DIVISION AND ENTITLEMENT OF ASSETS: Is the Wife Worse off in Malaysia?

Enclosed below is the full speech by Foo Yet Ngo, from Y N FOO & PARTNERS, during a seminar on Family Law held at Concorde Hotel on 27 November 2014.

Marriage is a partnership of two individuals, built on love and cooperation. When two individuals marry, they set upon freely and willingly, to enter into an arrangement to divide their labour, one taking the financial breadwinning role and the other, the non-financial homemaking role, to promote the common good of the union and in the interests and welfare of their children. Each spouse contributes whatever he or she is able. Often their abilities are unequal, whether in the parenting role or in the income earning role and, during the marriage, this disparity of roles, efforts, talents and abilities are often never in issue.

So, when a marriage breaks up, should the courts, at the divorce, not uphold and accord equal value to the spouses’ different roles of homemaking and breadwinning and ensure no distinction be made between the two, when dividing up the wealth built between them during their union?

To quote a Singapore Judge [1] :-

“….. a marriage is not a business where, generally, parties receive an economic reward commensurate with their economic input. It is a union in which the husband and wife work together for their common good and the good of their children. Each of them uses (or should use) his or her abilities and efforts for the welfare of the family and contributes whatever he or she is able to. The partners often have unequal abilities whether as parents or as income earners but, as between them, this disparity of roles and talent should not result in unequal rewards where the contributions are made consistently and over a long period of time”.

Equally, our former Chief Justice, Abdul Hamid Mohamad JCA (as he then was), sitting in the Court of Appeal [2] in 2002, expounded the following approach be adopted in family matters :-

“….. in a marriage, both spouses share everything, both contribute towards the home and family in one way or another, to a bigger or smaller extent. Where both spouses work and earn income, each of them inevitably spends his or her own income, for the family. Similarly, where there is income from an asset purchased during the subsistence of the marriage, say rent, even though it may be paid into the account of one spouse, eventually it will go to the family, may be all and may be part of it. No one keeps an account, indeed no one should, as marriage is not a business venture. So, if and when the marriage breaks up, it is unreasonable that the Court should undertake an accounting of their income and expenditure. The function of the Court is to make a fair and equitable distribution of the matrimonial assets that exist at the time of the divorce taking into account the factors provided by S 76 of the Act.” (emphasis added)

At the outset, it must be stated the arguments in relation to one role over the other is not to favour a particular gender i.e. the wife over the husband. It is only because traditionally the role in the vast majority of families, is for the wife to discharge the non financial homemaking and child caring role, while the husband discharges the financial, breadwinning, income generating role. Where a husband discharges the homemaking and child caring role, there is no reason why he too should not be given as much as the wife, for his non-financial contribution.

ENGLAND : THE USUAL SOURCE FOR OUR FAMILY LAW AND THEIR POSITION ON DIVISION OF MATRIMONIAL ASSETS:

The decision of the English House of Lords in the landmark case of White v White[3] on 26 October 2000 marked a fundamental change in the law on division of matrimonial assets in England. This was when the concept of equal sharing became the accepted starting point for financial settlements between a wealthy divorcing couple, irrespective of one party’s role as the breadwinner and the other party’s role as the homemaker. Holding that no distinction must be made between the two roles, the House of Lords did away with the entitlement of the breadwinner (usually the husband) to retain the lion’s share of the matrimonial assets.

Pre White v White : During the 1980s and 1990s there was an emphasis in English cases on the importance of “needs” and “reasonable requirements” of the claimant spouse, usually wives. Duxbury tables (derived from the decision of the Court of Appeal in Duxbury v Duxbury (1992) Fam. 62 where this type of fund was first described) were used to calculate “reasonable needs” for life to give to the wife a capital sum based on an income need determined by the court, if the parties fail to agree. A lump sum is arrived at on the basis that every year the wife will spend some of the capital and some of the interest earned, so that when she reaches the actuarial age at which it is assumed she would die, there will be no capital left. This approach, it seemed, left recipients stuck to a rigid lifestyle and unable to leave a penny to their children from the estate. A wife’s “reasonable needs” as calculated using the Duxbury tables in particular involving wealthy couples, in many cases, bore little resemblance to the lifestyle that she had enjoyed during the marriage. The general sentiment was this approach was discriminatory against women and failed to protect the non-working mother.

The decision of the House of Lords in White v White reversed the dependence on the need approach (and the use of Duxbury tables) in the division of matrimonial assets. Lord Justice Nicholls’ judgment paved the way for a wife to expect to receive a half of the wealth gathered during the course of a marriage, even if she has never or rarely worked outside the home.

