David Bacci v Mr Matthew Green
| Jurisdiction | England & Wales |
| Judge | Mr Andrew Hochhauser |
| Judgment Date | 07 March 2022 |
| Neutral Citation | [2022] EWHC 486 (Ch) |
| Docket Number | Claim No. BL-2018-001572 |
| Year | 2022 |
| Court | Chancery Division |
and
[2022] EWHC 486 (Ch)
Andrew Hochhauser QC, sitting as a Deputy Judge of the High Court
Claim No. BL-2018-001572
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Royal Courts of Justice
Rolls Building, Fetter Lane,
London, EC4A 1NL
Saaman Pourghadiri (instructed by CANDEY Limited) for the Claimants,
Fenner Moeran QC (instructed by Mr Richard Quinn of Sehgal & Co) for the Defendant,
Michael Ashdown (instructed by Blake Morgan LLP) for the Interested Party, and
Robert Purdie (instructed by Landau & Cohen) for Mrs Green
Hearing date: 2 March 2022
APPROVED JUDGMENT
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to Bailii. The date and time for hand-down is deemed to be Monday 7 March 2022 at 3pm
I direct that pursuant to CPR PD 29A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Andrew Hochhauser QC
Introduction
This is the hearing of the Claimants' application, by an Application Notice dated 2 June 2021, for orders designed to enable the Claimants to enforce a judgment previously obtained against the Defendant, Mr Matthew Green (“ Mr Green”), in the sum of £3,233,625.76 and costs against his beneficial interest in the Richard Green (Fine Paintings) Executive Pension Scheme, (“ the Pension Scheme”). which is an HMRC registered money purchase occupational pension scheme (“ OPS”). The Interested Party comprises the present trustees of the Scheme (“ the Trustees”).
Mrs Allison Green (“ Mrs Green”), the estranged wife of the Defendant, has also appeared by Counsel, who has made representations on her behalf in relation to the impact of the Pension Sharing Order (“ PSO”) recently made by Moor J on 28 February 2022, pursuant to s.24B of the Matrimonial Causes Act 1973. Mr and Mrs Green married on 15 October 1990 and separated in October 2017. Mrs Green presented a divorce petition on 23 October 2017. A decree nisi of divorce was pronounced on 16 July 2018 but has not yet been made absolute. An application has been made for the decree to be made absolute, whereupon the Trustees can implement the pension share on that date or 28 days from the date of Moor J's Order, whichever is the later
Representation
At the hearing the Claimants were represented by Saaman Pourghadiri, Mr Green by Fenner Moeran QC, the Trustees by Michael Ashdown and Mrs Green by Robert Purdie. As I stated at the conclusion of the hearing on Wednesday, 2 March 2022, I am most grateful for the able written and oral submissions of all Counsel.
At the conclusion of the hearing, I indicated that I was willing to grant the relief sought by the Claimants, subject to amendments to their revised draft Order, to take account of certain points taken by the Trustees and Mrs Green. This judgment sets out my reasons for that decision.
Background
In 2017 the Defendant sought and obtained financing from FundingSecure Ltd (“ FSL”), a peer-to-peer lender. Mr Green purportedly secured the loans by way of mortgages over various artworks that he either did not own or had pledged or sold to a third party. As a result, the mortgages were not effective and, as was ultimately found upon the disposal of the Claimants' summary judgment application in their deceit claim, Mr Green acted dishonestly in relation to the loans.
The result was:
(1) since 26 July 2018 Mr Green has been subject to a worldwide Freezing Order (“ WWFO”) in the sum of £2,908, 987.74. This was originally made by Barling J on that date, continued by Ms Julia Dias QC, sitting as a deputy Judge of the High Court, on 29 January 2019 (“ the January 2019 Order”) “until further order”, and varied first by Mann J on 4 March 2019, and then by Fancourt J on 2 October 2019. The WWFO enables Mr Green to spend £500 per week towards his ordinary living expenses;
(2) a judgment against Mr Green in the sum of £3,233,625.76 and costs: see paragraphs 1 and 2of the January 2019 Order.
The dishonesty element of the judgment debt is important because this meant that Mr Green's debts were incurred in respect of “ fraud” within the meaning of s.281(3) of the Insolvency Act 1986 (“ the 1986 Act”). S.281(3) provides: “Discharge does not release the bankrupt from any bankruptcy debt which he incurred in respect of, or forbearance in respect of which was secured by means of, any fraud or fraudulent breach of trust to which he was a party.” The third recital of the January 2019 Order made clear that the Court considered that the judgment debt set out therein was incurred in respect of Mr Green's fraud within the meaning of that subsection of the 1986 Act. The consequence of this is that bankruptcy does not extinguish the relevant debt.
