CLS v CLT

• Jurisdiction: Singapore
• Court: High Court Appellate Division (Singapore)
• Judge: Belinda Ang Saw Ean JAD
• Judgment Date: 05 August 2022
• Neutral Citation: [2022] SGHC(A) 29
• Citation: [2022] SGHC(A) 29
• Docket Number: Civil Appeal No 61 of 2021
• Published date: 12 August 2022
• Plaintiff Counsel: Looi Min Yi Stephanie and Jheong Siew Yin (Constellation Law Chambers LLC)
• Defendant Counsel: Chew Wei En and Koh Tien Hua (Harry Elias Partnership LLP)
• Subject Matter: Family Law,Matrimonial assets,Division
• Hearing Date: 28 April 2022

Woo Bih Li JAD (delivering the judgment of the court): Background

This is an appeal by a husband in respect of the decision of a judge of the General Division of the High Court (“the Judge”) on the division of matrimonial assets. The Judge’s main decision was delivered on 24 May 2021. She made consequential orders on 12 August 2021. Her grounds of decision in CLT v CLS and another matter [2021] SGHCF 29 (“HC/GD”) were issued on 13 August 2021. We will refer to the husband and the wife as “H” and “W” respectively.

We begin with the undisputed background facts. The parties were married on 17 September 2001. The marriage lasted 17 years, and the parties have one daughter (“Q”). H has a daughter from a previous relationship. H is 69 years old and retired. Before his retirement, he was a successful businessman. W is a 50-year-old homemaker.

W had commenced divorce proceedings in 2012 and 2017, but those proceedings were withdrawn with the consent of the parties. W filed a third Writ of Divorce on 18 July 2018. Interim Judgment (“IJ”) was granted on 26 February 2019. The ancillary matters were heard on 15 and 18 March 2021 (HC/GD at [3]). As the care and control and access of Q were already subject to a consent order dated 5 July 2019 (HC/GD at [5]), the sole issue before the court below was the division of matrimonial assets.

The decision below

In the proceedings below, the parties filed a joint summary of relevant information (“Joint Summary”), setting out the parties’ position and valuation of the various assets belonging to them. Parties did not dispute that the assets listed in the Joint Summary were matrimonial assets, except for the following assets: 175,000 shares in a family company LB (“the LB shares”); 50,000 shares in a family company J (“the J shares”); and a property at Tanglin Park (“R1”). The present appeal relates to the same three assets as listed here.

The property R1

R1 was valued at $2,920,000 and was purchased by H in May 1994, prior to the marriage. However, as H confirmed that the mortgage was paid off in full in 2004 and that the family had used this property for five years (out of the 17-year marriage), the Judge held that it was a matrimonial asset within the meaning of s 112(10)(a)(i) of the Women’s Charter (Cap 353, 2009 Rev Ed) (“Women’s Charter”) (HC/GD at [12]).

The LB Shares

LB is a company incorporated in 1974 by H’s father. H was appointed a director of LB in 1980. He said that he received 223,400 LB shares from his father and brother prior to his marriage. In 2003, H transferred 148,400 LB shares to various family members (including W). In 2007, 175,000 LB shares were transferred to H from various family members (including W). At the time of the IJ, H held 250,000 LB shares, and it was not disputed that they were worth $8,147,783 (HC/GD at [23]).

In the proceedings below, H argued that the transfers of LB Shares in 2003 were “paper transfers” for the purpose of “tax planning” and the transfers to him in 2007 arose when the purpose ended. He claimed that the excess of 26,600 LB shares which he received in 2007 were from gifts to him. No consideration had in fact been paid for any of the transfers. W relied on the consideration stated in the signed share transfer forms and argued that the transfers in 2003 were transactions made at arms-length. For the same reason, she argued that the 175,000 LB shares acquired by H in 2007 were acquired for consideration. The Judge took into account the signed share transfer forms for the transfers in 2003 and in 2007 and the certificates of stamp duty. She was of the view that as it was stated in these documents that consideration had been paid for each set of transfers in 2003 and in 2007, H had acquired 175,000 LB shares in 2007 during the marriage.Accordingly, the 175,000 LB shares, valued at $5,703,448, were included in the pool of matrimonial assets (HC/GD at [31]).

The J shares

J is a company incorporated in 1972 by H’s father. H was appointed a director of J in 1979, and had acquired 191,600 shares in J (later clarified to be 222,514 J shares) from H’s father and various parties who were the friends or associates of H’s father prior to H’s marriage. H still holds 50,000 J shares. Similar to the LB shares, the number of J shares held by H had varied during the marriage, with various transactions occurring between family members (including W). The transfers were stated to be for the consideration of $1 per J share in the Register of Members and Share Ledger and the Register of Transfers (HC/GD at [32]). Signed share transfer forms for the J shares were not exhibited with any affidavit.