White v White case facts:

Martin and Pamela White were married in September 1961. Throughout their marriage Mr and Mrs White carried on a dairy farming business in partnership, both coming from farming families. At the outset each of them contributed, in cash or in kind, a more of less equal amount of capital, of about £2000. They bought Blagroves Farm. The farming business was a tremendous success and they purchased more land, which were held by them jointly, and treated as property of the farming partnership. Mr White’s father had made the couple an interest-free loan of £11,000 when they purchased Blagroves, together with a further £3,000 used as working capital. In 1974 Mr White’s father released his loan. Initially this was reflected in an increase in Mr White’s partnership capital account. Ten years later Mr and Mrs White’s capital accounts were merged into a single joint capital account.

Mr and Mrs White also farmed Rexton Farm as part of their partnership business. Rexton was part of the Willett estate bought by Mr White’s father, which he later transferred into the joint names of himself and his three sons, the four of them holding the estate in equal shares. Mr White’s share of the cost of borrowing, in the form of interest and endowment premiums, was met through a tenancy agreement, by the White’s farming partnership. In 1993 Mr White acquired Rexton Farm, subject to a mortgage debt of £137,000, as his partitioned share of the Willett Estate. Rexton Farm, as distinct from the the farming business carried on at the Blagroves Farm, was held in Mr White’s sole name. It was not in joint names and not treated as belonging to the White’s partnership. Rexton Farm was worth £1.25 million.

Following the breakdown of the marriage, the wife petitioned for divorce in 1994 and applied for ancillary relief. At the time of the divorce the children were adults and independent.

In the High Court : Holman J found the net assets of the couple totalled £4.6 million; Mrs White’s sole property; £193,300 (mostly pension provision); her share of property owned jointly, either directly or through the partnership: £1,334,000; Mr White’s share of jointly owned property: £1,334,000; and Mr White’s sole property: £1,783,500 (mostly Rexton Farm). Holman J decided that Mrs White reasonably required £980,000. This was to be satisfied by payment to her of £800,000 and by her keeping her sole assets. On being paid this amount, Mrs White was to transfer all the jointly owned assets to Mr White. Under this order, Mrs White was to receive slightly over one-fifth of their total assets.

Holman J’s reasoning, as summarised by Lord Nicholls in his judgement was this: “Neither party had any earning capacity outside farming. Mrs White’s wish to have enough money to enable her to buy a farm of her own was not a reasonable requirement. It was unwise and unjustifiable to break up the existing, established farming enterprise so that she can embark, much more speculatively, on another. Her housing and financial needs were a farmhouse type of home, with stabling and 25 acres of land for her horses, costing £425,000. She needed a net annual spendable income of £40,000. Capitalised, having due regard to her age, a net income of this amount called for a ‘Duxbury’ fund of £550,000. This provision for Mrs White would leave Mr White with an amount exceeding his reasonable requirements simply in terms of a home and income. But, additionally, he reasonably required to be able to continue farming in a worthwhile way. The financial contributions from his family made this reasonable”.

In the Court of Appeal: Mrs White’s appeal to the Court of Appeal was successful. The Court of Appeal increased the amount of her payment from £800,000 to £1.5 million. On the judge’s figures, and after deducting £310,000, representing the parties’ costs in both courts, this meant that Mrs White’s share of the total assets would be increased to about two-fifths. Thorpe LJ, one of the 3 Court of Appeal judges, regarded the farming partnership as the dominant feature in the case. He held Mrs White was entitled to use her share as she thought fit and that there was no fairness in an outcome which involved a transfer of property order in favour of Mr White. The court did not have the material to assess how much Mrs White would have been entitled to receive on dissolution of the partnership. But, having regard to the parties’ contributions and the goal of overall fairness, the Court of Appeal increased the provision for Mrs White by a further £700,000. Butler-Sloss LJ, (the other Court of Appeal Judge) considered that Mrs White was entitled to more than her partnership share, to recognise the contribution she had made to the family as wife and mother, over and above her partnership role in the farming business. She held Mr White would still be able to continue to farm, even if on a reduced scale.

House of Lords : Mr White appealed to the House of Lord, seeking the restoration of Holman J’s order. Mrs White cross-appealed seeking an equal share in all the assets.

The House of Lords upheld the decision of the Court of Appeal and brought in a change in the direction of the law on the redistribution of finances and property on divorce, exhorting that the law based on a “needs” basis for the claimant spouse had not kept up with changes in society.

