SINGAPORE – There are two crucial points when it comes to financial planning – understanding exactly what you are going to do and sticking to it through thick and thin.
Get them wrong and you could pay a heavy price as a man here knows all too well now, given he stands to lose $205,000 after a series of decisions on his part that a judge found “puzzling”.
The costly and curious tale of woe began after his plan to buy out his former wife’s share of their Housing Board flat started unravelling. The man borrowed $205,000 from a female companion with the aim of increasing his stake in the property.
He could have paid off the HDB mortgage of $125,000 himself but he chose instead to put the whole amount into his wife’s Central Provident Fund (CPF). He told her to use part of the funds to pay off the loan, meaning she got to keep around $80,000 that was left over.
When his wife later learnt that her husband was involved with another woman, she filed for divorce. But it was not known why the husband did not take part in the proceedings to pursue his claim on the flat, which eventually went to the wife entirely.
As a result, the female companion, who is now the man’s new wife, had to resort to suing both him and the former wife, as legal owners of the flat, to get back her money.
But this family drama ended with a twist – the new wife could get her $205,000 back but the person who has to pay her was her husband because the High Court ruled that the former wife had no obligation to return the money.
Justice Vinodh Coomaraswamy said that several points in the husband’s scheme puzzled him, noting that this dispute came about only because of “a plan conceived and executed” by the man.
The ‘puzzling’ plan
The three parties in the case work in the same organisation and both women know each other as “colleagues and acquaintances”. The man and his former wife were married in 1985 and lived in the flat, which was mostly paid for by the former wife.
Their marriage was on the rocks by 2010 and in 2013, the man entered into an “unregistered marriage” with his then colleague. They married in 2019, a year after his divorce.
The plan, which led to the dispute, was put into action some time in 2015 when the man asked his then companion to come up with $205,000.
He then passed this to his wife and directed her to deposit all of it into her CPF account through CPF top-up and property loan refund. The wife was then told to use her CPF to pay off the HDB loan of $125,000.
According to his plan, once the loan was paid off, he would ask the wife to transfer her share of the flat to him. She could then use the remainder of her money in CPF to buy a new flat for herself and one of their three children who still lives with her.
But he did not follow through with his own plan after the HDB loan was paid off.
When the wife asked how her then husband obtained the $205,000, he said he had “borrowed the money from friends and that she should not ask him any further questions”.
Indeed, it took the wife about a year to discover the origin of the money. This happened when the other woman’s relatives came to her home to look for her husband and ask him about the money he took. It was after this visit that she found out that her husband and the woman had an “unregistered marriage”. She filed for divorce at the Syariah Court later.
The court dissolved the marriage, ordered the couple’s HDB flat to be sold and that the wife could keep 100 per cent of the sale proceeds.
Justice Coomaraswamy said this outcome was not surprising because the man had failed to attend any of the court hearings, even though he wanted to take over the flat and that his companion’s $205,000 was spent for this purpose.
After the man realised the gravity of the ruling, he started to file applications to vary the court order. His new wife also got involved in a bid to get back her money.
In 2019, the Syariah Court made a fresh order for the former wife to return the portion that was used to pay off the HDB loan. As for the rest, the court noted that such a claim should be filed at the civil court since the dispute had nothing to do with the matrimonial case.
The new wife was unhappy with this decision and took the case to the Appeal Board. But the board not only dismissed her case but also restored the original ruling of the Syariah Court, namely that the former wife was entitled to 100 per cent of the flat.
The board noted that the Syariah Court does not have the power to determine the rights of a “non-party to the marriage” and that if the woman wanted to claim her money back, she should do so in the civil court. And that was what she did in 2020.
Was there an ‘unconscionable’ action?
Justice Coomaraswamy found that the former wife was not liable to pay anything because she did not conduct herself unconscionably. She did not even know that the woman was involved with her husband, let alone that the $205,000 came from her until a year later.
Her former husband told her the money was from his friends. She also believed him when he said the payment was meant to make up for his failure to pay their HDB mortgage. Finally, she did not spend the money elsewhere and did exactly what her former husband instructed her.
As this saga came about because of what the man did, the court held that he should be accountable for the money he took from his current wife. He conceded that he owed a personal obligation to return the money since his new wife had nothing to do with his scheme to acquire the HDB flat for himself.
Moreover, his plan was executed at the expense of his new wife, who obtained the money because she had sold her own flat.
So Justice Coomaraswamy ordered him to make good the whole amount that he had received from his new wife as a form of restitution. In addition, he also had to foot $15,000 of her legal costs.
The new wife had to pay $25,000 of the former wife’s legal costs as she lost the case against her. Both she and her husband have appealed against the ruling.
Meanwhile, the flat at the centre of the dispute has yet to be sold despite the order of the Syariah Court. The former wife and one of her children still live there.
The flat’s estimated value is between $350,000 and $438,000.
This case highlights the importance of knowing the processes involving the CPF and property transactions well.
For instance, if you are not selling your property, there is no need to make a housing loan refund to your CPF account unless you want to save and earn more interest for your retirement. The HDB website also advises owners to appoint lawyers to handle transactions involving the change of ownership in a family. So it pays to seek legal help early so that you won’t end up making costly mistakes.
“Source:[‘Puzzling’ plan to buy over HDB flat costs man $200k] © Singapore Press Holdings Limited. Permission required for reproduction”
