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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Manolete Partners PLC v White [2024] EWCA Civ 1418 (15 November 2024) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2024/1418.html Cite as: [2024] EWCA Civ 1418, [2025] WLR 1065, [2024] WLR(D) 491, [2025] 1 WLR 1065 |
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN MANCHESTER
His Honour Judge Hodge KC (sitting as a Judge of the High Court)
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE GREEN
and
LORD JUSTICE SNOWDEN
____________________
MANOLETE PARTNERS PLC |
Applicant/ Respondent |
|
- and – |
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IAN RUSSELL WHITE |
Respondent/Appellant |
____________________
Joseph Curl KC and Jon Colclough (instructed by Addleshaw Goddard LLP) for the Respondent
Hearing date : 4 July 2024
____________________
Crown Copyright ©
Lord Justice Snowden :
"(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.
(3) [Repealed]
(4) Subsection (2) does not prevent the making of -
(a) an attachment of earnings order under the Attachment of Earnings Act 1971, or
(b) an income payments order under the Insolvency Act 1986.
(5) In the case of a person ("the person in question") who is entitled to a pension under an occupational pension scheme, or has a right to a future pension under such a scheme, subsection (1) does not apply to any of the following, or any agreement to effect any of the following
…
(d) … a charge or lien on, or set-off against, the person in question's entitlement, or right … for the purpose of enabling the employer to obtain the discharge by him of some monetary obligation due to the employer and arising out of a criminal, negligent or fraudulent act or omission by him…"
The Facts
The Company and the Pension Scheme
"6A Retirement
(1) The amount available to apply under this Rule shall be determined by the Trustees, on the advice of the Actuary, having regard to the Member's Interest and such other Rules as affect the Member's entitlement to benefit.
(2) On the retirement of a Member from the Service at his Normal Retirement Date, the Trustees shall apply the amount available under this Rule to -
(a) pay any Lifetime Allowance Charge;
(b) pay to the Member a lump sum in accordance with Rule 6B;
(c) provide for the Member a pension payable in accordance with section (3) of this Rule and, if the Member so requests and the Insurer is willing to accept such a request, that pension will include [death benefits] …
(3) The Trustees shall secure any pension payable under this Rule by purchasing a Lifetime Annuity from an insurer of the Member's choice on such terms that meet the conditions set out in paragraph 3 of Schedule 28 to the Finance Act 2004.
…
(6) If, on or after the Member's Normal Minimum Pension Age, the Member asks for all of the amount available under this Rule (or a specific proportion of that amount) to be … designated as a Drawdown Pension Fund and the Trustees agree then the Trustees shall -
(a) pay any Lifetime Allowance Charge due; and
(b) … hold the balance of the designated amount as a Drawdown Pension Fund to be applied under Rule 6C.
…
6C Member's Drawdown Pension Fund
(1) Where a Member has a Drawdown Pension Fund, the Member shall agree with the Trustees the income to be withdrawn from the Drawdown Pension Fund in each Drawdown Pension Year … and the number of instalments in which that income is to be paid. The Trustees may delay the payment of any income to allow sufficient time to sell any illiquid investments.
…
(3) The Member may at any time direct the Trustees to use the Drawdown Pension Fund to secure a pension for him in accordance with the provisions of section (3) of Rule 6A that commences on a date agreed between them. The Trustees may delay the securing of the pension to allow sufficient time to sell any illiquid investments."
"(1) Benefits non-assignable. Except where permitted both in terms of sections 91 to 93 of the Pensions Act and in terms of the Rules or Pension Sharing Rules, no person having a beneficial interest in the Scheme shall assign, commute, surrender or charge that interest or any part of it, nor can such interest be forfeited or a lien or set-off be exercised in respect of it. Where a person having a beneficial interest in the Scheme agrees to a purported transaction which would, if belonging absolutely to that person, be of no effect under section 91(1) of the Pensions Act, benefits shall cease to be payable to that person under the Scheme and the Trustees may in their absolute discretion apply any moneys which have ceased to be payable to that person for the maintenance or otherwise for the support or benefit of that person or pay the moneys to any other person to which such a payment can be made in terms of section 92(3) of the Pensions Act, but in no circumstances shall any payment be made to a purported assignee.
…
(5) Charge on benefits for debt due to the Employer. Subject to sections 91 and 93 of the Pensions Act, all benefits payable or prospectively payable to a beneficiary under the Scheme shall stand charged with and be subject to reduction on account of a monetary obligation due to the Employer by the beneficiary and arising out of a criminal, negligent or fraudulent act or omission by the beneficiary … Where the beneficiary disputes the liability, the Trustees shall not exercise the charge unless the obligation has become enforceable under an order of a competent court … The Trustees may in their absolute discretion pay the amount of the charge to the Employer."
