Divorcing Singapore couple's messy property set-up

03 Oct 2021

SINGAPORE - All divorces are messy but the fiendishly complex property set-up one couple devised gave the courts more headaches than most as they tried to untangle it.

The case involved a 45-year-old owner of a pub and his wife, a 34-year-old flight stewardess, who owned three condominium units together.

Sounds simple but the devil is in the details: They were listed as the joint owners of one of the condo units but had invested around $200,000 in total in the other two units, but these are in the names of two of the husband's friends.

It was not known if the parties made any agreements on their respective stakes in the properties because this is an unorthodox way of investing in real estate. If everything hinged on what the parties had agreed verbally, the couple would have a hard time proving their shares in the properties in a dispute.

One likely reason why some people invest in property this way is to avoid paying the additional buyer's stamp duty, which is 12 per cent for the second property and 15 per cent for the third.

Whatever reason the couple had for their property investments, the transactions came to light in a High Court ruling on the division of their assets after the marriage broke down.

They were together for almost nine years and have two children.

Their total assets were valued at around $900,000, which comprised the condo unit they were living in as well as cash, CPF and other investments.

Their family condo unit had a market value of $1.2 million but the value of assets was smaller, presumably because there was a mortgage that had to be repaid if the property was sold.

In assessing the sum for division, the court looked at the couple's two other property investments.

They put in around $146,000 to buy the first investment condo, which was bought in the name of the husband's friend. The wife contributed $59,000, while the husband provided the rest.

The husband claimed that his share - about $87,000 - was not money for the property but a repayment of a loan owed to his friend. But this claim was not accepted by the court.

The husband invested over $75,000 in the second investment property, which was bought in the name of another friend of his. Just like in the other condo purchase, he claimed he was paying off a loan owed to this friend.

Again, this claim was not accepted by the court because the man did not produce any documents that could prove there was such a loan.

The consequence of 'hiding' assets

When the court rules on a divorcing couple's assets, it has the power to draw adverse inference against the party who fails to make full and frank disclosure. Indeed, the party that is found to have hidden away assets would get a lower share of them.

This was what happened to the husband in this case. The Family Court ruled that the wife should get a 53.5 per cent share, versus the husband's 46.5 per cent.

The husband appealed, arguing that he should get 65 per cent of the share instead because the court did not consider that the purchase of the family home was allegedly made with a loan from his brother.

He claimed that his brother had helped him pay over $1,800 every month towards the mortgage of the matrimonial home since September 2015, and relied on a purported loan agreement dated Sept 1, 2016, signed by him and his brother. But High Court judge Choo Han Teck found that, other than this document, the man could not produce evidence to show that there was indeed such a loan, and dismissed his case.

"The alleged loan agreement was signed one year after the loan commenced; the said agreement is lacking in details, such as the duration of the loan and how much the loan was," said Justice Choo, who noted in his judgment that the man had filed for divorce in July 2016, or more than a month before the signing of the purported loan agreement.

The husband had also said that he had no share in the two investment properties, stating that he was paying off loans to his friends.

But this claim was contradicted by a WhatsApp exchange he had with his wife in which he acknowledged the payment of the principal sum for the first investment property when they tried to resolve their asset division. The judge also found this friend's explanation of the loan as "similarly lacking in credibility". The friend said he had extended cash loans of close to $170,000 to the husband without any loan agreements.

As for the other investment property, the court found that the husband had issued three cheques in favour of the developer for the purchase of the unit. This again contradicted the husband's claim that he had "no involvement whatsoever" in this condo unit. Again, there was no loan agreement between him and this other friend, who purportedly had extended a loan.

What should you do

It should be clear to you by now that when it comes to deals involving money, you should make sure you have proper documents that can help you enforce your rights.

In this case, the Family Court could not make any ruling on who actually owned what share in the two investment condo units as third parties were involved. If there is a dispute, the parties have to start a separate civil suit.

After all, the primary purpose of the court is to help divorcing couples and their children, and such cases do not determine other people's money, even if they are entangled in the couples' fight.