Luo v. Chan

2025 BCSC 703 Luo v. Chan

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Luo v. Chan, 2025 BCSC 703 Date: 20250416 Docket: E233181 Registry: Vancouver Between: Zu Yan Luo Claimant And Joseph Shing Wan Chan and Fair Winds Industries Corporation, Inc. Respondents Before: The Honourable Justice Branch Reasons for Judgment Counsel for Claimant: G. Yu Counsel for Respondents: J. Cudmore T. Bradford, Articled Student Place and Date of Hearing: Vancouver, B.C. February 5, 2025 Place and Date of Judgment: Vancouver, B.C. April 16, 2025 Table of Contents I. INTRODUCTION.. 3 II. BACKGROUND.. 3 The Parties. 3 The Commencement of the Relationship. 3 Living Arrangements. 3 The Respondent's Father's Estate. 4 The Seymour Property. 5 The Separation and Living Arrangements. 5 Status of the Litigation. 5 Projected Property Equalization Order 6 The Expenses Associated with Property. 10 The Parties' Current Financial Situation. 11 The Claimant's Medical Situation. 11 The Parties' Positions on the Future of the Property. 12 III. ANALYSIS. 12 A. The Test for Sale of the Property. 12 B. Application of the Test for a Court-Ordered Sale 14 C. Restraining Orders. 18 IV. CONCLUSION.. 19 I. INTRODUCTION [1] The respondent in this family law matter seeks an order compelling the sale of the home in which the parties resided during most of their relationship (the "Property"). The claimant is presently living at the Property and

opposes its sale. [2] The evidence available on this application does not yet support a sale. There are too many "known unknowns" to be able to conclude that a sale is advisable, given the risk that the home may need to be available to facilitate an appropriate final property distribution. It may be that the questions raised by the claimant about the respondent's financial situation will be answered through the discovery process however, so I would adjourn the motion so that the respondent has the option to bring it back for hearing once the financial picture clarifies. II. BACKGROUND The Parties [3] The claimant, Zu Yan Luo, was born July 25, 1976. She is unemployed. She has not worked in BC since 2012. [4] Joseph Shing Wan Chan (the respondent) was born on October 12, 1964. Mr. Chan is an office manager at Superior Cove Tops Ltd. ("Superior Cove"). The Commencement of the Relationship [5] The claimant says that the parties' marriage-like relationship began on or about June 20, 2008. Mr. Chan states it only commenced on June 15, 2011 - the date of their marriage. Living Arrangements [6] The parties initially lived together at the respondent's parents' residence in Richmond, BC. In 2014, the respondent's parents sold this home. The respondent's father subsequently purchased the Property located at 33-6600 Lucas Rd, Richmond, BC. The parties moved into the Property. The claimant

has lived at the Property since it was purchased. The Respondent's Father's Estate [7] The respondent's father passed away on November 16, 2015. He had three children: the respondent and his siblings, Sing Chi Vincent Chan and Shing Yan Chan (the "Siblings"). Both Siblings ordinarily reside in Hong Kong. [8] Before his death, the respondent's father transferred certain assets to the respondent. Most notably, on April 10, 2015, the respondent's father added the respondent as a joint tenant on the Property. After his father's death, the respondent became the sole legal owner of the Property. [9] On September 10, 2015, the respondent's father transferred his shares in the corporate respondent, Fair Winds Industries Corporation, Inc. ("Fair Winds") to the respondent. Fair Winds is a holding company which owns a warehouse and several bank accounts. The respondent's father also transferred his vehicle, a 2011 Mercedes, to the respondent. [10] The respondent's father made a will dated September 17, 2015, pursuant to which he left his estate to the respondent, although impressed with a trust requiring that the value of the estate be distributed to the three children as follows: 40% to the respondent, and 30% to each of his Siblings. The terms of the trust provide that the trustee may, at his discretion, convert the entire estate, or any part of it, into money and decide how, when and

