Qu v. Zhang: Resulting Trusts, s. 14 FLA Timing, and the Weight of Credibility

Introduction

In Qu v. Zhang, 2025 ONCA 391, the Court of Appeal upheld the Application judge’s determinations that the wife was the sole beneficial owner of the home under a resulting trust and that occupation rent was properly assessed with credits, dismissing both the appeal and the cross-appeal. The ONCA accepted the trial judge’s conclusion that s. 14 of the Family Law Act (“FLA”) did not apply to pre-marital transfers on these facts and found no palpable and overriding error, while declining to decide whether Holtby v. Draper, 2017 ONCA 932, permits a broader, retroactive use of s. 14 of the Family Law Act \. Credibility findings were central and were afforded appellate deference (paras. 21–27).

Facts as Found by the Application Judge

The parties married on July 3, 2016, and separated on August 1, 2017. The wife lived and worked in China and spent about nine weeks in Canada during the marriage (para. 3). Before marriage, she deposited $312,342.50 into a joint account. On October 4, 2016, $240,506.07 from that account funded the down payment on a home registered in joint tenancy. Shortly before separation, the husband removed her name from the joint account and moved $10,000 to another joint account.

The application judge rejected the husband’s evidence as that of a “very poor witness” and accepted the wife’s evidence as straightforward and consistent, including that she intended to invest in Canadian real estate and did not intend a gift, corroborated by her daughter and by her unfamiliarity with joint accounts. He found the wife 100% beneficial owner via resulting trust, with constructive trust in the alternative, and ordered title transferred to her. He awarded occupation rent from separation to October 2023, then set off full carrying-cost credits, leaving a net $12,641.66 to the husband. He also awarded $6,000 for roof-leak repairs and rejected the wife’s request for a speculative $30,000 deposit for possible latent damage.

Resulting Trust and s. 14 FLA — Timing, Onus, and the Unresolved Holtby Question

Based upon Precore v. Precore, 2007 SCC 17, the law presumes that gratuitous transfers between individuals are not intended as gifts. However, the presumption may be rebutted, on a balance of probabilities, by evidence showing that the transferor intended the transfer, whether money or other property, to be a gift. This must be based on “sufficiently clear, convincing and cogent” evidence: F.H. v. McDougall, 2008 SCC 53. The Court noted that “The presumption of resulting trust flows from the principle that equity presumes bargains and not gifts.”.

Section 14 FLA reverses the presumption between spouses where title or deposits are in joint names: “the fact that property is held in the name of spouses as joint tenants is proof, in the absence of evidence to the contrary, that the spouses are intended to own the property as joint tenants”.

The application judge analyzed the finances by three time-periods: pre-marriage deposits, in-marriage deposits, and the purchase of the house from the joint account during the marriage. He held s. 14 did not apply pre-marriage because the parties were not yet spouses, so the husband bore the onus to prove a gift and failed. During the marriage, for both the deposits and the purchase, the application judge found that Ms. Qu provided “sufficient evidence” to rebut s. 14’s presumption.

On appeal, the Court of Appeal held that it was unnecessary to decide whether the application judge erred in treating the pre-marriage deposits under the resulting-trust presumption rather than under s. 14 of the Family Law Act. Accepting the judge’s finding that Ms. Qu’s consistent intention was to invest, not to make a gift, the Court concluded that the same outcome—a resulting trust in her favour—would follow whether the case were analyzed under the common-law presumption or the statutory one. Mr. Zhang relied on Holtby v. Draper, 2017 ONCA 932, to argue that marriage engages s. 14 FLA retroactively for pre-marital transfers. The Court responded that it was not necessary to consider whether Holtby supports that broader proposition, leaving the interaction between s. 14 FLA and pre-marital transfers unresolved. The case underscores the importance of clearly documenting each party’s intent at the time of any transfer to avoid later disputes about ownership or onus.

