Once parties have reached a financial agreement, they are advised to incorporate the terms of their agreement into a Consent Order. The Consent Order can then be sent to the Court for a Judge to approve. Once it has been approved by the Court it becomes legally binding on both parties.
Unfortunately, in some cases, one party may change their mind and try to renege on that agreement before it is converted into a Consent Order and approved by the Court. This can cause real problems for the other party. So where does this leave the other party? The party who seeks to uphold the agreement can make an application to the Court for ‘Notice to Show Cause’. This application requires the reneging party to show the Court why a Consent Order should not be made in the terms of the agreement reached.
The Court will need to consider whether there is a concluded agreement. In order to do so, the Court will look at the correspondence between the parties (including without prejudice correspondence), the parties conduct and their reliance upon the agreement that has been reached. Even if some points of detail are still to be agreed, the Court may be prepared to make an order in the terms agreed if the broad heads of agreement are clear.
In these situations the Court will not be looking to establish whether the ordinary contractual principles have been met but whether the parties were in agreement at the time.
In the case of Rothwell v Rothwell the court said “as a matter of general law there is no doubt at all that once the parties have arrived at a compromise of litigation, the court will uphold and enforce that compromise, absent some vitiating element”. A vitiating element could be if one of the parties has not received legal advice, there has been material non-disclosure by one party, pressure has been placed on one party to enter into the agreement or if there has been a material and unforeseen change in circumstances since the parties reached their agreement.
The case of Edgar v Edgar held that agreements which have been ‘property and fairly arrived at with competent legal advice will only 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”.
Unless a party can provide a justifiable reason as to why they should not be bound by the concluded agreement, the parties will be held to it. It is clear from the case law that the Courts will only interfere with agreements in the most exceptional circumstances.
Once the Court is satisfied that there is a concluded agreement, the Court must consider whether the agreement is fair in light of Section 25 of the Matrimonial Causes Act 1973 before approving the terms of the Order.
If one party seeks to renege from an agreement then it may be that the other party has no option other than to make a notice to show cause application in order for the terms of their agreement to be incorporated into a Consent Order. Any party that seeks to renege from a concluded agreement should be aware that they could find themselves with a costs order being made against them.
