Dividing assets in a divorce is often contentious
Splitting assets during divorce proceedings are often contentious and a challenge, regardless whether it’s a sum of $5,000 or $50 million. It’s natural that both sides would want to preserve as much of their assets as they can in a fair way. The court typically has final say in this, and there may be unhappiness over the way the assets are divided by the court. This is particularly the case when one party receives a major share of the assets to which the other party has made contributions too.
What goes into the decision?
The outcome when it comes to dividing matrimonial assets lies in part with the information presented to the court and with the lawyer’s advocacy skills. If you are someone looking to divorce and own assets (movable and immovable) acquired during the course of marriage, you will be asked to give facts to your lawyers who must inform the court of your Direct and Indirect Contributions to the assets acquired during the course of marriage, in lengthy affidavits and voluminous exhibits. Section 112 of the Women’s Charter is the Financial Provisions consequent on matrimonial proceedings – the power of court to order division of matrimonial assets.
The court divides matrimonial assets in a way it considers JUST & EQUITABLE
According to Section 112 (1) of the Women’s Charter, the court shall have power to order for the division of matrimonial assets as the court thinks JUST and EQUITABLE. This may sometimes be similar to drawing borders between hostile nations following wars or crisis.
What the court defines JUST and EQUITABLE is important? Just and equitable is not equality. The Women’s Charter does not define or lists down the elements that constitute JUST and EQUITY. It does however, state what the court must consider or look into or deliberate for a JUST and EQUITABLE outcome for both parties.
There are various High Court and Court of Appeal decisions enlightening the public on the issues surrounding the division of matrimonial assets, all of which striving to achieve the goal of fairness, and equity.
Defining matrimonial assets
Section 112(10) of the Women’s Charter defines “matrimonial asset” as any asset acquired during the marriage by either party or both parties to the marriage or any assets acquired before the marriage by either party or both parties to the marriage ordinarily used by both parties or their children as residence, household or for education, recreation, social or aesthetic purposes or which has been substantially improved by other party or by both parties.
Basically, matrimonial home, which means where the parties reside together with their children are divisible although one party may have acquired it before or during the marriage and may have had it under their sole names.
There is one thing that is excluded from the pool of matrimonial assets — A gift or inheritance acquired by one party (not being a matrimonial home) provided it has not been substantially improved during the marriage by the other party or both parties to the marriage.
What will the court consider?
The court will consider the parties’:
- DIRECT and INDIRECT contributions towards acquiring, improving or maintaining the matrimonial assets besides other factors (all given equal weight)
- Needs of the children
- Any pre-marital agreement
- Any period of rent-free occupation enjoyed by one party in the matrimonial home to the exclusion of the other
- Support rendered by one party to the other in running her occupation or business
Direct v. indirect contributions
DIRECT contributions are payments made by either or both parties towards acquisition of assets- for example purchase of flat, INDIRECT contributions are those made by either or both parties towards running the household, maintaining the properties.
This is further divided into INDIRECT non-financial contributions and INDIRECT financial contributions. The former is mainly for those who have been full time housewives/househusbands from the beginning of the marriage or when either of them sacrificed their careers for the welfare of the family and the children. Nothing is compensable in situations like these but the court works harder and throw in equitable/just share as a reward.
Lengthy marriages can be a challenge to lawyers and judiciary
Lengthy marriages of 15 years plus are the challenges to the lawyers and judiciary because it comes with various combinations – childless marriages, full-time working couples, full-time housewife, full-time househusband etc. Each and every marriage is a planet on its own with hues and shades.
The maths behind the division of matrimonial assets evolved through various cases and appeals. To call it a math begs forgiveness as life is much more complex than that. The algorithms followed by courts to arrive at fairness, justness, equity paved way to various patterns all of which were strenuous efforts on the part of the Bar and Bench to achieve the impossible, which eventually settled in the Court of Appeal decision –ANJ v ANK.
The court has ruled out the “up-lift” methodology because it does not sufficiently account for indirect contributions
This decision did not want to follow the “up-lift” methodology of division of assets, where the starting point was given for parties who made direct contributions which left little room for parties who made indirect contributions during the marriage. The court observed that this will lead to under valuation.
The court was also cautious about over evaluation where the parties making indirect contributions were given the up-lift (extra percentage of assets) which tend to become unfair for the parties who made the direct contributions (actual payments) towards the assets. On the whole, the court ruled out the “up-lift” methodology of division of assets.
The “broad bush” approach is most suitable now which balances direct and indirect contributions to the marriage
The current approach pursuant to ANJ v ANK is Structured Approach whereby the court thought that applying “broad brush” approach will be the most suitable. This depends on the length of marriage, children, extent of assets and nature of contributions.
The court took an average of each party’s actual contributions (monetary terms) towards the assets vis a vis each party’s indirect contributions and arrived at an average ratio to achieve the just and equitable outcome as envisaged by the Women’s Charter. In this manner, both parties’ direct and indirect contributions were given equal weight. This was of course achieved in all the previous decisions and cases where contributions (direct and indirect) which are the major determining factors for division of assets, were weighed, evaluated and determined but there was a mathematical formula in the determination of it which may have undervalued direct or the indirect contributor.
The indirect contributions can take various forms, depending on the families and the histories behind the marriage and divorce. With the structured approach both parties indirect contributions are duly weighed and analysed before allocating a percentage. The percentages are not found in the Women’s Charter but have been set out in the precedent cases that were fought in higher courts.
The way the court divides matrimonial assets will continue to change and evolve
Will there be changes to this current methodology of division? Yes, only time will tell. Each and every case demands attention and screams for justice. This reminds me of the fact that humans are evolving species, every day is one step towards the higher goal or a superior energy, surrounded by harsh realities of materialism, which the humans must surmount.
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This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte. Ltd. accepts or assumes responsibility, or has any liability, to any person in respect of this article.