Division of Matrimonial Assets in ‘Big Money’

Cases

‘Big money’ cases must now be heard and determined by the High Court and not the Family Court where the division of assets is contested and the assets total or exceed $1.5 million. This article discusses the approach the High Court in Singapore is likely to take in big money cases having regard to the approach taken by the courts in England when dividing assets. The elimination of discrimination and the need to give equal weight to the respective roles of husband and wife who is a home maker referred to by the Ministry of Community Development on 27 August 1996 is discussed.

Introduction
 

Recent developments in the law could well see Singapore courts adopting the reasoning of the House of Lords in White v White [2001] AC 596 on the division of assets and maintenance in big money cases, and the decision of the English Court of Appeal in McFarlane v McFarlane and Parlour v Parlour [2004] EWCA Civ 872 on the assessment and quantum of maintenance in big money cases. The House of Lords ruled that the yardstick that should be used as a guide when matrimonial assets are divided should be equality of division. In assessing maintenance the wife should have, inter alia, the same opportunity as a husband to make provision for the years of retirement and that a wife should have the means with which to insure herself and the children against the risk of premature cessation of the husband’s high earnings in big money cases.

The corresponding statutory provisions in the Charter are in substance and spirit similar to the corresponding provisions in the English Matrimonial Causes Act 1973 with respect to financial provision and property adjustment orders but they are not entirely in pari materia (see Part II Matrimonial Causes Act 1973). The question is whether the yardstick spelt out by the House of Lords in White v White for the division of assets and payment of maintenance is a useful guide that can be applied in ‘big money’ cases in Singapore to be heard and determined by the High Court pursuant to the Supreme Court of Judicature (Transfer of Matrimonial, Divorce and Guardianship of Infants Proceedings to District Court) Order 2003 which requires contested applications for the division of assets where the value is or exceeds $1.5 million to be heard in the High Court.

The marriage of Mr and Mrs White lasted 30 years. They both built up a successful farming business. At first instance the court made an order giving Mrs White a little over one-fifth of the total assets. It was about £4 million, sufficient to meet the wife’s reasonable requirements.

On appeal the Court of Appeal [1998] 4 AER 659 allowed the wife’s appeal. The wife’s share of the assets was increased to nearly two-fifths. The court was of the view that the parties traded as equal partners during the marriage.  Therefore the wife’s award should not be limited to her reasonable requirements. Both parties appealed. The wife wanted half the total assets. The husband wanted the decision of the court of first instance restored.

The House of Lords rejected the approach taken by the Court of Appeal saying it was unnecessary to establish the parties’ financial entitlements under partnership principles.  A broad assessment of their financial position and not a detailed partnership account and valuation of the business assets was required.  This is in line with the ‘broad brush’ approach adopted by the Singapore courts.

Equality
 

Their Lordships said that the principle of equality between husband and wife did not depend upon their equal contribution as business partners.  Lord Nicholls stated the principle of universal application in the following terms: (p 605)

In seeking to achieve a fair outcome, there is no place for discrimination between husband and wife and their respective roles. [emphasis added] Typically, a husband and wife share the activities of earning money, running their home and caring for their children. Traditionally, the husband earned the money, and the wife looked after the home and the children. This traditional division of labour is no longer the order of the day. Frequently both parents work. Sometimes it is the wife who is the money-earner, and the husband runs the home and cares for the children during the day. But whatever the division of labour chosen by the husband and wife, or forced upon them by circumstances, fairness requires that this should not prejudice or advantage either party when considering paragraph (f), relating to the parties’ contributions.  This is implicit in the very language of paragraph (f):  “the contributions which each … has made or is likely … to make to the welfare of the family, including any contribution by looking after the home or caring for the family”. If, in their different spheres, each contributed equally to the family, then in principle it matters not which of them earned the money and built up the assets. There should be no bias in favour of the money-earner and against the home-maker and the child-carer.

Dealing with the practical application of the principle of equality he added: (p 605)

A practical consideration follows from this. Sometimes, having carried out the statutory exercise, the judge’s conclusion involves a more or less equal division of the available assets. More often, this is not so. More often, having looked at all the circumstances, the judge’s decision means that one party will receive a bigger share than the other. Before reaching a firm conclusion and making an order along these lines, a judge would always be well advised to check his tentative views against the yardstick of equality of division. As a general guide, equality should be departed from only if, and to the extent that, there is good reason for doing so. The need to consider and articulate reasons for departing from equality would help the parties and the court to focus on the need to ensure the absence of discrimination.
 

and said that: (p 606)

There is greater awareness of the extent to which one spouse’s business success, achieved by much sustained hard work over many years, may have been made possible or enhanced by the family contribution of the other spouse, a contribution which also required much sustained hard work over many years. There is increased recognition that, by being at home and having and looking after young children, a wife may lose for ever the opportunity to acquire and develop her own money-earning qualifications and skills.  In Porter v Porter [1969] 1 WLR 1155, 1159, Sachs LJ observed that discretionary powers enable the court to take into account “the human outlook of the period in which they make their decisions”. In the exercise of these discretions “the law is a living thing moving with the times and not a creature of dead or moribund ways of thought”.