on what terms such a conversion occurs. [11] Although the evidence is not particularly precise on this point, it appears that there were other Hong Kong properties flowing in whole or in part to the respondent through the father's estate. The respondent provided Hong Kong probate documents with a schedule of assets and liabilities listing a 1/4th interest in three pieces of real property (to be given to the respondent and his Siblings) and a 1/72 interest in another property (to be transferred to another individual). The respondent asserts that he renounced his right to the "modest" Hong Kong estate in favour of his sister, that the properties have been sold, and that he did not receive any proceeds from the sale. The respondent attached a 2016 document which states that he is forfeiting his share of the Hong Kong estate in favour of his sister on account of his sister caring for their mother. The Seymour Property [12] Before the marriage, the respondent purchased a townhouse. When he sold it in 2017, he used the proceeds to purchase the property at 1901-1082 Seymour St., Vancouver, BC (the "Seymour Property"). The Separation and Living Arrangements [13] The parties disagree on the date of separation. Mr. Chan states that it occurred on May 1, 2019, while Ms. Luo says they only separated on November 26, 2023. Following the separation, the parties initially continued to live at

the Property, although the claimant did spend time in Hong Kong. In 2024, a police incident resulted in the respondent leaving the Property. He is now staying with a friend. Status of the Litigation [14] The claimant filed a Notice of Family Claim on December 4, 2023. It alleges that the Property is family property and seeks unequal division. The claimant does not specifically plead that she is entitled to a specific property interest in the Property, although the respondent acknowledges the potential for such an amendment. [15] Associate Judge Muir granted an ex parte restraining order against the respondent on December 4, 2023. This order was amended on March 22, 2024, to allow the defendant access to certain accounts. I will refer to these two orders collectively as the "Restraining Orders." [16] The trial is set to commence on June 8, 2026 for 10 days. The discovery process is not yet complete, and examinations for discovery have not yet taken place. [17] The respondent's application seeks orders that: a) the Property be listed for sale, with the respondent having conduct of sale; b) 30% of the net sale proceeds of any sale be paid to each of his Siblings, with the balance held in trust. Projected Property Equalization Order [18] In terms of estimating the potential property equalization order following trial, the key issue will be the extent to which the respondent can

establish his excluded property claims. It is the respondent's position that the following property held by him is excluded and not subject to division: a) his 40% share of the Property at acquisition ($284,000); b) the equity in the Seymour Property at the time of purchase ($212,460.57); c) the 2011 Mercedes ($16,000); d) the funds in account "TD Plan 60" ($217.68); e) the value of a London Life "20 Pay Life Participating" life insurance policy purchased before the relationship ($14,652.81); f) the value of an iA Financial Group Apex Ultra Gold Universal Life insurance policy ($138,879.44); g) a "Canaccord Genuity Wealth Management RRSP" ($17,176.70); h) a "TD Direct Investing RRSP" ($52,106.28); and i) his 40% share of Fair Winds at the time of its acquisition ($220,651.83). [19] The respondent accepts that the following property held by him will be subject to division: a) The increase in value of his 40% share in the Property ($162,040). (The Property is presently assessed at $1,071,300); b) The increase in the equity of the Seymour Property ($66,812.86); c) The funds in various bank accounts ($355,041.24); d) The increase in the value of the London Life "20 Pay Life Participating" Life insurance policy ($20,057.22); e) The increase in the value of the "Canaccord Genuity Wealth Management RRSP" ($9,583.01); f) The increase in the value of the "TD Direct Investing RRSP"

($288,052.46); g) The increase in the value of his 40% share of Fair Winds ($424,375.77); h) The value of an Ocean View Burial Park lawn crypt ($68,002.72); i) A 2020 Rolex Submariner watch ($19,000); and j) A loan receivable from Venus Yin-Fong Leung ($250,000). [20] On the claimant's side of the equalization equation, it is the respondent's position that the following property in the claimant's name will be subject to division: a) the funds held in various bank accounts ($458,769.73); b) a 2020 Rolex watch ($35,000); and c) a 2013 Lexus RX350 ($25,000). [21] Based solely on the above information, the respondent projects that the likely equalization payment he will pay to the claimant will be in the range of $580,000, which he notes would be inadequate to purchase the Property. The respondent says that, in fact, this amount is an overestimation of the funds the claimant is likely to receive since it does not account for the capital gain tax payable on the disposal of the Fair Winds shares, nor does it account for the minority discount to be applied to those shares. [22] The claimant notes that her November 21, 2024 Form F8 Financial Statement ("F8") contains further information about her financial situation that changes the calculus somewhat: a) The claimant owns an investment property in China, which she shares 50/50 with her sister. It was purchased in 2017 for $564,000 and