The insolvency of the Company and the proceedings by Manolete against Mr. White
The application for the order now under appeal
The Judgment
"It has always been clear that what [Manolete] is seeking is substantive injunctive relief under section 37. The issue (as Mr. Asquith clearly recognises) has always been (and remains) whether [Mr. White] should be required to access his "pension pot" so as to enable him to satisfy his substantial judgment debt. The mechanics for achieving this are essentially a matter of form rather than substance … [Manolete] is not wedded to [a] particular form of order, and is content to leave it to the court to craft an appropriate form of order.. "
"Section 91 of the 1995 Act does not prevent the court granting the Order. The Order does not have the effect of restraining [the defendant] from receiving the pension. It does the precise opposite - it ensures that payment of [the defendant's] pension is effected, rather than remaining trapped in the Fund. Again, as a matter of principle, Mr. Moeran does not rely upon section 91 of the 1995 Act to oppose the orders sought."
"29. Like Blight v Brewster, Bacci v Green was a case where the judgment was founded on fraud. The real significance of the case is twofold. First, the court's holding that the making of an order which affects that part of the judgment debtor's pension which cannot be withdrawn without incurring a liability to tax is not "an impermissible extension of Blight v Brewster". Second, that section 91 is no obstacle to the court ordering a judgment debtor to access their pension pot. As Mr. Asquith emphasises, that second development was the product of a concession by counsel appearing for the judgment debtor; but as Mr. Curl points out, the concession was made by experienced leading counsel specialising in pensions law, and was one which commended itself to the experienced Deputy High Court Judge."
"74. I have set out the rival submissions on this aspect of the case earlier in this judgment. Like many issues of construction, contractual or statutory, the point is ultimately a short one. Having carefully weighed the competing submissions, and recognising that I am free to come to a different conclusion, ultimately I have decided that the analysis and reasoning of Mr. Hochhauser in Bacci v Green is to be preferred. Provided I direct that payment of [Mr. White's] pension pot is to be made to a nominated UK bank account in [his] name … , I do not consider that there will be any contravention of the statutory prohibition in section 91 of the Pensions Act 1995 because, as explained by the deputy judge in that case, the order will not have the effect of restraining [Mr. White] from receiving that pension pot but rather the opposite: it will ensure that the payment of that pension pot is made to [Mr. White], rather than remaining within the Scheme wrapper. In my judgment, it makes no difference that the order is motivated by the objective of enabling that pension pot to be applied in satisfaction of a pre-existing judgment debt owed to [Manolete] by [Mr. White]. As [paragraph 4.14.33 of the 1993 report of the Pension Law Review Committee chaired by Professor Sir Roy Goode] makes clear, whilst the asset represented by future pension entitlements is immune from the claims of a member's creditors,
"The position is otherwise, of course, when the pension has come into payment, as regards sums that have been paid over by the trustees to the beneficiary or have become due for payment. These are income in the hands of the scheme member and do not enjoy any greater protection from creditors than any other income of the scheme member.""
"79. I derive no assistance, either way, from the exception in section 91(5)(d) of the Pensions Act [1995]. That sub-section is directed to charges, liens, and set-offs, and not to the grant or withholding of injunctive relief. It also relates to criminal, negligent, or fraudulent acts or omissions, and not to misfeasance as a company director, in breach of the strict fiduciary duties he owed to the company."
The Consequentials Judgment and the Order
"1. By 4pm on [a date 14 days after determination of this appeal] ("the Notification Date"), [Mr. White] shall notify [Manolete] of the UK bank account (denominated in sterling and in the name of [Mr. White]) into which he will request payment in accordance with paragraph 2 below.
2. By 4pm on the date 7 days after the Notification Date, [Mr. White] shall give written notice to the Pension Scheme trustees exercising (so far as is necessary) such rights as he may have under the Pension Scheme rules or under the general law to draw down his entire remaining pension fund (including, if necessary, asking for the fund to be designated as a Drawdown Pension Fund and/or for the trustees to take such steps as are necessary to enable him to draw down his entire remaining fund). [Mr. White] shall direct the Pension Scheme trustees to make any payment to the bank account nominated under paragraph 1 above."
"6. [Mr. White] shall, to the extent he is aware of the information, within 72 hours of becoming aware of any of the events listed in the following sub-paragraphs, notify [Manolete] of the following.
