The Court of Appeal has determined that part of an Islamic marriage contract was part of net family property under the Ontario Family Law Act. The appeal in Bakhshi v. Hosseinzadeh concerned whether property conveyed under an Islamic marriage contract — or Maher — should be excluded from net family property, which is the monetary value of parties’ net worth that is equalized between spouses when they separate.
The Court of Appeal has determined that part of an Islamic marriage contract was part of net family property under the Ontario Family Law Act.
The appeal in Bakhshi v. Hosseinzadeh concerned whether property conveyed under an Islamic marriage contract — or Maher — should be excluded from net family property, which is the monetary value of parties’ net worth that is equalized between spouses when they separate.
Meysa Maleki, a lawyer with Niman Gelgoot and Associates LLP, who was not involved in the case, says the decision is significant because it elevates the status of a religious or cultural obligation to one that is capable of recognition under the Family Law Act as an asset that can be included in the calculation of net family property.
She says the decision also clarifies the legal test around the issue.
“Where the Court of Appeal departs from the trial judge and, I think, prior decisions is that they say there is a second step,” says Maleki. “That second step requires you to take a look at the factual matrix of the case and take a look at the contract itself.”
The couple in the case entered into a Maher when they got married in Iran in 1995 and immigrated to Canada soon after. The Maher included a clause requiring the husband to pay his wife 230 gold coins, which the court valued at $79,580, when she requested them.
When the wife filed for divorce in 2013, she brought an application seeking equalization of net family property along with a number of other remedies.
After a one-day uncontested trial in which the husband did not respond, a judge ordered him to pay her an equalization payment of $187,075, which he said was inclusive of the Maher, and post-separation adjustments of $44,449.
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But the Court of Appeal found the judge had actually treated the Maher obligation as separate from the equalization calculation and only added the Maher payment after the calculation was made, as he had decided it should be excluded.
In his appeal, the husband argued that the judge erred by excluding the Maher payment from the net family property, and the Court of Appeal agreed.
The decision reinforced the principles of an earlier Court of Appeal ruling from 2011 in Khamis v. Noormohamed, but it resulted in a different finding because of the different facts of the Bakhshi case.
In Khamis, the Court of Appeal affirmed a lower court decision that found a Maher payment should be excluded from net family property because of specific wording in the contract that said it should be excluded.The Maher in Bakhshi, however, did not have an equivalent provision.
Patrick Di Monte, who represented the husband on appeal, says the wording of these agreements is crucial.
“In future, if Muslim men manage to keep the Maher silent, it will be included in the calculation of net family property,” says Di Monte.
“If the wife is astute enough — whether the Maher is made in the Middle East or here — to put that exclusion in, the Family Law Act says you can exclude an item of property from that family property if the parties agreed to that clearly at the time the Maher was made.”
He adds that the ruling goes further than the Khamis decision as it says that, if the Maher is silent on this front, it will be included in net family property.
The Court of Appeal allowed the exclusion in Khamis pursuant to s. 4(2)6 of the Family Law Act, which allows spouses to exclude property from net family property if they have agreed not to include it in a domestic contract. In Bakhshi, the Court of Appeal found the trial judge failed to review the Maher in determining whether they had made such an agreement.
The Court of Appeal found the Maher payment should be included in net family property. This reduced the equalization payment to $36,520. The Court of Appeal found the wife was also owed the $44,449 in post-separation adjustments and the realization of the Maher payment, for a total of more than $160,549. The husband would have paid $231,524 if the trial judge’s decision was upheld.
Heather Hansen, a certified family law specialist, who was not involved in the case, says the decision is not inconsistent with the reasoning of the Khamis decision even though the results were ultimately different.
“Whether the contract is a religious marriage contract or otherwise, there is no significance on the analysis that the trial judge or the Court of Appeal did in this case,” says Hansen, a partner at Martha McCarthy & Company LLP.
Natasha Bakht, a law professor at the University of Ottawa, says the decision and others like it help to demystify Maher agreements.
“The main thing is . . . it’s really saying that these are religious agreements but that they have fair financial basis [and] they’re written agreements so there is no reason why they can’t be enforceable,” she says.
Frances Wood, the lawyer representing the wife in the case, did not respond to a request for comment.