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Singapore – How Effective Is A Postnuptial Separation Agreement?

30 July, 2014

 

Legal News & Analysis – Asia Pacific – Singapore – Dispute Resolution

 

Introduction

 
In the course of divorce proceedings, parties are sometimes able to negotiate a separation agreement that is intended to settle the parties’ disputes regarding any ancillary issues such as maintenance and the division of matrimonial assets. However, when making its decision on these ancillary issues and particularly on the division of matrimonial assets, the Court has the power to make an order in such proportions as the Court thinks “just and equitable”, and shall have regard to “all the circumstances of the case”. To what extent, then, will a postnuptial separation agreement be taken into account by the Court in ordering the division of matrimonial assets? This was the question faced by the Court of Appeal in Surindar Singh s/o Jaswant Singh v Sita Jaswant Kaur [2014] SGCA 37.

 
In this case, the settlement agreement was eventually held to be binding, and orders reflecting its provisions were made. Notably, the Court of Appeal held that separation agreements should generally be given significant weight in determining the division of assets. In fact, having been influenced by the fact that the separation agreement here was the result of a properly conducted mediation, and that its terms were not inequitable, the Court gave the agreement in question conclusive weight.

 
This decision highlights the value of the mediation process in divorce proceedings, as well as the importance of obtaining proper legal representation to negotiate an effective separation agreement.

 
Brief Summary

 
The parties in this case had been married for thirty-five years. Two years into the divorce process, the parties decided to go for mediation, where they were both represented by counsel. The parties eventually entered into a separation agreement (the “Separation Agreement”) setting out how the issues of maintenance and the division of assets were to be resolved. However, the wife subsequently claimed that she was not bound by the agreement.

 

At the High Court, the Judge effectively rewrote the Separation Agreement. The Judge found that the effective 68% – 32% distribution of matrimonial assets between husband and wife proposed in the Separation Agreement was not just and equitable, and instead ordered the equal division of the matrimonial assets.

 
The Court of Appeal overruled the High Court decision, choosing instead to give the Separation Agreement conclusive weight. In doing so, the Court of Appeal held that a postnuptial separation agreement should be given significant weight when determining the division of assets, unless doing so would clearly result in an injustice.

 
In particular, the Court of Appeal emphasised the importance of the fact that “the Settlement Agreement resulted from a mediation process during which the parties had independent advice”. Parties should be held to an agreement where they have an intention to be bound by it, and where the circumstances show that they fully understand the terms they are entering into. Similarly, parties to a mediation in the context of divorce proceedings should be held to any agreement they have reached.

 
Since the mediation process was properly conducted, and the resulting Separation Agreement was not unfair, the Court decided to give effect to its terms.

 
Concluding Words

 
As demonstrated in this case, the process of the division of assets can be long-drawn and costly. One of the ways this can be avoided is if the parties are able to come to a negotiated agreement without resorting to determination by the Court. However, it is also important to ensure that such an agreement is recognised by the Court.

 
Parties should thus consider entering into mediation, where they will be guided into reaching a mutually acceptable division. Apart from saving time and costs, the Singapore Courts have shown that they will give significant weight to the result of such a mediation.

 
It is also important that parties should be legally represented in the mediation process. This is to ensure that parties are properly advised throughout, and that the resulting separation or settlement agreement has been legitimately obtained. Parties wishing to consult regarding the mediation process may contact Rajah & Tann’s Family Practice below. The Practice Group has extensive experience in guiding and assisting parties in the conduct of mediation, as well as on the issues of maintenance, division of assets, and other related ancillary proceedings.

 

Rajah & Tann

 

For further information, please contact:

 

Chandra Mohan, Partner, Rajah & Tann
[email protected]

 
Lay Lian Kee, Partner, Rajah & Tann
[email protected]

 
Nigel Desmond Pereira, Partner, Rajah & Tann
[email protected]

 

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