Division of Matrimonial Assets — Latest Cases

In our previous issue, we featured a practitioner's view on the latest common law developments in the division of matrimonial property (April 2000, pages 16–18). In this issue, we present a leading academic’s perspective on this area.

Section 112 of the Women’s Charter (Cap 353, 1997 Ed) which empowers the court hearing a petition for the termination of marriage to divide the spouses’ matrimonial assets between them in ‘just and equitable’ proportions is the result of a 1996 amendment (Women’s Charter (Amendment) Act 30 of 1996) to build on developments achieved under its innovative predecessor, the famous former section 106 (Cap 47, 1981 Reprint, enacted vide the Women’s Charter (Amendment) Act 26 of 1980). The basic principles of the law have been settled under the predecessor provision. No breakthrough case has been reported since 1996. This article surveys the more significant decisions since the publication of The Family Law Library of Singapore (CD-ROM — Butterworths Asia, 1999) (FLLS).

Fundamentals Re-affirmed

Yeong Swan Ann v Lim Fei Yen [1999] 1 SLR 651

This case concerned an application out of a nine-year marriage which produced two children. The Court of Appeal approved the decision that the former husband should repay to his former wife a $28,900 loan and give to her half of the shares acquired during marriage. Speaking generally, Chief Justice Yong Pung How said (at page 658):

It must be noted that [the former] s 106 is not modelled on an equivalent provision from England, the usual source of family law in Singapore. As such, an independent interpretation of the provision should be carried out without simply relying on English law as an aid. … [W]e were minded to follow the broad approach [of] Koo Shirley v Mok Kong Chua Kenneth [[1989] 2 MLJ 264, discussed in FLLS, note 4 at C697] … [W]e are of the opinion that s 106 of the Women’s Charter gives the court a very wide power to order the division of matrimonial assets in the fairest way possible …

In recalling Koo Shirley, the Chief Justice has re-affirmed its ‘three defining principles’ established in 1989 (see FLLS, note 4 at B314):

First, any asset acquired during marriage is liable to division, second, the power is to be exercised in broad strokes and, third, the aim of the court is to reach a fair and reasonable division of the assets between the spouses.

Even now we do well to remain guided by these principles.

Just and Equitable Proportions of Division

There are only two potential sets of substantive issues in an application to divide matrimonial assets: whether a piece of property constitutes ‘matrimonial asset’ liable to division and the ‘just and equitable’ proportions of division in that particular case. Of the former, there is now a definition in section 112(10), the strengths and weaknesses of which the writer has discussed previously (FLLS, note 4 at C754). There have been no reported decisions on this definition.

Of the direction to divide all matrimonial assets between spouses in ‘just and equitable’ proportions irrespective of who owned what in property law, the writer has suggested that it should be read thus (FLLS, note 4 at B322):

The new s 112 corrects the infelicities in the predecessor provision and permits further development of this powerful mechanism to bring economic fairness to the spouses. [With the] abandonment of the bias favouring financial contribution … a just and equitable division should generally be an equal division. On an equal division, each partner leaves the partnership with half of what he or she has helped to gain. An equal division best equalises the economic situations of the spouses on dissolution of their marital partnership. This is especially when the marital partnership has continued for a reasonable time so that there has been substantial non-financial contribution to homemaking and child-caring. Where spouses have discharged these roles for a considerable period … the starting point should be that each spouse is entitled to half of the net material gains of their marital partnership. The comparative strength of each spouse’s case may then increase or reduce this proportion accordingly. Where there is no additional strength in either spouse’s case, it is just and equitable to divide the gains equally.

The suggestion is that where two people have genuinely engaged in marital partnership for several years and have discharged the requisite roles of marriage, it is unnecessary to try to work out who has done what with any degree of particularity. It is sufficient to take as a starting point the view that a just and equitable division of their gains is an equal division. At least two recent cases support this view. It bears remembering that even under the former section 106 which favoured financial contribution over non-financial contribution, the courts have normally given the homemaker [1] between 35–45% of these gains.

