What can you anticipate during divorce: Division of Matrimonial Assets

Besides children’s guardianship and custody, division of matrimonial assets has become a trending topic in recent years, in view that the contribution made and the role played by women in family have become more substantial and recognised by the society.

We have prepared some frequently-asked-questions and scenarios based on real-life cases, to provide our readers an insight of what they should anticipate during divorce regarding division of matrimonial assets.

1. What are matrimonial assets?

   Law Reform (Marriage and Divorce) Act 1976 (“LRA”) does not define what are matrimonial assets. Generally, matrimonial assets¹ include but not limited to matrimonial home, shop lots, monies, cars, and shares, that are acquired by joint efforts of the parties during the marriage.

2. Would furniture, cooking utensils and other equipment purchased during marriage be considered as matrimonial assets?

   Purchase of kitchen cabinets, crockery, pots, pans and payment of servant’s salary could be considered as contribution in acquiring the matrimonial assets, which we view that it could affect the ratio of division of matrimonial assets during divorce.

3. What happen if an asset is classified as matrimonial asset?

   If an asset is classified as matrimonial asset, the said asset would be subject to division during a divorce between the parties.

4. What would the Court consider when deciding the division of matrimonial assets?

   With the introduction of Law Reform (Marriage and Divorce)(Amendment) Act 2017 , Section 76 (2) LRA now provides that the Court would consider the following factors when deciding the division of matrimonial assets:

   1. Monetary contribution, which is the extent of the contributions made by each party in money, property or work towards the acquisition of the assets or payment of expenses for the benefit of the family;
   2. Contribution in kind, which is 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 for the family;
   3. Any debts owing by either party which were contracted for their joint benefit;
   4. The needs of the minor children, if any, of the marriage; and
   5. The duration of the marriage.

5. Can assets purchased by one party before marriage be classified as matrimonial assets?

   Yes, it is provided under Section 76(5) LRA that matrimonial assets could include assets owned by one party solely before marriage (hereinafter to be referred to as “Pre-Marital Assets”).However, the other party who wants to claim for a portion shall prove that the said Pre-marital Assets have been:

   1. substantially improved by the other party during the marriage; or
   2. substantially improved by joint efforts of both parties during the marriage,

   in which the Court would consider factors laid down in Section 76(2) LRA when determining whether the said Pre-Marital Assets are matrimonial assets and the division thereof.

6. I did not make monetary contribution as I resigned from job to take care of the family after our marriage. Could I still claim for the matrimonial house purchased during our marriage but solely registered under my husband’s name?

   Yes, you can.
   The Court would not only consider monetary contribution but also would consider contribution in kind by one party. If you could prove that you resigned to become a full-time housewife taking care of the family, cleaned up and taken care of the matrimonial home, all this would constitute contribution in kind.²

7. I acquired intangible assets and accumulated some wealth from it since 2015 before we got married in 2018. Is it possible to argue the wealth accumulated before 2018 is not a matrimonial asset?

   Yes, it is possible to do so.
   We have seen a case where the High Court has separated the portion of Employment Provident Fund (EPF) acquired prior to marriage and after marriage, in which it was held that only the portion of the EPF acquired during marriage could be considered a matrimonial asset.³
   However, please note that if a non-acquiring party who claims for the Pre-Marital Assets able to prove that he/she has substantially improved the assets or this improvement has been achieved by the joint efforts of the parties, the Court is still empowered to order that the said Pre-Marital Assets are matrimonial assets and shall be subject to division.

8. What is the usual percentage for division of Pre-Marital Assets?

   There is no fixed rule on the portion to be awarded by the Court. Previously we had seen division in the ratio of 70:30 and 90:10⁴, whereas in recent cases we have also seen division in the ratio of 65:35⁵.
   In short, the Court would consider factors laid down in Section 76(2) LRA and divide the matrimonial assets in a ratio that is fair, reasonable, and just.

9. My spouse and I are shareholders and directors of a company limited by shares. What are the arrangements we can make if we are considering a divorce? If settlement could not be achieved, what will happen if we go to Court?

   We have seen cases where one party decides to sell his/her portion of shares to the other party and resign from the company, where the other party would pay a sum of money to the selling party as settlement sum.
   If parties decide to bring this issue to Court, the Court will most likely order for the company to be wound up and any clean proceeds to be divided equally between the parties or in a ratio that the Court considers fair, reasonable, and just.