Credibility and Evidentiary Sufficiency

Mr. Zhang argued that the application judge erred by placing too much emphasis on credibility and failing to focus on Ms. Qu’s intention at the time the funds were advanced to purchase the home. He also submitted that her testimony, standing alone, could not meet the requirement for “sufficiently clear, convincing and cogent” evidence of intention, citing Pecore and F.H. v. McDougall. The Court of Appeal rejected these arguments. Trotter J.A. held that, in this case, assessing credibility—particularly Ms. Qu’s—was crucial, as there was little evidence beyond the parties’ testimony and banking documents. He emphasized that while confirmatory evidence can assist a trier of fact, it is not always available, and testimonial evidence alone can suffice if accepted by a responsible judge. The Court found that the application judge did, in fact, have circumstantial confirmation supporting Ms. Qu’s account: her background as an experienced real-estate investor, her consistent statements to her daughter about buying property in Canada, and her daughter’s corroborating testimony. Characterizing Ms. Qu’s testimony as “narrative” was, in the Court’s view, unhelpful—the question was whether it was genuine and believable, and those findings were entitled to considerable deference. The ONCA therefore dismissed this ground of appeal, confirming that the application judge properly determined Ms. Qu’s intention through credibility findings grounded in the available evidence.

Occupation Rent — Reasonableness, Credits, and Appreciation

The application judge awarded occupation rent from August 1, 2017 to October 2023 (Zhang occupied the home from January 2017 but rent ran from separation) based on expert evidence of $3,000/month ($204,000 total), then credited $216,641.66 in carrying costs to the husband, yielding a net $12,641.66 payable to him. The ONCA upheld the award, emphasizing— Griffiths v. Zambosco (2001), 2001 CanLII 24097 (ON CA) —that occupation rent must be reasonable, not exceptional, and setting out the familiar factors (timing, duration, non-resident spouse’s inability to realize equity, reasonable credits, competing claims). Applying those factors, the application judge found that: Ms. Qu, who lived in China, could neither occupy nor rent the home, while Mr. Zhang lived there rent-free and rented out his own properties; all carrying-cost credits were accounted for; as the 100 percent beneficial owner, Ms. Qu was entitled to any increase in value; and Mr. Zhang’s renovation claims were vague and short-lived after separation. Finding no error, the Court dismissed the appeal on this issue

Cross-Appeal — Proven vs. Speculative Repairs

The wife sought $30,000 security for potential latent roof damage. Expert evidence established $6,000–$9,000 in known damage, and further harm could not be determined without intrusive work. The Application judge limited recovery to proven loss and refused speculative security. The ONCA found no error and dismissed the cross-appeal.

Practical Takeaways

1. Treat timing as strategy, not trivia. When funds are advanced before marriage, the resulting-trust presumption governs unless the transferor later confirms a donative intent. The Application judge in Qu found that s. 14 FLA did not apply because the parties were not yet spouses, and the Court of Appeal left that finding undisturbed, expressly declining to decide whether Holtby v. Draper extends s. 14 retroactively. Frame your pleadings and discovery around when and how intent was formed.
2. Build your case through credibility. In cases with limited documentation—especially involving cross-border finances—credibility is the evidence. Prepare your client to testify with clarity and consistency; circumstantial corroboration (family witnesses, cultural practices, patterns of investment) can be decisive.
3. Record intent early and often. Even simple acknowledgments of purpose—an email, note, or draft trust declaration—can avoid years of litigation about whether a contribution was a gift or an investment. In mixed-fund situations, contemporaneous records carry far more weight than ex post facto explanations.
4. Occupation rent is no longer exceptional. Post-separation occupancy now attracts routine scrutiny. Courts apply a reasonableness test, not hardship: they look at timing, duration, use, and credits. Counsel should quantify potential rent exposure early and negotiate offset arrangements where possible.
5. Keep damage claims grounded. Speculative repair estimates and “just-in-case” holdbacks rarely succeed. Qu confirms that courts will compensate only proven losses, not hypothetical future repairs.
6. Manage expectations on costs. Despite the appeal’s complexity, costs were modest—$8,500 net to the wife. The decision reinforces proportionality: strong credibility and clear intent often matter more than the quantum of costs recovered.
   

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Disclaimer: The information provided in this blog post is intended for general informational purposes only and should not be considered as legal advice. Consult with a qualified family law attorney for advice regarding your specific situation. Goldhart Mediation & Arbitration is not responsible for any actions taken based on the information presented in this blog.