



COURT OF APPEAL FOR BRITISH COLUMBIA




Citation:



Xu v. Hu,









2021 BCCA 2




Date: 20210107

Dockets: CA43073;
CA43079



Docket: CA43073

Between:

Tianyun Xu also
known as Terence Xu

Respondent/

Appellant on Cross
Appeal

(Claimant)

And

Yuenyuen Hu also
known as Betty Hu

Respondent/

Respondent on Cross
Appeal

(Respondent)

And

Vancouver
International Enterprises Ltd., and

Best Honour
International Trading & Investment Co. Ltd.

Appellants/

Respondents on Cross
Appeal

(Respondents)

-
and -

Docket: CA43079

Between:

Tianyun Xu also
known as Terence Xu

Respondent/

Appellant on Cross
Appeal

(Claimant)

And

Yuenyuen Hu also
known as Betty Hu

Appellant/

Respondent on Cross
Appeal

(Respondent)

And

Vancouver
International Enterprises Ltd., and

Best Honour
International Trading & Investment Co. Ltd.

Respondents/

Respondents on Cross
Appeal

(Respondents)




Before:



The Honourable Madam Justice Fenlon

The Honourable Mr. Justice Hunter

The Honourable Mr. Justice Butler




On appeal from:  Orders
of the Supreme Court of British Columbia, dated
August 10, 2015 (
Xu v. Hu
, 2015 BCSC 1400, Vancouver Docket E120635);
December 8, 2017 (
Xu v. Hu
, Vancouver Docket E120635); and July 23, 2019
(
Xu v. Hu
, 2019 BCSC 1336, Vancouver Docket E120635).




Counsel for Vancouver International Enterprises Ltd., and
  Best Honour International Trading & Investment Co. Ltd., appearing via
  videoconference:



L.N. MacLean, Q.C.

S. Chen





Counsel for Tianyun Xu also known as Terence Xu, appearing
  via videoconference:



C.J. Cao





Counsel for Yuenyuen Hu also known as Betty Hu, appearing
  via videoconference:



H.B. Chiu

L.B. Williams





Place and Date of Hearing:



Vancouver, British
  Columbia

September 21, 2020





Place and Date of Judgment:



Vancouver, British
  Columbia

January 7, 2021









Written Reasons by:





The Honourable Madam Justice Fenlon





Concurred in by:





The Honourable Mr. Justice Hunter
The Honourable Mr. Justice Butler








Summary:

The parties sought a divorce
and division of assets, including the family residence held by a corporation
controlled by the wifes parents. The trial judge granted the divorce, declared
the family residence to be subject to an express trust in favour of the wife
and therefore a family asset, and divided the interest equally between the
spouses. Held: Appeal allowed in part, express trust declaration set aside. The
facts found by the judge did not establish the requisite certainties of
intention and object. Characterization and division of other assets not
disturbed, as the trial judge made the best of an inadequate evidentiary record
and unreliable testimony. All parties to bear their own costs given their
litigation misconduct in misleading the court.

Reasons for Judgment of the Honourable
Madam Justice Fenlon:

[1]

This appeal turns primarily on whether the judge erred in finding
that a corporate-owned family residence was subject to an express trust in the
wifes favour and therefore a family asset. Yuenyuen Hu, also known as Betty Hu,
appeals that finding (CA43079), as do the corporate appellants, Vancouver
International Enterprises Ltd. (VIE) and Best Honour International Trading &
Investment Co. Ltd. (BHIT): CA43073. The respondent husband, Tianyun Xu, also
known as Terence Xu, cross appeals in both proceedings, seeking a larger share
of that asset and the setting aside of an order directing him to bear 50% of
the residences expenses. Ms. Hu and Mr. Xu also appeal orders determining
and dividing other assets.

[2]

For the reasons that follow, I would allow the appeal in part,
setting aside the orders declaring that BHIT holds the family residence in
trust for Yuenyuen Hu and dividing the beneficial interest in that property
between Ms. Hu and Mr. Xu.

