Lian Hwee Choo, Phebe v Tan Seng Ong

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 03 July 2013
• Neutral Citation: [2013] SGCA 37
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal No 136 of 2012
• Published date: 09 July 2013
• Year: 2013
• Hearing Date: 02 May 2013
• Plaintiff Counsel: Narayanan Sreenivasan S.C., Stuart Andrew Palmer and Judy Ang Pei Xia (Straits Law Practice LLC)
• Defendant Counsel: Lim Kheng Yan Molly S.C., Koh Sunanda Swee Hiong, and Lim Rui Cong Roy (Wong Tan & Molly Lim LLC)
• Subject Matter: FAMILY LAW,Husband and wife,Agreements between
• Citation: [2013] SGCA 37

Judith Prakash J (delivering the judgment of the court): Introduction

The appellant and respondent in this appeal were formerly wife and husband respectively. In the course of the ancillary matters consequent upon their divorce, a preliminary question arose. This was determined by the Judge dealing with the ancillary matters (“the Judge”) after the parties were cross-examined on their affidavits. The determination led to the sole issue in this appeal, namely, whether the parties had come to an agreement on the matrimonial assets that could be categorised as one “made in contemplation of divorce” within the meaning of s 112(2)(e) of the Women’s Charter (Cap 353, 2009 Rev Ed) (“the Charter”).

At first instance, the Judge essentially held that such an agreement could be implied from all the relevant circumstances. The wife appealed against this determination. We allowed the appeal and held that there was no such agreement. We now set out the detailed grounds for our decision.

Facts Procedural history

The parties married in August 1974, and have four adult children. Three of the children were born before 1985. In December 2010, the wife commenced divorce proceedings. In April 2011, the husband consented to interim judgment on the basis that the parties had lived apart for a continuous period of at least three years immediately preceding the filing of the writ of divorce.

In October 2011, the wife filed and served a request for discovery and interrogatories on the husband, in which she asked for the audited reports and lists of assets of companies which the husband had an interest in. The husband refused to accede to the request on the ground that the parties had agreed in 1985 to divide their matrimonial assets and cease community of assets, with both parties thereafter having no claim to future assets acquired by the other during marriage (“the Agreement”). This was the first time that the husband had alleged the existence of the Agreement. The husband then made a similar request for information relating to the wife’s companies. His request was denied on the basis that the companies concerned were not matrimonial assets.

Subsequently, the husband filed a summons for the determination of the preliminary issue of whether the Agreement had indeed been made in 1985.

Background facts

By November 1985 when the Agreement was allegedly made, the parties had already engaged in a number of property transactions. At that time, the husband was working full-time with the Public Utilities Board (“the PUB”) whilst the wife was a housewife, but they worked together to purchase and re-sell real estate.

In 1980, the parties entered into their biggest transaction. This was the purchase of a plot of land at Jalan Pasir Ria (“the Jalan Pasir Ria Land”). The transaction was carried out in the wife’s name because the husband’s employment with the PUB made it less convenient for the transaction to be carried out in his name. In November 1982, they sold the Jalan Pasir Ria Land for a profit of $4.018m. The husband and the wife were entitled to half of the profits each, but they deposited their respective shares into a joint bank account.

In 1982, the parties became joint owners of a Housing and Development Board flat. Due to regulations extant then, the parties were not allowed to purchase private property in their own names thereafter. Thus, when they subsequently went on to purchase several other private properties using profits from the sale of the Jalan Pasir Ria Land, they placed the same in the names of the wife’s mother and sister to be held on trust for them (“the Properties”). The parties also acquired a property in London which was placed in the wife’s name alone.

In January 1984, the Inland Revenue Authority of Singapore enquired into the sale of the Jalan Pasir Ria Land. As the Jalan Pasir Ria Land was held in the wife’s name, she would have been fully liable for income tax at a rate of approximately 33.3% (ie, about $1m) if the profits earned on the re-sale were found to be liable to be taxed as income. The wife alleged that she received no assurances from the husband that he would contribute his share of the tax and that there had been substantial withdrawals from the funds in the joint bank account. She was therefore concerned about her ability to pay any outstanding taxes.

