Separation in Singapore and Hong Kong – When are assets no longer regarded as matrimonial?

Divorce by separation is a common approach in both Singapore and Hong Kong, allowing couples to dissolve their marriages without assigning fault. This method involves a period of living apart before the divorce can be finalized.

While it offers a less contentious path to divorce, it raises important questions about the treatment of assets acquired during the separation period. This article explores the legal implications of divorce by separation in Singapore and Hong Kong, and highlights a notable decision in Singapore. 

Divorce trends in Singapore

In Singapore, many couples file for divorce on the basis of separation. In a 2023 Singstat report of applications for divorce filed in 2022, it was reported that 45.2% of such applications were on the basis of 3 or 4 years’ separation. Indeed, this is not unexpected – until divorce by mutual agreement comes into effect, separation is the only way to have a ‘true’ no-fault divorce. It is admirable to avoid conflict even in a divorce, and filing for divorce on the basis of separation achieves that. 

Legal status of separated spouses in Singapore

Separation, however, creates a practical issue for the spouses involved. Whilst they are separated, they remain legally married. What, then, happens to assets acquired during their separation? Can such assets be excluded from division? Or are these assets still regarded as matrimonial assets and therefore liable to division, notwithstanding that the marriage is effectively over? This is exacerbated by the relatively long periods of separation required under Singapore law for a divorce: 3 years with consent of the other party or 4 years without. 

Clarification from the High Court in Singapore: WOS v WOT

The Appellate Division of the High Court (‘AD’) clarified the legal position on 19 April 2024, in a decision known as WOS v WOT, [2024] SGHC(A) 11. 

Skipping the legalese and summarizing the Court’s decision in a nutshell, whilst the parties are separated, they remain legally married. As a result, assets acquired during the period of separation are, by default, matrimonial assets that are liable to division. It is only when the Interim Judgment (‘IJ’) is granted that the marriage is effectively over. Assets acquired thereafter would not be regarded as matrimonial assets and would not be liable to division. 

The AD confirmed that this applies notwithstanding the following factors:

1. Even if the parties were fully separated (e.g. living in separate places, with no further communications as husband and wife) and intended their marriage to have ended as at separation, and
2. Even if one party continued to care for the parties’ minor children post-separation.

Impact of separation on asset division in Singapore

However, the AD noted that there was one situation in which the Court may accept that the date of separation ended the marriage for all intents and purposes, such that assets acquired thereafter are no longer liable to division. This would be if the parties have entered into a Deed of Separation that (1) specifies that the parties intended thereafter to live separate and apart ‘as if each were single and unmarried’, and (2) includes an agreement on ‘all matters that a court would have to consider in ancillary proceedings arising out of a divorce’. The AD affirmed that when the parties have entered into such a Deed, it would be appropriate to regard assets acquired after the date of separation as no longer being matrimonial assets. 

In closing, the AD also noted that in cases involving lengthy separations, the Court would have to take into account the separation in determining the proportion in which assets are divided between the parties. The AD did this in two ways. Firstly, the AD took into account the length of separation in determining whether the marriage could be regarded as a ‘long single-income marriage’. The AD held that in this case it was not, because although the parties were married for 20 years, they were separated for 10. Secondly, the AD noted that, in general, parties’ indirect contributions to the marriage post-separation would ‘generally be reduced’.

 In WOS, the AD found that the sizable pool of matrimonial assets as well as the fact that the bulk of the matrimonial assets were acquired after the separation were significant factors which justified awarding the ex-husband a larger share of the matrimonial assets. The Court also noted that the ex-wife’s contributions to the marriage post-separation notwithstanding her continued contribution in caring for the child of the marriage, would not have been as much as a homemaker spouse’s contributions to a shared home. The AD ultimately reduced the ex-wife’s share of the matrimonial assets on appeal. 

