2008 BCSC 266 Wei v. Cao

Before: The Honourable Madam Justice Gerow

Reasons for Judgment

Counsel for the Plaintiff:	G.A. Lang B.J. Ingram
Counsel for the Defendant:	J.C. Fiddes
Date and Place of Trial:	December 3 – 12, 2007
	Vancouver, B.C.

[1] The parties were married on April 29, 1996, in Beijing, China. Both parties currently reside in Beijing, China. They have one child of the marriage, a daughter Xiao Han Cao who was born on September 19, 1996. The parties filed a joint statement of claim on November 8, 2005, seeking a divorce. The joint statement of claim states that the parties ceased to cohabit on December 12, 2002; however Mr. Cao, the husband, says that the date is not correct and that the parties knew the date was not correct when they filed the joint statement of claim.

[2] Mr. Cao filed a statement of defence and counterclaim on November 18, 2005, seeking a determination and division of family assets, amongst other relief. An amended statement of defence and counterclaim was filed at the commencement of the trial. In the amended statement of defence and counterclaim, Mr. Cao seeks to set aside a marriage agreement (the “Agreement”) entered into between the parties on the basis that it was unconscionable and that Ms. Wei has repudiated the Agreement as modified by an Addendum. Mr. Cao alleges that although he signed the Agreement on December 12, 2002, he did not understand the Agreement because of language difficulties. As well, he alleges that he did not seek independent legal advice regarding an Addendum to the Marriage Agreement (the “Addendum”) he signed on November 4, 2005. Ms. Wei seeks to rely on the Agreement as modified by the Addendum.

[3] In the statement of defence and counterclaim, Mr. Cao also seeks joint custody and joint guardianship of the couple’s daughter; however, the parties agreed that I do not have jurisdiction to deal with the issues of custody and guardianship because the parties have resided in China since the fall of 2006, and therefore have a more substantial connection to that jurisdiction. I am advised by the parties that China is not a reciprocating state.

[4] Both parties seek a divorce.

[5] The issues are:

1. whether the Agreement should be varied or set aside; and

2. whether a divorce should be granted.

BACKGROUND

[6] In their evidence the parties did not agree about when they met, when or where they lived together, what work each did, how much they earned, who paid for the expenses when they were together, what assets they have in China, the value of their assets in China, who paid for the real estate property they have accumulated in B.C., and when they separated.

[7] Both say the other is not a credible witness. I did not find either credible. Their evidence was full of inconsistencies and much of it did not make sense when viewed in the context of the evidence as a whole. I could not tell if either of them told the truth about anything. As a result, I do not accept their evidence unless it is against interest.

[8] In her testimony, Ms. Wei downplays the fact that she and Mr. Cao ever had any romantic feelings for each other. Her evidence is that she met Mr. Cao in a club in late 1995 and commenced a casual relationship with him. She says when she learned she was pregnant and told Mr. Cao, his response was that it was up to her whether or not she wanted to keep the baby. Her evidence is that the only reason she married Mr. Cao was so that her child would have a birth certificate. Ms. Wei testified that if she had not married Mr. Cao the child would not have been entitled to a birth certificate, to attend school or to a household registration in China.

[9] According to Ms. Wei, the marriage was one of convenience, and the parties did not live together prior to marriage. Ms. Wei’s evidence is that she did not even know where Mr. Cao lived before she married him. After the marriage, Mr. Cao moved into her Beijing apartment. Her evidence is that she purchased the apartment in 1993 for cash, and that the money to purchase the apartment came from her company, Qui Shui. I note that this evidence contradicts her evidence in her examination for discovery that she purchased the apartment in July 1994. Her evidence is that she did not live in the apartment until after she was pregnant with the couple’s daughter.

[10] Ms. Wei’s evidence is that the couple immigrated to Canada in 1998, but that Mr. Cao returned to China within weeks of arriving in Canada, and spent just a few weeks a year in Canada between 1998 and 2002. This differs from Mr. Cao’s evidence that between 1998 and 2002 he spent six months a year in Canada to fulfill the residency requirements to obtain his Canadian citizenship. Ms. Wei’s evidence is that Mr. Cao continued to visit Canada after 2002, but says that it was to see their child and that both of them had relationships with other partners.

