Be careful what you wish for – the case of SC v YD

The High Court has recently heard an interesting case on whether an earlier ‘agreement’ between two parties can be admitted as evidence in subsequent court proceedings between them.

The case of SC v YD begins back in early 2013. The parties (described as mother and father) had been in a lengthy relationship of over 17 years. They were not married. They had five children whom were aged between 16 and 6 at the time of the recent hearing. The relationship ran into difficulties and in October 2012 the father informed the mother that he was worried they were drifting apart. He wanted the two of them to continue to live together with the children in the family home and hoped that they could resolve their differences. The family home was solely owned by the father and valued at between £2.5m and £2.75m. It was mortgage free. The father had total assets valued at around £14.5m. The mother had very limited assets, mainly comprising of a modest flat bought for her by the father.

In late February 2013 the mother returned from a trip to New York. The father presented her with a document. This was entitled “Agreement between SC and YD.” It was dated 24 February 2013 and was drawn up by the father. The document, referred to as ‘the agreement’ specified the following key points:

• That the parties wanted the family home to remain a base for the children for as long as was possible;
• That the father hoped the parties could share use of the family home until the youngest child (aged 5 at the time of the agreement) joined a weekly boarding college at the age of 13;
• That the family home would not be sold before the end of February 2016;
• If the family home was sold after the end of February 2016, the mother would receive half of the sale proceeds;
• That the mother would retain her modest flat.

It should be pointed out that the mother did not sign the agreement. It was also accepted that neither party had received any legal advice when it was presented to her. The mother was distressed to read the document and refused to sign it.

The parties subsequently separated in April 2013 and the mother started court proceedings very shortly thereafter. During the course of the proceedings, the mother sought permission to rely upon the agreement. Specifically, she wanted the content of the agreement to form part of the evidence that the court would consider at a forthcoming final hearing to be heard in July 2014.

The father opposed the inclusion of the agreement as part of the evidence. No doubt by that point his position had hardened during the course of prolonged litigation. His argument was that the agreement was privileged, namely because it was a genuine offer to settle litigation between the parties. The issue was decided originally by a Deputy District Judge. He heard submissions from the parties’ legal representatives and ruled that the agreement could be admitted as evidence. The father sought permission to appeal the decision of the Deputy District Judge.

The matter came before the High Court on 17 June 2014. It was accepted that in order for the agreement to attract privilege, the following criteria must be met:

• The document should be written in an attempt to resolve actual or pending litigation between the parties, and;
• It must be inferred from the context of the document that there was an offer of settlement for which a party who made the offer can claim privilege.

The High Court agreed with the decision of the Deputy District Judge. Their reasoning was identical to that of the Deputy District Judge. Put simply, in late February 2013 neither the mother nor the father were seeking to resolve actual or pending litigation. There was no real dispute between the parties at that point in time and therefore the agreement was not an effort to resolve a dispute. The agreement was not privileged and it could therefore be admitted as evidence. The father was refused permission to appeal.

The main lesson of the above is that if there is even limited contemplation that a separation is possible, prompt legal advice can be invaluable. The father was essentially a victim of (from his perspective) unfortunate timing in this particular case. Had he presented the agreement to the mother after the parties had separated, it is possible that the court would have reached a different conclusion.