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Payne Hicks Beach

26 November 2020

BSA -v- NVT - the enforceability of recitals as part of an order

In the recent case of BSA v NVT [2020] EWHC 2906, Mr. Justice Williams sheds some new light on, inter alia, the enforceability of recitals recorded on the face of orders by consent.

The facts of the case are as follows: a mother applied for financial orders for the benefit of her two children under Schedule 1 of the Children Act 1989. She and the children’s father appear to have reached an agreement at an FDR, and this agreement was formalised in a consent order approved by DDJ O’Leary on 11 December 2018.

In that December order, it was agreed and recorded as a recital that the father would purchase a property for the benefit of the mother and the children worth £2.75m. Upon the father taking specialist tax advice, a further order dated 13 February 2019 was agreed specifying the mechanics of implementation. In that February order, the parties agreed that the father would provide the property to the mother on a long lease – and again, this was recorded on the face of the order as a recital.

However, in due course, the father failed to provide the housing fund and, in July 2019, the mother applied to enforce the December 2018 consent order. On 8 October 2019, HHJ Oliver ordered that the December 2018 consent order be endorsed with a penal notice. The father appealed.

The father’s two lines of argument are summarised at paragraph 32 of Mr. Justice Williams’ judgment on his application for permission to appeal:

First, the matters said to have been breached by the father were recitals to the December 2018 consent order and thus not terms ordered by the court itself. They merely established contractual terms which might be enforceable in civil proceedings. Second, those matters went beyond the allowable order the court might make in Schedule 1 proceedings. To allow enforcement of such terms would be going beyond that permitted by statute”  

Dealing with the father’s first line of argument, Mr. Justice Williams referred to the authority of H v H (Financial Provision) [1993] 2 FLR 35 in which Thorpe J. “took no issue with the proposition that a recital can be enforced as if it had been an order of the court”. Mr. Justice Williams then added to the judicial authority in this area at paragraph 34 of his judgement, which is pragmatic and worth quoting in full:

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.

The second limb of the father’s argument was that the court did not have the jurisdiction to order a long lease arrangement, and therefore a penal notice could not be attached to a breach of this recital. Indeed, the father’s representatives relied upon Mr. Justice Williams’ own finding in DN –v- UD [2020] EWHC (Fam) 627) as an authority for the Court not being capable of ordering such an arrangement.

The father's second line of argument did not fare any better than the first. Mr. Justice Williams noted that a penal notice had been attached to the entirety of the December 2018 order, which was a standard Schedule 1 consent order, rather than the February 2019 “mechanics” order. The recital in the December 2018 order simply provided for the father to purchase a property for the benefit of the mother and child. Section 1 (2) of Schedule 1 of the Children Act 1989 grants the court the jurisdiction to make an order for the settlement of property for the benefit of the child. Thus, in Mr. Justice Williams’ judgment, “the recital to the December 2018 order fell squarely within what was lawfully permissible under Schedule 1”. To this end, he agreed with the mother’s reference to 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.” Accordingly, the father’s second line of argument was not accepted and his application for permission to appeal was unsuccessful.

The case was not, however, without its nuances. Mr. Justice Williams did observe that if the penal notice been attached to the specific recitals of the February “mechanics” order, which provided for a long lease arrangement which could not be ordered by the Court, “the father might have persuaded me that permission should be granted to explore that issue in more depth.”

Additionally, whilst Mr. Justice Williams was content that a penal notice could be attached to the December order, he noted that “a penal notice is in effect a warning of the possibility of committal proceedings. Although that 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…

Putting these question marks to one side, this case is a reminder that recitals recorded on the face of a consent order may be enforced as an order, provided that the court would have had jurisdiction to make an order in like terms. When negotiating agreements, practitioners should explain to clients that if you record an agreement as a recital, in many cases it will be as enforceable as an order. 

Article by Luke Scarratt, Associate in the Family Department. For further information, please contact Luke Scarratt by email or your usual contact in the Family Department or, alternatively, telephone on 020 7465 4460.

 

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