Practical advice for divorcing couples in Singapore

In light of the AD’s decision in WOS v WOT, people who envisage undergoing divorce may wish to consider the following options, for peace of mind as far as their assets are concerned: 

1. Avoid a lengthy period of separation, if possible. With the implementation of the new 6th fact for divorce on 1 July 2024 – i.e. divorce by mutual agreement – this is likely to be more easily achieved. Parties who are concerned that they may not be able to fulfil the requirements for a divorce by mutual agreement, should seriously consider filing for divorce on the basis of unreasonable behaviour, if the relevant facts can be made out. 
2. If the parties desire a period of separation (for instance as an attempt to give the marriage a second chance), then the parties should consider entering into a Deed of Separation. Such a Deed should specify the date of their separation, how parties intend to live separate lives and importantly, an agreement on all their financial and childcare issues. If the parties are unable to agree on all financial and childcare issues, an agreement that all assets acquired after the date of the Deed of Separation be protected from division might still be given weight by the Court and provide peace of mind to the parties. 
3. Parties who enter into a Deed of Separation to crystallise their asset entitlements as at the date of separation are highly encouraged to either (1) list their assets in the Deed of Separation, and / or (2) keep a record of the assets they hold as at the date of separation, backed up by objective documentation. 

The AD’s decision in WOS v WOT is timely and illuminating. It allows parties to make more informed decisions about their financial affairs while reinforcing the utility of a Postnuptial Agreement where they wish to live separate lives and yet have certainty on the finances. Entering into a separation agreement with the benefit of legal advice will help reduce uncertainty and in turn acrimony that inevitably arises from any contested divorce proceedings. 

Legal perspective in Hong Kong: Shorter separation periods 

In Hong Kong, the separation periods required for a non-fault divorce have been significantly less since 1995 when the periods were reduced from two years separation with consent to one, and from five years separation without consent to two. In addition, this legislation, the Matrimonial Causes (Amendment) Ordinance 1995, allowed parties to divorce by joint application which is similar to the new divorce by mutual consent in Singapore. Joint applications can only be on the basis of one year's separation with consent, as in Singapore. 

Managing assets during separation in Hong Kong

Therefore, in Hong Kong, as the separation periods have been shorter for many years, the question of how to deal with assets while waiting for the separation period to expire, has been less of an issue. Nevertheless, it does arise, and it is common in Hong Kong to enter into a Deed of Separation in order to arrange finances and the children in the interim. Typically, a Deed of Separation will include a clause whereby the parties record their agreement to divorce on the non-fault basis, and to remain separated until the time comes to file. Also, in line with the current law on nuptial agreements generally, the parties will record that they have had (or waived) independent legal advice and have not been pressurized into making the agreement. A Deed will typically record whether the parties have had the benefit of full financial disclosure.

In most cases the deed will form the basis of a consent summons which can accompany the divorce petition on filing, and in such cases, the court can make it an order of court on decree nisi (the Hong Kong equivalent of the Interim Judgement in Singapore). The agreement cannot, however, oust the jurisdiction of the court, as with any nuptial agreement and the court will not rubber stamp it. Hong Kong follows the modern trend however that the courts will be more likely to allow an agreement which has been freely entered into with the full intention of both parties to be bound by it. Deeds of Separation made in contemplation of a non-fault divorce are generally upheld. If the parties cannot agree to separate, it is still open for them to proceed without waiting citing allegations of fault: adultery, unreasonable behaviour and desertion. As mentioned above, this will stir up acrimony which may ultimately affect the proceedings resulting in cost, delay and avoidable suffering. The better course of action in Hong Kong, as in Singapore, is a non-fault divorce with a Deed of Separation.

Ensuring a fair resolution 

Divorce by separation provides a viable path for couples in both Singapore and Hong Kong to dissolve their marriages with minimal conflict. However, it is essential for couples to be aware of the legal implications concerning asset division during the separation period. By taking proactive steps such as avoiding lengthy separations, considering deeds of separation, and documenting assets, couples can navigate the divorce process more smoothly and with greater financial clarity. Ultimately, seeking expert advice and formalizing agreements can help reduce uncertainties and ensure a fair and amicable resolution for both parties.