agreement on the terms of a final order, as well as on the matter of costs. If they are able to do so, they shall email to my assistant, Corry Allard (corry.allard@ontario.ca), a draft final order on consent for my consideration on or before January 20, 2022.

[39] If the parties are unable to come to an agreement on the terms of the final order, on or before January 20, 2022, based on my findings herein, both parties shall email to my assistant, Corry Allard (corry.allard@ontario.ca):

• A draft final order;
• Their supporting NFP statement; and
• Their Bill of Costs, relevant offers to settle, and costs submissions (max 5 pages, double-spaced, 12-point font, 1.5” margins).

[40] I remain seized of this matter pending issuance of my final order.

Mandhane J. Released: January 9, 2023