is now worth $420,650. b) The claimant purchased a parking stall in China for $17,208, which is now worth $14,340. c) The claimant has debts owing to her brother-in-law and others, totalling $695,006.21. [23] This information worsens the claimant's net financial picture. If these new assets and liabilities are accepted as family property and debt, it could potentially increase her equalization payment. However, these changes alone would not appear to be sufficient to support an equalization award large enough to give the claimant the capacity to purchase the Property outright. [24] But that is not the end of the story. The claimant says that the above calculations also fail to account for the possibility or likelihood that the respondent has not disclosed all his assets. She makes the following arguments: a) During the marriage, the respondent handled the family finances. As such, her knowledge of the extent of his holdings is limited. b) Her counsel has been following up for particulars of the respondent's assets and liabilities, but the respondent has not yet provided a fulsome response. c) There have not yet been discoveries that would allow the claimant to test the respondent's degree of disclosure. d) The gap between the respondent's expenses and income suggests that he has access to additional undisclosed funds. e) The respondent's calculation does not include a valuation

of the respondent's 20% stake in Superior Cove.[1] f) There is correspondence between the respondent and his Siblings suggesting that the respondent has assets or access to funds beyond those disclosed in his F8: i. In text messages between the respondent and his sister, there is the following exchange: Respondent: May. I transferred $150K CAD to your TD Account today. Will transfer more next week Sister: OK, didn't make any changes. But that's the money from Dad's account? Respondent: No from my own account. Sister: I mean th[sic] original source of fund. It is proof of dad & u don't need to share with crazy Respondent: I will be leaving Sunday night to JFK and back on September 30th. Will transfer another $150k to your TD Account tomorrow. Totally $300k Respondent: Remember I transferred $$300k to your account 2 years ago. ii. In text messages with his brother, there are the following exchanges: Brother: Dai Lo are you interested to make time deposit now? 6 month 3.25 12 months 3.4 Respondent: Sure Chi. I will suggest 6 months. Interest rate will keep going up You decide the amount Brother: Do 1 million 6 month first And next 1 million next month Respondent: All under your account right? Brother: Correct Although the respondent suggests that the funds mentioned in these exchanges were either his Siblings' funds or that he was loaning them the money, that is clearly not the

most natural inference. Discovery will be necessary to clarify these points further. g) The claimant says the respondent has overseas assets that have not been disclosed. In particular, the claimant alleges that the respondent: i. has $3 million worth of additional assets in Hong Kong. It is not clear whether this includes the right to the allegedly renounced properties discussed above; ii. sold a Hong Kong property for about HKD$7-8 million (or about CAD$1.4 million); and iii. that the respondent's father had a share in the "ancestral home" which was sold for HKD$60 million and in which the respondent may now have an interest. [25] The claimant argues that the fact that the respondent's assets may be overseas creates a potential need to transfer the respondent's assets in Canada to the claimant, including the Property, in order to effect appropriate equalization. [26] For his part, the respondent denies that he has any overseas assets other than a savings account that was previously included in his F8 and which contains less than CAD$3,000. The respondent denies that he sold a HKD$7-8 million property or that his father had a share in a HKD$60 million home. He says that the property described as the "ancestral home" was not owned by his father; instead it was owned by one of his uncles. Finally, the respondent suggests that the claimant may also have undisclosed assets

