A Mahr is a type of Islamic marriage contract that is entered into before a marriage, in which the husband makes a financial commitment to the wife. The agreement can have a religious dimension, and Canadian courts have had to determine whether to treat a Mahr as a domestic contract, and if the obligations in a Mahr can be enforced in the event of a marriage breakdown. So, is a Mahr payment excluded property when calculating the parties’ net family property for equalization?

Mahr is Assessed as a Domestic Contract

Courts had grappled over whether traditional marriage contracts under Muslim law could be enforced in Canada. However, the question was resolved in Bruker v. Marcovitz. In that case the Supreme Court of Canada stated that if “the religious marriage contract meets all the requirements for a civil contract under provincial legislation, then the courts may order the fulfilment of undertakings”. Consequently, courts have determined that foreign marriage contracts, such as a Mahr, are enforceable even if they contain a religious component.

In Bakhshi v. Hosseinzadeh, the judge found that Mahrs could be treated like any other contract and that each case depended on the objective intentions of the parties given the wording of the Mahr. Section 4(2) of the Family Law Act lists categories of excluded property, which includes “property that the spouses have agreed by a domestic contract is not to be included in the spouse’s net family property”. This case concluded that Mahr payments may be excluded under section 4(2)(6) if there is evidence of the parties’ intention to opt out of the equalization regime. However, without that evidence, it must be treated in accordance with the Family Law Act and counted in the parties’ net family property. The Ontario Court of Appeal explained that “there is simply no provision in the Family Law Act that excludes transactions between spouses” and that “inter-spousal debts must be included in” the parties’ net family property.

Party Seeks to Exclude Value of Mahr From Their Net Family Property

While the enforceability of a Mahr was settled, there were still questions about how they could impact family law rights under Ontario legislation. In Ramezani v. Najafi, the parties called experts who testified to the purpose of a Mahr and how they are treated in Islamic law. The evidence indicated that a Mahr is an enforceable obligation in which the husband agreed to pay the wife, and historically they ensured a wife had some financial security and separate property in the event of the breakdown of a marriage. In this case, the husband was prepared to pay the amount set out in the Mahr. The wife, however, pointed to the intent of the Mahr and argued that it was intended to provide her financial security. Therefore, she argued that including the Mahr as an account receivable in the calculation of her net family property was punitive and would result in her paying a greater equalization payment to the husband, which was contrary to the purpose of the Mahr. In her view, the court should not require the value of the Mahr to be included as either an account receivable or a debt in the parties’ net family properties.

When the parties entered into the agreement, they did not agree that the Mahr would be excluded from the calculation of their net family property. Significantly, Bakhshi clarified that the parties’ intentions need to be determined as of the time they entered into the contract. Here, there was no evidence that the parties considered how the Mahr would impact their obligations under Ontario law, or that the wife intended that the Mahr would not be considered if they separated in Ontario. Without any evidence of their intentions the Mahr payment had to “be treated under the Family Law Act like any other payment obligation between the spouses”. As the judge put it, the wife’s position was to have the husband pay his financial obligation under the Mahr, but without her accounting for her right to that property. As the judge concluded, that was contrary to the purposes of the Family Law Act’s equalization provisions.

Courts Consider the Express Wording in the Contract

In Faizian v. Ashouri the parties began their married life in Iran before moving to Ontario. When they were married, they signed a Mahr, which provided that on demand, the husband would pay 356 gold coins to the wife. In this case the wife argued that the Mahr should be treated outside of the equalization of net family property scheme. The wife specifically claimed that it would be unfair to include the value of the gold coins as of the separation date when she made the demand several years earlier, during which the value of the gold coins increased. However, the judge was not prepared to ignore the precedent set in Bakhshi, which was clear that a Mahr payment needed to be counted in the parties’ net family property. That case established that clear language opting out of the Family Law Act’s equalization provisions needed to be included in a Mahr, but that language was not present in the Mahr at issue.

The court looked at the circumstances surrounding a consent order and noted both parties agreed the Mahr was an enforceable contract and that it did not contain language excluding it from the equalization calculations. Further, neither party appealed the consent order nor tried to set it aside. So, while the wife argued the Mahr should be excluded from the equalization regime, it did not change the fact the court order was enforceable. Importantly, the provisions of the Family Law Act also supported including the Mahr in the parties’ net family properties. As the judge explained, equalization provides for the sharing of any increase or decrease in the family’s wealth during marriage and it is “intended to address all forms of property, debts and monies owing to each of them including interspousal loans and gifts, unless there is a valid domestic contract”. The wife also suggested the judge should consider her objective intentions when the contract was made. However, like in Ramezani, there was no indication the wife considered the impact of the Mahr within Ontario law or intended to “opt out of a foreign property regime” given the parties expected to continue residing in Iran.

Mahr Can be Treated Like Any Other Contractual Obligation

If a Mahr fulfills the requirements of a valid contract, the payment between the spouses can be enforced just like any other contractual obligation. However, this does not mean the value of the payment can be excluded from the parties’ net family property for purposes of equalization. Specific wording would be needed to exclude the Mahr payment.

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