Author: leslie_wongsk@webstergy.com

By PracticeForte Advisory Affiliate Lim Seng Siew, Director of OTP Law Corporation

In the first part of this series of articles we had discussed the birth of a start-up.  In this second part, we discuss the next steps in the growth of a start-up.

This article was first published on www.otp.sg

Taking the First Baby Steps
So you have incorporated your start-up. The founders’ equity has been sorted out. Funds have been raised from family and friends. What next?
You need to engage external contractors and hire employees. Dealing with employees first.

Employees
An employment letter is actually a contract in letter form between the start-up and the employee. In fact Singapore’s Employment Act requires that key terms of the employment must be set out in a written document called “KETs” or Key Employment Terms. The form in which the KETs takes is left to the employer; it can be a letter or a ‘formal’ contract. The Act also requires that the employer must issue to the employee an itemised payslip. Details can be found in the Ministry of Manpower’s website at http://www.mom.gov.sg.

The key employment terms include: (a) name of employer; (b) name of employee; (c) job title, main duties and responsibilities; (d) start date of employment; (e) duration of employment, if fixed term; (f) working hours, working days and rest days; (g) salary period; (h) basic salary; (i) fixed allowances; (j) fixed deductions; (k) overtime payment period; (l) overtime rate of pay; (m) other salary related components (eg bonus and incentives); (n) annual leave, sick leave, hospitalisation leave, maternity leave and childcare leave; (o) medical benefits (eg insurance or dental benefits); (p) probation period; (q) notice period; and (r) place of work.

In addition, it would be prudent for a start-up to include in the employment letter clear terms about: (a) confidentiality and IP rights; (b) entitlement to share options; (c) restraints from joining competitors; and (d) termination procedures.

Do not forget that working shareholders/directors are also employees who should be given employment letters and itemized payslips. They should be paid a reasonable salary for the services that they perform for the start-up as an employee. Such services must be differentiated from their contribution as founders for which they would have received equity.

In addition to the Employment Act, there are also other regulations governing the relationship between the employer and the employee. One example is the Central Provident Fund Act that mandates an employer to contribute funds (over and above the salary payment) and to deduct a portion of the employee’s salary to pay into the employee’s CPF account. The entitlement to holidays, annual leave, sick leave as well as working hours are regulated and the employer has to meet these standards. The employer is also mandated to have insurance cover for injuries and occupational diseases suffered by employees that occur in the course of their employment.

It may be tempting for a start-up to ‘treat’ employees as external independent contractors to avoid having to meet these various regulations. It might even save on CPF payments. Basic advice. Resist the temptation. Crafting the independent contractors’ agreement so that they won’t be considered as employees is complex and risky. Remember an earlier advice, keep things simple. Also, the law is not stupid. If a person “looks like an employee and sounds like an employee”, the law will treat that person as an employee, no matter what the documents say.

External Contractors & Service Providers
A start-up is not going to be hiring everybody whom it needs for its operations. Some of the services a start-up needs will genuinely be provided by external contractors or service providers. Contracts will have to be entered into with such external parties. Often they have their ‘standard contracts’ for the start-up to accept. Usually there is nothing wrong with that. You just have to know what to watch out for. Look out for the commercial terms: like how much to pay, when to pay, what are the services or products that you are paying for, and when those services are to be provided. At the very least, they have to be acceptable to you.

Also look out for the ‘fine print’. Often the detailed terms are set out on the reverse side of an invoice or in a web link referred to in the invoice. Read them. Ask questions of your contractor if anything is not clear. If any clause is not acceptable to you, negotiate to amend them. There is no such thing as a non-negotiable clause, only that the contractor is not prepared to negotiate. Remember that you are the customer. If the contractor wants your business, they should be prepared to negotiate. As a customer, you have to be satisfied before signing on the ‘dotted line’. If you believe that the terms are so onerous that you cannot accept them, be prepared to walk away and find another provider. Don’t sign in the hope that the onerous clauses won’t be invoked.

Another thing to look out for are the indemnities that the contractor is asking from you. An indemnity is when you agree to cover any claims that the contractor will face because they are doing work for you. In general, you should not be giving any indemnities since you are the customer. However, in some cases, the contractor may properly require indemnities from you. One example is an indemnity to cover claims against the contractor arising from any wrongful use by you of other people’s intellectual properties that the contractor is relying on to provide its services. For a start-up, sometimes it is important that the contractor maintains the confidentiality of the information that you provide them and that you own the intellectual property rights of the product that they are doing for you. Make sure the appropriate clauses are included.

Your Teenage Years
You’ve got your employees. Your contractor has completed your key products which are up and running. Let’s say that you are providing online services with a SaaS model to your customers. You begin to explore your surroundings and test your horizons. You seek out your first customers. Potential competitors are taking notice of you.

