Gifts Excluded, Value of RESP Included in Net Family Property
Recently, in the case of Lau v. Tao, 2025 ONCA 819, the Court of Appeal largely upheld a lower court’s family law decision with respect to excluding gifted property and including RESP assets in the parties Net Family Property. In doing so, the Court of Appeal emphasized the deference owed to trial judges on factual findings and mixed fact-and-law determinations. The facts of the case can be summarized as follows.
The parties separated after a five-year marriage, during which they each received substantial gifts from their respective parents. The respondent wife used gifted assets to purchase homes (otherwise called ‘real properties’) in Hong Kong and Ontario. On the valuation date, namely, the date of the parties’ separation, each party also owned a registered education savings plan (“RESP”) for their two children.
After an 11-day trial, the Superior Court of Justice found that the contributions from the parties’ parents were gifts to the parties. In particular, the respondent wife’s 50% share of her real property in Hong Kong represented funds gifted to her by her parents which could be traced to assets owned by her at the valuation date. The Court further concluded that the Hong Kong property was not a matrimonial home, which designation would otherwise result in the respondent having been unable to exclude the gifted funds or the Hong Kong property. Accordingly, the trial judge found these assets to be excluded assets under s. 4(2)(1) of the Family Law Act, R.S.O. 1990, c. F-3.
As a separate issue, the trial judge further found that the values of the RESPs owned by the parties as of the date of valuation should be subject to equalization. The Court reasoned that RESPs generally belong to the subscriber and not the child, unless a party can show that all three elements of a valid trust have been established.
On appeal, the appellant husband argued that the trial judge erred in the calculation of the equalization payment, the treatment of gifts and loans, the finding that the Hong Kong property was not a matrimonial home, and the inclusion of the RESP values. He also sought credits for post-separation property-related payments and challenged the costs order. The respondent wife asserted that the trial judge’s treatment of gifts, loans, and RESPs was correct and that the costs order was reasonable and proportionate.
The Court of Appeal found that the trial judge made a minor error in calculating the appellant husband’s debt to his mother, which required an adjustment to the equalization payment. However, it dismissed the remaining grounds of appeal for lack of merit.
Regarding the gifts and loans, the Court of Appeal found that the trial judge correctly excluded the assets from the respondent wife’s net family property. The appellant husband, however, failed to provide sufficient evidence to trace similar exclusions for his assets.
Further, as the Hong Kong property was sold before the parties’ separation, the trial judge did not err in finding that it was not a “matrimonial home” under the Family Law Act.
The Court of Appeal also found the inclusion of RESP values in the net family property was consistent with established case law, including L. v. L., 2022 ONSC 4787, as cited by the trial judge’s decision. The Court also refused to interfere with the costs order, finding it proportionate. The Court of Appeal ultimately concluded that the trial judge’s findings were supported by the evidence and applicable legal principles, and no palpable or overriding errors were identified. However, the court increased the equalization payment owed by the respondent by $4,250, to correct the calculation error made by the trial judge.