Background

[3]

The parties married in 2002. At the time, Mr. Xu was living
and working in Beijing. He moved to Vancouver to join Ms. Hu and her son
from a previous marriage and to begin working in the seafood business owned by Ms. Hus
wealthy parents, Mr. Hu and Ms. Fan. That business consists of the two
corporate appellants, BHIT and VIE, as well as Best Honour International
Seafood Ltd. (BHIS). After marrying, Ms. Hu continued her employment as
a manager in the family business. Mr. Xu initially worked receiving
shipments of fresh seafood but eventually took on a more significant role.

[4]

After the couples son was born in 2005, BHIT purchased a home on
Marguerite Street in Vancouver and the family resided there until Mr. Xu
and Ms. Hu separated in 2012. BHIT paid the mortgage, property taxes, and renovation
and insurance costs, while the couple took care of routine home maintenance. Ms. Hus
annual tax forms recorded a taxable housing benefit reflecting the use of the
Marguerite Street property.

[5]

Following a 26-day trial, the judge resolved a range of issues,
including the enforceability of a separation agreement initially drawn up by Ms. Hu,
the pool of family assets, spousal and child support, responsibility for
extraordinary expenses, and eligibility for a divorce. She determined the
Marguerite Street property was the subject of an express trust in favour of Ms. Hu
and that, like the other family assets, it should be apportioned equally
between the spouses.

[6]

Most of the orders made are not in issue on this appeal, so I
need not review the judges reasons for making them. Of note, however, is her
assessment of the parties credibility:

[27]
This is a case in which I cannot accept all, or
even much, of the evidence of any party or its principals. To varying extents,
all were careless with the truth, self-serving and argumentative or dissembling
while on the witness stand. On balance, Mr. Xu suffered least from these
testimonial deficiencies, but, given their magnitude in others, this is hardly
praiseworthy. The net result, mildly put, is that finding facts on disputed
matters has been unusually challenging.

[28]      Mr. Xu, Ms. Hu and Mr. Hu all seemed
to have trouble answering many of the questions posed on direct and cross
examination. Instead, they launched into long soliloquies or rambled off on
tangents with regrettable frequency. In addition,
none of the three seemed
to strive much for factual accuracy. Their trial testimony often differed from
contemporaneous documents, previous affidavit or discovery evidence and, when
confronted, the common reaction was to shrug off the inconsistency dismissively
or project blame elsewhere
. For her part, Ms. Fan mostly parroted what
her husband said.

[Emphasis added.]

[7]

The judge was faced with the almost insurmountable task of
finding the truth about what had occurred despite the parties marked failure
to assist the court in that exercise.

[8]

Although the judge found Mr. Xu suffered least from these
testimonial difficulties, that assessment shifted markedly after she granted the
appellants application to reopen the trial. In unpublished oral reasons
delivered on December 8, 2017 (supplementary reasons), the judge described
the events leading to the reopening this way:

[5]        Shortly after the reasons were issued, Ms. Hus
counsel learned that Mr. Xu had recently become the registered owner of
two houses on the west side of Vancouver, 8556 Oak Street and 2134 West 53
rd
Avenue. Searches revealed that he purchased 8556 Oak Street for $1,165,000 on
February 18, 2015, two months after final argument completed, and he purchased
2134 West 53
rd
for $2,160,000 on August 20, 2015, 10 days after the
reasons were issued. The searches also revealed mortgages with Mr. Xu as
borrower registered on both properties.

[6]        On the face of it,
these facts were starkly at odds with the picture Mr. Xu painted of his
financial circumstances and prospects at trial only a few months earlier. In
particular, he would plainly not have been able to afford such purchases or to
qualify for mortgages if this trial description of his financial had been
accurate.

[9]

After setting out a litany of deficiencies in Mr. Xus
evidence on the reopening, the judge said:

[14]
The foregoing are but a few examples of Mr. Xus
many false, or at best, misleading statements
regarding his financial
circumstances that came to light when the trial was reopened. Mr. Xu made
some of these false statements inside the courtroom and he made others outside
the courtroom. As discussed below,
considered together, they affect my
previously expressed view that Mr. Xu suffered the least from testimonial
deficiencies as compared to Ms. Hu and Mr. Hu. In my view, what they
demonstrate is that he testified in an equally deficient way
.