Soh Chan Soon v Tan Choon Yock (mw) (DCA 5017/97, unreported)

In this case (see Academy of Law Digest Issue 14/98 at pages 18–19), Warren LH Khoo J (as he then was), in a twenty-year marriage where the wife brought up three children, saw no reason to overturn the decision to give her 63% of the sole matrimonial asset despite the fact that it was clear that the husband had made the larger financial contribution to its purchase. The lower court found that she was responsible for holding the family together while the former husband behaved fairly irresponsibly. His Honour observed:

In a relationship ruled by the heart rather than the head [a wife who is also homemaker and child-carer] would not keep accounts of what she expended for the family. When it comes to dividing the family assets … it would not be right to start from the basis that the party who is shown by documentary evidence to have made direct monetary contribution to the equity in the family home should be treated as having made a greater contribution than the other party. … It is closer to reality to use as the starting point the assumption that both parties have contributed jointly and equally throughout the marriage to the acquisition and growth of the equity in the family home. An account can then be taken of other factors to tilt the balance one way or the other. It is more a qualitative than a quantitative exercise. Working out the exact amounts of direct monetary contribution would be worthwhile only in a case, eg, of a couple who have been married for a short time, with no children, each with independent means and who have not shared a household and its myriad responsibilities.

Louis Pius Gilbert v Louis Anne Lise [2000] 1 SLR 274

In this case, Goh Joon Seng J (as he then was) repeated Warren LH Khoo J’s comments before adding (at pages 278–279):

[F]or the purpose of arriving at a just and fair division of the matrimonial assets, it is not particularly helpful to try to ascertain, sometimes in the face of conflicting evidence, the exact amount of money that each party has put in directly for the acquisition of the family home, as this ignores the indirect contributions, monetary or otherwise, most of which are incapable of any meaningful ascertainment either because no record was kept or because the nature of the contribution is irreducible into monetary terms. It is closer to reality to use as the starting point the assumption that both parties have contributed equally throughout the marriage to the acquisition and growth of the equity in the family home. Working out the exact amounts of direct monetary contributions would be worthwhile only in a case, for example, of a couple who has been married for a short time, with no children, each with independent means and who have not shared a household and its myriad responsibilities. An account can then be taken of factors to tilt the balance one way or the other.

His Honour also refused to overturn the decision, in this eighteen-year marriage that produced two children, that the former wife who barely made financial contribution to the family should receive 35% of the HDB flat and the husband’s CPF savings. His Honour added that he would only vary such an order if he adjudged it ‘out of line as to be perverse or that it was clearly wrong on principle’ (at page 279).

Lau Loon Seng v Sia Peck Eng [1999] 4 SLR 408

The High Court has, in one case, taken a contrary view of the effect of the 1996 amendment. In Lau Loon Seng v Sia Peck Eng, a forty-one year marriage produced three children where the former wife had also initiated the family business that later prospered. Kan Ting Chiu J overturned the equal division ordered and gave the former wife only 30% while giving the husband 70%. His Honour did not accept that, with the 1996 amendment, a just and equitable division should generally be an equal division. Instead, His Honour took the cue from the current simpler section 112, in no longer distinguishing assets acquired by joint effort from those acquired by sole effort, also omitting the former direction to the court, of jointly acquired assets, to incline towards equality of division. His Honour reasoned that, because there is no longer any direction to ‘incline towards equality of division’ of any part of the matrimonial assets, a ‘just and equitable’ division can assume any proportion. The field of choice of what constitutes just and equitable proportions is now thrown wide open. There is no encouragement of equal division. His Honour found that the wife had taken charge of the family business for a shorter number of years compared with the husband and at its early period when the business was worth less. The revised 30:70 division was based, inter alia, on these findings.

The writer has disagreed [2] with this decision. His Honour’s findings may have been harsh to the former wife. She did demonstrate entrepreneurial spirit ahead of the husband and successfully guided the business in its difficult early years. In any case, by concentrating on the spouses’ contribution to the business, His Honour ignored the wife’s non-financial contribution to the family and the children. The writer suggests that the decision unfortunately encouraged these parties who ‘engaged in the co-operative partnership of marriage with admirable success’ to now account for their individual contributions. It would have been preferred if the court ‘patted [them] on their backs’ by approving the order of equal division which ‘reflected the success of their equal partnership.’

Apart from the moral message of the equal value of roles in marriage that an equal division conveys, the writer also suggests that His Honour could have misinterpreted the 1996 amendment. His Honour may have made too much of the omission of the direction of selected matrimonial assets, to incline towards equality of division. The records make clear that ‘the Select Committee settled for “just and equitable proportions of division” only because members did not wish to constrain the court’s discretion where the marriage may be short.’ For a marriage that lasted a reasonable length, a just and equitable division ought to begin from an equal division. If marriage is an emotional and economic partnership, as the Women’s Charter section 46(1) states, two persons who genuinely engaged in this equal co-operative partnership for a reasonable length of time should emerge from it with an equal share of the net gains. (See also FLLS, note 4 at P959.)

