Enclosed be is the full speech by Kiran Dhaliwal from Messrs Y.N. Foo & Partners during a seminar on Family Law held at Concorde Hotel on 27 November 2014
When parties enter into a contract of marriage, they expect the marriage to last a lifetime, i.e. “till death do us part”. However, some marriages do not last that long and instead end up in divorce, which in recent years unfortunately (or fortunately for some), has seen an uptrend. During a divorce, the Court will make the necessary orders as regards the financial arrangements of the parties and the division of matrimonial assets.
It is when the Court makes the financial orders that the allegation is often leveled that “you intend to take me to the cleaners!” This has been the time immemorial allegation that husbands have usually leveled at the wife, the most recent example of which will be the much publicized case of the Malaysian business man tycoon and his Malaysian beauty queen wife. However, we have seen an increase of cases where it is the wife who is the economically stronger spouse, and the one who is trying to “protect” assets from the reaches of the husband.
It is this wish to “protect” assets, and the fact that we have an adversarial system of litigation where court proceedings are perceived as a “fight”, where one party “wins” and the other “loses”, which seems to propagate situations where tracing becomes necessary. We all know the famous maxim “All’s Fair in Love and War”.
It is usually where one spouse has all the information and details about the family income, acquisition of assets and wealth portfolio. The other spouse has no information, either from lack of interest, preferring to allow the other spouse to deal with the financial aspects of the marriage, or because they have been deliberately kept in the dark. Either way, and for whatever reason, if you are faced with a spouse who has no idea what assets are available in a marriage, either upon death or divorce, you may need to consider tracing assets.
In this paper, I will only be dealing with non-Muslim marriages and the provisions of the Civil Law.
What is tracing?
Asset tracing is the process whereby a “money trail” or a “document trail” is followed either:-
- to find an asset i.e. to identify the specific assets that are available for distribution on death or division on a divorce. What is the asset, and where it is; or
- to determine the source of funds by which an asset is acquired.
When is asset tracing necessary: If the marriage is dissolved by death
Where a marriage is dissolved by death, the estate of the deceased spouse will be distributed or divided either:-
- on the terms of the deceased’s Will; or
- if there was no Will, by the intestacy laws, for the Muslim under the Syariah law and for the non-Muslim under the civil law and the Distribution Act 1958.
Asset tracing may be necessary upon death:-
- if the Will does not provide particulars (or insufficient particulars) of the assets, i.e. if the Will does not set out the details of the assets to be distributed, or
- if there is no Will and the person dies intestate.
In both situations, asset tracing at death will be the process of acquiring information and documentation to determine what assets are available for distribution, either by Will or if there is no Will, under the Distribution Act 1958.
In the event the beneficiaries are unaware of the extent of the estate available for distribution, the beneficiaries (i.e. the surviving spouse, any parents and/or children) or the executor/administrator, will need to locate the assets or trace what assets are available for distribution.
For example the terms of the Will are expressed generally and merely state that the deceased gives all his assets, movable and immovable to his listed beneficiaries. If there is no list of assets provided, the beneficiaries will need to conduct a tracing to locate the assets, to find what assets belong to the deceased. A tracing will be conducted to discover what properties were owned by the deceased, what bank accounts he had, if there are shares in a Bursa account, the account number of the CDS Bursa Malaysia account.
Tracing will be used to locate assets either:-
- In the name of the deceased: If the assets are in the name of the deceased spouse, tracing will be used to determine what assets are available and where they are situated.
- In the name of a nominee: The beneficiaries will also need to consider whether there are any assets held in the name of nominees, where the beneficial ownership in fact belongs to the deceased.
Where assets are in the name of a nominee, and if the nominee is now claiming ownership of the asset, the source of funds showing the acquisition of the asset will need to be traced back to the deceased. This evidence will then be the premise for proceedings to recover the asset, and proof that the property was beneficially owned by the deceased and held on a resulting trust by the nominee.
Tracing can be used to show the evidence that the source of funds to acquire the asset was from the deceased, and the nominee is only holding the asset on trust for the deceased.
