



COURT OF APPEAL FOR ONTARIO

CITATION: Bakhshi v. Hosseinzadeh, 2017 ONCA 838

DATE: 20171102

DOCKET: C61561

Laskin, Feldman and Juriansz JJ.A.

BETWEEN

Faranak Bakhshi


Applicant (Respondent)

and

Masoud Hosseinzadeh

Respondent (Appellant)

Patrick Di Monte, for the appellant

Frances M. Wood, for the respondent

Heard: August 22, 2017

On appeal from the order of Justice J. Scott McLeod of
    the Superior Court of Justice, dated December 7, 2015, with reasons reported at
    2015 ONSC 7407.

Juriansz J.A.:

[1]

The main issue in this appeal is
    whether the property conveyed under an Islamic marriage contract, or Maher
    (sometimes also written as Mahr in the case law), is excluded from the
    definition of net family property (NFP) under s. 4(2) of the
Family
    Law Act
, R.S.O. 1990, c. F.3. (
FLA
) and excluded from equalization.

[2]

The parties entered into the Maher
    upon marrying in Iran on May 18, 1995.
[1]
The parties immigrated to Canada after they married. Among other things,
the
    Maher contained a clause requiring the husband to pay his wife 230 gold coins upon
    her prompt request.

[3]

On October 29, 2013, the wife
    issued an application in Ontario claiming a divorce, custody of their children,
    child support, equalization of NFP, and other relief. An order dated September
    23, 2014 granted a divorce and another order dated February 18, 2015 resolved
    other substantive matters leaving equalization, post-separation adjustments,
    and the treatment of the Maher for trial.

[4]

A one-day trial took place on
    November 20, 2015. It proceeded on an uncontested basis because the husband did
    not respond and disregarded several court orders. He was present at the trial
    but not permitted to participate.

A.

THE DECISION OF THE TRIAL JUDGE

[5]

The trial judge determined the value of properties owned by each spouse
    and equalized those values pursuant to s. 5(1) of the
FLA
. He also made
    a valuation of the post-separation adjustments claimed by the wife.

[6]

The trial judge ordered the husband to pay the wife an equalization
    payment of $187,075 and post-separation adjustments of $44,449.93. The trial
    judge stated the equalization payment was inclusive of the Maher. The trial
    judge found the value of the 230 gold coins was $79,580. The trial judges description
    of his order as
an equalization payment of
    $187,075, inclusive of the Maher,
is misleading. As will be explained further
    below, the trial judge actually treated the Maher obligation as separate from,
    or, in the terms of the
FLA
, as excluded from the equalization
    calculation. Having calculated the equalization payment owing as $107,495, he
    then added the $79,580 Maher payment value to the amount owing by the husband
    to the wife to arrive at the total of $187,075. The trial judge also ordered the
    husband to apply for an Islamic Iranian divorce at an approved agency and to
    register the divorce with the Iranian government within 30 days.

[7]

The trial judge then went on to consider the Islamic marriage
    contract. He concluded that the Maher, including the payment of the gold coins,
    was a valid and binding marriage contract under s. 55 of the
FLA
. On
    this point, he adopted the reasoning in
Khanis v. Noor Mohamed
, [2009]
    O.J. No. 2245 (S.C.), 2009 CanLII 27829, affirmed 2011 ONCA 127. He noted the
    Maher in this case, as in
Khanis
, satisfies the requirements of s.
    55(1) of the
FLA
since it was in writing, signed by both parties, and
    witnessed.

[8]

The trial judge considered s. 56(4) of the
FLA
, which gives the
    court the discretion to set aside a marriage contract. However, he stated that there
    was no reason to exercise that discretion in this case as the terms of the
    contract were simple, and the husband understood the contract and its binding
    nature.

[9]

The trial judge concluded that the value of the Maher was to be excluded
    from the calculation of NFP. In making this conclusion he relied on s. 4(2)6 of
    the
FLA
. Section 4(2)6 excludes from NFP, [p]roperty that the spouses
    have agreed by a domestic contract is not to be included in the spouses net
    family property.

[10]

Having
    excluded the Maher payment from the calculation of the NFP and equalization
    payment, the trial judge treated it as an additional amount owing to the wife and
    added it to the equalization payment.

B.

ISSUES ON APPEAL

[11]

The
    primary ground of appeal, and the only one advanced in oral argument, is that
    the trial judge erred in his exclusion of the Maher payment from NFP. The
    secondary ground of appeal, as advanced in the husbands factum, disputes the trial
    judges valuation of other property and post-separation adjustments.

