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If I divorce in malaysia, do I automatically get half the property?

2 months ago Denise C.

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Most love stories start with the honeymoon period, the puppy love dating, and fervent whispers of, "I love you". You and your partner then frolic off, hand in hand, into the sunshine amongst the beautiful flowers. Okay, maybe your dating life was not this dramatic but you get the point. You find that someone and hit it off. Then you get married and you start sharing everything together like a house and maybe even a bank account.

One day you wake up and the blissful marriage is over. Maybe you guys don't have anything in common anymore or maybe that spark has died. Whatever it is, you are now left with all the worldly belongings that you and your partner have purchased together over the course of your relationship. While some may choose to split it 50-50 and avoid the fuss of court proceedings, some believe that they are entitled to a bigger share of the property because they contributed more.

Image from glscsshepherds.blogspot.my 

This is the point where you turn to your lawyer for help. But what does the law tell us exactly? Please note that this article would address that law that applies to non-Muslims. 

 

There are three categories of property for divorce cases

The case of Yap Yen Piow v Hee Wee Eng [2016] 1 LNS 1060 tells us that the Law Reform (Marriage and Divorce) Act 1976 ("LRA 1976") divides property into three types for the purposes of divorce.

To prevent any headaches on your part, we suggest that you remember the following terms as they would be used throughout the article:

1. Matrimonial property

2. Non-matrimonial property

3. Property acquired before marriage

The first is "matrimonial property" which is really not defined in the LRA 1976 but the Yap Yen Piow case tells us that it is defined as property which is acquired by the joint effort of both parties to the marriage. This means that any property that is purchased through the shared finances or effort of you or your partner is a matrimonial property.

The second classification of property is "non-matrimonial property" which is property which is acquired by only one party to the marriage. This means that any property that is purchased by you or your partner alone is a non-matrimonial property.

Image from wikihow.com

The third classification is rare as it involves property acquired before the marriage. This basically means that it covers the property you bought before you got married. However, the court can also consider this as matrimonial property if it was substantially improved on during the marriage. As provided by section 76(5), substantial improvement can happen through the joint effort of both parties or by the party who did not acquire the property. 

For example, if you purchase a house prior to marrying your partner, that house can still be divided between you and your partner if the both of you worked together to renovate that house or if your partner renovated the house by himself/herself.

Section 76(5) LRA 1976

"...assets acquired during a marriage include assets owned before the marriage by one party which have been substantially improved during the marriage by the other party or by their joint efforts."

As to whether you automatically get half of the property, well... 

 

Malaysia is inclined to the 50-50 split for matrimonial property but...

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Section 76(1) LRA 1976 is the section which allows the courts to order a division of matrimonial property or even to order you to divide up the money you made if you sold it off. However, this power is not entirely discretionary. This means that the courts can’t just decide based off whatever reason they like. The courts must take into account several considerations which are laid out in the Act and subject to these considerations, the courts will incline towards dividing the property equally.

In essence, the LRA provides three considerations for the courts to mull over before coming to a decision. They are broken down as follows:

1. Contributions made by you or your partner towards acquiring the assets

2. Any debts accrued by you or your partner for your joint benefit

3. The needs of any minor children (below the age of 18)

It is important to note that the contributions referred to above is not merely monetary. It can include property or work done towards acquiring the assets. For example, if your partner pays the mortgage on your family home but you paid for the renovation of the property, you might be able to argue for half of the property. AskLegal spoke to Aileen Lau, a partner in Donovan and Ho and who specialises in family law and she told us that:

”Section 76(2) refers to assets acquired during the subsistence of a marriage. This includes property, shares and savings. The courts will take into account the contribution of one spouse towards improving the value of the property but this is not necessarily a monetary contribution. It also needs to be noted that there is no fixed formula that the courts adopt, and it is entirely the court’s discretion.” – Aileen Lau, family law partner at Donovan and Ho.

