A separation agreement is a document entered into by separating spouses.
A separation agreement is crafted to the particular circumstances of each separating couple, but it will usually deal with a division of the financial pot.
A separation agreement is not the same as a final financial order, as it is not approved by the court. It does not resolve matters on a final court approved basis. It may be that at a later date one of the spouses will want to retract from that separation agreement. Perhaps they enter it without taking legal advice, or in haste, or they consider their circumstances have changed in the interim, making the earlier deal an undesirable one. The deal however may prove difficult to withdraw from. It is open to the other spouse to ask a court why the couple should not be bound by it. The court will stick to the terms of the separation agreement if it “is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement.”
This was a situation in which Mr M recently found himself. He had signed a separation agreement in 2010, which provided that he was to pay his wife £2 million lump sum, in instalments, plus significant spousal maintenance each month. After part payment of the lump sum, he no longer wished to be bound by the agreement. The wife issued an “application to show cause”, asking the court to make an order that Mr M should be bound by the signed deal.
Mr M said he should not be bound by it because:
• there was insufficient financial disclosure between the parties before it was signed;
• he did not take legal advice on the document he was signing;
• he could no longer afford to pay up.
In response the court said:
• everyone knew well enough what assets were available for distribution;
• he had the opportunity to take advice and he signed the agreement freely, fully understanding what it meant;
• he had not persuaded the court that his circumstances had changed, or that he could not afford to pay.
Consequently, the deal reached between Mr M and Ms L was converted into a binding court order by the judge.
Time will not dissolve the binds of a separation agreement either: an agreement signed in 1991 was approved by the High Court in 2013**.
* L v M [2014] EWHC 2220 (Fam)
** T v T [2013] EWHC B3 (Fam)
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