Separation Agreement Upheld by the Courts
Most people realise that Pre-Nuptial Agreements may now have significant consequences should a marriage breakdown. Less well known is the effect of a Separation Agreement.
Separation Agreements differ from Pre-Nuptial Agreements as they obviously require the parties to have concluded that the marriage has come to an end and make provisions for what should happen next. Many people find that the prospect of dealing with the financial implications together with the emotional and other practical issues overwhelming at the time the marriage comes to an end.
If this is the case, a Separation Agreement maybe a sensible step to manage the period until a final settlement can be approved by a Court and a divorce Petition issued.
It is important to realise that until a Separation Agreement has been “converted” into a Court Order it is not binding and there may be times when it is not appropriate, for example, when there are substantial pension assets.
The decision of Bruce Blair QC, sitting as a Deputy High Court Judge in the recent case of L v M shows the importance of a Separation Agreement. A Solicitor friend assisted the parties in reaching an agreement and a written document was prepared. The husband informed the wife that he had received legal advice and the agreement was drafted and concluded. Both parties had enough information as to the others’ financial circumstances not to require detailed financial documentation.
The first instalment of a lump sum was paid but then the husband failed to pay maintenance and the remainder of the money owed under the agreement.
An application was issued at Court by the wife to hold the husband to the terms of the agreement. The husband claimed there had been a change for the worse in his financial circumstances which effectively made the agreement unfair and that he was of very limited resources.
Unsurprisingly, the wife disputed this. During the legal proceedings, the husband refused to co-operate with Court Orders requiring him to provide information as to his means and assets. In fact at an early stage, the husband ceased to play any meaningful role in the legal proceedings.
He did not even attend the Trial and after a lengthy five-day hearing, the Judge decided that the husband’s financial disclosure was “highly unconvincing” and the remainder of his arguments had not been proved as the husband had effectively not participated in the case.
The Judge concluded that the husband should be held to the “fundamental terms” of the agreement as he had not shown any good reason why that should not be the case. Given the delay the Judge ordered interest on the lump sums due which significant increased what he owed to the wife.
Most people will not have either the assets to justify or the resources to argue for five days in the High Court. However, this case illustrates the importance that Separation Agreements can have and even though they may not be automatically enforceable they are likely (in the right circumstances) to be of magnetic importance to any Judge who is asked to consider a financial settlement.
If your marriage has recently come to an end or you simply want to understand your options, please contact Jim Richards at George Ide LLP to discuss this further in confidence.Family Law