Manolete Partners Plc v Ian Russell White
| Jurisdiction | England & Wales |
| Judge | Hodge |
| Judgment Date | 16 March 2023 |
| Neutral Citation | [2023] EWHC 567 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CR-2021-MAN-000222 |
In the Matter of Lloyds British Testing Limited (In Liquidation)
And in the Matter of the Insolvency Act 1986
[2023] EWHC 567 (Ch)
HIS HONOUR JUDGE Hodge KC
sitting as a Judge of the High Court
Case No: CR-2021-MAN-000222
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
IN MANCHESTER
INSOLVENCY AND COMPANIES LIST (ChD)
Manchester Civil Justice Centre,
1 Bridge Street West,
Manchester
M60 9DJ
Judgment — Enforcement — Occupational pension — Whether court can compel judgment debtor to draw down pension benefits to satisfy judgment debt — Senior Courts Act 1981, ss. 37 (1), 39 (1) — Pensions Act, 1995, s. 91 (2)
Mr Joseph Curl KC and Mr Jon Colclough (instructed by Addleshaw Goddard LLP, Manchester) for the Applicant
Mr Tom Asquith (instructed by Farleys Solicitors LLP, Preston) for the Respondent
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A 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.
HIS HONOUR JUDGE Hodge KC
Hearing date: 13 March 2023 Judgment handed down: 16 March 2023
Remote hand-down: This judgment was handed down at a remote hearing at 2.00 pm on Thursday 16 March 2023 by circulation to the parties or their representatives by email and by release to The National Archives.
The following cases are referred to in the judgment:
Bacci v Green [2022] EWHC 486 (Ch), [2022] BPIR 641
Bacci v Green [2022] EWCA Civ 1393, [2023] Pens LR 2
Brake v Guy [2022] EWHC 1746 (Ch)
Lindsay v O'Loughnane [2022] EWHC 1829 (QB), [2022] Pens LR 13
Office of the Bankruptcy Adjudicator v Shaw [2021] EWHC 3140 (Ch), [2022] BPIR 807
Tasarruf Mevduati Sigorta Fonu v Merrill Lynch Bank and Trust Co (Cayman) Ltd [2011] UKPC 17, [2012] 1 WLR 1721
His Honour Judge Hodge KC:
I: Introduction
The core issue raised by this insolvency application is whether the court can, and should, compel the respondent judgment debtor to draw down his benefits under an occupational pension scheme financed by his employer in order to satisfy a substantial outstanding judgment debt in favour of the assignee of claims for breach of director's duties brought following the insolvent administration and voluntary liquidation of the employer company. The respondent contends that the orders sought by the applicant would be in breach of the prohibition in s. 91 (2) of the Pensions Act 1995 (the Pensions Act) and that the court should decline to follow the case law authority which suggests otherwise. It is for this reason that I reserved judgment at the conclusion of the one day hearing.
II: Background
The applicant is a specialist insolvency litigation funder and the assignee of claims asserted on behalf of Lloyds British Testing Limited (the company) and its liquidators against the respondent, Mr Ian Russell White, who will be 61 years of age the day after this judgment is due to be handed down and who served as a director of the company between 26 June 2002 and 23 December 2016. Mr White has explained that the company was formed on 21 May 2002 after he had led a successful management buy-in of the business with the assistance of bank finance and a substantial personal investment; and that the company was his “life's work”. The respondent states that he was central to the company floating on London's AIM stock exchange which led to the company's bank making a 20% return on its investment before the company reverted to private ownership. The company entered into administration on 24 November 2016 and then into creditors' voluntary liquidation on 28 November 2017. Prior to its insolvency, the company had grown to be a prominent provider of inspection, testing and repair services of lifting equipment.