Your Customers
Just as your service providers or external contractors needed you to sign a contract before they begin work for you, you now require your customers to sign your contract before you provide your services to them. You should do this even if you are provided your services without charge to your customer, say during the trial stage. The contract between a start-up and its customers governs more than just payment, it sets out the scope of the relationship, and hence the respective obligations, between you and your customer.

The Contracts
Unfortunately, drafting a be-spoke contract is a costly business. If funds are tight, and particularly while your products or services are only at the early trial stages, we believe that most start-ups can make do with generic contract templates that cover about 80% of common use cases.
We have basic contract templates that should help many start-ups with limited funding, in particular non-disclosure agreements, website terms of use, software licensing agreements, and privacy policies, among others. Email us at enquiries@otp.sg.

We will be happy to customise any of these documents to suit your particular needs. Every start-up’s need is different (or so the founders think), and the start-up’s contracts are similarly diverse (or so the lawyers think).

As your business grows into adulthood, you will fall in love and think about getting married. Just as in life, bringing in new investors and acquiring other businesses that complement your core business is tricky. In our third part, we will explore the issues that arise when businesses get ‘married’.

By Susan Tay, Founding Partner of OTP Law Corporation & Co-Founder of PracticeForte Pte Ltd.  This article was first published on OTP Law Corporation’s website:

This is the 6th part of a series on therapeutic justice and how it may be applied in family cases in Singapore. You may read Part 1, Part 2, Part 3 here, Part 4 here and Part 5 here.

In these parts, we dealt firstly with how the essence of Therapeutic Justice for family cases is in the healing. The next parts involve the perspectives and roles of the different players and they are namely, The Lawyer, The Accountant, The Mediator, The Mediation Advocate and in this article, The Neutral Evaluator.

Family cases will be restricted to divorces and the issues arising out of a divorce. These issues include division of assets, financial support and importantly, children’s matters like custody, care and control, access.

Neutral Evaluation For Family Cases- What, Why, When, Who, Where and How

WHAT IS NEUTRAL EVALUATION?
The Law Society of Singapore Neutral Evaluation Scheme (LSNES)
On 15th June 2021, the Practice Direction that the Family Justice Courts in Singapore may refer matrimonial cases to the Law Society of Singapore for mediations and/or neutral evaluations took effect.

These cases involve asset pools of S$2m and above. They are cases that do not qualify for court mediations which are provided by the Family Justice Courts free of charge. You will be pleased to know the Law Society’s fees are only S$150 per hour. With S$2m worth of assets to be determined, these fees are, to use the oft understatement: eminently reasonable.

They have also expanded the modes of resolution to Neutral Evaluation, in addition to Mediation. Law Society of Singapore’s panel of mediators and neutral evaluators are only one of two panels that the Family Justice Courts will refer to under the Practice Direction. For now, Law Society is the only one of the two with a panel of neutral evaluators specifically selected for family cases. I am one of these eight neutrals in this pilot phase.

This is heartening news, both for the public and the professionals. A widening in scope and qualified professionals can only mean better accessibility and visibility for the peace pathways to dispute resolutions.

Ok, so what is Neutral Evaluation really?
To quote Assistant Professor Quek Anderson Dorcas , “Neutral Evaluation involves a third-party neutral giving the parties a non-binding assessment of the case at an early stage on the basis of brief presentations made by the parties. Unlike mediation, in which the mediator assists the parties in reaching an agreement without necessarily stating an opinion on the case, the explicit aim of Neutral Evaluation is to provide a without-prejudice evaluation of the strengths and weaknesses of a case. 

Faced with an independent assessment of the merits of the case, and a better understanding of their prospects of success at trial, the parties are more likely to settle their dispute.”

What kind of disputes are suitable?
Currently, the following have been identified as suitable for Neutral Evaluation under the pilot phase :
• Marital/ Financial Disputes
• Divorce and reasons for the breakdown of the marriage
• Nullity and reasons for nullity
• Maintenance for former wife or husband who has been incapacitated during the marriage
• Financial provision on divorce/ judicial separation or nullity. Assessment of pool of matrimonial assets. Division of the matrimonial assets.
• Maintenance for the children of the marriage
Cases suitable for Mediation only and not for Neutral Evaluation:
• Parenting and care arrangements for the children, including access and contact time
• Where and with whom the children should live
• Custodial arrangements and major decisions concerning the children’s upbringing relating to the children’s education, health and/or religion
• Relocation of children
• Abduction or wrongful retention of children either for Hague Applications or otherwise

Cases not suitable for both Mediation and Neutral Evaluation:
• Determination of the appropriate forum
• Domestic violence cases
• Guardianship matters
• Contempt of court cases – breach of court orders and obligations including access and care and control orders
• Bankruptcy or insolvency
• Status either of individuals or of their relationship
• Any claim or involvement of third party interests, unless that third party agrees in writing. This also applies to cases where an asset is held jointly with a third party or is alleged to belong beneficially either in whole or part to a third party
• Child protection proceedings

WHY NEUTRAL EVALUATION?
Neutral Evaluation fills the gaps and serves where Mediation may fall short. It is primarily useful and overwhelmingly so as a form of reality check.

