Agreements by Spouses

Contract Law and Families

In principle, it is possible to enter legally binding contracts on most issues. However, certain matters, including many in the family law sphere, are either regulated by statute or common law in the public interest.

The terms of marriage and civil partnership are largely prescribed by law. Generally, it is not possible to enter an arrangement analogous to marriage that will be enforceable as a private contract. Cohabitation agreements have been permissible since 2010.

Various aspects of family and succession law regulate the validity of both prenuptial agreements and separation agreements. In effect, there are certain rights and obligations in the family law context that one cannot contract out of. This arises in maintenance and, most pointedly, in the case of support for and the welfare of minor children.

The State has a strong interest in the amicable resolution of matrimonial disputes in the context of separation.  Legislation has long since positively required steps to be taken towards a mediated agreement. The courts are, in addition, willing in practice to adjourn and press the parties towards an agreed solution.

An agreement reached by the parties is likely to be more acceptable in the broader sense than one imposed by the court. Accordingly, in the context of separation where appropriate, the legislation and courts will positively encourage parties to enter an agreement, provided it is consistent with legal principles.

Enforceability

A separation agreement without the force of a court order may only be enforced through breach of contract procedures. In this context, parties who issue proceedings may seek to embody certain elements of the separation agreement in the court order. This will make the breach immediately enforceable as such.

Issues arise in relation to enforceability against a third party. It is a fundamental principle that a person may not be subject to a court order unless he has been party to court proceedings.

Provisions regarding pension splitting have necessitated bringing in the relevant pension trustees as third parties to proceedings so that they are bound in respect of orders made in respect of pension splitting and apportionment, etc.

Weight in Divorce Proceedings

There is a public interest in ensuring that spouses are not left without adequate maintenance. It is a very strong public opinion that the interests of the children should be paramount.

The divorce legislation requires the court to take into account existing separation agreements in making decisions regarding financial relief orders in the event of divorce. However, the court can set aside any part or all of the agreement. On granting a decree of divorce, it has the power to vary the benefits of either party or dependant members of a family under any prenuptial or postnuptial agreement or settlement entered by spouses.

In recent times, the courts have been less willing to vary settlement agreements where adequate and fair provision has been made for the applicant’s spouse. Where the agreement fails to make proper provision, it may be varied. The courts have indicated that where the agreement is older and is less relevant to current circumstances, it is more likely to be varied.

The weight to be attached to the prior agreement will depend on a range of circumstances. The current financial circumstances and those at the time it was entered will be considered. If there is an intention that the separation is to be lasting and a substantial division of family assets has occurred, then the agreement is less likely to be varied in the absence of significantly changed circumstances.

Where the parties have been separated for a long time, this is a factor against variation. On the other hand, the length of time may mean that the change of circumstances is more radical.

During the so-called Celtic Tiger period, a number of applications were made by separated spouses where one spouse had received a relative windfall on terms of asset value on sale. In some cases, the courts have been willing to make an award of a modest proportion of the windfall gain.

Non-Disclosure/Legal Negation

Settlement agreements are more likely to be displaced where there has not been full disclosure at the relevant time.  Indeed, such agreements are displaced on basic contractual principles.

The variation may be justified in the circumstances short of that legally sufficient to negate the agreement. Where, for example, there has been a lack of full disclosure or information, or imperfect knowledge of one party’s business prospects, variation is more likely to be allowed.

In some cases, courts have allowed a variation even where the original separation agreement was reasonable, where it has taken the view that it would be unfair to prevent the spouse from enjoying a better standard of living and lifestyle relative to that enjoyed by reason of prosperity generally in the country, which might be reflected in the other spouses enhanced income and assets.

The courts have taken the view that the terms on which divorce is allowed in the Constitution is such that the obligation on the court to make termination cannot be removed by agreement.

Criteria for Variation

The Supreme Court set out principles as to the extent to which a separation agreement might be varied. It should be given significant weight where it is intended as a full and final settlement of all matters between the parties. In the event of a divorce decree, it may be appropriate in many cases to incorporate it in the court order.

If the circumstances at the time of the separation agreement have not changed, then presumptively, proper provision has been made. Where they have changed significantly, the court may consider the entirety of the circumstances.  There is no requirement of itself to make a redistribution of wealth.

If one spouse acquires significant wealth after separation, which is unconnected with joint efforts by the spouse during marriage, this is not a factor in itself to grant the making of further provision for the other spouse. All circumstances should be looked at where a party seeks extra provision. The facts and circumstances include the length of time since the separation agreement.

Courts have accepted that there have been radical changes in circumstances in some cases. This has occurred both in the context of the so-called property boom and subsequent property crash, where dramatic changes in fortune had occurred.