C.

THE HUSBANDS ARGUMENT

[12]

Counsel
    for the husband submitted the trial judge was wrong to interpret the Maher as imposing
    on the husband an unequivocal obligation to pay his wife 230 gold coins upon
    her prompt request. He pointed out that the second clause of the Maher listed a
    number of requirements for the husbands behaviour during the marriage. He
    submitted that, properly construed, the Maher entitled the wife to payment of
    230 gold coins only upon proving the husbands default of one of the listed behavioural
    requirements. He argued that, as a policy matter, a fault-based agreement of
    this nature should not be enforced since it would be contrary to Ontarios no-fault
    family law regime.

[13]

Alternatively,
    even if the Maher created a demand obligation, counsel for the husband submitted
    that the payment to the wife under the Maher should not be excluded from the
    NFP calculation. He pointed out that while the Maher in
Khanis
stated
    that it shall be in addition and without prejudice to and not in substitution
    of all my obligations provided for by the laws of the land, there was no such language
    in this case. Without an equivalent provision, he submitted that there was no
    basis to exclude the Maher payment from NFP.

[14]

In
    addition, counsel for the husband argued the wifes Form 13B Financial
    Statement erroneously listed the Maher payment as both the husbands existing
    debt at the date of marriage and an excluded asset. He submitted this error
    double-counted the Maher payment to the husbands detriment by inflating his
    NFP in the Financial Statement.

D.

THE WIFES ARGUMENT

[15]

Counsel
    for the wife submitted that the trial judges treatment of the Maher payment is
    entitled to deference. She submitted that this court could not interfere with
    the trial judgment absent a palpable and overriding error.

[16]

Counsel
    for the wife contended the trial judges construction of the Maher obligation as
    a promissory note was reasonable because the two clauses of the Maher were
    independent. Each of the two clauses had separate sets of signatures. She
    argued the first clause created the payment obligation and the second clause created
    a side binding agreement by which the husband granted the wife a power of
    attorney to seek a divorce if he breached one of the listed behavioural requirements.

[17]

Counsel for the wife submitted that the result in the
Khanis

case did not depend on the express term in its Maher that provided the payment
    was in addition to the husbands other legal obligations. She asserted the Maher
    payment would have been excluded from NFP in that case even without that
    clause. She said the wife had testified that the Maher was akin to a dowry and Mahers
    have been treated by the courts [as] more of a dowry. She submitted it was
    for that reason that the courts have accepted it as a contract separate and
    apart from equalization.

[18]

Finally, counsel for the wife argued that the Maher payment would
    have to be made even if the Maher payment were included in the wifes NFP, irrespective
    of the equalization calculation.

[19]

Therefore, counsel for the wife
    submitted the trial judge was correct in excluding the Maher payment from the NFP
    calculation.

E.

ANALYSIS

(1)

Enforcing a domestic contract with religious aspects

[20]

Ontario
    courts have dealt with obligations under a Maher on a number of occasions:
Ghaznavi
    v. Kashif-Ul-Haque
, 2011 ONSC 4062;
Yar v. Yar
, 2015 ONSC 151;
Bari
    v. Nassr
, 2015 ONSC 4318;
Boustanji v. Barazi
, 2017 ONSC 4261;
Mohammadi
    v. Safari
, 2017 ONSC 4696 and
Khanis
,
supra
.

[21]

Courts have proceeded on the basis that agreements that satisfy the
    elements of a valid civil contract may be legally enforceable even where they
    have a religious aspect since the Supreme Courts decision in
Marcovitz v.
    Bruker
, 2007 SCC 54, [2007] 3 S.C.R. 607. At para. 123 of
Marcovitz
,
    the Supreme Court held that if a spouse can show that the religious marriage
    contract meets all the requirements for a civil contract under provincial
    legislation, then the courts may order the fulfilment of undertakings to pay
    the amounts provided for in the contract. Ontario courts have followed
Marcovitz
and enforced Mahers that satisfy the
FLA
s domestic contract requirements
    in cases such as
Khanis, Bari
, and
Boustanji
.

[22]

These
    cases treat Mahers like any other contract that may impose a variety of different
    legal obligations. The outcome of each case depends, just as in any other case
    of contractual interpretation, on the objective intentions of the parties as
    ascertained through the particular wording of the Maher when read as a whole
    and considered in light of its factual matrix
. As such, e
vidence about the religious
    and/or cultural significance of the Maher to the parties could conceivably be
    relevant to the factual matrix in determining their objective contractual
    intentions. In the final analysis, however, the courts role is confined to
    enforcing only those undertakings that fulfil the requirements of a civil domestic
    contract under provincial legislation.