When is asset tracing necessary: If the marriage is dissolved by a divorce:
In a divorce, asset tracing will be relevant if:-
- There is no disclosure: parties are not providing full disclosure of the assets that are available for division by the Court, and/or
- Assets are held by nominee: There is reason to believe an asset is held by a nominee and the beneficial ownership remains with the spouse. A tracing is required to show either the document trail of how the asset is now transferred into the name of a nominee, or the money trail to show that the source of funds is from the spouse.
- To show contribution: In circumstances where the Court requires proof of the respective contributions of each party towards the acquisition of the asset.
I will be focusing mainly on tracing in a divorce scenario, but the tracing and forensic methods will be applicable to tracing in the event of a death.
Divorce in Malaysia
From an article in the Malay Mail Online, the number of divorces in Malaysia has more than doubled in the eight years from 2004 to 2012. In 2012, there was a total of 56,760 divorces recorded, a combination of both, Muslim and non-Muslim divorces. The article set out statistics provided by the Syariah Judiciary Department Malaysia (JKSM), that the number of Muslim couples getting divorced rose by 2.3 times from 20,916 in 2004 to 47,740 in 2012, and to 49,311 last year.
Although the number of divorce for non-Muslim marriages are less in total numbers, i.e. in 2012 there being 9,020 cases of non-Muslim divorces with 47,740 cases of Muslim divorces, nevertheless there was a higher rate of increase of divorce in the non-Muslim communities, i.e. from 3,291 divorces in 2004, increasing by 2.7 times to 9,020 cases in 2012. See more at: http://www.themalaymailonline.com/malaysia/article/one-divorce-in-malaysia-every-10-minutes
Clearly, the numbers of Malaysians who are divorcing is increasing, the 2012 statistics showing that there is a divorce in Malaysia every 10 minutes. So in the span of this one-hour session, 6 previously “happily married” couples will be divorced.
In the event the marriage is dissolved by a divorce, the financial aspects including the division of matrimonial assets will be dealt with by the Court, either the Civil or Syariah Court depending on whether the parties are non-Muslim or Muslim.
What happens during a divorce?
In a civil divorce, parties can agree to terms, for example the amount of maintenance to be paid and the division of their assets, and file a Joint Petition for Divorce. If there is no agreement, then an application will have to be made for the Court to dissolve the marriage, and to make orders, inter alia, for maintenance and the division of matrimonial assets. You will need to file a Petition for Divorce or Judicial Separation.
Is tracing necessary in all divorce cases?
Whether or not tracing will be necessary will depend on the facts of your case, the issues before the Court and your case theory on the facts. It is your case theory that will allow you to:-
- determine the relevant issues before the Court.
- assess the evidence you will need to prove the various elements of your case, and
- determine if that evidence is available and whether tracing is required.
Not all cases will require a tracing exercise, and as a general rule, tracing is an added expense in the litigation process. On occasions it can be a substantial expense. Careful consideration must be given to determine if it is necessary.
If tracing is necessary, your case theory will be crucial to enable you to provide clear and concise instructions to the professional appointed to do the tracing. It is important that you are clear about what you need in terms of the evidence that you require to assist you to put your case to the Court, as otherwise the tracing professional may embark on a wild goose chase, with nothing of useable value provided to you for use in Court.
It is accordingly important that you be clear about the issues that are before the Court and what you need to prove, before you consider doing any tracing.
The Issues Relevant in a Divorce.
In general terms, the issues before a Court when dealing with a divorce will be:-
- What orders ought to be made as regards children of the marriage, i.e. orders for guardianship, custody, care and control, and access;
- How much maintenance ought to be ordered for the children of the marriage, and whether maintenance ought to be ordered for a spouse, and if so, how much.
- What are the matrimonial assets of the parties, and what orders ought to be made to divide these assets.
What are the relevant facts/evidence to enable the Court to address the issues?
Once the issues are clear, you can then determine the facts and evidence you need to be placed before the Court.