The application of the ‘yardstick’ was explained. It was not the same as inclining towards equality, a concept that was debated about in the Singapore Parliament, or a presumption of equal division, or using equality as a ‘starting point’. A fair outcome could involve an unequal division. The yardstick of equality serves as a check upon a proposed order to ensure that judges give good reasons for opposing the equal division of assets. It is submitted that this approach is useful not only to the judge at first instance and counsel giving advice but also to judges sitting on appeal when deciding whether there was a proper exercise of the discretionary powers. No priority is given to the factors that must be considered.

McFarlane and Parlour Appeals
 

The decisions of the English court of Appeal in McFarlane v McFarlane and Parlour v Parlour decided after White’s case throw more light on the proper approach to be taken when a court exercises its wide discretionary powers in big money cases for maintenance where the big money is likely to ‘plummet’ as in Parlour’s case or keep rising as in McFarlane’s case.

Parlour’s Case
 

In Parlour’s case the former wife of a £1.2 million-a-year Arsenal footballer was awarded £250,000 annual maintenance by the High Court, after she had agreed to accept 37% of the family assets which consisted of two houses worth more than £1 million after she had agreed that she was not entitled to 50% of the assets because it was a short marriage. The only issue that went to trial was the quantum of the wife’s periodical payments order. The wife gave up her employment with her husband’s encouragement and became financially dependent upon him.

The High Court ruled that the husband’s offer of £120,000 a year did not reflect the part she had played to help her hard drinking husband ‘grow up’ and avoid a ‘laddish’ culture, and awarded her maintenance of £250,000 a year.

The wife appealed. Counsel for the wife before the Court of Appeal argued that her 31-year-old footballer husband would enter his ‘twilight years’ in four years and there was a ‘real risk’ that he would not be able to maintain the family in the long term.

The Court of Appeal was asked to rule that, in principle the post-divorce income of a high-earning spouse should be split 50:50 in the same way as other matrimonial assets to reflect the contributions of the other party to the marriage.

The footballer’s counsel argued that the wife’s contributions on the football field was not part of a ‘joint enterprise’. Ray Parlour laboured on the field and risked injury without the wife.

The court, however, was of the view that it was discriminatory and wrong in principle for the earner to have sole control of the surplus of income over need during the years of accumulation. The wife was told that she must ‘invest the surplus sensibly of her maintenance’.

Ms Parlour received two mortgage-free houses worth more than £1 million, a £250,000 lump sum and £12,500 a year for each of their three children aged eight, six and four.

Lord Justice Thorpe sitting in the Court of Appeal said that the footballer’s income was likely to ‘plummet’ within the next four or five years. The court recognised that because of the decline in her husband’s earnings the wife would be required to save £294,000 a year from her maintenance over the next four years. The court then awarded her £444,000-a-year maintenance, £406,000 for the wife and the remainder for the three children. The award was for an initial period of four years, so that it can be extended or discharged depending on the financial situation of each party to achieve a 
clean break.

Division of Capital and Division of Income
 

In McFarlane v McFarlane the question that was posed to the Court of Appeal was if the decision in White v White introduces the yardstick of equality for measuring fair division of capital, why should the same yardstick not be applied as the measure for the division of income?

The parties in McFarlane were a chartered accountant and a solicitor and were 44 years of age. The marriage took place in 1984. After the birth of her second child the wife did not return to work. It was agreed that the wife should abandon her legal career to devote all her time and energy to the two babies and the developing family. The husband had become a partner. Houses were bought in their joint names and 
separate names.

The husband upon forming a relationship with one of the partners in August 2002 purchased a house with the partner for £2.94 million. The purchase was largely financed by a substantial mortgage and loans. The husband planned to spend nearly £350,000 from his net income in payment of interest and repayment of capital. His earned income over the five years between 1999 and 2003 expressed in thousands was 272-427-579-633-753. Unlike Parlour’s case the big money was escalating. Both the husbands had found new partners.

Equal division for the family capital was agreed at about £3 million. The husband agreed to pay the fees of the children at £20,000 per annum.

The wife quantified her spending needs at about £128,000 a year. The husband contended that the budget sought by the wife was considerably greater than the family’s spending during the marriage. The wife sought an order for £275,000 per annum; the husband for an order of £100,000 per annum. What should be the wife’s share was the question for the court.