Prenuptial Agreements

Prenuptial agreements have rarely come before the Irish courts. The Succession Act expressly allows prenuptial agreements in respect of legal rights shares and statutory rights on intestacy. The position is more problematic in other contexts.

In a famous case in the 1950s, the Supreme Court considered an agreement regarding the religious upbringing of a child between parents of a different faith. In that context, the agreement was upheld. However, this is not generally considered a precedent and may reflect the mores of the time.

Historically, some prenuptial agreements were held invalid as they were inconsistent with public policy. Divorce was prohibited by the Constitution until 1995. Since the change in legislation, the public policy objection has lessened.  However, courts may take account of public policy considerations of this nature.

Study Group

The Department of Justice, Equality and Law Reform established a Study Group on Prenuptial Agreements in 2006.  Its recommendations express support for the principle of prenuptial agreements.

It indicates, however, that it should be capable of being examined by the courts in judicial separation and divorce proceedings similar to the provisions in respect of maintenance and asset division referred to above. It is suggested that the court should have regard to the provisions of the agreements in the same way.

The Group recommended that prenuptial agreements should be capable of review on death. It recommended a similar provision for statutory review equivalent to that provided for in England and Wales. It recommended certain procedural requirements, in particular that the agreement should be in writing, witnessed and made after each party had received separate legal advice and after full disclosure of financial and economic circumstances.

It recommended that it be made at least 28 days prior to marriage.

Separation agreements are generally in relatively standard terms. They provide that parties are to live apart and not interfere with each other. They generally provide arrangements for custody and access to children.

Division of Assets & Pre-Nuptials

Pre-nuptial agreements may be entered in the sense that they are not invalid under Irish law. However, it is not clear to what extent the courts will have regard to them. They will not be automatically enforced. At best, regard may be had to them.

The divorce legislation allows the courts on divorce or judicial separation to provide for a variation of a prenuptial or postnuptial agreement and to extinguish the interest of parties/spouses in a settlement. Where parties agree on a separation agreement, the courts will still require to be satisfied that they make proper provision for the parties.

It appears that there has been no case in which a prenuptial agreement has come before the courts in the Republic of Ireland.

Mediation

The State has established the Irish Family Mediation Service, which operates through a number of offices. A number of professionally trained mediators run the service. It is operated in conjunction with the Legal Aid Board.

The Mediation Service seeks to facilitate the amicable resolution of matrimonial disagreements on mutually acceptable terms. A mediator will seek to resolve the conflict between the parties and assist them in reaching an agreement. See generally the sections on mediation.

The European Union Mediation Directive sought to encourage mediation as a form of dispute resolution. The Directive has been translated into Irish law by the European Community Mediation Regulations 2011.

Provision is made to protect the confidentiality of the mediation process. Matters disclosed are protected from being used against a party to the proceedings.

The courts are given powers in cases where they consider it appropriate to order proceedings to be adjourned in order to facilitate mediation. They may invite mediation themselves or, with the consent of the parties, refer the matter to mediation. Mediation cannot be forced but the courts may use sanctions, including costs, to encourage mediation.

A person involved in the mediation process may not be compelled to give evidence in proceedings relating to any matter arising out of the mediation. However, there is an exception where withholding the evidence would contravene public policy, in particular in relation to child protection issues or matters of physical or psychological harm. The regulations provide that after an agreement has been reached, an application may be made to the court to make the agreement an order of the court.

Collaborative

Collaborative law derives from the United States. Its aim is to facilitate the resolution of family law disputes without recourse to contested court proceedings. Collaborative law makes agreeing on a resolution the collective aim for the parties.

Parties enter an agreement to agree. In particular, lawyers agree to relinquish their involvement if proceedings commence. This removes the parties’ apparent or actual interest in commencing proceedings for contested court hearings.

Mediation Notification

Most separations and divorces are dealt with on a largely consensual basis without full resort or any resort to court.  The judicial separation of family law legislation requires solicitors to discuss the possibility of counselling mediation and or the inclusion of a separation agreement before the commencement of legal proceedings.

The matter must be specifically certified as part of the issue of court proceedings.

Case Management

Family law procedures have been amended by the incorporation of case management provisions. Case management requires parties to agree and parties to attend and may allow the court to press, encourage and incentivise an agreed resolution. Case progression rules seek to ensure that proceedings are prepared for trial in a manner which is just, expeditious and likely to minimise costs. Issues which can be agreed upon should be agreed and may be encouraged to be agreed upon.

Rules have been introduced at the Circuit Court level to facilitate supervision and case progression hearings before the County Registrar.