Husband bound by agreement reached in correspondence

A wife has succeeded in an application to bind a husband to a financial remedies agreement that she claimed had been reached in correspondence between him and the wife’s solicitors.

The case is a useful reminder of the mechanics of negotiating and finalising a financial remedies settlement, which may be summarised as follows (assuming that the negotiations take place in correspondence, which is usually the case):

1. One party will put forward their settlement proposals in a letter (or email) to the other party (of course this may follow a period of protracted negotiations). The proposals may be in an open letter, or a letter headed “without prejudice” – the difference being that without prejudice proposals cannot normally be shown to the court, unless the proposals are agreed.

2. The other party will reply, accepting the proposals. This does not necessarily mean that absolutely everything in the proposals has to be accepted for an agreement to be reached, just that all matters of substance have been agreed – trivial matters can be sorted out later.

3. Even if there has been an agreement on all matters of substance, the court still has a discretion to decide whether or not the parties should be bound by the agreement, having regard to the understanding of the parties and their communications with the court.

4. Lastly, an agreement is not contractually binding, and it is up to the court to determine whether the terms of the agreement are fair. If the court decides that they are fair then it will draw up an order in the terms of the agreement, bringing the matter to a conclusion.

In the case the wife suggested that there had actually been three possible ‘moments’ when agreement had been reached.

The first of those moments occurred when the husband put forward without prejudice settlement proposals in a letter to the wife’s solicitors. On the following day the wife’s solicitors replied accepting the proposals, subject to a couple of outstanding points.

The first question, therefore, was: were those outstanding points matters of substance? The court found that they were not – they were merely matters relating to the implementation of the agreement. Accordingly, there had been an agreement.

The second question was: should the parties be bound by the agreement? The court found that they should, having regard to the circumstances, including that both parties had been sufficiently confident that a concluded agreement had been reached that they had written to the court to that effect.

There was no dispute between the parties as to whether the agreement was fair. Accordingly, all that was left for the court to do was to determine the outstanding matters relating to the implementation of the agreement. The judge dealt with those matters, and invited the parties to draft a final order, to give effect to the agreement.

You can read the full report of the case here.

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