Taking only the financial aspects, as that is what is relevant when talking about tracing, the facts or evidence that the Court will require to be placed before it will be:-
- Evidence as regards the income of parties, as well as the expenses and liabilities of parties: This will allow the Court to ascertain the “means and needs” as well as “station in life” of the parties. See Section 78 and 92 LRA 1976. This will include as examples, salary slips, income tax returns, evidence of any other source of income including as examples rentals or dividends, proof of expenses including receipts and invoices.
- As regards the matrimonial assets, the particulars of the assets that are matrimonial assets, the net value of the matrimonial assets and the respective contributions of the parties in acquiring the asset. See Section 76 LRA 1976. The evidence will include title details and documents for landed properties, bank statements, fixed deposit slips, company search records, company accounts, and so on.
- In order to put into evidence the relevant matrimonial assets, you must first determine what are the matrimonial assets. Matrimonial assets, as defined by Section 76 LRA 1976 are any assets acquired by parties during the marriage, either by their “joint efforts” or by the “sole effort of one party” and include “assets owned before the marriage by one party which have been substantially improved during the marriage by the other party or by their joint efforts”.
- Assets are defined widely and include monies, properties, unit trust, investments, businesses, partnerships and companies.
- Section 76 LRA 1976 sets out the considerations for the Court when ordering a division of the matrimonial asset, and you will need to lead evidence of these considerations, which is:-
- for properties acquired by joint efforts: The extent of contributions made by each party in money, property or work towards the acquiring of the asset; Any debts owing by either party which were contracted for their joint benefit; The needs of the minor children, if any, of the marriage and subject to those considerations, the Court shall incline towards equality of division.
- for properties acquired by the sole effort of one party: The extent of the contributions made by the other party, who did not acquire the asset 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 these considerations, the Court may divide the asset or the proceeds of sale in such proportion as the Court thinks reasonable, but in any case the party by whose effort the asset was acquired shall receive a greater proportion.
- Evidence of dissipation. The Court can also consider and take into account assets, including property and money that has been disposed either by a sale, gift, lease, mortgage or other transfer of ownership, within the preceding three years, with the object on the part of the person making the disposition of reducing his or her means to pay maintenance or of depriving his or her spouse of any rights in relation to that property. The Court can set aside the disposition or grant an injunction preventing that disposition. See Section 103 LRA 1976. Evidence will need to be led to show the dissipation i.e. bank statements to show transfers, share transfer forms, evidence of property transfers and such.
What is the purpose of asset tracing in divorce?
In a divorce, there are two purposes to asset tracing. Either:-
- to locate assets: This is where tracing is used to prove that a marital asset exists. This scenario arises where the other spouse is not disclosing the extent of assets that are available for distribution.
- to separate assets: To show that an asset which is in the name of the spouses (whether joint name or sole name), is not in fact a matrimonial asset, i.e to trace documents and evidence to show either that it was acquired before the marriage (with no improvement during the marriage), or that there was no contribution at all from the other party (whether direct or indirect).
Tracing to locate assets
In a divorce, where your case theory is that there has been non-disclosure of assets, you will need to provide some proof to the Court that:-
- there are assets that have not been disclosed;
- the asset “belongs” to the spouse i.e. either directly or beneficially in the name of a nominee.
- it is a “matrimonial asset” i.e. acquired by both parties with contribution, either direct or indirect.
Tracing here will mean following the paper trail or money trail to see if it ends up in an asset being acquired.
Various methods are available to you to “discover assets”. You can:-
- search public records, for example land office records or company records, to discover if there are assets registered to a party, but undisclosed during proceedings.
- an analysis of bank statements provided to you either by your client, or from disclosure from the other side, can be a mine of information. You would want to look out for periodic payments which may point towards a loan repayment for a property, withdrawals into other bank accounts, or to nominees.
Tracing to separate assets
If your case theory is that a particular asset is not a matrimonial asset, you will need to bring proof that:-
- the acquisition is by only one party with no contribution at all (direct or indirect) by the other party, or
- that it was acquired before the marriage and that there was no improvement to the asset subsequent to the marriage.
