Alliance Trust Savings Limited Against Fraser Currie And Others
| Jurisdiction | Scotland |
| Judge | Lord Tyre |
| Neutral Citation | [2016] CSOH 154 |
| Date | 03 November 2016 |
| Docket Number | CA30/16 |
| Court | Court of Session |
| Published date | 03 November 2016 |
OUTER HOUSE, COURT OF SESSION
[2016] CSOH 154
CA30/16
OPINION OF LORD TYRE
In the cause
ALLIANCE TRUST SAVINGS LIMITED
Pursuer
against
FRASER CURRIE AND OTHERS
Defenders
Pursuer: D Thomson; Burness Paull LLP
Defenders: Simpson, QC; Anderson Strathern LLP
3 November 2016
Introduction
[1] The late Donald Currie, who died on 31 August 2012, had a self-invested pension plan (SIPP). The pursuer was the scheme administrator of the Alliance Trust Personal Pension Plan (“the scheme”) of which Mr Currie’s SIPP formed part. The defenders, who are Mr Currie’s three sons, were the persons nominated by Mr Currie as beneficiaries of the SIPP. After Mr Currie’s death, the pursuer exercised its discretion in terms of the rules of the scheme to distribute the funds in the SIPP to the defenders in three equal shares. By two payments instructed on or about 21 November 2012, the pursuer transferred lump sums amounting in total to £927,413 to Messrs Alexr. McAllister & McKechnie (“AMM”), solicitors acting for the defenders. This represented the total sum held in the SIPP. No tax was deducted. Shares of the funds thus transferred were paid over by AMM to each of the three defenders.
[2] By agreement dated 18 October 2012, the pursuer sold its pensions business, with effect from 13 December 2012, to Curtis Banks plc (“CB”). On 18 March 2014, CB wrote to AMM advising them that it had come to light that the death benefit payment from Mr Currie’s SIPP attracted a tax charge of 55% which, according to the scheme rules, ought to have been deducted by the pursuer before payment. CB advised that the sum that ought to have been paid to the beneficiaries was £417,336, and sought repayment of the balance of £510,077 to enable the tax to be remitted to HM Revenue & Customs. The defenders denied liability to make any repayment. Further demands were made to the defenders by solicitors acting for CB and then subsequently to both AMM and the defenders themselves by solicitors acting for the pursuer.
[3] In these proceedings, the pursuer seeks repetition of sums of £170,025.83 from each of the three defenders. The defenders challenge the pursuer’s title to sue and the relevancy of its case. Each of the defenders further maintains that he has not been enriched with regard to any part of the sum received that has been expended to date. For its part, the pursuer contends that the defenders’ averments concerning title to sue, absence of loss to the pursuer, and absence of enrichment of the defenders are irrelevant. The case came before me for debate of the parties’ preliminary pleas.
The Tax Charge
[4] The pursuer has averred circumstances in which it asserts that the lump sum with which this action is concerned was properly categorised for tax purposes as a “drawdown pension fund lump sum death benefit”. In terms of the Finance Act 2004, section 206(1) (as it stood at the material time), a charge to income tax known as the special lump sum death benefits charge arose inter alia where a drawdown pension fund lump sum death benefit was paid by a registered pension scheme. Under section 206(2), the person liable to the charge was the scheme administrator. The rate of the charge, according to subsection (4), was 55%. Subsection (6) provided that tax under section 204 was to be charged on the amount of the lump sum paid or, if the rules of the pension scheme permitted the scheme administrator to deduct the tax before payment, on the amount of the lump sum before deduction of tax. Section 254 of the 2004 Act requires (and at the material time required) a scheme administrator of a registered pension scheme to make quarterly returns to HMRC of the income tax for which it is liable. Under section 254(5), the tax shown in such a return is due at the time by which the return is to be made, and is payable without any need for an assessment.
[5] Section 271 of the Finance Act 2004 deals with the situation where a person ceases to be the scheme administrator of a registered pension scheme, to be replaced by a new administrator. In these circumstances, the outgoing administrator’s liability to pay tax (though not penalties) ceases and the liability is assumed by the incoming administrator.
Correspondence Leading up to Payment by the Pursuer
[6] On 19 September 2012, AMM wrote to the pursuer to advise it of Mr Currie’s death and of the identity of his executor, and to request a valuation of the SIPP at the date of death. Ms Barbara Low, Operations Administrator, replied on behalf of the pursuer on 26 September 2012. She advised AMM that the defenders were the nominated beneficiaries of the funds in the SIPP. Ms Low described three available options, one of which was that “the fund can be paid as a Lump Sum Payment, less 55% tax charge”. She sought information to enable the pursuer to decide to whom to make over the funds. Letters seeking further information were sent by another Operations Administrator to the defenders themselves. By 15 November 2012 the pursuer had made its decision. Another Operations Administrator, Ms Rachel Muir, wrote to each of the defenders in the following terms:
“Further to our previous correspondence, I can now confirm that the Trustees have decided to pay the value of the above plan as follows:
| Beneficiary name | Percentage |
| Frazer Macfarlane Currie | 33.33 |
| Douglas Jackson Currie | 33.33 |
| Michael Frazer Currie | 33.33 |
I enclose an acceptance and discharge form, this form is to be completed by you and returned.
