Background
Oren Blau appealed an equalization order made following family-law proceedings with Michal Blau. He challenged the inclusion of a $78,000 shareholder loan that he had made to his corporation as an asset in his net family property, arguing that the loan was unlikely to be repaid and had not, in fact, been repaid.
He also sought leave to appeal the trial judge’s costs award. The trial judge had ordered costs on an elevated basis after finding a history of abusive and threatening correspondence by the appellant to the respondent and her counsel, as well as a concerted effort to refuse or delay financial disclosure.
The Court’s Holding
The Court of Appeal dismissed the appeal. Net family property is determined as of the separation date, and the shareholder loan remained outstanding on that date. Because the corporation’s financial status was unclear on the record, the trial judge was entitled to include the loan’s value in the appellant’s net family property. The court found no reviewable error.
The court also refused to disturb the elevated costs award. The trial judge’s findings concerning bad faith, threatening correspondence, and delayed or refused disclosure supported elevated costs under the Family Law Rules. The respondent was awarded a further $6,000 in appeal costs, inclusive of applicable taxes and disbursements.
Key Takeaways
- Net family property is valued as of the separation date; later non-payment does not by itself establish that an outstanding shareholder loan had no value on that date.
- A trial judge may include a shareholder loan in net family property when the evidence does not clearly establish that the corporation was unable to repay it.
- Bad-faith conduct, including abusive communications and deliberate obstruction of financial disclosure, can justify elevated costs in family-law proceedings.
Why It Matters
The decision underscores that equalization disputes involving closely held corporations turn on evidence of value at the statutory valuation date. A spouse seeking to exclude or discount a shareholder loan must provide a record capable of establishing its reduced or nonexistent value at that time.
It also confirms the substantial deference given to discretionary costs awards and the financial consequences that may follow from abusive conduct or obstruction of disclosure in family litigation.