COURT FILE NO.: FS-19-13520

DATE: 20241115

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Barbara Lang-Newlands

Applicant

– and –

Ian Newlands

Respondent

– and –

Stuart Lang

Added Respondent

Martha McCarthy, Brigitte Barsalou, Ian Hull, and Doreen Lok Yin So, for the Applicant

Harold Niman, Daryl Gelgoot, Jen-Yii Liew, Timothy Youdan, and Andrew Carlson, for the Respondent

Christopher Caruana, for the Added Respondent

HEARD: November 27 to December 1, 2023, December 4 - 8, 2023, December 20 – 22, 2023, January 10 -12, 2024, January 15 - 19, 2024, January 29 - 31, 2024, February 2, 5, 9, and 22, 2024, May 14 and 17, 2024, September 27, 2024 and October 16, 2024

REASONS FOR JUDGMENT

Justice M. Sharma

Table of Contents

A. INTRODUCTION.. 3

B. ESTATE FREEZES GENERALLY.. 5

C. OVERVIEW OF FACTS. 6

D. ISSUES TO BE DECIDED.. 19

E. CREDIBILITY OF WITNESSES. 20

F. ANALYSIS OF ISSUES. 29

Issue 1: What is the value of Barb’s interest in the BJL Trust, as at the date of marriage?. 29

a. What Capital Gains Inclusion Rate should apply?. 30

b. Should a Minority / Illiquidity discount apply, and if so, at what rate?. 31

c. Should a Mortality Risk discount be applied?. 32

Issue 2: What is the value of Barb’s interest in the GSL Trust, as at the date of marriage?. 33

Issue 3: Is Barb’s interest as a beneficiary in the NFT on the date of separation “property” under s. 4 of the Family Law Act? 33

Issue 4: Is Barb’s interest in the NFT excluded from her NFP pursuant to s. 4(2)1 of the FLA because it represents a gift acquired during the marriage?. 42

a. Is Shinder v. Shinder binding?. 42

b. If Shinder is not binding, is Barb’s interest in the NFT a gift acquired from her father during the marriage and therefore excluded from her NFP?. 46

Issue 5: Is a note receivable of $8,744,662 payable to Barb from 4MK as at the date of separation excluded because it is traceable to distributions from the NFT?. 60

Issue 6: If Barb’s interest in the NFT is “property” and not excluded under s. 4(2) of the FLA, what is the value of Barb’s interest in the NFT on the date of separation?. 60

a. Should the value of the NFT ascribed to Barb be discounted because she is one of five discretionary beneficiaries?. 63

b. Should a minority / illiquidity discount be applied?. 75

c. If a minority/illiquidity discount applies, at what rate?. 90

Issue 7: What is the value of Barb’s remaining 205 preferred shares in 4MK as at the date of separation, and more specifically, what are the costs of disposition, if any?. 99

Issue 8: What is the value of Barb’s 33,333 fifth preferred shares in SHL, and specifically, what are the costs of disposition, if any?. 100

Issue 9: What is the value of Barb’s interest in the Lang New Trust and Domsam Holdings Ltd.?. 101

Issue 10: Determination of valuation issues regarding the Main Cottage and Lower Cottage. 101

a. What was the value of the Main Cottage on the date of separation?. 102

b. Does Ian have a successful unjust enrichment / constructive trust claim to the Main Cottage?. 105

c. May Barb deduct contingent disposition costs for the Main Cottage?. 106

d. May Barb deduct contingent disposition costs for the Lower Cottage?. 107

Issue 11: How to deal with the Florida condo in the parties’ NFP statements?. 107

Issue 12: Who owns what and what is the value of various disputed items in the parties’ NFP statements?. 108

Issue 13: Should an Order be granted allowing Ian to return to the Main Cottage to collect items he submits belong to him? 114

Issue 14: What is the amount of equalization payable and by whom?. 114

Issue 15: What post-separation adjustments should be credited to Barb to Ian?. 114

Issue 16: Should the Court make an order for unequal division under s. 5(6) of the FLA?. 120

Issue 17: Should the Court order that the equalization payment be made over a period of time, and if so, what period? 133

Issue 18: What is Barb’s income for support purposes?. 134

Issue 19: Is Ian entitled to spousal support?. 139

Issue 20: Pre- and Post-Judgment Interest 151

Issue 21: Divorce. 151

Issue 22: Costs …... 151

G. CONCLUSION.. 151

[1] This trial deals with three principal issues: (1) equalization of net family property; (2) the Respondent’s unjust enrichment claim to a property owned by the Applicant; and (3) the Respondent’s claim for spousal support. Mid-trial, the Respondent withdrew his position on date of separation, and he settled the claims he had in relation to the Added Respondent (except costs).

[2] While there are only three principal issues, the sub-issues are numerous and complex. To put this case in context, I begin with a high-level overview, followed by a more specific factual summary. I then turn to the issues and analysis.

A. INTRODUCTION

[3] This family enjoyed significant inter-generational wealth. It was a product of the Applicant’s father’s successful business. Neither party worked in this business nor contributed towards its significant value.

[4] Before the parties’ marriage, the Applicant’s father settled a trust as part of his estate planning. It held shares in his business. The Applicant was the sole beneficiary and would acquire its assets at the age of 39. The shares were worth approximately $16M[^1] at the date of marriage.

[5] The parties married without a marriage contract. During the marriage, and before turning 39, the Applicant received the shares from the trust. She owned them outright.

[6] Eight years after she received them, the shares were the subject of an estate freeze. There is a dispute as to whether this estate freeze was directed by the Applicant’s father, or the Applicant initiated the estate freeze herself for her own benefit.

[7] The estate freeze involved the following transactions. The Applicant’s father settled a new trust for $100. A new holding company was created. The Applicant sold her shares to this new holding company, and in exchange, she received $24.5M in preferred shares. The new trust purchased common shares in the holding company for $100. As such, the new trust was entitled to the future growth in value of the shares held by the holding company. The beneficiaries under the new trust were the Applicant and the parties’ four children. At the time the parties separated, the new trust was valued at roughly $670M.

[8] During the marriage and following the estate freeze, the Applicant received income from various sources. Principally, it came from dividends and redemption of her preferred shares in the holding company, and dividends and lump sum distributions from the new trust. Funds from the new trust were the most significant source of family income.

[9] The Respondent submits that the entire value of the shares held by the new trust on the date of separation is subject to equalization.

[10] The Applicant disagrees. She argued:

a. the Applicant’s beneficial interest in the new trust is not “property” under s. 4(1) of the Family Law Act, R.S.O. 1990, c. F.3 (“FLA”);

b. if it is property, it is excluded under s. 4(2) of the FLA because it was a gift from the Applicant’s father;

c. if it is property and is not excluded, the Court should (i) only assign 20% of its value to the Applicant because she was one of five beneficiaries, and (ii) a 50% minority/ illiquidity discount ought to be applied; and

d. if it is property, then under s. 5(6) of the FLA, it would be unconscionable to equalize the Applicant’s interest in the trust.

[11] There are many other disputed items in the parties’ respective net family property (“NFP”) statements. The Applicant also seeks a credit for post-separation adjustments.

[12] The Respondent also makes an unjust enrichment claim to a cottage property and a condo in Florida.

[13] The Respondent claims spousal support. However, if he is awarded an equalization payment of $50M or more, he does not seek spousal support. The Applicant disputes the Respondent’s entitlement. If he is entitled, the parties disagree on the Applicant’s income for support purposes.

B. ESTATE FREEZES GENERALLY

[14] The most significant issue is the treatment of the Applicant’s interest in property arising from the estate freeze. Several Ontario cases have dealt with this issue. I provide a general description of estate freezes to provide context around the particular estate freeze in this case.

[15] Owners of a family business often establish an estate freeze. An estate freeze permits an owner to defer the tax payable on the deemed disposition that arises upon the owner’s death, and to pass wealth on to subsequent generations in a tax efficient manner.

[16] Generally, an estate freeze involves three transactions. First, a trust is settled.

[17] Next, an owner of shares (the “Freezor”) will transfer the future growth in value of the shares (“Former Shares”) to a new holding company. In exchange, the Freezor receives fixed value preferred shares. The fair market value of the Former Shares at the time of the transaction determines the fixed value of the preferred shares. The holding company thus holds the future growth in the Former Shares.

[18] Then, the holding company will issue common shares. They are acquired by the trust for a nominal amount. The trust thereby acquires the future growth in the Former Shares by virtue of its ownership of the common shares in the holding company. The distribution of that future growth will depend on the terms of the trust.

[19] The Freezor, by virtue of their ownership of preferred shares in the holding company, is entitled to dividends and may also redeem their fixed value preferred shares in the holding company. The Freezor may or may not be (a) the settlor of the trust; (b) a trustee of the trust; and (c) a beneficiary of the trust.

[20] In this case, the Applicant did not settle the trust, but she was one of the trustees of the trust, and she was one of five discretionary beneficiaries.

[21] The Canada Revenue Agency’s (“CRA”) longstanding position on estate freezes is that they achieve the government’s objective of encouraging tax efficient succession of family businesses. If the estate freeze transaction satisfies all of the CRA’s administrative requirements, the CRA will accept that the fair market value of the preferred shares is equal to their redemption and retraction amount. Consequently, the growth shares will have a nominal fair market value at the time of their issuance and can be acquired by the trust for a nominal amount.

[22] For Canadian income tax purposes, a trust will be deemed to have disposed of its capital property on the 21^st anniversary of the date of its creation (the “21-year rule”). The proceeds of the trust deemed to have been received on this disposition, would be equal to the fair market value of the capital property on the 21^st anniversary. To avoid this deemed disposition and the associated tax consequences, most trustees will distribute the trust’s capital property to the trust’s beneficiaries before the trust’s 21^st anniversary. In most cases, such a distribution can be made on a tax-deferred basis and the beneficiaries will thereby not pay tax on any accrued gains on capital property until they dispose of it (including a deemed disposition on a beneficiary’s death).

C. OVERVIEW OF FACTS

[23] Regrettably, the parties were unable to agree on an Agreed Statement of Facts. As a result, there was significant evidence on events, valuations, and the structure of transactions. Some of the parties’ positions changed during trial.

[24] With no disrespect to the parties or their family members, I refer to these individuals by their first name. This is how they were often referred to at trial. This will assist the reader in distinguishing among individuals who share the same surname.

[25] The Applicant, Barbara Lang-Newlands (“Barb”) is the daughter of Gordon S. Lang (“Gordon”). Barb has three siblings, Don Lang, Stuart Lang, and Sherry Lang. Collectively, I refer to them as Gordon’s children.

[26] On August 21, 1987, the Respondent, Ian Newlands (“Ian”), married Barb. They separated on July 31, 2019. The parties did not enter into a domestic contract before separation.

[27] The parties have four children: Wesley, Spencer, Harrison, and Jordan. At the date of separation, they were all adults.

Gordon’s business

[28] Don Lang was a witness at trial. He was very involved in Gordon’s business and gave significant evidence about its history. Gordon passed away in December 2001.

[29] Some of Don’s recounting of Gordon’s business and its history was hearsay and is not relevant to the factual and legal determinations I must make. I recount some of it nonetheless because it provides a contextual narrative into the origins of this family’s wealth. Other parts of Don’s hearsay evidence are relevant to issues I must decide. I later assess whether it meets the principled exception to the hearsay rule of necessity and reliability.

CCL Industries

[30] Gordon was an electrical engineer. He worked with his father, Stuart Lang (Senior), in an electrical business, named Samson Dominion, that manufactured toasters, kettles, and similar items.

[31] In 1951, Gordon and his father started a new aerosol business with a company in Connecticut called Connecticut Chemicals Limited, or CCL.

[32] Gordon led this business, CCL Industries (“CCL”)[^2], with great success. CCL was a publicly traded company. By the 1970s, CCL had multiple manufacturing plants. CCL acquired its largest competitors in Canada, and ultimately became the largest aerosol manufacturer in southern Ontario. The customers that CCL manufactured products for included Proctor & Gamble, Unilever, and Colgate Palmolive, who in turn sold those products to retailers.

[33] CCL underwent significant changes in the 1970s as awareness grew about the detrimental effect that chlorofluorocarbons (“CFCs”) in aerosol cans had on the ozone layer. CFCs were later prohibited in Canada.

[34] This led to significant changes in CCL’s manufacturing and safety protocols in the 1970s. During this time, Gordon sought legal advice on the structure of CCL from Bud Estey (as he then was), Albert Gnat, and Arnold Englander. On their advice, Gordon bought back all of the shares in CCL to make it a private company. This resulted in significant business debt and the value of the CCL shares was low.

[35] Gordon initiated the first estate freeze involving CCL shares in 1977 and it involved the following:

a. The creation of a trust for each of Gordon’s four children, including Barb’s trust – the Barb Joan Lang Trust (“BJL Trust”).

b. The creation of a control corporation that exercised voting control over CCL. From 1977 (or by June 25, 1986, onwards), a control corporation owned by Gordon exercised voting control over CCL or its parent holding company.[^3]

BJL Trust

[36] Before marriage, Gordon settled the BJL Trust for $100. Barb was the sole irrevocable beneficiary. The Trustees were Gordon, Arnold Englander, and Albert Gnat. The Trustees were to be possessed of the capital and income of the trust fund and were bound to pay and transfer it to Barb at age 39 “for her own use absolutely.”

[37] At some point before June 25, 1986, 361588 Ontario Ltd. (“361”) was created. 361 owned directly or indirectly shares in CCL worth about $100M. Gordon was the sole owner of 361.

[38] Prior to June 25, 1986, the Trustees of the BJL Trust purchased 90 of the 450 issued and outstanding common shares of 361 (i.e., 20% of the common shares). At the time, CCL was a private corporation.

[39] Gordon settled a trust for each of his other three children. Similarly, those trusts each acquired 90 common shares (or 20%) of 361. The remaining 90 common shares of 361 (or 20%) were held by 532712 Ontario Ltd. (“532”). Gordon owned 532 and it held 991 voting special shares of 361. Consistent with Don’s evidence, 532 was the control corporation that exercised voting control over Gordon’s business. It was in place by at least June 25, 1986.

[40] Between June 1986 and February 1987, a series of corporate amalgamations and transactions occurred. The net result is that a new numbered company, 702303 Ontario Inc. (“702”) acquired all 450 of the common shares once issued by 361 or its successors.

[41] As a result, by February 1987, prior to the parties’ marriage, the BJL Trust held 90 common shares of 702, which in turn held shares in CCL. Gordon retained voting control of 702 through his 991 voting special shares.

GSL Trust

[42] In addition to the BJL Trust, on the parties’ date of marriage, Barb was one of four discretionary beneficiaries of the Gordon S. Lang Family Trust (“GSL Trust”). The other beneficiaries were Gordon’s three other children. The GSL Trust’s asset on the date of marriage was a promissory note for $18,051,911.

1993 – Gordon’s Health Scare and Asset Distribution

[43] Don testified that in 1993, Gordon had a health issue that he thought was cancer. He stated that this exacerbated Gordon’s concerns about his estate planning and prompted him to distribute the assets held in each child’s trust, before the usual 21 years for an estate freeze.

[44] On October 28, 1993, the BJL Trust distributed its 90 common shares of 702 to Barb. This occurred during the marriage and before Barb turned 39 (Barb was 36 years old at the time of distribution).

1993 Transfer of Share Ownership Agreement (“1993 Agreement”)

[45] On October 29, 1993, the day after the distribution of the BJL Trust, Gordon, his four children, 702, and another related company, 723960 Ontario Ltd. (“723”), entered into a Transfer of Share Ownership Agreement (“1993 Agreement”). In the preamble, it notes that each of Gordon’s four children were the principal beneficiaries of four separate trusts, that each trust held capital of 90 common shares in 702, and that those shares have now been distributed to each of the four siblings.

