Can I Change my Mind?
With all the debate over whether the European Treaty change commitments signed by all member states of the European Union are binding or not upon the European Court of Justice, at Paradigm Family Law we thought we’d take a look at the position when an agreement is reached between divorcing couples and what makes it binding upon them.
We are concerned in this post with Pre-Nuptial Agreements (and their post wedding counterparts, Post-Nups) and Consent Orders.
Nuptial Settlements
Pre-Nuptial Agreements are covered in more detail in or post here. The leading case is that of Radmacher v Granatino [2010] UKSC 427.
In summary there are a number of provision that must be followed for the agreement to hold water in the event of divorce. Those are:
- Ensure that the purpose of the agreement is to regulate the financial arrangements between the couple for during the marriage or in contemplation of future divorce or separation
- Ensure that it complies with normal contractual requirements including:
- consideration and clear intent to create legal relations;
- no undue influence, misrepresentation or contravention of public policy
- no unequal bargaining position or abuse of power by one party over the other
- the conduct of the parties before and after the agreement and all the circumstances of the agreement in deciding whether it should be upheld
- Ensure that generous provision is made in the event of children, such that the court is unlikely to seek to intervene
- Both parties must take independent legal advice
- Both parties should fully disclose all their respective financial circumstances
- Any prenuptial agreement should be drawn up at least 21 days before the marriage (although this is not apparently critical since the parties in Radmacher signed 7 days prior to marriage)
Agreements to settle claims on Divorce
In Radmacher, the court reaffirmed the notion that parties cannot completely oust the jurisdiction of the court when they enter into an agreement. However, the court is keen to uphold the premise whereby couples who freely enter into a compromise agreement and with the assistance of legal representation should be able to do so and expect to be bound by those agreements.
But have the parties reached an agreement at all? As Mr Cameron is keen to point out, the answer for the European Union is definitely Yes. But what if the paperwork isn’t signed, or concluded and one party changes their mind?
This issue arose in the case of Xydhias v Xydhias [1999] 1 FLR 683 CA. In this case there was an agreement between spouses to settle their financial claims. A draft order had been drawn up but not signed however the court were notified of the deal and the final hearing was taken out of the court list. But between then and the adjourned hearing, the husband withdrew his offers and asserted that he was not bound because of the principles of contract law.
In Xydhias the court decided that the normal contractual principles do not apply when establishing an agreement in financial claims on divorce. The court has to establish whether there was an agreement though and each case is going to be fact specific. Where heads of agreement have been signed by the parties or there is a clear exchange of letters between solicitors that can be sufficient to show the agreement has been established.
If there is a dispute as to whether there is agreement, the court can look at without prejudice correspondence when assessing the situation. We dealt with this very area in our blog post here.
European Debate
In the European debate, the Member States might do well to read Edgar v Edgar [1980] 1 WLR 1410 in which Ormrod LJ held (at 1417C – 1417E):
“To decide what weight should be given, in order to reach a just result, to a prior agreement not to claim a lump sum, regard must be had to the conduct of both parties, leading up to the prior agreement, and to their subsequent conduct, in consequence of it. It is not necessary in this connection to think in formal legal terms, such as misrepresentation or estoppel; all the circumstances as they affect each of two human beings must be considered in the complex relationship of marriage. So, the circumstances surrounding the making of the agreement are relevant. Under pressure by one side, exploitation of a dominant position to secure an unreasonable advantage, inadequate knowledge, possibly bad legal advice, an important change of circumstances, unforeseen or overlooked at the time of making the agreement, are all relevant to the question of justice between the parties. Important too is the general proposition that formal agreements, properly and fairly arrived at with competent legal advice, should not be displaced unless there are good and substantial grounds for concluding that an injustice will be done by holding the parties to the terms of their agreement. There may well be other considerations which affect the justice of this case; the above list is not intended to be an exclusive catalogue”.
When the European Court is asked to review the agreement, David Cameron will no doubt be hoping that the approach is similar to that set out by Munby J in L v L [2006] EWHC 956 (Fam). Where he set out that:
“the judge is not a rubber stamp. He is entitled but is not obliged to play the detective. He is a watchdog, but he is not a bloodhound or a ferret.”
Consent Orders
The applicable statute for Matrimonial agreements is found at Section 33A of the Matrimonial Causes Act 1973 which sets out the rules governing consent orders. Section 33A (1) and (2) provide:
“(1) Notwithstanding anything in the preceding provisions of this Part of this Act, on an application for a consent order for financial relief the court may, unless it has reason to think that there are other circumstances into which it ought to inquire, make an order in the terms agreed on the basis only of the prescribed information furnished with the application.
(2) Subsection (1) above applies to an application for a consent order varying or discharging an order for financial relief as it applies to an application for an order for financial relief”.
Arbitration
And with the rise in the number of couples seeking to resolve their financial claims through Arbitration, there is a clear direction of travel from the judiciary again led by the President, that agreements reached in arbitration will be ‘magnetic’. In S v S [2014] EWHC 7 Fam Munby J said:
“Where the consent order which the judge is being asked to approve is founded on an arbitral award under the IFLA Scheme or something similar (and the judge will, of course, need to check that the order does indeed give effect to the arbitral award and is workable) the judge’s role will be simple. The judge will not need to play the detective unless something leaps off the page to indicate that something has gone so seriously wrong in the arbitral process as fundamentally to vitiate the arbitral award. Although recognising that the judge is not a rubber stamp, the combination of (a) the fact that the parties have agreed to be bound by the arbitral award, (b) the fact of the arbitral award (which the judge will of course be able to study) and (c) the fact that the parties are putting the matter before the court by consent, means that it can only be in the rarest of cases that it will be appropriate for the judge to do other than approve the order. With a process as sophisticated as that embodied in the IFLA Scheme it is difficult to contemplate such a case.”
Most recently, an application to show cause why the court should not make an order in the terms of the Arbitrator’s award was dealt with by Mostyn J in DB v DLJ [2016] EWHC 324 (Fam). The case deals with the issues of how to challenge an award being made into an order (under the Arbitration Act 1996) aswell as reviewing the authorities since Barder v Barder (Caluori intervening) [1988] AC 20. It provides a useful and informative summary. For more on ‘intervening events’ read our blog here.
So whether its a pre nuptial agreement, heads of terms or an arbitration decision, the Member States will find out soon whether they will be bound to adopt the new Treaty or else face months of uncertainty and maybe even a divorce.
Contact Us
For more details on this or any other family law matter, please do not hesitate to contact James or Frank. Paradigm Family Law offers a free initial consultation and our fixed fee solutions cover financial proceedings from start to finish. You can call us on 0845 6020422 or email us to [email protected]. You can also follow us on twitter and LinkedIn and Facebook for the latest news and views on family law.