Similar to the LB shares, H claimed that the various transfers from him to various family members in 2003 were made for the purpose of “tax planning” and for no consideration. When the purpose ended, the J shares were transferred to him in 2005 and 2007 by various family members also for no consideration. Any excess shares he received were gifts from family members (HC/GD at [34]). The Judge held that as the Register of Transfers showed that consideration was paid in respect of each of the transfers, H had acquired 175,000 J shares during marriage and held 50,000 J shares at the time of the IJ. As H was unable to discharge the burden of proving that his current holding of 50,000 J shares were traceable to his pre-marital assets, the Judge found that that the remaining 50,000 J shares held by H were matrimonial assets. The 50,000 J shares were valued at $5,408,937 (HC/GD at [37]).

The division of matrimonial assets

On 24 May 2021, the Judge concluded that the pool of matrimonial assets amounted to $53,485,931 (HC/GD at [59]). She divided the assets in the ratio of 30:70 in H’s favour (HC/GD at [78]). The share of W was $16,045,779 (in round figures). As W held $9,410,266 of the assets in her own name, H was to pay W $6,635,513. As parties could not agree on the consequential orders, the Judge made orders on 12 August 2021, ie, that H was to pay W the $6,635,513 as follows: $635,513 within one month from 12 August 2021; $2,000,000 within three months from 12 August 2021; and $4,000,000 within one year from 12 August 2021.

The first two payments have been made by H. H then filed the present appeal on three grounds. First, that the Judge had erred by finding that the 175,000 LB shares and 50,000 J shares owned by H are matrimonial assets (the “Share Issue”). Second, that the Judge had erred by including the entire value of R1 in the matrimonial pool (the “R1 Issue”). Third, that the Judge had erred by dividing the assets in the matrimonial pool in the ratio of 30:70 instead of 20:80 in favour of H (the “Division Issue”).

The Share Issue 175000 LB shares

The details of the shareholding of H in LB and in J and subsequent transfers and re-transfers are set out in H’s Appellant’s Case with a helpful diagram at Annexes A and B thereof, which we attach to this judgment as Annexes 1 and 2.

We first elaborate on the LB shares. According to H, he had received 223,400 LB shares from his father and brother before the marriage as gifts. In 2003, he transferred 148,400 LB shares as follows: 87,500 shares to W; and 60,900 shares to his niece, LHJ.

In 2007, he received $175,000 LB shares from the following persons: 87,500 shares from W; 29,170 shares from LHJ; 29,170 shares from another niece, LWL; and 29,160 shares from the wife of H’s brother (the “Sister-in-law” and the “Brother” respectively).

As can be seen, the end result was that the 87,500 shares transferred by H to W in 2003 were transferred back to him by W in 2007. Additionally, although H transferred 60,900 shares to LHJ in 2003, he received a total of 87,500 shares from LHJ, LWL, and his Sister-in-law (ie, an excess of 26,600 LB shares).

While W had disputed that the LB shares held by H prior to marriage were gifts from H’s brother and father in the hearing below, she accepts that the shares which H originally held were pre-marital assets which are prima facie non-matrimonial assets. W’s case was that the 175,000 LB shares which H received in 2007 were matrimonial assets as they had been acquired by H during the marriage and were no longer traceable to the original shares H had held prior to marriage. H disagreed that they were matrimonial assets as no consideration had in fact been paid by him for the acquisition. His position was that the transfers in 2007 could be traced back to his shares in LB which he received as gifts before the marriage, save for the excess of 26,600 LB shares.

There were signed share transfer forms for each of the transfers in 2003 and in 2007. Each form showed a consideration of $1 for each share. There were certificates of stamp duty for the 2003 transfers as well as certificates of adjudication of stamp duty for the 2007 transfers.

H’s position that no consideration had in fact been paid by any transferee when he transferred the shares in 2003 or by him when he received the shares in 2007 was supported by the explanation of an accountant (“the Accountant”) who had assisted in the tax planning of H and the Brother.

According to the Accountant, who had filed an affidavit, the reason for the transfers in 2003 and in 2007 was as follows. In 2003, dividends were taxable prior to distribution to the shareholders, and if the income tax bracket of the shareholder was below the tax rate imposed on the dividends, the shareholder could claim the difference as a refund from the Inland Revenue Authority of Singapore (“IRAS”). Hence H transferred shares to various relatives in 2003 as those relatives were in a lower income tax bracket. When the law was changed subsequently such that dividends were not taxable, the shares were transferred back to H.

We note that even with the Accountant’s explanation, there was no satisfactory explanation by the Accountant, or H, as to why he received an...