Manolete Partners PLC v White

Factual and Procedural Background

This appeal concerns whether a judgment creditor can compel a judgment debtor to draw down a lump sum from their occupational pension fund and direct payment of that sum into a specified bank account for enforcement purposes. The judgment debtor ("Appellant") was the sole member of an occupational pension scheme ("the Scheme") established by his company ("Company A"), which went into insolvent liquidation. The judgment creditor ("Respondent"), a litigation funder, obtained a judgment against the Appellant for breach of fiduciary duty related to his conduct as the controlling director of Company A. Following non-payment of the judgment debt, the Respondent sought an order under section 37 of the Senior Courts Act 1981 requiring the Appellant to exercise his rights under the Scheme to draw down his pension fund and direct payment to a bank account to facilitate enforcement of the judgment debt.

The High Court Judge made such an order, requiring the Appellant to notify the Scheme trustees to draw down his entire pension fund and to provide details of a nominated UK bank account in his name, along with information about the progress of the sale of a commercial property owned by the Scheme. The Appellant appealed against this order.

Legal Issues Presented

1. Whether section 91 of the Pensions Act 1995 prohibits a court from ordering a judgment debtor to draw down lump sums from their occupational pension scheme to satisfy a judgment debt.
2. Whether the order made by the High Court Judge, mandating the Appellant to draw down his pension and provide payment details to the Respondent, contravenes the statutory protection afforded to occupational pension rights.
3. Whether the Respondent can rely on the exception in section 91(5)(d) permitting a charge or lien on pension entitlements arising from criminal, negligent or fraudulent acts by the pension scheme member.
4. Whether permission should be granted to the Respondent to raise a new argument on appeal based on the exception in section 91(5)(d).

Arguments of the Parties

Appellant's Arguments

• The order requiring him to draw down his pension fund and direct payment to a nominated account effectively restrains him from receiving his pension, contrary to section 91(2) of the Pensions Act 1995.
• The statutory protection for occupational pension entitlements is clear that future pension rights are immune from creditor claims, and the order undermines this protection by enabling enforcement against future pension payments.
• The Respondent's late attempt to rely on the exception in section 91(5)(d) is improper and should not be permitted on appeal, especially as it was not raised below.
• The breaches of fiduciary duty for which he was found liable do not fall within the exception in section 91(5)(d) as they do not constitute criminal, negligent or fraudulent acts as defined therein.

Respondent's Arguments

• The order does not restrain the Appellant from receiving his pension but ensures payment of the pension, which is consistent with the statutory regime.
• Without the order, there is no mechanism to enforce the judgment debt against the pension monies, and the Appellant could dispose of the funds at will.
• The Respondent sought permission to rely on the exception in section 91(5)(d), contending that the Judgment Debt arose from negligent or fraudulent acts by the Appellant, justifying enforcement against the pension fund.
• The Respondent argued that the charge under Scheme Rule 11(5) permits enforcement of the pension fund to satisfy the Judgment Debt.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Blight v Brewster [2012] EWHC 165 (Ch)	Permitted order requiring a defendant to draw down a lump sum from a personal pension scheme to facilitate enforcement of a judgment debt; did not involve an occupational pension scheme or section 91 issues.	The Court distinguished this case as involving a personal pension scheme and no section 91 issue; the reasoning was considered incomplete when applied to occupational pension schemes.
Bacci v Green [2022] EWCA Civ 1393	Considered an order requiring a judgment debtor to revoke enhanced tax protection and draw down lump sums from an occupational pension scheme; section 91 was raised but not argued at first instance.	The Court of Appeal accepted the order but did not address the section 91 prohibition in detail; the present Court preferred a different interpretation of section 91.
Brake v Guy [2022] EWHC 1746 (Ch)	Followed Bacci v Green at first instance regarding pension enforcement orders.	Referenced as part of the line of cases considering enforcement against occupational pension schemes.
Lindsay v O'Loughnane [2022] EWHC 1829 (QB)	Followed Bacci v Green at first instance.	Referenced in relation to enforcement powers over pension funds.
Aon Trust v KPMG [2006] 1 WLR 97	Interpretation of "entitlement" and "accrued right" under section 91; distinction between pension in payment and future pension rights.	Used to clarify that "entitlement" refers to pensions already in payment, while "accrued right" relates to future pension rights.
R (PACCAR) v Competition Appeal Tribunal [2023] UKSC 28	Statutory interpretation principles, including purposive construction.	Supported the approach of interpreting section 91 in light of its statutory purpose.
WT Ramsay v IRC [1982] AC 300	Real world approach to statutory interpretation; considering composite transactions as a whole.	Applied to reject artificial or fragmented interpretations of statutory prohibitions.
UBS AG v HMRC [2016] UKSC 13	Confirmed the "Ramsay" approach to statutory interpretation in tax and related contexts.	Supported the purposive and realistic approach to interpreting section 91.
Rossendale BC v Hurstwood Properties [2021] UKSC 16	Affirmed the principle that statutory provisions should be construed purposively and realistically.	Reinforced the approach that the court should consider the overall effect of orders in context.
Notting Hill Finance v Sheikh [2019] EWCA Civ 1337	Guidance on the circumstances in which new points of law may be raised on appeal.	Applied to refuse permission for the Respondent to raise a new point based on Scheme Rule 11(5) for the first time on appeal.
Nocton v Lord Ashburton [1914] AC 932	Criticism of the concept of "equitable fraud" in law.	Referenced in the context of whether breach of fiduciary duty constitutes "fraud" under section 91(5)(d).
Bristol and West BC v Mothew [1998] Ch 1	Distinction between fiduciary duty and duty of care; fiduciary duty concerns loyalty.	Used to explain that breach of fiduciary duty is not necessarily negligence or fraud as defined in section 91(5)(d).