In this situation you will want to trace the funds by which the asset was acquired, to show that the acquisition was solely by one party, with no contribution by the other. Tracing here will involve:-
- showing detailed records for example, deposit and withdrawal slips, cheque butts or images, receipts, bank statements, this will be evidence to show that the acquisition of the asset was solely by your client.
- The other party, will be tracing to try to show that funds of both parties were deposited into the joint account, and therefore it is jointly acquired and a matrimonial asset.
Issues will arise where there are mixed or comingled funds used towards the acquisition, example monies from a joint bank account. The other side will argue that the funds are therefore “joint”, both parties had therefore contributed to the acquisition of the asset and it is accordingly a matrimonial asset.
To raise an argument that there was no contribution from the other party, you will need to trace the funds in the joint account to their source, to show that the funds were only deposited by the one party, and therefore not joint funds.
How to trace:
There are various methods to trace, and the method you will use on the facts will be dependent on a balancing exercise between the cost of tracing, and the value of the result to the client.
The methods that can be used will include:-
- Ascertaining first, what evidence is available to your client, as in their possession and control.
- What evidence your client can obtain i.e. documents and information that your client may have access to, for example documents that maybe available at home, in a shared home computer, from the other party’s phone if your client has access to it.
- Searching public records, including searching land office or company.
- Hiring a private investigator.
- Seeking professional assistance of either accountants or forensic accountants.
- Applying to Court for discovery.
What evidence is available to your client?
You should be ascertaining from your client, at an early stage, what evidence is available to your client.
If, for example, your client is the economically stronger spouse and the one who solely acquired the matrimonial asset, you will want evidence to show your client acquired the property, that there was no direct or indirect contribution by the other spouse. You will request client obtains, for example loan repayment statements, deposit slips, receipts for payments made. Secure all evidence, ensure copies are available.
In practical terms, it is always wise to advise clients to be proactive and gather as much information as they can on the financial and asset position. This can be achieved by a client gathering their own evidence and information from correspondence available to them, for example bank statements or credit card statements. Information may also be available on the home computer, from emails, or from the internet.
The information, once obtained, should be reviewed to consider whether these documents point towards other assets that may be hidden. For example, bank statements can be used to see if there are any fixed payments being made, which could indicate the existence of another property. Some people make notes on their bank statements to show what payments are for. These annotations can be a mine of useful information.
You may want to assist your client in looking at these documents as it will also assist you in framing discovery applications pursuant to Divorce Rules 1980 and the Rules of Court 2012, as well as preparing cross-examination questions.
If information is not available to client, how can this evidence be obtained?
- Searches on public records
There is some information that is available from public records, and this includes information of properties registered in a party’s or a company’s name, bankruptcy records, information lodged at the Registrar of Companies as regards businesses, partnerships and companies.
- Can only be conducted at the land office, and must be done at the specific land office where the property is situated. So you will need to know which land office to go to, each land office is separate and they do not share information.
- You will need either the full name together with old and new identity card number; or you will need the title details i.e. the HS(D) No./HS(M) No/ QTR No., Lot No, Mukim/Bandar, District and State. If you only have the address of the property, you will first need to go to the relevant Municipality office (i.e. the Majlis Perbandaran/Bandaraya) to search for the quit rent records for the title details.
Bankruptcy Search (Individual/Company)
Can be conducted at the Department of Insolvency Headquarters at Putrajaya or an Online search at their website www.insolvensi.gov.my under the ‘Services’ link.
Information needed to do a search:-
- For an Individual – Full name and old and new identity card number;
- For a Company – Full name and company registration number.
Can be done either at the Companies Commission Malaysia offices (SSM), or online from their website http://www.ssm.com.my/ using the e-info service.
There will be information available as regards the directors and shareholders, as well as the company financial statements. However, this information is only as good as what the company provides, and in the event of a family dispute, and where a “family” company maybe involved, the opposing party could delay submission of proper information and financial statements.
In circumstances such as these, it may be prudent to assess your own client’s involvement with the company, and whether the client can obtain the necessary information directly themselves, by entering the premises and copying the documents, or from the company accountant directly.
