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Separation Agreements - Are They Binding or Not?

View profile for John Boon
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Consider the case of MB v EB. The parties separated in 2004 after only three or four years of marriage.

In 2011 they agreed on a separation agreement where the husband, a struggling artist, received £245,000, from his wife, to purchase a property and an additional lump sum of £35,000. 

Both parties had legal advice and the agreement was intended to be in full and final settlement of all claims between them that would subsequently have to be finalised whenever a future divorce was filed. Divorce proceedings were delayed until they were eventually issued in 2017 and, again, in 2019. 

The husband then pursued additional financial claims against his wife and has succeeded, despite the agreement. The court has now awarded him an additional £325,000 - a one-off payment to provide for his living expenses at £25,000 per annum for the rest of his life expectancy. He also received an extra £10,000 for a car. The wife, a multi-millionaire with a wealth of “not less than £50m”, had argued that there should be no additional claim. She would have argued that both parties knew what they were agreeing on back in 2011 and that both parties had solicitors at the time.

The judgment records that she had argued that parties are free to make agreements between themselves and that they should be entitled to rely upon those agreements as they move forward with their lives after the relationship has ended.

For all of that, the court has ordered that the wife will have to pay more money to her husband. The court can do this because financial agreements between divorcing couples are never fully binding until they have been approved and sealed by the court.

In many cases, this happens when a properly drafted consent order is filed at court, together with a summary of the parties’ relevant financial circumstances. A judge then considers the documents and if she or he feels the agreement is appropriate, will approve and seal the order. The court is not able to consider consent orders until the decree nisi has been made. 

Where an agreement is reached before the parties get divorced then there is always the risk that it could be varied at a later date. That risk is reduced if both parties had legal advice and full knowledge of each other’s financial circumstances and in the absence of coercion or fraud. All of those safeguards were presumably present in this current case. 

So how was the husband able to succeed in his claim?

In summary, the judge provided six reasons.

  • Despite the 2011 agreement, the husband still had income needs that had not been met.
  • The wife would have always known that his income needs were not met.
  • The wife knew that the husband had health difficulties that made it harder for him to meet his own income needs.
  • Although the husband got what he wanted in 2011, what he had sought was inadequate.
  • Although the marriage effectively ended with the parties’ separation in 2004, there remained a relationship of sorts, referred to as a degree of co-dependency for another 10-12 years.
  • The amount required to meet the husband’s needs was said to be a “small pinprick” compared with the wife’s wealth. 

The judgment does reinforce the warning, however, that the only truly, final and binding financial arrangement between a divorcing couple is a sealed financial order – whether one reached by consent or one imposed by the court.