Where marriage is not a 50-50 proposition
Article by Arthur Chin.
How should courts divide matrimonial assets in “highly unusual” marital breakdowns?
The three-step structured approach to the division of matrimonial assets is a useful starting point for courts to determine the appropriate ratio to be ascribed to each party. However, should courts depart from this starting position where a party is found to have made negative contributions to the family in the course of the marriage? In this "highly unusual" case, the Court of Appeal held, inter alia, that the Wife’s contributions to the family should be ascribed a negative value. Notwithstanding this, the Court of Appeal reversed the High Court’s decision by affirming the three-step structured approach to grant division of the matrimonial assets 75:25 in favour of the Husband.
I. Introduction
1. The three-step structured approach to the division of matrimonial assets has become a useful starting point for many decisions[1] since the 2015 Singapore Court of Appeal (“CA”) decision of ANJ v ANK [2015] 4 SLR 1043 (“ANJ v ANK”).[2] While this approach has provided certainty, the CA has opined that this structured approach may not be appropriate in every case.[3]
2. How then should the court achieve a just and equitable division of matrimonial assets when the factual matrix of the marriage is "highly unusual"? In the recent decision of TQU v TQT [2020] SGCA 8 (“TQU v TQT (CA)”), the CA was confronted with this question and provided much needed clarification on the approach that courts should take in this category of cases.
3. In this case, the appellant husband (the “Husband”) appealed against the decision of the High Court (“HC”) judge (the “Judge”) to award 75% of the matrimonial assets to the respondent wife (the “Wife”). The facts were "highly unusual" for three reasons.[4] First, while the marriage took place in 1990 and it was undisputed that the marriage broke down in 2001,[5] the interim judgment of divorce was only granted in 2016 pursuant to the Wife's third application for divorce. Secondly, the Wife's contributions were ascribed a negative value. Thirdly, the Wife acknowledged that she made no indirect contributions to the family from 2010.
4. Notwithstanding the "highly unusual" circumstances of this matter, the CA nonetheless held that the structured approach is still the starting point for cases with such fact patterns. Applying the appropriate methodology, the CA overturned the Judge's decision in the HC and divided the matrimonial assets in the ratio of 75:25 in favour of the Husband.
5. That being case here, the CA cautioned that any approach to be used by the courts must necessarily turn on the precise fact pattern and the methodology must ensure a just and equitable division.
II. Material Facts
6. The Husband is a medical doctor and ran his own clinic (the “Clinic”) as a sole proprietorship from 1991 to 2003 before shutting it down.[6] In the same time period, the Wife, who was then working as an accountant, quit her job to work in the Clinic from time to time until 2001.[7] It is not disputed that the Husband's father had given him assets during his lifetime and by his will prior to the Husband's marriage.[8] In the course of the Husband's marriage, his mother had also left him assets when she passed away in 2000.[9] This culminated in the Husband and Wife owning properties in Singapore, Malaysia and China, in joint and separate names.
7. The Judge in his decision in TQT v TQU [2018] SGHCF 17 (“TQU v TQT (HC)”) concluded that all the assets currently owned by the parties came from the Clinic, which was a “joint matrimonial venture”.[10] Thus, the Judge took the starting point that each party ought to be entitled to 50% of the matrimonial assets. After drawing an adverse inference against the Husband for failing to shed light on the identity and value of the assets, the Judge adjusted the ratio of division by 25% in favour of the Wife. This gave rise to the final ratio of 75:25 in favour of the Wife.[11]
8. Dissatisfied with the Judge's decision, the Husband appealed against the HC decision, contending that the Judge had erred in his finding on the parties' direct and indirect contributions.[12]
III. Issues on Appeal
9. The sole issue before the CA was the division of matrimonial assets between the parties.[13] Flowing from this, the following sub-issues arose for the CA's determination:[14]
a. The operative dates for determining and valuing the matrimonial assets (“sub-issue 1”);
b. The matrimonial assets and their value (“sub-issue 2”);
c. The direct contribution ratio between the parties (“sub-issue 3”);
d. The indirect contribution ration between the parties (“sub-issue 4”); and
e. Any adverse inference to be drawn against either party (“sub-issue 5”).