[46] The 1993 Agreement can fairly be summarized as achieving the following:

a. Don, Barb, and Sherry[^4] agreed to execute a Will containing a provision for the establishment of a trust (“Will Trust”) for the exclusive benefit of their respective children, grandchildren, or other issue in the event of their death. Under the Will Trust, the issue of each of Don, Barb, and Sherry shall receive all of their respective shares in 702, and the spouses of Don, Barb, and Sherry shall be excluded from any interest in the Will Trust.

b. Don, Barb, and Sherry agreed that their respective 90 common shares of 702 would be reclassified into separate classes of 90 shares.

c. Provisions were made for Don, Barb, and Sherry to buy out Stuart’s shares, except if he has children.

d. 702 and 723 would hold life insurance policies for Gordon’s children. Upon the death of any of Gordon’s children, life insurance proceeds would be entered into corporate capital dividend accounts of 702 and 723. 702 and 723 would pay capital dividends to the estate of that child. The estate would use the funds to pay the capital gains tax arising from the deemed disposition of the child’s shares in 702.

e. The parties agreed that they would not sell, transfer, exchange, gift, or otherwise encumber their shares of 702 without the consent of the other parties. Furthermore, the parties agreed that if any of Gordon’s children sought to effect an “estate freeze” in favour of his or her respective issue, the parties were to cooperate to amend the Agreement accordingly. Notably,

Any such amendment of this Agreement consented to by all of the parties hereto, shall preserve the basic principle that the shares of [702] or the shares of any such holding corporation shall always be held by the issue of Gordon S. Lang or a trust for the sole benefit of such issue.

[47] According to Don, the 1993 Agreement was the “cornerstone of all the planning going forward in this generation and [subsequent generations].” Don testified that since Gordon distributed the assets held by the trusts, he wanted to make sure they were protected so that “these shares can only be owned by his issue or his children’s issue, basically the blood line. It can’t be owned by the spouse of anybody else, it’s his issue.” Don explained that the underlying concept of the 1993 Agreement was control, consistent with the structure of CCL that Gordon adopted in 1977 on the advice of his advisors.

[48] On May 4, 1994, Barb’s 90 common shares of 702 were reclassified as 90 Class B common shares. Don’s and Sherry’s shares were similarly reclassified to distinguish them amongst the siblings.

Samson Holdings Ltd. (“SHL”) and Samson Investments Ltd. (“SIL”)

[49] On January 20, 2000, 702 was amalgamated with another company and became Samson Holdings Ltd. (“SHL”). SHL is now the holding company that holds shares in CCL, either directly or indirectly through ten sub-corporations. The value of SHL shares is directly related to the value of CCL shares. In my reasons, unless otherwise indicated, I refer to 702 shares as SHL shares.

[50] The Directors of SHL are Stuart, Barb, Don, and Arnold Englander.

[51] Samson Investments Ltd. (“SIL”) is a related subsidiary corporation of SHL that also holds CCL shares. Don and Stuart are the sole directors of SIL. A control corporation holds 800 special voting control shares of SIL, which is wholly owned by Don and Stuart.

[52] At various junctures, when Barb or Stuart (or through their holding companies) redeemed some of their SHL shares, they were purchased by SIL.

Control Corp.

[53] According to Don’s evidence, Gordon created a new corporation in 1998: 1281228 Ontario Inc., (the “Control Corp.”) which exercised voting control of 702 (and later SHL and SIL) and CCL.

[54] The Control Corp. was wholly owned by Gordon, Stuart, and Don. Don explained that its purpose was to have voting control over 702, and later SHL and SIL. While there was a gap in the documentary evidence regarding how 1281228 Ontario Inc. took over control from 532 (which was owned solely by Gordon), the fact that the new Control Corp. was created or that it exercised voting control of SHL was not disputed.

[55] When Gordon died in 2001, Don and Stuart each became 50% owners of the Control Corp. and had voting control over SHL and SIL.

Buy out of Sherry’s 90 common shares

[56] In 1999, Sherry’s 90 common shares were bought out for $23.5M, for which funds were paid to her over several years.

[57] Don’s evidence was that Sherry felt that she was wealthy and wanted more cash through dividend payments. Don testified that the company was younger and there were not big dividends at that time. He also testified that Sherry’s involvement in the family business and as a director of SHL had become disruptive. For this reason, he said he would have paid a premium to remove her.

[58] Don suggested to Sherry that she sell her shares. Don testified that after obtaining a valuation of shares, the parties settled on the purchase price, and an agreement was reached whereby SHL bought back her shares and they were cancelled. The buyout was financed internally without the sale of CCL shares.

Growth of CCL

[59] The Lang Family’s business grew significantly in value. To appreciate the value of the SHL shares at the date of separation, I provide a summary of CCL’s significant growth as explained by Don.

[60] In 1982, after graduating from business school, Don joined Gordon’s business. He started at entry level positions within CCL and became Vice-President of Operations when he was in his mid-30s. He assumed responsibility for all of CCL’s aerosol plants in North America and later CCL’s contract manufacturing worldwide.

[61] In 2000, Don became the Chief Operating Officer of CCL. He testified that CCL underwent significant changes and massive growth. Today, CCL’s major business is manufacturing labels. This includes clothing labels, adhesive and plastic product labels seen on common grocery store or pharmacy products, and labels used in car manufacturing and other technology parts (i.e., iPhones). Don’s evidence was that CCL is the second largest manufacturer of clothing labels worldwide.

[62] CCL also prints money, literally. As part of its security business, CCL incorporates anti-counterfeiting measures into its plastic resin production of currency for 35 countries, including Canada, Australia, and the U.K.

[63] CCL has 200 factories globally, operates in 45 countries, and has 23,000 employees.

[64] CCL eventually became publicly traded. In August 2001, its share price was $2.44. By July 31, 2019, on the date of separation, its share price was $66.00. At the time of trial, CCL was valued at more than $2.2 billion.

The Estate Freeze and The Newlands Family Trust

[65] Between 1993 and 2000, after his initial health scare, Gordon underwent treatments for various forms of cancer. In 2001, Gordon’s cancer came back. According to Don and Barb’s testimony, Gordon was the instigator of all of the estate planning, including Don’s estate freeze of his 90 Class A common shares of SHL in December 2000, and Barb’s estate freeze of her 90 Class B common shares about nine months later in August and September of 2001.

[66] Ian raised a hearsay objection in response to Don and Barb’s evidence about their communications with Gordon regarding Barb’s 2001 estate freeze. For reasons given below, I accept Don and Barb’s evidence of Gordon’s intention with respect to Barb’s estate freeze under the principled exception to the rule against hearsay.

[67] Barb’s estate freeze was completed through the following transactions:

a. On August 22, 2001, Gordon settled the Newlands Family Trust (the “NFT”) for $100. The Trustees of the NFT were Don, Stuart and Barb. The beneficiaries were Barb and her four children. The Trustees were granted “uncontrolled discretion” to pay income and distribute capital from the NFT fund as they determined appropriate to the beneficiaries and charities chosen by the Trustees. However, no distributions of income or capital were to be made to minor beneficiaries. Every decision had to be made by the majority of Trustees.

b. On August 27, 2001, a holding corporation was created, known as WSHJ Holdings Ltd. This holding company was named after the parties’ four children – Wesley, Spencer, Harrison, and Jordan. It was later renamed 4MYKIDZ Inc. (“4MK”). For consistency, I refer to it only as 4MK.

c. Initially and briefly, Arnold Englander and Barb were the directors of 4MK, but on September 24, 2001, Mr. Englander resigned. Barb was the sole director.

d. On August 27, 2001, 4MK resolved that 100 common shares would be issued to the NFT in return for $100.

e. On September 24, 2001, the NFT subscribed for 100 common shares of 4MK for $100.

f. On September 24, 2001, 4MK passed a share purchase resolution, purchasing Barb’s 90 Class B common shares of SHL, and in exchange, issued Barb 900 special (or preferred) shares of capital in 4MK. The resolution states that the fair market value of the 90 SHL shares is not less than $24,480,000 (or $272,000 per share), and that the value of the 900 special shares issued to Barb was $24,480,000.

[68] The image below, presented at trial through one of Barb’s witnesses, provides a timeline of key events described above.

[69] As a result of the estate freeze of Barb’s 90 shares in SHL, the following may be said:

a. Barb owned 900 preferred shares of 4MK worth $24.48M, and this value was fixed.

b. 4MK owned 90 Class B common shares of SHL. 4MK was entitled to the future growth in value of SHL shares.

c. Unless dividends were paid on Barb’s preferred shares,[^5] all the future growth of 4MK would benefit the NFT because the NFT held 100 common shares of 4MK.

d. Barb was the sole director of 4MK. As sole director of 4MK, Barb could control whether dividends and cashflow received were paid through 4MK to the NFT.

e. Barb’s ability to sell 4MK’s 90 Class B common shares in SHL was subject to the Control Corp.’s approval.

f. The NFT owned 100 common shares of 4MK, which, in turn, owns the 90 Class B common shares of SHL.

g. For the NFT to acquire dividends or cash from its sole source of capital (i.e., from the sale of SHL shares), 4MK would need to approve such a distribution.

h. Barb was one of five discretionary beneficiaries of the NFT.

i. The trustees of the NFT were Don, Stuart and Barb.

[70] On the date of separation, Control Corp. owned 1,982 special shares of SHL with voting control. Since Don and Stuart had voting control of SHL through the Control Corp., any sale of SHL shares required their approval. Similarly, Don and Stuart controlled whether dividends from SHL are paid to 4MK (and other shareholders), and the amount of dividends.

[71] The parties’ experts agree that although 4MK held approximately one-third of the common shares of SHL, 4MK (with Barb as its sole director) held less than 4% of the voting shares of SHL.

[72] The diagram below was presented at trial by Barb’s valuation expert, Ms. White, and provides a visual description of the ownership of the NFT and various corporate entities as at the date of separation.

The Parties’ Married Life

[73] Shortly after marriage on August 21, 1987, Barb and Ian began having children. Their four children were born between 1988 and 1992. At the time of the estate freeze in 2001, the children were between 9 and 13 years old. On the date of separation, they were between 27 and 31.

[74] Barb worked as a teacher from 1981 to 1988. She did not return to work. Her evidence was that during the marriage, she was primarily involved in managing the children and it was Ian’s responsibility to manage the parties’ finances and their properties.

[75] Barb’s work-related roles was limited to attending SHL Board meetings. She testified that she would often discuss issues with Ian after those meetings. The evidence was clear that Barb had a very limited understanding of financial and business issues. Professional advisors retained by the Lang family, including Mr. Howard Lerner and later, Mr. Andrew Butler, were involved in explaining issues to Barb and Ian.

[76] Ian worked from 1986 until September 2012 in real estate or property management. He had various roles, working primarily for Wittington Investments Ltd, and other companies owned or associated with the Weston family. He worked part-time after 2012 for a few years. He stopped working in 2017. Ian has held a real estate licence and testified that he continues to hold one, but he is not active in the real estate market and is not currently working. He does not hold a university degree.

[77] In 2010, Ian incorporated Castle Harbour Limited (“Castle Harbour”). He testified that Castle Harbour was set up as a shell corporation to use for his own projects that he wanted to pursue, but none of them had got off the ground.

[78] The evidence discloses that the family lived well. The children attended private schools and they were supported by a full-time nanny. They had a home in Toronto on Valleyanna Drive (“Valleyanna”) that they purchased and renovated in or around 2008, and which sold in 2022 for $8.8M. They had other properties in Florida, Muskoka, and Ellicottville. Significant funds were spent on horses and their maintenance for Wesley, who is an equestrian.

[79] There was some dispute as to the extent to which Ian was involved in the lives of the children. However, Barb acknowledged that Ian played a role in caring for the children when he was not working and when they were young, that he had a good relationship with them at least until they were teenagers, and that Ian cared for the three other children when Barb was away with Wesley at horse shows in Florida. Ian was also a board member of The Country Day School where three of the parties’ children attended. There was evidence of the family vacationing at their cottage and annual vacations to Cabos San Lucas.

[80] During the marriage, Ian was diagnosed with several serious health conditions, including Lupus, Factor V Leiden (a blood clotting disorder), and Polymyalgia rheumatica, which causes arthritic symptoms. Ian also suffered from alcoholism during the marriage. In 2018, he was admitted to an alcohol rehabilitation program.

[81] At trial, Ian testified that he suffered from further conditions, including a hernia in his chest over his heart that impacts his breathing. There were periods when the trial was adjourned because of Ian’s physical health.

Date of Separation – July 31, 2019

[82] At the start of trial, the date of separation was disputed. Ian took the position it was August 27, 2018, and not July 31, 2019. There was much evidence on this issue. The evidence related to a fight the parties had on August 27, 2018, Ian’s alcoholism, his admission to rehab in October 2018, his mental health, and the related impacts on Barb and the children. On January 26, 2024, well into Ian’s presentation of his side of the case, he withdrew his position on the date of separation.

[83] The parties no longer dispute the date of separation. I find that the parties separated on July 31, 2019.

Family Income During the Marriage

[84] In terms of the parties’ finances, Barb acknowledged that Ian’s income was used to support the family and to pay household bills. Barb also received dividends on her shares which supported the family.

[85] When Ian stopped working full-time in 2012, Barb gave evidence that Ian drew on investments he had with Nesbitt Burns and she began to share some of her dividends with Ian to cover expenses in 2017.

[86] Barb received income from various sources between 2001 and the date of separation. From 2001 to 2012, her annual income ranged from $150,000 to $650,000, except in 2008 and 2009. In those years, Barb redeemed some of her preferred shares in 4MK and her income increased significantly (an additional $5M and $3M, respectively). From 2013 to 2019, her annual income was higher, significantly so in some years.

[87] Barb’s income came from four sources:

a. A dividend distribution from the NFT.

b. A capital distribution from the NFT.

c. Dividends from her 900 preferred shares of 4MK.

d. Redemption of some of her 900 special shares of 4MK (695 of the preferred shares were redeemed, resulting in her holding 205 special shares in 4MK on the date of separation).

SIL Redeems 12 of 90 SHL Shares from 4MK

[88] During the marriage, with the approval of Don and Stuart, 12 SHL shares held by 4MK were bought back by SIL on the following dates:

Date

Number of SHL Class B Common Shares Redeemed

Value

May 29, 2008

3

$3,150,000

September 2, 2008

5

$5,250,000

January 23, 2009

1

$1,050,000

November 26, 2013

3

$5,619,000

4MK Assets on Date of Separation

[89] 4MK’s most significant asset was its ownership of the 90 Class B common shares of SHL. Because 12 had already been redeemed, 4MK held 78 Class B Common shares on the date of separation.

[90] In addition, on the date of separation, 4MK held limited cash and various investments. These were investments Barb acquired during the marriage from distributions she received from the NFT. In 2018, she transferred these investments to 4MK, and in exchange, she received a note receivable valued at $8.7M on separation.

Barb’s Trust Assets on Date of Separation

[91] On July 31, 2019, Barb’s trust assets consisted of the following:

a. One of five discretionary beneficiaries of the NFT. Its main asset was 100% of the common shares of 4MK, which held 78 Class B common shares of SHL (or 30.95% of all common shares).

b. One of four non-discretionary beneficiaries of the Lang New Trust (“LNT”), which held all of the common shares of 384060 Ontario Ltd. Gordon settled the LNT during the Newlands’ marriage for the benefit of his four children in equal shares. The LNT made various distributions to the beneficiaries during the marriage. Its value on the date of separation is disputed. In any event, its value was modest (approx. $82,000), of which only 25% is attributable to Barb, and there is no dispute this asset was a gift during the marriage from Gordon. It is therefore excluded property under s. 4(2)1 of the FLA.

c. One of five discretionary beneficiaries of the Newlands Property Trust (“NPT”). The NPT was settled by Ian on June 6, 2012. Its assets were a home in Florida that the parties used as a matrimonial home, and a condo in Florida.