[Emphasis added.]

[10]

With that sorry context, I turn to the grounds of appeal.

Analysis

1.       Did the judge err in
finding that the Marguerite Street property was subject to an express trust?

[11]

I begin by noting that, although Mr. Xu pleaded express, constructive,
and resulting trusts, he did not pursue an express trust claim at trial.
Instead, he argued that he was entitled to an interest in the Marguerite Street
property either as a matter of
contract or constructive trust
. The claim
in contract was based on Mr. Hus alleged promise to buy a big house for
Mr. Xu within two years of arriving in Canada if he worked hard in the
family seafood business. The constructive trust claim was based on Mr. Xus
contributions to the seafood business and his maintenance of the Marguerite
Street property. On appeal, Ms. Hu and the corporate parties do not take
issue with the judges conclusion that it was open to her to decide the case
before her on the basis of an express trust. I will accordingly proceed on that
assumption.

[12]

Express trusts are established when the certainties of intention,
subject, and object have been established, and the property has been vested in
the trustee:
Suen v. Suen,
2013 BCCA 313 at para. 45.

[13]

The onus of establishing each of the certainties
lies with the party asserting the trusts existence:
McInerney v. Laass,
2015
BCSC 1708 at para. 36. The standard of proof is the usual civil balance of
probabilities:
Pavlovich v. Danilovic,
2020 BCCA 239 at para. 27.

[14]

Certainty of intention is a question of fact; certainty of
subject and object are questions of mixed fact and Law:
Grewal v. Khakh
,
2018 BCCA 357 at para. 24. Thus, the trial judges conclusion that the
requisite certainties were satisfied is reviewable on a standard of palpable
and overriding error, except for any extricable questions of law, which are
reviewable on a standard of correctness:
Housen v. Nikolaisen
, 2002 SCC
33.

[15]

The settlors intention is the critical element
for the creation of an express trust. As explained by Deschamps J.: Express or
true trusts arise from the acts and intentions of the settlor and are
distinguishable from other trusts arising by operation of law:
Century
Services Inc. v. Canada (Attorney General),
2010 SCC 60 at para. 83.
As explained by A. H. Oosterhoff, Robert Chambers & Mitchell McInnes in
Oosterhoff
on Trusts: Text, Commentary and Materials,
8th ed. (Toronto: Carswell, 2014)
at 193194:

Certainty of intention is a question of
construction. That intention may be express or implied, it may arise from words
or acts
. Technical language need not be used. A
settlor may create a trust without using the word trust and, indeed, without
fully understanding the concept of trusteeship.



Nor is there any magic in words.
intention
ultimately is a matter of substance rather than form
. Language alone cannot
create a trust.

[Emphasis
added.]

[16]

However, it is not
enough for the purported settlor to intend for another party to benefit; they
must have intended for the other party to benefit
on trust
: Donovan W.M.
Waters, Mark R. Gillen & Lionel D. Smith,
Waters Law of Trusts in
Canada,
4th ed. (Toronto: Carswell, 2012) at 143144. Since
Milroy v.
Lord
(1862), 4 De. G.F. & J. 264adopted in BC in
Re Mee
(1971),
23 D.L.R. (3d) 491 (B.C.C.A.); courts have been unwilling to allow imperfect
gifts to take effect as a declaration of trust. Therefore, where the intention
to benefit is clear, the crucial inquiry is whether the donor intended the
property as a gift or as a trust.
If the benefit was intended as a gift, the court cannot convert it into a
trust.

[17]

Although no particular form of words is required to constitute a
trust, there must be a clear declaration of trust to avoid imperfect gifts
being given effect as trusts:
Paul v. Constance
, [1976] 1 W.L.R. 527
(C.A.) at 531. Further, the donor should have evinced by acts which admit of
no other interpretation, that he himself has ceased to be, and that the other
person has become, the beneficial owner:
Heartley v. Nicholson
(1875),
L.R. 19 Eq. 233 (Eng. Ch.) at 242. In
Richards v. Delbridge
(1874), L.R.
18 Eq. 11, Jessel M.R. said:

It is true he need not use the
words I declare myself a trustee, but he must do something which is
equivalent to it, and use expressions which have that meaning, for, however
anxious the court may be to carry out a mans intentions,
it is not at
liberty to construe words otherwise than according to their proper meaning
.

