Going nuclear: Freezing assets in matrimonial proceedings
In divorce proceedings, marital assets are frequently one of the most contested issues where spouses will respectively seek to lay their claim over these assets. It is not uncommon, especially in high net worth divorces, that a party will attempt to hide/dispose assets in order to defeat or reduce the value of the other party’s claim to it. This typically involves transferring assets to a third party such as a family member, channelling assets into a trust, or transferring monies to an offshore bank account.
The freezing injunction
In a situation like this, the party intending to preserve the assets during the matrimonial proceedings may apply for an injunction under Section 102 of the Law Reform (Marriage and Divorce) Act 1976 (“the LRA”) which empowers the Court to grant a “freezing injunction”. A freezing injunction is essentially a Court order which prevents a party from disposing or dealing with the assets until the completion of the divorce proceedings.
A party may apply for the injunction on an ex parte basis (i.e. the injunction is sought without the other party’s knowledge or attendance at the hearing) in order to obtain the order before his/her spouse has the opportunity to dispose of the assets. In the event a party has discovered that his/her spouse has already disposed of the assets, the Court is also empowered under Section 102 of the LRA to set aside that disposition, if the disposition was made within 3 years before the application.
As observed by the High Court in the case of Sheng Lien @ Sheng Len Yee v. Tan Teng Heng  1 LNS 1480, the effect of a freezing order is akin to a commercial freezing injunction, otherwise known as a Mareva Injunction, and the same principles would therefore be applicable under Section 102 of the LRA. As such, the following criteria must be satisfied before a Court will grant a freezing injunction:-
- the applicant must show that he/she has a good arguable case;
- there is a risk that assets will be dissipated; and
- in considering dissipation of assets, the Court will take into account the evidence of both parties.
The most important ingredient that the Court will consider in granting injunction under Section 102 of the LRA is whether there is a real risk of dissipation or disposition of the assets. Clear evidence must be shown to the Court that a party is, in fact, disposing the assets and mere suspicions would not be enough. In the case of Sheng Lien, the High Court was satisfied that there was clear evidence of the disposition when the husband sold the matrimonial property, transferred the shares in in his Central Depository System (CDS) accounts and closed a bank account which had substantial amount of monies in. Further, the High Court held that the applicant wife had an arguable case as she is an interested party to prevent any dissipation or disposition of property pending the matrimonial proceedings.
In the case of Susila S Sankaran v. Subramaniam P Govindasamy  4 CLJ 579, the High Court also considered the factor of balance of convenience, where the Court will weigh the inconvenience the applicant would suffer if the injunction is not granted against the inconvenience suffered by the respondent with the injunction. The High Court dismissed the application in Susila S Sankaran because the balance of convenience tilts in favour of the respondent husband. This is due to the fact that the assets in which the applicant wife was seeking to injunct was in regards to the husband’s company, which is his sole source of income. An injunction to freeze these assets would therefore cause hardship to him in operating his business.
Another important consideration with respect to the power of the Court to grant an ex-parte injunction is that the party seeking for the injunction will be required to give an undertaking to the Court to be responsible for any damages that may arise from the injunction. As such, an applicant applying for an injunction must take caution that there may be potential costs and compensation to be paid if the Court finds out that the injunction granted is not justified.
A freezing injunction is a powerful remedy to protect spouses in preserving the marital assets during matrimonial proceedings. It is often described by jurists as the “nuclear weapon” of family law as freezing injunctions have far reaching consequences and can be disastrous for the party whose assets have been frozen. Once an order is obtained, the injunction can freeze a party’s assets, including immovable properties such as land or properties, bank accounts and even company shares.
With that being said, a freezing injunction may be difficult to obtain as pursuing such an order requires the applicant to meet the stringent test and considerations required to convince the Court. However, it is nonetheless imperative for a party to pursue such relief to prevent his/her spouse in deliberately depriving him/her of a fair financial settlement in a divorce proceeding.
By: Jaclyn Chang
DISCLAIMER: This article is for general information only and should not be relied upon as legal advice and/or legal opinion. Messrs Yeoh & Joanne accepts no liability for any loss which may arise from reliance on the information contained in this article.
正如高等法院在Sheng Lien @ Sheng Len Yee v. Tan Teng Heng  1 LNS 1480一案中所指出的，冻结令的效力类似于商业冻结禁令，也称为玛瑞瓦禁令（Mareva Injunction），因此，根据《1976年法律改革(婚姻和离婚)法》第102条，同样的原则也适用。因此，在法院发布冻结禁令之前，必须满足以下标准：-
在Susila S Sankaran v. Subramaniam P Govindasamy  4 CLJ 579案件中，高等法院还考虑了便利平衡因素（給被告或原告造成的損害、痛苦或不便等因素），即法院将权衡申请人在未获得禁令的情况下会遭受的不便，以及申请人在获得禁令后会遭受的不便。高等法院驳回了Susila S Sankaran的申请，因为便利的天平倾向于被告丈夫。这是因为申请人妻子寻求禁令的资产与丈夫的公司有关，这是他唯一的收入来源。因此，冻结这些资产的禁令会给他经营业务带来困难。
文章来自于：张美琪律师 (Jaclyn Chang Mei Qi)
文章翻译：李淑婷律师 (Lee Su Ting)
免责声明:本文仅供参考，不应作为法律建议和/或法律意见。Yeoh & Joanne律师事务所不会承担因依赖本文所含信息而产生的任何损失的责任。