MATRIMONIAL ASSETS AND THE 3rd PARTY— TO START A NEW FIGHT, TO JOIN IN THE FRAY, TO SPEAK FROM THE SIDELINES, OR TO LIVE IN BLISSFUL IGNORANCE…

• Author: LIM HUI MIN
• Published date: 01 December 2003
• Citation: (2003) 15 SAcLJ 219
• Date: 01 December 2003

An analysis of the jurisdictional and procedural issues which arise when the matrimonial assets to be divided by the court in the ancillary matters proceedings subsequent to a divorce involve 3rd party interests, or potential 3rd party interests.1

1 Introduction

1 A newly married couple will usually set up a home together. In the course of their married life, they may buy a car, do renovations to their house, and make investments in the stock market. They may take loans to do these things, either from their friends and relatives, or from a financial institution or company. Together, or separately, they may set up bank accounts, companies, and business ventures with their friends, family members or business acquaintances. No man is an island,2 particularly for the socially and economically successful. The husband and wife could be connected to many other people, not just emotionally and socially, but economically. The husband, when fulfilling his role as a son, nephew, friend, employee, boss, business partner, and so on, may be involved in significant financial transactions, commitments and obligations. The same would be true for the wife.

2 When the marriage breaks down and the couple get divorced, the court then has the task of dividing the matrimonial assets between the couple (“the ancillary matters”). In the course of doing this, the court may find itself faced with the prospect of dealing with, and deciding on, the interests and concerns of all the third parties—i.e. all those family members, friends, business acquaintances and creditors of the divorcing couple who have economic connections with either or both of them—in

the form of joint investments, friendly or commercial loans, monies kept in a bank account, shareholdings in a company, a piece of property, and so on.

3 For example, the father of the husband may claim that the car which his son is driving is actually his, and not a matrimonial asset which should be divided by the court.3 The husband may claim that half the monies in a particular bank account in both his and his business partner’s names belong to his business partner, while his wife contends that the entire contents of that bank account actually belong to the husband.4 The wife may claim that all the shares in a particular company which are in the names of the husband’s mistress and his two illegitimate children with her actually belong to the husband.5 The husband’s mother may claim that she lent a sum of money to the husband and wife to purchase their matrimonial home, while the wife asserts that this sum was a gift to herself and her husband, and not a loan.6

4 For the purposes of this article, the person, aside from the divorcing couple (who shall be termed “the husband and wife”), who:

1. (i) claims (or on whose behalf it is claimed by the husband and/or the wife that) an interest in an asset which is claimed by either or both the husband and wife to be a matrimonial asset; and/or

2. (ii) claims (or on whose behalf it is claimed by the husband and/or the wife) to have loaned monies to either or both the husband and wife, which he expects to be returned to him at some point in the future

shall be known as the “3^rd party”.

The term “3^rd party issues” shall be used to refer to the issues set out in paragraphs 4 (i) and (ii) above.

5 Numerous jurisdictional and procedural questions arise in relation to the 3^rd party and 3^rd party issues:

1. (i) Does the court dealing with the ancillary matters also have the jurisdiction to deal with the 3^rd party issues?

2. (ii) Even if the court had such jurisdiction, can the 3^rd party nonetheless choose to start his own proceedings in respect of the 3^rd party issues in an ordinary civil court? Should such proceedings be heard together with the ancillary matters proceedings?

3. (iii) Alternatively, is the 3^rd party allowed to intervene in the ancillary matters proceedings? If so, how does he go about doing this?

4. (iv) What will happen if the 3^rd party does not intervene in the ancillary matters proceedings?

5. (v) If the 3^rd party does intervene in the ancillary matters proceedings, what procedure should be adopted at the hearing? (i.e. open court hearing with cross-examination of all witnesses, or chambers hearing without cross-examination as of right)

6. (vi) What effect does (a) the Supreme Court of Judicature (Transfer of Matrimonial, Divorce and Guardianship of Infants Proceedings to District Court) Order (“the Transfer Order”) (which, inter alia, gave the District Court the jurisdiction to hear and determine any proceedings under Part X of the Women’s Charter, regardless of the monetary amount involved, in respect of divorce petitions filed on or after 1 April 1996) and (b) the Supreme Court of Judicature (Transfer of Matrimonial, Divorce and Guardianship of Infants Proceedings to District Court) Order 2003 (“the Second Transfer Order”)7 (which, inter alia, gives

1. the District Court the jurisdiction to hear and determine any proceedings under Part X of the Women’s Charter, save for contested applications for the division of matrimonial assets where the gross value of the matrimonial assets are asserted by any party to the proceedings to be worth S$1.5 million or above, in respect of divorce petitions filed on or after 15 December 2003) have in relation to all the above questions, if any?