Lord Nicholls, delivering the main judgement in the case, held :-

that there should be no discrimination between a husband and wife and their respective roles in a marriage. He said : “if in their different spheres each contributed equally to the family, then in principle it matters not which of them earned the money and built up the assets. There should be no bias in favour of the money-earner and against the home-maker and the child-carer” …. “whatever the division of labour chosen by the husband and wife, or forced upon them by circumstances, fairness requires that this should not prejudice or advantage either party” in relation to the parties’ contributions.

a judge before making an order for distribution of assets would always be well advised to check his tentative views against the “yardstick of equality of division” and as a general guide “equality should be departed from only if, and to the extent that, there is good reason for doing so. The need to consider and articulate reasons for departing from equality would help the parties and the court to focus on the need to ensure the absence of discrimination”.

Lord Nicholls specifically said he was not introducing a presumption of equal division or even a starting point principle of general application in all cases (saying that is a matter for Parliament) but merely that “equality as a check” would ensure the absence of discrimination between the income earner and the child carer, in tune he said, with current perceptions of fairness.

His Lordship recognised that in keeping with the times, being at home and looking after young children, a wife may lose forever the opportunity to acquire and develop her own money earning qualifications and skills.

After White v White :

Since then in UK many high earning husbands have found themselves bound by a 50:50 division, in line with the principles enunciated in White v White. To avoid the 50:50 split which some consider harsh, husbands in several subsequent cases have had to come up with various “innovative” legal arguments to distinguish their case from the White v White theme. According to an article by Marilyn Stowe, a divorce lawyer in the firm of Stowe Family Law in her Family Law & Divorce website[4], such innovative attempts at distinguishing from the White v White theme have included “illiquidity impacting upon a 50:50 split”, “the valuations of assets”, “the impact of premarital wealth on wealth acquired during the marriage”, “the impact of a short marriage on assets acquired during the marriage”, “assets placed into trusts before and after the marriage”, “the impact of post-separation wealth” on equal distribution, and cases about “sharing income and bonuses”. Ms Stowe referred specifically to the case of Charman v Charman (decided in 2007). It involved a marriage of 30 years, the couple having started married life with very little. They had two children and at the time of the divorce, Mr Charman had secured a place on The Sunday Times Rich List, with the couple having assets worth £131 million. Mr Charman described his wife as “a housewife” and had contended his contribution entitled him to the larger share and proposed his wife should only be awarded £20 million. The Court rejected his argument and awarded Mrs Charman £48 million, a discount from the 50:50 split given because the court accepted that he, Mr Charman had made a “stellar” contribution to the family fortune. According to Ms Stowe in her article , the 50:50 split is usually adhered to and high earning husbands are not able to secure discounts as in the Charman case (unique to its facts); and not just high earning men find their fortunes divided 50:50 but the rule applies equally to high earning women.

Many, especially angry husbands have publicly berated the English legal system and have even commenced a vigorous campaign for change.

OTHER JURISDICTIONS :-

The following jurisdictions have, in their respective statutes provisions aimed at providing for equality in the division of matrimonial assets :

New Zealand :

In New Zealand, in their Statute i.e. the Property (Relationships) Act 1976 [5] specifically direct their courts to equal division of the following :-

the family home and
the family chattels; and
any other relationship property

and provides for exceptions [6] to equal sharing only in limited instances e.g. marriages or relationships of less than three years . New Zealand has a unique feature in their Act providing their courts with explicit statutory power[7] to make a compensatory adjustment at the time of division of property to pay a compensatory lump sum (out of relationship property) to the other spouse/partner on the grounds of significant future economic disparity between the parties. Economic disparity under the Act is typically where one party (usually the female), has sacrificed a career in order to look after the family, thus freeing the other partner to build up a high earning career.

Canada

In Ontario [8], their Courts do not have jurisdiction to divide property in specie. Instead all property acquired by the spouses during their marriage is equalised at separation by the transfer of money from the spouse who accumulated more during the marriage and at separation owns property of greater value, to the other spouse. The courts determine each spouse’s net family property (after deduction of debts and liabilities). The spouse with the larger ‘ownership pile’, pays money to the spouse with the smaller ‘ownership pile’ to ensure that they leave the marriage with assets, whether property or money, of equal value. The Court retains a limited discretion to order an unequal division where it would be unconscionable to do so, and unconscionable has been defined in case law as unfair or inequitable i.e. something that would ‘shock the conscience of the court’ [9].

THE MALAYSIAN POSITION (TOGETHER WITH A COMPARATIVE STUDY OF THE SINGAPORE POSITION)

In Malaysia, the power of our divorce court to deal with and divide matrimonial assets at the end of a marriage is set out in Section 76 of the Law Reform (Marriage & Divorce) Act 1976 (LRA) which came into force on 1.3.1982. The source of inspiration for our Section 76 was not England but apparently [10] two African countries, Kenya and Tanzania. Accordingly, the specific Section 76 provision in our LRA has no equivalent in the English Matrimonial Causes Act and relying on English cases uncritically as precedent is not only dangerous but in some cases wrong. The LRA first appeared as a Bill presented to the Malaysian Parliament in 1972. It took some ten (10) years before the Bill became law.