10. In the following segments, we seek to address the sub-issues in turn.
A. Summary of Sub-issues 1 and 2
11. We deal with sub-issues 1 and 2 summarily. The CA cited with approval their earlier decision in ARY v ARX [2016] 2 SLR 686[15] at [33] that the default position for the operative date to determine the matrimonial assets is the date that the interim judgment for divorce is granted.[16] Notwithstanding, the court may still depart from the starting point where there are cogent reasons to do so.[17] Here, the CA saw no principled reason to depart from the default operative date given that the parties had remained in a legal albeit unhappy union.[18]
12. In relation to the date of valuation of the matrimonial assets, the CA cited with approval their decision in TDT v TDS [2016] 4 SLR 145[19] at [50], where they held that the default operative date is the date of the first ancillary hearing, although the court retains the discretion to depart from this date where it is warranted by the facts.[20] Likewise, the CA saw no reason to depart from the default operative date in the circumstances.[21]
13. Having identified the operative dates for determining and valuing the matrimonial assets, the CA then proceeded to identify the relevant matrimonial assets and to determine their values.
B. The Applicable Law on the Division of Matrimonial Assets
14. The Singapore courts are empowered to order the division of matrimonial assets by section 112(1) of the Women's Charter (“WC”) (Cap 343, 2009 Rev Ed) which states:[22]
"112.—(1) The court shall have power, when granting or subsequent to the grant of a judgment of divorce, judicial separation or nullity of marriage, to order the division between the parties of any matrimonial asset or the sale of any such asset and the division between the parties of the proceeds of the sale of any such asset in such proportions as the court thinks just and equitable."
15. Given that the division of matrimonial assets is the main issue before the CA, we devote more attention to the CA's decision on this issue in the following sections.
(1) The Structured Approach
16. The structured approach on the division of matrimonial assets is set out in the CA decision of ANJ v ANK[23] and summarised in BPC v BPB [2019] 1 SLR 608 at [70]:[24]
a. First, ascribe a ratio that represents each party's direct contributions relative to those of the other party, having regard to the amount of financial contribution each party has made towards the acquisition or improvement of the matrimonial asset;
b. Second, ascribe a second ratio to represent each party's indirect contribution to the well-being of the family relative to that of the other throughout the marriage; and
c. Third, using each party's respective direct and indirect percentage contributions, derive each party's average percentage contribution to the family that would form the basis to divide the matrimonial assets.
17. The CA in this case accepted without qualifications the position above. In this regard, the CA accepted that the structured approach on the division of matrimonial assets must not be applied in a rigid, mechanistic and overly-arithmetical manner; the role of the court is not to analyse every single allegation against the other party but to focus on major details to assist parties to find a way forward.[25]
18. Though the CA has set out the structured approach to recognise the parties' respective contributions to a marriage, the CA also observed that this approach may be inappropriate for long single-income marriages where the court tends towards equal division of matrimonial assets.[26] Given that this is not a long, single-income marriage, the structured approach should apply here.
(2) Appropriate Methodology for the Structured Approach
19. Next, the CA held that a court may choose between one of two methods when applying the structured approach, so as to achieve a just and equitable division of matrimonial assets:[27]
a. The classification methodology; or
b. The global assessment methodology.