At its core, neutral evaluation is really this: A highly experienced practitioner who will study the evidence, hear the disputants and then gives them an evaluation of the case. Unlike being before a judge in court, and this is a massive advantage of neutral evaluation over litigation, this process is very flexible, can be friendly and yet effective as a forewarning of things to come.

Imagine this: you have been in a fiery and ulcer-inducing court fight and are now weeks from trial. S$200,000.00 down after paying legal and court fees, you have just received yet another invoice for another S$100k to pay the massive hearing fees since you have 11 witnesses and the hearing will likely last for 14 days. Imagine being told only then that even if you win, you cannot recover enough to even pay your fees. Or worse, that even if you can, the stomach ulcer has developed into something more sinister.

Neutral evaluations give you an opportunity for some sort of a reality check very early on. In family cases, we hope you get it even before you file your writ. Mainly because of this 110% proven fact: acrimonious matrimonial battles destroy familial relationships even between relatives who are not directly involved in the fight. Too often, these relationships never heal or are repaired. Which brings us to-

WHEN?
Now. If you are reading this article, you may be contemplating divorce. You may be thinking of a way to see if you can get a fair assessment of what is likely to happen if you go to court for: your rights over maintenance or matrimonial assets. So do it before you even file the writ. It can even be before you engage your lawyers although I personally feel lawyers are indispensable, really, for anything that will culminate into a court order.

Neutral Evaluation is especially useful before you go into mediation. With the likely outcome and any false expectations demolished, parties can be better ready to come to a reasonable settlement.
Like I have said in previous articles, oftentimes, judges don’t order what you want. It is not uncommon for both parties to feel that way.

WHO, WHERE AND HOW
I will take the easy way out and refer you to the Law Society’s website for information on the Who, Where and How: https://adr.lawsociety.org.sg/family.
In particular:
• WHO: a list of the panel members here: https://adr.lawsociety.org.sg/familylaw_panellists
• WHERE AND HOW: for a detailed work flow: https://adr.lawsociety.org.sg/lsneds
In summary, if you are ready for a neutral evaluation, complete this application form here: https://adr.lawsociety.org.sg/applyforlsneds and then email it to adr@lawsoc.org.sg.

Quite simple really.

Ms Susan Tay was appointed as one of eight neutral evaluators by The Law Society of Singapore for the Pilot Family Panel of Neutral Evaluation Scheme. In time to come, more neutrals will be trained and appointed to further the aspirations and administration of Therapeutic Justice in the Family Justice Courts.

By Wan Cheng Chan

All families are different.  Unfortunately, not all families are equal.

When Elo and I met more than 9 years ago, we fell in love. Just like any other couple, we had dreams of starting a family one day and growing old together.

As two women from two different countries, we knew that our chosen life journey was not going to be easy.  After fighting for our families to accept us, jumping through administrative hurdles to secure our marital and legal status, we were finally ready to have a child together.

However, if there was one thing that we had not expected on this journey to becoming a parent, it was the strong support we had received from our family, friends and even strangers.  From conception, delivery and finally raising a child, we were surprised by the unexplainable bond that we had with others that wanted to help us succeed and become parents.

In fact, the biggest takeaway from all of this was realising that we were not alone.  When we first wanted to know how we could even start a family, there was already plenty of help at hand thanks to readily-available resources and advice given by other same-sex families, both in Singapore and France.  Looking back, the making of baby L was actually straightforward because we had guidance and just needed to follow medical protocols.

Hence, we knew our biggest challenge was going to be the fight for the legitimate recognition of our family after the birth of baby L. Turning once again to our community of same-sex families, we were able to get in touch with a French lawyer, Maitre R, who helped us launch the legal procedure to obtain the second parent adoption in France once baby L was born.

Second parent adoption is typically done when one LGBTQ partner is biologically or already legally related to the child and the “second” parent needs to establish the parent-child relationship legally.  This process grants the “second” parent the same rights as the “first” parent without the legal parent losing any rights.

However, we knew we were headed towards unchartered territory because there were very few cases of bi-national, female, same sex couples requesting for second parent adoption in France. Our lawyer was particularly concerned due to the lack of adoption rights between our two countries for same-sex couples.

Given that we had already chosen to establish our lives in France, we had to make the tough decision to not claim Singapore citizenship rights for baby L in order to urge the French courts to apply French laws and allow Elo to adopt our son.  However, we needed this decision to be substantiated by legal documentation.

As such, we contacted Susan Tay Ting Lan from OTP Law Corporation (who had previously helped us apply for our LPA and drafted our wills) to assist us in drawing up an affidavit to clarify the interpretation of Singapore law in our case.

Fortunately for us, Susan was able to tap into PracticeForte Advisory’s EU legal contacts and link us up with a French affiliate, Sabrine Cazorla Reverre, who was familiar with French family laws.  A Skype call was quickly arranged with all parties and, shortly after, Susan had her team put together an extremely comprehensive affidavit explaining our difficulties of obtaining Singapore citizenship for baby L and the legal impossibility of the Singapore courts of ever permitting to Elo’s adoption of our child.

