SINGAPORE – In a test case involving the valuation of a Housing Board flat as a matrimonial asset, a man who argued that his former spouse should buy out his share of their HDB flat at its market value and not its surrender value won his case on appeal in March last year.
A family court district judge had ruled in 2018 that, following the couple’s divorce, the woman be given the first option to buy out the husband’s share in their flat as part of the matrimonial division of assets.
The couple, both former flight attendants, had split after being married for about seven years and have two young children.
The Yishun flat, bought jointly in the couple’s names in August 2014 for $371,500, had a five-year minimum occupancy period (MOP) based on HDB requirements during which the flat could not be sold.
The woman argued that the man should sell her his share of the flat based on its surrender value – the price at which a flat is sold back to the HDB.
The man then appealed to the High Court. He argued that using the flat’s surrender value at $352,925, being lower than its market value, meant he would be selling his share to his former wife at a discount.
The High Court, in the test case, held that the flat be valued at the prevailing market price, as the former wife would otherwise have an unfair gain in buying out the husband’s share at a lower sum.
“I accept the husband’s argument that a valuation based on the surrender value would result in a windfall to the wife,” said Judicial Commissioner Tan Puay Boon in his judgment grounds last year.
He added that the flat should be pegged to the market value of similar HDB properties in the vicinity.
“The surrender value would only be an accurate estimate of the flat’s value if it was actually surrendered to the HDB, which is unlikely to be the case,” said Mr Tan.
The market value would be a more accurate indication of the real worth of the flat, he said.
He ordered that the flat’s valuation should be determined based on its market rate in September 2018 – backdating the valuation to the period when the divorcing couple’s ancillary matters were brought before the family court district judge.
Yeo & Associates managing director Beatrice Yeo, whose law firm represented the man, said the appeal decision that followed in the High Court is significant in being the first such ruling.
It clarified the position of the appropriate method of valuing the flat that was subject to the MOP, she said.
“Both parties had been stuck as to the use of the market price or the purchase price, the surrender value being pegged at a percentage below the purchase price. The court’s answer is the market price,” Ms Yeo said, noting that the Build-to-Order flat in point was valued at some $545,000 early last year.
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