[11] Mr. Cao deposed in his April 2006 affidavit that he spent six months each year in Beijing and Vancouver between 1998 and 2005. This evidence did not however, accord with the information for 2003 to 2005 in his Canadian and Chinese passports which were produced. The passports indicate he spent 7 weeks in Canada in 2003, 16 days in Canada in 2004, and just under 4 months in Canada in 2005. Mr. Cao’s evidence is that he could not produce his earlier passport because the Chinese government took it away from him. When his affidavit was put to him, Mr. Cao agreed that “his affidavit evidence is doubtful”, but had no explanation as to why he was untruthful in his affidavit.

[12] Ms. Wei’s evidence in direct examination was that in 2001 she formed a new relationship with Marc Rovner and started living with him that year. She testified that she is still living with him, and that since 2001 there has never been a period when she had lived with him. However, in cross examination she admitted that evidence is untrue, as she recently had a child who was fathered by another individual and Mr. Rovner has not visited China since she returned there in October 2006. Her evidence is that since late October 2006 she has resided in Beijing.

[13] In her income tax returns Ms. Wei reported that she was married to Mr. Cao as late as 2004. Her 2005 income tax return is the first one which shows her status as separated.

[14] Ms. Wei is dismissive about Mr. Cao’s work history. Ms. Wei’s evidence is that when she met Mr. Cao he was working for a friend, but he ended up being fired from that job after they met. Ms. Wei testified that she had Qui Shui hire him, and that he worked for Qui Shui on a part‑time basis doing “ordinary work” such as assisting an electrician or fixing air conditioners. According to Ms. Wei, Mr. Cao made very little money during the marriage and she paid for all of the household expenses, and all the monies and property the couple accumulated were due to her efforts. Her evidence is that she was also the one who looked after their daughter.

[15] On the other hand, Mr. Cao’s evidence is that they met in 1994 and that Ms. Wei suggested he work for Qui Shui. Shortly after they met they developed a romantic relationship, and started living together at the end of August 1994. His evidence is that they started living together in the Friendship Hotel, and then bought the apartment in Beijing with their combined savings, with each contributing half towards the purchase price. He agrees that starting working at Qui Shui, but says that he worked as the marketing director, administrative director and general managing director, earning a substantial income.

[16] Mr. Cao’s evidence is that the marriage did not break down until 2005, which is why they signed the Addendum that year. He says that he was unaware of Mr. Rovner, or that his wife had any involvement with Mr. Rovner until 2005. Mr. Cao testified that until 2005, whenever he came to Canada or Ms. Wei came to China, they lived together as man and wife.

[17] No documents were produced by either party to support their evidence about when or for how much the Beijing apartment was purchased for or what either contributed to the purchase price. Accordingly, I cannot determine when the apartment was purchased or who purchased it. Nor can I tell from the evidence presented how much income either party earned, either prior to or during the marriage. Although Mr. Cao’s evidence is that from 1998 onwards the parties were required to file income tax returns in China, neither has produced any income tax returns from China. It would appear from the assets they have accumulated in Canada that one, or both of them, was earning a substantial amount of money.

[18] Mr. Cao presented some evidence about the value of various companies in which Ms. Wei owns shares in China. Mr. Cao’s evidence contradicts Ms. Wei’s evidence regarding their worth. However, there was insufficient evidence to determine the value of any of the couple’s assets in China, what companies they had shares in, or how much they earned or received in dividends from the various companies.

[19] There is evidence that Ms. Wei, with other shareholders formed a company in 1998 called Beijing Unioncom Pharmaceutical Ltd. (“Beijing Pharmaceutical”). Ms. Wei’s evidence is that Mr. Cao took significant sums of money out of Beijing Pharmaceutical without her authorization. Mr. Cao’s evidence is that he was authorized to take monies from that company. Although there is evidence that Mr. Cao took significant sums from Beijing Pharmaceutical, I cannot resolve the conflict as to whether or not he was authorized to take the monies as neither party presented corroborating evidence for their version of events, and neither was credible in their evidence.