In the meantime, Singapore adopted our proposed provision for the division of matrimonial assets vide their Women’s Charter (Amendment) Act 26 of 1980 which came into effect on 1^st June 1981. As their Section 106 mirrored our Section 76, many Singapore cases on how their courts viewed the section and divided matrimonial assets, can be cited as persuasive authority in our courts. However, from 1 May 1997 vide the Women’s Charter (Amendment) Act 30 of 1996, Singapore has substituted a new Section 112 in place of Section 106. Their new Section 112 broadly :-

abandoned the separation of matrimonial assets into the 2 categories of jointly acquired and solely acquired assets that is the hall mark of the previous S 106 (and our S 76);
introduced a definition of what constitutes matrimonial assets; and
provided a new direction to the Court to consider all the facts and circumstances of the case, including a list of factors that the court should have regard to, to arrive at an order of division that “the court thinks just and equitable”.

Hence Singapore cases since then must be read with caution.

It is important to heed His Lordship, Mahadev Shankar JCA’s, (one of the architects of the LRA) word of caution in looking to English decisions and adopting English priniciples on divorce :-

“……whilst S47 refers to English principles we should always keep in the forefront of our minds that when the Act was first initiated we were breaking new ground. It was then necessary to look to English case law because we had adopted much of the wording of the corresponding English statute. In the two decades which have since passed we have injected enough local experience into the application of the provisions of Part VI of the Act to become acutely aware that the differences between social and cultural aspirations with regard to marriage, divorce and welfare in England and Malaysia are such that much caution is called for before we adopt Modern English attitudes. The measures we should take today to preserve the integrity of the Malaysian family when it is threatened by the calamity of divorce must be determined in the light of the Malaysian conditions. At best therefore, the English reports should only be regarded as being of persuasive value or as case studies ……

During marriage, property interests between spouses are determined without taking into consideration the parties’ relationship as husband and wife. A dispute between spouses over property is regulated and resolved by the same principles that regulate and settle similar disputes between strangers i.e. under general principles of property law. For a spouse to acquire an interest in property, he/she must have contributed in money’s worth towards its acquisition. Any contribution in non-monetary efforts i.e. by looking after the home or taking care of children does not entitle a spouse to any interest in the property.

However, upon termination of a marriage, the power of the Courts to “divide” matrimonial assets and the factors which the Court can take into consideration when exercising that power of division i.e. of taking into account contribution of the non-monetary kind, of child caring and looking after the home, had to be expressly conferred by Parliament. The enactment conferring our Courts with the express power is S 76 of the LRA.

Section 76 of the LRA reads as follows :-

In relation to jointly acquired assets :

“(1) The Court shall have power, when granting a decree of divorce or judicial separation, to order the division between the parties of any assets acquired by them during the marriage by their joint efforts or the sale of any such assets and the division between the parties of the proceeds of sale.

(2) In exercising the power conferred by subsection (1) the court shall have regard to –

the extent of the contributions made by each party in money, property or work towards the acquiring of the assets;
any debts owing by either party which were contracted for their joint benefits;
the needs of the minor children, if any, of the marriage

and subject to those considerations, the court shall incline towards equality of division.

In relation to assets acquired by the sole effort of one party:

“(3) The court shall have power, when granting a decree of divorce or judicial separation, to order the division between the parties of any assets acquired during the marriage by the sole effort of one party to the marriage or the sale of any such assets and the division between the parties of the proceeds of sale.

In exercising the power conferred by subsection (3) the court shall have regard to –
the extent of the contributions made by the other party who did not acquire the assets to the welfare of the family by looking after the home or caring the family;
the needs of the minor children, if any, of the marriage.

and subject to those considerations, the court may divide the assets or the proceeds of sale in such proportions as the court thinks reasonable, but in any case the party by whose effort the assets were acquired shall receive a greater proportion.”

Principles to be distilled from the section :-

Under Section 76 : this power to divide matrimonial assets is ancillary to the power of the court to grant dissolution of a marriage via a judicial separation or divorce. In other words, it is a power available to the Court only in divorce or judicial separation proceedings :-

the fact that by the express wording of the section, the court has power to order division “when granting a decree of divorce or judicial separation” means that the application for the Court to exercise its powers to order division must be made in a petition or Answer (by the Respondent spouse) at the hearing of the Petition for matrimonial relief and in any case before the decree of divorce is made absolute. A Malaysian Supreme Court has ruled that any application for division of matrimonial assets made subsequent to the decree being pronounced absolute, is fatal [11]. This is consistent with the “clean break” principle underlying a divorce i.e. so parties can move forward and start a new life without fear of the other party making a fresh claim hanging over his/her head. Singapore has since amended their provision to allow the Court to make an order for division “when granting” or “subsequent to the grant” in their new S112 of the Women’s Charter. Malaysia has not done so.