- Private investigators
Private Investigators can obtain information on employment, for example where a spouse against whom maintenance is being sought, alleges that he is not working.
They are also able to obtain information as regards what bank accounts someone has, the bank account numbers and the available balance in an account. However, this information is of limited use as usually the private investigators are unable to get documents from banks, only information. It is useful to challenge the disclosure, or to request discovery orders as bank accounts can be specifically referred to.
Private Investigators can also obtain information from public records about properties registered in the name of a party or a company or business in which a party may have an interest.
- Forensic accountants
Forensic Accountants, sometimes referred to as “hound dogs” will try and trace assets. They will take a more investigative approach, as compared to accountants who have been appointed to value an asset.
A Forensic Accountant will consider whether there has been any deception, fraud or non-disclosure. The Forensic Accountant will check transactions to ascertain whether they were valid, transactions will be conformed, an investigation will be conducted and “abnormal” transactions will be scrutinized.
A Forensic Accountant could also retrieve data from a computer hard drive, and consider data that had been deleted. The problem would be in gaining access to the hard drive.
Where there has already been some disclosure and some documents available, a Forensic Accountant could also assist in looking at the disclosure to ascertain whether:-
- As regards bank accounts: consider if there is activity that points to other undisclosed assets. Examples may be transfers to or from other related bank accounts, that had not been disclosed. There could also be payments towards properties that are not disclosed.
- As regards businesses, companies and partnerships whether the transactions and accounting is reasonable and within good practices or whether there has been an attempt to minimize profits and “cook” the accounts.
- Application to Court for Discovery
Both the Divorce Rules 1980 and the Rules of Court 2012, imposes on a party in matrimonial proceedings a mandatory and spontaneous duty of disclosure, and a general obligation to provide disclosure of all relevant documents where it can be shown that a document is relevant and in the possession, custody or power of the person from whom disclosure is sought.
The Spontaneous Mandatory Obligation to disclose
The spontaneous and mandatory obligation to disclose arises upon a party to divorce proceedings being served with a Notice to Proceed with Ancillary Relief.
Rule 61(2) of the Divorce Rules 1980 states that:-
“Where a respondent … is served with a notice … in respect of an application for ancillary relief … he shall… file an affidavit in answer to the application containing full particulars of his property and income, and if does not do so, the court may order him to file an affidavit containing such particulars.”
This affidavit is usually referred to as the “Affidavit of Means”.
Further information and documents may be sought by letter:
Thereafter, upon receiving the Affidavit of Means, Rule 65(4) of the Divorce Rules 1980 states that an applicant may, by way of a letter, request further information regarding any matter contained in the affidavit, and states:-
“Any party to an application for ancillary relief may by letter require any other party to give further information concerning any matter contained in any affidavit filed by or on behalf of that other party or any other relevant matter, or to furnish a list of relevant documents or to allow inspection of any such document, and may, in default of compliance by such other party, apply to the registrar for directions.”
Rules of Court 2012 (Discovery provisions) also apply in matrimonial proceedings:
The general provisions on discovery as set out in the Rules of Court also apply in matrimonial proceedings. Rule 24 of the Divorce Rules 1980 states:-
“Rules of the High Court Order 24 rule 12 (discovery and inspection of documents) shall apply to a defended cause begun by petition as it applies to an action begun by writ”
The relevant provisions of the Rules of Court 2012 are:-
Order 24 Rule 12 of the Rules of Court 2012 that:-
“(1) At any stage of the proceedings in any cause or matter the Court may, subject to rule 13(1), order any party to produce to the Court any document in his possession, custody or power relating to any matter in question in the cause or matter that falls within one of the following descriptions:
- documents on which the party relies or will rely;
(b) documents which could-
(i) adversely affect a party’s case; or
(ii) support a party’s case; and
(c) documents which may lead to a series of inquiry resulting in the obtaining of information which may-
(i) adversely affect a party’s case; or
(ii) support a party’s case.
(2) The Court may deal with the documents when produced in pursuance of an order made under paragraph (1) in such manner as it thinks fit.”