This document not only provided legal proof to substantiate our case, it also helped our lawyer and us better understand the application of laws on same-sex families in Singapore.  In many ways, the document was a culmination of the EU-ASEAN connect showcased by PracticeForte Advisory.

A month later, we finally received a positive verdict regarding our adoption application.  After 2.5 years of trying to have a baby and almost 2 years of legal limbo, we were finally, officially, a family.

While our journey to becoming a family was not easy, I feel hopeful for the future of other same-sex families. For each step taken, we were able to push social and legal boundaries as well as challenge opinions even if these were just miniscule changes.  Most of all, we were only able to do all these thanks to our “village of allies”.

As a parent, I can only hope that baby L and his children will grow up in a world where families are no less equal, just because they are created differently.

“A special note of thanks again to Emelia Kwa, Sabrine Reverre from Rajan Chettiar LLC, Susan Tay and her entire team from OTP Law Corporation as well as PracticeForte Advisory for helping us in our fight for adoption”.

By Susan Tay, Co-Founder of PracticeForte & Founder of OTP Law Corporation.

This is the 5th part of a series on therapeutic justice and how it may be applied in family cases in Singapore. You may read Part 1 here, Part 2 here, Part 3  and Part 4 here.

In these parts, we dealt 1stly with how the essence of Therapeutic Justice for family cases is in the healing. The next parts involve the perspectives and roles of the different players  and they are namely, The Lawyer, The Accountant, The Mediator and in this article, The Mediation Advocate.

Family cases will be restricted to divorces and the issues arising out of a divorce. These issues include division of assets, financial support and importantly, children’s matters like custody, care and control, access.

What is a Mediation Advocate?

Not a well-known profession in this part of the world, a mediation advocate, very simply defined, is a party’s professional representative in a mediation. The mediation advocate is definitely the presenter of the client’s case. She is the negotiator of that settlement the client is often desperate to reach. He is the protector of the client’s interests and makes sure any settlement reached secures that interests. Sometimes, she can also be the conflict resolver. In practice, a mediation advocate is quite often the client’s lawyer as well.

In short, a Mediation Advocate is  Negotiator + Protector = Conflict Resolver. The Mediation Advocate advances the client’s case, protect the client’s interests, persuade acceptance and is non-adversarial.

A mediation advocate is definitely not a litigation lawyer.

Role of a Mediation Advocate vs The Lawyer

I have been a lawyer for 30 years and an active mediation advocate since 2013. That was when mediation becomes mandatory for all divorce cases involving child/children under 14 years old. That age limit has since be raised to just under 21 years old. 

I am therefore in a good place to say this: the role of a mediation advocate is quite different from that of a litigation lawyer. There are some who may even think that the mediation advocate and the litigation lawyer as inherently having contradictory interests.

For instance, the lawyer may want to have the case proceed to trial and the outcome determined by a judge. Often this is because the lawyer feels that the law is on the client’s side.  A mediation advocate, on the other hand, will earnestly help the client to settle the matter without further litigation. This may mean putting peace of mind over legal rights. Something repugnant to the lawyers who put rights over all else. A lawyer may think: this settlement is letting the other party off too easy because my client should be entitled by law to more

Mediation Advocate as the Guardian of Client and Client’s Interests During the Peace Process

 I often regard myself as a guardian or even a bodyguard for my client at the mediation session. Most of my clients hate the idea of sitting across from the person they are having a dispute with. So many times, the tension in the room is so palpable you can dance to it.  Both parties will be sitting facing away from the other, arms folded across chest, lips pursed.  At once angry and scared and feeling threatened, the reaction is likely to escalate by threatening back.

A good mediation advocate has to be the calm one. Not add to the fray of tensions, threats and escalations.

How To Better Serve the Client As A Mediation Advocate?

A mediation advocate advances the client’s case through persuasions, not arguments. You made the points amiably but firmly, with no need for aggression (even the passive types) or raised voices. Nice generates nice and so, quite often, the atmosphere immediately becomes more conducive for discussions. When things get heated and they do, then it will be a good time to indicate to the mediator perhaps a break or private sessions will be good. A good mediator will often beat you to that. Your mediation advocate selects that mediator for you.  

At the private sessions, the mediation advocate can then bring some very sensitive issues to the mediator. She will explain why these issues, which may be regarded as inflammatory or outrageous by the other party are important to the client. This is especially common in family disputes.

Family Law Does Not Always Solve Family Issues

In my focus of work which is family law, I firmly believe that the law often cannot and does not resolve many issues for families. These issues are multi-faceted. They involve complex mix of emotions (especially love, ironically), expectations, distrust, egos. They involve innocent parties beyond the married couples like children, parents, in-laws, helpers.

Many of these issues will not go away with a court ordered dos and don’ts. In divorce proceedings,  parties do go back to court again and again if they have no other means to resolve their disputes.

