When spouses choose to separate, they are able to agree the terms of a financial settlement between themselves, through a method of Alternative Dispute Resolution or through solicitors. Any such agreement can take a variety of forms such as a verbal agreement, informally in correspondence or formally through solicitors. Usually, if using solicitors, the parties draw up an agreement, either a separation arrangement or a financial remedy order made by consent known as a “consent order”. The consent order is then sent to the court to be approved by the Judge using a simplified and shorter procedure. Once the Consent Order is approved, it is then legally binding and very difficult for one of the parties to vary.
What if One Spouse Attempts to Retract from a Consent Order?
But what happens when a spouse attempts to renege from an agreement before it is approved by the Judge? The starting point is that the court can only approve the terms of a consent order where both parties consent. Such a situation can be incredibly frustrating for the spouse who thought they had a “done deal” and may wish to argue that the retracting spouse should be held to the agreement. In such circumstances, the spouse wanting to uphold the agreement can issue a notice to show cause as to why the other spouse should not be held to the fundamental terms of the agreement.
When an application is issued, the court will usually direct the retracting spouse to file a statement setting out his or her reasons as to why they say they should not be bound by the agreement. The spouse wanting to uphold the agreement will prepare a statement in response. The court will then hold a hearing at which both spouses will need to give evidence to the court to explain their reasons.
When deciding whether or not to uphold an agreement, the Judge has a broad discretion to determine whether the parties had agreed to settle and will look at all the circumstances including the extent to which the parties attached importance to the agreement and the extent to which the parties have acted on it. If the court concludes that the parties agreed to settle on terms, it may have to consider whether those terms were then void by a factor such as material non-disclosure, undue pressure by one side, exploitation of a dominant position, inadequate knowledge or an important change of circumstance which was unforeseen or overlooked at the time of making the agreement.
Even if the court is satisfied that an agreement was reached and there were no impairing factors that reduce the weight to be attached to the agreement, the court still has to assess the fairness of the order using the factors set out in section 25 MCA 1973.
It is not easy for a spouse to escape from the consequences of an agreement, particularly where he or she has been legally advised or certainly had the opportunity to take legal advice, there has been an exchange of financial disclosure and either one or both parties have acted on the arrangement. If the retracting party is unsuccessful, the court may make a costs order under which they will be required to pay the legal costs of the other spouse who successfully persuaded the court to uphold the terms of the arrangement. It is therefore important to take legal advice to consider your prospects of success before retracting on any agreement which a spouse purports to have been reached.