Hui v. Chan, 2025 ONSC 56
NEWMARKET COURT FILE NO.: FC-16-52274-01
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Agras Seabo Hui
Applicant
– and –
Sik Wai Chan (aka Roy Chan)
Respondent
D. Tobin, Counsel for the Applicant
Respondent – Self-represented
HEARD: May 29, 30, 31, June 3, 4, and 5, 2024
reasons for decision
Introduction
1This matter proceeded to trial before me on May 29, 30, 31, June 3, 4, and 5, 2024.
2The Applicant was represented by very capable Counsel who did an excellent job at trial.
3The Respondent was self-represented, hearing impaired and required the assistance of Cantonese interpreters. The Court ensured that the Respondent’s needs were met throughout the trial and when issues were raised, they were addressed before continuing.
Family Constellation
4The parties were each married previously, and they each have a child from their previous marriages.
5The parties started their relationship in December 1989 and, according to the pleadings filed by both parties, they separated on April 2, 2006.
6When they met, both parties were still legally married; but separated from their former spouses.
7The Applicant’s divorce was granted on April 13, 1991, and the Respondent’s divorce was granted on January 4, 1992.
8Despite the fact that both parties were still legally married on December 11, 1990, the parties participated in a “wedding ceremony” in Las Vegas. Given these circumstances, the “marriage” in Las Vegas was not legally valid and the issues in this matter proceeded by way of the Family Law Act.
9The parties had three children together, namely, Wayne Chan (born May 28, 1991), Eugene Chan (born September 2, 1992) and Chloe Agnes Chan (born November 11, 1999).
Issue for Trial
10The only issue to be determined at trial was the Applicant’s claim for spousal support between the years 2015 and 2022.
11The Applicant did not seek spousal support between 2006 and 2015. It was not disputed at trial that the Respondent supported the Applicant and their children financially during this approximately nine year period. The Applicant acknowledged that this period should be accounted for when the Court is considering duration of support.
12There was no accounting of the financial support provided between 2006 and 2015, and no written agreement existed.
13At trial, the Respondent claimed that the parties were still together between 2006 and 2015, however, this position contradicted his pleadings. I will address this issue further, below.
Questions for the Court
Was the Applicant entitled to spousal support on a contractual, non-compensatory and/or compensatory basis between 2015 and 2022?
If the Applicant was entitled to spousal support, can the Court determine the quantum and duration of support as at 2015, absent detailed records of the financial arrangements between the parties that took place from 2006 to 2015 (the “contract”)?
If the Court can determine quantum and duration starting at 2015, absent detailed financial records between 2006 and 2015, what are the parties’ incomes for support purposes between 2015 and 2022?
Once the parties’ incomes are determined, what duration of spousal support is appropriate in the circumstances of this case?
Background
14When the parties met, the Applicant was a travel agent and the Respondent worked in the insurance industry. The Respondent encouraged the Applicant to change her career to work in the insurance industry and both parties were very successful. Both had been recognized with various awards and promotions.
15Throughout most of their relationship, the Respondent resided in Hong Kong and visited the family in Canada periodically. The parties also travelled together for vacations.
16There were two periods during the parties’ relationship where the Applicant relocated to Hong Kong with the children, at the Respondent’s behest. The first time was in 1992, shortly after Eugene was born.
17The parties resided together in Canada between 1989 and 1992, they lived together in Hong Kong between 1992 and 1999, and in 1999 the Applicant returned to Canada with the two eldest children (while pregnant with Chloe). The Respondent remained in Hong Kong thereafter.
18While in Hong Kong between 1992 and 1999, the Applicant began working in the insurance industry with the Respondent. She won a number of awards, and her career was flourishing. However, she became pregnant with Chloe in 1999 and because of the very high cost of having a baby in Hong Kong, the Respondent encouraged her to return to Canada to give birth. The Applicant then uprooted the two boys and moved back to Canada.
19While in Canada, the Applicant continued working in the insurance industry and met significant success here. Again, her career was flourishing, and she had many clients and agents working under her.
20In 2006, the Respondent encouraged the Applicant to return to Hong Kong with the children.
21The Applicant claimed that upon her return, the Respondent convinced her to transfer her book of business to him, and to allow him to recruit her agents to work for the company the Respondent was working for at that time in Hong Kong, called MassMutual.
22The Applicant claimed that she did so with the hope of continuing her successful career in Hong Kong. However, when she arrived in Hong Kong, there was no job waiting for her and she alleged that the Respondent raped her. The Respondent denied this at trial.
23This was the end of their relationship from the Applicant’s perspective and the Applicant began to make plans to return to Canada with the children. As the children had just started school, she remained in Hong Kong for a year before returning.
24The Applicant returned to Canada with the children in 2007.
25It was in 2006 that the parties started engaging in a financial arrangement upon which the Applicant built her case at trial.
26The generalities of the financial arrangement was not disputed. The parties each claimed that the Respondent’s income had been regularly deposited in the Applicant’s bank account, and she would keep a portion, and send a portion to him. The portion she kept was to support her, the children and the Respondent’s parents who resided with the Applicant in Canada.
27The parties did not agree as to the amount of money that was being exchanged, and there was disagreement about some of this money being used by the Applicant to purchase various properties in Canada.
28The Applicant claimed that the properties were purchased to invest in her future, the Respondent claimed that she made the investments on behalf of the “family.” The Respondent was not on title to any of the properties in question and it must be noted that the Respondent did not pursue a trust claim at trial.
29The Applicant claimed that she kept 75% of the Respondent’s income and she sent him 25% of the income. The Respondent claimed that this was not possible, as he required funds to hire assistants, secretaries and to pay for business expenses. He did not advise the Court of what the actual division of the funds were, from his perspective, he just claimed that the number provided by the Applicant was incorrect and implausible.
30At some point leading up to 2015, the Applicant made her bank account a joint account with the Respondent, and this allowed both parties to access the funds.
31The Applicant claimed that as the years passed, and approaching 2015, the Respondent started removing more money than was agreed to and, eventually, started having his income deposited into his own account. He then started to transfer funds to her by way of the joint account.
32The Respondent claimed that in 2015, because the Applicant started to sell off the properties she had accumulated over the years with “his” money, he decided that their mutual financial agreement had come to an end, and he stopped sending her money.
33The Applicant claimed that it was the termination of the financial arrangement in 2015 that led to her starting a company called Ashlac with her best friend’s husband, named Lawrence Chan. She claimed that she saw a good investment opportunity that would ensure that her financial future was secure.
34In order to invest in Ashlac, the Applicant sold two of her properties to the company and she claimed that her investment equated to around $700,000. She testified that Ashlac ended up being a financial disaster and she lost her investment. As a result, she entered into a loan agreement with Lawrence Chan to ensure that she could continue to be financially supported.
Preliminary Issue – the Date of Separation
35As mentioned briefly, above, while the date of separation was not disputed in either party’s pleadings nor was it flagged as an issue for trial, the Respondent took the position at trial that the parties had “never separated” and he also took the position that they separated in 2015.
36The Respondent did not dispute the Applicant’s date of separation in his Answer. He listed the same date. While there was much evidence led at trial about the circumstances that took place in 2015, that evidence did not focus on the date of separation.
37No documents were prepared for trial anticipating that the date of separation was an issue to be determined.
38The date of separation was not listed as an issue for trial in the Trial Scheduling Endorsement Form.
39The Applicant took the position that the date of separation was not an issue for trial, as the parties’ pleadings demonstrated no divergence.
