Law Report: Ancillary relief is fixed by court order

Xydhias v Xydhias Court of Appeal (Lord Justice Stuart-Smith, Lord Justice Thorpe and Lord Justice Mummery) 21 December 1998

ORDINARY CONTRACTUAL principles did not apply to an agreement for the compromise of an application for ancillary relief: such an agreement could only be rendered enforceable by being converted into an order of the court, after which the rights and obligations of the parties were determined by the order, and not by any preceding agreement.

The Court of Appeal dismissed the appeal of Harry Costas Xydhias against an order of the district judge in ancillary relief proceedings.

The wife had petitioned for divorce and applied for ancillary relief. A trial date was fixed, but after negotiation heads of settlement were largely agreed, and the wife's solicitors wrote to the court suggesting that the case be removed from the list subject to a short appointment. At the short appointment, however, the husband's solicitor stated on instructions that all offers were withdrawn and that the case would be fully fought.

The wife applied for an order that: "The respondent do show cause why an order should not be made in the terms of an agreement reached between the petitioner and the respondent between 22-29 August 1996." The 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 draft agreement. The husband appealed.

He submitted that the question was to be decided on the application of normal contractual principles, which dictated that unless all the material terms were agreed, or the contract contained an agreed mechanism for ascertaining what was not agreed, then there was no contract.

Patrick Eccles QC and Edward Hess (Blakemores, Leamington Spa) for the appellant; Michael Horowitz QC and Timothy Bishop (Mercy Messenger, Solihull) for the respondent.

Lord Justice Thorpe said that ordinary contractual principles did not decide the issues in the appeal. That was because an agreement for the compromise of an ancillary relief application did not give rise to a contract enforceable in law. The parties seeking to uphold such an agreement could not sue for specific performance. The only way of rendering the bargain enforceable was to convert the concluded agreement into an order of the court. Thereafter, the rights and obligations of the parties were determined by the order and not by any agreement which preceded it.

The order was absolute unless there was a statutory power to vary, or unless vitiated by a fact that would vitiate an order in any other division. The court did not either automatically or invariably grant the application to give the bargain the force of an order.

In consequence it was clear that the award to an applicant for ancillary relief was always fixed by the court. The payer's liability could not ultimately be fixed by compromise as could be done in the settlement of claims in other divisions. The purpose of negotiation, therefore, was not finally to determine the liability but to reduce the length and expense of the process by which the court carried out its function.

Litigants in ancillary relief proceedings were subjected to great emotional and psychological stresses, particularly as the date of trial approached. There were sound policy reasons supporting the conclusion that the judge was entitled to exercise a broad discretion to determine whether the parties had agreed to settle. The court had a clear interest in curbing excessive adversar-iality and in excluding from trial lists unnecessary litigation.

A more legalistic approach, as the present case illustrated, only allowed the inconsistent or manipulative litigant to repudiate an agreement on the ground that some point of drafting, detail, or implementation had not been clearly resolved. It was to be hoped that a case such as the present, requiring the exercise of the judge's discretion, would be a rarity.