(2)

The
    standard of review

[23]

The
    trial judges conclusion as to the effect of the Maher on the husbands
    obligations to the wife was two-fold. First, he determined that the Maher
    payment was enforceable as a demand obligation. Second, he determined that the Maher
    payment was not included in the NFP.

[24]

The
    Supreme Court set out the
guiding principles
    concerning the standard of review on appeals from judicial decisions in
Housen
    v. Nikolaisen
, 2002 SCC 33, [2002] 2 S.C.R.
    235. Questions of law are reviewable for correctness, and questions of fact or
    questions of mixed fact and law are reviewable for palpable and overriding
    error, unless there is an extricable question of law:
Housen
, at paras. 8, 10, and 36.

[25]

The
    interpretation of non-standard form contracts is a question of mixed fact and
    law:

Sattva Capital Corp. v. Creston Moly Corp
.
, 2014 SCC 53,
    [2014] 2 S.C.R. 633, at para. 50; and
Ledcor Construction Ltd. v.
    Northbridge Indemnity Insurance Co.
, 2016 SCC 37, [2016] 2 S.C.R. 23, at
    para. 4. As such, the trial judges interpretation of the Maher as creating a
    demand obligation that was enforceable under the
FLA
is reviewable for
    palpable and overriding error:
Housen
, at para. 36. There was no such
    error in the trial judges reasons on this issue.

[26]

The
    two main clauses of the agreement were separately executed and the second
    clause listing the husbands behavioural requirements is better related to the
    wifes right to exercise a power of attorney to seek a divorce. Moreover, the trial
    judges finding that the agreement was a valid domestic contract under s. 55(1)
    of the
FLA
and his decision not to exercise his discretion under s.
    56(4) was amply supported by the evidence. There is no basis to interfere with
    these conclusions.

[27]

On
    the other hand, the applicability of a statutory provision to a contract is a
    matter of statutory interpretation that is reviewable for correctness:
Collett
    v. Reliance Home Comfort Limited Partnership
, 2012 ONCA 821, at para. 45. As
    such, the trial judges application of ss. 4(1) and 4(2) of the
FLA
to
    conclude that the Maher payment was excluded from NFP is reviewable for
    correctness. The trial judge erred in applying these provisions.

(3)

The
    Maher in this case

[28]

After
    following the
Khanis
case to conclude the Maher payment was enforceable,
    the trial judge found that the Maher payment was excluded from NFP pursuant to s.
    4(2)6 of the
FLA
. In so doing, the trial judge erred in applying s. 4(2)6.

[29]

In

Khanis
, this court made clear that the outcome in that case rested
    squarely upon the express language in the domestic contract, which excluded the
    Maher payment from NFP. In dismissing the husbands appeal at paras. 9-10, this
    court reaffirmed the trial judges reasoning that:

By necessary implication of the words
    "in addition and without prejudice to and not in substitution of all my
    obligations provided for by the laws of the land", the
maher
amount is excluded from net family property. Otherwise it
    would undermine the express intention of the agreement and the contract would
    have no meaning.

[Emphasis in original.]

[30]

There
    is no equivalent provision in the Maher in this case.

[31]

The
    trial judge states at para. 10 of his reasons that [t]he contract does not specify
    that the Maher payment is in substitution of the husbands obligations arising
    out of marriage. But that is not the issue. The relevant parts of ss.4(1) and
    4(2) of the
FLA
state
:

4(1) In this Part,

[]

net family property means the value of
all the property
,
    except property described in subsection (2), that a spouse owns on the
    valuation date

[]

4(2) The value of the following property that a spouse owns on
    the valuation date does not form part of the spouses net family property:

1.       Property,
    other than a matrimonial home, that was acquired by gift or inheritance from a
    third person after the date of marriage.

[]

6.       Property
    that the spouses have
agreed
by a domestic contract is not to be
    included in the spouses net family property.

[]

[Emphasis
    added.]

[32]

As
    such, 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 wifes 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.

[33]

As noted, the Maher in this case contains no express agreement that the
    Maher payment is to be excluded from the wifes 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), 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] 2 S.C.R. 129, at para. 54;
Family Insurance
    Corp. v. Lombard Canada Ltd.
, 2002 SCC 48, [2002] 2 S.C.R. 695, at para.
    36; and
Dumbrell v. Regional Group of Cos.
, 2007 ONCA 59, 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 Ontarios
FLA
.

[34]

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.

[35]

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, 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 spouses 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), 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.]

