Most financial settlements are agreed between divorcing couples without the need for a full-scale court hearing. When negotiations have concluded both parties – with their legal representatives – draft a consent order. This is then sent to court for approval by a family court judge. Once approved, the draft order is converted into a formal consent order which binds the parties. But what happens if one party changes his or her mind about what has been agreed before a judge approves the agreement?

In the 1998 case of Xydhias v Xhdhias the husband’s attempt to extricate himself from what he had agreed failed. Since then so-called Xydhias agreements have become a feature of many family remedy cases. We look at the agreements below.

What is a Xydhias Agreement?

You and your spouse might have come to an agreement about your finances. But strictly speaking the terms of the agreement don’t bind you until a judge has formalised the agreement in a consent order. An exception to this general approach is the situation where you and your spouse are deemed to have created a Xydhias agreement in the course of your negotiations. If such an agreement exists then the court can insist on formalising the agreement into a binding court order – irrespective of whether or not one party has decided he or she no longer wishes to abide with what had been agreed.

The best way to illustrate how the Xydhias agreements work is to look briefly at the facts of the 1998 case itself.

There the case had been listed for a three-day final hearing. Before the hearing the wife’s solicitor informed the court that, while there was a minor outstanding issue, all other matters had been resolved between her and the husband. Heads of Agreement had been produced. The wife requested that the three-day hearing be replaced with a 45-minute court appointment. At this appointment the husband informed the judge that he was no longer satisfied with the settlement terms and wished to proceed to a full trial. This turnaround seems to have come as a surprise to the wife who was unrepresented by counsel at this appointment.

The wife issued an application requiring the husband to ‘show cause’ as to why he should not be bound by the exhaustively negotiated agreement. Her application went all the way to the Court of Appeal. There Lord Justice Thorpe found in her favour.

Thorpe emphasised that courts have a wide discretion to determine whether or not parties have agreed to settle and that there are sound public policy reasons for this. Thorpe also highlighted that when it comes to agreements reached between couples involved in family law proceedings the normal rules of contract law don’t apply. The court always has the final word on the amount of any settlement. The underlying rationale for negotiations between spouses is to reduce the cost and time spent on the legal process.

Lord Thorpe suggested that courts must be ready to spot the ‘antics’ of a husband or wife who, having consistently sought to shorten proceedings by purporting to reach agreement, suddenly seeks to back out of that agreement by relying on some minor issue.

Can I Avoid A Xydhias Agreement?

As Lord Thorpe indicated it is up to the courts to decide if the parties have reached agreement or not, and they have a wide discretion to do so. If, as in the Xydhias case, Heads of Agreement have been reached and solicitors are dealing only with minor issues, it would be hard to argue against the existence of an agreement. Remember in Xydhias the wife had even gone so far as to cancel the already scheduled three-day trial. Each case depends on its own facts and the court always has to consider any agreement against the s25 factors. If you do try to disprove the existence of a Xydhias agreement and fail, you may well have a negative costs order imposed against you.

Comment

Don’t confuse what we have said about Xydhias agreements with the situation where already approved consent orders are unclear. Different rules of interpretation apply in those circumstances.

In essence a Xydhias agreement will be implied where an overarching agreement on all main areas have been reached in family remedy discussions. Even where there are specific outstanding areas to be addressed and where a formal consent order has not been produced, a party may be unable to pull out of the agreement.

Xydhias agreements are justified on public policy grounds, including the need for  certainty and good use of court resources. They also protect one party (often the financially weaker spouse) from unscrupulous behaviour by the other.

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