overseas, which would lower her equalization payment. The Expenses Associated with Property [27] Holding the Property requires payment of the following monthly expenses: a) $212.33 in property taxes; b) $73.58 in property insurance; c) $131.10 for water, sewage, and garbage; d) $857 in strata fees; e) $225 for repairs and maintenance; and f) $150 for heating and electricity. Monthly Total: $1,649.01. [28] Since separation, the respondent has been paying these expenses. The Parties' Current Financial Situation [29] According to his March 18, 2024 F8, the respondent's income is $88,218.05. This includes a net rental expense of about $7,000. His expenses, however, are said to be approximately $144,288.12 annually. [30] According to her November 21, 2024 F8, the claimant has no income. Her expenses are stated to be $64,684.68 annually. The Claimant's Medical Situation [31] The claimant provided the following report from her family physician, Dr. Frank Yue: This is to advise that [the claimant] is under my care for severe depression Patient is under severe stress from a very unpleasant divorce and is barely coping with everyday living. Patient is recently advised by her husband that she will need to move as he is selling the house that she is living in right now. This will cause tremendous pressure and instability to her already fragile emotional state. It would be extremely

important that she should be allowed to stay in her present abode until her divorce proceedings are over. If she is force[d] to move out at this time, it will cause severe physical and emotional stress and may precipitate a crisis involving hospitalization or [an] attempt to end her own life. The Parties' Positions on the Future of the Property [32] The respondent does not wish to retain the Property. He hopes to sell it so that he can pay his siblings the 60% interest he says is owed to them under the terms of his father's will and associated trust. The respondent says there is no prejudice in making such an order, as there is no reasonable prospect of the claimant being awarded the Property or being able to afford to purchase it with any equalization payment. [33] The claimant wants to keep open the possibility that she will be able to obtain control of the Property at the end of the matter. She also argues that it would not be wise to convert the Property into cash at this time, given that it may be necessary to transfer the respondent's interest in the Property to the claimant to offset the fact that enforcement against the respondent's foreign assets will be difficult. III. ANALYSIS A. The Test for Sale of the Property [34] Under s. 81 of the Family Law Act, S.B.C. 2011, c. 25 [FLA], the claimant is prima facie entitled to an undivided half interest in all family

property. [35] Section 85 of the FLA provides for certain types of property to be excluded from family property, including: a) property acquired by a spouse before the relationship between the spouses began; b) inheritances to a spouse; and c) gifts from a third party. [36] Section 84(2)(g) of FLA specifies that any increase in the value of excluded property during the relationship is considered family property and is subject to division between the spouses. [37] Section 96 of the FLA permits the court to divide excluded property under specific circumstances, such as when family property or family debt located outside British Columbia cannot be practically divided. [38] Section 97 allows the court to determine any matter respecting the ownership or right of possession of property or family debt. [39] Rule 15-8 of the Supreme Court Family Rules, B.C. Reg. 169/2009 provides the Court with the discretion to order a sale of family property on an interim application where it is necessary or expedient. The test is disjunctive. Where a sale is not required, it may still be ordered if it is expedient: Laflamme v. Beauparlant, 2024 BCSC 1008 at para.

32. The burden on such an application is on the applicant: Laflamme, para. 31. [40] The words "necessary" and "expedient" encompass several factors, such as the availability of alternative accommodation, the emotional condition of the spouses, external economic factors, wasting of the asset, the capacity of both parties to maintain the asset, whether the status quo should be preserved until trial, whether the sale will defeat a claim for reapportionment, and the likelihood that an order for sale will promote settlement: A.B. v. C.D., 2015 BCSC 2134 at para. 63; Laflamme at para. 31. [41] The question of whether a sale is "necessary" is specifically concerned with the parties' financial circumstances, including whether either party requires access to the equity in the property to finance the litigation, maintain property or support themselves. The court will also consider whether a sale is inevitable given the parties' financial situations: Laflamme at paras. 31-32. [42] An interim sale will be considered "expedient" if it is advantageous to both parties: N.N.N. v. D.E.B., 2016 BCSC 1778 at para. 21; Reilly v. Reilly, 99 D.L.R. (4th) 47, 1992 CanLII 742 at para. 35. [43] Ultimately, the decision is within the presider's discretion after considering the relevant factors. The above-noted factors are non-exhaustive: R.R.S. v. B.R.M.S., 2021 BCSC 1330 at para. 22. [44] In terms of