6.1. The Property being placed on the market for sale, including the price at which it is being marketed.
6.2. The name of the conveyancing solicitor(s) instructed by the Pension Scheme trustees in respect of the sale.
6.3. The acceptance of any offer for the Property, including the identity of the proposed purchaser, the proposed sale price and the like details of any other offers that have been made but not accepted.
6.4. The exchange of contracts, including the contractual date for completion.
6.5. Completion of the sale of the Property."
"I am satisfied that it is necessary and appropriate for those provisions to be included. [Manolete], as the person interested in the sale of the Property, and the realisation by [Mr. White] of the net sale proceeds, should know when the Property is on the market, the price at which it is being marketed, and who has the conduct of the sale so that they can be made known of the terms of the order. [Manolete] also needs to know of the acceptance of any offer for the Property, including the identity of the purchaser and the proposed sale price. It is entitled to know whether other offers have been made but not accepted. It is necessary for it to know the date of exchange of contracts and the contractual date for completion. Also, it needs to know the date of completion of the sale of the Property, when the funds will shortly thereafter be disbursed to the nominated bank account. It needs to know those matters so that it can prepare itself to make an application in connection with enforcement of the judgment against that nominated bank account."
(my emphasis)
The Appeal and Respondent's Notice
Analysis
The background to section 91
"4.14.3 The prohibition against dealings with pension entitlements during a scheme member's lifetime is designed to fulfil two objectives. First, it is intended to avoid additional administrative burdens which would arise if the scheme administrator had to recognise the title of assignees and charges. Secondly, and more fundamentally, the purpose of a pension scheme is not to build up an assignable asset but to provide income to support members upon their retirement and to their dependants on the member's death. The State has an interest in such provision, for in its absence the State itself may have to provide the requisite retirement support. Accordingly, approval of a scheme for tax purposes is dependent on the inclusion of a provision in the trust deed or rules precluding assignment or surrender of a pension except within the permissible limits of commutation or by way of surrender or allocation of pension to provide a pension for a surviving spouse or dependant, or exchange of a non-indexed for an indexed or a lower indexed or a higher non-indexed pension of equal actuarial value.
4.14.4 The evidence submitted to us shows a broad consensus that pension entitlements should not be disposable during the lifetime of the member. We endorse this approach. We consider that quite apart from tax considerations public policy requires that pension rights should be utilised only for the purposes for which they are established. In the United States the provisions of the Internal Revenue Code requiring inalienability as a condition of tax relief have been reinforced by the Employee Retirement Income Security Act (ERISA), which specifically directs pension plans to prohibit assignment or alienation. Section 65 of the Ontario Pension Benefits Act operates even more directly by providing that every transaction that purports to assign, charge, anticipate or give as security money payable under a pension plan is void. We recommend similar legislation for the United Kingdom, so making inalienability a rule of general application, not merely a condition of approval for taxation purposes or a rule confined to short services benefits, [guaranteed minimum pensions] and protected rights payments. There should be exceptions from this rule to reflect any decisions which may be made on the divisibility of pension rights on divorce, and to accommodate customary arrangements which are consistent with pensions policy, such as transfers to another scheme, limited commutation, surrender of part of pension to provide a pension for a surviving spouse or dependant, and the like."
"Attempted alienation
4.14.20 The typical pension provision referred to above, by which pension rights come to an end on an attempted alienation, is intended to ensure that pension rights are not treated as disposable asset, and to enable the trustees, where alienation is attempted, to make future pension payments to the spouse or dependants of the member. A provision of this kind is considered valid under the existing law so long as it goes not further than limiting the conditions in which future entitlements arise and does not purport to confer a power to forfeit rights to pensions that have come into payment. We consider this to be fully consistent with the policy recommended in paragraph 4.14.4 and see no objection to such provisions.
Bankruptcy
4.12.21 We recommend later that the asset represented by future pension rights (as opposed to pension payments themselves) should not be treated as a bankruptcy asset. In line with that recommendation we see no objection in provisions in scheme documents allowing trustees to terminate a member's future pension rights on his or her bankruptcy and, and when the pension is due to come into payment, to make payments to the member's spouse and dependants."
"4.14.33 As noted above, future pension rights are in principle an asset of the scheme member and as such are available to be taken in execution to satisfy a judgment debt and to be distributable among creditors in the scheme member's bankruptcy. But since scheme rules nearly always provide for rights of pensions not in payment to cease on levy of execution, attachment of earnings or bankruptcy there is in practice no asset or pension income capable of being attached or otherwise made available to creditors. Accordingly the same factor that precludes assignment renders the asset represented by future pension entitlements immune from the claims of a member's creditors. The position is otherwise, of course, when the pension has come into payment, as regards sums that have been paid over by the trustees to the beneficiary or have become due for payment. These are income in the hands of the scheme member and do not enjoy any greater protection from creditors than any other income of the scheme member.
