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DIVISION OF MATRIMONIAL ASSETS IN SHORT MARRIAGES

DIVISION OF MATRIMONIAL ASSETS IN SHORT MARRIAGES

DIVISION OF MATRIMONIAL ASSETS IN SHORT MARRIAGES

What is the general approach of the courts on division of matrimonial assets in short marriages?

Division of matrimonial assets in short marriages - Following the landmark judgment in ANJ v ANK, any court in the determination of the quantum of the division of assets should have recourse to the structured approach developed in that case. However, such an approach failed to achieve justice as it did not lead to an equal division of assets in short marriages. The rationale behind this is that a short marriage will inevitably affect the quantum of the financial fruits of the partnership. Thus, the approach of the courts tended to be to put the parties back in the position they were in prior to the marriage.

DIVISION OF MATRIMONIAL ASSETS IN SHORT MARRIAGES

It can be glimpsed from the case law on division of matrimonial assets in short marriages that more weight will be given to direction contribution (between 70-80%) and less to indirect contribution (between 20% to 30%). This means that if the husband had contributed more towards the direct contributions, and the wife had contributed more towards indirect contributions, the division of matrimonial assets will be in favour of the husband as direct contributions will be given more weight.

Case: ANJ v ANK [2015] SGCA 34

Facts: Duration of Marriage – 9 years, court to adjudicate issues pertaining to the division of matrimonial assets and maintenance.

Held: Suggested a structured approach as opposed to the traditional uplift methodology which was – susceptible to both undervaluation and overvaluation. Undervaluation – if direct contributions used as the prima facie starting point then too much emphasis might be placed on this percentage, and not enough emphasis placed on indirect contributions. Overvaluation – if the court in giving one party an uplift deducted the same percentage points from the other party’s share of direct contributions.

The Structured Approach

Step 1: Ratio representing parties’ direct financial contributions towards the acquisition of matrimonial assets.

Step 2: Ratio representing the parties’ indirect and non-financial contributions.

Step 3: Average of the 2 percentages to derive the overall contribution to the family. This average forms the basis for the division of matrimonial assets.

Step 4: The figure derived in step 3 was non-binding and at this stage, the courts have the power to make adjustments as and when necessary e.g. if parties’ collective direct contributions did not carry the same weight as that of parties’ collective indirect contribution or to take into account the other factors enunciated in s 112 of the WC – para [26] “there will also be 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.

To do so, the court must engage in a non-mathematical balancing exercise to determine the appropriate weight that should be accorded to the parties’ collective indirect contribution as against their collective direct contribution. We stress that the balancing exercise should be non-mathematical in nature, and should instead be based on the court’s sense of what is fair and just. This is fact-sensitive inquiry where context is paramount.

The Courts identified 3 broad categories that should be considered in attributing the appropriate weight towards the parties’ collective direct and indirect contributions:

(i) length of marriage

(ii) size of matrimonial assets

(iii) extent and nature of parties’ indirect contributions (note at para [27(a)] Indirect contributions in general tend to feature more prominently in long marriages (Tan Hwee Lee ([18] supra) at [85]).

Conversely, indirect contributions usually play a de minimis role in short, childless marriages (Ong Boon Huat Samuel vChan Mei Lan Kristine [2007] 2 SLR(R) 729 at [28]).

Case: AZZ V BAA [2016] SGHC 44

Facts: Short marriage of 4.5 years, large asset pool, parties’ had domestic help and more weightage given to direct financial contributions (70%) as opposed to indirect financial contributions (30%)

Held:

At para [163] The factors that could shift the “average ratio” include:

  1. Length of Marriage – more prominent in long marriages, de minimis in short marriages.
  2. Size of Matrimonial Assets – if pool of assets available for division is extraordinarily large and all of that was accrued by one party’s exceptional efforts, direct contributions are likely to command greater weight as against indirect contributions.
  3. Extent and Nature of indirect contributions – in particular the engagement of domestic help naturally reduces the burden of homemaking and caretaking responsibilities and to that extent. The weight accorded to parties’ indirect contributions may be correspondingly reduced.

At para [163] Courts referred to ANJ v ANK and the 3 broad categories in which the ratio of 50:50 is not applicable. The courts held that the ratio for direct contributions to indirect contributions should be 70% : 30% respectively. The reasons for this decision:

(a) this was a relatively short marriage of four and a half years;

(b) the pool of matrimonial assets is large;

(c) the parties kept their finances largely separate throughout the marriage; and

(d) the parties had the help of domestic staff (eg, maids and a driver) which to that extent reduced the weight to be attached to the parties’ indirect contribution.

At para [164] The parties’ average percentage contribution as derived from their direct and indirect contribution in relation to the matrimonial assets is therefore as follows:

 WifeHusbandDirect contributions (weighted at 70%)

36.3%

(25.4%)

63.7%

(44.6%)

Indirect contributions (both financial and non-financial) (weighted at 30%)

55%

(16.5%)

45%

(13.5%)

Average percentage contributions (weighted 70:30)41.9%58.1%
 
Conclusion

It appears from case law that direct contributions will be given more weight in short marriages. However, no two family law cases are alike. You should seek legal advice as to what your division of matrimonial assets is likely to be.

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