[Emphasis added.]

[18]

Compounding the difficulty of discerning the settlors intention,
in British Columbia, trusts are specifically exempted from the general
requirement that dispositions of land be evidenced in writing:
Law and
Equity Act,
R.S.B.C 1996, c. 253, s. 59(1)(a).

[19]

The judge in the present case concluded that certainty of
intention had been established. She found that Mr. Hu unambiguously told Ms. Hu
and others that the Marguerite Street house was being gifted to her: at para. 162.
She found that Mr. Hus goal in creating the trust was to protect his
daughters interest in the house from claims by Mr. Xu (at para. 164),
but concluded he had failed in that objective because a trust property that
would be a family asset if owned by a spouse is a family asset: s. 58(3)
of the
Family Relations Act,
R.S.B.C 1996, c. 128 [
FRA
]
.

[20]

Addressing the remaining elements of an express trust, the judge
said:

[166]    The first certainty
is thus established. The same is true of the second and third.
The subject
of the trust is the equity in the Marguerite Street house. The only person
intended to benefit is Ms. Hu, who is its object. Although Mr. Hu
referred to Mr. Xu in some of the statements
he made, given the nature
and circumstances of the family relationship and his other conduct,
I find
he intended to give the beneficial interest in the house to Ms. Hu alone
.

[Emphasis added.]

[21]

In my view, and with great respect to the judge who was faced with
a most challenging record, the findings of fact she relied on fall short of
establishing the certainties of intention and object.

[22]

First, the judge found that Mr. Hu told Ms. Hu and
others that the Marguerite Street property was being
gifted
to Ms. Hu.
The use of the word gift is not conclusive, but it is a very strong
indication that a gift was intended. I note as well that there is a presumption
that parties usually intend to gift, but rarely intend to constitute themselves
as trustees:
Oosterhoff
at 256.

[23]

Second, the judge found Mr. Hu told Mr. Xu that the
house was for
Mr. Xu and Ms. Hu
, that Mr. Hu wanted the
company to pay the mortgage for tax-saving purposes, and that
once the
mortgage was paid title would be transferred into Mr. Xus and Ms. Hus
name
: at para. 91. Although the judge found these statements did not
necessarily reveal Mr. Hus true reasons for putting the house in BHITs
name (at para. 95), in my view, they are consistent with an intention to
make a future gift to both spouses and do not support an intention to immediately
transfer a beneficial interest to Ms. Hu alone.

[24]

Third, the judge accepted the evidence of Kong Hung Tsui, a guest
at a dinner party hosted by Ms. Hus parents at their home shortly after
the Marguerite Street house was purchased. Ms. Tsui testified that Mr. Hu
told those present he had purchased a house on the west side of Vancouver for
his daughter and son-in-law to live in. This evidence is ambiguous as to
whether the house was being purchased as a gift or being purchased to provide
the couple with a rent-free place to live, but in either case, the statement
does not support an intention to make only Ms. Hu the object of a trust.

[25]

Finally, the judge found the following statements made to
witnesses Lina Xu and Kangkang Wang supported an intention to give a beneficial
interest in the house to Ms. Hu alone:

[98]

i.          when Mr. Xus
friend, Mr. [Wang], visited the Marguerite Street house in November 2005 Ms. Hu
gave him a tour and told him her parents bought the house and
gave it to her
and Mr. Xu
; and

ii.         over
dinner attended by Mr. Xus sister, Ms. Xu, in 2005, Mr. Hu
remarked on how lucky Mr. Xu and Ms. Hu were because they did not
have to pay a mortgage and got to live in a big house and Ms. Fan told Mr. Xus
mother she didnt have to worry about her son because
we bought them a big
house, best location
.

[Emphasis added.]