The Section does not preclude the Court making an order, to defer its exercise to a later date, but declared so at the time of pronouncement of the order for dissolution e.g. in the Singapore case of Lim Tiang Hock Vincent v Lee Siew Kim [12], the Court of Appeal approved an order of the High Court to defer the sale of the matrimonial home until the younger child reached 21 years of age, to allow the mother and children of the marriage to have exclusive possession (with liberty to apply for review). The Singapore Court of Appeal only modified the order to allow for review upon the husband reaching 55 years of age.

As the power to order division is ancillary to the power to order dissolution it means the dissolution of the marriage must be obtained in Malaysia. Singapore has since amended their Act in 2011 to allow parties divorced in a foreign country to apply for orders for ancillary relief in Singapore, if one of the parties was domiciled in Singapore or habitually resident in Singapore for a year prior to the application of the foreign divorce. The Court must be satisfied there are substantial grounds for granting such relief. Malaysia does not have any such provision. In other words, if the Order for dissolution of the marriage is sought and obtained in a foreign jurisdiction, parties cannot file for ancillary relief for the division of matrimonial assets in Malaysia.

Section 76 does not define “matrimonial assets”. Under another provision of the LRA giving courts the power to set aside dispositions intended to deprive the other spouse of his/her rights in a property, “property” is defined as “property of any nature, moveable or immovable and includes money” [13].

A study of case law indicates matrimonial assets shall include not only the parties’ matrimonial home but also all landed properties acquired during the marriage, cash balances in bank accounts, cars, jewellery, wine collections and even club memberships. It includes any kind of property of some value that the parties had acquired during the marriage, including even property acquired as a windfall.

The Malaysian Court of Appeal in a decision delivered in 1997[14] adopted the liberal approach taken by the Singapore Court [15] that “the purchase by the wife of kitchen cabinets, crockery, pots and pans and the payment of servant’s salary, food in grocery bills” all add up as her contribution to the acquisition of the matrimonial home, which the husband in the case claimed he had solely acquired because he alone had paid for it. His Lordship, Justice Mahadev Shankar went further to say “From the time she began to live in it, the wife ….. kept the house, and maintained and serviced it as a going concern. Its value appreciated from RM29,000 to RM175,000 partly as a result of her efforts too..”. The case places the parties’ matrimonial home in a special place for special consideration. Even where the matrimonial home was acquired before the marriage, his Lordship Justice Shankar JCA was not deterred. He held:-

“Once the house became the matrimonial home, its increase in value for the duration of the marriage is an asset acquired by their joint efforts”.

Any other interpretation he said would be too narrow.

A Malaysian High Court in 1994 [16] adopting the approach taken by the Singapore High Court and Court of Appeal in Ong Chin Ngoh v Lam Chih Kian[17] held that EPF contributions and gratuity payments which would have been a source of funds available to a couple and the family upon their retirement, constitute a matrimonial asset. If the EPF contributions were not deducted from the wages or salary of a worker, they would have gone to providing for the family. They are an asset acquired by the sole effort of the married worker during the marriage. The argument that a Court should have no power to order division of a fund where the other spouse has no legal capacity to withdraw until the age specified in the EPF Act, has not deterred the Courts from declaring EPF fund as being part of matrimonial assets, if acquired during the marriage, and hence available for distribution. In Leow Kooi Wah v Philip Ng Kok Seng[18], His Lordship Justice Shankar dealt expressly with the detailed provisions in the EPF Act and its Regulations to hold that a member’s EPF money is part and parcel of his assets and orders can be made in relation thereto.

Insurance policies, employment and retirement benefits including stock options too constitute matrimonial assets, if accumulated during the course of a marriage.

Business assets eg. shares in companies, including in a spouses’ own family business that one or both spouse continued to work in, constitute properties liable to division.

S 76 ought not to deter Courts from making orders for division of properties located abroad. The Singapore Courts have done so in several cases and awarded spouses a percentage share of the value of the foreign assets. Malaysian Courts should similarly not be deterred. However, to ensure that execution is possible and will bind the foreign assets, courts can, where appropriate and necessary, make consequential orders to bind local assets or order a sum representing the value of such foreign assets to be paid.

A literal reading of Section 76 i.e. “assets acquired by the parties during the marriage by their joint efforts …… or by the sole effort of one party” would suggest that it excludes inheritances and gifts received by one spouse from third parties, eg parents, in that they were not “acquired” by the spouse’s own efforts. Assets already acquired by one spouse before marriage would also not be included in that they were not acquired during the marriage. Hence gifts acquired before the marriage should also be excluded.