[20] The Canadian income tax returns each of them produced in this litigation show very little income being earned. Although there is an obligation to report income from all sources both inside and outside Canada, it appears neither reported any income earned in China. In the income tax returns Ms. Wei produced, she reported the following income:

	2002	$ 2,452.00
	2003	59.00
	2004	10,930.18
	2005	34,724.74
	2006	22,814.02

[21] As noted earlier, in her income tax returns until 2005 Ms. Wei stated she was married to Mr. Cao and reported his income on her income tax return.

[22] The income tax returns produced for Mr. Cao, which Ms. Wei apparently instructed an accountant to prepare, reported the following income:

	2001	$19,058.00
	2002	18,885.00
	2004	9,779.70

[23] They also indicated that Mr. Cao was married to Ms. Wei and reported her income.

[24] Ms. Wei produced partial bank account statements for the parties’ Canadian joint bank account covering some of the period from November 2002 to July 2005 that show wire transfers of U.S. dollars into the account from China. The statements reveal that the following amounts were wire transferred into the joint bank account in 2003: $60,000 in July, $320,000 in August (which consisted of numerous transfers of $10,000 and one of $20,000), $30,000 in September, and $20,000 in December. In 2004, the following amounts were wire transferred into the joint bank account: $40,000 in March, $40,000 in May, $260,000 in June, and $10,000 in December. In 2005, the amounts transferred into the joint bank account were $20,000 in March, and $20,000 in July.

[25] Ms. Wei’s evidence is that all of the money wired into the joint account was gifted by her father. She testified that the companies in China in which she has shareholdings, Beijing Pharmaceutical and a heating company called Beijing Jing Da Heating Company Ltd., made no money and in fact lost large sums of money after 2003. Ms. Wei testified that Beijing Pharmaceutical broke even from 2000 – 2002, but started losing money in 2003. She testified that not only was Beijing Pharmaceutical losing money because of government regulations, but that the company borrowed money in the amount of 31 million RMB from the bank to build a new factory and buy new equipment. Ms. Wei’s evidence is that she has never drawn a salary from Beijing Pharmaceutical, and that the only monies she receives from the company are for travel expenses for herself and her daughter. According to Ms. Wei, Beijing Jing Da also lost money.

[26] Although Ms. Wei’s evidence is that the wire transfers came from her father, she has provided no corroboration for that statement apart from some wire transfers which have her father’s name on them. Other wire transfers into the joint account have different names on them.

[27] Mr. Cao’s evidence is that the individuals sending the other wire transfers are foreign money traders who he used to send money to the joint bank account. He testified that the monies transferred into the Canadian joint bank account from China were dividends and income which the couple received from Beijing Pharmaceutical. According to Mr. Cao, there were restrictions on how much money could be brought out of China. In order to deal with the restrictions, each time Ms. Wei and Mr. Cao came to Canada they brought at least $10,000 cash with them, and wired money into their joint bank account through foreign money traders.

[28] Mr. Cao’s evidence is that in June 2003, Ms. Wei telephoned and told him she wanted to purchase the property on Lawrence Way in West Vancouver and needed money from China to complete the purchase. According to Mr. Cao, by 2002 the couple had brought into Canada all of the assets they had reported to Canadian immigration authorities and they were concerned that if they continued to bring money into Canada, that money would be taxed as income. Mr. Cao testified that Ms. Wei suggested that if they remitted the money under her father’s name it would be considered a gift and would not be taxed as income. I accept Mr. Cao’s evidence regarding the source of the funds which were transferred into the joint bank account from China as it has a ring of truth and is against his interest.

[29] In the financial statements Ms. Wei swore, her expenses and assets bear no relationship with the income she claims to have earned. In her financial statement filed November 30, 2007, Ms. Wei swore that her income was $22,814.02 before child tax credits and that her annual expenses were $208,940.52. She declared she owned or had an interest in two properties in West Vancouver, B.C. and one in Whistler, B.C., the total value of which was $3,578,900, a vehicle worth $26,000, and other financial assets in the amount of $12,924.55. The only debt she lists is a mortgage of $453,991.13 against a property on Groveland Road in West Vancouver and another debt for $66.86.

[30] In an earlier financial statement dated July 5, 2006, Ms. Wei swore that her annual income was $35,080.05 and her total annual expenses were $129,677.52. Her assets totalled $2,631,971.56 and her only debt was a mortgage on the Groveland Road property in the amount of $459,958.24. In both financial statements she stated she was employed by Beijing Pharmaceutical.

