XZ v YA

Steven Chong J:

[1] Disputes over maintenance and division of matrimonial property are common incidents arising from dissolution of marriages. In the present case, the dispute over maintenance has been particularly acrimonious. It has undergone several rounds before no less than three District Court Judges and several appeals to the High Court. Furthermore, the husband claimed that his mother’s loan to purchase the matrimonial home should be treated as his direct financial contribution for the division of matrimonial assets, in addition to deducting it at source from the gross sale proceeds to be refunded to his mother. In either event, the mother’s loan would be repaid but if the husband’s position was accepted, it would have increased his share of the net sale proceeds and would also entail double counting of the mother’s loan.

[2] The parties were married on 20 May 1995, and have two children (ages 9 and 12). The husband is 42 years old and is a captain with a reputable airline. The wife is 43 years old, and is a part-time customer service engineer.

[3] In July 2005, the wife confronted the husband on the issue of his suspected infidelity. In September 2005, he moved out of the matrimonial home at xxx (“the matrimonial property”) to live with his mother, before returning in November 2006. In February 2007, the wife filed for divorce. After a contested trial, the wife was granted a decree nisi on 28 December 2009 on the ground of the husband’s unreasonable behaviour (in particular, his improper association with a third party), while the husband’s counterclaim against the wife was dismissed.

[4] Earlier, pursuant to the wife’s application for interim maintenance in Maintenance Summons No 5941 of 2005, the parties had entered into Maintenance Order No 1168 of 2005 by consent on 8 November 2005, the terms of which were as follows:

[5] The husband subsequently applied to vary this maintenance order downwards in Maintenance Summons No 7419 of 2006 (“Maintenance Summons No 7419/2006”), while the wife applied to vary it upwards and to enforce outstanding arrears in Maintenance Summons Nos 5549 and 5500 of 2007 respectively (“Maintenance Summons Nos 5549/2007 and 5550/2007”). On 16 May 2006, District Judge Sowaran Singh (“DJ Sowaran Singh”) dismissed both applications to vary the maintenance order, but held that the husband was at liberty to re-apply for a downward adjustment in the event that his total income was substantially reduced (by at least $500) or in the event that the wife’s take-home salary increased substantially (by at least $400). Arrears of maintenance amounting to $24,408.10 were ordered to be paid in monthly instalments until the entire sum was paid up.

[6] In District Court Appeal No 19 of 2008, the husband appealed against the orders in Maintenance Summons Nos 7419/2006 and 5550/2007. Various grounds were raised by the husband including misrepresentation by the wife that she had ceased working or would be ceasing work even though she continued to work part-time, as well as matters relating to the true state of each party’s expenses. On 4 December 2008, Chao Hick Tin JA granted a downward variation with a monthly reduction of $1,000 backdated to January 2007, and ordered that the wife was to pay the husband the over-payment of $1,000 per month from January 2007 to November 2008 amounting to $23,000 in total. In XZ v YA [2009] SGHC 51 (“XZ v YA”) at [23], Chao JA stated that the reduction was on account of the misrepresentation of the wife as regards her employment status prior to the entering of the consent maintenance order. In the result, the monthly maintenance was reduced as follows:

[7] In Maintenance Summons Nos 5819 and 6388 of 2009 respectively, both the wife and the husband again applied to vary the interim maintenance order. On 30 August 2010, District Judge Amy Tung Chew Ming (“DJ Amy Tung”) granted a downward variation such that the husband was to pay the wife $4,000 per month with effect from 1 January 2010. DJ Amy Tung also ordered that the husband was to pay the wife the arrears of $14,395 in instalments of $200 per month.

[8] Both parties appealed but subsequently agreed to withdraw their respective appeals in the High Court against the interim orders made by DJ Amy Tung in deference to the final orders to be made in the ancillary matters. For this reason, DJ Amy Tung did not record in writing her decision to vary the maintenance order. On 30 November 2010, various ancillary orders were made by District Judge Jen Koh (“the DJ”). On 13 December 2010, the husband filed the present appeal against the orders in respect of access, maintenance and the division of the matrimonial property.