There are however two conflicting Malaysian High Court decisions as regards whether gifts and inheritances fall into the basket available for division between spouses. In a decision[19] delivered by the Kuching High Court, Ian H C Chin J held that the word “acquire” includes “to gain or to get” by way of a gift or bequest and that “acquire” in S 76 was not accompanied by any word of limitation, restriction or prohibition and so intended to be free from any trammels. However, in a subsequent case[20] His Lordship, James Foong J (as he then was) held that a gift (in that case a half share of the matrimonial house purchased before the marriage and registered in the name of the husband’s mother, which the husband inherited upon the mother’s death) fell outside the confines of S 76. The later case is the better view since the word “acquire” in Section 76(1) is not untrammelled but circumscribed by S 76(2)(a) in that the asset must have come into the spouse’s ownership by way of his/her personal “money, property or work”.

In Singapore however, Judges have not been deterred (in an appropriate case and where the facts justify it), from including for division an asset purely on the basis it was gifted to one spouse. Where the husband’s half share in the home in which the spouses lived (their matrimonial home), was registered in the joint names of the husband and his mother and a gift given to him before this marriage, and the home was subsequently sold and part of the proceeds put into purchasing and rebuilding a new property, the Singapore Court of Appeal [21] was prepared to deem this new property as a matrimonial asset. They gave the wife a 35% share of the husband’s half share in the new property, which new property was registered in his name and the name of his brother.

This decision appears to have shown that judges may be prepared to disregard the issue of gift where such gift involves the matrimonial home. The facts of the case also suggest that the acquisition of a gift over time may cease to be relevant especially where the other spouse has exerted personal effort in substantially improving its value.

5.5 There is a further subsection to Section 76 i.e. S 76(5) which states that an asset acquired during a marriage shall include assets owned before the marriage by one party which has been “substantially improved during the marriage by the other party or by their joint efforts”. As the sub-section does not state only that part of the asset which has been substantially improved constitutes a matrimonial asset, this subsection appears to allow for the entire of the asset to be included in the pool and not just its increase in value or profits due to the efforts. However, the discretion lies with the Court to discount the value prior to its substantial improvement. A spouse seeking to bring such an asset into the pool must show “substantial improvement” by him or her during the marriage.

A property gifted by one spouse to the other i.e. inter-spousal gift is not regarded as a gift but liable to be put back in the basket for division. The argument in a Singapore case [22] is that the gift is nonetheless acquired by the sole effort of the donor and, if acquired during the marriage, falls into the class of assets under S 76. Minor items of gift, such as dresses or even jewellery of no substantial value should be considered “de minimis” and not taken into account; but gifts of substantial value should be investigated to see if it is acquired by sole effort of one spouse or by the joint efforts of both.
Section 76 grants the Court power to :-

order the division of an asset; or
the sale of any such asset and the division between the parties of the proceeds of sale.

The matrimonial assets for division are divided, taking the market value of the property, less any debts or other liabilities of the spouses i.e. it is net matrimonial asset that is divided.

Division of assets into two categories : In exercising the power, Section 76 clearly behoves a Malaysian Court to categorise matrimonial assets into that acquired by sole effort and that acquired by joint effort. The section specifically directs that where an asset is jointly acquired, the court “shall incline towards equality” and where an asset is acquired solely by one spouse, the court “may divide …. .in such proportions as the court thinks reasonable but in any case the party by whose effort the assets were acquired shall receive a greater proportion”.

Where an asset is acquired jointly, the court, directed to incline towards equality, shall have regard to :-

the extent of the contributions made by each party in money; property or work towards the acquiring of the assets;
any debts owing by either party which were contracted for their joint benefit;
the needs of the minor children, if any, of the marriage.

S 76 (2) (LRA)

As regards solely acquired assets, the court is directed to have regard to :-

the extent of the contributions made by the other party who did not acquire the assets to the welfare of the family by looking after the home or caring the family.
the needs of the minor children, if any, of the marriage.

S 76 (4) (LRA)

From a literal reading of Section 76, the homemaker’s efforts fall within the second category of solely acquired property and Parliament has expressly directed that the other spouse i.e. who made the financial contribution shall be given the greater proportion.

The section unfortunately appears to require the Courts to conduct a detailed minute inquiry into the conduct and efforts of each of the spouses to determine if an asset falls within one or the other category as, even the most minute contribution would require the asset to be categorised as a jointly acquired property. Hence, under the adversarial system, the parties’ legal advisers feel compelled, during trial, to magnify and make as much as possible the contribution of the spouse they are representing, while at the same time endeavour to undermine the contributions of the other spouse. In effect the conduct of the matter is often reduced into a contentious, mud slinging exercise and the washing of dirty linen in public.