2022 Re-Organization

[92] The NFT was re-organized in 2022 after this litigation started. The 2022 re-organization saw the bulk of the NFT’s assets being distributed among Barb and the parties’ four children and a new trust was created (“2022 Trust”). A greater distribution was made to each of the children as compared to Barb.

[93] While there is no dispute that there would have been significant tax implications due to the 21-year rule if the NFT’s assets were not distributed, Ian submits that the distribution and the greater share given to the children was informed by this litigation. The re-organization is described later in my Reasons.

Partial Settlement of Property Issues and the Florida Condo

[94] On March 29, 2022, O’Brien J. signed an Order (“O’Brien Order”) reflecting a consent settlement of certain property issues. Referred to as a “property swap” at trial, the O’Brien Order achieved the following:

a. Barb paid Ian $680,762 (CDN) for half of a Florida home held by the NPT, less Barb’s half equity interest in a chalet in Ellicottville, New York. As a result, Barb transferred the title of the Ellicottville property to Ian, Ian assumed the mortgage on that property, and Ian’s claims to the Florida home were dismissed.

b. Barb paid Ian $4.5M for his one-half interest in a cottage that they had jointly owned (the “Lower Cottage”). Upon payment, Ian transferred title to Barb. With these funds, Ian was to retire a joint BMO line of credit secured against the Lower Cottage.

Ian retired the joint BMO line of credit because shortly after the separation, he withdrew $1.5M, which was his sole debt.

[95] The Florida condo was not resolved in the “property swap.” This condo was sold in October 2019 for $295,000 USD (or $380,500 CDN converted at 1.29%). Ian takes the position that the proceeds of sale to this condo should be included in Barb’s NFP and equalized.

Justice Black’s Order

[96] On October 19, 2023, Black J. heard a motion brought by the parties’ children to be added as parties. This was approximately six weeks before the commencement of trial. Black J. dismissed the motion.

[97] Later in my Reasons, I reference this decision and a ruling I made dismissing Barb’s motion, brought at the start of trial, to bifurcate this trial.

D. ISSUES TO BE DECIDED

[98] The issues and sub-issues to be decided are several. They are:

1. What is the value of Barb’s interest in the BJL Trust, as at the date of marriage? In valuing this asset,

a. What capital gains inclusion rate should apply?

b. Should a minority / illiquidity discount apply, and if so, at what rate?

c. Should a mortality risk discount be applied?

2. What is the value of Barb’s interest in the GSL Trust, as at the date of marriage?

3. Is Barb’s interest in the NFT on the date of separation “property” under s. 4 of the FLA?

4. Is Barb’s interest in the NFT excluded pursuant to s. 4(2)1 of the FLA because it represents a gift acquired from a third person during the marriage?

a. Is Shinder v. Shinder binding as to whether Barb’s interest is a gift?

b. If Shinder is not binding, is Barb’s interest a “gift” acquired from a third person during the marriage. This turns on:

i. Barb’s Property That was a Gift

ii. Gordon’s Intentions to Make a Gift

iii. Was Gordon the Donor of the Gift

5. Is a note receivable of $8,744,662 payable to Barb from 4MK as at the date of separation excluded because it is traceable to distributions from the NFT?

6. If Barb’s interest in the NFT is “property” and is not excluded under s. 4(2) of the FLA, what is the value of Barb’s interest in the NFT on the date of separation? In particular,

a. Should the value ascribed to her be discounted because she is one of five discretionary beneficiaries to the NFT?

b. Should a minority / illiquidity discount be applied?

c. If a minority / illiquidity discount is applied, at what rate?

7. What is the value of Barb’s remaining 205 special shares in 4MK as at the date of separation, and more specifically, what are the costs of disposition, if any?

8. What is the value of Barb’s 33,333 fifth preferred shares in SHL, and specifically, what are the costs of disposition, if any?

9. What is the value of Barb’s interest in the Lang New Trust and Domsam Holdings Ltd.?

10. Determination of issues regarding the Main Cottage and the Lower Cottage:

a. What was the value of the Main Cottage on the date of separation?

b. Does Ian have a successful unjust enrichment / constructive trust claim to the Main Cottage?

c. May Barb deduct contingent disposition costs for the Main Cottage?

d. May Barb deduct contingent disposition costs for the Lower Cottage?

11. How to deal with the Florida condo in the parties’ NFP statements?

12. Who owns what and what is the value of various items in the parties’ NFP statements?

13. Should an Order be granted allowing Ian to return to the Main Cottage to collect items he submits belong to him?

14. What is the amount of equalization payable and by whom?

15. What post-separation adjustments should be credited or deducted from any equalization payment payable by Barb to Ian?

16. Should the Court make an order for unequal division under s. 5(6) of the FLA?

17. Should the Court order that the equalization payment be made over a period of time, and if so, what period?

18. What is Barb’s income for support purposes?

19. Is Ian entitled to spousal support, and if so at what quantum?

20. Pre- and Post-Judgment Interest

21. Divorce

22. Costs

E. CREDIBILITY OF WITNESSES

[99] The credibility and reliability of witness testimony is relevant to several issues. Barb and Don’s credibility is relevant to this Court’s characterization of whether Barb’s interest in the NFT was a gift. Ian and Barb’s credibility is relevant to Ian’s claim for an interest in a cottage property, Barb’s post-separation adjustments, other disputed equalization items, and Ian’s claim for spousal support.

[100] Assessing credibility requires the court to consider many factors. Trial judges face the challenge of precisely articulating the complex intermingling impressions after watching and listening to witnesses when reconciling various versions of events: R v. Gagnon, 2006 SCC 17, [2006] 1 S.C.R. 621, at para. 20. A judge may accept some, none or all of a witness’ evidence: R v. D.R., 1996 207 (SCC), [1996] 2 SCR 291 at para. 93.

[101] Chappel J., in McBennett v. Danis, 2021 ONSC 3610, at para. 41 lists various factors to consider when assessing credibility. They include inconsistencies between a witness’ evidence and other credible witnesses or documentary evidence; whether the witness’ evidence is inherently improbable or implausible; the existence of other independent evidence that confirms or contradicts a witness’ testimony; whether a witness was straightforward or “evasive, strategic, hesitant or biased” and whether a witness is able to make concessions or gives self-serving evidence.

[102] I assess the credibility of the key fact witnesses, namely, Barb, Don, and Ian.

[103] The Court received evidence from other fact witnesses, although the facts on which they led evidence were less controversial. I discuss their evidence in my reasons.

[104] The Court also received significant opinion evidence from numerous experts, including valuation experts (Ms. Paula White for Barb, and Mr. Steve Ranot for Ian), property appraisal experts (Mr. Brent Ferguson for Barb, and Mr. Samuel Linds for Ian), and trust experts (Mr. Paul Gibney for Barb, and Mr. Bruce Harris for Ian). I consider their evidence and provide reasons, where applicable, as to why I favoured one expert’s opinion over another.

Barb’s Credibility

[105] Barb was a careful witness. She took time to consider questions put to her to provide answers. She had difficulty recalling dates. She would regularly consider the years in which her children were born to assist her in recalling dates. I considered whether, at times, her hesitation to answer questions was because she did not want to give answers that would hurt her case. However, I do not make this finding. Rather, I find that her hesitation reflected her desire to be truthful and accurate, and was a product of her limited business and financial knowledge. After concluding her evidence in chief, she raised with the Court deputy that she wanted to correct an answer she had previously given, after having spent the evening trying to remember a particular fact. This opportunity was granted. Generally, I am satisfied Barb intended to provide credible and reliable evidence.

[106] Ian argued that Barb was evasive in answering questions that do not support her position. However, from her testimony, it was evident that she had little business, estates, tax or financial expertise. During the parties’ marriage, Barb was a teacher for a very brief period, but then primarily a homemaker. She was financially supported by her father’s wealth and by Ian, who paid the household bills while he worked. Barb would discuss her financial affairs with Ian and relied on him to manage the family’s finances. She was the director of 4MK, a director of SHL, and a trustee of the NFT. Despite these roles, I am satisfied that she had a limited understanding of the management or operations of SHL or CCL, the various assets that she held, the intricacies of the estate freeze, how the NFT was managed, or her family’s finances.

[107] For example, Barb gave evidence about her surprise when she learned that 12 of the 90 Class B common shares of SHL held by 4MK had been sold. She also recounted that after she started attending SHL Board meetings in or around 1992, she would come home with a book of material to have Ian explain it to her, so that she could understand what was happening. She testified that Ian knew everything that was going on in her bank accounts and investments. I found her evidence on these issues honest.

[108] I am satisfied that she was given “big picture” information about her financial situation from Ian and her advisors, and she acted on their advice. Those who gave her advice were her father, Don, Ian, Howard Lerner, and Andrew Butler (the latter two served as accountants and bookkeepers for the family), along with professional tax, estates, and finance advisors.

[109] At times on cross-examination, it did appear that Barb’s answers may have been scripted. For example, she would repeatedly refer to the transaction that resulted in the estate freeze as being a “sale” of her shares, rather than as her own estate freeze involving her own assets. I was alive to her having a motive to fabricate evidence to minimize an equalization payment to Ian.

[110] However, upon review of all the evidence, it is clear that Barb had a limited understanding of the family’s finances and the transactions that resulted in the estate freeze. Her answers demonstrated that she had very limited knowledge and understanding of the complex financial arrangements involving her assets, rather than an intention to deceive the court. For example, she did not appreciate what a shareholder register was. At one point, she said she was a trustee of 4MK. I do not find that she answered questions with an intention to deceive or to provide scripted answers from others. I am persuaded she was trying her best to answer questions that were difficult for her to understand, or for which she did not know the answer.

[111] I sought to reconcile how Barb could have been surprised to learn that 12 of the 90 SHL shares held by 4MK had been sold, since she was the sole director of 4MK. This might be explained by the fact that Ian principally managed the family finances, and that he often approached Don for greater liquidity. In response, Don would speak with Barb and rather than increase SHL dividends, Don would advise that Barb had to sell some of her shares. It may be that Barb understood that when she received the proceeds from the sale of the 12 shares, she was selling some of her 900 preferred shares in 4MK. In fact, Mr. Lerner prepared memos to Barb to assist her in understanding her assets in 4MK and the effect of redeeming her preferred shares. Due to Barb’s very limited understanding of financial issues, it would not be improbable that Barb understood she was redeeming her preferred shares when the 12 SHL shares were redeemed.

[112] I am satisfied Barb gave reliable evidence in relation to discussions she had with her father about the shares he had given to her, what Gordon wanted done with them, and his wish that they pass on to subsequent generations through the NFT. Barb’s evidence on this was consistent with Don’s evidence. It was consistent with documentary evidence, such as the 1993 Agreement. It was also consistent with how Don dealt with his shares nine months earlier in the estate freeze involving his shares. While Barb did not understand the intricacies of the estate freeze transaction, I am satisfied that she understood her father’s wishes and recalled the steps she took to fulfil them.

[113] Ian took issue with the shifting positions Barb took in her sworn Financial Statements with respect to the NFT. In a previous Financial Statement, sworn October 25, 2019, she did not expressly exclude the value of the NFT, although she did indicate excluded property was “TBD”. In her November 2020 Financial Statement and any thereafter, she excluded the NFT. In October and November 2023, her Financial Statements reflected for the first time that the NFT was not property, and that if it was property, her interest in the NFT was only 20%, and that a 50% minority/illiquidity discount should be applied. She applied a similar minority/illiquidity discount to her interest in the BJL Trust on the date of marriage.

[114] Ian argued that when Barb was questioned before trial, she stated that her interest in the NFT was property. I do not find that her answers at questioning, while inconsistent with the position she took at trial, speaks to her credibility. The determination of whether the NFT is property is a legal issue. Furthermore, it is open to a litigant to take a position leading up to trial that is different than the one at trial. For this reason, it is not uncommon for pleadings to be amended prior to trial, or in some instances at trial – provided there is no prejudice that cannot be compensated in costs.

Ian’s Credibility

[115] Ian experienced health issues throughout the trial. It appeared he was experiencing physical discomfort during parts of his evidence. I viewed his testimony with that in mind. He gave evidence of his medical conditions. He was forthright in acknowledging his alcoholism and the impact it had on the family. He was candid and grieved the lack of relationship he has with his children.

[116] He was candid in giving evidence about the date of separation. His testimony strongly suggested that Barb would prevail on this issue. In my view, he properly conceded to Barb’s date of separation mid-trial.

[117] Like Barb, Ian’s testimony lasted several days. However, unlike Barb, Ian tended to answer questions promptly. He was less careful, more casual, sometimes argumentative, and it was clear some of his evidence was false, and possibly intentionally false.

[118] There were inconsistencies in his evidence. In his examination in chief, he gave evidence of not receiving an accounting of expenses and income on the Lower Cottage that was rented. On cross-examination, he acknowledged having received them, although he said they were incomplete. He stated, in chief, that he was denied access to certain belongings of his in the Lower Cottage, but in cross-examination, he acknowledged receiving some items.

[119] In a previous affidavit, he attacked Barb for certain conduct but the evidence at trial was that it was Ian who engaged in the problematic behaviour. For example, he alleged Barb had installed spyware on his computer. At trial, this was not proven. Instead, it was Ian who admitted to having accessed Barb’s email account to gather emails for this litigation. He sent an email to a third party confirming he had done so. In prior affidavits and evidence in chief, he criticized Barb for her spending on horses for their daughter, Wesley; however, at trial, Ian’s evidence was that he negotiated the purchase price of the horses. He was later emphatic in stating he wanted to keep the horses out of this litigation.

[120] There was evidence of Ian forging Barb’s signature on various documents. His initial position was that he did sign Barb’s signature on some documents, but only with her consent. In his examination in chief, he testified that Barb signed BMO documents in April 2015. These documents included a Trading Authorization Form that permitted Ian to trade investments on Barb’s behalf. He provided a detailed description of a meeting with his brother, a financial advisor, at BMO offices where his brother’s associate, Ms. Nichols was present. Ian stated Barb was with him that day, that Ms. Nichols at BMO witnessed Barb’s signature, and the signatures were made on a “low table” – perhaps to explain the irregular signatures. Barb’s evidence was that she was not certain this signature was hers.

[121] On cross-examination, Ian continued to assert that the signature on the BMO forms was Barb’s and not his. He maintained this position even after he was told that Barb was in Florida on the day she purportedly attended BMO’s office to sign these documents, and he went further to suggest that Barb could have signed the documents while in Florida. Later in the trial, on consent and to avoid reply evidence from Ian’s brother and Ms. Nichols, Ian agreed to a written stipulation of his evidence, which states: “Mr. Newlands acknowledges that Ms. Lang was in Florida in April, 2015. He does not specifically remember signing Ms. Lang’s name on the BMO from in April, 2015, however, he will acknowledge for the purposes of the litigation that he did so.”

[122] I am satisfied that Ian intentionally gave false evidence with respect to Barb signing the BMO forms in April 2015, which was only corrected after it was presented to him that Barb was in Florida and could not have attended BMO’s offices. He also admitted to forging Barb’s signature on other documents, specifically a lease to the Lower Cottage, and a municipal form in relation to the cottage properties, after suggesting that these signatures were Barb’s or may have been Barb’s. Not only did he forge her signature, he also admitted to directing his former assistant to witness Barb’s forged signature.