The judgment creditor, FSL, went into administration on 23 October 2019. The Claimants took an assignment of the judgment debt. As part of that arrangement, 25% of the recoveries from this action will be paid to FSL, which in turn will return those sums to investors, including 1,393 individual investors. The Claimants are four of those individual investors. They personally lent some £811,000 of the total sums loaned to Mr Green, all of which they lost due to his fraud.
Mr Green was declared bankrupt on 25 February 2019. As a result of that bankruptcy most types of his assets fell into his estate in bankruptcy. However, pursuant to s.11 of the Welfare Reform and Pensions Act 1999, one exception to this was his rights under the Pension Scheme.
Given his bankruptcy, his interest as a member (“ Member”) of the Pension Scheme is now Mr Green's primary asset, and the Claimants are seeking to enforce their bankruptcy-surviving judgment against it.
The Claimants initially sought to enforce their judgment by obtaining a charging order over Mr Green's interest in the Pension Scheme. This failed, essentially on the basis that there is statutory protection against charging an interest under an OPS: see s.91 of the Pensions Act 1995.
The Claimants seek to enforce their judgment by means of obtaining directions – effectively injunctions — under s.37 of the Senior Courts Act 1981 – as set out in the Claimant's revised draft order that Mr Green delegate to the Claimants by CANDEY Limited (“ CANDEY”), their solicitors:
a. his power to notify HMRC “ that he is revoking his Enhanced Protection concerning his lifetime allowance”. The relevant statutory provision is under the Registered Pension Schemes (Enhanced Lifetime Allowance) Regulations 2006/131 reg.4(8) and requires the taxpayer to notify HMRC that he “ no longer wishes to rely on paragraph 12” of Schedule 36 to the Finance Act 2004 (“ the 2004 Act”)
b. his right to call for a lump sum under the Pension Scheme;
c. his right to call for a pension under the Pension Scheme.
The Claimants seek the authority to exercise those delegated powers by giving notice to the Trustees, so that on 28 October 2022, when Mr Green turns 55 (the minimum age for taking a lump sum and/or pension), they can call for both a pension commencement lump sum (“ PCLS”) (i.e. the tax free cash lump sum) as well as a Lifetime Allowance Excess Lump Sum (“ LAELS”) (i.e. a lump sum subject to a 55% tax charge) as well as a pension from the remaining pension funds. Those lump sums and pensions would be paid into one of Mr Green's bank accounts as nominated by the Claimants.
At that stage, the Claimants then intend to seek recovery of the judgment debt out of that nominated bank account by means of a third party debt order, if not volunteered by Mr Green.
I should add that Mr Green has also been indicted by the Department of Justice of the United States of America for his involvement in a money laundering scheme. In early 2019, Mr Green was concerned not to enter the United Kingdom for fear of extradition to the United States. He currently resides in Alicante, Spain.
The Pension Scheme
The Pension Scheme's only asset is a freehold property at 33 New Bond Street, London W1 (“ the Property”), which was last valued in 2019 at some £55 million. The Trustees are members of Mr Green's family. Mr Green was himself a Trustee at the time the most recent Trust Deed and its Rules (“ the Rules”) were executed.
The interest of a Member in the Pension Scheme is his or her “Accumulated Credit”, as defined by Rule 4(e). I was informed that Mr Green's Accumulated Credit is presently calculated as 20.07% of the total Fund, which is calculated by reference to the value of the Property.
Pursuant to Rule 5, once a Member notifies the Trustees of his election to receive pension benefits from the Scheme, the Trustees are required to:
“realise sufficient of the assets of the Fund to produce a sum equal to the Member's Accumulated Credit (or a part thereof, as the Member shall direct) and apply the same by providing benefits in accordance with the Member's instructions (subject to complying with the provisions of Part Ill of this Schedule).”
Rule 11 of the Scheme Rules effectively prohibits the benefits from being assignable to another person. That, of course, is concerned with the rights under the Scheme. Once a payment has been made by the Scheme to the Member, such that he has funds in his bank account, he can freely assign those funds.
Part III of the Schedule to the Rules specifies the types of payment which may be made to, or in respect of, any Member. Those Rules, in effect, follow the...
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