Property Legal Brief: Division of Properties Upon Divorce

PropNex is a firm believer and Champion of financial literacy, and whilst one accumulates asset through property, having knowledge of legal issues and pitfalls concerning property matters will help protect and preserve them.

An earlier article in this column touched on HDB flat inheritance, and why the manner of holding is crucial for married couples who wished for their surviving spouse to have a roof over their heads. This article will analyse three cases where parties in divorce proceedings compete for higher shares in the division of assets, and one case involving a non-party. Let’s read on to glean some key lessons from these cases and to avoid falling into the same situations ourselves.

CASE 1 :

In the first case, the District Court in deciding the division of assets, excluded the wife’s contribution of $36,672 towards the renovation of the flat because “the renovation was a basic one which did not significantly alter the property.”

The wife appealed, and the High Court allowed the appeal because (a) the wife had proven her contribution of $36,672 in the lower court and (b) it “would not be just and equitable for the Court to ignore to [sic] sizeable sums of monies expended to improve matrimonial assets.” The flat was purchased at $370,000.

It is clear that the Court will readily consider monetary contribution which can be proved, but whether the contribution will ultimately be included in the division of assets appears to be subject to an assessment of whether the alteration or amount spent constitutes significant renovation, or amounts to a “sizable” contribution.

CASE 2 :

In the second case, the Court was called upon in a divorce proceeding to decide the division of assets which included a matrimonial home and a condo.

For the matrimonial home, the first contention was the cash gift of $500,000 from the husband’s mother for the purchase of the home. The husband contended that the $500,000 was a gift solely to him and should therefore count wholly towards his direct contribution.

The High Court held that without “clear and convincing evidence showing otherwise, a gift to a married couple should be treated as a gift to both parties. This flows from the union of the marriage and the view of marriage as a co-equal partnership.”

CASE 3 :

In another divorce case, the husband’s father joined the fray by applying to Court for the return of close to $750,000 worth of matrimonial assets of a divorcing couple to him. The father’s claim consists of the sales proceeds of two properties and monies from his then late-wife which he claimed to have been given to his son to be held on trust for him.

The High Court held that under the Civil Law Act, a person claiming a beneficial interest in a property must produce documents to prove the same. Because the father failed to do so, his claim for the sale proceeds failed

Take-aways from the three cases

It is not uncommon for newly-weds to renovate their homes. With the legal burden of proving payment of renovation costs and that it is sizeable or brings about significant alteration, a claimant would fail in his or her claim unless these points are established.

It is also not uncommon for parents to give marriage gifts to newly-weds. With the “presumption” of sharing for marriage gifts, what must parents do should they desire for (a) their child to own a property gifted by them or (b) for their child to be entitled to 100% of the monetary contribution they have made towards a property purchase (as opposed to the sum being shared with the spouse)?

How about the division of assets in a scenario like CASE 3 where assets were given by one party to the other to be held on trust? Pre-nuptial agreements (PNA) can and have already been widely used as a “contract” setting out clearly the ownership of property (or share thereof) of the husband and wife in the marriage. In the event of divorce, the PNA will be given effect by the Court in the division of assets; but will the PNA be “enforced” to the word?

This question brings us to CASE 4.

CASE 4 :
In the final case highlighted in this article, a couple who were married for almost 16 years, filed for divorce. Five days before their marriage, a PNA was executed to specifically exclude inheritances from the pool of matrimonial assets in the event of division of assets (“Excluded Assets”). The Court of Appeal held that the intentions of the parties vis a vis the Excluded Assets could transform them into matrimonial assets liable for division among the parties.

The husband had listed some of the Excluded Assets as “Our Net Worth” when communicating with his wife, deposited part of the Excluded Assets in joint accounts with his wife, and used them for the benefit of the family. Those actions showed an inconsistent intention for the Excluded Assets to be excluded from the division of assets. In other words, those Excluded Assets lost their character as a gift or inheritance, and became instead, matrimonial assets liable for division in a divorce.

Conclusion
Useful lessons can be gleaned from the four cases: 1st, contributions must be proved before it can be included in the division of assets; 2nd, a gift to a married couple is to be treated as a gift to both the husband and wife unless there is clear evidence otherwise by the giver; 3rd, beneficial interest in a property must be properly documented to support a valid claim; and 4th, PNAs may lose its meaning and effect if parties act inconsistently when dealing with the assets in the PNA.

There are other useful lessons and information from the four cases which are not discussed in this article, but the key learning here is again, when in doubt, consult, and consult a relevant professional.

About the writer
Heng Eam serves as Assistant Director of Legal and Compliance at PropNex Limited. Having joined the company since March 2021, he provides legal counsel and training for agents and employees. A lawyer by training, he was called to the Malaysian Bar in 2005. From 2007, he practiced law in Singapore for several years before being called to the Singapore Bar in 2014. He then served as legal counsel for in another major real estate agency, from 2015 up till 2021. Besides his specialisation in litigation, he also provides legal counsel for corporate regulatory issues such as the Personal Data Protection Act (PDPA), as well as advises clients on employment, property and landlord and tenant disputes.

________________________

WGW v WGX [2023] SGHCF 5
WGJ v WGI [2023] SGHCF 11
LAU YAW BEN v LAU WEE HION & Anor [2022] SGHC 130
CLC and CLB [2023] SGCA 10