Lord Thorpe answered the question on equal division by saying: (para 106)

     ... . The judges must remain focused on the statutory language, albeit recognising the need for evolutionary construction to reflect social and economic change. The statutory checklist and the overall circumstances of the case allow the judge to reflect factors which are said to be inherent in either the entitlement model or the compensation model. But to adopt one model or another or a combination of more than one is to don a strait-jacket and to deflect concentration from the statutory language. Clearly in the assessment of periodical payments, as of capital provision, the overriding objective is fairness. Discrimination between the sexes must be avoided. The crosscheck of equality is not appropriate for a number of reasons. First in many cases the division of income is not just between the parties, since there will be children with a priority claim for the costs of education and upbringing. Second Lord Nicholls suggested the use of the crosscheck in dividing the accumulated fruits of past-shared endeavours. In assessing periodical payments the court considers the division of the fruits of the breadwinner’s future work in a context where he may have left the child-carer in the former matrimonial home, where he may have to meet alternative housing costs and where he may have in fact or in contemplation a second wife and a further child.

The decisions – of the House of Lords in White’s case and the Court of Appeal in McFarlane’s and Parlour’s case – signal an important development for the law in Singapore given that the statutory provisions on which the Parlour and McFarlane decisions are based on are very similar to the relevant Singapore provisions as can be seen from the table (right) and the statutory objective spelt out in s 114(2) of the Charter which requires the court to place the parties in the financial position as if the marriage had not broken down.

In White’s case Lord Nicholls said: (p 604)

… . The tailpiece declared what should be the objective of the court when exercising the statutory powers to make financial orders and property adjustment orders. The court must exercise its powers: as to place the parties, so far as it is practicable and, having regard to their conduct, just to do so, in the financial position in which they would have been if the marriage had not broken down and each had properly discharged his or her financial obligations and responsibilities towards the other … . Implicitly the objective must be to achieve a fair outcome.

The matters to be regarded in s 114(1) of the Charter are substantially similar to the matters set out in s 25 of the Matrimonial Causes Act 1973 as can be seen from the factors that must be considered by the courts in England and Singapore. English cases on s 25 should not therefore be dismissed as being irrelevant. It would be invidious to suggest that a Singapore wife should be treated less fairly than the English wife when the factors to be considered are almost identical, notwithstanding the fact that the orchid may be a hardier flower than the rose.

The factors to be considered by the Singapore and English courts are as follows:

Section 114(1) of the Charter (Singapore):
 

(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

(c) the standard of living enjoyed by the family before the breakdown of the marriage;

(d) the age of each party to the marriage and the duration of the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

(f)  the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family; and

(g) in the case of proceedings for divorce or nullity of marriage, the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage that party will lose the chance of acquiring.

Section 25(2) Matrimonial Cause Act 1973 (England):
 

(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;

(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

(c) the standard of living enjoyed by the family before the breakdown of the marriage;

(d) the age of each party to the marriage and the duration of the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

(f)  the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;

(g) the conduct of each of the parties, whatever the nature of the conduct and whether it occurred during the marriage or after the separation of the parties or (as the case may be) dissolution or annulment of the marriage], if that conduct is such that it would in the opinion of the court be inequitable to disregard it; and

(h) in the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.

In the course of the Second Reading of the Women’s Charter (Amendment) Bill on 27 August 1996 the Minister for Community Development said:

I will now address the issue on the division of matrimonial assets tending towards equality, which has been touched upon by NMP Kanwaljit Soin. Sir, the concern is over the removal of the words “incline towards equality” in the existing provision of s 106 and its re-enactment into a new s 106. The concern is that the new provision is not as just and it will not provide for an equitable distribution to women. …

Sir, the new provisions will in fact benefit rather than put women at a disadvantage. The proposed provisions will not put a woman, who is a full-time home-maker or a working and contributing party, in a worse off position. It will not. In fact, a working and contributing woman will be better off under the proposed amendments, as the courts can now also take into consideration her home-making efforts, regardless of the extent of her contribution to the assets. This would provide for a fairer distribution of assets than the current provisions. [my emphasis]

Parliament clearly wanted to redress the wrong done earlier to women where their non-monetary contributions as a wife and mother was under-valued during marriage and after divorce, so that they are given a fairer division of assets and maintenance in all cases. The House of Lords has now said that fairness means an equal division of assets regardless of the financial contribution to the assets, based on a division of labour.