Court's Reasoning and Analysis

The court analysed the statutory provisions of section 91 of the Pensions Act 1995, which protects occupational pension entitlements and rights from assignment, charging, or attachment by creditors, except in limited circumstances. The court emphasised the legislative purpose, derived from the Pension Law Review Committee Report, to preserve pension entitlements for the member's retirement benefit and to shield them from creditor claims.

The court distinguished between future pension rights, which are protected, and pension monies already paid or due for payment, which are income and subject to creditor claims. The Appellant had not yet drawn down the remaining balance of his Drawdown Pension Fund and had no present right to payment, placing him within the protection of section 91(1) and (2).

The court rejected the Judge’s reasoning that the order did not restrain the Appellant from receiving his pension because the monies would be paid into an account in his name. The court found this to be an artificial and unrealistic approach, as the order was designed to facilitate enforcement by the Respondent, effectively preventing the Appellant from using the pension monies for his own benefit.

The court applied the "real world" approach mandated by authorities such as Ramsay and UBS AG v HMRC, viewing the order as part of a pre-planned sequence to enforce the judgment debt, which contravened the prohibition in section 91(2) against making orders that restrain a member from receiving their pension.

Regarding the Respondent's late reliance on the exception in section 91(5)(d) permitting charges on pension entitlements for debts arising from criminal, negligent or fraudulent acts, the court declined permission to raise this new point on appeal. It noted the absence of relevant factual findings and the limited legal basis for equating breach of fiduciary duty with criminality, negligence, or fraud as defined in the statute.

The court underscored the importance of statutory purpose and cautioned against judicial orders that circumvent clear legislative protection of occupational pension rights. It concluded that the Judge's order was an unlawful exercise of discretion under section 37 of the Senior Courts Act 1981 as it conflicted with the statutory scheme.

Holding and Implications

The court ALLOWED the appeal and set aside the order requiring the Appellant to draw down his pension fund and provide payment details to the Respondent.

This decision affirms the statutory protection afforded to future pension entitlements under occupational pension schemes, reinforcing that courts must not make orders that effectively restrain a member from receiving their pension. The ruling clarifies that judicial discretion under section 37 of the Senior Courts Act 1981 cannot be exercised to circumvent the clear prohibitions in section 91 of the Pensions Act 1995.

The court also denied permission for the Respondent to raise a new legal argument on appeal based on the exception in section 91(5)(d), emphasizing procedural fairness and the need for factual findings to support such claims.

The direct effect is that the Respondent cannot compel the Appellant to crystallise and draw down his occupational pension fund for enforcement of the judgment debt, preserving the statutory immunity of future pension rights from creditor claims. No new precedent was set beyond the application of existing statutory interpretation and procedural principles.