40The Respondent, who was self-represented, simply declared during the trial that the date of separation was in 2015, and not earlier than that. He also stated, as noted above, that the parties never separated.
41In my view, the Respondent’s decision to take this position at trial was akin to a request to amend his pleadings. As such, the Court is guided by the caselaw and legislation related to this issue.
Law – Amending Pleadings
42The Court of Appeal says that leave to amend a pleading should only be denied in the clearest of cases in Cuthbert v. Nolis.1
43The test for leave to amend under sub-rule 11(3) of the Family Law Rules strongly favours permitting amendments except in the “clearest of cases.”
44In determining what would constitute a clear case, the Court looks to Fraser v. Fraser:2
Various decisions of our court have confirmed that Rule 11(3) generally is mandatory, absent prejudice or disadvantage to another party that cannot be cured by either an award of costs or the granting of an adjournment or both. It generally does not matter whether the amendment is prompted by a change in the case, is merely an afterthought, raises a new issue, or comes as a surprise to the responding party. However, unfairness to a party resulting from a proposed amendment must be curable by costs, or an adjournment, or both. Moreover, the existence of bad faith is an exception to everything. In particular, where it can be shown that an amendment is motivated by bad faith, there is an inherent jurisdiction in the court to refuse the amendment. See, for example: Stefureak v. Chambers (No. 3), 2005 CanLII 16090 (ON SC), [2005] O.J. No. 1949 (S.C.J.), and Canabate v. Ayala, 2009 ONCJ 415, [2009] O.J. No. 3904 (S.C.J.).
Date of Separation - Analysis
45The Applicant took the position that she was entitled to spousal support, in part, on a contractual basis. She relied heavily on the financial arrangements that existed between the parties during the period of 2006 to 2015 to support this claim. As such, if the Respondent were to claim that the parties did not separate until 2015, his position would have a significant and prejudicial impact on one element of the Applicant’s case.
46The caselaw for amendments to pleadings noted above does not specifically address the issue of amendment at the time of trial, however, a significant change in position at trial is akin to such a request.
47The Court must consider whether permitting the Respondent to change his position at trial would be prejudicial to the Applicant, and whether it would put her at a disadvantage.
48Given that the change in position regarding the date of separation would have had a significant impact on the evidence led at trial, it is clear to the Court that to grant this amendment would be highly prejudicial to the Applicant. The Applicant did not have an opportunity to address the issue raised by the Respondent almost seven years into this litigation.
49During those seven years, the Respondent did not raise the date of separation as an issue in dispute. He did not seek to amend his pleadings. The issue was never conferenced. No opportunity was given for the Applicant to request a focused hearing on the issue.
50It is clear to the Court, as well, that no adjournment nor costs award would cure the disadvantage and prejudice. This matter had been outstanding for seven years at the time of trial and the Court would not have considered an adjournment request at that late stage, if one had been requested.
51Extensive financial, legal and Court resources had already been expended to move this matter through the stages of litigation over a long period of time. An adjournment was out of the question.
52Costs would not cure the prejudice or disadvantage because the evidence led at trial did not focus on the date of separation and the Applicant was not given an opportunity to refute this claim.
53Finally, the change in position made little sense based on the evidence filed by the Respondent, and the Respondent could not even establish a prima facie basis upon which to support his newly claimed date of separation.
54As such, the Court is dismissing the Respondent’s request to change his position at trial on the issue of the date of separation and I find that the parties were ad idem that the date of separation was April 2, 2006.
The Positions of the Parties at Trial
55At trial, the Applicant sought a finding that she was entitled to spousal support and sought retroactive spousal support from the Respondent for the period between November 1, 2015 and December 31, 2022 (plus pre-judgment interest). She sought a lump sum payment in the amount of $745,386, net of income tax.
56It was the Applicant’s position that the parties had an implied financial agreement between 2006 and 2015, such that the Respondent ensured that she and the children were financially supported after separation and it was her position that the Respondent unilaterally terminated this agreement in 2015, paying no support to her thereafter.
57The Respondent sought an Order dismissing the Applicant’s claim for a lump sum award on the basis of “financial disparity, contributions during the cohabitation period, [his] current financial incapacity and future income prospects.”
58The Respondent proposed a monthly spousal support award payable to the Applicant in the amount of $100 per month, for five years starting on July 1, 2024. It was the Respondent’s position that while he continued to financially support the Applicant between 2006 and 2015, it was not his intention that all of the funds were to be viewed as spousal support.
59The Respondent took the position that the funds were “family” funds, sent to the Applicant to ensure that she, their children and his parents were cared for, and to build a financial future for the family and their retirement through investments in property.
60It was his position that the Applicant demonstrated that their mutual arrangement had come to an end when she decided to unilaterally start selling the properties she owned.
61It was the Respondent’s position that the Applicant had amassed over $700,000 in net proceeds of sale from the properties, which provided her with sufficient funds to meet her own needs from 2015 onwards.
62It was his position that the sale of the properties to the Applicant’s jointly held company, Ashlac, was done solely to shield the assets from him and his family. He also alleged that the co-owner of Ashlac, Lawrence Chan, was a man that the Applicant was having an affair with, however, he maintained that it was not the alleged affair that resulted in his decision to stop sending the Applicant money.
63The Respondent alleged that the loan agreement entered into by Applicant and Lawrence Chan after the failure of Ashlac’s prospects, was a sham.
Properties Owned and Sold by the Applicant since 2015
64Based on the uncontested evidence filed at trial, the Court finds that the following properties were owned and sold by the Applicant since 2015:
18 Fellows Gate, Vaughan, ON – sold by the Applicant to a third party in 2015 for $1,370,493.76. A mortgage in the amount of $866,185.65 was discharged upon closing. The Applicant received $491,997.33 in net proceeds of sale.
39 Queens Quay, Suite 1019, Toronto, ON – purchased by the Applicant in June 2016, for $456,000. The Applicant claimed that she used the proceeds of sale from the Fellows Gate property to make this purchase.
39 Queens Quay, Suite 1019, Toronto, ON – sold by the Applicant to Ashlac on July 25, 2016, for $2.
39 Queens Quay, Suite 1019, Toronto, ON – sold by Ashlac to a third party on September 28, 2016, for $520,000. Ashlac received $520,000 in net proceeds of sale.
41 Frybrook Crescent East, Richmond Hill, ON – sold to a third party on September 16, 2016, by the Applicant and the Respondent’s mother for $2,410,000. A mortgage balance of $617,481.16 was discharged upon closing. The Applicant received $829,497.75 in net proceeds of sale.
40 Wilson Road, Seguin, ON – sold on November 15, 2016, by the Applicant to Ashlac for $2. Payments were made to discharge mortgages in the amount of $88,652.56 and $267,693.69. The trust ledger indicated that the funds to discharge the mortgages and closing costs were received from “Agras Chan or Ashlac Investment Ltd.”
40 Wilson Road, Seguin, ON – sold by Ashlac to a third party (off market) on June 28, 2017, for $650,000. Ashlac received $650,000 in net proceeds of sale.
Incomes of the Parties for the Relevant Period
65At trial, the Respondent agreed that his base income for the relevant period was as follows (all of these amounts reflected the value in Canadian dollars):
2014: $557,797
2015: $642,450
2016: $637,707
2017: $664,671
2018: $694,440
2019: $694,440
2020: $1,196,583.40
2021: $1,004,139.87
66The Respondent claimed that these amounts were only his “base” salary and that from these numbers he had to pay 16.5% in Hong Kong income tax and many business expenses.