The similar provisions in s 114(1) on the assessment of maintenance under the Charter and under s 25(2) of the Matrimonial Causes Act 1973 justifies a closer look at the reasoning and approach of Bennett J in the High Court which heard the appeals from the District Judge in McFarlane and Parlour’s cases, because it is the approach that must be taken to the factors that must be considered by a judge exercising discretionary powers under s 114 of the Charter in Singapore when assessing maintenance.

Age and Duration of Marriage
 

The judge considering this factor said that although the marriage in Parlour’s case lasted some three-and-a-half years it would not be just to ignore the fact that their relationship endured for seven or slightly more years. The judge regarded the period of cohabitation during which children were born as relevant. This would be in keeping with the definition of ‘child of the marriage’ in s 92 of the Charter.

Standard of Living
 

The judge considering this factor said:

I am satisfied that compared to the lifestyles of other footballers in the same bracket as the husband the wife and husband in this case did lead a comfortable but not an extravagant way of life.

Wife’s Contribution
 

The judge considering this factor said:

She is a full-time mother of three children aged eight, six and four. I am satisfied that she bore the brunt of bringing the children up whilst the parties co-habited. Furthermore it is obvious that she will have to bear the burden of bringing them up during their childhood. Thus by the time the youngest child is 16 the wife will have had a further 12 years of caring for the children. If the youngest remains at home until she is 18 then the period would be 14 years. That I recognise at once is, together with her past caring for the children, an enormous contribution. I am satisfied too that she has no earning capacity. She told me in evidence that she made no sacrifices in giving up her work with the opticians in 1994 nor has she been disadvantaged in staying at home. She accepted that she had not given up any career. There is no dispute, as I understand it, that the wife was a marvellous mother and ran the household efficiently and looked after the children and the husband to the very best of her considerable ability.

Husband’s Contribution
 

The judge considering this factor said:

… . So, strictly speaking, the financial wealth of the family was created by the husband. However, in my judgment, there is a very significant factor in the success of the husband in which the wife played a vital role. The wife has suggested in her evidence that the husband was and is a drinker … . However the wife realised that that was the way to ruin and unhappiness and I am satisfied that in about the mid 1990’s or slightly later she took a grip on the situation and encouraged and persuaded her husband to move away from that style of living. That rather bland description of what she did probably understates her contribution in this respect. …

Assessment of Income, Earning Capacity – Other Financial Resources, in the Foreseeable Future
 

The judge considering this factor said:

The wife has no income or if she can invest what she has not spent of the lump sum, such income would, in the circumstances of this case, be insignificant. I am satisfied as I have already said that she has no earning capacity now or in the foreseeable future. Her life is bound up with her children and will be for some considerable time in the future.

The husband. I have already set out his income and other financial resources. He is secure in a very large income until June 2005. What will happen thereafter is unknown … . After he has ceased to be a professional footballer – at least with Arsenal – it is likely that his income will decline very considerably.

Financial Needs, Obligations and Responsibilities
 

The judge having found that the wife’s main responsibility now and in the foreseeable future was to look after her children and herself said:

However, I am satisfied, looking at needs alone, generously construed, the figure of £180,000 per annum for the wife and the three children is substantially too high. If I were to allow £30,000 for all of the three children and £120,000 for the wife, in my judgment that would be fair and just.

The judge’s corresponding finding in relation to husband was:

So far as the obligations and responsibilities of the husband are concerned he now has two families to maintain.  However, in fairness to him, he has not suggested that the wife and the children should be in any way disadvantaged by the fact that he has to maintain his partner and their child. In any event I am satisfied that now and for the foreseeable future there will be more than adequate income to properly maintain his partner and child without in any way affecting his primary obligation and responsibility to the wife and the children.

The judge, recognising his duty to consider all the factors set out in s 25(2) of the Matrimonial Causes Act recorded that none of the other s 25(2) criteria were relevant to his decision: this is a process that must be undertaken under s 114(1) of the Charter if the court is not to err in principle.

The decision in McFarlane’s case had been heard earlier by Bennett J, and counsel in Parlour’s case tried to persuade the same judge hearing the appeal in Parlour’s case that the judgment in McFarlane’s case was erroneous. Counsel submitted that ‘needs’ or ‘reasonable requirements’ is not a limiting factor in cases where the payor has an ability to pay more than the payee’s needs. The objection implicit in the exercise of the court’s discretion under s 25 (our s 114) is to achieve a fair outcome in the financial arrangements between the parties. He relied on White’s case.

It was further submitted that in achieving a fair outcome there is no place for discrimination between the spouses and their respective roles. There should be no bias in favour of the money earner and against the home-maker and child case (White’s case).