20. While the CA held that both methodologies are consistent with section 112 of the WC, and neither method is more superior to the other, the CA found the global assessment methodology to be more appropriate in the present case.[28] This was in contrast to the HC's decision, where the Judge adopted the classification methodology, as one of the properties (the “Pender Court Property”) was acquired prior to the marriage by the Husband, while the remaining properties were acquired after the parties started working at the Clinic.[29]
21. The CA was of the view that the classification method will be more appropriate where there is a clear reason to make a different calculation for each category of assets. This was not the case in the appeal.[30]
22. Thus, in applying the global assessment methodology to the assessment of division of assets, the CA thought that on a general level, it would be more appropriate to discuss the properties according to the time they were acquired in relation to the Clinic.[31]
(3) Parties' Direct Contributions
23. Following the first step of the structured approach in ANJ v ANK, the CA ascribed a ratio that represents each party's direct contributions. In deciding in favour of the Husband in the ratio of 90:10, the CA found the following factors to be relevant:[32]
a. That the Clinic was not the sole source of moneys used to acquire most of the properties;
b. That the Husband's gifts and inheritance were a material source as well; and
c. The Husband was the resident doctor of the Clinic and so should be credited with a larger share of the direct contribution for the properties during the Clinic's operational years.
(4) Parties Indirect Contributions
24. Following the second step of the structured approach, the CA ascribed a second ratio to represent each party's indirect contributions to the well-being of the family. This includes both financial and non-financial contributions. In this step, the court has to exercise its discretion in broad strokes, bearing in mind that the values are necessarily a matter of impression.[33] The CA disagreed with the HC's inference that both the Husband and Wife looked after the children equally.[34] In coming to this conclusion, the CA highlighted the following:[35]
a. The children had spent more time with the Husband, having lived with him since 2010;
b. The Husband became a stay-at-home parent and cared for the children full-time since 2003; and
c. The Husband has maintained a close bond with the children till today.
25. As for the non-financial contributions, the CA implicitly accepted the Husband's submission that a negative value should be ascribed to the Wife's indirect contributions due to her misconduct. In this regard, the CA looked to their own decision in Chan Tin Sun v Fong Quay Sim [2015] 2 SLR 195[36] (“Chan Tin Sun (CA)”) at [27] that the court can ascribe a negative value to a spouse's contributions where he or she not only failed to contribute to the marriage but also engaged in conduct that fundamentally undermined the co-operative partnership and welfare of the other.
26. The CA in TQU v TQT (CA) agreed with their decision in Chan Tin Sun (CA) that the threshold for the court to ascribe a negative contribution is a high one and conduct must be both extreme and undisputed.[37] Correspondingly, all factors must be considered in a holistic manner and the court must have regard to the conduct of both parties.[38]
27. On the facts, the CA found that the Wife's conduct throughout this period amounted to harassment and undermined the co-operative partnership that marriage is intended to be.[39] The Wife had filed numerous complaints against the Husband with the authorities from 2001 to 2004 for corruption and other regulatory offences. In fact, one complaint culminated in a 15-day criminal trial in the district court which was dismissed. The district judge had found her evidence to be "absurd and ludicrous" and concluded that she "was eager to concoct evidence calculated to cause damage to the [Husband]".[40] Moreover, on the balance, the Husband had not retaliated despite the Wife's conduct.
28. The CA accepted the Husband's submissions and thus implicitly ascribed a negative value to the Wife's indirect contributions after the marital relations broke down in 2001. The CA found that the Husband's indirect contribution was significantly more than the Wife's. In applying a broad-brush approach, they adjusted the ratio to 80:20 in favour of the Husband.[41]
(5) Deriving the Parties' Average Percentage Contribution
29. The average ratio for the direct and indirect contributions resulted in an 85:15 ratio in favour of the husband. While this is the case, the CA exercised their power to draw an adverse inference against Husband as he had failed to make full and frank disclosure of the matrimonial assets.[42]
30. Correspondingly, the CA adjusted the ratio of division by 10% in the Wife's favour, deriving a final ratio of 75:25 in favour of the Husband in stark contrast to the HC's decision.[43]
IV. Legal Implications
31. Given that the structured approach to division of matrimonial assets is highly fact dependent, the latest pronouncements in TQU v TQT (CA) against such a unique fact pattern is much welcomed. There are a few key take-aways.