Order 24 Rule 13 Rules of Court 2012 that:-
“An order for the production of any documents for inspection or to the Court shall not be made under any of the foregoing rules unless the Court is of the opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs.”
Which Method to Use?
Which method to use and whether to appoint a professional to assist in tracing will depend on the following:-
- Value of the assets, and accordingly the value of the claim.
- Resources available to the client, how much can they afford to pay.
- Assess the cost of forensic accounting/tracing versus the value of the claim the client will hope to make.
- Location of assets in question: local or overseas to determine practicality of who to appoint.
Accountants, chartered accountants: reasonable grounds that client will be able to claim the assets traced, client able to afford fees chargeable, and the cost of tracing does not outweigh the value of the claim.
Forensic accountants: known as “blood hounds”, they will do an investigation and try to discover hidden assets. Time consuming, cost usually high.
Balance between a small firm where cost maybe lower, or maybe not; or a large accounting firm, where cost is usually higher (in 5 figures), but they will have more resources and experience, and links with overseas firms. Useful if the asset pool is large, and scattered across different jurisdictions.
The friendly accountant: if a client does not have resources, explore if they have a friend/relative who may do the tracing for free, reduced price. Explore ideas with the client. Make decisions bearing in mind cost versus potential claim.
The appointment should be by the client, and you should be clear that the accountant is not your agent. The duty should be owed by the accountant to the client, and not through you as otherwise, you will be opening yourself to allegations and dispute as regards the work done by the accountant.
What to watch out for: Red Flags of Dissipation
If your case theory involves an allegation of dissipation, i.e. that funds have been transferred or hidden, you should review with the accountant/forensic accountant the following common methods of dissipating funds/assets:-
- Conversion into resalable assets: Look out for large withdrawals of cash or equity, example withdrawal of funds from bank accounts. Trace the funds to investigate whether now being hoarded or converted to a resalable asset, for example, gold, jewellery, investment securities, property acquisition in own name or name of nominee.
- Conversion into liquid investments: Example funds converted into unit trust, savings bonds, bank transfers overseas, or cash taken overseas.
- Transfers to 3rd Parties as nominees: assets (example real property) or funds (from bank accounts) can be transferred to 3rd parties, usually a family member, close friend, business partner or even the Party Cited/Co-Respondent.
- Transfers to a Trust: a Trust maybe set up for the children/family, for example.
- Transfers to an Insurance Policy: either purchasing or making lump sum payments into an insurance policy to increase the overall value of the insurance policy. Usually the parties only look at the face value of the policy, and not the value/equity that maybe built up in the policy by pre-payments. These funds in the insurance policy would then be a source of funds for the party, after the proceedings are completed.
- Large deposits into flexi-loan accounts: a review of bank accounts or loan repayment statements may show a history of large payments made to reduce outstanding loans and therefore the interest payable to the bank. Flexi-loan accounts as these monies are still available for withdrawal. These deposits should be reviewed to discover the source of funds. That may then disclose hidden income sources.
- Credit Card Prepayment: Credit card statements should be reviewed to assess whether there have been pre-payments, again a way to hoard cash that would still be available to the party upon completion of proceedings.
- Loans to Company: Directors may have large loans to company remaining due to them, these “loans” maybe a devise merely to convert “personal” cash into company cash, to be “repaid” to the Director after the proceedings are over.
Why is asset tracing necessary?
At death: if a Will is drafted, with sufficient particulars of the assets that are available, either within the Will or in an annexure, then tracing should not be necessary.
Create awareness with your clients, that they should particularize their Wills, as otherwise the beneficiaries are left not knowing what is available. Issues arise where a deceased was traditionally very secretive about the assets they own.
At divorce: The short answer is that tracing should not be necessary.
In divorce proceedings, parties are both under a spontaneous obligation to provide full and frank disclosure of their income and all assets that are relevant to the proceedings. Solicitors, as officers of the Court, must advice clients that they are obligated to disclose their asset position, and we must advise our client to comply with this requirement.
