The Split After The Split - Part 1

Article By: PracticeForte Advisory Affiliate Ms. Susan Tay of OTP Law Corporation

This is the first of 2 articles to help explain how our courts distribute matrimonial assets fairly and equitably after a marriage ends. Part 1 focuses on dual income families where both spouses worked during the marriage and contributed financially to the acquisition of their matrimonial assets.

We cannot deal with this subject without dwelling into the 2015 court of appeal case of ANJ v ANK [2015] SGCA 34. In ANJ, the couple who were married for 9 years, both worked and contributed financially toward the acquisitions of their matrimonial assets. They had 2 young children, 12 & 8.

This case seals our apex court’s increasing preference for not looking at contributions by ex-spouses at a purely mathematical level toward each and every category of assets. It formulates what it calls a global assessment method by recognising the couple’s total contributions, both direct (toward purchase price) and indirect (all other contributions including efforts) and then attributes the apportionment to the pool of matrimonial assets without classifying the assets into different categories. Once and for all, the apex court states unequivocally, its rejection of what it calls the “uplift” method commonly used by the lower courts.

What is the “uplift” method?

Contributions used to be assessed this way:  1st, the proportion of the direct financial contributions by each party is determined. This is a very straight forward calculation of how much cash the parties have contributed towards acquisition of matrimonial assets (usually the biggest asset is the matrimonial property).  We give a simple illustration where both husband and wife contributes equally, halving everything down the line i.e. 50:50. Next we have the non-financial contribution. The uplift method happens when the court say, decides to give the wife an extra 5% because of her indirect contributions. The ratio according to this uplift method becomes 55:45 in favour of the wife. The flaw of this method becomes apparent when mathematically, one realises that this actually penalises the husband by 10% because the ratio of 55:45 means the husband suffers a further 5% drop from his 50% entitlement while the wife gains the 5%. The apex court proffers that the correct ratio in our illustration should have been 55:50 and not 55:45.

The global assessment method remedies this by giving a 2nd equation to the formula.  It proposes to deal with contributions this way (using our illustration):

1st Step:
work out the proportion of direct contributions (cash paid directly toward the acquisition of assets) which in our example is 50:50

2nd Step:
work out the proportion of indirect contributions (contributions other than in the 1st step) for example 55:45 in favour of wife

3rd Step:
add the 2 ratios and then half it which will then work out to be 52.5 : 47.5

By using the formula, the court “put financial and non-financial contributions on an equal footing, as opposed to the traditional “uplift” approach that places direct financial contribution as the foremost consideration.” This formula which the court calls the structured approach is aligned with s 112 of the Women’s Charter which does not give pre-eminence to any of the factors enumerated in that section.

However, this structured approach must also accommodate the broad brush approach of balancing certain elements which are just as important.

There are instances where one component necessarily assumes greater importance than the other on the facts and correspondingly greater weight should be attached to that component as against the other. In cases that fall within the latter category, the court should tweak or calibrate the “average ratio” in favour of one party to reflect what would be a just and equitable result in the circumstances of each case”

The court then went on to give 3 such elements:

  • The length of the marriage. Long marriages means indirect contributions in general tend to play a more significant role as opposed to say, a short, childless marriage.
  • The size of the matrimonial assets and its constituents. If a large pool of matrimonial assets is acquired through the extraordinary efforts of 1 party, then direct contributions will be given more weight as against indirect contributions.
  • Extent and nature of indirect contributions as not all indirect contributions are equal. E.g., having a domestic helper may mean that the weight accorded to the parties’ indirect contributions in the homemaking and caregiving are reduced. On the other hand, homemakers who have painstakingly raised children to adulthood, especially where such efforts have entailed significant career sacrifices on their part may be given weightier considerations.

Is this tweaking not already done at the 2nd Step? The author’s view is that ANJreally works for most standard circumstances like the couple’s in ANJ. This tweaking may, in our view be workable if a further step can be implemented to the formula for extraordinary circumstances like very long marriage or large matrimonial assets or exceptional efforts by one spouse. We call this the 4th Step, the non-mathematical tweak for broad brush balance.  In this way, we can also apply this Step 4 to cases where the court wants to draw adverse inference against one party for not being forthright about their disclosures and is suspected to be hiding assets.

Conclusion:

ANJ is the culmination of decades of attempts by the court to come to a just and fair way to distribute assets between ex-spouses who started their married lives without calculating their contributions down to the last cent. In fact, most couples just do not even count their contributions at all. E.g. couples pooled a total sum of S$x, half of which went to buying their home, the other toward a family car.  Some of these assets flourish (like the value of their matrimonial home) and some will continue to depreciate (like the family car). In the global assessment method, it does not matter whose money went where. The pooled assets are then divided according to the ratio (after adjustments) that the courts considered as the respective spouses’ financial and non-financial contributions, tweaked in a non-mathematical balance for the 3 elements and for any adverse inference to be drawn.

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