[123] The uncontradicted evidence from Howard Lerner, who performed accounting, bookkeeping and tax preparation work for the family, was that Ian had a primary role in managing the family’s finances. Mr. Lerner would rarely meet with Barb. Ian gave evidence that he had discussions with Barb about family purchases and their finances, and then he would liaise with Don, Howard Lerner, or others. I am satisfied that Ian had a greater understanding of Barb’s financial situation than Barb. Notwithstanding this greater understanding of the family finances, Ian was often unable to remember or account for significant spending that occurred during the marriage.

[124] Given the passage of time for some of the events, I would be inclined to accept discrepancies in Ian’s recollection of facts. However, I am persuaded that Ian had motive to deceive the court on material pieces of evidence and that he attempted to do so on some occasions.

[125] For these reasons, generally, and to the extent there is inconsistency between Barb and Ian’s evidence on material facts that cannot be reconciled by other documentary or witness testimony, I prefer Barb’s evidence over Ian’s evidence.

Don’s Credibility

[126] Don is an experienced and professional businessman. His testimony demonstrated intimate knowledge of CCL and SHL, consistent with his increasingly senior roles in them since 1982. Don is the Executive Chairman of CCL, having formerly served as its CEO as of 2001. He is a director of SHL, and owns 50% of the voting shares of the Control Corp. with Stuart.

[127] Don is also a trustee of the NFT, along with Barb and Stuart. He is also Barb’s brother and Gordon’s son. He gave evidence of the close and loving relationship he had with his father.

[128] In these various roles, Don has legal responsibilities as a corporate director, fiduciary duties to shareholders to effectively manage CCL and SHL, fiduciary duties as a trustee of the NFT to Barb and her children, and moral responsibilities to support his sister and to carry out Gordon’s intentions with respect to the family business. Given these various roles, I was mindful that he may have motive to minimize an equalization payment to Ian.

[129] However, subject to some minor errors in his evidence which he corrected, I do not find Don gave false or misleading evidence. His answers were direct and frank. His demeanour, and the consistency of his testimony with Barb’s testimony and documentary evidence suggest he was credible and that his answers were reliable. Furthermore, Don worked closely with Gordon in Gordon’s business. He recounted Gordon’s intentions with respect to the estate planning that was probable, logical, and consistent with the documentary evidence. Furthermore, Don testified that he was there when Gordon and his advisors were telling them to engage in the estate freezes, consistent with the long-term plan of the 1993 Agreement.

[130] Ian argued that Don’s evidence was unreliable and appeared scripted. He argued that Don refused to concede that Barb froze her SHL shares and that it was Barb’s estate freeze. Instead, like Barb, Don continued to state that Barb “sold” her shares. These answers do not suggest that the answers were scripted, and therefore, unreliable. Rather, they speak to how Don (and Barb) understood the transactions and how they characterized them. These answers were consistent with Barb and Don’s understanding that when the NFT was created, there were transactions – Barb sold her SHL shares in exchange for preferred shares of 4MK (valued at $24.5M), with the future growth being owned by the NFT, with Barb being one of the discretionary beneficiaries.

[131] On cross-examination, Don answered various questions which Ian suggested speak to his desire to assist his sister. For example,

a. Don answered repeatedly that he did not know whether Barb, by virtue of her ownership of preferred shares of 4MK, controlled 4MK. Ian argued that Don, given his sophistication, ought to have been able to answer this question.

After reviewing the transcript carefully, it appears that Don was honestly confused as to whether common shares or preferred shares resulted in a shareholder exercising control. His later answer within this line of questioning, “I’m the trustee, I make decisions when the trust meets” suggests that he was trying to reconcile Barb’s control of 4MK with the trust’s ownership of the growth value in the SHL shares.

Don is a businessman, experienced in the management and operations of a multi-national corporation. He is not a corporate lawyer.

b. In chief, Don testified that there was a loan to Barb with interest of 8%. He and Barb both testified that interest was payable when the loan was repaid. On cross-examination, Don testified that there was a “written terms sheet or something on it” reflecting the loan, and that he had recalled a conversation with Andrew Butler about whether the loan document was in evidence. Don understood it was. This document was not in evidence. Don further testified that he did not report the interest on this loan on his income tax return because he had not yet received the interest. Mr. Ranot later testified that the Income Tax Act requires a taxpayer to report income on an accrual basis, regardless of whether it has been collected. Ian argued that because Don is “a sophisticated businessman who relies heavily on professional advisors”, it is not credible that he was not aware he had to report interest income on an accrual basis.

The fact that Don, who Ian acknowledged “relied heavily on professional advisors”, did not know he had to report interest income on an accrual basis is a trivial basis to attack his credibility. Don is not a tax lawyer. The fact that he loaned his sister money does not suggest he was not credible.

c. Ian argued Don downplayed his role in this litigation. On cross-examination, he denied having a one-on-one meeting with Barb’s valuation expert, Ms. White, but he acknowledged attending a meeting where Ms. White was present. He also denied communicating with her electronically, but when he was presented with an email dated April 29, 2020, he acknowledged that he forgot about this email.

Given the multiple roles that Don played in the corporations and the NFT, it would not be surprising or unusual if he met with Ms. White or communicated with her by email about the corporate structure or trusts that were the subject of this litigation. The fact that he forgot about an email and readily conceded his error, does not suggest he is not credible.

[132] There were other attacks on Don’s credibility that relate to his knowledge or lack thereof of the 2022 re-organization of the NFT trust, even though he was a trustee in the 2022 Trust. This is not surprising since Don consistently testified that he relied on professional advisors in setting up the trust.

[133] In sum, I am satisfied that Don gave credible and reliable evidence.

Other Witnesses

[134] Barb’s other witnesses in this case were:

a. Andrew Butler, who is the president of the Samson Family Office where he manages the Lang family’s affairs, including investments, structural, tax and estate planning.

b. Paula White, a chartered business valuator, who I found qualified to give expert opinion evidence in the areas of business valuations and in calculating income for support purposes under the Spousal Support Advisory Guidelines. Ms. White has been qualified to give expert evidence in court in these areas previously. She is the Managing Partner of White & Lewis Inc., a company that provides chartered business valuations and litigation support. She has been doing this work for around 30 years. Her qualifications to give expert evidence were not disputed.

c. Paul Gibney, a lawyer, who I found qualified to give expert opinion evidence in the areas of taxation and estate planning. Mr. Gibney has been qualified to give expert evidence in court in these areas previously. He is a partner at Thorsteinssons LLP where he provides tax and estate planning advice to Canada’s wealthiest families. He has been involved in more than 300 estate freezes. His qualifications to give expert evidence were not disputed.

Mr. Gibney’s expert report was co-authored by David Steele. Mr. Steele was not a witness. Mr. Steele is a lawyer at Torys LLP, who practices in domestic and international trusts, estate planning and administration. Mr. Gibney has worked with Mr. Steele on many transactions for almost 25 years, with Mr. Steele coming from a trust perspective, and Mr. Gibney coming from a tax perspective.

d. Susan Bruhm, a friend of Barb’s and who has known the family over several years. Her testimony was relevant to the parties’ date of separation. This issue was settled after Ms. Bruhm gave evidence. She provided other evidence related to items Ian purchased for Barb.

e. Spencer Newlands, one of the parties’ children. His evidence primarily related to the parties’ separation, which was settled after he gave evidence. He also gave evidence of certain items purchased by Ian for Barb, Ian’s renovations to the parties’ Main Cottage, distributions from the NFT to him, and charitable donations made by the family.

f. Brent Ferguson, a real estate agent and candidate member of the Appraisal Institute of Canada, who I found qualified to give expert opinion evidence in residential real estate sales and appraisals in the Muskoka area. While Mr. Ferguson had not obtained a designation from the Appraisal Institute of Canada, he had worked for a company, Kitchen & Company Appraisal Service, from 1995 until 2021, and another company prior to that. In his career, he had performed hundreds of real estate appraisal reports, primarily for banks.

g. Howard Lerner, who is an accountant who performed accounting, bookkeeping and tax preparation work for the Lang family and their companies, including SHL, and their trusts.

[135] Ian’s other witnesses in this case were:

a. Bruce Harris, a chartered professional accountant, who I found qualified to give expert opinion evidence in the areas of taxation and estate planning. Mr. Harris was a partner at PricewaterhouseCoopers LLP in their tax group from 1984 to 2022. His work involved tax advice, uses of trusts, and estate planning, including estate freezes. He held memberships in the Canadian Tax Foundation and Society of Trust and Estate Practitioners since the 1990s. He had not been an expert at trial previously. His qualifications to give this evidence was not disputed, subject to there being a qualification that he was giving evidence as an accountant and not as a lawyer or a chartered business valuator.

b. Steve Ranot, a chartered accountant and chartered business valuator, who I found qualified to give expert opinion evidence in the areas of business valuations and in calculating income for support purposes under the Spousal Support Advisory Guidelines. He is a senior manager and partner at Marmer Penner Inc., which provides litigation support, forensic accounting, and valuation services. He has given expert evidence in court about 20 times. His qualifications were not disputed.

c. Samuel Linds, an accredited real estate appraiser with the Appraisal Institute of Canada, who I found qualified to give expert opinion evidence in the area of real estate appraisals. He has completed approximately 1,000 real estate appraisals since becoming an appraiser in 2014. He has given evidence as an expert at a private arbitration and at the Ontario Land Tribunal. His qualifications were not disputed.

d. And finally, Dr. Zahi Touma, a rheumatology and Lupus specialist, who treats Ian for his Lupus and other related medical conditions. He gave evidence as to how Lupus impacts Ian, which is relevant to Ian’s claim for spousal support.

[136] Where necessary in my reasons, I discuss the credibility and reliability of these witnesses.

F. ANALYSIS OF ISSUES

Issue 1: What is the value of Barb’s interest in the BJL Trust, as at the date of marriage?

[137] The BJL Trust held 90 common shares in 702 on August 21, 1987, the date of marriage.

[138] Barb’s expert valuator, Ms. White, assigned a value to these shares of $16,010,752 in her expert report dated August 30, 2023, subject to contingent taxes and a minority/liquidity discount.

[139] Ian’s expert valuator, Mr. Ranot, prepared four reports valuing Barb’s assets on the date of marriage based on different scenarios. The first assumed a 50% taxable capital gains inclusion rate. The second assumed a 75% taxable capital gains inclusion rate. His third report assumed a 50% taxable capital gains inclusion rate, plus a 5% discount for absence of control. His fourth report assumed a 75% taxable capital gains inclusion rate, plus a 5% discount for absence of control.

[140] Both experts used an adjusted book value approach to valuing this asset. Both testified that they reached similar conclusions on the gross valuation of the 90 common shares in 702, before taxes. In Mr. Ranot’s first report, he valued the 90 common shares at $15,960,000. Ms. White valued them at $16,010,752.

[141] The experts differed in their ultimate valuation based on (a) what capital gains inclusion rate is to be applied; (b) whether a minority/liquidity discount is to be applied; and (c) whether a mortality risk discount is applicable.[^6] Mr. Ranot considered a mortality risk discount, while Ms. White did not.

[142] After applying a 50% capital gains inclusion rate and a 50% minority discount, Ms. White concluded the value of Barb’s interest in the BJL Trust on the date of marriage was $8,005,000, less contingent taxes of $870,000, resulting in a net value of $7,135,000. This is the position Barb took at trial.

[143] In his NFP Statement, Ian’s position was that the value of Barb’s interest was $12,880,000. This is based on Mr. Ranot’s second report that uses a 75% capital gains inclusion rate, and no discount for absence of control.

a. What Capital Gains Inclusion Rate should apply?

[144] Ms. White used a 50% capital gains inclusion rate because this was the rate applicable at the date of marriage.

[145] Mr. Ranot did not opine on the correct taxable capital gains inclusion rate. He did not dispute that the 50% capital gains inclusion rate was in place on the date of marriage. However, he explained that on June 18, 1987, two months before the parties married, the Department of Finance released its Tax Reform White Paper announcing comprehensive changes to the tax system, including increasing the capital gains inclusion rate from its then 50% rate to 66 2/3% in 1988 and 1989, and to 75% commencing in 1990. He testified that from his experience working in the KPMG tax department, taxpayers generally act on assumptions that rates would increase.

[146] Ms. White acknowledged this announcement was made. Though she pointed out that the announcement was not made into law until the federal budget was passed in 1988. On the date of marriage, the capital gains inclusion rate was 50%, and it is only with hindsight that we know it changed to 66.33% for 1988 and 75% for 1990. Ms. White also stated in her report that with hindsight, we know the federal government reverted to a 66 2/3% inclusion rate on February 27, 2000, and a 50% inclusion rate from October 18, 2000, onwards.

[147] I find that the proper capital gains inclusion rate to apply when calculating Barb’s interest in the BJL Trust is 50%. I make this finding because the policy intent underlying the FLA and the express language in s. 4(1) of the FLA contemplates a “snapshot” valuation to be undertaken of a spouse’s assets “on the date of marriage” and “date of separation”: see, DeFaveri v. Toronto Dominion Bank, 1999 4162 (ON CA), 45 R.F.L. (4^th) 141, at para. 4; Numair v. Numair, 2022 ONSC 3449, at para. 103. To apply a future capital gains inclusion rate not yet legislated when valuing an asset on the date of marriage, would be inconsistent with the language and scheme of the FLA.

[148] Other cases have ruled similarly. In Fox v. Fox, 2006 63731, 26 R.F.L. (6th) 64 (Ont. S.C.), at para. 56, Karakatsanis J. (as she then was), held that it was not appropriate to discount the value of a date of marriage asset to account for a risk that a party would misappropriate that asset in the future. In Halliwell v. Halliwell, 2016 ONSC 182, at para. 57, Harper J., when assessing whether potential litigation at the time of separation would impact the value of an asset for equalization purposes stated, “[i]t is not proper to use hindsight in order to determine value.”[^7]

[149] Finally, while a tax advisor may give advice to taxpayers based on announcements of anticipated tax hikes, to interweave these and other contingencies into the “snapshot” equalization analysis required under s. 4 of the FLA would lead to uncertainty and impracticalities in our family justice system.

[150] Accordingly, I find that the proper capital gains inclusion rate to apply to Barb’s interest in the BJL Trust is 50%.

b. Should a Minority / Illiquidity discount apply, and if so, at what rate?

[151] The issue of minority/illiquidity discounts consumed significant trial time, primarily during Ms. White’s and Mr. Ranot’s testimony.

[152] Ms. White opined that a 50% minority/illiquidity discount should apply to Barb’s date of separation interest in the NFT, principally because of Barb’s lack of control. She also opined that a 50% minority/illiquidity discount should also apply to Barb’s interest in the BJL Trust on the date of marriage, for similar reasons.

[153] Mr. Ranot did not agree. In his view, Barb exercised control of the shares in the NFT in concert with her brothers. He did not view a minority/illiquidity discount to Barb’s interest in the NFT or the BJL Trust was appropriate, although he did calculate a minority/illiquidity discount of 5% if the Court were to find one applicable.

[154] Barb’s position was that a 50% discount is applicable to her interest in the NFT. She submitted that this discount should also apply to her interest in the BJL trust because there was a similar lack of control, as well as for the sake of consistency.

[155] Later, I fully assess minority, illiquidity and blockage discounts when valuing the NFT. There, I explain why I conclude that a minority/illiquidity discount of 50% should apply to Barb’s interest in the NFT on the date of separation. However, I provide a brief explanation here as to why I apply a 50% minority/illiquidity discount to the BJL Trust on the date of marriage.

