BSA v NVT: The enforceability of a recital

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There were various things going on in BSA v NVT, but I am going to concentrate upon just one: the enforceability of a recital.

The facts that you need to know are that the parties are the parents of two children. The mother applied for a Schedule 1 Children Act order, and on 11 December 2018 a consent order was made. As Mr Justice Williams explained:

"In summary, the order recorded the parties' agreement that the father would make a housing fund of £2.75 million available for the purchase of a new home for the mother and the children. It also makes provision for periodical payments and some other capital sums and a costs award. Upon the father taking specialist tax advice, a further order dated 13 February 2019 was agreed specifying the mechanics of implementation."

The 'mechanics' included a recital that provided for the property to be purchased, and leased to the mother.

The father failed to provide the housing fund and the mother commenced enforcement action. Amongst other things, the court (HHJ Oliver) endorsed the December 2018 order with a penal notice. The father sought permission to appeal. I don't need to go into the details, but it was part of the father's argument that the recital was not enforceable as an order, as it was not an order that the court could have made - the recital merely established contractual terms which might be enforceable in civil proceedings.

Mr Justice Williams accepted that the lease arrangement was not an order that the court could have made. However, he said:

"It would be surprising if the detailed and comprehensive agreement that the parties reached securing the future material needs of the children and crystallised on the face of an order in the formality with which it was expressed was not intended to be legally enforceable. For the father to suggest that this is not an enforceable order but merely an enforceable contract is surprising given that it is in the agreement part of the order of December 2018 that the full and final satisfaction clauses are found. It seems improbable that the mother would not have wished to have the full arsenal of enforcement powers open to her should the need arise and should voluntarily accept enforcement by contract action only in order to assist the father in terms of his tax liabilities."

He went on:

"In addition the interpretation that it was intended that the agreement should become part of an order is the only interpretation that makes sense of the matter being adjourned to allow the father to seek specialist tax advice; the parties distilling the mechanics of implementation in a 'consent order'; and that same order providing liberty to apply for implementation."

We then arrive at the crucial part of (this part of) the judgment:

"The particular difficulty with the father's submissions is that the Penal notice was attached to the December 2018 order not the February 2019 order which refers to the long lease. The order of December 2018 was a standard family court consent order. Rule 33 of the FPR 2010 contains provisions relating to applications for the family court to enforce an order made in family proceedings. Orders made pursuant to Schedule 1 fall within the ambit of that Rule. The agreement contained in the December 2018 order provided for the father to purchase a property for the benefit of the mother and the children and section 1(2)(d) of Schedule 1 gives the power to make an order for the settlement of property for the benefit of the child. The recital to the December 2018 order fell squarely within what was lawfully permissible under Schedule 1. I accept the submissions made by the mother that this analysis accords with Chapter 24.43 of Rayden and Jackson on Divorce which states that, "where an order of the court consists in part of a recital containing an agreement imposing an obligation on a party, and in part an order, the recital may be enforced provided the court would have had jurisdiction to make an order in like terms". The December 2018 order complies with this requirement. In any event the December 2018 order contains other matters whether in the recitals or in the formal part of the order (including periodical payments) which plainly would permit the court to attach a penal notice to it. The penal notice that HHJ Oliver provided for was not limited to any specific paragraph of the December 2018 order but rather referred to it in its entirety. In addition, I accept, as submitted by [counsel for the mother], that a penal notice is in effect a warning of the possibility of committal proceedings. Although it is part of the enforcement toolkit it is a precursor to true enforcement. The father's arguments that the order is not capable of enforcement because it is in truth an agreement not susceptible to enforcement by committal could of course form part of a defence to an application to commit for failure to comply but I do not accept that there is any merit in the ground that the order of December 2018 could not properly have a penal notice attached to it.

"Had the penal notice been attached to the specific paragraphs of the order of February 2019 which set out the long lease mechanism the father might have persuaded me that permission should be granted to explore that issue in more depth. However, that is not the order which is appealed against. The order of December 2018 is perfectly capable of being interpreted as a settlement and indeed the court would strive to interpret it in a way which was consistent with the statutory scheme in any event. Thus, I am entirely satisfied that the December 2018 order could properly have a penal notice attached to it."

Accordingly, permission to appeal was refused in respect of this ground of appeal.

You can read the full judgment here.