67The Respondent did not file any documents to support these claims and he did not particularize what these various expenses would be. The Applicant claimed that the income tax rate of the Respondent’s earnings in Hong Kong was 15% and it was her position that the Respondent’s income must be grossed up to account for the lower tax rate in Hong Kong.
68The Applicant filed her Notices of Assessment at trial for each year and claimed that her total income was as reflected in those assessments, as follows:
2013: $42,074 (capital gains) and $2,273 (commissions)
2014: $15,465
2015: $108,143 ($105,514 in capital gains)
2016: $33,955.90
2017: $8,955.57
2018: $2,788.52
2019: $1,314.10
2020: $21,541 ($14,000 in CERB benefits)
2021: $1,333
2022: $1,041
69The Court was not provided with evidence of the parties’ respective incomes between 2006 and 2012 nor was the Court provided with particularized evidence relating to any spousal support, child support nor section 7 expenses that were payable during that period of time.
Ashlac
70As briefly mentioned, above, according to the Applicant, in 2015, she and Lawrence Chan (“Lawrence”) started a company called Ashlac. Between 2015 and 2022, the Applicant held 10% ownership of Ashlac and Lawrence held 90% ownership, according to their evidence at trial.
71The Applicant and Lawrence both claimed that they did this to provide the Applicant with cashflow since the Respondent stopped sending her money.
72According to the testimony of the Applicant and Lawrence, the Applicant’s 10% share of the company was purchased by transferring ownership of various properties she owned, to Ashlac, with a total value of $700,000 in net proceeds of sale.
73According to his evidence, Lawerence’s 90% share of the company was purchased by him investing $500,000, plus his “expertise.” The Applicant testified that she did not know how much Lawrence had invested.
74The Applicant and Lawrence testified that when they started Ashlac their plan was to become involved in the business of Automatic Breaking System (ABS) technology and that there was a lucrative business opportunity presented to them.
75Lawrence had connections and he claimed that he was offered an opportunity to be involved with the North American distribution of ABS systems. This was potentially a multi-billion dollar opportunity, according to Lawrence.
76Both Lawrence and the Applicant testified that just before they were going to sign on to this lucrative deal, various governments started regulating the ABS technology and car manufacturers were developing their own in-house systems.
77As a result, the business was a total bust and both Lawrence and the Applicant lost their investments.
78Lawrence testified that this was a small investment for him, compared to the type of investments he was usually involved with.
The Applicant’s Properties and Investments in Ashlac
79According to the Applicant, the following transactions occurred in order for her to invest in Ashlac:
39 Queens Quay, Suite 1019, Toronto, ON – sold by the Applicant to Ashlac on July 25, 2016, for $2.
39 Queens Quay, Suite 1019, Toronto, ON – sold by Ashlac to a third party on September 28, 2016 for $520,000. Ashlac received $520,000 in net proceeds of sale.
40 Wilson Road, Seguin, ON – sold on November 15, 2016, by the Applicant, to Ashlac for $2. Payments were made by either Ashlac or Lawrence to discharge mortgages in the amount of $88,652.56 and $267,693.69. The trust ledger indicated that the funds to discharge the mortgages and closing costs were received from “Agras Chan or Ashlac Investment Ltd.”
40 Wilson Road, Seguin, ON – sold by Ashlac to a third party (off market) on June 28, 2017, for $650,000. Ashlac received $650,000 in net proceeds of sale.
80Accordingly, Ashlac received approximately $1,172,000 in total proceeds of sale. It paid off the Wilson Road mortgages totalling $356,346.25 and the Applicant was given $75,000 at some point, according to her testimony at trial. This resulted in the Applicant investing approximately $740,653.75 into Ashlac after the mortgage debt was paid off.
81According to the narrative provided by the Applicant at trial, in September 2015, she sold the property located at 18 Fellows Gate. The net proceeds of sale from that property were $491,997.33. She said that she used the lion’s share of those proceeds to purchase a property for her parents in June 2016, located at 1019-39 Queens Quay, Toronto, for $456,000.
82About one month later, on July 15, 2016, the Applicant transferred ownership of the Queens Quay property to Ashlac for $2. Ashlac turned around and sold the property for $520,000 a couple of months later, in September 2016.
83Around the same time, in mid-September 2016, the Applicant sold the 40 Wilson Road cottage to Ashlac for $2. Lawrence testified that this was done to avoid paying land transfer tax and commissions.
84Lawrence’s testimony was that Ashlac, having purchased the property for $2, allegedly discharged the existing mortgages with a balance of $357,926.26. As such, the Applicant and Lawrence claimed that the net proceeds of sale went toward the Applicant’s investment in the company and no other cash was given to the Applicant beyond the $75,000 mentioned earlier.
85Neither of the transfers of property from the Applicant to Ashlac took place on the open market. Lawrence testified that this was done to avoid various taxes and commissions. No evidence was filed at trial to establish the market value of the properties.
86In 2022, the Applicant claimed that she divested herself of her shares of Ashlac by “selling” them to Lawrence for $20,000. She said that she did not receive $20,000 cash as the funds were credited against the accumulating debt that she owed to Lawrence at that time under their loan agreement, detailed below.
The Loan Agreement
Loans from Lawrence Chan
87The Applicant claimed that starting in 2017, Lawrence agreed to lend her a total of $600,000 at 5% interest, which would be available on demand (similar to a line of credit), and that she requested funds periodically, as needed.
88At the time of trial, the Applicant claimed that she had already borrowed $450,000 from Lawrence (this was reduced by $20,000 when Lawrence “purchased” the Applicant’s shares of Ashlac from her in 2022, bringing the total loan to $430,000 at the time of trial).
89The Respondent asked Lawrence in cross-examination why he would have loaned such a significant amount of money to someone who had no income. Lawrence explained that the Applicant was his wife’s best friend. The Respondent was then able to elicit from Lawrence that his wife had passed away in 2015, long before the money started flowing.
90Up until this time in the evidence, the Court had been given the impression that Lawrence’s wife was the Applicant’s best friend at the time of trial. Neither the Applicant, nor Lawerence, proactively advised the Court of Lawrence’s wife’s death in 2015.
91The Applicant claimed that she and Lawrence entered into a Loan Agreement in the summer of 2017. A copy of the Loan Agreement was marked as an Exhibit at trial.
92The Respondent raised questions about the authenticity of the Loan Agreement as the signatures were not witnessed. Furthermore, he claimed that when the Applicant was asked about the financial agreement that she had with Lawrence during her pre-trial questioning, she said that they had entered into a verbal agreement.
93At trial, the Applicant claimed that she made an error at the questioning due to stress and confusion. The Respondent alleged that the Loan Agreement was back-dated for the purposes of the trial.
Allegations of Family Violence
94The Applicant made allegations against the Respondent that he had systematically abused her throughout their relationship and after separation, including when she was pregnant, and that she went along with this situation between 2006 and 2015 because she felt that she had no other choice. She claimed that if she did not go along, he would have stopped sending her money.
95The Respondent, in questioning, admitted to instances of violence that he inflicted upon the Applicant. At trial, the Respondent claimed that he did not understand the questions posed to him at the time of the questioning.
96The Applicant claimed at trial that the prolonged abuse, and its negative impact on her emotional stability, prevented her from being able to rejoin the workforce. That even if she could have rejoined the insurance industry (which career had been repeatedly disrupted by her moves to Hong Kong at the Respondent’s behest), she would not have been able to.
