GAO Expert Valuation Reports Facilitate Just and Equitable Division of Matrimonial Assets

2 Alexandra Road

#03-01D Delta House

Singapore 159919

Client Update | 28/12/2020

Introduction

The division of matrimonial assets following a divorce can be an arduous process. In cases where information is insufficient to draw a direct conclusion on the value of matrimonial assets, or where the value of matrimonial assets is disputed by parties, expert witnesses can help to shed light on the situation by submitting valuation reports to the Court. By employing a range of tests and methods to interpret the available information, these valuation reports help the Court decide how to best divide matrimonial assets in a just and equitable manner.

Background

UTJ v UTK [2019] SGHCF 6 (“UTJ v UTK”) dealt with the division of matrimonial assets between a couple in their seventies (“the Parties”). The Plaintiff (“the Wife”) was a retired primary school teacher, while the Defendant (“the Husband”) was a director at a printing and publishing company. The Parties’ divorce proceedings commenced in 2011, with an Interim Judgment granted in 2015. However, the division of the matrimonial assets and maintenance for the Wife were not heard until UTJ v UTK in April 2018 and May 2018.

GAO was appointed by the Court as an expert witness in UTJ v UTK. As an expert witness, GAO was tasked with submitting valuation reports relating to the Husband’s shareholdings in six companies. Of these, the values of the Husband’s shareholdings in two companies (“Company C” and “Company D”) in particular had been disputed by the Parties.

Companies Managed by One Spouse Included in Matrimonial Assets

The Husband submitted that, because he had acquired and managed the companies in which he had shareholdings without the involvement of the Wife, his shareholdings should be excluded from the pool of matrimonial assets. However, the Court disagreed, and held that his shareholdings do indeed form part of the matrimonial assets.

Two reasons were given for this. First, the Court deemed that the Wife’s noninvolvement with the companies arose out of a division of labor between the Parties as spouses. Second, maintaining nonliability with regard to the companies allowed the Wife to safeguard her financial status in case of any business failures in the companies; her inability to take on any liability was also partly due to her position as a civil servant prior to her retirement.

Furthermore, Section 112(10)(b) of the Women’s Charter defines “matrimonial asset” as any other asset of any nature acquired during the marriage by one party or both parties to the marriage. As such, even though the Wife had not been involved with the companies in which the Husband had shareholdings, the Court found that his shareholdings should still be included in the pool of matrimonial assets.

Court Upholds Valuation Report Disputed by Plaintiff

GAO’s valuation report for Company C valued a leasehold property in Singapore (“the Company Property”) owned by the company at S$6.4 million. This figure was disputed by the Wife, who claimed that the approach taken in the valuation process was unfounded, and that the Company Property had thus been undervalued by some S$2.1 million.

In valuing the Company Property, GAO adopted three methods: the Direct Comparison Approach, the Market Approach, and the Discounted Cash Flow Approach. GAO also considered the views of an expert who had been appointed separately by the Wife, and looked into cash advances the Husband had made to Company C, before completing the final valuation report.

Ultimately, the Court upheld the findings in GAO’s valuation report for Company C, noting that “there was no reason not to accept the Court Expert’s valuation”, and finding that “the Court Expert has adequately explained how he arrived at the valuation”. Company C was accordingly valued at S$11,506,014 and added to the pool of matrimonial assets for division between the Parties.

Conflicting Information on Defendant’s Shareholding Clarified by Expert Input

Although the Husband had sold his shares in Company D to a third party by way of a duly executed share purchase agreement dated 19 July 2007, an annual report filed by Company D dated 2 September 2015 indicated that he still held 8,000 shares of the company. This conflicting information led the Wife to submit that the Husband had not sold his shares in Company D at all.

Based on an analysis of the available evidence and information, GAO determined that the Husband had in fact sold his shares in Company D. In agreeing with this finding, the Court noted that the onus of presenting accurate information on Company D’s stakeholders lay on the company itself, and not the Husband, who had already given up his stake in the company by selling his shares.

GAO’s expert input brought clarity to an otherwise confusing set of information surrounding the Husband’s involvement with Company D. Seeing as the Husband no longer had any stake in the company, the Court decided to exclude the shares from the pool of matrimonial assets.

Conclusion

While the division of matrimonial assets can often be complicated by incomplete, disputed or conflicting information, expert witnesses’ reports can facilitate the Court’s understanding of the circumstances at hand. As an expert witness in UTJ v UTK, GAO produced credible, fair and comprehensive assessments of the matters dealt with in its valuation reports. These valuation reports allowed the Court to arrive at a more just and equitable means of dividing matrimonial assets between the Parties.

Contacts

Please feel free to contact our team at info@gao-cap.com if you have any queries on the above matters.

About GPS

Founded in 2017 after numerous enquiries for various corporate services, GAO Professional Services arose as a one-stop shop for a slew of corporate services to help companies save time and focus on their primary business. A rapidly growing wing of GAO Group, GAO Professional Services now serves a broad base of clients, including but not limited to law firms, multinational companies and high-net worth individuals. Forensic Accounting, e-Discovery & Information Management and Valuation Advisory are some of the many services GAO Professional Services provides.