4.14.34 It may be thought unfair to creditors that the asset represented by future pension rights should not be attachable. But it has to be remembered that employers do not establish schemes in order to benefit creditors of scheme members, nor is substantial tax relief given for that purpose. To allow future pension entitlements to be attached by execution creditors or made a bankruptcy asset would be to frustrate that fundamental purpose. The evidence submitted to us shows a broad consensus in favour of exempting future pension entitlements from the claims of creditors.
4.14.35 We therefore consider that the immunity currently granted by the Social Security Pensions Act 1975 to [guaranteed minimum pensions] and entitlements to protected rights payments should be extended to cover all pension entitlements. This would not preclude execution creditors from attaching money in the hand paid to the scheme member or due for payment, nor would it prevent trustees in bankruptcy from exercising their normal statutory right to apply for an income payments order requiring the bankrupt to pay over income in excess of what is necessary for meeting the reasonable domestic needs of the bankrupt and his family. Except as already provided by statute, there is no reason why pension payments made or due to a scheme member should be treated differently from other income in the scheme member's hands or enjoy any special immunity. But exemption of the asset represented by the future pension rights would give statutory effect to the protective trust provisions so widely adopted in scheme documents, enabling trustees to pay future benefits to a spouse or other dependent instead of to the scheme member."
"… for the purpose of enabling the employer in order to obtain the discharge by the member of some monetary obligation due to the employer and arising out of a criminal, negligent or fraudulent act or omission by the member".
The legislative scheme
"(1) Subject to subsection (5), where a person is entitled, or has an accrued right, to a pension under an occupational pension 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, or accrued right, to a pension under an occupational pension 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.
(3) Where a bankruptcy order is made against a person, any entitlement or right of his which by virtue of this section cannot, apart from subsection (5), be assigned is excluded from his estate for the purposes of Parts VIII to XI of the Insolvency Act 1986 …
(4) Subsection (2) does not prevent the making of –
…
(b) an income payments order under the Insolvency Act 1986.
(5) In the case of a person ("the person in question") who is entitled, or has an accrued right to a pension under an occupational pension scheme, subsection (1) does not apply to any of the following, or any agreement to effect any of the following
…
(d) … a charge or lien on, or set-off against, the person in question's entitlement, or accrued right, to pension, for the purpose of enabling the employer to obtain the discharge by him of some monetary obligation due to the employer and arising out of a criminal, negligent or fraudulent act or omission by him…"
"(1) Where a bankruptcy order is made against a person on a bankruptcy application made or petition presented after the coming into force of this section, any rights of his under an approved pension arrangement are excluded from his estate."
The definition of "approved pension arrangement" was originally to be found in the Income and Corporation Taxes Act 1988 but is now to be found in section 153 of the Finance Act 2004. That makes provision for the registration of pension schemes, including occupational pension schemes: see section 150(5) of that Act.
The approach to interpretation
"12. Another aspect of the Ramsay approach is that, where a scheme aimed at avoiding tax involves a series of steps planned in advance, it is both permissible and necessary not just to consider the particular steps individually but to consider the scheme as a whole. Again, this is no more than an application of general principle. Although a statute must be applied to a state of affairs which exists, or to a transaction which occurs, at a particular point in time, the question whether the state of affairs or the transaction was part of a preconceived plan which included further steps may well be relevant to whether the state of affairs or transaction falls within the statutory description, construed in the light of its purpose. In some of the cases following Ramsay, reference was made to a series of transactions which are "pre-ordained": see e.g. IRC v Burmah Oil Co [1982] STC 30, 33 (Lord Diplock); Furniss v Dawson [1984] AC 474, 527 (Lord Brightman). As a matter of principle, however, it is not necessary in order to justify taking account of later events to show that they were bound to happen - only that they were planned to happen at the time when the first transaction in the sequence took place and that they did in fact happen: see IRC v Scottish Provident Institution [2004] 1 WLR 3172, para 23, where the House of Lords held that a risk that a scheme might not work as planned did not prevent it from being viewed as a whole, as it was intended to operate.