32. First, it is certainly clear from this decision that the structured approach is here to stay. This is also a useful starting point for courts to determine on the division of matrimonial assets. Save for long single income marriages, the three-step approach in ANJ v ANK is still very much relevant even where the marital breakdown is "highly unusual".
33. Second, the CA appears willing to ascribe a negative value to a party's indirect contributions should the conduct of one party undermine the co-operative partnership and welfare of the other party.
34. Third, the ultimate objective of any decision on division of matrimonial assets must still be to accord due and sufficient recognition to each party's contribution towards the marriage so that the outcome would be just and equitable.
35. Lastly, there is no doubt that each decision will still turn on the precise circumstances of the case before the court. In coming to a decision, the court must not apply the structured approach in a rigid, mechanistic and overly arithmetical manner but instead exercise its discretion in broad strokes.
[1] See BPC v BPB and another appeal [2019] 1 SLR 608 (CA); UJF v UJG [2019] 3 SL 178 (HC); UBM v UBN [2017] 4 SLR 921 (HC); TIT v TUI and another appeal [2016] 3 SLR 1137 (HC).
[2] ANJ v ANK [2015] 4 SLR 1043 at [22].
[3] TQU v TQT [2020] SGCA 8 at [32], citing TNL v TNK [2017] 1 SLR 609 at [44].
[4] TQU v TQT (CA) at [5].
[5] TQU v TQT (CA) at [4].
[6] TQU v TQT (CA) at [6].
[7] TQU v TQT (CA) at [6].
[8] TQU v TQT (CA) at [7].
[9] TQU v TQT (CA) at [7].
[10] TQU v TQT (HC) at [11].
[11] TQU v TQT (HC) at [11].
[12] TQU v TQT (CA) at [14].
[13] TQU v TQT (CA) at [25].
[14] TQU v TQT (CA) at [33].
[15] ARY v ARX [2016] 2 SLR 686.
[16] TQU v TQT (CA) at [35]-[37].
[17] ARY v ARX [2016] 2 SLR 686 at [35].
[18] TQU v TQT (CA) at [38].
[19] TDT v TDS and another appeal and another matter [2016] 4 SLR 145.
[20] TQU v TQT (CA) at [39].
[21] TQU v TQT (CA) at [41].
[22] Section 121(1), WC (Cap 353, 2009 Rev Ed).
[23] ANJ v ANK [2015] 4 SLR 1043 at [22].
[24] BPC v BPB [2019] 1 SLR 608 at [70].
[25] TQU v TQT (CA) at [97], citing UYQ v UYP [2020] SGCA 3 at [3]-[4].
[26] TQU v TQT (CA) at [32], citing TNL v TNK [2017] 1 SLR 609 at [44].
[27] TQU v TQT (CA) at [98].
[28] TQU v TQT (CA) at [100].
[29] TQU v TQT (HC) at [9]-[10].
[30] TQU v TQT (CA) at [100]-[101].
[31] TQU v TQT (CA) at [102].
[32] TQU v TQT (CA) at [124].
[33] TQU v TQT (CA) at [125], citing ANJ v ANK at [24].
[34] TQU v TQT (CA) at [127].
[35] TQU v TQT (CA) at [128].
[36] Chan Tin Sun v Fong Quay Sim [2015] 2 SLR 195 at [27].
[37] TQU v TQT (CA) at [131] citing Chan Tin Sun (CA) at [25].
[38] TQU v TQT (CA) at [131], citing UAP v UAQ [2018] 3 SLR 319 at [82].
[39] TQU v TQT (CA) at [132].
[40] TQU v TQT (CA) at [132].
[41] TQU v TQT (CA) at [133]-[134].
[42] TQU v TQT (CA) at [137], citing ANJ v ANK at [29].
[43] TQU v TQT (CA) at [142].