[31] Ms. Wei’s evidence is that she is supported by her family; however, she did not produce any documents apart from the wire transfers showing her father’s name, nor did she call any family members to corroborate that evidence. As I noted earlier, I accept Mr. Cao’s evidence that Ms. Wei’s father’s name was shown on the wire transfers in order to avoid paying income tax on money earned by the parties.

[32] As well, Mr. Cao’s financial statement dated November 29, 2007 does not accord with the evidence. He swore that he had no income. However, he states that he was employed by Beijing Huayang Company until October 2007 and there is evidence that he received spousal support payments of $3,000 a month in 2007. He did not include any amounts he received either as income up to October 2007 or as spousal support in his financial statement.

[33] In his financial statement dated April 20, 2006, Mr. Cao also reported no income and little in the way of assets or debts. He stated that he was unemployed, and does not report any spousal support he received in 2006.

[34] One thing the parties do agree on is that they applied to immigrate to Canada under an investment immigration program. Both also agree that Ms. Wei initiated the inquiries. Ms. Wei’s evidence is that the $250,000 used to immigrate was earned solely by her, whereas Mr. Cao says that the money came from a combination of each of their savings and monies they had earned working in China. The evidence is that the investment was repaid and the monies were put into their joint bank account.

[35] The parties also agree that when they met, Ms. Wei was a shareholder in Qui Shui, which she had started in 1992 when she was 28 years old. Qui Shui was involved in the business of buying, selling and renting buildings. It apparently ceased operations sometime in 1997 or 1998.

[36] In 1998, the same time she immigrated to Canada, Ms. Wei says she formed Beijing Pharmaceutical, through Qui Shui, with two other shareholders. Qui Shui apparently contributed about 450,000 RMB of the start up funds. The nature of Beijing Pharmaceutical’s business is manufacturing traditional Chinese medicines.

[37] According to Ms. Wei, she is chairman of the board of Beijing Pharmaceutical. Mr. Cao worked for the company from 1998 to 2005; however, Ms. Wei says he only worked part time. Mr. Cao says that he was a manager and took care of the company when Ms. Wei was in Canada. His evidence is that he earned significant monies from Beijing Pharmaceutical through dividends and salary.

[38] I find it difficult to accept Ms. Wei’s evidence that she could manage Beijing Pharmaceutical between 1998 and 2005, when her evidence is that during the same period she spent most of her time living in Canada with the couple’s daughter. As I indicated earlier, Ms. Wei’s evidence is that Mr. Cao spent very little time in Canada from 1998 to 2005.

[39] The parties purchased properties in Canada, all of which were registered in Ms. Wei’s name. Both agree that the property purchased in 1999 on Lyons Place in North Vancouver was a family residence. However, there is a dispute as to whether the rest of the properties they purchased were purchased by both parties or by only Ms. Wei.

[40] The purchase price of the Lyons Place property was $453,000, which was in part financed by a mortgage in the amount of $280,000. The property was sold in 2001 and a property on Camelot Road in West Vancouver was purchased for $629,000 with a mortgage of $150,000. The Camelot Road property was sold in 2004 for $882,000. The mortgage had been discharged when the property was sold. In July 2003, a property on Lawrence Way in West Vancouver was purchased for the amount of $730,000 without a mortgage. In February 2004, a property on Groveland Road in West Vancouver was purchased for $1,355,000. It appears from the documents there was a mortgage of $880,750; however, Ms. Wei testified that the mortgage was actually $438,000. As well, a property in Whistler, B.C. was purchased in May 2004 for the amount of $470,000. According to both Ms. Wei and Mr. Rovner, Mr. Rovner contributed $100,000 towards the purchase of the Whistler property. It is unclear if there is any mortgage on that property.

ANALYSIS

Should the Agreement be varied or set aside?

[41] Mr. Cao seeks to set aside the Agreement on the basis that it is unconscionable and that Ms. Wei has repudiated the Agreement. For the reasons set out below, I am unable to find a basis in the evidence to conclude that the Agreement as modified by the Addendum should be set aside as unconscionable or unfair, or that Ms. Wei has repudiated the Agreement.