At around the same time, the wife discovered that the husband was involved in an affair. In anger, she unilaterally cancelled a line of credit which the parties had obtained. This cancellation had a detrimental effect on the cash flow of the husband’s property development business. In early November 1985, the wife left the matrimonial home with their three children, then aged nine, seven and one, with the intention of relocating to London.

The husband immediately engaged solicitors from Shook Lin & Bok (“Shook Lin”) and on 13 November 1985 successfully obtained an injunction preventing the wife from leaving Singapore with the three children. The husband also lodged caveats against the Properties. In turn, the wife engaged solicitors from Harold Seet & Co (“Harold Seet”). The parties, and their respective solicitors, met at Harold Seet’s office on 19 November 1985 in an attempt to resolve the impasse (“the 19 November Meeting”). The husband wanted the Properties transferred to him immediately and he was also very concerned with the welfare of the three children.

Subsequently, Shook Lin hand-delivered a letter dated 22 November 1985 to Harold Seet (“the 22 November Letter”). The contents of this letter were directly pertinent to the appeal and the letter is discussed in further detail below (see [31], [32] and [41] below). On 23 November 1985, the wife returned to the matrimonial home with the three children and the parties resumed cohabitation. Meanwhile, the parties, through their solicitors, continued to have discussions regarding the transfer of the Properties and the income tax liabilities. In July 1986, the parties’ relationship broke down again when the wife left. However, she returned subsequently and the parties then continued living together for more than 20 years.

The issues relating to the transfer of the Properties and the income tax liabilities were finally resolved in February or March 1987. Three properties in Singapore were transferred to the husband whilst the wife retained cash in an English account and an apartment in Pepys Hill. It was not disputed that the couple, despite their apparent reconciliation, had thereafter conducted their financial affairs separately. The husband and wife operated their respective property development businesses independently of each other, and did not pool their assets. The only exception was a joint venture regarding the redevelopment of one plot of land, in which each party was entitled to half of the profits. In 1991, the parties had their fourth and youngest child.

The decision below

In his grounds of decision (cited at [2012] SGHC 255) (“the GD”), the Judge first noted that there was no signed agreement between the parties setting out all the terms of the Agreement (at [49] of the GD). He then cited Cooperative Centrale Raiffeisen-Boerenleenbank BA (trading as Rabobank International), Singapore Branch v Motorola Electronics Pte Ltd [2011] 2 SLR 63 (“Raiffeisen”) for the proposition that an agreement could nevertheless still be implied from a course of conduct or dealings between the parties or from correspondence or from all relevant circumstances (ibid.).

The Judge found that the negotiations between the parties “bore the hallmarks of a couple contemplating the possibility of divorce in the future” (at [51] of the GD) because: The wife had left in a fit of anger at discovering the husband’s infidelity, rather than because of concern over the tax liabilities (at [50] of the GD); Despite the Properties taking centre stage, there were also discussions about access to the children and a personal allowance for the wife (at [51] of the GD); The negotiations were not made in a spirit of reconciliation and renewal of vows; they transformed the marital relationship into a business-like relationship (ibid.); The transfers of the Properties were final, and were done neither for love nor for tax planning purposes (ibid.); After the transfers, the parties took care of their respective assets. They made their own capital and maintenance-related payments, and had unilateral control over rental and sale. This was despite the fact that three of their units were in the same condominium (at [52] of the GD); The husband had to offer for sale a half-share of the matrimonial home to the wife. The wife had also offered a half-share in another property to the husband. The parties were dealing with their own business affairs (and tax matters) without the need for consent from the other party (at [53] of the GD); The wife’s conduct during discovery also underscored the parties’ understanding that there was to be no more community of assets. She had claimed that certain companies that were set up and run as businesses during the subsistence of the marriage were not matrimonial assets (at [54] of the GD).

Our decision The law

Section 112 of the Charter governs the division of matrimonial assets. It deals, amongst other things, with agreements for the division of these assets. The material portions of this statutory provision are reproduced below:

Power of court to order division of matrimonial assets

112. — (1) The court shall have power, when granting or subsequent to the grant of a judgment of divorce, judicial separation or nullity of marriage, to order the division between the parties of any matrimonial asset or the sale of any such asset and the division between the parties of the proceeds of the sale of any such asset in such proportions as the court thinks just and equitable.

(2) It shall be the duty of the court in...