This article was originally published in Law Times on November 13, 2017.
For many years now, the issue of enforceability of a Maher marriage contract as well as its interrelationship with provincial family law property regimes has been considered by our courts.
This issue was put before the Ontario Court of Appeal very recently in Bakhshi v. Hosseinzadeh, 2017 ONCA 838 and the court’s analysis of this particular Maher is worthy of review by those practising family law in Ontario.
In Bakhshi, the parties married in Iran in 1995 and entered into the Maher. Some time after the marriage, the couple emigrated to Canada and separated in Ontario in 2013.
At this point, the wife initiated an application for divorce and ancillary relief related to support, equalization of net family property and parenting issues.
The primary appellate issue in this case was whether the wife’s Maher entitlement ought to be treated as excluded property pursuant to s. 4(2) of the Family Law Act or whether her entitlement should be included in her net family property for purposes of the equalization calculation.
Ontario courts recognize the Maher as a valid marriage contract, provided that it meets the general test of formation of a valid marriage contract, including that it is written, signed, dated and witnessed.
In this case, the Maher was determined to comply with Ontario’s legal requirements for a valid marriage contract and was deemed enforceable.
The issue was how to treat the entitlement in the context of our equalization scheme.
The trial judge, relying on the Court of Appeal’s earlier decision in Khanis v. Noor Mohamed, 2011 ONCA 127, held that the Maher, which in this case provided the wife with the right to receive 230 gold coins upon her request (an approximately $80,000 value), was deemed to be “excluded property” pursuant to s. 4(2) of the Family Law Act.
This was the primary issue on appeal by the husband, along with several other issues related to the trial judge’s calculations themselves.
Upon appeal, what became apparent to the court was that the actual terms of this particular Maher were not carefully considered by the trial judge when making a determination of the treatment of the asset to which the wife was entitled in the context of the equalization scheme.
While the court of appeal endorsed its prior decision in the Khanis case, the court was mindful to consider the language of both contracts.
In Khanis, the contract provided that the wife was to receive the asset from the husband “in addition and without prejudice to and not in substitution of all my obligations provided by the laws of the land,” said the ruling.
In the case at bar, the Maher did not contain any such language. The trial judge held the Maher did not say that the payment is “in substitution of the husband’s obligations arising out of the marriage” in concluding that it was excluded property.
However, the Court of Appeal was quick to clarify that this was not the issue but, rather, whether the Maher contract brought the asset entitlement within the exception to the equalization scheme under s. 4(2) of the act, allowing for it to be treated as excluded property. Absent language in the Maher contract that would bring the asset into the realm of excluded property, the Court of Appeal reversed the trial judge on this issue and recalculated the equalization payment accordingly. The Maher was treated as the wife’s asset in the sense that it was money owed to her, and it was also treated as a debt of the husband.
As a result, the equalization payment was significantly reduced, but the court did confirm and ordered that, in addition to the equalization payment, the husband was to also pay the wife the amount at which the Maher was valued.
This case, especially read in conjunction with prior decisions on Maher contracts and other similar contracts, supports the conclusion that Maher contracts are valid and enforceable marriage contracts in Ontario as long as they meet the statutory requirements of a marriage contract under the provisions of the Family Law Act.
However, they are also susceptible to being set aside if the circumstances under which they were formed warrant this, such as not being understood by one of the parties or being entered into under duress and, just as any other marriage contract, they must be interpreted and applied based on their actual terms.
If there have been any misapprehensions historically about whether property entitlements under a Maher are excluded or included property, those have now been put to rest in Ontario, and the answer is we must look carefully at the language of the contract, just as we would any other marriage contract.