While our Courts of Appeal [23] have advocated adopting the approach of Singapore cases [24] and approaching the division of the wealth of the family as a whole i.e. using the “broad brush approach”, instead of taking each asset individually, unfortunately the Malaysian High Courts have felt compelled to approach the division in an item by item manner, the courts conducting a detailed minute examination of each asset to determine each spouse’s effort in acquiring the particular asset and awarding accordingly.
The power in S76 should be looked at as a power to divide net family wealth i.e. grouping all assets together, capitalising them and an order made for division of a percentage so that, if the spouse in whose name properties are registered wishes to retain ownership he/she can pay the other the capitalised sum. In a Singapore decision[25] Judith Prakash J awarded each of the parties 50% of the value of each of the assets in the marriage and then granting the wife the first option to purchase the husband’s 50% share in the flat she and the child was residing in, by paying the husband his 50% share, such option to be exercised within three months, and if it lapsed, the husband would have a similar option for a similar period. Malaysian courts can similarly consider such an approach.

In Singapore following case law, a pure homemaker who made no financial contribution in a moderately long marriage could look to receiving between 35% to 45% of the matrimonial assets[26]. A survey of Malaysian cases[27] show that the homemaker spouse is awarded between 15% to 35% for her non-financial contributions of home making and child caring.

In summary : The Malaysian Courts when dividing matrimonial assets at the termination of a marriage should have in mind the following principles :-

that Malaysian courts should pay special attention to the provisions in the LRA and not rely uncritically on decided cases from other jurisdiction, except, perhaps, Singapore (i.e. cases pre the 1997 amendment) where the relevant law was similar. [28]Two Court of Appeal judges have warned against uncritically adopting the approach in English cases, where their Matrimonial Causes Act is not in pari material with our LRA.

that the Act is “a piece of social legislation for which a liberal interpretation is more apt than a strict one” expounded by Siti Norma Yaakob JCA in the Court of Appeal decision of Diana Clarice Chan Chiing Hwa v Tiong Chiong Hoo[29], should permeate all decisions

that in line with the approach advocated by our former Chief Justice, Abdul Hamid Mohamad in the case of Sivanes v Usha Rani [30] it is unreasonable for courts to undertake an accounting of parties’ income and expenditure during the period the marriage subsists as marriage is not a business venture, and that the function of the court is to reach a fair and equitable division of matrimonial assets that exist at the time of the divorce.

that consideration should be given to the case of Koay Cheng Eng v Linda Herawati Santoso [31] where the Court of Appeal in adopting the Sivanes approach retained substantially the High Court Order for the wife to be awarded one half of the value of the assets, in an 18 year childless marriage. The Wife’s career as an architect had taken a back seat when the husband had to sit for his medical exams in UK to qualify as a specialist. She was also unable to practise subsequently, upon their return to Malaysia, due to local restrictions. His Lordship, Hashim Yusoff JCA, delivering the judgement of the Court and adopting the principles in the Sivanes case said :-

“From the passages above, it is clear to us that the learned trial judge, in making the order, had considered the contribution made by the [wife] in total. It is our view that the [wife] is entitled to her share of the assets for her contributions to the assets. I would like to quote what Abdul Hamid Mohamad JCA said (as he then was) in Sivanes Rajaratnam v Usha Rani Subramaniam at 279: … [I]f and when the marriage breaks up, it is unreasonable that the court should undertake an accounting of [parties’] income and expenditure during the period the marriage subsists. The function of the court is to make a fair and equitable division of the matrimonial assets that exist at the time of the divorce, taking into account the factors provided by s 76. In the circumstances, in our view, taking all the factors into account, including the direct financial contribution by the [wife] towards the purchase of the properties, the fact that the [husband] must have utilised the proceeds of the sales of the properties to purchase other properties, a reasonable division would be that the [wife] is entitled to half the current value of the properties. In other words, we would confirm the order made by the learned trial judge.” (emphasis added).

CONCLUSION :

It is true Section 76 does set specific principles requiring a Court to categorise assets into jointly acquired and solely acquired before making an order for division at the termination of a marriage. Any deviation from those statutory provisions would be considered a transgression and a contravention of the express terms of Section 76. However, it is submitted there is room for a Malaysian Court, adopting the principles enunciated by the various Court of Appeal judges in the three (3) Malaysian cases aforesaid, in appropriate cases, to recognise and accord mutual respect and equal value to non-financial contributions in a marriage on the basis that both roles are important to and fundamental to the building of the marital partnership. Bearing in mind that during a marriage the spouses had seen fit and readily agreed to distribute their roles between them, one to undertake the economic role and the other the homemaking role and that both must work in tandem to promote the well being of the family, the Court, can in an appropriate case and where the facts justify it, say of a very long marriage, and there are children, accord almost equal value to the non financial role as the financial role i.e. give due recognition of that marriage as an equal partnership of efforts.