97Evidence was filed by the Applicant, and put to her by the Respondent, that she had reported the allegations of abuse to her doctor, that she had been connected to a social worker and that it was recommended that she engage in Alcoholics Anonymous and addictions treatment related to her alcohol consumption.
98The Applicant, at trial, denied that she had an alcohol problem at the time. She did not follow through with treatment.
99The Court is satisfied on a balance of probabilities, that the Applicant had been subjected to intimate partner violence and coercive and controlling behaviour by the Respondent. The Applicant filed corroborating evidence. Her own evidence at trial was consistent with the records filed and the undisputed facts presented at trial about the burden of childcare, the burden of caring for the Respondent’s parents and the Respondent’s disregard of the importance of the Applicant’s career also paint a picture of a relationship characterized by imbalance of power.
100Furthermore, the Respondent fully acknowledged that despite providing the Applicant with significant financial support for nine years, he decided to unilaterally cut her off financially in 2015, for his own reasons.
101Despite his ongoing financial success up to 2022, the Respondent never resumed providing the Applicant with financial support. In the view of this Court, the Respondent used his power over the financial affairs of the party as a weapon against the Applicant and that this qualifies as financial abuse.
Was the Applicant entitled to spousal support on a contractual, non-compensatory and compensatory basis between 2015 and 2022?
Spousal Support
The Law
102The parties were not legally married, as such, sections 30 and 33 of the Family Law Act set out the authority of the Court to make a spousal support award, as follows:
Obligation of spouses for support
30 Every spouse has an obligation to provide support for himself or herself and for the other spouse, in accordance with need, to the extent that he or she is capable of doing so. R.S.O. 1990, c. F.3, s. 30; 1999, c. 6, s. 25 (3); 2005, c. 5, s. 27 (7).
Order for support
33 (1) A court may, on application, order a person to provide support for his or her dependants and determine the amount of support. R.S.O. 1990, c. F.3, s. 33 (1).
Purposes of order for support of spouse
(8) An order for the support of a spouse should,
(a) recognize the spouse’s contribution to the relationship and the economic consequences of the relationship for the spouse;
(b) share the economic burden of child support equitably;
(c) make fair provision to assist the spouse to become able to contribute to his or her own support; and
(d) relieve financial hardship, if this has not been done by orders under Parts I (Family Property) and II (Matrimonial Home). R.S.O. 1990, c. F.3, s. 33 (8); 1999, c. 6, s. 25 (5); 2005, c. 5, s. 27 (9).
Determination of amount for support of spouses, parents
(9) In determining the amount and duration, if any, of support for a spouse or parent in relation to need, the court shall consider all the circumstances of the parties, including,
(a) the dependant’s and respondent’s current assets and means;
(b) the assets and means that the dependant and respondent are likely to have in the future;
(c) the dependant’s capacity to contribute to his or her own support;
(d) the respondent’s capacity to provide support;
(e) the dependant’s and respondent’s age and physical and mental health;
(f) the dependant’s needs, in determining which the court shall have regard to the accustomed standard of living while the parties resided together;
(g) the measures available for the dependant to become able to provide for his or her own support and the length of time and cost involved to enable the dependant to take those measures;
(h) any legal obligation of the respondent or dependant to provide support for another person;
(i) the desirability of the dependant or respondent remaining at home to care for a child;
(j) a contribution by the dependant to the realization of the respondent’s career potential;
(k) Repealed: 1997, c. 20, s. 3 (3).
(l) if the dependant is a spouse,
(i) the length of time the dependant and respondent cohabited,
(ii) the effect on the spouse’s earning capacity of the responsibilities assumed during cohabitation,
(iii) whether the spouse has undertaken the care of a child who is of the age of eighteen years or over and unable by reason of illness, disability or other cause to withdraw from the charge of his or her parents,
(iv) whether the spouse has undertaken to assist in the continuation of a program of education for a child eighteen years of age or over who is unable for that reason to withdraw from the charge of his or her parents,
(v) any housekeeping, child care or other domestic service performed by the spouse for the family, as if the spouse were devoting the time spent in performing that service in remunerative employment and were contributing the earnings to the family’s support,
(v.1) Repealed: 2005, c. 5, s. 27 (12).
(vi) the effect on the spouse’s earnings and career development of the responsibility of caring for a child; and
(m) any other legal right of the dependant to support, other than out of public money. R.S.O. 1990, c. F.3, s. 33 (9); 1997, c. 20, s. 3 (2, 3); 1999, c. 6, s. 25 (6-9); 2005, c. 5, s. 27 (10-13).
Conduct
(10) The obligation to provide support for a spouse exists without regard to the conduct of either spouse, but the court may in determining the amount of support have regard to a course of conduct that is so unconscionable as to constitute an obvious and gross repudiation of the relationship. R.S.O. 1990, c. F.3, s. 33 (10); 1999, c. 6, s. 25 (10); 2005, c. 5, s. 27 (14).
Spousal Support Entitlement
103The Spousal Support Advisory Guidelines are clear that they are not to be used to determine entitlement. The Court must first look to the legislation and caselaw to determine this issue on a case-by-case basis. Once entitlement has been established and the factors that support the findings in this regard are set out, the Court is to then turn to an analysis of the quantum and duration of support using the Spousal Support Advisory Guidelines (SSAGs) as a guide.
104In this case, the Respondent did not dispute the Applicant’s entitlement to spousal support. However, because the nature of entitlement is an important factor when the Court considers quantum and duration of support, it is important for the Court to characterize the type of support at issue in this trial.
Law of Entitlement
Categories of entitlement
Compensatory Support. The court is directed to look at the economic circumstances of each spouse’s role during the marriage in determining support. There are three types of compensatory support (Beneteau v. Young, 2009 CanLII 40312 (ON S.C.):
i. non-specific compensatory support (where a spouse’s ability to achieve self-sufficiency was comprised by career/job dislocation for the family); Walsh v. Walsh, 2006 CarswellNB 582 (Q.B.);
ii. specific calculable disadvantage (where a spouse can point to a specific calculable overriding loss resulting from the marriage or the roles adopted in marriage)’ Spurgeon v. Spurgeon (2001), 2001 CanLII 38738 (ON SCDC), 15 R.F.L. (5th) 440 (Ont. Div. Ct.);
iii. specific calculable and advantage conferred (where a spouse conferred a substantial career enhancement opportunity on the other spouse): Caratun v. Caratun(1992), 1992 CanLII 7715 (ON CA), 42 R.F.L. (3d) 113 (Ont. C.A.).
105Moge and Bracklow set out the following examples of compensatory support:
a) A spouse's education, career development or earning potential have been impeded as a result of the marriage because, for example:
a. A spouse has withdrawn from the workforce, delays entry into the workforce, or otherwise defers pursuing a career or economic independence to provide care for children and/or spouse;
b. A spouse's education or career development has been negatively affected by frequent moves to permit the other spouse to pursue these opportunities;
c. A spouse has an actual loss of seniority, promotion, training or pension benefits resulting from absence from the workforce for family reasons;
b) a spouse has contributed financially either directly or indirectly to assist the other spouse in his or her education or career development.
106The SSAG set out following examples of economic disadvantage:
i.Home with children full-time or part-time
ii.Secondary earner
iii.Primary caregiver of the children after separation
iv.Moving for payor’s career
v.Support for payor’s education or training
vi.Working in family business
107One needs to ask where the recipient would be if they continued in the labour market, not where they were years ago.
