“[S]4(2).6 of the FLA operates as an exception to the general rule and allows spouses to agree to exclude certain property from the NFP calculation. The issue in this case is whether the parties agreed to exclude the Maher payment from the wife’s NFP, as they had in Khanis. The trial judge erred in law by not reviewing the Maher to determine whether the spouses had actually made such an agreement.
As noted, the Maher in this case contains no express agreement that the Maher payment is to be excluded from the wife’s NFP. Moreover, there is no basis for inferring the parties intended to exclude it. The objective contractual intentions of the parties are to be determined at the time when the contract is made: Davidson v. Allelix Inc. (1991), 1991 CanLII 7091 (ON CA), 86 D.L.R. (4th) 542 at 547 (C.A.), [1991] O.J. No. 2230, at para. 16; Eli Lilly & Co. v. Novopharm Ltd., 1998 CanLII 791 (SCC), [1998] 2 S.C.R. 129, at para. 54; Family Insurance Corp. v. Lombard Canada Ltd., 2002 SCC 48 (CanLII), [2002] 2 S.C.R. 695, at para. 36; and Dumbrell v. Regional Group of Cos., 2007 ONCA 59 (CanLII), at paras. 48 and 53. Here, at the time they executed the Maher in Iran, the parties evidently contemplated their continued life in Iran. The Maher, for example, contemplated that the husband could take a second wife. It also required the husband to grant the wife a power of attorney so she could initiate a divorce if he defaulted on any of the prescribed behavioural requirements. There is no basis in this case to infer that the parties contemplated their mutual obligations under Ontario’s FLA.
Absent any evidence of an objective intention at the time of contract to treat the Maher differently, the Maher payment must be treated under the FLA like any other payment obligation between the spouses.
Counsel for the wife submitted that all transactions between spouses, irrespective of any domestic contract, should be excluded from NFP. Counsel submitted it is pointless to include transactions between spouses because they have no net effect on equalization. I reject this submission for three reasons. First, there is simply no provision in the FLA that excludes transactions between spouses. On the contrary, bona fide inter-spousal debts must be included in NFP: Burke (Public Trustee of) v. Burke Estate, [1994] O.J. No. 1342 (Gen. Div.), at paras. 37-40, 1994 CanLII 7442 (ON SC), 1994 CanLII 7442, at paras. 38-41; and Long v. Long, 1989 CarswellOnt 2687 (H.C.), at paras. 15-17. Second, because of the effect of the deeming provision in s. 4(5), transactions between spouses may affect the equalization payment where a spouse’s net assets would otherwise be negative. Transferred assets that fluctuate in value could also make a difference. Third, excluding transactions between spouses would be inconsistent with the separate property regime under the FLA, which continues during a marriage and terminates only on the triggering of the valuation date. As Feldman J.A. said in Stone v. Stone (2001), 2001 CanLII 24110 (ON CA), 55 O.R. (3d) 491 (C.A.), at para. 26:
The nature of the property regime established as between spouses under the Family Law Act was clearly described by Cory J. in Rawluk v. Rawluk … Spouses each own their separate property throughout the marriage. However, upon the happening of one of the five triggering events, there is a valuation date.
[Underlining added. Citations omitted.]
The wife’s submission that the Maher payment should be considered akin to a dowry also does not assist her. A dowry from the husband would be included as part of NFP since only gifts given by third parties after the date of marriage are excluded: FLA, s. 4(2)1.”