 Further, issues involving family members like children change. They grow up, they need more. Income capacity alters, ability to provide diminishes. And the old orders will not be fair anymore. Variations are thus necessary and parties must expect that orders will not remain forever. This idea can be unsettling.

Therapeutic Justice and the Role of A Mediation Advocate

I believe that people should learn how to adapt to the changing scenarios without resorting to litigation. 

A mediation advocate can help advance that by 1^st doing a good job at reaching not just a settlement, but an enduring settlement. If that settlement is enduring, parties are also likelier to work better together. It is then much easier to promote mediation as a default pathway to dispute resolution, an effective peace approach everyone can come back to again and again.  

This article was first published in Law Gazette, an official publication of The Law Society of Singapore.

By Rajan Chettiar, PracticeForte Advisory Affiliate

“You are too nice,” he said. “How do you want me to be at a mediation?” I replied. “I am worried,” he said. I had given an assessment of the outcome at the mediation to him. “If you are worried, I cannot do anything for you,” I replied. This is an exchange I had with a client recently who wanted adversarial conduct during a mediation.

If being non-adversarial is a cause for complaint in family proceedings, then we cannot fault lawyers who are litigious during mediation or in Family Court proceedings. The complaints of lawyers’ conduct in court proceedings, the role they play in increasing the acrimony between parties by encouraging their clients to be litigious by filing a multitude of interlocutory applications is not a fair one then. The duty is then not only on lawyers to be amicable; the burden falls equally on the clients.

The recent recommendations of the REFF Committee on promoting non-adversarial family proceedings need to be extended to creating public awareness of amicable divorces. Non- adversarial proceedings in the Family Justice Courts will only become a norm if clients choose amicable divorces over contentious divorces.

The most welcoming recommendation by the committee is the extension of the judge-led approach. Though not a new recommendation, the hope is that our Family Court judges will exercise this approach with more rigour and no fear against litigants in person. Currently litigants in person are perceived by the Bar to be treated lightly by the Court which gives them courage to be unreasonable and rude to counsel. Recently I was involved in a long hearing with a litigant in person; she was extremely rude and continued to berate me in court. A senior Judge just told her to tone down her manner which did not have any effect on the lay person who continued with her behaviour during the hearing which spanned over three days.

I am heartened to note my advocacy for pre-mediation and counselling before a spouse files for divorce has now become a reality. The effectiveness of these much awaited measures lies in its implementation.

The future of family law practice is undergoing changes. There is a big move to help litigants who are unable to afford legal fees to obtain divorces. Schemes will be rolled out to help these needy litigants. This may affect family lawyers’ livelihood. Yet, this class of litigants may not be able to afford lawyers in the first place. Though I appreciate the concerns, are we as lawyers overreacting? As clients often tell us, we need to think out of the box and adopt new strategies in providing our legal services.

I have been a full- time family lawyer for 17 years out of a 23-year law career. I concentrated on family practice as I wanted to use law to help people. The practice has become competitive with many more firms now focussing in this area of law. It has become demanding in terms of ever changing court processes and different types of demands from clients. Clients expect their lawyers to understand them better, often to even know their unspoken thoughts and concerns, be vocal, be aggressive and outbeat their opponent counsel. They often talk about strategies and being fully aware of processes up to the minute. Many want to be actively involved in the administration of their matter.

Lawyers choose family law practice because of love for the law and a wish to help couples and children. I find many members of the Family Bar protecting their clients’ interests a little too seriously. They become personal towards the opposing counsel. They are at times unnecessarily aggressive towards opposing counsel. Sometimes I wonder whether it is their own divorce they are fighting for. How do these lawyers forget their previous persona and become friendly towards their opposing counsel in social situations? I find this behaviour strange and I am unable to change my personality in the way that others easily make the switch. Are we, family lawyers, chameleons?

There are other lawyers who consistently use the cloak of clients’ instructions to pursue aggressive family litigation. The practice of family law is a business but at the same time it is different from other areas of law where families and the future of children are affected. If clients, against sound legal advice, decide to litigate and can financially afford to do so, this is different from lawyers encouraging clients to litigate and file a sleuth of interim applications in addition to divorce proceedings.

Although mandatory mediation in family proceedings have been implemented for some time now, there are lawyers who will hint at litigation at the first opportune moment during the first round of mediation.

The first question many family lawyers ask at the first client meeting is, who are the opposing counsel and then proceed to advise the client on how the opposing counsel will conduct the matter and advise on legal fees accordingly.

Besides promoting amicable divorces, amiable advocacy should be encouraged in the Family Bar.

At the end of the day the question is whether we feel we have done an honest day’s work and can have a peaceful sleep.

By Susan Tay of OTP Law Corporation

This is part 2 of my article on the case of UZN v UZM. In Part 1 of my article here, I gave some background on the rationale behind dividing matrimonial assets.