[156] Slightly different facts are at play when assessing lack of control and illiquidity in relation to the BJL Trust, in comparison to the NFT. Barb was a discretionary beneficiary of both trusts; however, unlike the NFT, Barb’s interest in the BJL Trust was more certain. She would certainly acquire the assets of the BJL Trust at age 39, provided she was still alive, and provided the trustees did not previously dispose of the shares or its other assets. In addition, the 1993 Agreement, which restricted shares ownership to Lang family members did not exist. Had the shares been distributed to Barb before the 1993 Agreement, this restriction on share disposition would not have been a restriction.

[157] On the other hand, there were other control and liquidity factors present with respect to the BJL Trust. Gordon controlled the BJL Trust as co-trustee. The trustees controlled what flowed into the BJL Trust and they also controlled distributions to Barb. By the date of marriage, Gordon and his co-trustees could have sold the trust’s assets, as they saw fit. There was no evidence of a shareholder agreement that would permit Barb to liquidate her shares if those shares were distributed to her. The BJL Trust’s assets were shares in 702, and Gordon exercised voting control over 702. By at least 1986 and likely sooner, there was a control corporation in place that could have restricted the sale.

[158] Ms. White explained that because of the control Gordon exercised, she applied a 50% discount. She further explained that a consistent discount approach – applied on the date of marriage and date of separation – in a case with similar facts was accepted by the Court in LeVan v. LeVan 2006 31020, 82 O.R. (3d) 1. This was another reason why Ms. White applied the same discount rate.

[159] While I considered a slightly reduced minority/illiquidity discount when valuing the BJL Trust because of the different facts at play on the date of marriage and date of separation, a discount rate of 50% benefits Ian. It would reduce Barb’s date of marriage deduction. It was Barb’s position that a 50% minority discount should apply. For this reason, I apply a 50% minority/illiquidity discount to the BJL Trust.

[160] Ms. White and Mr. Ranot placed similar values on the BJL Trust on the date of marriage. ($16,010,752, and $15,960,000, respectively). These values are marginally different. Because I accept Ms. White’s minority/illiquidity discount valuations, I prefer her valuation of the BJL Trust over Mr. Ranot’s.

[161] Applying a minority/liquidity discount of 50% when valuing Barb’s interest in the BJL Trust, results in a value of $8,005,000.

[162] Ms. White determined the contingent taxes on Barb’s interest in the BJL Trust to be $1,740,000. She discounted contingent taxes by 50%, consistent with the 50% minority/liquidity discount that she applied, resulting in discounted contingent taxes of $870,000.

[163] I find the value of Barb’s interest in the BJL Trust to be $8,005,000 after applying a 50% minority/illiquidity discount, less contingent taxes of $870,000, resulting in a net value of $7,135,000.

c. Should a Mortality Risk discount be applied?

[164] Mr. Ranot’s valuation of Barb’s interest in the BJL Trust noted that Barb was married at age 30 and she was the sole beneficiary of the BJL Trust, provided she attained the age of 39. In his first report (with a 50% capital gains inclusion rate and no discount), Mr. Ranot applied a mortality risk discount after placing a value on the BJL Trust ($15,960,000) and deducting contingent taxes ($2,290,000). He reduced the value further by a mortality risk because Barb had not yet reached the age of 39 when she would certainly receive the trust asset. Mr. Ranot calculated this risk using the 1987 mortality table, and applied a discount of 0.553%, or $75,636.

[165] Ms. White did not address this issue.

[166] I find that a mortality risk discount of 0.553% should be applied for the reasons that Mr. Ranot explained.

[167] The net value of the BJL Trust, after contingent taxes, is $7,135,000. I reduce this amount further by $39,456 (0.553% of $7,135,000) to account for mortality risk. This results in a net value of the BJL Trust to be $7,095,500 (rounded).

Issue 2: What is the value of Barb’s interest in the GSL Trust, as at the date of marriage?

[168] On the date of marriage, Barb was one of four beneficiaries of the Gordon S. Lang Trust (“GSL Trust”). The GSL Trust’s sole asset was a promissory note receivable for $18,051,911. This asset was distributed equally during the marriage among Barb and her siblings (the other beneficiaries).

[169] Ms. White valued Barb’s 25% interest on the date of marriage at $4,512,978. Mr. Ranot valued it similarly, at $4,513,000.

[170] However, like the BJL Trust, Barb said a 50% minority and illiquidity discount should be applied, reducing its value to $2,256,000. Ian said no discount should be applied.

[171] The rationale for applying a minority/illiquidity discount to the GSL Trust is less apparent. The GSL Trust’s asset was a promissory note, a more liquid than the asset of shares where issues around lack of control and illiquidity may be present. Ms. White explained, however, that because Barb did not control the GSL Trust, she applied the same discount rate as she did to the BJL Trust.

[172] I would be inclined to assign a modest discount to Barb’s value in the GSL Trust because she did not control the trust; but, because its assets were not shares, I would not be inclined to assign a discount as high as 50%. However, because a discount to Barb’s interest in the GSL Trust on the date of marriage benefits Ian, and because Barb’s position is that a 50% discount to the GSL Trust should apply, I apply the 50% discount.

[173] I find the value of Barb’s interest in the GST Trust on the date of marriage to be $2,256,000.

Issue 3: Is Barb’s interest as a beneficiary in the NFT on the date of separation “property” under s. 4 of the Family Law Act?

[174] Barb’s position was that her interest as a beneficiary in the NFT was a discretionary trust interest, and therefore, not “property” pursuant to s. 4(1) of the FLA. She relied on family law cases which have held discretionary trust interests are not property.

[175] Ian’s position was that Barb’s interest in the NFT, even if it is a discretionary interest, is “property” under s. 4 of the FLA. He relied on the definition of property in s. 4(1)(a) of the FLA to argue that Barb’s power as Trustee as set out in the NFT Trust Deed, in conjunction with her brothers (who were also Trustees), means she had a power of appointment exercisable in her favour. As such, he stated that the statute clearly includes the value of the NFT as property.

[176] Before turning to the legal principles and analysis, it is necessary to define and contextualize Barb’s interest in the NFT with reference to the Trust Deed.

[177] Gordon settled the NFT on August 22, 2001 for $100, naming Barb, Don, and Stuart as Trustees.

[178] Para. 1(a) defined the beneficiaries as “Barbara Joan Lang-Newlands, and all of her issue, whether now living or whether born or adopted at any time after the date of this Settlement…”.

[179] Para. 1(c) defined “Distribution Date” to mean “the earlier of (i) the date on which there is no child of Barbara Joan Lang-Newlands alive and under the age of thirty-five years; and (ii) such earlier date as the Trustees may in their unfettered discretion designate in writing.”

[180] Other relevant portions of the NFT Deed state:

a. Distributions of income or capital from the Trust to charities or the beneficiaries are at the unfettered discretion of the Trustees (para. 2(a)).

b. In the event of Barb’s death, the Trustees shall divide the Trust Fund among such charities or beneficiaries, or any mix of them, as Barb may have appointed in her Will.[^8] If Barb is alive on the Distribution Date, the Trustees shall divide the Trust Fund among the beneficiaries in such proportions and on such terms and conditions as the Trustees appoint by deed in writing. Or if there is no such deed, on the Distribution Date, the Trustees shall divide the Trust Fund among Barb’s children then alive in equal shares per stirpes (para. 2(b)).

c. None of Barb’s children shall receive any income or capital from the Trust Fund if they have not attained the age of majority. If any of the children die before reaching the age of majority, the “share of such Beneficiary” shall be divided among that Beneficiary’s issue, or if the Beneficiary had no issue, “among the remaining Beneficiaries alive at the death of such Beneficiary in equal shares per capita” (paras. 3(a) and (b)).

d. In the exercise of their power, authority, and discretion, the Trustees had broad authority to manage the Trust Fund (para. 4).

e. In the event of Barb’s death while she holds office as Trustee, Ian shall fill Barb’s vacancy as Trustee “provided he was married to and residing with Barbara Joan Lang-Newlands at the time of her death and is willing and able to accept the appointment” (para. 5(a)).

f. In the exercise of their discretion and power, the Trustee shall have unfettered and absolute discretion, and every decision made by the Trustees may be made by a majority of Trustees (para. 6(a)).

g. “Any benefit and the income on any benefit to which any person shall become entitled pursuant to the provisions of this Settlement shall not fall into any community of property which may exist between such person and his or her spouse, and shall not form part of the net family property of such person as referred to in the Family Law Act or any successor or replacement legislation” (para. 11).

[181] When the NFT was established on August 22, 2001, the children were 13 (Wesley), 11 (Spencer), 10 (Harrison), and 8 (Jordan) years old.

[182] On the date of separation (July 31, 2019), the children were 31 (Wesley), 29 (Spencer), 28 (Harrison), and 26 (Jordan) years old.

Legal Principles

[183] Section 4(1) of the FLA defines property.

“property” means any interest, present or future, vested or contingent, in real or personal property and includes,

(a) property over which a spouse has, alone or in conjunction with another person, a power of appointment exercisable in favour of himself or herself,

(b) property disposed of by a spouse but over which the spouse has, alone or in conjunction with another person, a power to revoke the disposition or a power to consume or dispose of the property, and

(c) in the case of a spouse’s rights under a pension plan, the imputed value, for family law purposes, of the spouse’s interest in the plan, as determined in accordance with section 10.1, for the period beginning with the date of the marriage and ending on the valuation date;

[184] This definition of “property” is broad. It includes “any interest, present or future, vested or contingent, in real or personal property”.

[185] In Black v. Black (1988), 1988 4756 (ON SC), 66 O.R. (2d) 643 (H.C.), in holding that the husband’s beneficial interest in a trust at the date of marriage was property under s. 4(1), Walsh J. stated that “[t]he definition of “property” contained in s. 4 of the Act is all-encompassing.” Property can include a stream of income derived from a trust: Brinkos v. Brinkos, 1989 4266 (ON CA), 69 O.R. (2d) 225.

[186] However, the definition of “property” is not without its limits: Lowe v. Lowe (2006), 2006 804 (ON CA), 78 O.R. (3d) 760 (C.A.), at para. 12.

[187] In Lowe, the issue was whether a stream of income from a WSIB disability benefit was “property” under s. 4(1). The Court held, at para. 15, that it was not property because it bore no relationship to the marriage partnership, but rather arose because of a disability that impeded the recipient’s capacity to earn a livelihood. Citing Misener J. in Pallister v. Pallister (1990), 1990 12272 (ON SC), 29 R.F.L. (3d) 395 (Ont. S.C.), at pp. 404-06, the Court held, at para 14:

[14] As Misener J. put it at p. 406 R.F.L., this purposive and contextual method of statutory interpretation allows "the courts to ensure that the broad definition employed is kept within the bounds of the scope of the Act". In keeping with the "modern" approach to statutory interpretation, s. 4 should not be read as including any and every interest, even those bearing no relationship to the marriage partnership, simply because that interest is not specifically excluded. While the scheme of the FLA is to give a broad definition to property and then exclude certain specific types of property, I agree with Misener J. that the definition of property itself must be given meaningful content and that meaningful content imposes limits on the definition of property limits apart from the specific exclusions. Misener J. held, at p. 405 R.F.L., that the wife's monthly benefits from an Armed Forces Disability Pension, found on the facts to amount to a permanent pension, were not "property" within the meaning of s. 4:

The Family Law Act purposely eschews any attempt to equalize all the assets owned at the date of separation. Rather it seeks only to equalize the assets, the accumulation of which occurred during the marriage, and then only those assets that can fairly be said to bear some relationship to the partnership that the marriage is said to create. Accordingly, there is provision in s. 4(1) for the deduction of the value of property owned on the date of the marriage on the ground that that value was acquired prior to the marriage, and in s. 4(2) for the exclusion of property acquired by gift or inheritance after the date of the marriage and for the exclusion of the right to damages for personal injuries suffered after the date of the marriage, on the ground that the acquisition of that property bears no relationship to the marriage partnership.

Is Barb’s discretionary interest in the NFT “property” under s. 4(1)?

[188] The NFT Deed makes it clear that Barb’s ability to receive funds from the trust was at the unfettered discretion of the Trustees.

[189] Barb argued that because she had a discretionary interest in the NFT without certainty of any future distribution, the trust asset is not “property” under s. 4(1) of the FLA. Unlike the BJL Trust, where Barb would certainly receive those trust assets upon a contingent event occurring (i.e., Barb turning 39), Barb said her interest in the NFT was uncertain and therefore no property interest existed on the valuation date. She relied on several authorities.

[190] In Spencer v. Riesberry, 2012 ONCA 418, 114 O.R. (3d) 375, the Court of Appeal held, at para. 37, that, “[u]nless the terms of the trust expressly provide otherwise, a beneficiary of a trust has no property interest in any specific asset of the trust, prior to or absent an appropriation of such asset to the beneficiary by the trustee”.

[191] Spencer does not assist Barb. In Spencer, the wife’s mother created a trust that held real property, including the home in which the parties lived during the marriage. The trust agreement identified the mother as the trustee and the wife (and her siblings) as beneficiaries. The assets of the trust were only to be divided amongst beneficiaries after the death of the mother. The husband argued that the home in which they lived was their matrimonial home under s. 18(1) of the FLA.

[192] The trial judge found that the wife had a contingent beneficial interest in the trust, “whatever that might be on the death of [the wife’s mother]”. The wife, however, had no interest in any specific property held by the trust. The trial judge therefore concluded that the wife did not have an interest in property within the meaning of s. 18(1) of the FLA: Spencer v. Riesberry, 2011 ONSC 3222, 17 R.F.L (7th) 73, at para. 36 (“Spencer Trial Decision”).

[193] The trial judge went on to consider whether the wife’s interest in the trust was to be included in her NFP. He relied on definitions in s. 4(1) of the FLA and case law in which courts have held that a beneficial interest in a trust, whether vested or contingent, is property and is to be included when determining a spouse’s NFP: Spencer Trial Decision, at paras. 39-42, and 61.

[194] On appeal, the appellant husband only challenged the trial judge’s first determination as to whether the wife’s interest in the property was a matrimonial home within the meaning of s. 18(1) of the FLA: Spencer, at para. 13. The appellate court did not consider whether the wife’s interest in the trust was “property” under s. 4(1) to be included within her NFP. It was in the context of a s. 18(1) analysis, not a s. 4(1) analysis, that the Court of Appeal determined the wife had no interest in the property held by the trust.

[195] The definition of property governing the interpretation of s. 18(1) of the FLA, found in Part II which deals with the matrimonial home, is significantly different than the definition of property in s. 4(1) of the FLA, found in Part I of the Act. The definition of “property” in Part II of the FLA is found in s. 17. It defines property simply as “real or personal property.” It is not as broad or all-encompassing as the definition of “property” in s. 4(1) found in Part I of the FLA, which includes “any interest, present or future, vested or contingent…”. Therefore, the Court of Appeal’s holding that a beneficiary has no property interest in a specific asset of a trust prior to, or absent an appropriation of such asset to the beneficiary, was specific to whether the wife had “real or personal property”, and not whether her trust interest was “property” as more broadly defined under Part I of the FLA.

[196] In a non-family case, S.A. v. Metro Vancouver Housing Corp., 2019 SCC 4, [2019] 1 S.C.R. 99, the appellant, who had a disability, was receiving rental assistance from the respondent. The appellant was required to provide annual income verification. The appellant had a discretionary interest in a Trust that was settled for her care, maintenance, education, and benefit. She was a co-trustee of the trust, along with her sister. It was a Henson trust. The appellant could not compel the trustees to make payments to her and she could not unilaterally collapse the Trust. The respondent sought disclosure of the Trust fund, which they viewed as an “asset” and subject to disclosure in their Assistance Application. The appellant refused.