On 10 March 2006, the company was granted a lease of land and buildings on the north-east side of Fabian Way, Crymlyn Burrows, Swansea (the property) for a term of ten years. The landlords were the trustees of the Lloyds British Small Self-Administered Pension Scheme (the Scheme) who, at that time, were Mr Hayden Davis, the respondent and Mr Trevor Dale. The register of title for the leasehold interest (CYM 285910) is at page 59 of Bundle B. At paragraph 24 of his witness statement, the respondent states that the Scheme purchased the property in 2004 and that: “The purchase was made using the company's funds”. The reversionary estate is now a long lease for a term of 125 years from 24 June 2007 granted to the Scheme trustees on 17 December 2008 and first registered on 15 January 2009. The register of title for the long leasehold reversion (CYM 432674) can be found at page 64 of Bundle B. I queried the discrepancy over the dates of purchase of the property at the beginning of the hearing but although the respondent was present in court throughout, I received no explanation for it. I infer that there must have been some form of surrender and re-grant of an earlier reversionary leasehold interest. The property is the only asset of any substance within the Scheme, which was created on 1 July 2003 and is subject to a deed of amendment entered into on 14 August 2006 and the Standard Life General Rules for Small Self-Administered Schemes, code SAS71 (the Scheme Rules).
As at 2 September 2022 the registered proprietors of the long leasehold reversion are shown as the respondent, his son Ryan, and Barnett Waddingham Trustees Ltd, who were registered in their capacity as the then Scheme trustees on 29 November 2018. As explained at paragraph 18 of the respondent's witness statement, Barnett Waddingham Trustees Ltd are no longer the scheme's professional trustee as they have resigned over a dispute. Mr Ryan White is the professional trustee, although he has no other interest in the Scheme; and the respondent is its only beneficiary. During the course of this hearing, it became common ground that the respondent is the managing trustee of the Scheme. Upon reaching the age of 55 in 2017, the respondent withdrew the 25% tax-free part of his pension by taking some money from the Scheme and all of the money from his Standard Life scheme. He says that he has since spent all of that lump sum; but he accepts that he does “still have an interest in the [Scheme] subject to my tax-free lump sum having already being taken”; and that he is its “only beneficiary”. The property is presently occupied by a company called SA1 Business Park Limited, paying an annual licence fee of £60,000. The respondent claims that the tenant has an option to purchase the property; but Mr Curl says that in fact the emails on which he relies only show a discussion about the possibility of the grant of an option, and do not evidence any option having in fact been granted.
On 26 August 2020, the applicant took an assignment of claims that the respondent had breached fiduciary duties owed to the company by causing it to make various payments in the period of some 20 months leading up to the company entering into administration, between 1 April 2015 and 24 November 2016. These included payments towards a Bentley Flying Spur and a Bentley Continental, two Lamborghinis, a Porsche, foreign holidays in the Caribbean and the Maldives, the respondent's home, the rent on his son's flat, substantial direct payments to the respondent, and the cost and expenses of acquiring and operating a helicopter. The applicant alleged that these payments were made in breach of the respondent's duties as a director of the company.
Under the terms of the relevant purchase agreement, the applicant is under a contractual obligation to return a substantial part of any net recoveries to the company's insolvent estate: (i) 50% of the first £500,000; (ii) 60% of anything between £500,000 and £1,000,000; and (iii) 65% of anything above £1,000,000. According to the list of creditors which the applicant has obtained from the liquidators, there are roughly 500 creditors that have lost money by reason of the liquidation. Most of these are small trade creditors (typically electricians, plumbers, cleaners, and various suppliers) left unpaid for a few hundreds or thousands of pounds; and the filed claims are in the region of £3.3m.
The applicant issued an insolvency originating application against the respondent on 19 April 2021. The trial took place before me over three days between 15 and 17 August 2022, with Mr Jon Colclough (of counsel) representing the applicant and the respondent acting as a litigant in person. I delivered an extemporary judgment on 18 August 2022, finding that the respondent had made various payments in breach of the fiduciary duties he owed to the company. Following a consequentials hearing on 25 August 2022, I made an order upholding the claim against the respondent in part. He was ordered to pay: (1) £ 657,149.85 in respect of the principal element of the claim; (2) simple interest to the date of judgment of £ 124,768.45 in respect of interest; (3) £ 64,095.92 as an additional sum because the applicant had bettered its own Part 36 offer; and (4) costs to be assessed, with a payment of £ 150,000 on account of such costs. That resulted in a total judgment debt of £ 996,014.22, which was payable within 14 days (and thus by 8 September 2022). To date, the respondent has paid not a penny towards this judgment debt. The respondent makes the point that the applicant had sought to recover the sum of £ 6,913,323.05 from him but was only awarded £ 657,149.85, plus costs and an additional award under CPR 36.17 (4) (d), together with interest, and that the balance of the applicant's claims were dismissed.
III: Application
The application now before the court is dated 22 September 2022. It is supported by the first...
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