Mark John Wilson v Michael Bernard McNamara
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lewison,Lord Justice Newey,Lord Justice Baker |
| Judgment Date | 16 January 2023 |
| Neutral Citation | [2023] EWCA Civ 20 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: CA-2022-000583 |
[2023] EWCA Civ 20
Lord Justice Lewison
Lord Justice Newey
and
Lord Justice Baker
Case No: CA-2022-000583
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE BUSINESS AND PROPERTY COURTS OF ENGLAND
AND WALES INSOLVENCY AND COMPANIES LIST
LORD JUSTICE NUGEE — [2022] EWHC 243 (CH)
MR JUSTICE NUGEE — [2020] EWHC 98 (CH); [2020] 2 CMLR 27
Royal Courts of Justice
Strand, London, WC2A 2LL
Deok Joo Rhee KC (instructed by Eversheds Sutherland) for the Appellants
George Peretz KC and John Briggs (instructed by Edwin Coe LLP) for the Respondent
Hearing dates: 14–15/12/2022
Approved Judgment
This judgment was handed down remotely at 10.30am on 16/01/2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
Introduction
Mr McNamara, an Irish national, was adjudicated bankrupt in England on his own petition. The underlying issue in this litigation is whether his entitlement under a pension scheme established in Ireland (“the Simcoe Scheme”) forms part of his bankruptcy estate. Mr McNamara says that it does not; whereas his trustees in bankruptcy say that it does. Mr McNamara's argument was that the UK legislation which, on its face, did not exclude his entitlement under the Simcoe Scheme from forming part of his bankruptcy estate was incompatible with EU law. That question came before Nugee J in 2019 in the form of a preliminary issue. He decided that the UK national legislation (which on its face differentiates between UK pension schemes and foreign pension schemes) might be incompatible with EU law. He thus referred questions to the CJEU. The particular issue on this appeal is whether, when the case returned to these shores, Nugee LJ (as he had by then become) was wrong to deny the trustees the opportunity of arguing that even though the UK legislation was indirectly discriminatory (as the CJEU had decided), it was objectively justified and proportionate. The judge's judgment on the first hearing is at [2020] EWHC 98 (Ch), [2020] Pens LR 15; and his judgment on the second hearing is at [2022] EWHC 243 (Ch), [2022] BPIR 851.
The trustees put their case in three different ways. First, they say that as a result of the way in which the CJEU answered the questions referred, the judge was obliged to consider the question of justification. Second, they say that as a matter of national procedural law they were entitled to argue the question of justification as of right. Third, they say that even if the judge was not obliged to consider that question, and they were not entitled as of right to argue it, his discretionary decision to refuse the trustees permission to argue it was wrong.
How the issues came before the judge
The issues came before the judge in the form of a preliminary issue ordered by ICCJ Mullen, largely on agreed or assumed facts. There was originally one contested issue of fact (whether Mr McNamara was a “worker”) in relation to which ICCJ Mullen directed evidence, but ultimately that question was not pursued.
He did not direct the service of statements of case; and no one asked him to.
The way that the issue was framed was whether by reason of various provisions of EU law, and in particular article 49 of the Treaty on the Functioning of the European Union (“TFEU”), Mr McNamara's interest in the Simcoe Scheme was:
“to be treated for the purposes of section 11(1) and (2)(a) of the Welfare Reform and Pensions Act as rights under an ‘approved pension arrangement’ and hence excluded by that statutory provision from his bankruptcy estate.”
The underlying facts and legislation
The agreed or assumed facts on which the judge reached his first decision were as follows.
Prior to his bankruptcy Mr McNamara was engaged in the building and property development business through Michael McNamara & Co (“MMC”), a company operating largely if not exclusively in Ireland.
On 20 December 2002 MMC as employer and trustee established an occupational pension scheme for Mr McNamara (“the MMC Scheme”) with a payment of €6,161,256, paid as a single premium on a pension policy issued by Irish Life (“the Policy”), under which benefits would be paid on Mr McNamara's retirement or earlier death. The Policy was unit-linked, and the premium secured 6,161,256 units in a fund called the Future Fund. The asset underlying the Future Fund was a shopping centre in Dublin called St Stephens Green Shopping Centre. The policy was governed by Irish law.
In November 2010 MMC was put into receivership in Ireland at the suit of the National Asset Management Agency which had acquired MMC's debts to the Bank of Ireland. Its failure resulted from the crash in the Irish property market.
