I wrote here a couple of weeks ago about the case of Edgar v Edgar, which dealt with the issue of when a financial/property agreement reached between husband and wife was binding. But what if the agreement is incomplete? Is it still binding then? This was the issue facing the Court of Appeal in the 1998 case Xydhias v Xydhias (pronounced, if I recall correctly, ‘Zid-e-ass’).
To explain Xydhias I don’t really need to set out the facts of the case in any great detail. The wife had made a financial remedies application (then known as an ‘ancillary relief’ application) in April 1995 and a three day final hearing was eventually fixed, to begin on the 2nd of September 1996. After the fixing of the hearing, negotiations proceeded between the parties and an agreement was reached a few days prior to the hearing, save for two outstanding issues of a relatively minor nature. On the 27th of August the wife’s solicitor wrote to the court stating that ‘heads of terms of settlement’ had been agreed, and that a three day hearing would therefore no longer be required. Instead, a 45 minute appointment was all that was needed to deal with the outstanding issues and for the court to make an order in the terms of the agreement.
At the hearing on the 2nd of September the husband’s solicitor informed the court that the husband had withdrawn all offers and that the case would be ‘fully fought’. It would therefore have to proceed to a contested final hearing after all. However, on the 7th of October the wife applied for an order requiring the husband to show cause why an order should not be made in the terms of the agreement that had been reached prior to the 2nd of September hearing. The district judge found that it was clear that the parties had wished to conclude an agreement before the court was called upon to decide the issue, and made an order essentially in the terms of the agreement.
The husband appealed, claiming that ordinary contractual principles should apply, i.e. unless all the material terms are agreed or the contract contains an agreed mechanism for ascertaining what is not agreed, then there is no contract.
The Court of Appeal did not agree. Ordinary contractual principles did not apply, because an agreement to settle a financial remedies claim did not give rise to a contract enforceable in law. The only way to make the agreement enforceable was to convert it into a court order.
In the circumstances, held Lord Justice Thorpe, the district judge was entitled to exercise his discretion to determine whether the parties had agreed to settle. “The court”, he said, “has a clear interest in curbing excessive adversariality and in excluding from trial lists unnecessary litigation.”
“…on the evidence before him I am in no doubt that the district judge rightly held that the parties had concluded a compromise during the week before the hearing. Throughout that week it was the husband who was pressing for a settlement and plainly there came a point at which the wife agreed his terms. All that remained unresolved was either mechanics or trivial.”
Accordingly, the husband’s appeal was dismissed.
Xydhias is an example of a general principle that Lord Justice Thorpe himself enunciated in the later case of Rothwell v Rothwell:
“As a matter of general law there is no doubt at all that once the parties have arrived at a compromise of litigation, the court will uphold and enforce that compromise, absent some vitiating element”.
Xydhias, like Edgar, gave its name to the lexicon of family law, with the sort of outline settlement reached in the case being referred to as a ‘Xydhias agreement’. The case is still good law and will be found in all textbooks to this day.