You can read the one from the perspective of a forensic accountant, Wan Yew Fai of Strix Strategies Pte Ltd, here.

Both Wan Yew Fai and I are part of PracticeForte Advisory, a multi-disciplinary grouping of professionals. We often work as a team in matrimonial cases especially when the matrimonial estate comprises of more complex portfolios like shares, equity in companies, real estates in different countries and intricate family businesses.

This is thus a joint effort to give 2 perspectives on the recent Court of Appeal case of UZN v UZM. One from the accounting expert and one from a family lawyer. I also split my article into 2 parts.

Here I will dive straight into the case of UZN v UZM.

Facts of UZN

In UZN v UZM [2020] SGCA 109, the Court of Appeal dealt with how it should draw an adverse inference against a spouse who failed to provide full and frank disclosure of his assets.

This is a case of a 14-year childless marriage when the husband had initiated divorce. Highly acrimonious, by the time of the Court of Appeal (CA) judgment, proceedings had been ongoing for 6 years. With no children issues, the ancillary matters dealt mainly with how matrimonial assets should be split, maintenance and costs. The wife was working in the husband’s law firm for 13 years as a manager before she found out about his affair. She was apparently sacked around the same time.

The long and short of it is this: the wife was awarded S$763,440.88 or 40% of the matrimonial asset in the High Court of Singapore as her share in the matrimonial pool.  This amount was increased to S$1,129,181.58 (at only 32% of the matrimonial pool) after she appealed to the CA.

What actually happened in the two courts that caused the difference?

It was how the CA drew adverse inference differently from the High Court.

Disclosure Obligations

The CA sets out the absolute duty of disclosure by spouses in divorce proceedings as follows:

Unlike proceedings in civil trials, the determination of the pool of matrimonial assets in family proceedings takes place in the absence of cross examination (unless, exceptionally, cross-examination is specifically ordered by the court). …. these procedural constraints result in the parties’ duty of full and frank disclosure taking on particular significance. Each party’s discovery obligations must be strictly observed; since it is ultimately for the court to decide which of the parties’ assets belong in the matrimonial pool, it is not for the parties to tailor the extent of their disclosure in accordance with their own views on what constitutes their matrimonial assets …(emphasis added)

Undervaluation of Assets

It then went on to explain the four different types of undervalue of matrimonial assets as:

1. Inadvertence
2. Intentional concealment
3. Wrongful dissipation
4. Innocent dissipation

Differences in the category of undervaluation may have different consequences where the court is concerned.

Adverse Inference

In a case where a spouse hid assets beyond the reach of the other spouse by refusing to disclose the full extent of his/her worth, the one recourse for the other spouse has always been adverse inference. Simply put, it is akin to drawing a negative conclusion against the non-disclosure spouse.

The court does this in 2 ways:

1. The quantification approach where the court adds back into the pool of assets what it believes to be the worth of assets that the non-disclosure spouse tries to hide or
2. The uplift approach where the court increases the percentage of the other spouses’ entitlement to the pool of assets.

In the example of UZN, after the High Court went through the parties’ assets based on their respective accounting experts’ reports, it drew adverse inference against the husband using the uplift approach. The wife’s proportion was increased by an additional 8% to 40% instead of 32%. This was despite the High Court agreeing with the expert that the cash balance in the Husband’s bank account cannot be a mere S$500. The High Court also made a finding that the husband’s undisclosed assets came up to some $1.62m in cash. It did not add into the pool this discrepancy which would have been the quantitative approach. The matrimonial pool size was calculated to be just over $1.9m without the discrepancy.

In the CA however, the treatment was to use the quantitative approach instead. Not only did the CA add back into the pool the said $1.62m, it also added a whole host of other expenses like legal costs, expenses for the upkeep of the firm, and jewellery. These added yet another $200,000 into the matrimonial pool and the matrimonial pool size bloated to $3.73m.

Using the quantitative approach and without increasing the wife’s percentage entitlement, the wife got, as a result, almost one third more.

My Observations

In my view, adverse inference using the uplift method often yield unsatisfactory outcomes. A percentage uplift in the region of 10% is hardly enough of a dent to dissuade a spouse who is determined to dissipate the assets.

Look at the case in UZN. If the High Court had adopted the quantification approach and added what it deemed to be the size of the undisclosed assets i.e. $1.62m, the total pool of assets would have been S$3.52m. At 32% of $3.52m, the wife’s share would have been S$1.126m which is really quite a bit more than 40% of $1.9m.

It is interesting to note that the High Court also treated his adverse inferences between the spouses differently. There was a hybrid of both approaches as he also drew adverse inference against the wife for the S$10,000 legal costs she spent. This he used the quantitative approach by adding the amount back into the pool. It would have been consistent if he also used the quantitative approach for the husband’s assets.

It is clear that the quantitative approach yields a better and perhaps more equitable split for the other spouse. I use the word equitable also to reflect that adverse inference should have a real negative effect on the non-disclosure spouse.

