When married couples separate, there are often financial and childcare issues to be resolved. In the usual course of events, these matters are resolved via negotiations with a view to entering into a Separation Agreement, also known as a Minute of Agreement.
What is a Separation Agreement?
A Separation Agreement is essentially a contract between the parties and sets out the terms of the arrangements they have reached to deal with the division of matrimonial assets and debts, payments of maintenance, and child residence and contact among other things.
Such agreements provide parties with certainty and closure in what is often a time of uncertainty and upheaval, and if one can be bartered then lengthy and costly court cases can be avoided. But are these Agreements watertight, or can they be challenged?
An Agreement which includes provision for childcare, including where the children will live and when they will have contact with the other parent, can be very helpful. The parties themselves, and the children, benefit from having the exact arrangements set out in black in white.
However, parties to Separation Agreements must be aware that nothing is ever truly set in stone with regards to childcare matters. Children's lives, circumstances, activities, and overall their best interests, can change over time, so what suits them and the parties at the time of entering into an Agreement could quite conceivably be less than ideal a few years down the line when they are older and entering a new stage of their life.
Parties should bear in mind that even when a detailed framework of contact is provided for in an Agreement, a degree of flexibility and cooperation will usually be required. If, however, one party seeks to make unilateral changes to the childcare arrangements set out in the Agreement, with no child-welfare based reason for doing so, the other could raise court proceedings for contact and the Agreement is a useful piece of evidence to show that both parties had agreed that the contact arrangement therein operated in the children's best interests at the time.
Broadly speaking, it is open to parties to reach any agreement they want in relation to the financial issues arising from their separation. In the majority of cases, once a Separation Agreement has been signed by both parties, parties cooperate and the terms of the Agreement are successfully implemented.
However, what happens if one party changes their mind about the agreement reached? Are they bound to implement its terms? The answer is a qualified yes – they are bound to do whatever is required to be done by them in order to give effect to the Agreement, unless they successfully have the Agreement, or some of its terms, varied or 'set aside' by a Court.
Section 16 (1) of the Family Law (Scotland) Act 1985 gives the Courts the power to set aside or vary agreements on financial provision, as long as the parties are not yet divorced. However, it has long been acknowledged that the Courts will be slow to interfere with a Separation Agreement, even if its terms have led to an unequal division of matrimonial assets.
What are the factors which a Court would take account of in considering whether to set aside a Separation Agreement?
The case of Gillon v Gillon examined whether a Separation Agreement should be set aside in circumstances where, after signing it, the wife realised she could have obtained a better outcome if the parties had divided their assets according to the law as set out in the Family Law (Scotland) Act 1985.
She had given up the right to spousal support and claims to her husband's assets, however in exchange she obtained the right to buy him out of his share of the family home at a good price. The Court refused to set the Agreement aside – Mrs Gillon had achieved what she wanted in settlement. The mere fact that there proved to have been an unequal division of assets did not give rise to an inference of unfairness or unreasonableness.
In this case, the Court set out principles which should be considered when deciding whether an agreement should be varied or set aside:
- The agreement has to be examined from the point of view of both fairness and reasonableness;
- All the relevant circumstances leading up to and prevailing at the time of the execution of the agreement need to be considered, including the nature and quality of the legal advice given to either party;
- Evidence that some advantage has been taken by one party of the other by reason of the circumstances prevailing at the time of the negotiations might have a cogent bearing on the determination of the issue;
- The Court should not be unduly ready to overturn agreements validly entered into; and
- An agreement which has led to an unequal, and possibly very unequal, division of asset does not of itself necessarily give rise to any inference of unfairness or unreasonableness.
The onus is very much on the party seeking to have the Agreement varied or set aside to establish that there are grounds for doing so.
How to protect against a challenge to a Separation Agreement
The overall circumstances of how the Agreement was brokered and entered into will always be relevant. For instance, parties should refrain from putting undue pressure on the other to sign an Agreement, or from making, for example, contact with children of the marriage conditional upon the signature on an Agreement dealing with financial provision. Parties should be advised against such an approach.
It is also better if both parties are each instructing separate independent solicitors. Typically, a clause will be inserted into the Separation Agreement confirming that both parties have had the benefit of (or if one or both have not, at least the opportunity of obtaining) independent legal advice. Whilst such a clause does not in itself provide a barrier to any subsequent challenge, it certainly makes it more difficult for either party to say that they did not receive adequate legal advice at the time they signed.
Certain other clauses will also be inserted into the Agreement by a prudent solicitor, confirming amongst other things that each party has had the opportunity of seeking full disclosure of the other's assets, that the Agreement is in full and final settlement of all financial claims, and that at the time of entering the Agreement each party acknowledges its terms as being fair and reasonable. Properly worded clauses in these veins will make the Agreement much more likely to stand the test of time, and make it less susceptible to challenge.
The bottom line: speak to a solicitor
The best way to protect against a challenge to your Separation Agreement at a later date is to ensure that it is properly negotiated and prepared. Good legal practice and drafting is key, and so you should take legal advice from a Family Law solicitor at the earliest opportunity.
At Harper Macleod, our Family Law solicitors are highly experienced in negotiating, preparing and drafting Separation Agreements. If you would like to find out more and how we could help, please get in touch. We're here to help you plan your future.