[42] Ms. Wei argues that the Agreement was a separation agreement not a marriage agreement, because the parties had agreed they were no longer going to live together. However, I do not accept Ms. Wei’s evidence that the parties separated in 2002. As indicated earlier, the income tax returns Ms. Wei filed show both her status and that of Mr. Cao as married until 2005.

[43] The Agreement itself does not support Ms. Wei’s evidence. The Agreement is entitled “Marriage Agreement” and specifically contemplates property being acquired during their marriage. The Agreement also refers to the fact that it is anticipated that the parties will maintain both separate and joint bank accounts.

[44] The law regarding the enforcement and variation of marriage agreements is set out in Hartshorne v. Hartshorne, 2004 SCC 22, [2004] 1 S.C.R. 550. Marriage agreements are permitted to allow spouses to substitute a consensual regime for the statutory regime that would otherwise be imposed on them. However, they are subject to judicial intervention when their provisions for the division of property are found to be unfair at the time of distribution, after considering the various factors enumerated in s. 65 of the Family Relations Act, R.S.B.C. 1996, c. 128 (the "FRA"): Hartshorne at ¶1.

[45] Although Mr. Cao asserts that he did not understand the contents of the Agreement due to his lack of English, he has not established that the circumstances in which either the Agreement or the Addendum were negotiated and executed were such that the documents should be discounted. I accept the evidence of Mr. Steven Jung that Mr. Cao received independent legal advice regarding the Agreement, and that despite being advised that the Agreement was unfair, he chose to sign it.

[46] At the time the parties negotiated the Agreement, the parties’ assets in Canada were the house on Camelot Road, which had been purchased for $629,000 with a mortgage of $150,000, and a Honda motor vehicle. As well, they had shares in companies in China, and in a company in Canada, called Han’s Medical Products Ltd., from which the income shown on their income tax returns was derived.

[47] Both Mr. Cao and Ms. Wei were shareholders in Han’s Medical Products Ltd.; however, there was no evidence presented as to the value of that company in 2002 or at the time of the marriage breakdown. The 2002 financial statements for Han’s Medical Products Ltd.’s show gross revenue of $27,480 and a net loss of $3,579 for the year. Ms. Wei’s evidence is that Han’s Medical Products Ltd. never made much profit. Mr. Cao gave no evidence about the income from the company.

[48] The Agreement sets out the following:

D. The Wife is a businesswoman and the Husband is a businessman. The Wife, Husband and child immigrated to Canada on May 27, 1998 as investor immigrants with the Husband as the principal applicant. The Husband admits that the investment fund, which was held by the Immigration Fund, was earned and owned by the Wife.

E. The Husband willingly admits the fact that all the assets, both of personal and business and both in Canada or overseas, were earned and accumulated by the Wife; and the Husband has been employed by the Wife’s business as the deputy general manager and his work is fully compensated in the form of salary and other benefits.

F. The Husband’s salary income is for his own use only and has not contributed to the family assets nor to the daily life of the family.

G. Certain assets of the Wife are under the name of the Husband or under the joint names of the Wife and Husband.

[49] Under the Agreement, the parties each retain their separate property and the family residence which is registered in the wife’s name is identified as the separate property of the wife. As well, the Agreement provides that the parties’ “separate bank accounts will remain the owner’s separate property” and the “joint bank accounts will be true joint accounts so that the balance in any such account will at the death of one of the parties belong to the survivor”. In the event the marriage breaks down, each party is to retain their separate property, and the wife will have custody of the child. The Agreement provides that the husband’s income is for his use only, and provides that in the event of a marriage breakdown the wife will not claim child support from the husband. The Agreement further provides in s. 15 that if the wife remarries after the breakdown of the marriage, she will transfer all her separate property to the child.

[50] The Addendum provides that if the marriage breaks down, the wife will pay the husband $3,000 CAD a month until September 14, 2014, the 18^thbirthday of the child, and that the husband will pay the amount of $750 a month child support. The Addendum provides: “Both parties agree to alter section 15 of the Marriage Agreement, that the Wife shall transfer the Wife’s assets to the Child as soon as the Child graduates from a university.”

[51] I do not accept Mr. Cao’s assertion that he did not understand the Agreement because of language difficulties. He testified that he understood the Addendum because Mr. Grant Meng, the lawyer who drafted both documents, explained it to him in Mandarin.