10. I have purchased a property after our separation but before divorce. Would it be subject to division?

    It is unlikely to be classified as a matrimonial asset unless your spouse could prove that he/she has made monetary contribution and/or contribution in kind.

11. My spouse has transferred the money in our joint account to another party during our negotiation for divorce. What can I do?

    You shall consider filing a Single Petition in Court and apply for a Court Order under Section 102 LRA to trace back the money that has been transferred out. However, the Court is only empowered to trace back the disposition made within 3 years before the Single Petition is initiated.

12. My spouse has purchased several properties during our marriage. What should I do to prevent my spouse from selling the properties before our divorce is finalised?

    Similarly, if you have reasonable belief that your spouse might dispose of the matrimonial assets during the divorce proceedings, you may consider filing an application under Section 102 LRA for an injunction to prevent disposition of matrimonial assets until the conclusion of the divorce proceedings.
    Take notice that you would have to show the Court, amongst others, that there is a real risk your spouse would dispose of the matrimonial assets to reduce his/her means to pay maintenance or it is intended to defeat your claim for the matrimonial assets.

13. Could my spouse and I execute an agreement agreeing on division of matrimonial assets?

    Yes, you may consider executing a prenuptial agreement or a postnuptial agreement.
    Prenuptial agreement is an agreement executed between parties before marriage, whereas postnuptial agreement is an agreement executed after marriage, usually when the marriage has broken down but parties attempt to reconcile.

14. What is the weight attached to prenuptial agreement and postnuptial agreement during divorce proceedings for division of matrimonial assets?

    The Court is still bound by the considerations set out in Section 76 (2) LRA. However, Section 56 LRA allows parties to apply to Court to refer to prenuptial agreement and/or postnuptial agreement, provided that the aforesaid agreement is fairly drafted and consented by both parties.
    Generally, the weight attached to prenuptial agreement or postnuptial agreement would depend on the precise circumstances of each case. However, from authorities in other jurisdictions, we view that a postnuptial agreement may bear more weights compared to prenuptial agreement as parties’ marriage has already broken down during execution of postnuptial agreement and it could be argued that the postnuptial agreement is executed with intention and after consideration of parties on the division of matrimonial assets (and other terms).

15. What is your advice when it comes to matrimonial assets to prevent disputes in future?

    Although the Court is bound by the LRA, we view that a prenuptial agreement or postnuptial agreement may be useful to provide parties an insight of how they want to divide the matrimonial assets currently held by both parties or by each party, or matrimonial assets that will be purchased in future.

    If the marriage breaks down, parties may file a Joint Petition in Court and incorporate the terms in the prenuptial agreement or postnuptial agreement, which would help parties minimise the disputes and prevent lengthy litigation process.

    As a conclusion, the law on division of matrimonial assets in Malaysia has evolved with the enforcement of the Law Reform (Marriage and Divorce)(Amendment) Act 2017. It has introduced major amendments to the current law including but not limited to Section 76 LRA, which is the principal section when it comes to division of matrimonial assets.

    We can see that now the Court is granted more powers when deciding on division of matrimonial assets, amongst others that the matrimonial assets are no longer confined to assets acquired by the joint efforts of the parties during the marriage but has been extended to all assets acquired during the marriage and the court may now consider additional factors including but not limited to duration of marriage and contribution in kind.

¹Ching Seng Woah v Lim Sook Lin [1997] 1 MLJ 109
²Owen Koh Tat Gin v Diana Lee Cheng See [2021] 11 MLJ 20, where the High Court held that wife resigned from her job and became a full-time housewife taking care of the family, and gave birth to the first daughter, giving marital life use and enjoyment to this property, all this which when considered constitute her contribution in kind.
³Chee Kok Choon v Sern Kuang Eng [2005] 4 MLJ 461
⁴Loke Sow Leng v Yap Eng Kee [2004] MLJU 290, where the Court granted 90% to Husband and 10% to Wife who is a non-acquirer of the matrimonial assets. The Court further held that usually the Court would grant a range from nominal to no more than 30% to non-acquirer.
⁵Shireen a/p Chelliah Thiruchelvam v Kanagasingam a/l Kandiah [2012] 7 MLJ 315, the High Court ordered that the husband was entitled to 65% of the shareholding whereas the wife was entitled to 35% of the shareholding, as it was clear that the husband has contributed more utilising his business skills and past working experience as compared to the wife.

If you have any questions or require any additional information, please contact our lawyer that you usually deal with.

This article is written by

Tang Joey
Senior Associate, Low & Partners