In this regard, in order to comply with the express provisions of S 76, in appropriate cases, there is no reason for the courts not dividing it in the proportion 49:51, so that the spouse who paid for the asset still retains the greater proportion and the homemaker spouse is nevertheless awarded a just and fair share. Chan Sek Keong J, as he then was, in interpreting the previous S106 of the Women’s Charter said :-

“the court has the power, in an appropriate case, to award the applicant up to 49% of the matrimonial assets acquired by the sole effort of the (defendant)”[32]

Such an order would be appropriate in cases of a very long marriage where a spouse may have given up a lucrative career to take over the home making and child caring roles and who, in the twilight years of her life, would find returning to the workforce, near impossible.

A wide discretion and power still remains with the Court in determining the proportion and making an order for division which “the Court thinks reasonable”. The principle that should guide the Court is a sense of justice to provide a just and fair division between the spouses via a purposive construction.

[1] Judith Prakash J in Yow Mee Lan v Chen Kai Buan (2000) 2 SLR ® 659

[2] Sivanes a/l Rajaratnam v Usha Rani (2002) 3 MLJ 273

[3] (2001) 1 AC 596

[4] www.marilynstowe.co.uk/2009/12129/whitevwhite

[5] S 11, 11A and 12 of the Act

[6] S 13 of the Act

[7] S15 and 15A of the Act

[8] Family Law Act R.S.O. 1990 C F3 S1 and 5

[9] European Lawyer Reference: Family Law – Jurisdictional Comparisons 2^nd Edition 2013

[10] See: Leong Wai Kum “Principles of Family Law in Singapore” at page 883

[11] See Manokaran Subramaniam v Ranjid Kaur Nata Singh (2008) 6 CLJ 209

[12] (1991) 1 MLJ 274

[13] See Section 102 LRA

[14] See Ching Seng Woah v Lim Shook Lin (1997) 1 MLJ 109

[15] Shirley Koo v Kenneth Mok Kong Chua (1989) 2 MLJ 264

[16] Mohd Hishamuddin JC in Lim Kuen Kuen v Hiew Kim Fook (1994) 2 MLJ 693; also Ching Seng Woah v Lim Shook Lin (supra)

[17] Singapore Court of Appeal Lam Chih Kian v Ong Chin Ngoh (1993) 1 SLR (R) 460 and CPF Board v Lau Eng Mui (1995) 2 SLR (R) 826 where LP Thean JA brushed aside the objections raised by the Singapore CPF Board as mere procedural inconveniences that are not insurmountable.

[18] (1997) 3 MLJ 133

[19] Doris Howell v Pui Jin Kong & Anor (1998) 1 LNS 27

[20] N(f) v C (1997) 3 MLJ 855

[21] Hoong Khai Soon v Cheng Kwee Eng (1993) 3 SLR 34

[22] Yeo Gim Tong Michael v Tianzon Lolita (1996) 1 SLR (R) 633

[23] Ching Seng Woah v Lim Shook Lin (1997) 1 MLJ 109 and Sivanes Rajaratnam v Usha Rani (2002) 3 MLJ 273

[24] Singapore case of Koh Kim Lan Angela v Choong Kian Han (1994) 1 SLR 22 where Karthigesu JA spoke of grouping together all the husband’s assets and applying a broad brush approach

[25] Ryan Neil John v Berger Rosaline (2000) 3 SLR(R) 647

[26] See Leong Wai Kam Elements of Family Law in Singapore 2^nd Edition at page 629-630

[27] See Kuala Lumpur Family Court cases : Baheerathy a/p Arumugam v G Gunaselan a/l V Visvanathan (2012) 6 MLJ 868; Shireen a/p Chelliah Thiruchelvam v Kanagasingam a/l Kandiah (2012) 7 MLJ 315; Chong Yen Chuin v Guan Ah Soon (2014) ILNS 1048 where his Lordship, Vernon Ong J ordered to the wife a 35% share for her indirect contribution to a house owned before marriage by the husband and his brother and brother’s ½ share transferred to him after marriage.

[28] Until May 1997 when the Singapore Women’s Charter was amended and a new S112 was substituted for their S106 (which was in pari material with our S76)

[29] (2002) 2 MLJ 97

[30] (2002) 3 MLJ 273

[31] (2008) 4 MLJ 863

[32] Ong Chin Ngoh v Lam Chih Kian (1992) 1 SLR(R) 574