6 This article organises and categorises the questions set out above, in order to provide a framework which can be used to analyse any situation in which 3^rd party issues arise. It will also put forward the author’s views on how these questions should be answered, and illustrates these with examples of how the Singapore, English and Malaysian courts have answered such questions in the past.

2 Jurisdiction of court hearing ancillary matters to hear the 3^rd party issue

7 Under Section 112(1) of the Women’s Charter (Cap. 353),8 the court has the power 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.

8 Does this section give the court dealing with the issue of the division of the matrimonial assets the jurisdiction to also deal with 3^rd party issues, or must a separate civil suit be taken out to deal with the 3^rd party issues?

9 Note: This question is discussed in section 2.1 on the basis that the civil suit to be taken out in respect of the 3^rd party issues is to be taken out in a court of the same jurisdiction as the court dealing with the ancillary matters—i.e. either both the civil suit and the ancillary matters would be heard in the High Court or both the civil suit and the ancillary matters would be heard in the District Court. The particular jurisdictional issues which would arise if the civil suit is taken out in the High Court, but the ancillary matters are being heard in the District Court will be discussed in section 2.2. For the purposes of this article, the term “Family Court” will be used to refer to the District Court which deals with the ancillary matters.

2.1 Must a separate civil suit be taken out to deal with the 3rd party issues?

2.1.1 Yes—Court dealing with ancillary matters has no jurisdiction to deal with 3^rd party issue

10 One view is that 3^rd party issues should not be dealt with by the Family Court, as Section 112 appears only to refer to the parties to the divorce proceedings (i.e. the husband and wife). On this view, a civil suit should be taken out to resolve the 3^rd party issues, and, if necessary, the ancillary matters should be adjourned to await the outcome of the civil suit. This approach was taken by the parties in the case of Liu Ah Moy@Liu Ah Lin (m.w.) v Lim Seck Yeow and Another.9 In this case, the husband acquired a property in the names of himself and his mistress during the course of the marriage, which property was subsequently sold. The wife filed a divorce petition in the Family Court on 15 April 1999, and a decree nisi was granted on 18 August 2000, with the ancillary matters being adjourned to chambers. The wife then filed an originating summons in the High Court on 20 April 2001 seeking a declaration that the husband’s mistress held her half share of the said property in trust for the husband and that the husband’s mistress’ share of the sale proceeds

of the said property constituted part of the matrimonial assets subject to division in the pending matrimonial proceedings (the 3^rd party issue). When the originating summons came up for hearing, the High Court held that half of the sale proceeds of the property should be released to the husband’s mistress, and that the other half (amounting to $ 1,072,511.69) belonged to the husband and formed part of the matrimonial assets. This sum was to be held by stakeholders until the final disposal of the matrimonial proceedings. The Family Court then proceeded to deal with the division of the matrimonial assets (final orders being made on 31 May 2002), giving the wife, inter alia, a 25% share of the husband’s half-share in the sale proceeds, i.e. the $1,072,511.69. It should be noted, however, that there was no pronouncement by the Family Court that the Family Court would have had no jurisdiction to deal with the 3^rd party issue.10 Only the order in respect of maintenance was appealed (and which was varied by the High Court). No comment was made by the High Court at the appeal regarding the Family Court’s jurisdiction (or the lack thereof) to deal with the 3^rd party issue.

11 In the case of Yu Wei Shin v Yong Kim Ying (m.w.),11 the husband claimed that certain properties were held by the respondent’s wife’s brothers on trust, or partially on trust, for him. The wife disputed this. The court hearing the ancillary matters (the Family Court) did not deal with this issue, stating that until there was a determination of the parties’...