[197] At paras. 38-39, the Supreme Court found that the appellant had an interest in the Trust subject to the discretion of the Trustees, but that the terms of the Trust did not confer any fixed entitlements on the appellant. The terms of the trust contemplated the possibility that the appellant might not receive all, or even any, of the trust property. There were no enforceable rights to receive anything, unless and until the Trustees decided to exercise their discretion in her favour. The appellant’s interest in the Trust was “akin to a mere hope that some or all of its property will be distributed to her at some point in the future.” Nothing turned on the fact the appellant was a co-trustee in determining the nature of her interest in the Trust. Because the Trust terms required there to always be two trustees who made decisions unanimously, the appellant was prevented from unilaterally ordering payments to herself.

[198] S.A. is distinguishable. S.A. was interpreting the word “asset” within the Assistance Application, as a matter of contractual interpretation: S.A., at para. 41. The Supreme Court interpreted “asset” to mean “property or interest in property that can actually be used to discharge his debts and liabilities”: S.A., at para. 48. In contrast, the definition of “property” in s. 4(1) of the FLA is broader than the Supreme Court’s interpretation of “asset” in S.A.

[199] There are several Ontario family cases where a spouse’s discretionary interest in a trust was found to be property and included in NFP calculations.

[200] In Sagl v. Sagl (1997), 1997 12248 (ON SC), 31 R.F.L. (4th) 405 (Ont. S.C.), the husband was one of several beneficiaries of a Trust and was also one of three trustees. The husband had the power to appoint or remove a trustee. Trustees exercised absolute discretion. Decisions had to be made by a majority, provided that the husband was in the majority. After considering the definition of property in the FLA and trust law, the Court held that the husband’s contingent interest in the discretionary trust was property and subject to valuation: Sagl, at para. 37.

[201] In Kushnir v. Lowry, [2004] O.T.C. 133, the wife was one of two beneficiaries of a discretionary trust that was created by the wife’s mother: at paras. 21, 23. While the Court did not undertake a thorough analysis of the issue, it concluded that because the wife was one of only two beneficiaries of the trust, 50% of the trust assets should be included in her NFP.

[202] In LeVan, the Court considered the value of the husband’s discretionary interest in the income and capital of a trust at the date of marriage. The husband, along with his siblings and their issue, were beneficiaries. The Court also did not analyze whether the husband’s discretionary interest in the trust was property under the FLA, but it did treat it as “property”.

[203] In Mudronja v. Mudronja, 2014 ONSC 6217, the husband’s father created a trust during the marriage. The husband was the sole trustee. The beneficiaries were the wife, the couple’s children, and the family company (60% owned by the husband, 40% by the wife). However, the husband was given the power to appoint himself or anyone else as an additional beneficiary.

[204] In Mudronja, at para. 96, Seppi J. considered traditional trust law principles, similar to the Ontario Court of Appeal’s decision in Spencer. Seppi J. stated that “[t]raditional trust law principles are clear that a person who is named as the object of trustee discretion to pay income or capital in his or her favour does not have an existing property interest.”[^9] From a property law perspective, this interest is only an “expectancy”. This stands in contrast to a person who has a fixed, vested, or purely contingent interest.

[205] After considering some of the above noted cases, Seppi J. concluded, at para 98:

Based on the above-noted authorities, and the need to provide for a fair property settlement following marriage breakdown, I find an interest in a discretionary trust is an interest in property for purposes of equalization pursuant to the FLA. That statute in its preamble endorses the necessity of providing “the orderly and equitable settlement of the affairs of the spouses upon the breakdown of the [marriage] partnership”. Having regard to the numerous and varied methods spouses choose to arrange their financial affairs during marriage, and the need to ensure an equitable result on marriage breakdown, a beneficial interest in a trust is not automatically excluded from a spouse’s net family property merely because it is subject to discretion. The approach needs to be contextual, having regard to the particular circumstances of the parties, their financial situation and the terms of the trust in relation to the marital relationship on V-day.

[206] I agree with the approach and rationale of Seppi J. in Mundronja. I find that Barb’s interest in the NFT is property within the meaning of s. 4(1) of the FLA for the purposes of NFP calculations and not excluded simply because it is discretionary. The real issue in this case is determining the value of Barb’s discretionary interest in the NFT.

“Property” by virtue of power of appointment?

[207] Ian also argued that Barb’s interest in the NFT is “property” under s. 4(1)(a) of the FLA because the definition of “property” includes “property over which a spouse has, alone or in conjunction with another person, a power of appointment exercisable in favour of himself or herself.” Ian relied on para 2(a) of the Trust Settlement, which gives the Trustees, of which Barb was one in conjunction with her brothers, the uncontrolled discretion to make distributions to the beneficiaries, which included Barb.

[208] As stated in Anger & Honsberger, Law of Real Property, 3rd ed. (Toronto: Thomson Reuters, 2015) (loose-leaf updated 2023, release 1, 10/2023) at § 13:

“Powers of appointment are powers to distribute property to, or create interest in property for the benefit of, designated persons.”

[209] As a trustee, Barb had the power in conjunction with her brothers, to distribute assets of the NFT to herself. Because of this power of appointment in favour of herself, the property meets the statutory definition of property in s. 4(1)(a) of the FLA.

[210] While I agree with this legal conclusion, this does not resolve the question of whether the entire value of the NFT is to be included as Barb’s property. I agree with Mr. Youdan, one of Ian’s counsel, who argued during closing submissions that once a discretionary interest in a trust is determined to be property, the determination of what value to ascribe to that interest ought to depend on the control the trustee possessed to distribute trust assets to themselves as beneficiary.

[211] For example, in Mudronja the husband, as the sole trustee, had the power to appoint himself as beneficiary and, at his unlimited discretion, had the power to distribute all trust assets to himself as a beneficiary. As a result, the Court assigned nominal value to the wife’s beneficial interest in the trust, noting that at the date of separation, the parties were adversaries: Mudronja, at para. 100.

[212] In Tremblay v. Tremblay, 2016 ONSC 588, Phillips J.’s analysis as to whether a husband’s discretionary interest in a trust is “property” within s. 4(1) of the FLA was determined based on whether the husband had the ability to control distributions of trust property to himself: para. 31. In other words, whether a trust asset was “property” depended on the ability of the trustee to control distributions.

[213] My analysis differs from that in Tremblay. Based on the broad statutory language of s. 4(1) and caselaw cited earlier, I conclude that Barb’s interest in the NFT, albeit a discretionary interest, is “property” under s. 4(1) of the FLA. In this case, it is not necessary to assess control to define such an interest as “property”.

[214] I agree, however, that the indicia of control set out in in Tremblay, at para. 32, are helpful to assess what value ought to ascribe to Barb’s discretionary interest. In examining these indicia of control, the Court can conduct a contextual analysis and assign a value to the portion of trust assets that are elevated from an expectancy to a certainty. I return to this analysis when valuing Barb’s interest in the NFT.

[215] Barb relied on Kochar v. Kochar, 2015 ONSC 6650, 71 R.F.L. (7th) 183, a case that dealt with a motion for disclosure in a family proceeding. The wife sought disclosure with respect to a trust in which the husband was a discretionary beneficiary. At para. 20, Aston J. held:

With respect to the Kochar Family Trust, the husband’s interest is merely that of a discretionary beneficiary. The first observation I would make about his interest in the trust is that he is not even a contingent beneficiary. There is no legal precedent for the proposition that the beneficiary of a discretionary trust, without any power of appointment, has a proprietary interest in the trust for the purposes of the broad definition of property in Part II (sic) of the Family Law Act. Mr. Kochar’s “interest” is akin to the expectation of an inheritance, which has consistently been found not to form part of a spouse’s net family property. However, even if he technically has an “interest in property”, it is clear from the evidence in this case that the value to the applicant husband is nil.

[216] Kochar is distinguishable. Barb had a power of appointment in conjunction with her brothers exercisable in her favour. The husband in Kochar apparently did not.

[217] Barb also relied on Durakovic v. Durakovic, [2008] O.J. No. 3537 (Ont. S.C.). In that case, the wife’s family had a trust that had terms that were imprecisely defined. The Trust indenture was not produced at trial. According to Mr. Paul Gibney, an expert who had seen the indenture (and who was also a witness in the present case), the beneficiaries were the wife’s mother and her siblings. The identities of the trustees were not disclosed. The wife was “a mere residuary beneficiary” and there was “considerable uncertainty as to whether the [wife]…would ever be entitled to any further proceeds and/or certainly any corpus of the trust: Durakovic, at para. 62.

[218] Durakovic is also distinguishable for the same reason. Barb was a trustee and a beneficiary of the NFT. In conjunction with her brothers, she had a power of appointment exercisable in her favour. In addition, in Durakovic, the wife’s potential interest in any remaining balance in the trust was “at the behest of or after the decease of the four named beneficiaries”: Durakovic, at para. 85. The wife’s entitlement was residual and contingent upon her mother being alive. In contrast, Barb’s interests pursuant to the NFT Deed was as a direct beneficiary.

[219] And finally, Barb relied on Borges v. Santos, 2017 ONCJ 651, 100 R.F.L. (7th) 483, where the Court considered whether a husband’s discretionary interest in a trust is “property” in the context of a garnishment proceeding arising from a child support Order. In that case, the Court held that the husband’s discretionary interest in a trust was not property subject to garnishment. I do not decide whether property subject to garnishment is the same as “property” under s. 4 of the FLA for NFP equalization purposes; the definitions may not be the same. However, I find Borges distinguishable because the husband was not both a trustee and a beneficiary to the trust, and there was no evidence he had a power of appointment exercisable in his favour.

[220] In conclusion, Barb does not have a right to receive an interest in the NFT. As held in S.A., a discretionary beneficiary only possesses a “mere hope” that the trustees will exercise their discretion in a manner favourable to her. Nothing in my reasons is intended to challenge this authority.

[221] However, in this case, Barb is both a beneficiary and trustee, with a power of appointment with her brothers to make a distribution in her favour, and she has in fact received substantial distributions from the NFT. With these facts, it would be inconsistent with the broad definition of “property” in s. 4(1) of the FLA to not include as “property” Barb’s interest in the NFT. I find it is “property” and its value is to be determined after considering various factors, including the control Barb exercised over the assets held by the NFT.

Issue 4: Is Barb’s interest in the NFT excluded from her NFP pursuant to s. 4(2)1 of the FLA because it represents a gift acquired during the marriage?

[222] The analysis of whether Barb is entitled to an exclusion must be grounded in the statutory language in s. 4(2). Specifically, a spouse’s NFP is not to include “[p]roperty…that was acquired by gift…from a third person after the date of marriage.”

[223] Barb argued that if her interest in the NFT is property, it is excluded on the date of separation pursuant to s. 4(2)1 of the FLA because it was a gift acquired from her father during the marriage. Barb said the gift is her beneficial interest in the NFT which Gordon created during the marriage.

[224] Ian argued that, on the date of marriage in 1987, Barb held the common shares in SHL (then 702) indirectly through the BJL Trust, in which she was the sole, contingent beneficiary. At no point after marriage were the SHL shares owned by Barb’s father, who purportedly “gifted” Barb an interest in the NFT.

[225] Ian also argued that the same property cannot be both a date of marriage deduction and an exclusion under s. 4(2).

a. Is Shinder v. Shinder binding?

[226] A case with surprisingly similar facts is Shinder v. Shinder, 2018 ONCA 717, 142 O.R. (3d) 321.

[227] On the date of marriage, the husband held 48 shares in a business owned and controlled by his father: Shinder, at para. 5. Two years before the date of separation, the husband’s father initiated an estate freeze with the consent of the husband and with the intention to pass on the benefit of future growth of his business to his grandchildren. One asset held by the trust created by the estate freeze were the husband’s 48 shares given to him by his father, for which the husband received preference shares with a fixed value of $1.1M. The trust also held shares that were owned by the father. The husband was a beneficiary of the trust, along with the grandchildren.

[228] In Shinder, parties had entered into a separation agreement. The wife alleged that the husband had not disclosed he was a beneficiary of the trust in prior sworn financial statements. Because of this non-disclosure, she sought to set aside a separation agreement. The husband argued disclosure of the trust had occurred. He brought a motion for summary judgment.

[229] The motions judge found the husband failed to disclose he was a beneficiary of the trust. The husband’s summary judgment motion was dismissed: Shinder v. Shinder, 2017 ONSC 4177, 96 R.F.L. (7th) 315 (ON SC).

[230] On appeal, the Court of Appeal held that the motions judge erred in finding there was non-disclosure because the wife had knowledge of the husband’s trust interest through her lawyer.

[231] Of importance to this case, the Court also held that even if the omission of the husband’s interest in the trust in his financial statements could be characterized as non-disclosure, s. 56(4) of the FLA required the court to consider whether the implicated asset was “significant”. The Court found the husband’s interest in the trust was not “significant” because it was a gift. At para. 58, the Court explained:

Here, there was not a genuine issue requiring a trial. Section 4(2) of the Family Law Act excludes from net family property, and therefore from equalization, any property "acquired by gift or inheritance from a third person after the date of the marriage". The trust comprised [the father’s] property and [the husband’s] common shares in Coofer that had originally been given to him by [the father] and then exchanged for preference shares that were disclosed to [the wife] and included in both of [the husband’s] financial statements. In the face of the disclosure of these Coofer shares, any additional benefits [the husband] might receive under the trust would constitute a gift or inheritance acquired after the date of the marriage and hence would have to constitute excluded property as defined under the Family Law Act. Although not determinative, this is consistent with s. 22 of the trust indenture, which declares any benefit received by any beneficiary under the trust to be excluded property for family law purposes. [Emphasis added].

[232] Ian argued that this statement made by the Court of Appeal is obiter, and that the case was really about whether the motions judge erred, on a summary judgment motion, in finding that there was non-disclosure of the husband’s trust interest.

[233] After careful review of Shinder, I find that the Court’s characterization of the husband’s interest in the trust as a gift acquired during the marriage was not obiter. It formed part of the Court’s ratio decidendi. The Court first found that there was disclosure of the husband’s trust interest, which would have been sufficient to dispose of the appeal. The Court then went on to consider the result, namely whether there was a genuine issue requiring a trial, even if there had been non-disclosure. There, the Court concluded that the husband’s interest in the trust was a gift and excluded property. It was an equally sufficient basis to dispose of the appeal.

[234] Even if para. 58 of Shinder were obiter, along a spectrum, I find it is closer to being integral to the result or the analysis that underlies the determination of the matter, and less incidental or collateral to the analysis: R. v. Prokofiew, 2010 ONCA 423, 100 O.R. (3d) 401, at para. 20. This is because the Court of Appeal provided two rationales for the disposition of the case, and either would have been sufficient.

[235] It matters not that Shinder offered two rationales for disposing of the appeal, with the second rationale being that the husband’s interest in the trust was a gift. In The Catalyst Capital Group Inc. v. VimpelCom Ltd., 2019 ONCA 354, 145 O.R. (3d) 759, the Court considered whether issue estoppel and cause of action estoppel prevented a subsequent action from proceeding. The appellants argued that findings made by the trial judge that gave rise to the estoppel arguments were not necessary to his decision and that they were merely collateral. The Court disagreed. Tulloch J.A. (as he then was) stated, at para. 32:

Canadian courts have consistently rejected the argument that a judicial finding is merely dictum or collateral because there was another sufficient basis for the judge's decision. In Stuart v. Bank of Montreal (1909), 1909 3 (SCC), 41 S.C.R. 516, [1909] S.C.J. No. 19, the Supreme Court rejected the argument that a judicial finding that is "a distinct and sufficient ground for its decision [is] a mere dictum because there is another ground upon which, standing alone, the case might have been determined": p. 534 S.C.R., per Duff J. (Fitzpatrick C.J.C. concurring), pp. 539-40 S.C.R., per Anglin J., quoting New South Wales Taxation Commissioners v. Palmer, [1907] A.C. 179 (P.C.), at p. 184.