Relating the Power to Divide with the Power to Declare Proprietary Interests

The Women’s Charter does not carefully relate the power in section 112 with the general declaratory power to declare the spouses’ proprietary interests in section 59. The relationship is further complicated by section 59(4) (added vide the Women’s Charter (Amendment) Act 26 of 1980) allowing spouses to seek such declaration within three years of termination of marriage. The writer has, however, suggested (FLLS, note 4 at P907):

there is an overlap of the power in s 59 with the power in s 112 [for three years from termination of marriage]. The former spouses have a choice during this time whether to invoke one power or the other. The power in s 59, being merely to declare their proprietary interests, is clearly less potent … A determination that one former spouse is sole beneficial owner does not prohibit the other to apply under s 112 for a just and equitable division of that property where it is a matrimonial asset … It may, therefore, be suggested that, although there is an overlap of the powers during this time, it is s 112 which predominates.

Lee Leh Hua v Yip Kok Leong [1999] 3 SLR 506

The High Court in this case decided, however, that there is no overlap between these provisions. The parties were married for some nine years. After the sale of their former matrimonial home, (a HDB flat they jointly purchased) and although the husband paid more, the husband voluntarily affirmed, before the HDB sales officer, that the proceeds of sale were solely for his wife. Later, he changed his mind and applied for a division of the proceeds. The lower court ordered that he should receive 60% of the proceeds. On appeal, GP Selvam J decided that section 112 only gave a power that he had the option not to exercise and that (at page 512):

where the events before the divorce petition clearly establish that one party was entitled to an asset as of right, the court ought not allow the other party to ask the court to exercise its power under s 112 of the Women’s Charter. So in this case, the court cannot vary the vested interest of the wife …

The result was that the wife received the entire proceeds of sale as the husband had publicly affirmed that they were solely for his wife.

While this result is laudable, it is submitted that the way it was achieved is less supportable. His Honour suggested that the form of section 112 as a ‘power’ allows a court easily to opt out of exercising it. Precedents suggest the contrary. It has been suggested (FLLS, note 4 at B315) that it is ‘the rare case where the court declines to exercise the power’. Indeed, before this case, only Wong Kam Fong Anne v Ang Ann Liang [1993] 2 SLR 192 (discussed in FLLS, note 4 at C552 and C714) could be cited. In Wong Kam Fong Anne, the spouses entered a comprehensive formal agreement inwhich the financially sophisticated husband agreed to give the larger share of the matrimonial assets to his wife. Michael Hwang JC found that the terms of this agreement were ‘not unreasonable’. The terms of the agreement, therefore, may not have been very different from the order of division if indeed one were made. Thus, in dismissing the husband’s application and leaving the spouses to the agreement they made, they were likely to be left in a fairly similar position as if the order of division were made. Lee Leh Hua may be regarded as being quite similar. The court clearly felt that the husband should be held to his public affirmation of the wife’s entitlement to the proceeds of sale. The decision to hold him to this affirmation would have been better reasoned if his Honour had said so.

The more troublesome suggestion resulting from Lee Leh Hua is that because the proceeds of sale were so clearly the wife’s entitlement, there was no room for the application of section 112. This implies that section 112 is only available where there is some ambiguity about the respective entitlements of the former spouses. This would severely limit the applicability of this power because it is always possible for a court to determine their respective entitlements from the evidence proffered. If such determination ousts the application of section 112, there is little room left for its operation. It is submitted, with respect, that this view may be disagreed with. The separation between sections 59 and 112 is not so simple. As the writer suggests, even after a declaration is given as to the former spouses’ respective proprietary interests in the family property, there is nothing to prohibit a further order of division of those properties that are matrimonial assets, so that they each obtain a more ‘just and equitable’ proportion. Indeed, an application for division is aided by such declaration as the spouses’ financial contribution to their purchase. In the application for division, however, there are other factors to consider, in particular, the spouses’ non-financial contribution. The power to divide can operate together with the power to declare proprietary interests.

The actual decision in Lee Leh Hua can even be supported as the outcome of an application under section 112. The court, having considered the parties’ financial and non-financial contributions and also the husband’s public affirmation of the wife’s entitlement to it, could have decided that this matrimonial asset should go completely to the wife. They may have other matrimonial assets which may not all go to her. The decision would have been better if decided thus. For the moment, we await another opportunity for the courts to reconsider the relationship between these powers.

Leong Wai Kum
Associate Professor
Faculty of Law, National University of Singapore

Endnotes

[1] Leong Wai Kum, ‘Division of matrimonial assets: recent cases and thoughts for reform’ [1993] SJLS 351 at 388.

[2] Leong Wai Kum, ‘The just and equitable division of gains between equal former in marriage’ [2000] SJLS forthcoming.