[52] I accept the evidence of Mr. Meng and Mr. Jung, the lawyer who gave Mr. Cao independent legal advice, regarding the Agreement. Both Mr. Meng and Mr. Jung were credible witnesses who gave their evidence in a forthright manner.

[53] Mr. Meng testified that he went through the Agreement and explained it in Mandarin with both parties present. Prior to either signing the Agreement, he made it clear to both parties that Mr. Cao would need independent legal advice, and arranged for Mr. Cao to see Mr. Jung for independent legal advice.

[54] Mr. Meng’s evidence is that he also recommended to Mr. Cao that he seek independent legal advice prior to signing the Addendum, but that Mr. Cao did not wish to obtain independent legal advice at that time.

[55] Mr. Jung testified that Mr. Meng contacted him on December 12, 2002 to ask if he would be able to provide independent legal advice to Mr. Cao. On the same day, he met with Mr. Cao and reviewed the Agreement with him. Mr. Jung’s evidence is that after reviewing the Agreement he advised Mr. Cao that, in his view, the Agreement was unfair and recommended that Mr. Cao not sign it. Mr. Jung’s evidence is that he explained to Mr. Cao his rights and remedies under the FRA, and that he was entitled to a 50% share of the family assets unless circumstances dictated otherwise. He presented Mr. Cao with options and told him that he was under no obligation to sign the Agreement.

[56] Mr. Jung testified that he had no problem communicating with Mr. Cao in English, and that Mr. Cao never told him he could not understand what he was saying. According to Mr. Jung, Mr. Cao had no trouble speaking to him in English and he had no trouble understanding Mr. Cao. Although Mr. Jung does not speak Mandarin, 90% of his clients speak English as a second language. I note Mr. Jung’s evidence about Mr. Cao’s English ability is consistent with the evidence that Mr. Cao wrote and passed a Canadian citizenship examination in English.

[57] Mr. Jung testified that Mr. Cao appeared to understand the effect of the Agreement. Mr. Jung’s evidence was that after Mr. Cao advised him he wished to sign the Agreement, he witnessed Mr. Cao’s signature after going through the statement of independent legal advice.

[58] Although Mr. Cao testified that Ms. Wei made him sign the Agreement, this conflicts with his earlier affidavit evidence in which he deposes that he signed the Agreement because he felt guilty that he had a girlfriend.

[59] In my view, the Agreement cannot be assessed in light of various factors enumerated in s. 65 of the FRA because there is insufficient information about the parties’ financial situation at the time of the breakdown of their marriage.

[60] As indicated earlier, Mr. Cao’s financial statements are deficient as they do not report his Chinese income or his income from spousal support, nor has he produced his income tax returns from China. As well, they do not have any information about his Chinese bank accounts.

[61] Mr. Cao’s evidence is that he was working, but quit his job in order to come to Canada for the trial. His evidence is that prior to starting work for Qui Shui in 1994, he was working and continued to work in China throughout the marriage. Mr. Cao testified that he would deposit the monies he received from Beijing Pharmaceutical into one of his many bank accounts. His evidence is that the couple earned the equivalent of $6 million CAD between 1998 and 2005 from Beijing Pharmaceutical. The records of the wire transfers of money to Canada that have been put into evidence fall far short of that amount. It is unclear what assets Mr. Cao has in China. Ms. Wei testified that Mr. Cao has shares in a company in China; however, no such company is referred to in Mr. Cao’s financial statement.

[62] As well, there is insufficient information about Ms. Wei’s financial situation. Although Mr. Cao argues that I should take into consideration the value of Ms. Wei’s Chinese assets in determining whether the Agreement was unfair, there is insufficient evidence before me to determine what her assets are in China, the value of those assets, or what Ms. Wei earns from the companies in which she admits she is a shareholder. Mr. Cao asserts that the companies in which Ms. Wei has shares are worth millions of dollars and Ms. Wei asserts the companies are losing money.

[63] I note that Mr. Cao testified that he and Ms. Wei had an oral agreement as of the date of the Addendum about managing the Chinese companies and distributing their assets in China which the parties agreed not to include in the Addendum.