108A strong compensatory claim will be a factor for a higher SSAG range. Also, this will more likely entitle them to share in post-separation increases in income.
109The legal considerations for the entitlement to compensatory support was reviewed by Chappel J. in Thompson v. Thompson,3 as follows:
ii. Compensatory Support
The compensatory basis for spousal support entitlement recognizes that upon marriage breakdown, there should be an equitable distribution between the parties of the economic consequences of the marriage. The objective of a compensatory award is to provide some degree of compensation for the sacrifices and contributions which a spouse made during the marriage, for economic losses which they experienced and may continue to experience as a result of the marriage, as well as the benefits which the other spouse has received as a result of the sacrifices and contributions. A compensatory award recognizes that such sacrifices, contributions and benefits conferred often lead to an interdependency between the spouses and merger of their economic lives.
Compensatory support claims arise most typically in situations where one spouses suffered economic disadvantage and contributed to the other spouse’s income earning potential as a result of assuming primary responsibility for child care and/or home management obligations. However, a compensatory claim can also be founded on other forms of contribution to the other party’s career, such as supporting the family while the other party obtained or upgraded their education, selling assets or a business for the benefit of the family unit, or assisting a party in establishing and operating a business that is the source of that party’s income.
In considering whether a compensatory claim exists, the court must undertake a broad and expansive analysis of advantages and disadvantages which each party experience throughout the relationship as a result of the marital union. In some situations, a compensatory claim may be defeated or weakened by the fact that the disadvantage suffered by the claimant spouse is offset by disadvantage of a different type experienced by the other spouse.
A compensatory claim for spousal support may be established even where the recipient spouse is employed and reasonably self-supporting at the time of the parties’ separation. This situation can arise where, despite that spouse’s ability to meet their own needs, their financial advancement has been impaired as a result of subordinating their career to that of the other spouse or from adopting a less lucrative career path in order to accommodate the needs of the family.
110Compensatory support ought not to be varied (unless there is an inability to pay) since it will have been awarded to recognize the length of the marriage and the roles adopted throughout the marriage. These factors are retrospective.4
111Compensatory support is premised on a marriage being a joint endeavour, seeks to alleviate economic disadvantage by taking into account all the circumstances of the parties, including the advantages conferred on either spouse during the marriage. It is concerned with an equitable sharing of the benefits of the marriage. Contractual entitlement, on the other hand, flows from the express or implied agreement. Finally, non-compensatory support may be ordered “where it is fit and just to do so.”5
Contractual support – the basis will be an agreement between the parties. The express or implied term will either create or negate spousal support.
Despite the existence of an order incorporating an agreement, a judge retains jurisdiction to consider whether a variation in support should be granted based on whether there has been a material change in the circumstances of either former spouse, and having regard to any existing agreement. See: Hendriks v. Hendriks, 2022 ONCA 165.
Non- compensatory support – Where compensation is not the basis, a support obligation may arise from the relationship itself when a spouse is unable to become self-sufficient. It can be based on need. Under this model, spousal support will be based on economic hardship resulting from the breakdown of the marriage, but not necessarily the roles assumed during the marriage. The needs-based support could, therefore, consider the recipient’s ability to become self-sufficient for reasons such as health.
112Under Section 30 of the FLA, every spouse has an obligation to support the other spouse in accordance with need, to the extent that they are capable of doing so. This is consistent with the concept of spousal relationships as a partnership. There is a presumption that spouses owe one another a mutual duty of support.6
113In determining need, courts ought to be guided in part by the principle that the spouse receiving support is entitled to maintain the standard of living to which she was accustomed at the time cohabitation ceased. The analysis must consider the recipient’s ability to support herself, in light of her income and reasonable expenses.7
114There must be some evidence that the disadvantage to the recipient spouse must arise from the breakdown of the marriage.8 However, in practice, entitlement will generally be found in cases where there is a significant income disparity at the time of the initial application.9
115Where a spouse maintains a similar standard of living to that he enjoyed before separation, there is no basis for a needs-based, non-compensatory claim for support.10
116Non-compensatory support may arise from the mere fact that a person who formerly enjoyed inter-spousal entitlement to support now finds themselves without it. A party’s accustomed standard of living during a relationship is an appropriate part of context upon which need should be based.11
117The word “need” is not limited to one’s basic needs. It can be interpreted to cover situations where a spouse suffers a significant decline in the standard of living, they enjoyed during the relationship.12
118It is critical for the court to determine all grounds for entitlement, as the basis for entitlement may have a significant impact on quantum and duration of spousal support.13
Analysis
119The parties were in a relationship for 16.5 years, between 1989 and 2006. They had three children together and it was not disputed that the Applicant was the primary caregiver of the children before and after 2006.
120It was also not disputed that the Applicant received the assistance of a nanny in caring for the children and that she was a well established professional in the travel and insurance industries during the parties’ relationship.
Needs-based Claim
121The Applicant’s claim for spousal support in this trial started approximately nine years after the parties had separated. In the intervening nine years, it was undisputed that she had been receiving financial support from the Respondent in an amount that was sufficient to meet her needs, the needs of the children, and to permit the Applicant to make significant investments in property in Canada.
122While the Court was not provided with any particulars regarding the quantum of support received by the Applicant between 2006 and 2015, the Court is not satisfied that in 2015 – nine years post-separation - the Applicant had a claim for non-compensatory support.
123By 2015, the Applicant had been receiving financial support for nine years and she was an educated woman who had an obligation to take meaningful steps toward self-sufficiency, even within the context of her experiences of intimate partner violence by the Respondent.
124The Applicant did not file any evidence from an expert or otherwise to support her claim that she was unable to approach some element of self-sufficiency by 2015.
125That being said, it is possible that the Applicant would have been able to establish a non-compensatory element of spousal support in 2006, and for many years thereafter, however, the Court was not provided with sufficient evidence to find that such entitlement extended to 2015 and beyond.
Contractual Claim
126The parties did not have a written agreement for spousal support, rather, they had an informal (or implied) financial arrangement that persisted for nine years post-separation.
127The Applicant failed to provide the Court with particulars regarding the terms of this implied contract.
128While it was not disputed that the Respondent continued to provide support up to 2015, the Court has no way of determining the terms of the implied contract absent any particulars relating to that period of time. Without an understanding of those terms, the Court cannot make findings regarding the nature of the implied agreement, whether the terms of the agreement were to continue, if they were to be varied and the impact, if any, those terms would have on quantum and duration of support starting in 2015.
129While the Court is satisfied that some sort of implied agreement had been in place for nine years, the Court is unable to consider and assess the Applicant’s claim for contractual entitlement to support absent evidence relating to the terms of that agreement.
Compensatory Claim
130For the reasons set out below, this Court is satisfied that the Applicant was entitled to spousal support on a compensatory basis starting in 2006.
131It was not disputed that the Applicant sacrificed her career to raise the parties’ three children, while the Respondent worked long hours (and resided), in Hong Kong.
132The parties arranged their lives in such a way that the Applicant, with the support of a nanny, was the primary caregiver of the children, ensuring that all of their needs were met on a daily basis and the Respondent was the primary breadwinner throughout their relationship and beyond.
133This arrangement continued post-separation, between 2006 and 2015 under an implied agreement (the terms of which are entirely unknown). It was not disputed that the Respondent continued to financially support the Applicant and the children while they resided in Canada, and he resided in Hong Kong.
