USB v USA and another appeal

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 12 June 2020
• Neutral Citation: [2020] SGCA 57
• Docket Number: Civil Appeal Nos 39 and 40 of 2019
• Date: 12 June 2020
• Published date: 18 June 2020
• Plaintiff Counsel: Chong Siew Nyuk Josephine, Yeo Fang Ying, Esther and Navin Kangatharan (Josephine Chong LLC)
• Defendant Counsel: Koh Tien Hua, Chew Wei En and Carrie Gill (Eversheds Harry Elias LLP),Professor Leong Wai Kum (Faculty of Law, National University of Singapore) and Professor Chan Wing Cheong (School of Law, Singapore Management University) as amici curiae.
• Court: Court of Appeal (Singapore)
• Hearing Date: 23 January 2020
• Subject Matter: Family Law,Division,Matrimonial assets

Judith Prakash JA (delivering the judgment of the court):

This case involves a pair of cross-appeals against the decision of the High Court judge (“the Judge”) in relation to the division of matrimonial assets in USA v USB [2019] SGHCF 5 (“GD”). This was a short marriage of five and a half years but it was preceded by a long period of cohabitation between the parties. This judgment is an opportunity to clarify the law relating to the identification of matrimonial assets and the application of the structured approach set out in ANJ v ANK [2015] 4 SLR 1043 (“ANJ v ANK”).

Background

The Husband and the Wife were married on 23 February 2011 and interim judgment of divorce was granted on 16 August 2016 (“the IJ date”). Prior to the marriage, they had cohabited for about 12 years. Although the Wife did not bear any children during the marriage, her two children from her earlier marriage lived with the couple from the time they began cohabiting, some 12 years before the date of the marriage.

The Husband is a lawyer and the Wife is a senior marketing director in a major real estate agency. There is no dispute that the Wife is the more financially astute spouse as she has made very successful real estate investment decisions. As at the IJ date, she owned 17 properties, some of which were held through companies in which she was the sole shareholder. The Husband, on the other hand, had not been doing well for some time prior to the IJ date. The assets within the pool of matrimonial assets were largely a result of the Wife’s successful financial planning.

The decision below

Before the Judge, it was common ground that eight of the 17 properties owned by the Wife must be classified as matrimonial assets. Of these eight, seven were purchased during the marriage and the eighth, though purchased before the parties married, was used as the matrimonial home. The parties, however, disagreed over whether the following assets should be included in the pool of matrimonial assets (“the Disputed Properties”): the Bedok North Property; Telok Blangah Property A; Telok Blangah Property B; the Compassvale Property; the Marina Boulevard Property; Robertson Quay Property A; Robertson Quay Property B; the Woodleigh Property; and the Leedon Property.

It was agreed that the Disputed Properties were purchased (but not fully paid for) before the marriage on 23 February 2011. The Judge decided that notwithstanding this, part of the value of each of the Disputed Properties should be included in the pool. This was on the basis that the “acquisition” of an asset under s 112(10) of the Women’s Charter (Cap 353, 2009 Rev Ed) (“the Charter”) refers not only to their “purchase”, but also includes the continuing process of payment through repayment of a mortgage (GD at [15]). We refer to the value so added to the pool in respect of such assets as their matrimonial pool value or “MP value” for short. As a result of a lack of evidence as to the precise sums paid during the marriage, the Judge applied different methods to determine the MP values of the Disputed Properties. We describe them below to the extent that they are relevant to the appeals before us.

For Telok Blangah Property A, Telok Blangah Property B and Robertson Quay Property A, to obtain the respective MP values, the Judge applied the formula , where x = amount paid towards the acquisition of each property during the marriage (ie, between the date of the marriage and the IJ Date); y = total amount paid towards acquisition of each property as at the date of the ancillary matters hearing (“AM date”); and N = net value of the property (ie, market value less outstanding liabilities) as at the AM date (GD at [72]).

For the Leedon Property, the Judge observed that there was no information provided on the total outstanding liabilities on the property as at the date of the marriage (GD at [74]). However, there was evidence that the Wife had taken out a housing loan of $632,280 for the property around November 2011, ie, during the marriage. Given the lack of evidence showing how much the Wife had paid upfront for the Leedon Property, the Judge assumed that the remainder of the purchase price, apart from the loan of $632,280, had been paid before the marriage. This amounted to $31,843.61.

