Pension Pot Protected Says Court Of Appeal In Win For Mr White 

In the case of Manolete Partners PLC v White [2024] EWCA Civ 1418 the Court of Appeal allowed the appeal of Mr White and in doing so protected the occupational pension rights.

In general terms, a creditor faces some serious real world courtroom mountains to climb to extract a debtor’s pension to satisfy a judgment debt. 

The decision successfully appealed was that of Manolete Partners Plc v White [2023] EWHC 567 (Ch). The applicant Manolete, a well known insolvency litigation funder, it seems had been suggesting Mr White should not be able to:

… keep the benefit of a £800,000 property, and annual income of £60,000, to the detriment of his creditors.

The Order Appealed

The matter at large here was an order Manolete obtained which it argued does not fetter Mr White’s deployment of his pension pot:

The Judge ordered Mr. White to give notice to the Scheme trustees (Mr. White and his son), exercising such rights as he might have to draw down his entire pension fund and directing payment to a UK bank account in his own name. The Judge also ordered Mr. White to give details of the nominated bank account in advance to Manolete, together with information as to the progress of the proposed sale of the property owned by the Scheme that would enable it to make the draw down payment. The Judge held that Manolete was entitled to such information in order to prepare itself to make an application to enforce its judgment against the nominated bank account.

It seems the Court of Appeal was unimpressed and then proceeded it appears to pour ice cold water on the suggestion:

On appeal, Mr. Curl sought to rely upon the fact that Manolete does not, as yet, have any further order which would prevent Mr. White from using the funds paid into the nominated bank account for his own benefit. That argument was totally unreal. Consistent with the intention plainly manifested in its application and in its earlier draft order, Manolete went to the trouble of persuading the Judge to make an order that it should be given advance notice of the nominated bank account into which payment was to be made, together with information as to the progress of sale of the Property so that it could “police” the Order, as if it had a freezing injunction or an order for sale of the Property. The clear intention behind such provisions was to facilitate Manolete applying for an order prior to any payment being made by the Scheme so as to ensure that Mr. White would not be at liberty to use any pension monies for his own benefit.

In the real world, the idea that Manolete would stand idly by and permit the pension monies to be paid by the Scheme to Mr. White and then to be disbursed by him from his account is absurd. Indeed, if Manolete were not intent upon obtaining Mr. White’s “pension pot” to satisfy its Judgment Debt, then it is not immediately apparent what standing or interest it had in asking the court to interfere with Mr. White’s choices as regards his pension in the first place.

Should Protection Be Available?

Many might be sympathetic with Manolete who has been since 2022 attempting to collect in about £1 million from Mr White in respect of misfeasance claims arising from a company Lloyds British Testing Limited which went into creditors voluntary liquidation. 

However, our legislature made a notable provision which outflanks those potential sympathies. If one casts an eye into the statutory sky there is Section 91 of the Pension Act 1995 which fetters a judgment creditor from hoovering up the pension pot:

(1)   Subject to subsection (5), where a person is entitled to a pension under an occupational pension scheme or has a right to a future pension under such a scheme –

(a)  the entitlement or right cannot be assigned, commuted or surrendered,

(b)  the entitlement or right cannot be charged or a lien exercised in respect of it, and

(c)  no set-off can be exercised in respect of it,
and an agreement to effect any of those things is unenforceable.

(2)   Where by virtue of this section a person’s entitlement to a pension under an occupational pension scheme, or right to a future pension under such a scheme, cannot, apart from subsection (5), be assigned, no order can be made by any court the effect of which would be that he would be restrained from receiving that pension.

Purpose Of Section 91 Of The Pension Act 1995

The Court of Appeal said of the purpose of Section 91 was:

… The intention is that a member’s entitlement or right to future benefits under an occupational pension scheme should remain available to provide support to that member in retirement, so that, subject to specific exceptions, in the same way that such entitlement or rights should not to be capable of alienation by the member, they should also be immune from attachment to pay the claims of creditors…

Moreover, given the very clear policy and purpose identified by the PLRC Report that future benefits under occupational pension schemes should be for the support of the member in retirement, and that (subject to the exceptions set out) the entitlement or rights to such future benefits should not be capable of alienation and should be protected from attachment by judgment creditors, in my view, the reference to a member “receiving” their pension in section 91(2) must be to a member receiving the pension for their own benefit. Specifically, that would not be the case where the debt giving rise to a pension payment was attached or charged in favour of a judgment creditor, or where the effect of the order would be that, upon receipt, the member would be prohibited from using the pension monies except to pay a judgment debt.

Pension Pot Order Appealed Successfully

The Court of Appeal highlighted the issue with the order that was successfully appealed:

In reality, Manolete’s argument amounted to an assertion that the Order made by the Judge requiring Mr. White to draw down his pension was not prohibited by section 91(2) because it did not itself prevent Mr. White from receiving his pension monies; but when Manolete then came to make its application to enforce its judgment over the monies in the designated account, it would doubtless contend that such enforcement order would also not fall foul of section 91(2), because it would apply to monies which by then had actually been paid or were due to be paid into Mr. White’s account. In essence, Manolete’s contention is that by making two orders in sequence, the court can achieve a result that would plainly be prohibited if it were to make one composite order. That is precisely the type of artificial and non-purposive approach to the interpretation and application of a statute that has been firmly rejected in cases such as Ramsay, UBS AG v HMRC and Rossendale BC v Hurstwood Properties.

Instead, in my view, the correct approach to section 91(2) required the Judge to take a more realistic and purposive view of the order he was being asked to make. He should have recognised that his Order formed part of a pre-planned sequence of steps that was designed to enable Manolete to enforce its Judgment Debt over the monies required to be drawn down from the Scheme and paid into the designated account. As such, the Order had the prohibited effect that Mr. White would be prevented from receiving his future pension from the Scheme.

…

… the Order which was made by the exercise of a discretionary power was contrary to section 91 and was crafted in an attempt to circumvent the effect of the section. It cannot be “just and convenient” for the court to exercise a power in such a way.