[36]

The
    wifes 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.
[2]

F.

THE HUSBANDS OTHER ARGUMENTS

[37]

The
    husband also advanced other attacks on the trial judges equalization
    calculations.

[38]

First,
    he argued that certain assets, particularly some real property in Iran, were
    not appraised. He submits that this resulted in inaccurate determinations of
    the parties respective obligations. The trial judge found that these assets
    belonged to the husband. As such, it was his responsibility to provide
    appraisals for those assets:
Family Law Rules
, O. Reg. 114/99, r.
    13(3.3) (as they appeared from June 10, 2015 to June 22, 2016). Though there
    were no appraisals, the trial judges valuation of the assets was not
    arbitrary. He used what he found to be their purchase price for their value,
    which was substantially less than what the wife claimed in her evidence. As
    such, the husband benefitted from this determination since it reduced his NFP.

[39]

Second,
    the husband submitted the trial judge double-counted the effect of the Maher
    payment on the husbands NFP as the Form 13B Financial Statement in the trial
    record shows the Maher payment both as an excluded asset and a debt existing on
    the date of marriage. While this is so, the resulting numbers indicate the
    trial judge treated the Maher payment solely as excluded property.

[40]

Third,
    he submits there was an inadequate evidentiary base for the post-separation
    adjustments. I do not agree. The trial judge was entitled to accept the
    testimony and documentary evidence of the wife. There is no basis for
    interfering with these factual determinations by the trial judge.

G.

THE EQUALIZATION PAYMENT IN THIS CASE

[41]

The
    Maher payment must be included in NFP and the equalization order varied as a
    result. The wifes Form 13B Financial Statement in the record was not
    calculated correctly. However, based on the data in the statement as varied by
    the trial judge, and before considering the Maher obligation, the husband and
    wife had net assets of $214,990 and -$17,210, respectively. Since the trial
    judge treated the Maher obligation as excluded property, he deemed the wifes
    NFP to be zero pursuant to s. 4(5) of the
FLA
. As a result, the trial
    judge calculated the equalization payment to be $107,495.

[42]

Properly
    including the Maher obligation as part of NFP reduces the husbands net assets
    by $79,580 and increases the wifes net assets by $79,580. Accordingly, the
    parties NFPs are $135,410 and $62,370, respectively. This obviates the need to
    rely on the deeming provision as the wife has a positive NFP. The resulting
    equalization payment is $36,520.

[43]

Counsel
    for the wife pointed out that the Maher payment needs to be actually paid even
    if it is included in equalization. I agree. The Maher payment included in the
    equalization calculation is a demand obligation with a paper value. Collection
    of the demand obligation is not an equalization issue but a debt collection
    issue. This can be seen clearly by considering the situation where, during the
    marriage, the husband endorses over to the wife a third partys promissory
    note. The third partys promissory note would be included in equalization, and
    afterwards the wife could collect the debt from the third party. The same
    reasoning applies to the husbands own promissory Maher obligation in this
    case. The wife is entitled to collect the debt owed to her. Thus the wife is
    entitled to an equalization payment of $36,520 plus post-separation adjustments
    of $44,449.93 plus realization of the Maher obligation of $79,580 for a grand
    total of $160,549.93.

H.

Conclusion

[44]

I
    would allow the appeal and vary paragraph one of the judgment below to order a
    payment of $116,100 composed of an equalization payment of $36,520 and $79,580 in
    realization of the promissory Maher obligation included in the equalization
    calculation.

[45]

The
    husband was successful on the family law issue of whether the Maher obligation should
    have been included in equalization. However, the wife was successful on the
    collection issue and obtained an order allowing her debt collection claim. As
    success is divided, I would not make an order as to costs of the appeal.

Released:  NOV -2 2017                            R.G.
    Juriansz J.A.

JL                                                             I
    agree John Laskin J.A.

I
    agree K. Feldman J.A.


APPENDIX A
The Maher dated May 18, 1995







[1]
A
    copy of a translation of the Maher, as filed in Tab 11 of the Appellants
    Exhibit Book, is attached in the appendix to these reasons.



[2]
See also
Berta v. Berta
,
    2015 ONSC 1493, at para. 21, reversed on other grounds 2015 ONCA 918, where the
    trial judge held that the wifes position that gifts from her husband during
    marriage were excluded from NFP had no chance of success in law. This court
    reversed the costs award on other grounds, but agreed at paras. 95-96 with the
    trial judge that the wifes untenable positions regarding the parties NFPs
    was amply supported by the evidentiary record.