[11] The ancillary orders pertaining to maintenance and the division of matrimonial assets made by the DJ on 30 November 2010 were as follows:

[13] With respect to maintenance, the DJ found that the husband had an average total income of $17,886.31 per month (from all sources). As such, his financial situation had improved substantially since 2007/2008 when the order for $5,000 per month was made by Chao JA, and thus there was no merit in the husband’s application to vary the maintenance for each child downwards to $1,000 per month. Further, the DJ found, after taking into consideration the wife’s income and expenses, that she would have a shortfall of about $5,000 per month, which reinforced the appropriateness of the maintenance order in that quantum.

[14] The matrimonial property is the only matrimonial asset that the wife is claiming. Both parties had agreed that each party was to retain all other assets held in their own names, including CPF monies.

[15] The matrimonial property was purchased for $935,000, with the assistance of a $305,000 loan from the husband’s mother. It has since been sold for $1.27 million. The break-down of the sale proceeds, according to the completion account on 14 December 2010, was as follows:

[16] The DJ first assessed the husband’s and wife’s direct financial contributions towards the matrimonial property to be 61.2 percent and 38.8 percent respectively after considering the parties’ contributions towards the mortgage payments and the improvement of the matrimonial property. The break-down of their respective direct financial contributions (at the time of the hearing before the DJ) was as follows:

The DJ rejected the husband’s assertion that his mother’s loan of $305,000 should be included as part of his direct financial contributions. As this sum was to be repaid to his mother from the sale proceeds (and has since been repaid), its inclusion in the calculation of direct financial contributions would lead to double-counting. In any case, the sum was intended by the husband’s mother as a loan, and not an investment.

[17] On the issue of indirect contributions, the DJ found that the marriage subsisted for 12 years, and rejected the husband’s contention that the wife’s contributions towards him and the marriage should be confined to 7.75 years by excluding the period when they did not live together when the husband was undergoing training in Perth, Australia (12 months) and when he was training and staying at xxx (11 months), as well as the period when the parties stayed with his parents (15 months). During those periods, it could not be said that their marriage was suspended and that they were no longer married, or that they failed to do their part in contributing towards the family.

[18] The following indirect contributions over the length of the marriage were pleaded by the wife:

(a) Paying for the family expenses when the husband was studying to become a pilot.

(b) Taking care of the children, maintaining the home and looking after the welfare of the family especially when the husband was away from Singapore for15 to 17 days each month.

(c) Contributing more financially towards the first matrimonial property which was an HDB flat.

(d) Holding the family together and looking after the children when the husband walked out on them for one and a half years while he was involved with another woman.

Having considered these factors as well as all the circumstances of the case, the DJ apportioned a further 11.2 percent of the matrimonial property to the wife for her indirect contributions, such that the parties each received an equal share of the net sale proceeds after repayment of the bank loan, the husband’s mother’s loan and the costs and expenses of the sale.

[19] Before me, it was not suggested by the husband that the DJ was wrong in assessing the indirect contributions of the parties. Instead, counsel for the husband only advanced two arguments that the DJ had erred in her apportionment:

(a) That the husband’s mother’s loan should be included as part of the husband’s direct financial contribution.

(b) That the DJ’s apportionment had overlooked a consent order recorded by DJ Sowaran Singh dated 6 April 2010 (“the Consent Order”), wherein the parties had agreed to the apportionment of net sale proceeds after the repayment of the bank loan, the husband’s mother’s loan and the refund of CPF contributions.

As such, the husband sought the refund of CPF contributions before apportionment (such that the net sale proceeds to be apportioned would amount to only $151,297.91) and an upward adjustment of his share of the net sale proceeds to 70 percent on the basis of his increased direct financial contribution (taking his mother’s loan into account).