[26]

All of the statements relied on refer to the house being intended
for both Mr. Xu and Ms. Hu. The judge nonetheless relied on the nature
and circumstances of the family relationship and [Mr. Hus] other conduct
to conclude that he intended the beneficial interest to pass only to Ms. Hu:
at para.166. The difficulty with this conclusion is that it contradicts the
very words relied on to create the trust. In addition, the nature and
circumstances of the family relationship and Mr. Hus other conduct must
refer to Mr. Hus apparent antipathy towards Mr. Xu. However, the
relevant time to determine certainty of objects is the time the trust is
created:
Champoise v. Prost,
2000 BCCA 426 at para. 16. In the
present case, that was October 2005, when the Marguerite Street property was
purchasedthe same year the couples son was born. The judge expressly rejected
Mr. Hus evidence at trial that he disliked Mr. Xu from the outset
and did not speak to him prior to his arrival in Canada: at para. 64. She found
that Mr. Hu wanted Mr. Xu to marry Ms. Hu and come to Canada to
work for him. In particular, he wanted a suitable husband for his daughter and
a suitable son-in-law with whom to work : at para. 69. In my view, Mr. Hus
change in attitude towards his son-in-law after the date on which the trust was
alleged to have been created cannot be used to override the intention he
expressed that the house was purchased for both Ms. Hu and Mr. Xu.

[27]

In my respectful view, the judges findings of fact do not
establish the certainties of intention and object necessary to establish an
express trust. The statements relied on are consistent with either an imperfect
gift or an unenforceable gratuitous promise to transfer the house to Ms. Hu
and Mr. Xu at a future date:
Oosterhoff
at 248. More importantly,
the words relied on do not amount to a clear declaration of trust that admit
of no other interpretation:
Heartley
at 242.

[28]

I note that the judge did not have direct evidence about whether Mr. Hu
intended to create a trust because Mr. Xu did not advance this claim at
trial. Nor did the judge have the benefit of submissions on the issue.

[29]

Because all three certainties must be proved to establish an
express trust, it is not necessary to consider whether certainty of the subject
matter of the trust could be established given the ambiguity in whether Mr. Hus
words referred to the entire property or only the equity in the property.

[30]

Nor is it necessary to address the corporate appellants
submission that the judge erred in finding that BHIT purchased the Marguerite
Street property for Mr. Hu as his agent, and that his declarations were therefore
capable of causing BHIT to hold the beneficial interest in trust for Ms. Hu
(at para. 162). The corporate appellants contend that a corporation can
act only by way of resolution, and as no corporate resolutions or other
documentary evidence supported an intention on the part of BHIT to grant a
beneficial interest in the property to Ms. Hu, no trust could have been
created, let alone through the statement of a 50% shareholder.

[31]

In conclusion on this ground of appeal, I would set aside the
declaration that BHIT held the Marguerite Street property in trust for Ms. Hu.

[32]

As a result of that conclusion, a number of other grounds of
appeal fall away. Following trial, the Marguerite Street property was sold in
February 2018, with the proceeds of sale held in trust pending the resolution
of these proceedings. The sale triggered tax obligations for BHIT in the range
of 2 to 3.5 million dollars. The parties applied for directions: first, as to
the responsibility of the various parties for the tax obligations; and second,
as to the responsibility for expenditures of BHIT on Marguerite Street while
the couple resided there, including property taxes, insurance, and renovation
expenses. A chambers judge heard the applications, and ordered Ms. Hu and Mr. Xu
to pay for the taxes and expenses out of the sale proceeds as family debt before
dividing the remaining funds. Mr. Xu, in his cross-appeal, challenges this
order, but the parties agree that in the event it is determined that BHIT held
both the legal and beneficial title to the Marguerite Street property, (as it
now has been), Mr. Xu will not be required to pay taxes and expenses relating
to that asset. It follows that Mr. Xus appeal from that order must be
allowed and the order set aside.

[33]

Similarly, the appeals from the order apportioning the Marguerite
Street propertyMs. Hu having received 75% on the reopening and each of Ms. Hu
and Mr. Xu on appeal seeking up to 100% of that assetare no longer in
issue, and the orders relating to division of that asset should be set aside.

