4 October 2016

Will a Deed of Separation, usually signed some years ago, be binding when parties finally start their divorce? Those are questions few ask because they just assume the answer to be “Of course!” It is not.

Divorces can be messy and the couple in a recent Court of Appeal (“CA”) case of AUA v ATZ tried to avoid this by entering into a Deed of Separation.  In the end, the CA held that some of the terms in the Deed are in fact not binding.

This is their story.

Ukrainian lady working in Germany and German gentleman working in Singapore met on the Internet and fell in whirlwind love. Married in six months and separated after nineteen, they now live apart in Singapore. They have a daughter.

In 2009, they both hired lawyers to prepare a Deed of Separation. This was signed after five long months of negotiations. In 2012, the wife filed for divorce based on three year separation. Not wanting to abide by the Deed, she said there was undue influence. The husband disagreed but said he too wanted the care and control term for the daughter changed.

The key terms in the Deed are:

1. Matrimonial Assets (all his and discovered to be worth S$6.6m at divorce): Retaining the assets in their respective names, he keeps the matrimonial home but pays the rental for a flat for her and their child till November 2011. Thereafter, she pays rent but he pays a “Divorce Settlement” of S$40K for her contributions towards the marriage.
2. Maintenance: He pays a combined maintenance of S$2.3k to her and the child till November 2011. Thereafter, he pays maintenance solely for their daughter, a sum between S$1.5k-2k and medical insurance coverage.
3. The Child: Joint custody with care and control to her and liberal access to him.

CA decides that the order on division of assets i.e. the S$40k to her remains but maintenance and care and control which are issues affecting the child shall not be binding.

This is what they say:

57. In the case of the division of matrimonial assets (and, to a lesser extent, the maintenance of the child), the substance of the question is one of finances. As the issue is merely one which relates to the ownership of property, or the distribution of the financial burdens of parents inter se, understandably the court would be inclined towards playing a comparatively minor role. However, where the court is concerned with questions of custody and care and control, the subject is not wholly pecuniary but the welfare of a child. A child’s welfare is not something to be bartered or negotiated at the termination of a marriage. Thus, where the court decides on questions of custody and care and control, it always acts to maximise the welfare of the child, which is the “paramount consideration” (s 125(2) of the Charter).

58.     For this reason, while the court is enjoined to have regard to the wishes of the parents and of the child, it is not bound by anything that might be set out in a marital agreement. Indeed, in TQ v TR at [70], this court held that there ought to be a presumption that all agreements (whether prenuptial or postnuptial) relating to the custody or care and control of children are unenforceable unless it is “clearly demonstrated by the party relying on the agreement that the agreement is in the best interests of the child” [emphasis in original]. The reason for this, as the court explained in the same paragraph, is that in the heat of the matrimonial dispute, the interests of the child may unwittingly be relegated to second place. Thus, the court treats the terms of any such agreement with great circumspection and will not give effect to them unless it is satisfied that to do so would be in the best interests of the child. In the circumstances, we approach this matter by considering, as the Judge did, what is in the best interests of the child.

Deeds are thus important as a guide of sorts to decide how the division should proceed. As far as possible, it is only fair and just to stick to a Deed that was freely and advisedly entered into. Nonetheless, if the terms relate to a child or children, then the court will view a child’s welfare to be of paramount importance, and will work towards maximizing it as much as possible. As a result, it is only where the terms of the Deed are in the child’s best interests that the court will give effect to them.

Author Susan Tay,  assisted by Emelia Kwa, ex-intern of OTP Law Corporation and current 3rd year SMU Law Student.

Source http://otp.sg/2016/10/is-a-deed-of-separation-always-foolproof-and-ironclad/