Enforcement of judgments against debtors’ occupational pensions precluded by statute
In a decision handed down on 15 November 2024, in the case of Manolete v White ([2024] EWCA Civ 1418) the Court of Appeal addressed the question as to whether a judgment debtor’s occupational pension could be the subject of an order requiring it to be drawn down so that it could become available to a creditor seeking to enforce a judgment.
The High Court had earlier made an order that had precisely that effect. In so doing, it had followed a line of cases such as Blight v Brewster in 2012, in which the court had ordered a debtor to delegate his power to elect to draw down 25% of his personal (non occupational) pension as a tax free lump sum to a creditor’s solicitor. A third party debt order was then made which bit on the debt due from the pension fund once the election was made.
According to section 91 of the Pensions Act 1995, where a person is entitled to a pension under an occupational scheme or has a right to a future pension under such a scheme, the entitlement or right cannot be assigned, commuted, surrendered or charged and no order can be made by any court the effect of which would be that the he would be restrained from receiving that pension.
Blight v Brewster was a case where the judgment creditor had been the victim of fraud, but broadly similar orders had been made in at least two subsequent cases – Brake v Guy and Lindsay v O’Loughnane – where fraud was not involved.
In Manolete v White, the High Court issued a mandatory injunction requiring Mr White to exercise his rights to draw down his pension, to receive that pension into a bank account in his own name, and to keep Manolete informed of the process (including details of the bank account). The purpose was that Manolete would be able to enforce the judgment against that bank account once the pension funds had reached it. The High Court determined that the statutory prohibition had not been breached, because Mr White would, in fact, receive his pension, even if he would in practice have to pay it on immediately to Manolete.
The Court of Appeal disagreed with the High Court. It ruled that the injunction and notification provisions could not be looked at separately from the subsequent enforcement proceedings which they were intended to facilitate. The contention that Mr White would still “receive” his pension and that accordingly, section 91 would not be breached, was entirely unrealistic. The orders made by the High Court were tantamount to an attempt to evade the statutory prohibition imposed by section 91.
The Court did note that in the 2022 case of Bacci v Green, an occupational pension was involved and the court had allowed enforcement against the judgment debtor’s pension. However, the section 91 point had not been taken in front of the court and, as in Blight v Brewster, the judgment creditor had been the victim of fraud. No suggestion had been made that Mr White was guilty of any actual fraud.
Section 91 is of course concerned with occupational pension schemes rather than personal pensions. The reasoning of one of the judges in the Court of Appeal appears to extend beyond the section 91 point, however. She considered that the High Court’s order had wrongly assumed that under the rules of the relevant pension scheme, the beneficiary (Mr White) could merely direct the trustees how to proceed and require them to do so. He could make requests, but it was a matter for the trustees to determine what to do in accordance with their fiduciary duties and the requirements of the rules of the particular scheme.
Disclaimer: this article is not to be relied upon as legal advice. The circumstances of each case differ and legal advice specific to the individual case should always be sought.