[34]

I turn now to the remaining grounds of appeal.

2.       Did the judge err in
refusing to allow Mr. Xu to claim a constructive trust in the corporate
appellants?

[35]

On appeal, Mr. Xu argues that his salary was not
commensurate with his contributions to the family business. He contends the
corporate appellants were unjustly enriched by his work and, therefore, that he
is entitled to a constructive trust interest in the corporate appellants. This
ground of appeal can be dealt with summarily.

[36]

The judge began her judgment by grappling with which of the
claims advanced at trial could be addressed. She ruled that Mr. Xu could
not pursue a constructive trust remedy against the corporations because he had
not pleaded an unjust enrichment claim in relation to BHIT and VIE and had, in
fact, abandoned those claims by consent shortly before the trial commenced: at para. 18.
On appeal, Mr. Xu does not argue that the judge erred in so holding; instead,
he attempts to argue the merits of the unjust enrichment claim for the first
time in this Courta course that is patently not open to him.

3.       Did the judge err in
finding the insurance policy on Ms. Hus life to be a family asset?

[37]

The judge found that a whole life insurance policy owned by Ms. Hu
at the time of her marriage was a family asset under s. 58 of the
FRA
because it was ordinarily used for a family purpose: at para. 175.

[38]

Ms. Hu contends the judge erred in so finding because BHIS
paid the premiums, and her parents were the named beneficiaries, not Mr. Xu.

[39]

I see no error in the judges finding. Because this was a whole
life policy, it had monetary value that increased over time and could be cashed
in at any pointas it eventually was for $109,936. As the owner of the policy, Ms. Hu
was able to make use of that asset whenever she chose. There was accordingly
evidence to support the judges finding that the policy provided Ms. Hu,
and by extension, her husband, with a measure of security, which was a family
purpose within the meaning of s. 58 of the
FRA
.

4.       Did the judge err in
finding that properties acquired by Mr. Xu after the marriage ended were
not family assets?

[40]

Ms. Hu says that the judge erred in finding that she was not
entitled to a 50% share of properties acquired by Mr. Xu when the first
trial came to a close and shortly thereafter. In issue are three properties in
Vancouver. First, a property held in Mr. Xus mothers name at 8568 Oak
Street, purchased in October 2014 for $1,090,000; second, a property acquired
in Mr. Xus name at 8556 Oak Street in February 2015 for $1,165,000; and
third, a property acquired in Mr. Xus name at West 53rd Avenue in August
2015 for $2,160,000. Mr. Xu is registered as the borrower on both of the
latter properties mortgages: supplemental reasons at para. 5.

[41]

On the reopening to address these properties, the judge was once
again faced with an unsatisfactory evidentiary record. She noted that Mr. Xu
did not call any witnesses to corroborate his version of events that the
properties belonged to his mother and his new romantic partner, Ms. Liu.

The judge described Mr. Xus testimony as follows:

[17]      Mr. Xu testified further that he met Ms. Liu
in 2014 but they did not become common-law partners until January 2015. He
described Ms. Liu as a very shrewd businesswoman. He went on to say that
before they were common-law partners, he learned of a good development prospect
in Marpole based on new zoning, and he told Ms. Liu about it. As a result,
he said, she decided to purchase 8556 Oak Street, which was near the property
at 8568 Oak that his mother already owned. As to 8568, Mr. Xu adamantly
denied that it was actually his property and being held in trust by his mother
for his benefit.

[18]      Mr. Xu went on to testify that Ms. Liu
asked him to purchase 8556 Oak on her behalf and provided him with the funds to
do so. She later did substantially the same thing, he said, with respect to
2134 West 53
rd
. She also caused funds for this purpose to be wired
in to their joint accounts by various of her employees in China or family
members. She did this, he said, in order to get around Chinese currency
controls.

[19]      In the result, Mr. Xu
said he acquired and held both properties in trust entirely for the benefit of Ms. Liu.
As already noted, he also said that the properties were purchased in his name
even though the beneficial interest was Ms. Lius because CIBC
representatives told them as a non-resident that Ms. Liu could only hold
one real property in her name.

