Division of matrimonial Assets pursuant to a divorce – Are the approaches in ANJ v ANK and TNL v TNK sufficiently comprehensive to address the division of matrimonial assets?

The division of matrimonial assets in a divorce has traditional been decided and based upon:

(i) direct financial contributions of parties (i.e. monetary contributions towards the acquisition of matrimonial assets); and

(ii) indirect contributions (e.g. the caring of children, doing household chores etc),

by both husband and wife throughout the marriage. The Courts in Singapore have endorsed the view that a marriage is an equal partnership and all efforts by husband and wife, whether in the economic or homemaking spheres, should be recognised.

 

ANJ v ANK

Prior to ANJ v ANK [2015] SGCA 34 (“ANJ”), the Courts had used an “uplift” approach towards the division of matrimonial assets. After calculating parties’ direct contributions towards the acquisition of matrimonial assets, the Court, in calculating the final percentage for the division of matrimonial assets, will “uplift” the percentage points to the spouse who had made more significant indirect contributions.

The case of ANJ introduced a structured approach for the division of matrimonial assets as follows:

(1) The Court should derive a ratio which represents the parties’ respective direct contributions towards the acquisition or improvement of matrimonial assets;

(2) The Court should then derive a second ratio which represents the parties’ indirect financial and non-financial contributions towards the welfare of the family (this includes the caring of children and the payment of daily expenses);

(3) The two ratios would thereafter be averaged out to derive each party’s overall contribution to the family.

However, the average ratio is not a binding figure and the Court may still make the necessary adjustments to the final percentage if the case so warrants. Adjustments would usually be made when there are factors that would justify more weight being given to either the collective direct or indirect contributions to effect a fair and equitable division. Post ANJ, factors which the Courts take into consideration in adjusting the final percentage include:

(1) The length of the marriage (where indirect contributions will feature more prominently in a long marriage);

(2) The size of the matrimonial assets (where direct contributions will feature more prominently if the pool of matrimonial assets is large); and

(3) The extent and nature of indirect contributions made.

The reasoning for the ANJ approach was that in the previous “uplift” methodology, by giving one party a percentage uplift representing a spouse’s indirect contributions, the same percentage was deducted from the other spouse’s share of the matrimonial assets. This resulted in an overvaluation of a spouse’s indirect contributions.

 

TNL v TNK

The subsequent decision of TNL v TNK and another appeal and another matter [2017] SGCA 15 (“TNL”) thereafter clarified the position on the division of assets for single-income marriages in light of ANJ. The Court of Appeal noted that ANJ works well for dual-income marriages where both spouses were working throughout the marriage and were able to make both direct and indirect financial contributions to the household. As such, ANJ will still apply to dual-income marriages. In doing so, the Court of Appeal recognized that ANJ seemed to unduly favour the working spouse.

With regard to cases where one spouse is the sole income earner and the other plays the role of a homemaker, like in the case of TNL, the Court has clarified that if the marriage is long, the Court will tend towards an equal division of matrimonial assets. TNL was a case where the marriage lasted approximately 35 years (from date of marriage to the granting of the Interim Judgment). The Court divided the pool of matrimonial assets equally between both husband and wife.

 

Conclusion

The Court has clarified the position on the division of matrimonial assets in long single-income marriages. However, the Court did not clarify how matrimonial assets are to be divided in short single-income marriages. The Court proposed to deal with such an issue in an appropriate case “in the future”.

As the law now stands, it is clear that for dual-income marriages, the structured approach of ANJ will apply. For long single-income marriages, the Court will tend towards equal division of the matrimonial assets. The position on short single-income marriages has yet to be clarified by the Court of Appeal. The view is that this needs to be done as soon as possible to provide some certainty to this category of divorcing couples.

It therefore appears that the approach in ANJ will not be the approach for all divorces. As ANJ is not all inclusive, there may be more cases in the future that provides for different approaches for different broad categories of marriages, However, the Court, at the end of the day, retains the discretion to divide matrimonial assets on a broad brush approach to ensure that the division of assets is fair and equitable towards both spouses. In doing so, the Court will still look at parties’ direct contributions and indirect contributions in deciding the ancillary matters of the divorce.

If you have any queries pertaining to this article, please feel free to contact Ms Judy Ang at judy@straitslaw.com.sg, Ms Lim Shu Fen at limshufen@straitslaw.com.sg or the Straits Law Director who usually attends to your matters.