For reference, here are the factors covered by section 76(2): 

"In exercising the power conferred by subsection (1) the court shall have regard to—

(a) the extent of the contributions made by each party in money, property or work towards the acquiring of the assets;

(b) any debts owing by either party which were contracted for their joint benefit;

(c) the needs of the minor children, if any, of the marriage,

and subject to those considerations, the court shall incline towards equality of division."

This means that while there is no presumption that each partner is automatically entitled to 50% of the property, the courts can and will order such a division if after considering all the factors above, they are of the opinion that each party had contributed a sum or effort that is equivalent to 50%.

 

Things that you bought with your own money can also be divided

This guy cut all his possessions in half after his 12 year relationship ended. Image from independant.co.uk 

Imagine this scenario – you decided to buy yourself a nice new car with your year end bonus. You would think that in a divorce, this car cannot be divided because you bought it on your own. But section 76(3) actually involves the division of non-matrimonial property. You might find this section rather incredulous because why should you be forced to share the property you bought on your own with your partner who did nothing.

Dividing such property under section 76(3) needs to be done with consideration to the factors laid down in section 76(4). 

Similar to the considerations that judges have to take into account when dividing matrimonial property, the division of non-matrimonial property is also subject to the considerations found in section 76(4). In a nutshell, section 76(4) tells us that when considering whether or how to divide non-matrimonial assets, the courts must look at two things:

1. The contributions made by the non-acquiring partner towards the welfare of the family such as through caring for the family or looking after the home

2. The needs of any minor children (below 18 years of age)

While the courts can divide the non-matrimonial property in a division that they find reasonable after considering the points above, it is noteworthy that any division that is ordered must be more beneficial to the person who bought it (acquiring party). This means that if you purchased the property but your partner looked after the upkeep of the house, the property division would still benefit you. The division can be anything at all (90% to your benefit or 60% to your benefit) but you, as the acquiring party, must always get a greater proportion.

Aileen Lau tells us that:

”If a property is jointly acquired, it would be equally divided. If it was acquired by the sole effort of one party, that party would have the greater share in the property. When it comes to the needs of a child, the welfare of a child is paramount and this is provided in section 88(2) of the LRA. For the party who gains custody of the child, the division of assets could be greater for them and the extent of the distribution of the assets would depend on the age of the child/children, medical needs, wellbeing, and education requirements of the child/children.” – Aileen Lau, family law partner at Donovan and Ho. 

This is how section 76(4) looks like when quoted in full:

"In exercising the power conferred by subsection (3) the court shall have regard to—

(a) 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 the family;

(b) the needs of the minor children, if any, of the marriage;

and subject to those considerations, the court may divide the assets or the proceeds of sale in such proportions as the court thinks reasonable; but in any case the party by whose effort the assets were acquired shall receive a greater proportion."

 

So, do I get 50% or not?

Image from startribune.com

The answer is...there is not set answer. The laws were drafted to be more open-ended because in such a complicated family dynamic mixed with every day concerns of financial contributions and non-financial contributions, no situation is ever alike. Also, as mentioned by Aileen Lau, there is no fixed formula for the courts to adopt. It depends on their discretion. You may be shocked to learn that there have also been cases where a spouse’s EPF savings was also subject to division. 

In the case of Koay Cheng Eng v Linda Herawati Santoso, the husband’s EPF contributions during the marriage was divided equally with his wife. The judge was of the opinion that as the wife had entered the marriage with the intention of growing old with the husband and his EPF would have been used for both their benefits. The husband then should not be allowed to fully benefit from his EPF after the breakdown of the marriage.

At the end of the day, the sections listed above are meant to be a mere guide for the courts to follow but there is no absolute guarantee that you would be entitled to a certain percentage of the property upon divorce. The courts have the discretion to decide based on what they see fit in accordance with the statutory considerations they need to keep in mind.

 

 

 

This article is for informational purposes only and should not be taken as legal advice. Every situation is unique and dependent on the facts (ie, the circumstances surrounding your individual case) so we recommend that you consult a lawyer before considering any further action. All articles have been scrutinized by a practicing lawyer to ensure accuracy.
Tags:
law reform (marriage and divorce) act 1976
divorce settlement
property division
matrimonial assets
non-matrimonial assets
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