awarding one party control of any court-ordered sale, the court may consider the following: a) The willingness of the party to facilitate a sale; b) The inability of the parties to agree on routine aspects of the sale; and c) The inability of the parties to cooperate: Kainth v. Brar, 2022 BCSC 1552 at paras. 27-28. B. Application of the Test for a Court-Ordered Sale [45] The respondent says that a sale is justified because: a) There is no prospect of the claimant being able to purchase the Property at the end of the litigation. b) The claimant has sufficient accessible funds to afford the rental of another home. c) A sale would be advantageous to the parties as it would aid in the process of property division and encourage settlement. d) A sale would be fair to the respondent's Siblings, who are being deprived of the benefit of their inheritance. [46] The claimant responds that the following factors weigh against granting the order: a) Given that she has lived at the Property since 2014, she has an understandable emotional attachment to the Property. b) Given the claimant`s difficult medical and financial situation, it is not practical or advisable for her to find alternative accommodation at this time. c) Even though she would like to purchase the Property, she is unable to do so at this time. d) The claimant has not yet received what will likely be a substantial equalization

payment. Given the gaps in the respondent's disclosure, her compensation payment may be adequate to allow her to assume the Property as part of any equalization exercise. e) It may be necessary for the Court to transfer the respondent's interest in the Property to the claimant to account for the respondent's offshore assets. [47] I accept that the following factors favour a sale: a) The claimant has access to sufficient funds to rent other accommodation. There are few particulars provided about the loan said to be owed to her brother-in-law, and there is no evidence that he intends to call on this alleged loan in the short run. b) Based solely on the evidence presently available, it appears unlikely that the claimant will receive an equalization payment sufficient to allow her to purchase the Property outright. c) The claimant has failed to provide evidence of efforts to secure financing to allow her to purchase the Property: Laflamme at paras. 51, 56. d) A decision not to order a sale will affect the potential interests of third parties to the litigation - the Siblings. [48] However, I find that these limited factors are overwhelmed by the following opposing considerations: a) There is little evidence that the respondent or the Siblings are suffering, or will suffer, financial strain as a result of the Property being held through trial: Laflamme at para.

58. Indeed, (1) the respondent is proposing that his share be held in trust, and (2) the Siblings did not advance the application, nor did they seek to intervene. In Laflamme, the court found that the applicant's proposal to pay the sale proceeds into trust was inconsistent with her position that the sale was necessary to fund the litigation: para. 42. b) At this stage, it is unclear whether the Property was gifted outright to the respondent, forms part of the father's estate, or is bound by the terms of the trust. The final decision on this point will affect whether the Siblings have any interest in the Property and will also create a material swing in the final equalization payment calculation. c) There is no evidence that the Property is wasting. The respondent's father passed away almost 9.5 years ago. Given the delay in distributing the estate, the respondent and the Siblings do not appear to be operating under any particular urgency. d) Although it is true that, based on the disclosed assets to date, it would be difficult for the claimant to purchase the Property, there is also evidence which suggests that the respondent's assets may be undervalued. If true, this will make the claimant's purchase of the Property more realistic. It is, therefore, premature to conclude that the sale of the property to a third party is inevitable: Laflamme at paras. 51-57. e) Given that

there is evidence that the respondent may have undisclosed assets overseas, the trial court may need to use the Property to ensure the effectiveness and enforceability of any equalization award in the claimant's favour. A sale may impinge upon the claimant's ability to obtain an effective apportionment order: G.J.U. v. J.L.U., 2017 BCSC 1352 at para. 57. f) The claimant has lived at the Property for 10 years, and there is evidence that a court-ordered move from her home will be damaging to her mental health: Gatson v. Gatson, 2023 BCSC 1361 at para.

63. Given this evidence, I cannot conclude that the sale is "expedient' since it is clearly not advantageous to both parties: N.N.N. at para. 21. g) I do not see that a sale will promote early settlement. It is more likely that settlement discussions will need to await more fulsome disclosure of the extent of each party's overseas holdings. As the Court stated in Laflamme at para. 63: "given Mr. Beauparlant's strongly expressed desire to retain the Property, and the fact that the only real matters to be resolved between the parties relate to their interests in the Property, in my view, an order for interim sale would likely create greater discord, rather than moving the parties closer to settlement." h) Given that the applicant has not established that an interim sale is necessary or expedient, and there are at least doubts regarding the justice of such an order at this time, the status quo should prevail: Laflamme at paras. 31, 33. As the Court concluded in Laflamme: [64] Taken as a whole, I have doubts about the justice of an order for sale in the face of the uncertainty created by Ms. Laflamme's excluded property claim and in light of the limited time that Mr. Beauparlant has had to obtain support to buy out her interest in the Property, as explained through her notice of application. A sale at this point would clearly prejudice Mr. Beauparlant by foreclosing his ability to