[236] Barb argued that Shinder is on “all fours” with this case.[^10] I agree.

[237] On the date of marriage, a spouse had a property interest in shares of the spouse’s father’s business. During the marriage, those shares were realized or continued to be held by the spouse. With the consent and cooperation of the spouse, and with the intention to pass on the benefit of future growth in the father’s business to the grandchildren, an estate freeze was implemented and created a new beneficial interest for the spouse (along with the grandchildren) in a new trust. With these facts, the Court held “any additional benefits [the husband] might receive under the trust would constitute a gift or inheritance acquired after the date of the marriage and hence would have to constitute excluded property as defined under the Family Law Act.”

[238] In my view, critical analysis in Shinder is missing. Namely, the Court did not analyze how shares that the husband owned on the date of marriage were “acquired by gift…from a third person after the date of marriage.” Nor did it comment on whether the husband’s interest in the trust on the date of separation constituted the same property on the date of marriage, for which he would have been entitled to a deduction. The same property cannot be both an exclusion and a marriage-date deduction: Knight v. Knight-Kerr, 2021 ONCA 686, at para. 25. Even if the husband’s ownership interest in the shares on the date of marriage was materially different than his beneficial trust interest on the date of separation, the husband would benefit from a “double deduction”: see Mittler v. Mittler, 1988 8645 (ON SC), [1988] O.J. No. 1741 (ON SC), at para. 68.

[239] I identify these problems in Shinder because a trial judge who considers reasons of an appellate court to be problematic ought to provide reasons: Canada v. Craig, 2012 SCC 43, [2012] 2 S.C.R 489, at para. 21.

[240] I have considered other appellate authority with similar facts, but it does not resolve the analytical gap in Shinder. In Brinkos v. Brinkos, the wife’s parents gifted the wife $224,000 prior to the marriage. After the marriage, the wife’s father made an additional gift of $71,000. Then, the wife settled the gifts of $224,000 and $71,000 in a trust with her mother and brother as trustees and received an inalienable life interest in the income of the trust. Her father then made a further gift of $100,000 to the trust. The Court of Appeal held that the wife’s income stream derived from her father’s gifts of $71,000 and $100,000 during the marriage was excluded.

[241] In Brinkos, the Court did not rule on whether the wife’s own contribution to the trust, which consisted of the pre-marital gift from her parents (i.e., the $224,000), was excluded. This is because the parties agreed that this sum of $224,000 was property “owned on the date of marriage” and was therefore deducted from the calculation of NFP. If the Court of Appeal had ruled on this issue, it would be binding authority.

[242] This Court is bound to apply the law in the same way as appellate courts when it finds facts similar to those relied upon at the appellate level. It cannot ignore legal precedent. It can only do so when a new legal issue is raised, or if there is a significant change in circumstances or evidence: Canada (Attorney General) v. Bedford, 2013 SCC 72, [2013] 3 S.C.R. 1101, at para. 44; Craig, at paras. 18-23.

[243] Accordingly, I find that I am bound by Shinder to exclude Barb’s interest in the NFT from her NFP on the date of separation.

[244] However, in the event I am wrong and for the purposes of any appeal, I analyze whether Barb’s interest in the NFT is excluded under s. 4(2)1 of the FLA. I provide equalization calculations based on two scenarios: first, exclusion of the NFT from Barb’s NFP, and second, an alternative that reflects what I would find if it were included. In these unusual circumstances, it is proper for a trial judge to determine the facts and engage in legal analysis for appellate purposes: Bedford, at para. 42-44.

b. If Shinder is not binding, is Barb’s interest in the NFT a gift acquired from her father during the marriage and therefore excluded from her NFP?

Parties’ Positions

[245] For Ian, this case involves a typical estate freeze. An owner of shares in a business utilizes the transaction to minimize tax liability and pass wealth on to the next generation as a part of their own inter-generational estate planning. However, Ian characterized the transaction as an “estate gel” because Barb was a beneficiary of the NFT, and as such, retained an interest in the future growth in value of the SHL shares. Had it been a typical estate “freeze” and not a “gel”, Barb would have given away the future growth in the common shares entirely to her children, and only the preference shares would form part of her NFP.

[246] Ian stated that because Barb was the “freezor” of the SHL shares and a beneficiary of her own assets, there was no gift from a third person. It was a gift to herself. He further relied on the fact that she received the vast majority of distributions from the NFT. Her interest in the NFT was, in pith and substance, derived from the transfer of her own common shares in SHL to 4MK.

[247] Barb framed the issue differently. She stated that the Court, when looking at the transactions that embody the estate freeze, must consider the intentions of the parties at the time. It was Gordon’s intentions to pass wealth to the next generation, and as such, the estate freeze was Gordon’s, not Barb’s. She said intention matters because it allows the Court to view the estate freeze as two separate transactions, in furtherance of Gordon’s intention to pass inter-generational wealth to his issue.

[248] In one transaction, Barb sold her 90 SHL shares to 4MK, with the NFT acquiring the future growth in value of those shares. This concluded her transaction, for which she received consideration of $24.5M in preferred shares. She did so without certainty of receiving any future benefit. In the other transaction, which Barb says is the gift, Gordon settled the NFT and made Barb and her children beneficiaries as part of his estate planning. The NFT then acquired the growth value in those shares. Therefore, she submits it was Gordon’s estate freeze and any benefit Barb acquired from the NFT was a gift from Gordon. She said the common law requirements for a gift were met.

Analysis

[249] I can appreciate why the parties seek to characterize the transaction as “Barb’s estate gel” or “Gordon’s estate freeze”. But, regardless of its characterization, the analysis must rest on the statutory language for an exclusion under the FLA.

[250] Barb had the onus of establishing an exclusion under s. 4(2): s. 4(3) FLA.

[251] Section 4(2)1 of the FLA excludes from NFP calculations the value of “[p]roperty, other than a matrimonial home, that was acquired by gift or inheritance from a third person after the date of the marriage.”

[252] The FLA does not define the term “gift”. The Ontario Court of Appeal in McNamee v. McNamee 2011 ONCA 533, 106 O.R. (3d) 401, at paras. 23-24, provides authority for how the term is to be construed in family law cases:

[23] Although the term "gift" is not defined in the Family Law Act, a gift, generally speaking, is a voluntary transfer of property to another without consideration: Black's Law Dictionary, 7th ed. (St. Paul, MN: West Group, 1999), at p. 696; Birce v. Birce (2001), 2001 8607 (ON CA), 56 O.R. (3d) 226, [2001] O.J. No. 3910 (C.A.), at para. 17. A transfer of property by contractual agreement involves a mutual exchange of obligations ("consideration"), but a transfer by way of gift involves a gratuitous, unilateral transaction: Mary Jane Mossman and William Flanagan, Property Law: Cases and Commentary, 2nd ed. (Toronto: Emond Montgomery Publications, 2004), at p. 439. As McLachlin J. observed in Peter v. Beblow, 1993 126 (SCC), [1993] 1 S.C.R. 980, [1993] S.C.J. No. 36, at p. 991-92 S.C.R., "[t]he central element of a gift [is the] intentional giving to another without expectation of remuneration".

[24] The essential ingredients of a legally valid gift are not in dispute. There must be (1) an intention to make a gift on the part of the donor, without consideration or expectation of remuneration, (2) an acceptance of the gift by the donee and (3) a sufficient act of delivery or transfer of the property to complete the transaction: Cochrane v. Moore (1890), 25 Q.B.D. 57 (C.A.), at pp. 72-73 Q.B.D.; Mossman and Flanagan, supra, at p. 441, Bruce Ziff, Principles of Property Law, 5th ed. (Toronto: Carswell, 2010), at p. 157. [Emphasis added]

[253] Therefore, Barb must establish that:

(a) The property she acquired (i.e. her beneficial interest in the NFT on the date of separation),

(b) Was a gift (i.e., (i) an intention to make a gift on the part of Gordon without consideration or expectation of remuneration; (b) an acceptance of the gift by Barb, and (3) a sufficient act of delivery),

(c) Which was acquired by Barb,

(d) During the marriage.

[254] For reasons that I explain, I make the following factual findings that are relevant to my analysis.

a. It was Gordon’s intention, the day after the shares were distributed to Barb in 1993 during the marriage, that their value was to be used solely for the benefit of Barb and her issue.

b. Throughout Barb’s legal and direct ownership of the SHL shares from 1993 to 2001, she was constrained in her ability to sell, encumber, or dispose of the shares for her sole benefit.

c. It was Gordon’s intention in 2001 that the NFT be created to ensure that the future growth in value of the 90 Class B Common Shares of SHL Barb legally owned passed on to Barb and her issue. Barb acted on her father’s wishes.

d. Barb sold her shares to 4MK. At the time, there was no certainty that Barb would receive distributions from the NFT when it was created. However, Barb knew that she would be a beneficiary of the NFT when the trust was created, and when she agreed to sell her shares to 4MK.

e. From 2001 to the date of separation, Barb received the vast majority of the distributions from the NFT, although these funds were used to support not only her and Ian, but also to support her children – the other beneficiaries of the NFT, who were not entitled to receive any capital or income distributions until they reached the age of majority.

[255] However, even with these factual findings, I cannot conclude that Barb’s interest in the NFT on the date of separation was a gift acquired from a third person after the date of marriage. I conclude it is not excluded property under s. 4(2)1 of the FLA.

a. Barb’s Property that was a Gift

[256] Defining the property that is the subject of the gift is critical. It is relevant to determine what was gifted by whom and when. It is relevant when analyzing other cases that have assessed whether property is a gift and is therefore excluded. It informs the analysis as to whether the same asset is both a date of marriage deduction and an exclusion.

[257] Barb’s position was that her beneficial interest in the NFT on the date of separation was a gift from her father by virtue of his establishment of the trust, pursuant to his wishes. It was not the value of the SHL shares themselves which were held, indirectly, by the NFT.[^11]

[258] Barb owned the SHL shares outright during the marriage, but she submits that when her father gave her the beneficial interest in the NFT, the gift was created. For certainty, Barb is not saying the gift for which she is seeking an exclusion was made when she received the shares in 1993 from the BJL Trust. Nor is she saying the gift was when her father paid $100 to settle the NFT, which then acquired 100 common shares in 4MK, and later acquired the future growth in value of SHL shares.[^12]

[259] It is also relevant that Ian did not allege that this estate freeze was a sham or a fraudulent conveyance, or that Barb participated in the estate freeze to avoid equalizing her interest in the SHL shares. It is Barb’s beneficial interest in the NFT that Ian is seeking to equalize.

b. Gordon’s Intentions to Make a Gift

[260] The parties relied on the opinion evidence of their respective experts, Mr. Gibney and Mr. Harris. Both were qualified to give opinion evidence on tax and estate planning. Both gave helpful evidence in terms of explaining estate freezes, the 21-year rule, the tax implications, their understanding of this estate freeze, and how similarly situated families may structure estate freezes for comparative purposes. They are both clearly knowledgeable and respected experts in these areas. The Court is grateful for their evidence.

[261] Prior to Mr. Gibney giving evidence, I raised an issue as to the admissibility of what appeared in paragraph 4 of his expert report. He relied on parts of the NFT Trust Deed to interpret, what he viewed, as Gordon’s “primary intention” to pass family wealth to Barb’s children. This was a function that, in my view, was reserved for the trier of fact. A voir dire was held, and I was persuaded that Mr. Gibney may be able to offer helpful perspectives based on how trusts in an estate freeze are typically constructed; however, I expressly reserved the right to determine the proper interpretation of the NFT Deed and what it may say about Gordon’s intention. To the extent either Mr. Gibney or Mr. Harris commented on Gordon’s intentions or lack thereof from their interpretation of the NFT Trust Deed, I disregard their evidence.

[262] Instead, I consider the evidence of Don and Barb on this issue, as well as my own interpretation of the NFT Deed and other documentary evidence.

[263] Don and Barb both provided evidence as to what Gordon told them with respect to his intentions leading up to the NFT. Ian objected because it was hearsay. I admitted it, subject to my assessment of its reliability and what weight I would give it.

[264] Gordon’s intentions are relevant to determine if Barb’s interest in the NFT was a gift. Hearsay evidence can be admitted pursuant to the principled exception to the hearsay rule of necessity and reliability, if threshold reliability is met. R. v. Khelawon, 2006 SCC 57, [2006] 2 S.C.R. 787, at para 47; R. v. Bradshaw, 2017 SCC 35, [2017] 1 S.C.R. 865, at para. 23. The principled exception to the hearsay rule was developed because “[i]n some circumstances, the evidence present minimal dangers and its exclusion, rather than its admission, would impede accurate fact finding”: Khelawon, at para. 2; R. v. Charles, 2024 SCC 29, at para. 45.

[265] The necessity criterion was met because Gordon passed away in 2001. Barb's and Don's evidence is also necessary because it is the "best available form" of evidence in the circumstances: R. v. Baldree, 2013 SCC 35, [2013] 2 S.C.R., at para 103. Their evidence provides additional insight that will assist the Court in interpreting the documentary evidence.

[266] Early in the trial, hearsay evidence was adduced from Barb and Don when its reliability could not be tested. I admitted it subject to my assessment of what weight, if any, I would give to it, aware that there would be further evidence. There was documentary evidence of Gordon’s intentions with respect to his estate planning prior to 2001. It appeared to be consistent with the hearsay evidence received, which in my view, met threshold reliability. My determination of ultimate reliability would depend upon my assessment of all the evidence at trial, including my credibility assessment of Barb and Don. Both were cross-examined.

[267] The Court may examine what a deceased settlor said prior to his death when assessing, as a question of fact, a settlor’s certainty of intention to create a trust: Elliott (Litigation guardian of) v. Elliott Estate (2008), 2008 63993 (ON SC), 45 E.T.R. (3d) 84 (Ont. S.C.), at para. 29, citing Jones v. Lock (1865), 1 Ch. App. 25; Paul v. Constance, [1977] 1 All E.R. 195 (C.A.).

[268] At trial, Barb gave the following evidence as to the circumstances leading to the estate freeze, her father’s role, and what she understood about the transaction.

Q. And what did you understand your father wished to do in the year of 2001 with respect to estate planning?

A. So, it was coming to my brother's date of having to do an estate freeze because of the 21-year rule, and then my brother would be shortly after. But my father, he was very ill. He died in December, but he had been very ill. He did an estate freeze that included me. Like, mine was supposed to be, I think it's on your 30, my 39th birthday. He, he did an estate freeze early for me.

Q. Okay. And do you recall whether you had any discussions with your father in 2001 about the estate freeze?

A. Yes. He explained it to me you know, what he was doing and why he was doing it.

Q. What did you understand was the why he was doing it?

A. Well, because the business had been so successful, and he wanted future growth to be for the next generation.

Q. And what did you understand in this estate freeze was going to happen to your shares?

A. The original shares I had, I, I sold them to, [4MK], and I got $24 million with pref shares.

Q. Okay. And what was discussed with your father, if anything, about the 24 million in pref shares?

A. Well, it was very generous that I was, I could use that money whenever I wanted.

Q. I just would like you to tell His Honour without me interrupting and directing a bit, just you tell the story of the discussion with your dad around the 2001 estate freeze. You have already said that he was very ill.

