This is a short discussion on the appropriate circumstances in which lump sum maintenance will be ordered in divorce proceedings.

Power to order Lump Sum Maintenance:

By s115 —(1) of the Women’s Charter: A maintenance order may provide for the payment of a lump sum or such periodical payment as the court may determine.

Circumstances under which lump sum maintenance will be ordered

It is not often that the Court orders lump sum maintenance. Invariably one key ingredient required before the Court makes these orders is that the husband must be able to make such a payment. The other circumstance which must arise is:

a) it is better for parties to achieve a clean and final break

b)there is a history of default on the husband’s part to pay maintenance or

c)there is an agreement or offer by the husband to pay lump sum maintenance

How to Compute Lump Sum Maintenance?

Lump sum maintenance is calculated by taking the amount of maintenance ordered for each month and multiplying it with the number of months that the Court considers is appropriate to order the husband to continue to maintain his former wife.

The sum ordered as maintenance for each month is called the "multiplicand" and the number of months for which the sum is ordered to be paid is the “multiplier”.

A) Multiplicand

In order to determine what is the amount for monthly maintenance or the multiplicand, the court has to consider the factors listed at s114 of the Women’s Charter, reproduced as follows:

Assessment of maintenance

114. —(1) In determining the amount of any maintenance to be paid by a man to his wife or former wife, the court shall have regard to all the circumstances of the case including the following matters:

(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

(c) the standard of living enjoyed by the family before the breakdown of the marriage;

(d) the age of each party to the marriage and the duration of the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

(f) the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family; and

(g) in the case of proceedings for divorce or nullity of marriage, the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage that party will lose the chance of acquiring.

(2) In exercising its powers under this section, the court shall endeavour so to place the parties, so far as it is practicable and, having regard to their conduct, just to do so, in the financial position in which they would have been if the marriage had not broken down and each had properly discharged his or her financial obligations and responsibilities towards the other.

B) Multiplier

In Ng Ngah Len @ Datin Sandra Kuah v Kuah Tian Nam @Dato Peter Kuah [2003] SGHC 109, Judith Prakash J in explaining the approach to be adopted when assessing the multiplier for lump sum maintenance said:

In this case, as in most cases, one had to take account of three facts: first, that if the parties had remained married, the death of the husband would have ended the wife’s maintenance, secondly, there would have to be some allowance made for the fact that the wife would be obtaining her maintenance in a lump sum and up front, and thirdly, the amount of the wife’s own assets. In view of those factors, I thought only a slight adjustment needed to be made to the multiplier. I substituted a period of 16 years because I thought that it was reasonable to take the retirement age of the husband in this case as 68. Being self-employed, he did not have any compulsory retirement age but since he was also well heeled, there would be no financial need for him to work till he dropped. As far as the wife was concerned, 16 years would take her up to her early 60s and even if she lived for a considerable period beyond that, she would be reasonably comfortable if she was a sensible steward of the lump sum maintenance.

On the facts of this case, lump sum maintenance should be ordered for a clean break. The life expectancy of W is not the only consideration. Other matters have to be considered. H is 62 and he has stopped work. However, H has means to realise an order for lump sum maintenance. He is asset-rich and is able, financially, to pay the lump sum maintenance without suffering adverse financial consequences. His father died intestate leaving 16 beneficiaries. H’s share is 1/30. According to Mr Tan, H received from the estate in June 2007 the first interim distribution of $459,977.95. In May 2008, there was a final distribution of $67,000. In addition, H is also a beneficiary under his mother’s estate. As of 20 August 2007, Mr Tan said that H has not received any distribution. Nevertheless, it must be remembered that H has a small interest in the Rambutan Road property that is from his mother’s estate.

In my judgment, the appropriate multiplier is 11 years. As there is a breakdown for $3,000, I compute the lump sum maintenance based on $3,000 x 12 x 11 years. The multiplier of 11 takes into account the factors mentioned in the judgment of Prakash J (see above), access to a lump sum amount which W can use to invest and the retention of the undisputed assets in H’s name. Accordingly, the lump sum maintenance is $396,000….

The above case illustrates the kind of considerations a court makes before determining lump sum maintenance.

Further factors will include:

a)Age of parties (both wife who needs to maintain and husband, who will retire whereupon his income will be severely affected)

b)Skills and health of the wife, the less she possesses, the more will be her need to be maintained