134The Applicant uprooted her life and career more than once at the behest of the Respondent, by relocating to Hong Kong and coming back to Canada.
If the Applicant was entitled to spousal support, can the Court determine the quantum and duration of support as at 2015, absent detailed records of the financial arrangements between the parties that took place over a nine year period, from 2006 to 2015?
135While the Court was provided with a general understanding of the parties’ financial arrangements post-separation and up to 2015, no particulars were provided to assist the Court in determining the following:
(a) the parties’ incomes between 2006 and 2012;
(b) the amount of money retained by the Applicant from the Respondent’s income between 2006 and 2015, for support purposes;
(c) child support payable between 2006 and 2015, including section 7 expenses (a calculation that would have evolved as the children each turned 18 and started post-secondary studies);
(d) spousal support payable between 2006 and 2015 according to the Spousal Support Advisory Guidelines and how the amount and duration may have been impacted by the “with child support” formula and the section 7 expenses that were payable by the Respondent; and
(e) the Court was advised that the Applicant did not report to the CRA any of the funds she received from the Respondent between 2006 and 2015 asspousal support income during those years. She, therefore, received an undetermined amount of spousal support tax-free. This undetermined amount would then need to be either grossed up to account for the fact that she did not pay income tax or recalculated along with refiling of her tax returns. The latter would then result in tax arrears owing.
136The Court was left with the question of whether sufficient evidence was adduced to assist the Court in calculating quantum and duration of spousal support between 2015 and 2022.
Law
137Despite SSAGs, the court is still required to conduct a proper analysis of budgets and the principles of spousal support set out in the legislation and not automatically revert to the SSAG.14 In Phillips-Curwin v. Curwin,15 Justice Dellapinna, noted as follows:
Whatever method one might use to determine the appropriate level of spousal support, from a practical point of view the figure chosen should be a reflection of the recipient's reasonable needs and should not exceed the payor's means. This is not an exercise in maximizing the spousal support simply because the payor may have the ability to pay it. Rather, the Court must look at all of the factors listed in the Act in light of the stipulated objectives of support and exercise its discretion in a manner that equitably alleviates the adverse consequences of the marriage breakdown between the parties (see Bracklow v. Bracklow, 1999 CanLII 715 (S.C.C.), [1999] 1 S.C.R. 420 at paragraph 36). That requires a support order that is fair to both parties.
138Amount and duration are interrelated parts of the SSAG formula.16 Using one part of the formula without the other undermines its integrity and coherence. Extending duration beyond the formula ranges, for example, may require a corresponding adjustment of amount by means of restructuring (see SSAG Ch. 10) or a finding that the facts of the case require an exception (see SSAG Ch. 12). See: Spousal Support Advisory Guidelines: Revised User’s Guide, supra, Chapter 7).
139The SSAGs set out that the first step is for the court to determine if the outcome suggested by the guideline formula is appropriate in the case.
140The caselaw has set out exceptions to using SSAGs, as follows:
Analysis
141In the view of this Court, the absence of the financial particulars that existed between 2006 to 2015 was a massive gap in the evidence. I specifically requested that the parties address this issue in their closing submissions.
142The Applicant’s position was simply that the Court should look at the parties’ incomes starting in 2013 and to only rely on the past pattern of financial dealings as proof that the parties had a “contract” for the payment of support and, further, if there was an underpayment during that period of time, she was not seeking a recalculation.
143The Applicant did not address the question raised by the Court and while there is ample caselaw regarding delays in seeking spousal support Orders, the Court was not provided with a single case that provided authority to simply ignore nine years of support payments, and to start the spousal support inquiry de novo nine years post-separation.
144In my view, the Applicant had the onus to provide the Court with the support calculations she was entitled to receive starting from the date of separation and particulars of the support that she received. This would have provided the Court with the necessary financial details that it would need to take into account in determining what support entitlement was remaining, starting in 2015.
145If the Court had this information, the Court could identify the details of the financial arrangements that existed, and it could potentially enforce, or vary, those arrangements after conducting a detailed analysis.
146Given the significant gap in relevant and necessary evidence presented at trial, this Court finds that I am unable to determine the quantum or duration of spousal support payable by the Respondent starting in 2015.
If the Court can determine quantum and duration absent detailed financial records between 2006 and 2015, what are the parties’ incomes for support purposes between 2015 and 2022?
147If I am incorrect in my analysis above, for the reasons set out below, I find that it is not possible to calculate spousal support that may have been payable between 2015 and 2022.
148As will be explained below, this Court finds that the Applicant’s evidence as it related to her income and financial circumstances was wrought with deception, scheming, fraud and misrepresentation. To be clear, the Court did not find any of the evidence presented by the Applicant regarding her financial dealings and income to be credible.
149Because the Court received evidence regarding each party’s income during the trial, I will review the income analysis of both parties for the sake of thoroughness, starting with the Respondent.
The Respondent’s Income for Support Purposes
150The Respondent did not dispute his base income at trial. In fact, under oath, he reviewed a draft Statement of Agreed Facts setting out his income for each year at the start of the trial.
151However, the Respondent claimed that there were business expenses associated with his income, as well as income tax that he had to pay. He claimed that these deductions were not included in the base income that he acknowledged.
152The Applicant claimed income tax was calculated at a rate of 15% in Hong Kong. The Respondent claimed that the income tax rate was 16.5%. In either case, if the Court were to accept one party’s position over the other, the Respondent’s net income for support purposes would be required to be grossed up to account for the higher tax rate payable in Canada.
153That said, neither party provided the Court with expert evidence as to the income tax rate payable in Hong Kong. Absent this information, the Court is unable to determine the appropriate amount to be used to gross up the Respondent’s income. In any event, the Applicant did not seek to have the Respondent’s income grossed up.
154The Respondent did not provide disclosure of his business expenses before the trial. He had ample time to provide such disclosure as this matter had been outstanding for almost six years by the time the trial proceeded (with two of those years being clouded by COVID-19, to account for some of the delay). While he was self-represented at trial, the Respondent had Counsel periodically before trial and he was present at the Court dates where deadlines were established for the provision of disclosure.
155At one point during the trial, the Respondent attempted to present to the Court a box full of documents that he claimed were bank records. The Court explained that such documents would not be accepted at trial as they had not been previously disclosed.
156A party who claims business and other deductions from income has a positive obligation to provide documentary proof to support those deductions. The Respondent failed to do this.
157The Applicant was content to use the Respondent’s income as agreed to at trial and there was no evidence before me to show that the Respondent’s income declared at trial was subject to any deductions. He did not file any receipts, tax returns, reports nor particularized oral evidence about these claimed deductions. He simply claimed that he had some and that it was common sense that he would have to pay for staff, supplies and other expenses.
158While it is common sense that someone who owns a business may have such expenses, the Court was not satisfied that the Respondent owned the business that he worked for and there was no way for the Court to know whether the business expenses were paid by the company directly, or if they were paid out of the Respondent’s salary.
The Respondent’s Ability to Pay Support
The Law
From the Family Law Act:
Order for support
Determination of amount for support of spouses, parents
33 (9) In determining the amount and duration, if any, of support for a spouse or parent in relation to need, the court shall consider all the circumstances of the parties, including,
(a) the dependant’s and respondent’s current assets and means;
(b) the assets and means that the dependant and respondent are likely to have in the future;
(d) the respondent’s capacity to provide support;
Analysis
159The Respondent claimed that he declared bankruptcy in Hong Kong in 2022 and that, as a result, he would not be able to afford to pay spousal support as claimed by the Applicant.
