How should provisions of a court order that are in dispute be construed?

This question most often arises in the context of consent orders. As stated in Besharova v Berezovsky [2016] EWCA Civ 161 per Sir Stephen Richards at [11]:

‘the principles applicable to the construction of a consent order are the same as those applying to a commercial contract: see Sirius International Insurance Company v FAI General Insurance Limited [2004] UKHL 54 at [18]. As Lord Steyn said in that paragraph, the question is what a reasonable person, circumstanced as the actual parties were, would have understood the parties to have meant by the use of specific language; the answer to that question is to be gathered from the text under consideration and its relevant contextual scene.’

This applies to family proceedings as well as civil proceedings notwithstanding that (as observed in Sharland v Sharland [2015] 2 FLR 1367 per Lady Hale of Richmond at [27]) in the former a consent order derives its authority from the court and not from the preceding agreement of the parties (de Lasala v de Lasala [1980] AC 546) whereas in the latter a consent order derives its authority from the contract made between the parties (e.g. Purcell v FC Trigell Ltd [1971] 1 QB 358).

Besharova v Berezovsky was cited with approval most recently in Dehalli v Derhalli [2021] 2 FLR 1097 per Eleanor King LJ when determining that the wife was entitled to live in the FMH rent free until it was sold and was not liable to pay an occupation rent to the husband pending sale.

In Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 All ER 98 Lord Hoffman at pp.114–115 summarised the principles by which contractual documents are to be construed. The principles have also been set out in cases including Arnold v Britton & Others [2015] AC 1619 per Lord Neuberger of Abbotsbury at [15] and Wood v Capital Insurance Services Ltd [2017] AC 1173 per Lord Hodge at [10]–[15].

The need for a court order made after contested proceedings to be subsequently construed is rarer for the self-evident reason that it reflects the judgment that preceded it (and hence why an appeal is from the decision and why time for permission to appeal runs from the date the decision is given). However, it may occur.

In A v M [2021] EWFC 89, a private equity case, Mostyn J had ordered at [80]⁠(i) that W was to:

‘receive 48.53% of the husband’s share of carry in Fund 1 and 78.91% of the husband’s co-investment in that fund, in each instance when realised. The payments to the wife will be made by way of contingent lump sums from the husband.’

The court order reflecting the same stated that H ‘shall pay to [W] lump sums equal to 78.19% of all capital and income proceeds of or any other payments or receipts due or received by [H] from time to time arising out of the Fund I Co-Invest share net of tax’ and similarly arising out of the Fund 1 Carry share.

Mostyn J’s judgment was given in November 2021 and his final order was made in January 2022. In August 2024, in A v M (No. 2) [2024] EWFC 214, Sir Jonathan Cohen was tasked following Mostyn J’s retirement with interpreting the order to determine whether or not W was entitled to share in H’s investments which were in fact not realised but transferred into a continuation fund (‘CF’). W’s complaint was that she was not given the opportunity of sharing in H’s co-investment and carry that was carried forward in the CF and instead was cashed out against what she said would have been her will if she had known that H was to remain invested.

At [22] the judge described his ‘sole task’ was to construe the final order and in doing determine whether the order gave W an option to elect to carry over to the CF or whether it required H to pay W the lump sums calculated in accordance with the percentages that Mostyn J had determined.

It was agreed that the applicable law was as summarised in Barnard v Brandon & Ors [2023] EWHC 3043 (Ch) per Richards J:

‘[34] No doubt by coincidence, the sole authority to which I was referred on the proper approach to the construction of court orders, was my own judgment in Banca Generali SPA v CFE (Suisse) SA and another [2023] EWHC 323 (Ch). All parties were agreed that I should follow the approach set out in paragraphs [18] to [22] of that judgment. Ignoring those principles that are applicable to the construction of injunctions which are not applicable in the present case (there being no dispute as to the meaning of paragraphs [10] and [11] of the Trial Order) the parties’ common approach can be summarised as follows:

i)⁠ The sole question for the court is what the Trial Order means. Issues as to whether the Trial Order should have been made and, if so in what terms, are not relevant to construction. The court should not succumb to any temptation to stretch legal analysis to capture what are seen as the merits or lack of merits of the case that led to the making of the Trial Order.

ii)⁠ The words of the Trial Order are to be given their natural and ordinary meaning and are to be construed in their context, including their historical context, and with regard to the object of the Trial Order.

iii)⁠ The reasons the Judge gave for making the Trial Order in his judgment or judgments are an overt and authoritative statement of the circumstances which the Judge regarded as relevant. Those reasons are admissible for the purposes of construing the Trial Order.

iv)⁠ However, caution should be exercised before engaging in an excavation and analysis of the parties’ submissions to the Judge to discover their motives for seeking particular orders with a view to construing the Trial Order. That runs the risk of being a difficult and dubious exercise with parallels to admitting evidence of negotiations in construing a contract.’

Applying these principles led Sir Jonathan Cohen to conclude (at [32]) that ‘[t]he order is clear: H’s obligation is to pay the appropriate percentage of the proceeds due to or received by him from respectively the co-invest or carry funds net of tax and transactional costs’ and (at [33]):

‘[t]his is exactly what he did. W received full value for her interest. Having paid W, the fact that he invested, as a matter of obligation, some of the proceeds into the CF does not lead to any requirement for him to give W the same opportunity.’

Although what happened was not foreseen this did not mean (at [37]) ‘it follows that if Mostyn J had been asked to consider this possibility he would have given W the opportunity to roll over her interest into the CF. Nor, should I enter into such surmise’ as (at [38]⁠(i)) ‘[t]he words of the order are clear. That the event was not foreseen is not a ground for going behind the words’.

Both situations therefore require consideration of what was meant – with a consent order the question is what a reasonable person would have understood the parties to have meant and with an order made after contested proceedings the question is what the judge’s order meant.

One lesson from A v M (No. 2) is the fact that something was not foreseen does not permit speculation as to what would have been the judge’s intention if it had been foreseen and the judge asked to consider what ought to happen if – as was the case – the meaning of the order was clear.