With regard to what can be done with the amount to be paid to you, the beneficiary, the following option is available:
1. The appropriate proportion of the fund can be paid as a tax free lump sum payment.
We are not permitted to give you financial or investment advice but, should you have any questions about the mechanics of these options, we will be happy to discuss these with you.”
[7] On 21 November 2012, Ms Muir wrote to AMM confirming that the majority of the funds had been paid into their nominated account and that a closing balance would be paid on 10 December 2012. She continued:
“As Donald Currie’s plan funds were uncrystallised and [sic] there was no death lump sum tax charge on the benefit payments that were made. We confirm that the available funds from the plan are not in excess of the lifetime allowance, however, benefits from all sources must be accounted for by the personal representatives.”
A closing balance of £2,249.50 was paid as anticipated on 10 December. A letter of that date from Ms Muir to AMM again confirmed that there was no death lump sum tax charge on the payments made.
[8] Each of the defenders executed, on 19 or 20 December 2012, and returned to the pursuer an indemnity in the following terms:
“In consideration of the fact Alliance Trust Savings is to rely on the information and documentation provided by me, I release, indemnify and keep indemnified Alliance Trust Savings against any actions proceedings claims or demands by any person claiming to be entitled to have been considered by Alliance Trust Savings under the Full SIPP or received payment from the Full SIPP, but have not because Alliance Trust Savings has not had available to it information that I ought to have brought to their attention but did not. This indemnity is limited to the value of the payment made to me by Alliance Trust Savings and claims brought under this indemnity before the expiry of seven years from the date of this release and discharge.”
Sale of the Pursuer’s Pensions Business to CB
[9] The agreement entered into on 18 October 2012 between the pursuer and CB bore to relate to “the sale of the Full SIPP Business, the Adviser SIPP Business and the entire issued share capital of Alliance Trust Pensions Ltd”. A heavily redacted version of this agreement was produced; I shall have more to say about that later. In terms of the sale agreement, “the Business” was defined as including inter alia the Full SIPP Business. Clause 2.2 provided as follows:
“Unless expressly provided in this Agreement, with effect from Completion, the Seller shall sell and the Buyer, with a view to carrying on the Business, as a going concern, shall purchase free from all Encumbrances with effect from the Effective Time:
2.2.1 the Goodwill;
2.2.2 the benefit (subject to the burden) of the Customer Contracts;
2.2.3 all rights and obligations to administer the Business in succession to the Seller in its capacity as the provider of the Services;
2.2.4 the Business information;
2.2.5 the Records; and
2.2.6 in respect of the Assets, all of the Seller’s rights against third parties, including rights under any warranties, conditions, guarantees or indemnities or under the Sale of Goods Act 1979 and the benefit of all sums to which the Seller is entitled from third parties or insurers in respect of loss or damage to the Assets.”
The word “Assets” in Sub-Clause 2.2.6 is a defined term, meaning “the property, rights and assets of the Business set out in clause 2.2”. It is common ground that in order to avoid circularity the reference in this definition to Clause 2.2 may reasonably be interpreted as a reference to the first five sub-paragraphs of Clause 2.2.
[10] Clause 2.3 provided that “the Excluded Assets and the Excluded Liabilities shall be excluded from the sale under the Agreement”. “Excluded Assets” were defined in Clause 1.1 as meaning:
“…save for the Assets, all assets and rights possessed by the Seller and used in the Business or otherwise (which for the avoidance of doubt includes the Book Debts and the Seller’s cash-in-hand or at any bank or at any other financial institution where the Seller holds a bank account).”
“Goodwill” was defined as:
“the goodwill, custom and connection of the Seller in relation to the Business, together with the exclusive right for the Buyer and its successors and assigns to carry on the Business (other than under [the name Alliance Trust or similar]...
To continue reading
Request your trial
-
Promontoria (henrico) Limited Against James Friel
...confidential information that is not material to the issue before the court (Alliance Trust Savings Limited v Fraser Currie and others [2016] CSOH 154, paras 44-46; Dowling v Promontoria (Arrow) Limited, 11 September 2017, Chancery Division Bankruptcy Court; English v Promontoria (Arran) Li......
-
Promontoria (ram) Limited Against John Moore
...of practice, one commercial judge has already deprecated the lodging of redacted documents: Alliance Trust Savings Limited v Currie [2016] CSOH 154 paragraphs 44-46. It is submitted that there is real substance to that criticism, in terms of a public general statute, where the document reli......