The recent case of Edward Avery-Gee v Lesley Ann Coppen and Taray Brokering Limited [2022] EWHC 2958 (Ch) serves as an important update that despite some earlier cases, suggesting the opposite, it is not for a party to place a penal notice on a court order if the court itself has not done so itself.
Facts
The Claimant in this case was the Trustee in Bankruptcy (TiB) of Mr Lawrence Coppen. In July 2022 he sought an order pursuant to Section 125 of the Companies Act 2016 for rectification of the register of members of the Second Defendant (Taray) so as to show the Claimant as the owner of the shares.
The application was heard in September, the First Defendant did not attend the hearing and an order was made requiring rectification within five business days of the date of the order. The original order did not contain a penal notice. The first defendant did not comply.
A letter was sent on 11 October 2022 seeking compliance in 24 hours. The court order was attached with an additional penal notice attached. Again the first defendant did not comply. The claimant applied to have the first defendant committed for non-compliance. The parties reached terms prior to the hearing of the application.
It was held that a party is not entitled to add a penal notice of its own volition. However, it does remain open to the party seeking to enforce the court order to explain that there may be penal consequences, even where one is not included in the order.
Law
It must be borne in mind that CPR 81 was substantially redrafted from 1 October 2020.
There is now reference in CPR 81.4 which states that "A contempt application must include statements of all the following". In this situation we are concerned with CPR 81.4(2)(e) "confirmation that any order allegedly breached or disobeyed included a penal notice".
It was held that with the amendments to CPR 81 the penal notice now forms part of the order rather than being an appendage to it.
The absence of a penal notice is not necessarily a complete bar, however, a court must be satisfied that there is no injustice caused to the defendant(s). There is case law on this point; Kenneth Parker J in Serious Organized Crime Agency v Hymans [2011] EWHC 3599 and Miles J in Business Mortgage Finance 4 v Hussain [2022] EWHC 449.
As an aside, there remains no set wording for a penal notice. However, CPR 81 does provide a suggestion.
Takeaways
In practice this means that a decision needs to be made earlier about whether or not a penal notice is sought. Where a party is seeking an injunction, they will initially be in control of the timeline and a decision needs to be made before litigation is pursued.
Ultimately, this should not have a dramatic practical impact, save for tidying up a slightly unusual situation where a party could in essence add elements to a court order without the permission of the court.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