This spontaneous obligation on parties to disclose fully the financial and asset position recognized in the case of Leow Kooi Wah v Philip Ng Kok Seng & Anor  3 MLJ 133 where, Justice Mahadev Shanker, who was one of the architects of the LRA 1976, had recognized that the Divorce Rules 1980 imposed upon parties a spontaneous duty to exercise the utmost good faith in making the fullest disclosure of all relevant information. The consequences of not doing so would result in the Court drawing an adverse inference against the party who refuses to disclose.
The duty of a solicitor to properly advise the client has been recognized in a Singapore High Court case, Koh Teck Hee v Leow Swee Lim  4 CLJ Rep 913 which quoted with approval Rockwell Machine Tool Co. v. EP Barrus (Concessionaires)  1 WLR 693. I am extracting the quote from that case so that the extent of the obligation placed on solicitors is clear, although that case was not a matrimonial matter, the principle stated therein will have equal (if not more) applicability in matrimonial proceedings. In that case, it was stated:-
“The law requires solicitors to take positive steps to ensure that his client is aware of the precise scope of the obligation to make a full and proper discovery. In Rockwell Machine Tool Co. v. EP Barrus (Concessionaires)  1 WLR 693, at 694, Megarry J said:
‘It seems to me necessary for solicitors to take positive steps to ensure that their clients appreciate at an early stage of the litigation, promptly after (the) writ (is) issued, not only the duty of discovery and its width but also the importance of not destroying documents which might by possibility have to be disclosed. This burden extends, in my judgment, to taking steps to ensure that in any corporate organisation knowledge of this burden is passed on to any who may be affected by it.’
A litigant has an obligation to locate all documents that could be relevant and pass them to his solicitor who will decide whether they must be disclosed. All relevant documents must be disclosed because their existence must be revealed to the opponent. The documents must be organised and listed. The solicitor sorts out any documents that are privileged from production.
The litigant must also identify those relevant documents which were in his possession, custody or power but are no longer.”
How should you deal with and advice your client
We must not forget that we are, first and foremost, officers of the Court. We owe a duty to the Court. We must advise our client’s, keeping foremost in mind this duty we owe to the Court.
As officers of the Court, we must advise our client of:-
- their duty to provide full and frank disclosure,
- the repercussions that exist in law against those who do not provide full and frank disclosure, i.e. that an adverse inference can be visited on them if they are discovered not to have provided full and frank disclosure.
So what happens when you meet your client:
Generally speaking, you will be advising either the economically stronger spouse or the economically weaker spouse. Again generally speaking, the approach will be different depending on which spouse you represent.
Usually, the economically stronger spouse will want to secure assets, and not have them divided with or transferred to the less economically stronger spouse. They will not want to give disclosure. The economically weaker spouse will want to find out what the other spouse has in terms of income and assets, and will usually be alleging that there has been transfers of assets, i.e. dissipation of assets. The economically weaker spouse will be demanding disclosure.
– The economically stronger spouse will refuse disclosure, and
– The economically weaker spouse will demand disclosure.
As solicitors, should we condone this idea? The idea that “All’s fair in Love and War”, information is to be covered, assets are to be hidden. I say “No”. We owe a duty to the Court, as officers of the Court, we owe a duty to our client and in matters of family law, I think we owe a duty to society to ensure a “fair fight” instead of a “dog fight”.
We also owe a duty to our client, to ensure that the Court does not make an adverse inference against them. We need to advise the client of the dangers of non-disclosure, which will include:-
- loss of trust, and thereafter your client’s credibility will be questioned.
- Litigation cost and time increased by reason of interlocutory applications being made, including applications for discovery,
- The Court can make an adverse inference, and make orders that are not in the client’s favour.
Illegally obtained evidence
If an argument is raised that the information obtained by your client or the Private Investigator (for example as regards the bank accounts) is “illegally obtained evidence”, the Malaysian position is that this information can be used, especially where the other party is trying to hide the information and not provide disclosure. Equitable principles will be considered and the Court should consider what would be equitable in the circumstances. See Court of Appeal case of Lim Lean Heng v Wako Merchant Bank (Singapore) Ltd & Other Appeal  3 CLJ 9.
Thank you and I wish you all the best in your practice.