[20] I agreed with the DJ that the husband’s mother’s loan should not be treated as the husband’s direct financial contribution. This was a loan to both the husband and wife to purchase the matrimonial property. While it is true that the husband’s mother extended the loan because the husband is her son, it is equally true that it was extended to enable both the husband and the wife to jointly purchase the matrimonial property. After all, the property was registered in their joint names. This became even clearer given that the loan has since been fully repaid to the husband’s mother from the sale proceeds of the matrimonial property.

[22] In any event, the approach of refunding the mother’s loan before apportionment and including the loan as part of the husband’s direct financial contribution for the purposes of apportionment, as proposed by the husband, would have resulted in double counting of the mother’s loan to the detriment of the wife. Should the loan of $305,000 be included in the husband’s direct financial contribution, the ratio of direct financial contributions would shift from 38.8 percent : 61.2 percent to 23.8 percent : 76.2 percent in favour of the husband. Making the same adjustment for indirect contributions as was done by the DJ, the apportionment ratio would be about 35 percent : 65 percent, instead of equal apportionment, in favour of the husband. This implies that the husband would receive $403,879.86, out of the net sale proceeds of $621,353.63, in addition to the refund of $305,000 to his mother. On the other hand, the wife would receive only $217,473.77, as opposed to the $310,676.81 that she would receive under the present orders. As such, it may be observed that double counting of the mother’s loan would unjustifiably re-allocate close to $100,000 from the wife to the husband.

[23] Before DJ Sowaran Singh, the parties had recorded the Consent Order to sell the matrimonial property and for the sale proceeds to be dealt with on the following terms:

This Consent Order was not made pursuant to any application by the parties and the circumstances under which it arose were unclear.

[24] In Smith Brian Walker v Foo Moo Chye Julie [2009] SGHC 247 at [5], I observed that “there is no hard and fast rule whether the sale proceeds should be divided at source or after repayment of the parties’ respective CPF accounts”. On that occasion, the District Judge had ordered the division of the sale proceeds of the matrimonial home at source and not after reimbursement of their CPF accounts with the result that the wife’s share of the sale proceeds was insufficient to fully refund her CPF account. Under those circumstances, I allowed the appeal and ordered the sale proceeds to be apportioned after reimbursement of the respective parties’ CPF contributions in order to achieve a fair and equitable distribution.

[25] In the present case, no such argument was raised by either party. Instead the husband’s case was that under the terms of the Consent Order, the parties had agreed that the sale proceeds should be applied in a specific order, in particular, that the apportionment of the balance net sale proceeds should be done after repayment of the bank loan, the husband’s mother’s loan and refund of the parties’ respective CPF contributions. However, the DJ, at paras 62–63 of her Grounds of Decision (“the GD”), had instead awarded an equal apportionment of the net sale proceeds after repayment of the bank loan and the husband’s mother’s loan, and directed the parties to use their equal net sale proceeds to refund their respective CPF contributions. In doing so, the husband submitted that the DJ had reversed the order in relation to the refund of CPF contributions as recorded in the Consent Order.

[26] The rationale for the husband’s argument for the refund of the parties’ respective CPF contributions prior to apportionment was obvious – this would effectively grant him a larger share of the net sale proceeds of the matrimonial property. At the point of completion of sale, the total CPF contributions from both parties amounted to $470,055.72. The refund of this amount prior to apportionment would necessarily imply that about three-quarters of the net sale proceeds (ie, $621,353.63) would be excluded from the process of apportionment, and thus the relative indirect contributions of the parties (which was in favour of the wife) would only be reflected in the apportionment of the remaining $151,297.91.

[27] In my view, the Consent Order by DJ Sowaran Singh was made to facilitate the sale of the matrimonial property and for repayment of the husband’s mother’s loan (see para 5(8) of the Consent Order). Further it was specifically recorded in para 5(3)(vii) of the Consent Order that the balance sale proceeds shall be kept by the parties’ solicitors pending final determination of the ancillary matters. It was therefore merely an interim arrangement and was not intended to bind both parties for the purpose of division of the matrimonial property on the specific order for the application of the sale proceeds. There was also no question of issue estoppel either since neither party addressed this issue before DJ Sowaran Singh or before me for that matter. Further, the husband evidently did not treat the Consent Order as having such an effect since this argument was not even raised before the DJ in the court below. This was yet another afterthought that was raised belatedly to increase the husband’s share of the sale proceeds.