meaningfully explore possible financing in an attempt to retain the Property once his interest can be determined. As Justice Melnick stated at paragraph 12 of M.A.L. v. N.A.L., 2014 BCSC 203, "[t]here are at present too many unknowns concerning the extent to which each party may have equity in the matrimonial home to order that it be sold prior to trial." I am therefore satisfied that there are reasons to preserve the status quo, and an order for sale would not be expedient. [49] The discovery process should fill in the evidentiary gaps identified by the claimant. The information gleaned through discovery could establish with greater certainty both (1) the claimant's ability to purchase the Property and (2) the need for the court to have access to the Property to use as a tool to address the issue created by the existence of potential overseas assets. Hence, I find that it is appropriate that this application for sale be treated as adjourned rather than dismissed. Even the claimant accepted that a sale may be necessary in the future, but sought the opportunity first to be allowed to obtain the full financial picture through discoveries. [50] This decision should not be interpreted as requiring the respondent to continue to pay all expenses related to the Property. I am only addressing the application before me, which requested that the Property be sold. It did not seek

alternative relief if the Property was not going to be sold. It is not clear from the record whether the issue of interim spousal support has been addressed by the parties, which would play into any analysis about expense allocation. Given the lack of evidence and the lack of a formal application, I am obviously not in a position at this time to address (1) whether spousal support should be awarded, (2) whether the claimant should bear any or all of the monthly expenses associated with the Property, or (3) whether the claimant should be responsible for interim occupation rent. C. Restraining Orders [51] The application also sought the following order: 3. Pursuant to section 91(4) of the Family Law Act, an order setting aside the order of this Court dated December 4, 2023, and replacing with an order as follows: (a) The Respondent will not withdraw any funds from his TD Direct Investing RRSP ending in 459S, but is at liberty to make transactions within the account, until further order of the Court or written agreement of the parties. [52] As mentioned, Associate Judge Muir granted an order on December 4, 2023, restraining the respondent from disposing of any property. This order was amended on March 22, 2024, to allow the defendant access to certain accounts. [53] On a plain reading, the proposed order would set aside all financial restraints on the respondent other than

prohibiting withdrawal from the identified RRSP. [54] Little time was spent on this item at the hearing. From the limited submissions received, it appeared that the respondent was prepared to narrow this request for relief. As I understood his final submissions, the respondent sought only the ability to engage in trading within his TD Direct Investing RRSP. He was prepared to continue to agree not to withdraw any funds from this account. Other than this limited modification, my understanding was that the Restraining Orders would remain in place. [55] The claimant's position is that all the present restrictions should remain. [56] I am prepared to grant an order allowing trading in the TD Direct Investing RRSP. There is little prejudice to the claimant, given that the account itself will be protected. There is no evidence that the respondent is an irresponsible investor, such that allowing him trading power would be improvident. The parties are aligned in their desire to maximize the value of this account. [57] If the respondent is seeking relief from the Restraining Orders beyond the ability to trade within the TD Direct Investing RRSP, the parties may seek to arrange a further 9:00 a.m. hearing before me via MS Teams to address this issue, if they cannot otherwise agree on any proposed further relaxation of the terms. IV. CONCLUSION [58] The respondent's application for a sale

of the Property is adjourned generally. The application to relieve the respondent from the strictures of the earlier Restraining Orders is granted in part on the terms set out above. [59] Unless the parties wish to make additional submissions on costs, I would order that the claimant receive their costs in the cause given that she was substantially successful in avoiding the Property sale. If either party does wish to make further submissions on costs, they may arrange a 9:00 a.m. hearing before me via MS Teams on a mutually agreeable date. "The Honourable Mr. Justice Branch" [1] The respondent responds that these shares were provided by his employer before the marriage-like relationship, and, in any event, there is little reason to believe that they have materially increased in value since acquisition.