160At trial, the Respondent filed a two page document from Hong Kong that appeared to be a portion of an Order and Endorsement from the Hong Kong High Court declaring him bankrupt in 2022. He did not provide any supporting documentation nor expert evidence regarding bankruptcy in Hong Kong and the impact that would have on his financial situation.
161The Court had no information, for example, listing the assets that were included in the bankruptcy, or excluded, which liabilities were discharged upon bankruptcy, what evidence the Respondent filed in support of his claim for bankruptcy (such as his income of over $1 million that year), how bankruptcy works in Hong Kong, whether the bankruptcy left the Respondent with more cashflow as a result of releasing him from various debts and obligations. And so on.
162The Applicant also successfully raised questions about the amount of money the Respondent was gifted in 2022 and how much money he had spent. There was evidence of the Respondent inheriting $800,000 in 2022 and he claimed to have spent significant funds that year on the parties’ children (there was no actual proof of this claim).
163While the Respondent claimed that he did not have the ability to pay retroactive spousal support, he did not prove this claim at trial. He failed to provide disclosure of bank records and he did not disclose any information to permit this Court to make findings that he is unable to pay support.
The Applicant’s Income for Support Purposes
The Law
164An individual must make full and complete financial disclosure to ensure that the information required to make a decision on the issue is before the court.19
165From: Kinsella v. Mills,20:
165In the spousal support context, the ability to impute income applies equally to the payor and the recipient spouse, since one the objectives of spousal support is to promote the economic self-sufficiency of each spouse within a reasonable time, in so far as practicable (Juvatopolos v. Juvatopolos, 2004 CanLII 34843 (ON SC), 2004 CarswellOnt 4423, 9 R.F.L. (6th) 147 (S.C.J.), aff’d 2005 CanLII 35677 (ON CA), 2005 CarswellOnt 4774, 19 R.F.L. (6th) 76 (C.A.)). As the authors of the SSAG emphasize, by focussing on income, including the possibility of imputing income to the recipient spouse, the SSAG encourage “a more sophisticated analysis of "self- sufficiency" on the part of the recipient, rather than some rough-and-ready downward adjustment of the monthly amount of support” (at p. 137).
166Imputing income to support recipients is also appropriate.21
Analysis
167In Order to have a full understanding of the Applicant’s financial circumstances starting in 2015, it is necessary to review the financial arrangements she made with Lawrence Chan.
168I will start with findings related to Ashlac, and the loan agreement, and then follow with findings regarding the Applicant’s income.
Ashlac
169For the reasons that follow, the Court finds that the corporate set up of Ashlac and its subsequent involvement in the purchase and sale of the Applicant’s properties was an elaborate scheme developed by the Applicant and Lawrence.
170This Court finds that they developed this scheme for the sole purpose of creating a false narrative and to hide significant capital gains earned by the Applicant through the sale of various properties.
171The Applicant, Lawrence and Ashlac (by extension), each took active steps to shield the capital gains received from discovery by the Respondent, the Canada Revenue Agency, and this Court.
172No corroborating evidence was led during the trial to show that Ashlac had engaged in any other transactions, or business activities, apart from purchasing the Applicant’s properties and disposing of them.
173Other than some corporate registers and ledgers with little to no information listed, and a few bank statements from 2022 and 2023, the Applicant did not file any bank records for the period of time when Ashlac was allegedly an “active” company, no corporate tax returns, general ledgers or balance sheets for Ashlac were filed at trial.
174The idea that the Applicant, with no money flowing to her from the Respondent, simply transferred a total of $700,000 worth of real estate to Ashlac as an “investment opportunity” (and that this only gave her a 10% stake in the company) does not have an air of reality to it.
175When asked by the Court, Lawrence stated that he only invested $500,000 as his investment, for 90% ownership of the company.
176There was no documentary evidence filed to support these claims.
177When the Court asked Lawrence how the Applicant’s $700,000 investment had been spent, he claimed that all of the money was used to bribe diplomats and various levels of government in China. This claim is very convenient, in the Court’s view, because of course, no business records would exist to support such claims.
178The entire scheme of Ashlac defies logic.
179The Applicant worked in the travel and insurance industries in the past, as such, entering into the business of ABS braking systems made no sense.
180The Applicant and Lawrence continued to have an endearing friendship despite his colossal financial failure that resulted in the Applicant allegedly losing a significant amount of money – and putting her into significant debt to Lawrence. This makes no sense.
181When Lawrence was asked why he would lend the Applicant money (approximately $495,000, allegedly) when she had no access to funds and no property left to her name, Lawrence claimed that he did so because he was a friend of hers and of her family for many years, and because she was his wife’s best friend.
182Both the Applicant and Lawrence spoke about the Applicant’s relationship with his wife in the present tense throughout their testimony. In cross, Lawrence acknowledged that his wife passed away in 2015.
183There were many transfers of funds from Lawrence to the Applicant over the years since 2015, or so they wanted the Court to believe. The total of those funds allegedly totalled $495,000.
184This Court is not satisfied that the transfer of this cash arose out of a loan, as claimed by the Applicant and Lawrence.
185The Court finds that the “loan agreement” was a ruse developed by the Applicant and Lawrence to explain why he was sending her large amounts of cash over the years.
186The Court finds that Lawrence was sending the Applicant her own money, earned from the sale of her properties to Ashlac.
187The Court is not satisfied that the $700,000 simply disappeared into an ABS braking system fiasco. Nor is the Court satisfied that Lawrence had been gratuitously sending the Applicant hundreds of thousands of dollars in cash.
188Both the Applicant and Lawrence claimed that her life insurance was being used as collateral to pay back this massive loan in the event of her death – however, neither provided the Court with a copy of any life insurance policy, much less a policy naming Lawrence as a beneficiary.
189It is clear to the Court that the Applicant is not coming to this Court with clean hands. She clearly sold the cottage for $2 not only to avoid land transfer tax; but also to avoid capital gains tax. Further, she sold it to her own company – not at arms length.
190It is worth repeating that the scheme defies any logic whatsoever.
191The Applicant and Lawrence were friends. Long time friends. They continued to be friends at the time of trial. The only way the Ashlac scheme would have made any sense was if Lawrence was defrauding the Applicant, taking advantage of her and the Applicant was being equally unsophisticated and naive.
192The Court finds that this is not plausible. Lawrence appeared to be someone who was willing to go to great lengths to move assets around and to send money to the Applicant on a regular basis in a manner that avoided tax liabilities, and in an effort to shield the transactions from the government, the Respondent and this Court.
193Further, the Applicant was an award winning insurance professional. She was not so naïve. In her testimony she was articulate, with a strong personality.
194Since the Respondent had no claim for an interest in the properties sold, it is entirely unclear why the Applicant would have gone to so much trouble to hide her money and assets – other than to increase the amount of spousal support she might otherwise be entitled to, and to support her claim for needs-based support.
195Given the Court’s findings regarding the Applicant’s behaviour, I am drawing an adverse interest against her and attributing the following amounts as cash she has had available to her since 2015:
a. 41 Frybrook Crescent East, Richmond Hill, ON – on September 16, 2016, the Applicant received $829,497.75 in net proceeds of sale.
b. 39 Queens Quay, Suite 1019, Toronto, ON – on September 28, 2016, the Applicant received $520,000 in net proceeds of sale.
c. 40 Wilson Road, Seguin, ON – on June 28, 2017, the Applicant received $293,653.75 in net proceeds of sale ($650,000 less the mortgages).