[28] In any case, I was of the opinion that the approach of refunding CPF contributions prior to apportionment would lead to an inequitable outcome in the present case. In effect, the husband’s submission would also entail some form of double counting of his CPF contributions. The DJ in arriving at her decision that the husband’s direct contribution was 61.2 percent had factored in his CPF contributions. If his argument was accepted, it would result in reducing the net sale proceeds from $621,353.63 to $151,297.91. This would in turn have a negative effect on the value of the wife’s additional indirect contributions (over and above those of the husband’s) which was found to be 11.2 percent of the value of the net sale proceeds. Under the present order, the monetary value of her additional indirect contributions would be 11.2 percent of $621,353.63, ie, $69,591.61 whereas under the husband’s computation, it would be drastically reduced to $16,945.37 (11.2 percent of $151,297.91). This would result in an inequitable recognition of the wife’s indirect contributions and would thus be inconsistent with the need to give full credit and value to indirect contributions, as stated in NK v NL [2007] 3 SLR(R) 743 at [34].

[29] Accordingly, I ordered that the division of the matrimonial property made by the DJ below was to stand.

[30] Before examining the reasons for my decision on the maintenance, it is necessary to briefly recount the history of the parties’ disputes over the quantum of the maintenance. By consent, the husband had previously agreed to interim maintenance for the wife and children ranging from $4,500 to $6,000. It has since undergone two variations eventually resulting in the DJ ordering monthly maintenance of $5,000. I reduced it to $3,500 due to a change in the circumstances as explained below. The amount ordered by me is the lowest of all the previous maintenance orders made and is $1,500 more than what the husband claimed to be the fair monthly maintenance for both the wife and the children. There was no cross appeal by the wife.

[31] The husband is a pilot of a reputable international airline. When the application was heard by the DJ, his monthly salary was at least $12,000. Since then, he was promoted to the position of captain with effect from August 2010. The husband did not produce the updated salary after his promotion but it is likely to be higher than $12,000 per month. The husband also disputed the DJ’s assessment of his average monthly income from all sources (including salary, bonuses and income from personal investment activities) as $17,886.31. During the hearing before me, much time was unnecessarily spent in determining the exact current salary of the husband. Ultimately, the exact current salary was not critical as the ability of the husband to pay the maintenance whether it was $2,000 (as proposed by the husband) or $5,000 (as claimed by the wife) was really not in issue based on either his previous salary or his current salary as a captain. This was borne out by the undeniable fact that he had previously agreed to a higher interim maintenance ranging from $4,500 to $6,000 (see [4]) above) or even the reduced maintenance ordered by Chao JA (see [6] above) after taking into account the wife’s part-time employment. On the other hand, the wife works part-time as a customer service engineer and has a monthly take-home pay of $1,999 (or $2,165 after taking into account pro-rated bonuses).

[32] In the court below, the DJ assessed the wife’s expenses as follows:

[33] The rental of the apartment was deducted from the list of expenses as the DJ held that the wife was to be solely responsible for this item to be paid with her part-time salary. As such, the DJ found that the wife would have a monthly shortfall of $5,144.82 (based on her basic salary of $1,999) or $4,859.82 (based on her gross salary of $2,165). This was rounded to $5,000 per month, which coincided with the amount of maintenance ordered in view of the husband’s financial resources and income.

[34] In this appeal, the husband argued that the maintenance for the two children should be reduced from $2,000 each to $1,000 and that no maintenance should be ordered for the wife, such that the total maintenance should be $2,000 and not $5,000. The grounds were as follows:

(a) There were several unjustified expenses in the wife’s list of expenses, including insurance expenses, expenses for the maid and the children’s tuition fees.