In giving judgment the High Court 
judge said:

(a) In my judgment to confine in this instant case an award of periodical payments for the wife to a ceiling of “needs” or “reasonable requirements” where the husband has the ability to pay more, indeed far more, than the wife’s needs would be a faulty exercise of the court’s discretion. For that could be to determine her application by reference to only one matter in s 25(2) and ignore the other matters … .

(b) The husband’s open offer of periodical payments is equivalent to 10% of his net income. To suggest that in the circumstances of this case the wife should walk away with £120,000 (for her and the children) when set against her husband’s net income of about £1.2 million is thoroughly mean and would be unfair. However, to award her £444,000 because that represents 37.5% of his net income which is the same percentage of the capital she received, would be an unprincipled and unfair award on the facts of this case ... .

(c) Thus, in my judgment, the court must seek a way that does justice to the parties and which does not, so far as is possible, impose a glass ceiling on the one hand but which does not hand out capital on the other. It surely must be implicit in the concept of periodical payments when placed next to the concepts of lump sum and property adjustments that where there has been a capital adjustment between spouses in accordance with White, as it was in the instant case, the function of periodical payments should not then or at some later date be seen to further the claimant spouse’s ability to mine the paying spouse’s income for further capital ... .

Court of Appeal
 

Before the Court of Appeal the question was ‘What should be the principles governing an award of periodical payments during joint lives … where the net income of the payor significantly exceeds what both parties need to meet their outgoings at the standard of living the court finds appropriate?’

The Court of Appeal noting that the two appeals are far removed from the norm said it is the huge excess over need that creates the debate over the principle governing the quantification of the award.

After noting that in one case the division of assets was equal and that in the other the earner took 60% and considering s 25 of the English Act (our s 114) the court said:

In any case in which, despite a substantial capital base available for division, clean break is not presently practicable, the court has a statutory duty to consider the future possibility. That duty assumes particular prominence in cases where there is a certain and substantial surplus of future income over future needs. If, as in one of the present appeals, the surplus will be predictably short-lived, the first option for consideration should be the planned progress to clean break by means of a substantial term order open to a later application for extension. The obligation on the parties to achieve financial independence is mutual. The earner must give proper priority to making payments on account out of the surplus income. The payee must invest the surplus sensibly, or risk that her failure so to do might count against her on an application for discharge under s 31(7A) and (7B). Given the mutuality of the obligation, the opportunity and responsibility to invest should, in my judgment, be shared. It strikes me as discriminatory, and therefore wrong in principle, for the earner to have sole control of the surplus through the years of accumulation. The preferred mechanism by which the surplus is to be divided annually must be periodical payments. They are variable, which lump sum orders are not. They can therefore reflect fluctuations in the payer’s income. They are determined by the court in the event of dispute. They terminate on the remarriage of the recipient. The practicality of such an order will depend upon many factors. Essentially the completion of the process must be foreseen within a relatively short span. A term of five years which these cases illustrate may be towards the limit of 
the foreseeable.

The Court of Appeal observing that the High Court had not given sufficient weight to the duties created by s 25 in McFarlane’s case where unlike Parlour’s case the income would be constant or keep rising then said:

… . The key was the husband’s capacity to borrow in a tax-efficient way on the security of his home. Although he had borrowed very substantially to acquire an excessively expensive home, his proposal was to discharge the mortgage over five years by annual instalments of £347,500. Plainly on completion of that exercise he could re-mortgage his interest to finance the clean break. Over the intervening years he could make what would effectively be payments on account … .

Wife’s Responsibility
 

The court referring to the wife’s responsibility where she is paid maintenance above her needs said:

… the wife’s responsibility to contribute to the financing of the clean break requires her to put the surplus periodical payments above needs (on the district judge’s figures £122,000 per annum) to achieving financial self-sufficiency. The evidence advanced was that the premium on a policy to secure her against the husband’s death or disability would be £40,000 per annum. Given the reduction of the years of risk, it would not seem to me reasonable for the wife to spend [the] surplus on insurance. The greater priority is to achieve financial independence.

Their maintenance is not limited to being given sufficient money for clothes to wear, food to eat and an HDB roof over their heads. Where there is big money and big bungalows for the husband, the wife in big money cases must save some of the ‘big maintenance’ for her future needs and not squander the big maintenance that may be ordered.