Total: $1,643,151.50
196The Court finds that the Applicant had access to significant funds starting in 2016.
197The actual amount that may have been available (if the Applicant did not shield transactions from the CRA and if she sold all of the properties on the market) is impossible to calculate.
198The primary focus of the trial was on the Applicant’s financial dealings and her financial entitlement.
199The Applicant did not deny that she received the benefit of the proceeds of sale for her properties that were sold to Ashlac. She chose to “invest” those funds.
200The Court cannot simply ignore the fact that the Applicant had $1,643,151.50 at her disposal in 2016 and 2017. The availability of this money contradicts the Applicant’s claim of being financially destitute and impacted on this Court’s assessment of her credibility in a negative way.
201First, as set out above, the Court simply does not believe the Applicant’s claim that she transferred the property to Ashlac, that the company lost all of her money and she essentially “borrowed” the money back from Lawrence.
202But even if the Court did believe her story, her decision to invest a significant portion of her life savings into a company, to sell off her assets and to leave herself allegedly destitute does not become the responsibility of the Respondent.
203If the Court were to believe her, the Applicant put herself in that situation through poor decision making, or being duped by Lawrence.
204All of that being said, the Court is unable to determine the Applicant’s income during the period between 2015 and 2022, for the following reasons:
(a) the properties purchased by Ashlac were not sold on the market in a transparent manner and the Court received no evidence of the market value of those properties;
(b) the Court was not provided with ledgers, Financial Statements or Income Tax Returns for Ashlac;
(c) the only bank statements filed from Ashlac were dated long after the company claimed to have been a total failure;
(d) the Applicant sold the properties to a company in a non-arms length transaction, as she was a director and shareholder of Ashlac;
(e) Lawrence acknowledged that the properties were transferred to Ashlac in such a way as to avoid both land transfer tax and capital gains tax;
(f) the Applicant’s Notices of Assessment were inaccurate, as the income she earned from the sale of various properties had been shielded through the transfer of the properties to Ashlac using the scheme described above;
(g) the Court was not provided with any evidence that Ashlac paid any taxes on the subsequent sale of the properties;
(h) the Applicant admitted to engaging in a pattern of withholding income information from the Canada Revenue Agency between 2006 and 2015 when she did not claim the spousal support that she had been receiving during those years;
(i) the Applicant lacked any credibility as it related to any of her financial circumstances given her deceptive behaviour in hiding income from the CRA starting in 2006, her participation in schemes to transfer property to Ashlac in a deceptive manner that evaded paying land transfer and capital gains tax, and the scheme she engaged in with Lawrence to create a sham loan agreement that allowed her to receive periodic payments of her own money to her; and
(j) even at trial (and closing submissions), the Applicant did not adjust her income for support purposes to include the capital gain values she received from the sale of the various properties to Ashlac.
205The Court does not engage in the practice of speculation. The Applicant had a positive obligation to prove her income for support purposes for the years in question. The Applicant was a shareholder of Ashlac and without any financials of that company being filed with the Court, it is impossible to determine whether there were retained or other earnings that should have been attributed to her income and grossed up each year.
206The Court finds Lawrence’s claim that he spent the Applicant’s approximately $700,000 investment into Ashlac on bribes and other untraceable commodities to be a continuation of the deception and scheme that he and the Applicant had devised.
Conclusion
207Given that the Court was unable to make findings as to the financial arrangements between the parties from 2006 to 2015 and the Applicant’s income for support purposes starting in 2014, it is not possible to determine quantum and duration of spousal support that would have been payable during that time.
208The Court cannot look to the Spousal Support Advisory Guidelines to determine quantum and duration of spousal support when it is unable to make any findings as to the recipient’s income.
209Further, while the Court has found that an implied contractual obligation to pay support was established at trial, neither party provided the Court with the specific financial arrangements that existed during that period. The Court cannot enforce or vary terms of an agreement that are unknown to the Court.
210The Applicant’s decision to engage in shady financial dealings had the effect of casting a long shadow over all of her evidence as it related to her financial circumstances. It is not sufficient to claim that the Respondent did not contradict the Applicant’s evidence of income at trial when the Applicant’s own evidence raised many questions about the income she reported to the CRA.
211I have used the value of property between $700,000 to $1.6 million attributed to the Applicant in various parts of my decision, however, the Court has no way of knowing exactly how much money the Applicant would have received from the sale of her properties.
212Beyond the unknown value of the properties, if they were sold on the open market, it would also depend on the various taxes she would have had to pay out of those proceeds.
213Having found that the Applicant has attempted to mislead this Court with an elaborate financial scheme, the Court is unable to accept any of her evidence as it relates to her financial dealings and the income she reported to the Canada Revenue Agency between 2015 and 2022.
214Absent reliable evidence of the Applicant’s income, the Court is unable to conduct an analysis under the SSAGs.
Order
- The Application is dismissed.
Costs
- If the parties are unable to reach an agreement on the issue of costs, the Court invites written submissions on the issue, as follows:
a. The Respondent may file written submissions not exceeding 8 pages within 15 days of the release of this decision.
b. The Applicant may file written submissions not exceeding 8 pages within 25 days of the release of this decision.
Submissions shall be double spaced, using 12 point font.
The page limits do not include Offers to Settle or Bills of Costs, which should be attached.
Cost submissions shall be sent to my Judicial Assistant by email at nurit.suzana@ontario.ca and uploaded to Case Centre.
If costs submissions are not received in accordance with the above timelines, no costs shall be payable to the applicable party.
The Honourable Justice A.M. Daurio
Date: January 3, 2025
Footnotes
- 2024 ONCA 21
- 2017 ONSC 3774
- 2013 ONSC 5500, at paras. 55–59
- Witzl 2008CarswellOnt. 2549 (SCJ)
- Poirier v. Poirier, 2010 ONSC 920
- Bracklow v. Bracklow, 1999 CanLII 715 (S.C.C.), [1999] 1 S.C.R 420 para. 20
- Gray v. Gray, 2014 ONCA 659
- See: Lamb v. Watt, 2017 ONSC 5838
- See: Spousal Support Advisory Guidelines: The Revised User’s Guide, April 2016: Professor Carol Rogerson and Professor Rollie Thompson
- See: McIntyre v. Winter, 2020 ONSC 4376; Lamothe v. Lamothe, 2006 CanLII 42360
- See: McIntyre v. Winter, 2020 ONSC 4376; Blackstock v. Comeau, 2018 ONSC 193
- See: McIntyre v. Winter, 2020 ONSC 4376; Nixon v. Lumsden, 2020 ONSC 147
- See: Cassidy v. McNeil, 2010 ONCA 218 (C.A.), at para. 64
- See: Saunders v. Saunders, 2010 CarswellNS 490 (N.S. S.C.).
- 2008 CarswellNS 328 (N.S. S.C.)
- See: Domirti v. Domirti, 2010 BCCA 472; Lazare v. Heitner, 2018 CarswellOnt 9389 (Ont. S.C.J.)
- Quackenbush v. Quackenbush, [2013] O.J. No. 5649 (SCJ)
- Mudronja v. Mudronja, 2014 ONSC 5137
- Charron v. Carriere, 2016 ONSC 4719
- 2020 ONSC 4785
- Elmgreen v. Elmgreen, 2016 ONCA 849; S.N.S. v. K.N.S., 2023 ONCJ 55