16 April 2024

Rule Changes Regarding Penal Notices

On 6 April 2024, an amendment to the Civil Procedure Rules came into force regarding penal notices – that is, notices given to persons served with a court order warning them that breach of the order may be punishable...
UK Litigation, Mediation & Arbitration
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On 6 April 2024, an amendment to the Civil Procedure Rules came into force regarding penal notices – that is, notices given to persons served with a court order warning them that breach of the order may be punishable as a contempt of court. Proof that such a notice was given will usually be a prerequisite for bringing an application to have a person committed for contempt (unless, exceptionally, a court considers it appropriate and not prejudicial to the defendant to dispense with that requirement).

The stated purpose of the rule change is to reverse the effect of the High Court decision in Re Taray Brokering Ltd [2022] EWHC 2958 (discussed here). That decision held that penal notices form part of the relevant court order to which they are attached and, accordingly, if an order approved by the court did not include a penal notice a party was not at liberty to add one itself before serving the order.

The amendments are to clarify that a penal notice does not form part of the relevant order and can be added subsequently by the party serving it. CPR Part 81 (Contempt of Court) is amended as follows:

"81.2 ... "penal notice" means a prominent notice on the front of an order warningA "penal notice" is a prominent notice added to the front of an order by or at the request of a party warning that if the person against whom the order is made (and, in the case of a corporate body, a director or officer of that body) disobeys the court's order, the person (or director or officer) may be held in contempt of court and punished by a fine, imprisonment, confiscation of assets or other punishment under the law.
81.4 .. (2) A contempt application must include statements of all the following, unless ... wholly inapplicable —
(e) confirmation that whether a penal notice had been added to the front of any order allegedly breached or disobeyed included a penal notice;

Does this change the need for a penal notice?

The deletion of the requirement for "confirmation" that a penal notice was given might cause some to wonder if it affects the need to have served a penal notice before bringing a committal application. However, it seems very unlikely that it would be interpreted as altering the existing position.

It is clear from the Civil Procedure Rule Committee's proposal of the amendments, and from the statutory Explanatory Note, that their intended purpose is limited to reversing the finding in Taray regarding the status of penal notices as part of the order. The Taray decision did not concern the question of when penal notices are required (or might be dispensed with) in contempt proceedings. Indeed, the judge expressly made clear that

"... nothing in this judgment deals with the position where a party seeks to enforce by way of committal a court order that does not contain a penal notice" (paragraph 22).

Practitioners therefore should still ensure that, if an order might potentially be the subject of contempt proceedings, there is a prominent penal notice on the front of the document served on the defendant. However, it is now clear that the notice may be either on the document that was approved by the court or added separately after.

When should a penal notice be given?

Of course, the fact that parties can add penal notices to court orders does not mean that they should do so indiscriminately for all orders made in the course of litigation.

Not all such orders will support contempt proceedings if breached. As recently highlighted by Foxton J in Olympic Council of Asia v Novans Jets LLP [2023] EWHC 276 (discussed here), the civil courts' approach to their contempt jurisdiction distinguishes between:

  • orders made to assist the court in adjudicating the substantive dispute (such as ordinary disclosure orders); and
  • orders that are "coercive" in nature (including freezing injunctions and other orders to facilitate and protect the court process and the enforcement of judgments – including disclosure orders ancillary to such relief).

Contempt sanctions against a party will generally only be appropriate in respect of "coercive" orders, on the basis that their breach cannot adequately be sanctioned within the litigation itself, by the trial judge drawing adverse inferences or limiting the party's ability to pursue/defend the claim. Foxton J accepted that a court may in some circumstances make a coercive order (ie. amenable to the contempt jurisdiction) within its adjudicative function, such as where a party has repeatedly breached disclosure orders. However, such an order would be clearly conceived and "badged" as such by the court, including a penal notice.

Whether or not a particular order has the potential to attract contempt sanctions may not always be obvious, and will ultimately be a question for the court to assess in the specific context (either when asked to approve a draft order bearing a penal notice, or when a committal application is brought). In any event, it is clear that if a particular order would not normally attract contempt sanctions, a party cannot transform it into one that does simply by adding a penal notice after it is made.

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.

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