The Peng-Chai divorce: lessons to be learned?

financial settlement

The High Court has just handed down its judgment in relation to the marriage of Mrs Pauline Chai and her husband Mr Khoo Kay Peng.

The couple had been married for over 42 years. They had five children together and had lived in Malaysia until Mrs Chai moved to this country. There followed a long running argument as the whether the courts in Malaysia or those in this country should deal with their divorce and the division of their wealth. Mrs Chai succeeded in her argument that the courts in this country should do so.

The total value of their assets was estimated to be in the region of £205 million and Mrs Chai had suggested  that she should receive around one half of that: about £100 million.

Mr Khoo argued in turn that £9 million would be more than sufficient.

Both of them tried to persuade the court that their contributions to the marriage were so special as to entitle them to more than they would otherwise receive.  Mrs Chai relied on the fact that she had brought up five children while Mr Khoo highlighted the fact that he had built up, by any standards, a very substantial fortune.

Until the full Judgment is available it will be impossible to say whether the court agreed with either Mrs Chai or Mr Khoo, or perhaps neither, and only then will we be able to say whether there is any useful guidance to be had on when a court will consider one person’s contributions to be so exceptional they should receive more than one half of the assets.

What we can say at this stage is that for any argument that a contribution has been especially noteworthy to even get off the ground, the total value of the assets has to be very substantial.  As yet there are no clear guidelines but in all likelihood, unless the assets are worth at least £100 million, it is difficult to see such an argument attracting any credibility at all in court.

That, however, is just the start.

For a contribution to be special it has to be totally extraordinary. Wealth built up through inheritances or lottery wins will not count. The person wanting to suggest that they made a special contribution has to show that they achieved something that few others could.

Such an argument is normally used by the already wealthier, financially stronger party to justify receiving even more and therefore courts have to be on their guard not to discriminate unfairly against the wife, the mother, the homemaker.  As ever, each case is different, but three things are clear.

Firstly, there has got to be very substantial wealth.

Secondly, one party rather than the other must have been totally responsible for the accumulation of that wealth.

Thirdly, like the elephant in the room, a special contribution is something we all recognise when we see it.

Image by Phillip Taylor via Flickr

Graham Coy

Graham is based at the firm's London office.

His career as a family law specialist has spanned three decades. He is an experienced advocate, mediator and arbitrator who has worked in all areas of family law.

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1 comment

Andrew - April 8, 2017 at 7:51am

For the bulk of the divorcing population cases like this are not important. Graham is right to say how rarely it is appropriate in big-money cases to depart from the yardstick of equality on the basis of “stellar contribution”.
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What is more important is for the law to stop departing from the yardstick of equality on the basis of perceived “need”. There is rarely enough to satisfy what both parties regard as their needs and the sacrifice, like the assets, should be shared equally.
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Subject as ever to the needs of children during minority; but that is a reason for postponing the equal division for a finite team. If the incidental disbenefit of that postponement to the NRP is very great it may be appropriate to depart from equality in his (usually his) favour when the time comes.
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A few other reforms:
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A Calderbank regime (again if necessary postponing enforcement of the debt).
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Limitation: three years from the absolute, extendable only when the service of the petition was dispensed with, and reducible to six months if the other party gives notice to “proceed or not”.
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Lump sums to be time-barred if not collected like any other judgment debt; the court to have power to extend the life of the debt in the case of intransigent non-payment: BUT:
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Lump sums to be provable in bankruptcy and released on discharge; again like any other judgment debt. They should also be postponed for dividend behind non-matrimonial debt because outside creditors must always come first.
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It’s not difficult provided principle governs over emotion.

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