[64] As I have indicated, I found neither party credible. In my view, neither party was truthful in the financial statements that they filed. Accordingly, I am unable to assess whether the Agreement as modified by the Addendum was fair at the time of distribution, taking into account factors enumerated in s. 65 under the FRA.

[65] As stated above, I find no basis in the evidence for setting aside the Agreement as unconscionable. I accept Mr. Jung’s evidence that Mr. Cao wanted to sign the Agreement even though he was told it was unfair.

[66] In the Agreement, Mr. Cao acknowledged that all of the assets were earned and accumulated by Ms. Wei. He also acknowledged that he was receiving a salary and other benefits as the deputy general manager of his wife’s business, and that he was entitled to keep all of his salary and benefits for his own purposes. He had no responsibility under the Agreement to provide support for the family during the marriage, or his child in the event of a marriage breakdown. There is evidence that he took significant sums of money from Beijing Pharmaceutical after the Agreement was signed. According to Ms. Wei, Mr. Cao took approximately $230,000 CAD from the company without authorization; however, Mr. Cao says that he was authorized to take the money from Beijing Pharmaceutical. Mr. Cao testified that after each directors’ meeting of Beijing Pharmaceutical, he would take cash out of the company and deposit the money into one of his many bank accounts.

[67] The Addendum improves Mr. Cao’s position in that Ms. Wei agrees to pay spousal support in the amount of $3,000 CAD a month, and to transfer all of her assets to their child upon her graduation from university.

[68] Mr. Cao pleads that Ms. Wei has repudiated the Agreement as amended by the Addendum by failing to pay spousal support and by not giving him the opportunity to care for the child in accordance with the provisions of the Addendum. The Addendum sets out that Mr. Cao agrees to come to Canada up to 183 days a year if such care for the child was required when Ms. Wei was away from Canada for business. There is evidence that Mr. Cao came to Canada to care for the child subsequent to the separation in 2005. Since the fall of 2006, the child has been living in China. There is documentary evidence that spousal support has been paid to Mr. Cao by Ms. Wei.

[69] Mr. Cao testified that some of his spousal support had been sent to an incorrect address, and that Ms. Wei knew that the address was incorrect as it was the apartment in Beijing the parties had shared. Ms. Wei testified that she used the address Mr. Cao used in court documents in China in June 2007, and that is the only address she has for Mr. Cao. Mr. Cao gave a long explanation as to why he used an incorrect address in the court documents which made no sense. I cannot resolve the conflict in evidence because neither party’s evidence on this point is credible.

[70] Accordingly, Mr. Cao has not established that Ms. Wei has repudiated the Agreement.

Should a divorce be granted?

[71] I have concluded that the parties colluded in their joint statement of claim regarding the date of their separation.

[72] Section 11 of the Divorce Act, R.S.C. 1985, c. 3 provides:

(1) In a divorce proceeding, it is the duty of the court

(a) to satisfy itself that there has been no collusion in relation to the application for a divorce and to dismiss the application if it finds that there was collusion in presenting it;

…

(4) In this section, "collusion" means an agreement or conspiracy to which an applicant for a divorce is either directly or indirectly a party for the purpose of subverting the administration of justice, and includes any agreement, understanding or arrangement to fabricate or suppress evidence or to deceive the court, but does not include an agreement to the extent that it provides for separation between the parties, financial support, division of property or the custody of any child of the marriage.

[73] Although Ms. Wei denied in cross-examination that she and Mr. Cao agreed to use the date of Agreement because they knew if that date was used they would not have to wait for a divorce, her evidence is not credible in light of my finding that the couple did not separate until after 2004. Mr. Cao’s evidence is that Ms. Wei asked him to use that date so they could get a divorce, and that he agreed even though he knew it was not the correct date. It is apparent from the evidence that the parties knowingly put a false date of separation in their joint statement of claim in order to obtain a divorce without having lived separate and apart for at least one year. In my view, by doing so, they attempted to deceive the court for the purpose of subverting the administration of justice.

[74] Having found that the parties colluded by knowingly putting false evidence in the joint statement of claim, I am dismissing their application for divorce.

CONCLUSION

[75] The claims set out in the joint statement of claim and the counterclaim are dismissed. Neither party is entitled to costs of this action.

“Gerow, J.”

Citation:	*Wei v. Cao,*
	2008 BCSC 266