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DISSIPATION OF MATRIMONIAL ASSETS

  What happens when a spouse dissipate assets during a divorce?

DISSIPATION OF MATRIMONIAL ASSETS
DISSIPATION OF MATRIMONIAL ASSETS
When divorces are bitterly fought, there may be allegations that one spouse is deliberately hiding or dissipating assets so that the other spouse will not be able to have a share of those assets.  What actions are available to the spouse who suspects that the other spouse has been less than honest in declaring assets?
  What happens when a spouse dissipate assets during a divorce?

An adverse inference acts to discourage a spouse from dissipating assets so that a just and equitable division can be reached.

  What are some examples of dissipating of assets?

In general, a spouse is said to be dissipating assets if he intentionally acts towards excluding his assets from the pool of matrimonial assets. Some examples include:

  1. Withdrawal of funds and monies;
  2. Transfer of funds or properties to relatives;
  3. Transfer or sale of shares at an undervalue to related persons; and
  4. Hiding and not declaring any assets for division.

The main consideration for the Court in this regard is that a spouse deliberately seeks to exclude their assets from the pool of assets without legitimate reasons.

  What is the impact of an adverse inference?

In NK v NL [2007] SGCA 35, the Court considered two approaches Court to effect an adverse inference. Firstly, if a value can be determined from the evidence adduced, the Court will add that value into the pool of assets for division. In the second approach, the Court may infer a value based on the information available and order a higher proportion of the known assets to be awarded to the other spouse.

Unless the spouse whom the adverse inference is drawn upon shows that the value is unreasonable, the value will be included into the pool of assets. It is also worth noting that the Court eschews the notion of speculation. As a result, the Court is unlikely to apply the second approach unless it is necessary to achieve a just and equitable division of assets.

  What are the requirements for the Court to draw an adverse inference?

The Court in Koh Bee Choo v Choo Chai Huah [2007] SGCA 21 laid down two requirements that must be satisfied for the Court to draw an adverse inference. First, there must be basis in the form of evidence for an adverse inference to be drawn. It must then be shown that the spouse has access to the assets that he is said to be hiding.

The Court’s exercise of drawing an adverse inference on a party is heavily dependent on the evidence in each case. Further to this, the burden of proof vests on the spouse seeking the application of an adverse inference. In this regard, the Court is unlikely to draw an adverse inference if the spouse seeking the application fails to provide evidence. Parties may therefore invite the Court to draw adverse inferences if they are able to provide sufficient evidence.

  What if your spouse is deliberately dissipating assets?

Parties are always advised to make full and frank disclosure in relation to their assets. If you suspect that your spouse is acting to dissipate assets before or during a divorce, an injunction may also be taken out to put a stop to the act.

It is very difficult to get an injunction. You need more than just suspicion - you need solid proof that your spouse is really dissipating assets to defeat your right to division of assets.

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