Matrimonial Assets
 

‘Matrimonial asset’ for the purpose of division or sale of matrimonial assets means:

s 112(10) …
 

(a) any asset acquired before the marriage by one party or both parties to the marriage –

(i) ordinarily used or enjoyed by both parties or one or more of their children while the parties are residing together for shelter or transportation or for household, education, recreational, social or aesthetic purposes; or

(ii) which has been substantially improved during the marriage by the other party or by both parties to the marriage; and

(b) any other asset of any nature acquired during the marriage by one party or both parties to the marriage,

but does not include any asset (not being a matrimonial home) that has been acquired by one party at any time by gift or inheritance and that has not been substantially improved during the marriage by the other party or by both parties to the marriage. [my emphasis]

Inheritance: Separate Property or Contribution
 

The House of Lords dealt with the two classes of properties acquired during the marriage by one spouse by gift or succession or as beneficiary under trust in White’s case and said: (p 610)

This distinction is a recognition of the view, widely but not universally held, that property owned by one spouse before the marriage, and inherited property whenever acquired, stand on a different footing from what may be loosely called matrimonial property. According to this view, on a breakdown of the marriage these two classes of property should not necessarily be treated in the same way. Property acquired before marriage and inherited property acquired during marriage come from a source wholly external to the marriage. In fairness, where this property still exists, the spouse to whom it was given should be allowed to keep it. Conversely, the other spouse has a weaker claim to such property than he or she may have regarding matrimonial property.

Plainly, when present, this factor is one of the circumstances of the case. It represents a contribution made to the welfare of the family by one of the parties to the marriage. The judge should take it into account. He should decide how important it is in the particular case. The nature and value of the property, and the time when and circumstances in which the property was acquired, are among the relevant matters to be considered. However, in the ordinary course, this factor can be expected to carry little weight, if any, in a case where the claimant’s financial needs cannot be met without recourse to this property.

Section 112 – Division of Assets
 

Section 112 of the Charter requires the court when deciding in what manner the court must exercise its power of division to have regard to all the circumstances of the case, including the following matters: 

Section 112 of the Charter on the division of assets is linked to s 114(1) of the Charter as a code to be adopted when dealing with financial provision. Where the matters are relevant the two sections must be read together to obtain a fair result.

… . But, as already emphasised, the two types of financial provision cannot and should not be kept wholly distinct, and all criteria are, or may be relevant … . (1969 LAW Commissioners Report para 83).

In Doherty v Doherty [1976] Fam 71, this court eschewed technicality when considering the distinction between lump sum and property adjustment orders, Ormrod LJ (whose judgments, as Lord Nicholls commented in White v White [2001] 1 AC 596 at 607 are a valuable source of the jurisprudence of the period) said: (at p 79)

Whether it is right, or not, to accept counsel for the husband’s submission that a clear distinction should be drawn between notices of application for financial provision under s 23 and notices of application for property adjustment orders under s 24, may be doubted. These two sections are, in effect, a statement by Parliament of the code to be adopted by the court in dealing with ancillary relief after divorce generally. The fact that they are two separate sections seems to me to be much more a matter of convenience and drafting than anything else. There is no reason that I can see why any distinction should be drawn between those two classes of relief which the court is now empowered to grant. In my view, these two sections should be, as far as possible, regarded as part and parcel of a single code. It may be very important in many cases when the matter comes to be investigated by the court that the court should be free to make either a property adjustment order or a lump sum order, whichever turns out to be the more convenient in the circumstances. It would be unfortunate, I think, if that degree of elasticity were lost for some technical reason. It is quite plain that the same principles apply in the assessment of claims under each of these two sections. That appears from s 25, and it is equally plain from the judgments in Trippas v Trippas of Lord Denning MR and Scarman LJ. Lump sum orders are alternatives to property adjustment orders, and in many cases one order may prove more convenient than another. I do not think there is any greater difference than that. So, in my judgment, the court should keep technical points of the kind with which we are dealing in this case to an absolute minimum.

It is submitted that a Singapore court too must look upon gifts and inherited property as a ‘circumstance’ under s 112 of the Charter when deciding what is just and equitable. It would not be equitable to ignore the wife’s inheritance of ten houses when determining the division of matrimonial assets which consists of a matrimonial house that is a large bungalow in the husband’s name or 
vice versa.

Equality under Charter
 

The Charter emphasised equality by stating that upon the solemnisation of a marriage under the Charter the husband and wife are required by law to co-operate with each other in:
 

1   safeguarding the interests of the union; and

2   caring and providing for the children.

It is a co-operation of equals. It is left to the parties to decide how they should go about co-operating and safeguarding the union. It is a contribution that the parties are required to make. In so far as caring and providing for the children are concerned it is a contribution the parties must continue to make even after divorce and this is a factor that must be considered when assessing the question of maintenance.

Equality is again emphasised by providing that the husband and wife have the right separately to engage in any trade or profession or in social activities and have equal rights in the running of the matrimonial household (s 46 Cap 353). The principle of equality in the running of the matrimonial household was spelt out in the Charter in 1961 to make it clear, that whatever may have been the position under the personal laws of the Chinese and Indians on marriage, the position of the man and woman in the marriage partnership has changed. There is no better half, only equal halves. Where the wife gives up her right to engage in any trade or profession or in social activities for the welfare of the family she makes a substantial contribution that the courts must not ignore.