[42]

The judge was unable to determine the precise extent to which
8556 Oak Street and 2134 W. 53rd Avenue were purchased with funds from Ms. Liu,
but the judge was satisfied on the whole of the evidence that Ms. Liu provided
at least the majority of the funding for the acquisitions: supplemental reasons
at para. 24. As a result, the judge concluded that, in large measure, Mr. Xu
holds the properties at 8556 Oak Street and West 53rd Avenue for the benefit of
Ms. Liu; although, the judge was also satisfied that he received, at a
minimum, some form of interest in them in exchange for the use of his name on
title.

[43]

Drawing an adverse inference against Mr. Xu for failing to
call his mother as a witness despite her being available for that purpose, the
judge was satisfied that 8568 Oak Street had been purchased in October 2014 for
Mr. Xus benefit. Again, she was unable to determine the precise extent of
that benefit or how and why the arrangement had been made as it was.

[44]

Although the judge stated that she was unable to determine
whether the three properties were family assets, this amounts to a finding that
Ms. Hu had not met the burden of proving that the properties were acquired
with family assets so as to warrant a compensation order under s. 66(2)(c)
of the
FRA.
Under the
FRA,
assets acquired by a spouse after the
triggering event, are not family assets:
Foster v. Foster
, 2007 BCCA
83 at paras. 3437. In the present case, the triggering event (a
declaration under s. 57 of the
FRA
that Ms. Hu and Mr. Xu
had no reasonable prospect of reconciliation with each other) occurred in
April 2012, long before Mr. Xu took title to the properties.

[45]

The judge did, however, take Mr. Xus changed financial circumstances
into account. She increased Ms. Hus share of the Marguerite Street
property from 50% to 75% and increased the income attributable to Mr. Xu
for child support and special expenses from $45,000 to $75,000 per year.

[46]

Although Ms. Hu will no longer receive an increased share in
the Marguerite Street property, I would not disturb the judges decision to
leave intact her order dividing all other family assets equally between the
former spouses. It is apparent the judge was doing the best she could with an
inadequate evidentiary record and unreliable testimony. Parties who come to
court intending to dissemble and deceive cannot expect perfect justice. In these
circumstances, I would not accede to this ground of appeal.

5.       Did the judge err in ordering the parties to bear their own costs?

[47]

In the court below, all parties sought special costs against the
opposing parties, pointing to litigation misconduct on the part of the others.
In addressing this question, the judge said:

[38]
I conclude that
all concerned engaged in litigation misconduct in that each of Mr. Xu, Ms. Hu
and Mr. Hu sought to mislead the court
in various ways and provided
unreliable testimony. These actions prolonged the trial and made the resolution
of all the claims extraordinarily difficult. In the end, success was divided,
although Mr. Xu did succeed to some extent on some major issues such as
the validity of the Chinese divorce agreement and the existence of the express
trust in the equity of the Marguerite Street house. Nevertheless,
I conclude
that the litigation misconduct of all concerned disentitles all of them to
costs
, and I order that all of the parties bear their own costs.

[Emphasis added.]

[48]

Costs orders are discretionary decisions that are afforded deference
on appellate review. I see no reason to interfere with the judges exercise of
her discretion in this case. Indeed, for the same reasons, I would not award
costs of the appeals to any party as an expression of this Courts censure of
the parties cavalier disregard for the oaths and affirmations they made to
tell the truth.

Disposition

[49]

The appeals are allowed in part: The declaration at 8(a) of the December
2017 order that BHIT holds the Marguerite Street property in trust for Yuenyuen
Hu is set aside, as is paragraph 10(a) of the order dividing that beneficial
interest. The cross appeals are allowed in part by setting aside the order of
the chambers judge made October 16, 2019, including paragraph 4 relating to
costs of the chambers hearing. Each party is to bear their own costs of the
appeals and cross appeals.

The
Honourable Madam Justice Fenlon

I AGREE:

The Honourable
Mr. Justice Hunter

I AGREE:

The Honourable
Mr. Justice Butler