The CA has made it clear that a quantitative approach is the more appropriate approach to take when there is a finding on the value of the undisclosed assets:

When a court makes findings in respect of the value of undisclosed assets, those findings should be reflected in the manner in which the court gives effect to the adverse inference. This is true whether the court’s findings provide a basis for making a reasonable estimate of the value of the undisclosed assets, or are direct pronouncements on what the undisclosed assets are worth.

Legal and accounting experts’ help thus played a critical role for the wife in this case as the Courts were able to make the necessary findings on the values, resulting in a quantitative approach that gave her more.

By PracticeForte co-founder Susan Tay

This is my article on the case of UZN v UZM. You can read the one from the perspective of a forensic accountant, Wan Yew Fai of Strix Strategies Pte Ltd, here.

In this article, I will share my perspective as a lawyer.

Before I start on the case proper, I think some background on the rationale of dividing matrimonial assets may be useful.

Why Should I Split My Assets with The One I Am Going to Divorce?

I often hear this from clients, whether husband or wife: it is not fair, this is my money, earned solely by me OR these are assets bought solely with my hard-earned money, why should I share this with that fella (by the time of divorce, these clients can’t even speak the other spouse’s name),  especially when that fella is the unfaithful spouse, the irresponsible one who gambles/squanders away all our hard-earned money not contributing anything to the marriage.

Sometimes, although not often, and quite ironically, this same party feels a sense of entitlement when it comes to the other spouse’s assets. It’s a case of your money is my money but my money is my money.

Having said that, I think we will all appreciate how negative we can feel about a person when relationship breaks down, even between friends, relatives, colleagues. And how at that point of time, it is easy to forget all the good and remember only the nasty. And if we are asked then to share even just a piece of cake, not to mention what we think we have acquired over many years, with this same person, the kind of vitriol and resentment is possibly similar.

So Why Must We be Made to Split Our Assets?

Well, because when we calm down from the fits of anger and despair, and think back at the good things, those great moments, yes, I mean specifically the contributions by our spouses to our marriages, most of us will accept that that there are indeed contributions.

It is precisely these contributions that the family laws in Singapore will acknowledge when it comes to division of matrimonial assets.

How Can We Be Assured That It Will be a Fair Split?

The overriding principle of a matrimonial assets split is a just and equitable division. When 2 people marry, it is often with the starting point that both will contribute to the marriage and family. In some families, one spouse is the homemaker and the other the breadwinner. More common these days, both will work and share their part in homemaking either with the help of parents or a helper or a day care for the children.

When the court decides on what is fair and equitable, it looks at contributions by the parties. These contributions can be financially or from efforts. E.g. the homemaker may not have the money but he /she will have made contributions by the effort in taking care of the family/household/children. The homemaker should not be disadvantaged because the couple’s decision was that he/she would not work. A non-financial contribution is just as real as the financial contribution.

In the unfortunate event that the marriage breaks down and the couple heads for a divorce, the court will then have to ascertain the total matrimonial pool of assets acquired by the parties and then give a percentage to each party’s contributions.

The court will consider, through examining a series of factors whether a party truly contributes to the marriage. A diehard gambler or an irresponsible parent, or an alcoholic, or a violent spouse will have factors weighed against them and the percentage ascribed to this spouse can be reduced.

Of course, a judge can only do its duties effectively if the full set of facts are presented before the court. This is the full disclosure duty of the parties when it comes to divorce proceedings. Honesty is expected not only when you want to speak of the ills of the other party but also of the gains.

These gains will be viewed as assets acquired during the marriage due to the efforts of both spouses. It is therefore only right that at the point when the marriage is over and the assets are no longer to be enjoyed by both parties as if they are still married to each other, that these assets be split.

In Part 2 of the article, I will share a case on what the High Court and subsequently the Court of Appeal did when it was found that one party has failed to disclose his assets.

Article by: Lim Seng Siew of OTP Law Corporation
This articles was first published on www.otp.sg

The Start-up and the Lawyer

The life journey of a start-up is fraught with much uncertainties. Where is the next round of funding coming from? How do I make sure that I am complying with the law when I employ my first employees? Is the area of business that I want to get into regulated? Am I fair to my new investors without being unfair to my employees and my initial investors? 

In a series of articles, we hope to help you answer some of these and other questions. As a start-up, we understand that cash is often tight. Endless important issues demand a start-up’s limited resources. To assist, we will be having free templates that a start-up can use to cover the important basics. We also have plans to add to this introduction with a series of simple-to-understand articles. They are an important resource to help you think about typical issues a start-up may face. As a generic set of documents, they are not (and cannot be expected to be) tailored for specific issues that you may be facing. For these issues, you probably need to speak to a lawyer, whether as a formal engagement or catching up over a cup of coffee. 

First off, start-ups are not just tech companies, although tech start-ups have unique characteristics. If you have a new business model or idea, you are a start-up. Even lawyers who want to practice law in a ‘non-traditional’ way is a start-up. In this day and age, almost everyone you meet either has founded a start-up, is involved in a start-up, or wants to start a start-up.