Common Law Maintenance under the Charter
 

The Women’s Charter in Part VIII on Maintenance of Wife and Children empowers the subordinate courts to order maintenance to any married woman and her children whose husband neglects or refuses to provide reasonable maintenance consistent with the standard of living the wife is accustomed to. The court in such cases can order the husband to pay a monthly allowance or a lump sum for the maintenance for the mother and children (s 69) and not just for necessities.

The court when ordering maintenance in the common law sense under s 69 must now have regard to all the circumstances of the case and the matters set out in s 69(4). Section 69 was amended in 1996 to benefit the wife by reforming the common law basis for maintenance based on ‘necessities’ by requiring the court to have regard to the factors in s 69(4) set out below. 

The application for maintenance under s 69 is made and heard:
 

1   even when the marriage has not broken down under the provisions of the Criminal Procedure Code (Cap 68); and

2   in quasi criminal proceedings, that is heard in open court.

The contributions of a wife are a factor that must be considered both under s 69 of the Charter and under s 114 of the Charter.

Maintenance in Matrimonial Proceedings
 

The court may order a man to pay maintenance to his wife or former wife during the course of any matrimonial proceedings or when granting or subsequent to the grant of a decree of divorce, judicial separation or nullity of marriage (s 113). In determining the amount of any maintenance to be paid by a man to his wife or former wife, the court must have regard to all the circumstances of the case. The table below shows the measures taken by parliament to give a broader meaning to the word ‘maintenance’ to take it away from its common law roots to, as the minister said, ‘benefit the wife’.

Section 114(1) of the Charter:
 

(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

(c) the standard of living enjoyed by the family before the breakdown of the marriage;
 

(d) the age of each party to the marriage and the duration of the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

(f)  the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family; and

(g) in the case of proceedings for divorce or nullity of marriage, the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage that party will lose the chance of acquiring.

Section 69(4) of the Charter:
 

(a) the financial needs of the wife or child;

(b) the income, earning capacity (if any), property and other financial resources of the wife or child;

(c) any physical or mental disability of the wife or child;

(d) the age of each party to the marriage and the duration of the marriage;

(e) the contributions made by each of the parties to the marriage to the welfare of the family, including any contribution made by looking after the home or caring for the family;

(f)  the standard of living enjoyed by the wife or child before the husband or parent, as the case may be, neglected or refused to provide reasonable maintenance for the wife or child;

(g) in the case of a child, the manner in which he was being, and in which the parties to the marriage expected him to be, educated or trained; and

(h) the conduct of each of the parties to the marriage, if the conduct is such that it would in the opinion of the court be inequitable to disregard it.

Proportionate Not Arithmetic

Some of the problems a court faces when considering division of assets and the payments of maintenance must be touched upon to show that it is not a simple arithmetic exercise.

Gross Assets and Net Assets (s 114(1)(a))

The court’s duty to have regard to the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future must be read together with the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future in s 114(1)(b).

The courts are concerned with net rather than gross assets, but the courts being wise in the ways of men will scrutinise the financial needs, obligations and responsibilities put forward by respondents to reduce net assets or income that is available.

Mortgages, loans and debts in general are deducted but where it can be shown that they have been incurred improperly or in circumstances that suggest that the liabilities were incurred to reduce the net assets the party responsible could end up with a smaller proportion of what is left or be made to pay for the home of the wife and children until it is mortgage free.

In Pasha v Pasha [2001] 2 FCR 185 the district judge’s order took into account his finding that the husband had dissipated and secreted assets. The district judge allowed the husband’s appeal and reduced the wife’s lump sum on the basis that unless an asset or income could be established to exist, it had to be ignored. The Court of Appeal allowed the wife’s appeal and set aside the order of the district judge. Thorpe LJ commenting on the approach taken by the district judge said:

If that were the proper approach in ancillary relief litigation, it would be licence to the unscrupulous respondent, who would only have to act for the purposes of concealment with sufficient skill to be able to defend an attempt 
on the part of the applicant wife to prove the whereabouts of an asset or source of income. It is of fundamental importance that trial judges in this field should be acute to detect chicanery and to be forthright in dealing with it. The judge may find concealment where funds have passed through the respondent’s 
hands without explanation. In appropriate circumstances he may draw adverse inferences.