13. The decision of the House of Lords in Barclays Mercantile Business Finance v Mawson [2005] 1 AC 684 made it clear beyond dispute that the approach for which the Ramsay line of cases is authority is an application of general principles of statutory interpretation. Lord Nicholls of Birkenhead, delivering the joint opinion of the Appellate Committee (which also comprised Lord Steyn, Lord Hoffmann, Lord Hope of Craighead and Lord Walker of Gestingthorpe), identified the "essence" of the approach (at para 32) as being:
"to give the statutory provision a purposive construction in order to determine the nature of the transaction to which it was intended to apply and then to decide whether the actual transaction (which might involve considering the overall effect of a number of elements intended to operate together) answered to the statutory description."
Lord Nicholls also quoted with approval (at para 36) the statement of Ribeiro PJ in Collector of Stamp Revenue v Arrowtown Assets (2003) 6 ITLR 454, para 35, that:
"… the driving principle in the Ramsay line of cases continues to involve a general rule of statutory construction and an unblinkered approach to the analysis of the facts. The ultimate question is whether the relevant statutory provisions, construed purposively, were intended to apply to the transaction, viewed realistically."
Application of section 91(2) to the instant case
"The order does not have the effect of restraining [the defendant] from receiving the pension. It does the precise opposite - it ensures that payment of [the defendant's] pension is effected, rather than remaining trapped in the fund."
"As [paragraph 4.14.33 of the PLRS Report] makes clear, whilst the asset represented by future pension entitlements is immune from the claims of a member's creditors,
"The position is otherwise, of course, when the pension has come into payment, as regards sums that have been paid over by the trustees to the beneficiary or have become due for payment. These are income in the hands of the scheme member and do not enjoy any greater protection from creditors than any other income of the scheme member.""
"33. In my view, the public policy which led Parliament to protect pension rights in bankruptcy will, at most, normally be a factor of very limited significance when a court is considering whether to grant relief to a creditor in respect of a judgment founded on fraud by the debtor. While Parliament evidently thought it right to provide protection for pension rights in bankruptcy, it is equally clear that its intention has been that debts arising from fraud should survive bankruptcy, and it has nowhere said that the creditor should then be unable to have resort to the debtor's pension rights in the way that he could have done pre-bankruptcy or a post-bankruptcy creditor could. Nor is that surprising. In Blight v Brewster, Mr. Moss commented that "The idea that the fraudster and forgerer can enjoy an enhanced standard of living at his retirement instead of paying the judgment debt would be a very unattractive conclusion". While Mr. Moss made the remark in the context of the particular case before him, it has a wider resonance."
The Respondent's Notice
"26. … there is no general rule that a case needs to be "exceptional" before a new point will be allowed to be taken on appeal. Whilst an appellate court will always be cautious before allowing a new point to be taken, the decision whether it is just to permit the new point will depend upon an analysis of all the relevant factors. These will include, in particular, the nature of the proceedings which have taken place in the lower court, the nature of the new point, and any prejudice that would be caused to the opposing party if the new point is allowed to be taken.
27. At one end of the spectrum are cases such as Jones v MBNA International Bank [2000] EWCA Civ 514 in which there has been a full trial involving live evidence and cross-examination in the lower court, and there is an attempt to raise a new point on appeal which, had it been taken at the trial, might have changed the course of the evidence given at trial, and/or which would require further factual inquiry. In such a case, the potential prejudice to the opposing party is likely to be significant, and the policy arguments in favour of finality in litigation carry great weight….
28. At the other end of the spectrum are cases where the point sought to be taken on appeal is a pure point of law which can be run on the basis of the facts as found by the judge in the lower court: see e.g. Preedy v Dunne [2016] EWCA Civ 805 at [43]–[46]. In such a case, it is far more likely that the appeal court will permit the point to be taken, provided that the other party has time to meet the new argument and has not suffered any irremediable prejudice in the meantime."
Disposal
Lord Justice Green:
Lady Justice Asplin:
Note 1 he definition of an occupational pension scheme is to be found in section 1 of the Pension Schemes Act 1993 which is imported by reference into the 1995 Act.
[Back] Note 2 The income payments order regime was examined in relation to a personal pension in Horton v Henry [2017] 1 WLR 391. The Court of Appeal held that when assessing the bankrupt’s income for the purposes of making an income payment order under section 310 of the Insolvency Act 1986, the court could not do so on the basis that the bankrupt could be ordered to crystallise and draw down the balance of his personal pension fund. Gloster LJ observed, at [42]-[44], that both the 1986 Act and the 1995 Act draw a clear distinction between, on the one hand, rights to elect to receive payments under a pension scheme in the future and, on the other hand, payments actually made or to which the member is actually entitled. [Back]