Manolete Partners v White

The court cannot make an order preventing the debtor from receiving the benefit of their occupational pension.

Summary

The Court of Appeal reversed the decision of the High Court, which had granted an injunction forcing the respondent to draw down his pension for a debt incurred through a breach of director's duties.

Background  

Mr White was a director of Lloyds British Testing Limited until the company went into liquidation in 2017. Over the 20 months before the company’s liquidation, Mr White had accessed company assets to make various purchases. These included luxury cars, luxury holidays, the acquisition of a helicopter, and payments towards his own and his son’s properties.  

Application to access the pension funds 

Manolete Partners applied to the High Court for an injunction under section 37 Senior Courts Act 1981 to force Mr White to draw down his pension (within the pension scheme rules) and to satisfy some of the judgment debt. Manolete was aware that Mr White had pension funds totalling £237,000.  

Mr White’s main defence relied upon section 91 Pensions Act 1995 (Inalienability of occupational pension), stating that he would be restrained from receiving his pensions if an injunction were made forcing him to draw down his pensions.  

The High Court had to consider whether Mr White was required to draw down his pension to partially satisfy the judgment.

High Court decision

The High Court held that it was appropriate for the court to exercise its jurisdiction under section 37 Senior Courts Act 1981 to make the order sought and that section 91(2) Pensions Act 1995 was not a bar to making the order.

Mr White appealed.

Court of Appeal decision

The Court of Appeal reversed the High Court's decision, holding that the latter was wrong to conclude that ordering Mr White to draw down his pension was not prohibited by section 91(2).

The correct approach must consider the order requested against the statutory purpose of section 91(2) which was to protect a person's right to receive their future pension for their own benefit.

The conclusion that because the order provided that Mr White would receive payments into an account in his own name section 91(2) was not contravened had been artificial, and non-purposive in its interpretation of the statute.

It would be an illegitimate exercise of statutory power for the court to exercise its discretion under section 37 Senior Courts Act 1981 to make the order because it would bring about a result prohibited by statute.

Misfeasance not the same as fraud

The case could be distinguished from Blight v Brewster and Bacci v Green as there was no suggestion Mr White was guilty of fraud.

Misfeasance does not necessarily amount to fraud, negligence or criminality for which the exemption under section 91(5) Pensions Act might allow an order 'enabling the employer to obtain the discharge by him of some monetary obligation due to the employer'.

Comments

This decision represents a significant change in direction from the senior courts on the question of creditor enforcement against future, undrawn occupational pension rights.

This judgment does not apply to personal pension schemes.