In White v White where the husband was left with a farm which had not been sold and the wife with a cash sum Lord Nicholls spoke on the desirability of looking at all the assets in cash terms and said: (p 612)

… . Mrs White criticised the use of net values, arrived at after deducting estimates of the courts … to be incurred if the farm were sold. Mr White owns and uses the farm ... . Counsel submitted that the use of all values of this situation should be discontinued. I do not agree … when making a comparison it is important to compare like with like … . A comparison based on net values is fairer than would be a comparison of the White cash award and the gross value of the farm … .

Section 114(1)(a) Resources: Ability to Pay: Illiquidity of Assets
 

In N v N (Financial Provision: Sale of Company) [2001] 2 FLR 69 the husband who was 45 years old had an accounting practice in which there was illiquid capital and other assets which he found to be worth about £1.7 million. The overall value of the parties’ assets was nearly £2.6 million. The wife who was 35 was the mother of three children. The husband’s income from his practice was in excess of £120,000 a year. The court was confronted with the difficulty of achieving a fair result.

Coleridge J after considering the s 25 factors which corresponds to our s 114 considered the question of whether there is any justification for defaulting from the objective of seeking to achieve equality and said:

There is no doubt that had this case been heard before the White decision ... the court would have strained to prevent a disruption of the husband’s business and professional activities business except to the minimum extent necessary to meet the wife’s needs.

However, I think it must now be taken that those old taboos against selling the goose that lays the golden eggs have largely been laid to rest, some would say not before time. Nowadays the goose may well have to go to market for sale, but if it is necessary to sell her it is essential that her condition be such that her egg laying abilities are damaged as little as possible in the process. Otherwise there is a danger that the full value of the goose will not be achieved and the underlying basis of any order will turn out to be flawed.

The husband’s substantial shareholding was sold and his practice was left intact.

Legal Rights
 

Section 114(2) does not require the court when exercising its powers for the assessment of maintenance to have regard to legal rights. The court’s duty when exercising its powers is to place the parties in the financial position in which they would have been if the marriage had not broken down. Section 114 makes reference to the income, earning capacity, property and other financial resources existing at the time when maintenance is assessed and in the foreseeable future.  No reference is made to ‘entitlement’. The principles and guidance given in s 114(1) and the statutory objective set out in s 114(2) make it clear that the legal rights of one or other of the parties to property will not prevent a fair order.

Wrong Practice
 

In Singapore, the words ‘direct’ and ‘indirect’ are loosely used to describe contributions made by the parties instead of dealing with the various factors in s 69(4), s 112 and s 114 to the detriment of the wife. It is a short hand that is adopted to avoid going through the factors in s 114 seriatim.

Contributions – In the Foreseeable Future
 

In Vicaray v Vicaray [1992] 2 FLR 271 CA the Court of Appeal said:

I regret that I am unable to accept [counsel for the husband’s] submission that there is in some way a distinction between those cases in which the wife makes an actual financial contribution to the assets of the family and those in which a contribution is indirect in as much as she supplies the infrastructure and support in the context of which the husband is able to work hard, prosper and accumulate his wealth. I can find no justification in logic or authority in law for making an arbitrary distinction of this kind. Of course the value of the contribution, whether direct or indirect, is one of the factors which are properly to be taken into account when applying s 25 to the exercise of determining what the lump sum should be. In making the comparison, it is for the judge to assess the worth of the wife’s contribution; but this is essentially a matter for him. If he chooses to take account of this in the way which the judge did in this case, this is not a matter in which this court should interfere unless it is shown that the judge erred in some way or was plainly wrong.

The minister put it more shortly when he said the 1996 amendments will benefit women.

In Conran v Conran [2001] 2 FLR 192 241 Marce LJ considered the special problems in the context of the ‘other financial resources’ that are relevant and said:

There are many perplexing situations that may one day require examination. What for example, if the individual spouse who each week invests a small part of his or her spare cash in the National Lottery, and one day win a £1 million or £10 million? Should this asset be viewed like any sudden accretion to the value of the joint home or other matrimonial investment, due to market investments? Or ... more analogous to property bought into a marriage or inherited property? Would it … make any difference, if the other spouse was opposed to all gaming as a whole of money, or if the very limited money expended came from inherited property?

Conclusion
 

The minister’s assurance that the 1996 amendments will in fact benefit rather than put women at a disadvantage is clearly seen by the emphasis placed on the financial needs of the wife and child, the contributions of the parties to the marriage, the expanded meaning given to the word ‘maintenance’ in s 69(4), the financial needs, obligations and responsibilities each of the parties has or is likely to have not just on the date the order is made but in the foreseeable future in s 114(1)(a) and (b). The duty placed on the court to place the parties in the financial position in which they would have been if the marriage had not broken down is an onerous one and is not an arithmetical exercise, because there will always be perplexing situations.

KS Rajah, SC

Harry Elias Partnership

E-mail: ksrajah@harryelias.com.sg