With respect to Robertson Quay Property B, the Judge found that it was not possible to determine the total amount applied during marriage by deducting the outstanding liabilities as of the AM Date from the original purchase price. This was because fresh liabilities had been incurred against the property after the IJ date. Hence, the Judge took the absolute amount which was paid towards the acquisition of the property during the marriage, namely, $53,439.16, the sum of the mortgage instalments, and added this as a “notional sum” into the pool (GD at [79]).

Parties agreed that the matrimonial home, the Sunrise Close Property, should be included in the pool (GD at [11] and [44]). As regards two loans taken out by the Wife in relation to the property, the Judge held that these were not fresh liabilities undertaken in anticipation of the divorce, but that they had been incurred several years before the end of the marriage (GD at [115] and [118]). Thus, the Judge refused to draw an adverse inference against the Wife (GD at [118]).

Having ascertained how much of the values of the Disputed Properties should be included in the matrimonial pool, the Judge valued the total pool at $9,626,759.63 (GD at [85]). Applying the framework set out in ANJ v ANK, the Judge found that the ratio was 5:95 and 25:75 (in favour of the Wife) for the direct and indirect contributions respectively between the parties. In determining the indirect contribution ratio, the Judge took into account the parties’ contributions during the 12 years of cohabitation prior to the marriage. In this regard, the Judge endorsed the view in JAF v JAE [2016] 3 SLR 717 (“JAF v JAE”) that pre-marital contributions may be a relevant factor in division (GD at [92]). Applying a 70% weightage to the direct contributions, the Judge found the overall ratio to be 11:89 in favour of the Wife.

In the proceedings below, both the Husband and the Wife urged the court to draw an adverse inference against the other spouse, but the Judge declined to draw one. Although he found that both parties had failed to provide full and frank disclosure, he also found that there was no substratum of evidence to establish a prima facie case against either party (GD at [116] and [117]). Furthermore, he had already included in the pool funds belonging to the Husband that had not been disclosed previously and the sale proceeds of the Wife’s properties.

Parties’ cases

In this appeal, the Husband challenges the Judge’s method of calculating the MP values of the Disputed Properties. In brief, the Husband’s position is that the Judge ought to have included the entire net value of each of the Disputed Properties, instead of merely including the sums that were applied to their acquisition during the marriage. He submits that the Wife treated all her properties as a single “investment portfolio”, borrowing against one property to finance another without any consideration of whether the properties were purchased before or after the marriage. Thus, the true value of the matrimonial properties would be reduced when they were used to refinance pre-marriage properties. Relatedly, this means that the values of the pre-marriage properties would correspondingly increase. As the Wife did not adduce evidence to explain how the loans against the matrimonial properties were used, an adverse inference should be drawn against her and the entire value of each of the Disputed Properties should be included.

The Husband also submits that it is incongruous to take into account the parties’ contributions during the period of cohabitation for the purpose of determining the ratio of division whilst disregarding these same contributions for the purpose of identifying the pool of matrimonial assets. Further, the Husband contends that the Judge used an incorrect method to calculate the values of Robertson Quay Property B and the Leedon Property.

The Husband further argues that the Judge erred in rating his indirect contributions at 25%. In this regard, the Judge failed to take into account, inter alia, the financial component of his direct contributions and his care of the two children during the cohabitation period. Furthermore, the Husband contends that the Judge was wrong to have assigned greater weight to the parties’ direct contributions. According to the Husband, the direct and indirect contributions should be given equal weight or the weightage should be, at most, 60:40 in favour of the parties’ direct contributions.

For her part, the Wife contends that the Judge erred by taking into account any portion of the values of the Disputed Properties. As the Disputed Properties were purchased before the marriage, they do not in any way constitute matrimonial assets. The Wife also disagrees with the ratio of division arrived at by the Judge. In particular, the Wife asserts that the Judge ought not to have taken the pre-marital contributions into account in determining the ratio of division. The correct indirect contribution ratio should thus be 15:85 in her favour, with direct contributions given a 90% weightage. As for financial contributions, the Wife submits that the Judge should have used the present valuation of the matrimonial assets in order to determine their ratio, as opposed to the parties’ historic contributions. This would produce a ratio of 2.61:97.39 in her favour.

Issues

The issues arising in these appeals relate to: (a) the identification of the assets in the matrimonial pool; (b) the appropriate method to determine the ratio of division; and (c) whether an adverse inference ought to be drawn against the parties.

The law on...