Forum shopping is becoming an increasingly common feature in headline divorces, because parties see an advantage in getting their cases heard before more sympathetic tribunals.
Forefront: By TSMP takes a closer look at the Malaysian tycoon’s divorce, where his wife’s extensive shoe collection housed in their English country estate, becomes a factor in the legal war.
Defining The Field of Battle
Lately, the titanic divorce battle between Malaysian tycoon, Dr. Khoo Kay Peng, the non-executive Chairman of Laura Ashley, and his wife, Pauline Chai, has been making media waves. The battle lines have been drawn – Dr. Khoo has chosen his field of warfare in Kuala Lumpur, but Ms. Chai prefers to engage swords in London, going so far as to disclose to the English High Court that she kept 1,000 pairs of designer shoes in her sprawling estate in Hertfordshire in order for the court to agree to take jurisdiction. Thus far, Ms. Chai has successfully obtained a court order in England for her husband to pay her an interim maintenance of £50,000 a month. Dr. Khoo’s position is that under Malaysian law, a wife’s domicile follows that of her husband. Presumably, both parties believe that Ms. Chai would be entitled to a lesser pay out if the divorce proceedings were heard in Malaysia. And so the battle rages on, on both fronts.
In Hong Kong, the divorce of top engineer, Otto Poon, has unnerved trust professionals. Hong Kong’s Court of Final Appeal ruled that a family trust controlled by Mr. Poon worth HK$1 billion was to be treated as his financial resource and that Mrs. Poon was entitled to approximately HK$750 million. Trusts are usually set up to ring fence assets against creditors and other claimants. For the court to decide that the settlor of the trust had a continued interest in the trust assets (the “financial resource” finding made by the court), undermines the raisons d’etre of many trusts.
In order to reach the conclusion that the trust was Mr. Poon’s “financial resource”, the Hong Kong judges looked very closely at the workings of the family trust and the assets held by the trust. The court held that the test of whether the discretionary trust was Mr. Poon’s “financial resource” depended on whether the court is satisfied that if Mr. Poon were to request the trustee to advance the whole or part of the capital or income of the trust to him, the trustee, acting in accordance with its duties, would on the balance of probabilities be likely to accede to that request. In making this assessment the Court ought to take into account the creation and terms of the trust; the letters of wishes; the nature of the trust assets; and previous distributions made by the trustee. Looking at the facts, the Hong Kong Court was satisfied that the family trust was indeed Mr. Poon’s “financial resource”.
He Who Draws The Battle Lines Wins The War?
Why this chest beating about which court to have jurisdiction? The recent “big money” divorce cases in England may have something to do with it.
In 2007, the so-called “King of London Insurance Market”, John Charman, was ordered to pay his ex-wife, Beverly Charman, the sum of £48 million, the biggest divorce pay out at that time. Last year, the English courts ordered hedge fund billionaire, Sir Chris Hohn, to pay £337 million to his ex-wife, Jamie Cooper-Hohn.
As a result of these recent bloodlettings in London and Hong Kong, these two jurisdictions are beginning to develop a reputation as the divorce capital of the world and Asia, respectively, for marriages in the Commonwealth. Claimants are angling to have their cases heard before these – hopefully more generous – judges.
English law subscribes to the yardstick of equal division as a starting point (and often the end point as well) between a couple. This philosophy is also applied in equal force to wealthy couples regardless of the parties’ roles as the breadwinner or homemaker. In Hong Kong, the Court of Final Appeal has also said that to confine a non-working wife’s award to the sum needed to meet her ‘reasonable requirements’ is patently unfair and discriminatory. Unsurprisingly, many wives of wealthy Chinese businessmen have sought to file divorce proceedings in Hong Kong instead of Mainland China. The challenge with filing divorce proceedings in London or Hong Kong is for the spouse to show a sufficient connection to these jurisdictions. Otherwise, the other spouse may successfully apply for a stay of these proceedings.
It is interesting to contrast the English and Hong Kong approach to division of matrimonial property with Singapore’s family law. In Singapore, the courts do not start with the yardstick of equal division. In a careful study of Singapore cases, a leading commentator has demonstrated that in divorces involving high net worth individuals, the court has generally awarded the spouse a range between 35% and 40% of the total matrimonial assets. This trend has led a leading family law expert in Singapore, Ms. Lim Hui Min, to comment that “generally, a “super” homemaker who has not contributed to the matrimonial assets can look forward to being granted 50% of the matrimonial assets, at most. A “super” breadwinner, however, would usually be granted more than 50%.”
Will Singapore divorcees go forum-shopping too?
Given these statistics, high net worth couples with properties abroad, may find themselves arguing that their marriage splits should be presided over by a foreign judge, rather than the Singapore courts.
Nobody gets married in the expectation of an unhappy end to the union. And broken marriages plague both rich and poor alike. However, when you have a thousand pairs of shoes in your English country home, or a trust fund in the billions, the simple fact is that there is more at stake financially when your marriage starts to splinter. In addition to fighting over who gets the kids and the wedding silver, these days extended legal campaigns are fought over which court should have jurisdiction, because of a perceived arbitrage in the divorce awards in different courts.
Arguably these are problems that only rich people suffer from. But an end to any marriage is a bitter pill, even for the fabulously wealthy. And anything we can do to alleviate any future suffering – especially if there are children involved – is good legacy planning.