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A husband and wife may reach an agreement as to division of their assets at any stage - even, if they wish, before they get married. Agreeing the terms on which their assets and income will be split is clearly better than having the terms of the division imposed by the court, not only because it should mean that less money has to be paid to the lawyers but also because the husband and wife are likely to feel more positive about an arrangement whose terms they have negotiated themselves. However, it is important to make sure that both husband and wife have all the relevant information at their disposal, are aware of their legal rights and obligations, and genuinely agree on the final terms of the agreement. Negotiations may take some time, and should not be rushed. If, as is usually the case, both parties will be making difficult decisions in order to reach agreement, great care must be taken to ensure that concessions have been properly thought through and genuinely, albeit reluctantly, decided upon. The court will give great weight to an agreement reached between the parties, and will, unless it considers that it would be unfair to one of them to enforce it, turn the agreement into an order of the court. Once an agreement has been considered by the court, and approved, it is extremely difficult to change the terms of the agreement, or to challenge the agreement in court.

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Status of Private Agreement

A couple separating or divorcing may reach a private agreement as to their financial relationship. This may take many forms, for example: an oral agreement to ‘share everything’, a written note signed by both explaining in broad terms what will happen to the main assets, or a detailed legal document, covering every aspect of the couple’s past, present, and future financial relationship.

If the court considers that it would be fair to hold both parties to the agreement, then even if the court would have ordered a somewhat different division of the assets, the court will turn the agreement into a court order, and enforce it. However, if the court considers that it would not be fair to one or both of the parties to hold them to the private agreement, then no matter what the agreement says, the court can order a completely different division of the assets.

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Agreements Always Subject to Review

Although the court will give considerable weight to any agreement, it does not matter how ‘legal’ the agreement looks, it is not a contract, and cannot be enforced as such. Of course, the husband and wife can always agree between themselves to divide things in a certain way, and are entitled to do so without interference from anyone else, but if one of them subsequently changes their mind, the private agreement is subject to review and possible amendment by the court. Sometimes, where the court considers that the agreement was unfair for any reason, the court may amend the agreement very dramatically. There is no time limit on the court’s ability to review a private agreement. Someone who was divorced or separated from their spouse even 20 or 30 years previously is entitled to ask the court to reconsider any private agreement which governed their finances. The court does take into consideration questions of delay, and of reliance on the agreement when considering whether it would be just or unjust to uphold the agreement, but it is possible for the court to amend an agreement made many years ago.

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Weight Given to Agreement

The court will consider all the circumstances when considering whether it is fair to hold the parties to the agreement, including the conduct of each of them both before and after the agreement. The most important issues for the court will be whether there was full disclosure of all the relevant information by both husband and wife, whether they both had the benefit of independent legal advice, or at least the opportunity to take independent legal advice; or whether circumstances have changed in some important and unforeseen way, for example a business or a property going dramatically up or down in value. Other issues which have been considered significant by the courts are undue pressure by one party or the other, exploitation of a dominant position to gain an undue advantage, and even an unforeseen and significant change in the law.

A formal agreement reached after both husband and wife have considered all the relevant information and after having taken separate legal advice, is very likely to be upheld, even if the court considers that one of the parties has made a bad bargain. However, if both husband and wife want to reach a final agreement, which will not be open to challenge through the courts at some future date, then they should ask the court to ‘approve’ the terms of their private agreement, and turn it into what is known as a ‘consent order’.

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Consent Order

A consent order is an order of the court whose terms have been agreed by the parties rather than imposed by the judge. Once a private agreement has been approved by the court, it may be turned into a ‘consent order’. In many ways such an order is much more difficult to challenge than an ordinary order of the court, because it isn’t possible to argue in an appeal that the order should be changed because of any failings on the part of the judge.

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FDRs

The system of holding FDRs (Financial Dispute Resolution appointments) at which a judge considers the position of both husband and wife and offers advice as to the likely outcome of a trial, is designed to encourage the parties to reach agreement. Not only the judge, but also both legal teams will be working hard to bring the two parties closer together. Both husband and wife should always bear in mind that this process is designed to help them and to save them legal costs, not to pressure them into something with which they are unhappy. If either husband or wife has real reservations about a proposal, they should ask for more time to consider it, and ultimately may always reject it. Once an agreement has been negotiated, and has been acknowledged by the FDR judge, then the agreement is final. If one party withdraws consent after the FDR, but before the consent order has been drawn up, the court may choose to note on the final order that it is not a ‘consent’ order, but will make the final order nonetheless.

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Challenging Consent Orders

Consent orders can be challenged on a number of grounds: on the basis that there was fraud by one of the parties, that the order was based on a mistake by one or both parties, that there was non-disclosure of a material fact, or on the basis of an unforeseen event, shortly after the making of the order, which completely invalidated the basis on which the order had been made.

It is very rare indeed for a consent order to be set aside, not least because in all cases, it is not enough for the person seeking to challenge the order to show that there has been some error or problem with the order; the order will not be overturned unless it can be shown that a different order would have resulted had the error not occurred or the problem not arisen.

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Genuine Agreement

The real benefits of reaching an agreement, rather than leaving the decision to the judge, are the reduction in legal costs and a greater acceptance of the outcome. There is a risk that neither of these benefits will be achieved unless the agreement is ‘real’, that is to say understood by, and genuinely accepted by, both husband and wife. If one party leaves the negotiations feeling rushed and angry about the final outcome, there is always the possibility that they will try to bring the agreement back to court, or even attempt to challenge a consent order, which will result in further legal costs, although it is most unlikely to result in a different order. Both parties will, of course, have to compromise, and very rarely will either the husband or the wife be completely happy with the settlement, but if there has been genuine agreement both husband and wife should feel that it was a reasonable bargain to have made and, critically, that the whole process is now over and that they can move on.