Next off, standard documents intended for elsewhere may not be suitable for Singapore. One example is the SAFE (Simple Agreement for Future Equity) financing documents introduced by Y Combinator in 2013. It is very popular in the USA for its start-ups. SAFEs are intended for funding raised from family and friends, (ie pre-series A funding) based on a deferred issuing of equity. It is not a debt. However the concept of deferred issuing of equity in Singapore is different from that in the USA. Therefore using SAFE financing documents in Singapore is very ‘unsafe’. Instead we have an equivalent in Singapore called CARE (convertible agreement regarding equity). More about CARE later.

Typically, we help start-ups put in place the basics of corporate governance that investors expect to see. These will include the company’s constitution, a shareholders’ agreement and/or a co-founders’ agreement. Sometimes we also advise on the corporate or group structure, especially when risk management is one of the primary concerns of the start-up.

When the start-up is ready for business, we can help prepare or vet supplier’s contracts, employment letters, the start-up’s office/employee manuals, customer’s contracts and T&Cs of your product.

The Cradle: Starting a Start-Up

One key characteristic of tech start-ups is that they aim for ‘hyper-growth’, becoming a very very large company in a very very short time. Think Google and Facebook. To achieve this, tech start-ups need four key ingredients: a great idea, a great product, a great team, and great execution. There is a fifth ingredient that no one has any control over, luck. I will leave it to the start-up gurus to deal with these ingredients.

Instead, I will be touching on the boring bits of a start-up, that is its legal mechanics. You don’t need to know the details, but you need to know the basics. You concentrate on building and growing your business. Let the professional accountants and lawyers handle the details. That is what we are trained in and that is what we do, day in and day out. What I have to say applies to all start-ups, tech or non-tech.

If nothing else, my first advice is keep things simple. Use standard stuff where possible. Keep the paperwork organised. Know what you are doing but you don’t need to know the details.

My next advice is incorporate.  Don’t run a start-up using your own name. If things go wrong (and they can), you don’t want your family home and your bank account to be taken by creditors.

Incorporation means setting up a company under the Companies Act. The company is a legal entity separate from the founders. You and your co-founders will be shareholders of the company. Some of you may be directors. The shareholders are ‘owners’ of the company. The directors are the people responsible for the important decisions in the company.  Some directors will be working directors. Working directors will handle the day-to-day decisions and the operations of the company.

It is possible for your start-up to take other forms; such as partnerships or LLPs. But remember my first advice. Keep things simple and use standard stuff.

After deciding to set up a company, your next decision is how many shares (ie equity) to each of the founders?

It is always good to talk when relationships between the founders are good. Don’t delay. If relationships turn sour, things left unsaid and undocumented will always get blown way out of proportion and take on an entirely different meaning.

Having said that, what would be a fair distribution of the initial shares (ie equity allocation) among the founders?

Many start-up gurus say “Execution has a greater value than the idea.” Of course you have other gurus who ask “What valuable company is nobody building?”, implying that good ideas are rare. My take on this? It’s all about balance. A good idea with bad execution has zero value. Good execution of a bad idea is exactly the same.

So resist the urge to give away too much shares to the founder who came up with the idea. Give him a fair number as recognition that the original idea came from him. But remember that all founders pulling together in the same direction to grow the company is also important. So if one or more founders in a start-up has a disproportionate number of shares, will all the founders be pulling in the same direction? Maybe or maybe not. Most likely not because of the disproportionate rewards some will have.

Do take into consideration the contributions of the individual founders; ie Who developed the application? Who raised the initial funding? Who spent sleepless nights rallying the team together? Value all of these but don’t overvalue each of them. However this means that the discussion about each founder’s contribution cannot start too early when each founder’s role and contribution, hence his value, is not yet clear. Discussing a theoretical contribution is of little value. 

So the bottom-line, discuss equity allocation when each founder’s value becomes clear. It doesn’t have to be equal equity allocation to each of the founders but the difference should not be too large to ensure that all founders pull together in the same direction. Think Google again. When Google IPOed, Larry Page and Sergei Brin had almost equal number of shares.

Another important advice, once it has been agreed and why the shares were allocated the way they were allocated, document them in a founders agreement.

If you have plans to raise funds from family and friends, consider using CARE (convertible agreement regarding equity). CARE is part of a suite of model agreements called “VIMA” or Venture Capital Investment Model Agreements launched in October 2018 by the Singapore Academy of Law (SAL) and the Singapore Venture Capital and Private Equity Association (SVCA). Depending on the details, the funds raised can be treated either as equity or as debt.

After the documents have been signed, keep them safe. You do not want to have to scramble to find the documents (or discover that they are missing) when venture capitalists are knocking at your door and doing their due diligence. Telling venture capitalists that key documents are missing will not in-still any confidence in the founders ability to manage the start-up.

In the next part of this series, I will be dealing with the First Baby Steps of a Start-Up.