On 16 July 2009 Mr and Mrs McNamara established a new Irish company, Simcoe Industries Ltd (“Simcoe”), with Mr McNamara as director, and Mrs McNamara as director and secretary. Mr McNamara was a director of Simcoe from 16 July 2009 to 14 April 2012. He was also an employee of Simcoe from 1 December 2009 to 31 January 2011.
By Deed dated 31 August 2009 (“the Deed”) Simcoe as Principal Employer established the Simcoe Scheme, with effect from that date, with Marine House Trustee (“Marine House”) as pensioneer trustee and Mr and Mrs McNamara as additional trustees. The Simcoe Scheme is governed by Irish law.
The Simcoe Scheme was established as a retirement benefits scheme as defined in section 771 of the Taxes Consolidation Act 1997 (the applicable Irish legislation) (“ TCA 1997”), to provide relevant benefits as defined in section 770(1) TCA 1997 for such of the employees of Simcoe and associated employers as should be included therein as Members. Under the rules annexed to the Deed, a person was eligible for inclusion in the Simcoe Scheme if he were an employee (which for this purpose included directors and officers) of the employers, and the employers so decided. The members of the Simcoe Scheme have in fact been Mr McNamara, Mrs McNamara and their son Ronan McNamara.
By clause 3 of the Deed the Simcoe Scheme was to be established so as to be capable of being approved by the (Irish) Revenue Commissioners pursuant to section 772 TCA 1997 and of being treated by the Revenue Commissioners as an exempt approved scheme pursuant to section 774 TCA 1997. By letter dated 28 October 2009 an (Irish) Inspector of Taxes wrote to Marine House on behalf of the Revenue Commissioners to the effect that the Simcoe Scheme had been approved as a retirement benefits scheme for the purposes of Part 30, chapter 1 of TCA 1997, and would be treated as an exempt approved scheme for the purpose of section 774 TCA 1997, in each case with effect from 30 August 2009.
By clause 18 of the Deed if a member was entitled to a benefit under any other retirement benefits scheme, the trustees had power to accept a transfer payment in accordance with rule 9 of the rules. Rule 9 empowered the trustees to accept all or any of the assets of the other scheme relating to the Member. By Deed of Assignment dated 7 December 2009 MMC as trustee of the Policy assigned the Policy to Marine House and Mr and Mrs McNamara as trustees of the Simcoe Scheme, to hold the Policy subject to the provisions of the Policy documents and endorsements thereto, and in consideration of the Simcoe Scheme assuming the obligation to provide a pension appropriate to the Policy.
In the period ending 31 August 2011, the trustees of the Simcoe Scheme made certain payments to Mr McNamara. (He was born in 1950 and so had turned 60 in 2010). There was a dispute whether those payments represented his full entitlement to benefits under the Simcoe Scheme, but it was agreed that it should be assumed for the purposes of the preliminary issue that they did not, and that he had not received his full entitlement by the time of the commencement of his bankruptcy on 2 November 2012.
By Deed dated 26 July 2011 Mr McNamara was removed as trustee of the Simcoe Scheme by Simcoe (acting as principal employer), leaving Marine House and Mrs McNamara as the trustees.
On 13 April 2012 Simcoe was registered under the (UK) Companies Act 2006 as an overseas company that had established a UK establishment. The application for registration gave the date the establishment was opened as 1 December 2011, with an address in London, and with Mr McNamara as director and Mrs McNamara as director and secretary.
By the time of his bankruptcy it was agreed that Mr McNamara had moved his centre of main interests to the UK.
The agreed or assumed facts did not contain any facts which might have been relevant to the question of objective justification.
The legal framework
Sections 11 and 12 of the Welfare Reform and Pensions Act 1999 (“ WRPA 1999”) deal with the pension rights of those made bankrupt in the UK. Section 11 “(as amended)” relevantly provides:
“ 11 Effect of bankruptcy on pension rights: approved arrangements
(1) Where a bankruptcy order is made against a person on a bankruptcy application made or petition presented after the coming into force of this section, any rights of his under an approved pension arrangement are excluded from his estate.
(2) In this section ‘approved pension arrangement’ means—
(a) a pension scheme registered under section 153 of the Finance Act 2004
…
(h) any pension arrangements of any description which may be prescribed by regulations made by the Secretary of State
…
(11) In this section—
…
(b) ‘pension scheme’ has the meaning given in section 150(1) of the Finance Act 2004 and ‘registered pension scheme’ means a pension scheme registered under section 153 of the Finance Act 2004.”
Section 12 relevantly...
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