(b) The wife had sufficient CPF funds to purchase a small HDB flat, which would free up rental expenses and enable her to contribute towards the expenses of the children.

(c) The wife should not receive maintenance as the parties had the same educational qualifications (ie, a diploma) and the wife deliberately took on part-time, instead of full-time, work to halve her income.

(d) The children’s maintenance was excessive as the children are ordinary primary school children in local schools with school fees of only $5.50 per month.

[35] I agreed with the husband’s counsel that the following expenses should be deducted for the purpose of determining the maintenance:

(a) Personal expenses of the wife – the insurance premium of $541.27 for the wife’s personal insurance which was paid by the wife even prior to the marriage.

(b) Daughter’s expenses – the insurance premium of $205.70 for a policy which has already lapsed.

Taking into account these two deductions, the total remaining expenses would be $4,397.85.

[36] Further, at the hearing on 23 August 2011, the wife confirmed that she has since purchased an HDB flat which is scheduled for completion in December 2011. Upon completion, this would have the effect of freeing up the rental expenses of $1,880 which the wife is currently paying with her monthly part-time salary. It should be remembered that in arriving at the revised expenses of $4,397.85, the current rental of $1,880 was not included. However, with the purchase of the HDB flat, the wife would be able to use her current salary to provide for herself and to contribute towards the maintenance of the children.

[37] Arising from the recent purchase of the HDB flat, the wife through her counsel informed the court that she would be required to top up monthly repayments in cash of $300 for the HDB flat and that she is likely to incur renovation expenses of about $30,000 to be funded by a bank loan. Although the additional information was not stated by way of an affidavit, no objection was raised by the husband’s counsel during the hearing. Had it been raised, I would have directed the wife to file a supporting affidavit. In any event, the additional information appeared both fair and reasonable to me.

[38] The husband also submitted that if the wife would like to have the benefit of a full-time maid, she should return to full-time employment. In BF v BG [2006] SGHC 197, Woo Bih Li J found that although it was not in the interest of the children for the wife to return to full-time employment, she could have taken on part-time work given her qualifications and experience. Woo J then notionally ascribed a monthly salary of $1,000 as the amount which the wife could reasonably have earned from her part-time employment. The decision was affirmed by the Court of Appeal – see BG v BF [2007] 3 SLR(R) 233 at [80].

[40] On the evidence before me, I was satisfied that, contrary to the husband’s assertion, the wife was not deliberately working part-time to halve her monthly income in order to enhance her maintenance claim.

[41] Given that she has now acquired an HDB flat and is required to pay for her own insurance premiums as well as to pay the monthly top up amount of $300 for the HDB flat, I found that she should be able to contribute about $1,500 towards the revised expenses which would have included the expenses for the maid in any event. This was in fact consistent with the argument raised by the husband’s counsel in [34(b)] above as well as para 12 of the GD by the DJ wherein she stated that the husband was at liberty to apply for variation when the wife acquired a property of her own. In this regard, it is material to highlight that Chao JA in XZ v YA at [23] had reduced the maintenance by only $1,000 even though the effect of the wife’s misrepresentation had concealed her then part-time salary of $1,831. He found that it “would not be fair to reduce the monthly maintenance by the entire amount”. Similarly in the present case, I did not think it was fair or appropriate to reduce the monthly maintenance by the entire rental payment of $1,880 as both parties should benefit from this reduction.

[42] Accordingly, adopting a broad brush approach, I reduced the monthly maintenance for the wife from $1,000 to $500 and for each child from $2,000 to $1,500, totalling $3,500. I ordered the reduction to take effect from December 2011 after the completion of the purchase of the HDB flat. In my view, although the sale proceeds of the matrimonial property were distributed in December 2010, it was not unreasonable for the wife to rent an apartment in the meantime pending the purchase of the HDB flat. The wife did take prompt steps to purchase the HDB flat immediately after the observation which I made at the first hearing on 26 May 2011.