FAMILY LAW

The Power of Intent in the Division of Matrimonial Assets: CLC v CLB [2023]

When a spouse has shown a clear and unambiguous intention to treat assets from gifts or inheritance as part of a matrimonial pool, should the court give effect to that intention? This question was tackled by the Court of Appeal in CLC v CLB [2023] SGCA 10. (“CLC”)

Background

CLC concerns a couple married for 15 years. 5 days before marriage, the couple entered into a prenuptial agreement that excluded inheritances from the matrimonial pool. During their marriage, the Husband received monies from his father and inherited part of his father’s estate (the “Gifted Monies”). These Gifted Monies allegedly flowed into six Australian bank accounts and investment portfolios in the Husband’s name (the “Disputed Assets”).

The Appellate Division of the High Court ruled that the Gifted Monies had not lost their character as gifts and must be part of the Disputed Assets. In CLC, the Wife sought to appeal against the High Court’s decision. CLC raises the issues of:

The Interplay between s 112 of the Women’s Charter and property law principles; and

What is required to trace an asset to a gift or inheritance.

The Women’s Charter

Section 112 of the Women’s Charter 1961 excludes assets acquired by gift or inheritance, explicitly stating that a matrimonial asset:

“does not include any asset (not being a matrimonial home) that has been acquired by one party at any time by gift or inheritance and that has not been substantially improved during the marriage by the other party or both parties to the marriage.”

Generally, the law recognises the donor’s intention to solely benefit the donee spouse. However, in CLC, the Court claimed that nothing in the Women’s Charter excludes the spouse’s right to deal with his personal asset as he wishes, which includes incorporating it into the family estate.

The Court referred to the Report of the Select Committee on the Women’s Charter and the Third Reading of the Women’s Charter (Amendment) Bill to guide its interpretation of Section 112. Further, the Court reviewed the 1997 Amendments to the Women’s Charter, which were intended to enlarge the circumstances the court should consider in deciding what was just and equitable. Additionally, while Section 112 accorded the court the power to redefine parties’ respective property rights after divorce, this does not make property law principles irrelevant in such cases.

In view of the above, the Court decided that the Women’s Charter does not preclude it from considering the intention of the parties in order to reach a just and equitable outcome.

“A spouse who has a proprietary interest in a non-matrimonial asset naturally has the right to deal with that asset in any way the spouse wishes, including by bringing it into the matrimonial pool.”

-Justice Judith Prakash, Judge of the Court of Appeal

Whether the disputed assets were traceable to the gifts or inheritance

Whether an asset is traceable to a gift or inheritance is an evidentiary question. Rebutting the Husband’s arguments, the Court claimed that the onus is on the donee spouse, not the other party, to prove the traceability of the asset.

Nevertheless, even though the Husband could not prove the precise link between the Inheritance Monies and the Disputed Assets, the Court affirmed that the Disputed Assets were likely derived from Inheritance Monies. The Husband’s monthly income of more than $22,000 as a stay-at-home investor and consultant was attributed to non-matrimonial assets. Further, there was little co-mingling of money in accounts like DBS-3.

After establishing this, the key contention then lay in whether the monies were treated as part of the family estate.

Whether it was intended that the assets be treated as part of the matrimonial pool

The Court considered the following correspondence and actions:

Back in February 2007, the Husband wrote an email to the Wife titled “Our Net Worth”, which included a pre-marital gift from his father.
The Husband placed part of the inherited monies into the UOB Joint Account. Monies in the UOB Joint Account were used for the family’s holidays in Malaysia.
Inherited monies were mixed with funds in DBS-3, which were used to pay for the family’s property purchases and renovation works.
Monies in the Husband’s pre-marital asset, ANZ-55, were used to finance the family’s trips to Perth.

Based on the above evidence, the Court concluded that the Husband displayed a clear and unambiguous intention to treat the Inheritance Monies as part of the family estate and thus part of the matrimonial pool.

Eventually, those bank accounts and investment portfolios were included in the matrimonial pool available for equal division between the parties.

Key takeaways from CLC

The ruling in CLC highlights the weight given to a donee spouse’s intentions when considering the division of assets acquired by gift or inheritance. In determining said intention, the court examines the conduct, correspondence and acts of the parties. For example, the act of placing such assets in joint accounts can signal intention to share said assets.

Further, notwithstanding that assets may have co-mingled with other matrimonial assets throughout marriage, a proper “linkage” must be proven between an asset and the original gift or inheritance to exclude an asset from the matrimonial pool.

Finally, by highlighting marriage as a cooperative partnership, CLC also affirms a long-standing principle in family law.

For PDF version of this article, please click here.

References

CLC v CLB [2023] SGCA 10

Women’s Charter 1961 (2020 Rev Ed)

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Inﬁnity Legal LLC thanks and acknowledges Intern Tan En Xi for her contribution to this article.

[Last Updated: 1 February 2024, 7:13pm]