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Not paying one’s fair share in divorce? New law will make it harder to hide assets and dodge maintenance

Not paying one’s fair share in divorce? New law will make it harder to hide assets and dodge maintenance

Source: Straits Times
Article Date: 22 May 2023
Author: Theresa Tan

Those convicted of giving the Maintenance Enforcement Officers (MEO) false information can be jailed up to six months, or fined up to $5,000, or both. MEOs do not require a defaulter’s consent to get information about his means and assets from third parties like banks, Housing Board and the Central Provident Fund Board.

Those who have to pay maintenance will find it a lot harder to hide their wealth and not pay the sum to a family member, such as an ex-wife, when a new unit of Maintenance Enforcement Officers (MEO) starts work. 

This is because the MEOs do not require a defaulter’s consent to get information about his means and assets from third parties like banks, Housing Board and the Central Provident Fund Board.

The MEOs, whose role is announced as part of the Family Justice Reform Bill that was passed in Parliament on May 8, will also replace the existing Maintenance Record Officers (MRO), the spokesmen for the Ministries of Law and Social and Family Development (MSF) said in response to questions by The Straits Times.

The MRO was a role introduced in 2016, in a pilot to help the courts identify those who shirk maintenance payments and impose harsher penalties against them. 

Unlike the MEOs, MROs have no power to demand information or documents from an ex-husband, for example, even when they suspect he is hiding information to avoid paying his former wife maintenance, the spokesmen said.  

They said the MROs play a “limited role” to help the parties involved put together the relevant information and documents for the court, and rely on the parties being “forthright and co-operative”.

But “cooperative” and “forthright” are hardly the words used to describe those who refuse to pay maintenance, say lawyers interviewed.

This is why the MEOs’ powers to obtain information from third parties are critical to differentiate between those who really cannot afford to pay and those have money but refuse to pay. 

Lawyer Kee Lay Lian, a partner at Rajah & Tann, said: “Some parties are not happy with the quantum (of maintenance) they are ordered to pay.  Or they refuse to pay out of spite or to make things difficult for the ex-spouse.”

With the necessary information on hand, the MEOs can refer defaulters with genuine financial difficulties to financial aid schemes. 

The courts will also be in a better position to decide on the appropriate punishment for those who can afford to pay but refuse to do so.

This will have a deterrent effect and reduce the number of maintenance enforcement applications, the spokesmen said.

Unlike the MROs, the MEOs will hold conciliation sessions to help couples reach an amicable out-of-court settlement. 

The parties involved will be asked to provide the necessary and sufficient information themselves, but if they fail to do so, the MEOs can turn to third parties for such information without their consent.

It is a criminal offence to provide false information when asked by the MEOs or the courts. For example, those convicted of giving the MEO false information can be jailed up to six months, or fined up to $5,000, or both.

The new MEOs, who are part of the new Maintenance Enforcement Process, come as cases of non-compliance with maintenance orders remained “fairly high” even after various sanctions against defaulters were introduced over the years, Law Minister K. Shanmugam has said.

There was an average of 2,700 applications under the Women’s Charter to enforce maintenance orders a year between 2017 and 2019, and 15 to 20 per cent were repeat applications made within the same year.

Another significant measure introduced under the law is the show-payment order, which the court must issue when it is satisfied that the maintenance order has been breached.

Issued with such an order, the respondent has to show that they have paid the maintenance by specified dates. The Court will specify a jail term they could be sentenced to, if they fail to show proof of payment without a good cause.

The spokesmen said the penalties for a breach of show-payment orders are in addition to the current penalties provided under the existing law for non-compliance with the maintenance order.

A person can be jailed for up to six months for each failure to show proof of payment for the maintenance arrears, which are the sums owed.

And he can be jailed for up to one month for each failure to show proof of payment of one month’s worth of payable maintenance, which is the sum they have to give the other party each month.

Mr Jeremy Cheong, director of JCP Law, said the move to empower the MEOs to turn to third parties for a defaulter’s financial information is a bold move that will have a significant deterrent effect on defaulters. 

This is unlike the current situation where it can be tedious and costly for the aggrieved party to file a discovery application to try to uncover the defaulter’s finances and they may not find out all the facts even after doing so, Mr Cheong said.

He added: “With the MEO, it makes it so much harder for the respondent to hide assets.”  

Another significant change under the new Law is that it makes it easier for applicants to stop respondents from dissipating assets, such as transferring their assets to a relative or moving money out of the bank account.

This is often done so that the other party does not get his fair share of the matrimonial assets, or so that the respondent could pay less maintenance.

The new Bill introduces a rebuttable presumption that if certain conditions are satisfied, the respondent will be presumed to have intended to dissipate his assets to frustrate the maintenance claim.

With this rebuttable presumption, the onus is now on the respondent to prove that he did not intend to frustrate the maintenance claim. This is instead of the applicant having to prove that the respondent was trying to dissipate assets, which is difficult, lawyers explained.

Ms Wong Kai Yun, co-managing director at Chia Wong Chambers, said: “Under the old processes, it is a lot more tedious and less effective in getting the guy to pay up. The guy can play punk for a long while before there is a real big consequence to pay.

“But with the new processes, there are more checks in place to ensure that payment is made.”

The spokesmen for the two ministries said they will give further updates on when the new measures will come into effect.

Source: Straits Times © SPH Media Limited. Permission required for reproduction.


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