A. Yeah.

Q. Okay. So, just....

A. So, I, I, I have never been involved in the business. I don't understand the business. My father wanted 100 percent to leave the, the, the, the shares to the next generation. I was not going to question my father. I understood as much as I could because I am not involved in the company. I am not a businessperson. I did what my father told me, and this is what he was doing.

Q. Okay. And when you say I did what my father told me, what do you mean? Like, what did you actually physically do?

A. I did what he told me. I, I, I went along and I signed the papers. And I didn't understand it 100 percent, probably not even 50 percent, but this is what my father, my father did.

[269] Barb further testified:

Q. And when your father said to you that you were going to get $24 million worth of pref shares, what was your reaction?

A. I was thrilled. I was 40 years old. I, you know, I didn’t have any income. This was money that I could use to continue you know, taking care of the kids and not touch anything else because that was a gift from my father to be left to my four kids.

[270] Later in Barb’s evidence, when asked about the re-organization of the NFT in 2022 due to the 21-year rule, Barb answered that it was “left to the kids”. When asked why she wanted it left to the kids, she testified “[b]ecause that was the intention of my father when he started this, all those years back in 2001.” She later provided the following answers in her evidence in chief:

Q. Who do you believe is entitled to share in the growth in value of the shares in the Newlands Family Trust?

A. My four children.

Q. And why do you believe that?

A. Because my father left a trust and gifted it to five beneficiaries, the four children – Spencer, Wesley, Harrison, Jordan and myself. That has been sitting there making an incredible amount of money since that date, and now because of the 21-year rule, it has been redone so then there will be future growth for the new generation. And that was my father’s intention, and I know that, that’s not hearsay. I know that. That was my father’s, he built this company, and he didn’t keep it for himself he gave it to generations.

[271] On cross-examination, Barb’s evidence was consistent on this issue.

[272] Don similarly testified that Gordon instigated the estate freeze of Barb’s SHL shares in August/September 2001 and his in December 2000, because Gordon’s cancer had come back. He testified that this was like in 1993, when Gordon had his first cancer scare. These concerns resulted in him distributing the shares held by the BJL Trust to Barb, and the creation of the 1993 Agreement the next day which restricted disposition of the shares and ownership of the shares to Gordon’s issue. He testified that these cancer scares motivated Gordon to undertake this estate planning.

[273] Don testified that he attended meetings with his father and his advisors regarding the estate freezes. While he admitted he did not understand trusts, he understood the intention of the DGL trust was consistent with the long-term plan contained in the 1993 Agreement, namely to continue the growth value in SHL shares to the next generations of the Lang bloodline.

[274] Gordon’s intention to preserve the growth in value of the SHL shares to his issue is consistent with the 1993 Agreement. The details of that agreement demonstrate that throughout Barb’s direct ownership of the shares, she was restricted in what she could do with them. Even though Barb had direct ownership of them, Gordon’s control of those shares was imprinted on them, if not by Gordon’s moral suasion over Barb and Barb’s desire to please her father, then certainly by the 1993 Agreement and the existence of the Control Corp.

[275] The NFT Deed, which Gordon signed, is consistent with the intention of passing down exclusively to Gordon’s issue the ownership and benefits associated with the SHL shares. Barb and the children were named as the sole beneficiaries. The terms around the distribution of the NFT, had as a default, an equal division of the trust assets among all five beneficiaries (para 2(c)). It restricted distributions of capital and income to the children until they reached the age of majority. It contemplated that if Trustees sought to allocate or were directed to give capital or income to a minor beneficiary, they shall hold it and keep it invested until the beneficiary reached the age of majority (paras 3 (a) and (b)). These provisions demonstrate an intention to pass wealth solely to Barb and her issue.

[276] Don and Barb’s actions were consistent with the 1993 Agreement and Gordon’s intentions in 2000/2001, when they agreed to the estate freezes involving the shares they owned. I find the hearsay evidence of Gordon’s intentions received from Don and Barb admissible.

[277] Ian argued that a negative inference should be drawn from Barb’s failure to call lawyers at Lang Michener, and specifically, Ms. Marni Whitaker, to give evidence as to whose intention it was to engage in an estate freeze and create the NFT. Mr. Harris, in his evidence, was taken to a memo from Carl De Vuono of Lang Michener, dated March 29, 2000, addressed to Marni Whitaker and Cynthia Cross with Arnold Englander copied. Neither party called any of these individuals to give evidence. Don and Barb both testified that Ms. Whitaker was the estates lawyer who prepared all the trust agreements.

[278] This memo from Mr. De Vuono states that Don, Stuart, and Barb “wish to implement a share freeze arrangement” and that they will “establish a ‘gel’ trust, which as I understand it, will be a family discretionary trust which will include each of Don, Stu and Barb as one of the beneficiaries.” It continues, “I believe Marni should obtain instructions from each of the children and prepare a form of trust.”

[279] There was reference to another unsigned letter, purportedly from Ms. Whitaker to Barb that described the NFT in high level. It was marked only as a lettered exhibit. It was not presented to Barb during her evidence. Since neither its authenticity nor the truth of its contents were established in evidence, I place no weight on this letter.

[280] I decline to draw a negative inference for the following reasons.

[281] First, any potential evidence Ms. Whitaker might give about whether it was Barb or Gordon’s intention to create the NFT and Barb’s beneficial interest, would be protected by solicitor-client privilege. At a motion heard on June 23, 2021, Ian sought disclosure of Ms. Whitaker’s file to understand “whether the 2001 reorganization was undertaken to defeat his claims in the event of separation.” Pinto J. ruled that the information in the file is protected by solicitor-client privilege. If Ms. Whitaker were called as a witness, her testimony on who directed the establishment of the NFT would most likely be subject to solicitor-client privilege.[^13]

[282] I agree with Barb’s submission that drawing an adverse inference would be inconsistent with the protection afforded to solicitor-client privilege and would create an expectation that lawyers’ testimony be received. As stated by Kristjanson J. in Goldstein v. Walsh, 2018 ONSC 2978, at para. 157:

There cannot and should not be a presumption that litigants must call counsel and produce privileged documents, or else risk an adverse inference. Solicitor-client privilege is a substantive right with quasi-constitutional protection. The adverse inference sought would undermine the protection of solicitor-client privilege.

[283] Second, the NFT Deed sets out Gordon’s intention. While anyone could have settled the trust, it was Gordon who settled this trust and signed the NFT Trust Deed. It provides evidence of his intention that the wealth from the SHL shares were to pass inter-generationally to Barb and her children, consistent with the 1993 Agreement. I give this documentary evidence that memorialized Gordon’s intention significant evidentiary weight.

[284] Even if solicitor-client privilege were not an obstacle and Ms. Whitaker testified about instructions she received from Barb or Gordon, this would not have resolved whether Barb was acting on Gordon’s wishes. As explained, I am satisfied Barb agreed to do as her father asked. Ms. Whitaker could not have given evidence of private conversations Barb had with her father.

[285] For these reasons, I find:

a. It was Gordon’s intention, at the time the shares were distributed to Barb in 1993, that their value was to be used for the sole benefit of Barb and her issue.

b. Throughout Barb’s legal and direct ownership of the SHL shares from 1993-2001, she was constrained in her ability to sell, encumber, or dispose of the shares for her sole benefit, which was driven by Gordon’s wishes and which Barb agreed to in the 1993 Agreement.

c. It was Gordon’s intention in 2001 to create the NFT to ensure that the future growth in value of the 90 Class B Common Shares of SHL Barb legally owned, passed on to Barb and her issue. Barb acted on her father’s wishes.

c. Was Gordon the donor of the gift?

[286] Barb argued that the elements of a gift – intention, acceptance, and delivery – manifest differently in the context of a gift of an interest in a trust. The existence of a trust is premised on three certainties: “1) certainty of intention – the settlor must have intended to create a trust, 2) certainty of subject matter – the trust property must be sufficiently ascertained or ascertainable, and it must be sufficiently certain as to how that property will be divided among the beneficiaries, and 3) certainty of objects – the beneficiaries of a trust must be sufficiently identified”: Oosterhoff, Chambers & McInnes, Oosterhoff on Trusts, 9th ed. (Toronto: Thomson Reuters Canada Ltd., 2019), at p. 178.

[287] A beneficiary’s interest in a trust is created at the inception of a trust when the three certainties are met and the trust is constituted by the transfer of property: Knight v. Knight, 1840, 3 Beav. 148, 49 ER 58. Barb said there was certainty of intention because Gordon intended to create a trust. There was certainty of subject matter, because “he instructed Barb to participate in the transaction in order to give effect to Gordon’s intention to give the growth to Barb’s children”, and because Gordon made a gift of $100 to the NFT for those shares. The objects of the trust were Barb and her issue.

[288] Accordingly, Barb said the gift of her beneficial interest in the NFT occurred on August 22, 2001, when the three certainties were met. She said there was a valid gift because: 1) there was a unilateral intention on the part of Gordon to gift an interest in the NFT to Barb when the NFT was created on August 22, 2001. Barb provided no consideration for her interest in the NFT. Barb did not seek to negotiate with her father. She had no meaningful input in the transaction, other than her cooperation in signing papers; 2) Barb would have known and accepted her beneficial interest in the NFT at the same time she signed the trust deed; and 3) there was delivery of the gift since she received millions in dollars in distributions from the NFT since it was formed.

[289] Where Barb’s logic fails is that Gordon did not divest himself of property and transfer it to Barb (or her children), other than his $100 used to establish a trust as settlor.[^14] As stated in McNamee, for there to be a valid gift, “the donor must divest himself or herself of all power and control over the property and transfer such control to the donee”: at para. 25.

[290] Gordon did not own Barb’s shares when the NFT was created. At most, Gordon was a donor of $100 in which Barb has a beneficial interest. Aside from his $100, his property did not form the subject of the enormous value of the trust. It was the growth value in Barb’s 90 Class B common shares of SHL that formed the subject of the trust, which Barb owned and sold to 4MK and which was then purchased by the NFT. Or put differently, the value of Barb’s beneficial interest in the NFT arose from her own shares.

[291] I find that the three certainties of a trust have been met and that the NFT is a valid trust. Ian did not challenge the NFT as being invalid or a fraudulent trust. Barb submitted that her beneficial interest was created before the NFT acquired the growth value in her shares, and therefore, this Court should find that Barb’s subsequent contribution of her own asset to the NFT a month later is not a gift to herself. This conclusion is inconsistent with the evidence of what transpired.

[292] The estate freeze was Gordon’s plan, with which Barb agreed to cooperate. From its inception, according to Barb’s and Don’s evidence, the plan was to make Barb’s shares the primary asset of the NFT so that it could be passed on to future generations. She was both a beneficiary and a trustee of the NFT. She knew that because she signed the NFT Deed before selling her shares to 4MK. I reject any suggestion that she sold her shares to 4MK, without knowing that their future value would become owned indirectly by the NFT of which she was a beneficiary.

[293] Barb argued that, conceptually, the Court should view the transactions separately. In one transaction, Barb sold her shares to 4MK in exchange for preferred shares, with no guarantee of acquiring any growth value. She was then out of the picture, content with the consideration she received ($24.5M in preferred shares) from having sold her shares. In the other transaction, Gordon settled the NFT making Barb and her issue beneficiaries, consistent with his intention of passing wealth on to future generations. Any future benefit she acquired was a gift by virtue of the NFT.

[294] The problem with this argument is chronological. Gordon settled the NFT first on August 22, 2001. Its only asset was $100, but the intention of it acquiring the growth value of Barb’s shares was agreed upon by Barb and Gordon at the outset. A month later on September 24, 2001, Barb sold her shares. It was only because of Barb’s sale of her shares to 4MK that the NFT acquired the growth value of the shares, which in turn benefited Barb as a beneficiary. It also ignores the reality that the NFT’s acquisition of the growth value of Barb’s shares was the plan from the outset.

[295] I have considered Barb’s argument that “effectively”, she gave the shares back to Gordon so that he could make the gift back to Barb and her children. She relied on Ian’s testimony to support this conclusion. When Ian was cross-examined and asked whether Barb would have given back all of the shares to Gordon absolutely, Ian said “probably, yes.” He further testified that Barb would have done anything her father asked her to do. Ian also agreed he would have done anything for Gordon.

[296] Notwithstanding this evidence, I cannot conclude Barb gifted the shares back to her father. There was no legal transfer of the shares back to Gordon. There is no evidence of Gordon having accepted them back. He did not want them; he wanted their value to be passed on to Barb and her issue. Rather than gifting the shares to her father, Barb sold them to 4MK. That was the transaction. That was her bargain, for which she received consideration. There was also no evidence of the shares being delivered to Gordon (i.e., the third requirement for a gift). They were delivered to 4MK.

[297] It was Gordon’s intention that Barb engage in the estate freeze of her shares to pass on wealth to future generations. She did as her father asked. However, this gratuitous act was not her father’s. It was Barb’s. She gave up direct and certain ownership of the future growth in value of the SHL shares. Her gratuitous act to appease her father’s wishes does not characterize Barb’s interest in the NFT as a gift from her father. It merely demonstrates that her father had “moral sway” over Barb.

[298] Ian’s counsel argued that if I were to find Barb’s interest in the NFT was a gift from her father, it would invite other spouses to shelter assets from equalization through a similarly constructed estate freeze. Barb’s counsel argued that this “floodgates” argument was nonsense. Every trust is different and family courts are accustomed to individualized justice.

[299] I agree with the concern raised by Ian’s counsel. “The design of [the FLA] is to promote the goals of certainty, predictability and finality in the resolution of property matters following the breakdown of marriage”: Serra v. Serra, 2009 ONCA 105, 307 D.L.R. (4th) 1, at para. 56. Barb’s shares were acquired by gift before marriage, which she then made part of the NFT’s assets during the marriage because it was what her father wanted her to do. It was open to Barb before or during the marriage to ask Ian to enter a domestic contract, expressly excluding this asset from equalization. It was also open to Barb to legally transfer the ownership of the shares back to Gordon so that he could truly (re)gift them back to Barb and her issue through an estate freeze. Neither occurred.

[300] This case is not unlike other family cases involving trust interests that were subject to equalization, where the Court separated out and excluded trust assets that were a gift from a third person acquired during the marriage, from those assets which the spouse placed into the trust during the marriage: see Brinkos. However, I acknowledge in Shinder, the trust assets comprised both the husband’s assets and the husband’s father’s assets, and the entire trust assets were found to be excluded under s. 4(2).

[301] The FLA does not carve out the exclusion that Barb is asking this Court to grant. Specifically, it does not permit a spouse who acquires a gift before marriage to exclude the growth in value of that gift during the marriage from NFP calculations, simply because the spouse placed the growth in value of that gift into a trust.

[302] Barb relied on several cases to argue that her beneficial interest in the NFT on the date of separation is a gift and therefore, excluded. But the critical factual distinction between those cases and this one is that the property that became the subject of the trust was gifted by a third party during the marriage. Here, it was Barb’s own asset, gifted to her before marriage, that became the property of the NFT.

[303] In Clarke v. Read Estate, 12 RFL (5^th) 305, 2000 22457 (ON SC), the wife’s parents placed $60,000 and a mortgage in a trust during the marriage with the wife as beneficiary. At para. 60, the Court relied on the reasoning in Brinkos in considering whether the trust assets that were given by the wife’s parents to the trust were excluded. It held that they were.

[304] In Brinkos, the Court of Appeal excluded gifts the wife’s parents made to a trust during the marriage from NFP calculations. The Court did not have to rule on whether the wife’s own contributions to the trust, which constituted pre-marriage gifts from her parents, were excluded. This is because parties agreed that this asset was property “owned on the date of marriage” and therefore deducted from NFP calculations.

[305] In Black v. Black, the husband’s father created two estate freezes by incorporating a holding company, B Ltd. The father sold to B