Stuart John Whiteley Allan v Peter Nolan and Others
| Jurisdiction | England & Wales |
| Judgment Date | 12 March 2001 |
| Judgment citation (vLex) | [2001] EWHC J0312-2 |
| Docket Number | CASE NO: 1998 A No 393 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 12 March 2001 |
[2001] EWHC J0312-2
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
LEEDS DISTRICT REGISTRY
John Behrens
CASE NO: 1998 A No 393
This is a claim by Mr Allan for breach of trust against former trustees of a pension fund. Mr Allan was a director of an insolvent Company who had acquired very substantial benefits under 2 pension schemes. In May 1995 he applied to join a Small Self-Administered Pension Scheme even though he was not an employee of the principal employer of that scheme. Mr Allan and 2 of the trustees knew that Mr Allan was not an employee but the pensioneer trustee did not.
In June 1995 some of the assets of the old scheme were assigned to the trustees of the new scheme. In August 1995 assets to the value of £300,000 were converted into cash and paid into the bank account of the new trustees. Between July and November 1995 2 of the trustees (not including the pensioneer trustee) used £365,000 in the acquisition of real property as part of the assets of the new scheme. Those purchases exhausted the whole of the £300,000 invested by Mr Allan. Mr Allan contends that he was assured by one of the trustees that he would be informed of any investments made with "his moneys". He was not consulted over any of the investments.
Between August and November 1995 Mr Allan and/or Companies with which he was associated received benefits from the new scheme to the extent of £21,500. The payment of such benefits was in breach of the rules of the new scheme and put in jeopardy the tax exemptions to which the scheme might have been entitled.
In November 1995 one of the trustees was convicted of fraud and was sentenced to a term of imprisonment. In December 1995 Mr Allan informed the trustees including the pensioneer trustee of his wish to transfer his assets out of the scheme. In January 1996 Mr Allan informed the pensioneer trustee that the principal employer did not employ him.
Mr Allan's attempts to transfer his funds out of the scheme have been protracted. For the most part the pensioneer trustee attempted to assist Mr Allan in his attempts. However those attempts were frustrated for a number of reasons. Firstly the pensioneer trustee had difficulty obtaining relevant information about membership of the scheme and in particular whether the members were in fact employees. Secondly there were difficulties about the benefits that Mr Allan had had. In particular it required the repayment of a loan of £20,000 with interest before permitting the transfer. In the result the transfer out never took place.
In April 1997 one of the trustees became disqualified from acting though he did not realise this till September 1997 when he formally resigned. In May 1997 the pensioneer trustee resigned its trusteeship. In September 1997 the Supervisory Body appointed Mr Tatch to be a trustee with full control over the assets of the new scheme. That appointment was challenged by a number of persons including Mr Allan. It was however confirmed. In October and November 1997 the principal employer made 2 further appointments of trustees but they have both since resigned. The Supervisory Body removed the other original trustee from acting with effect from April 1988. Thus the only trustee of the new scheme is now Mr Tatch.
In this action Mr Allan is suing the 2 original trustees and the pensioneer trustee. The 2 original trustees have taken no part in the proceedings and are probably insolvent. Thus the main contest before me has been between Mr Allan and the pensioneer trustee.
Mr Allan contends that as he was not an employee of the principal employer he was never a member of the new scheme and thus the trusts failed. He goes on to assert that there was a resulting trust in favour of the old scheme. According the pensioneer trustee (together with the other 2 trustees) are liable to make good to the old trustees the £300,000 together with interest or with an enquiry on the footing of wilful default. In the alternative he contends that the new trustees - including the pensioneer trustee - have been in breach of trust in a number of ways for which he is entitled to compensation.
The pensioneer trustee disputes that there is any resulting trust and/or that it has been in breach of trust. It raises a number of defences including estoppel, acquiescence, and concurrence in breach of trust. In addition it seeks to rely on an exemption clause in the Trust Deed.
Mr Allan has been represented by Mr Bonney QC and Mr Caswell. DJT have been represented by Miss Rogers. Mr Nolan and Mr Thompson took no part in the trial. They did not appear and were not represented. They did not file defences.
All Counsel have produced very full and helpful skeleton arguments, and very full and helpful closing submissions. I am most grateful to all of them for the way in which this case was conducted. I am particularly grateful to Mr Bonney QC for coming on the last 2 days of the trial when he had a serious accident the weekend before. If the case had had to be further adjourned it is by no means clear when it could have been relisted.
If I have a criticism of Counsel it is how anyone could have thought that a case involving leading Counsel 6 bundles, several thousand pages and about 25 authorities could ever have been concluded in 3 days. As should by now be well known Chancery cases in Leeds (and Newcastle) do not operate on a rolling list system. If they are not completed within the allotted time they are entirely at the mercy of settlements of other cases. If they have to be listed in the ordinary way they may be listed up to 6 months ahead which is unacceptable. It is thus vital for accurate time estimates to be given which should include reading time. If it is intended that leading Counsel be instructed at the trial he or she should be consulted on any existing time estimate at an early stage.
Fortunately the inaccurate time estimate did not matter in this case, as there was a settlement which enabled the 2 further days which were necessary to be found within a short time of the original hearing.
Although witness statements from 4 witnesses were filed I in fact only heard evidence from 3 witnesses - Mr Allan, Mr Hesketh and Mr Larby.
I found both Mr Hesketh and Mr Larby to be honest witnesses doing their best to help me with relevant events. To a large extent their evidence was corroborated by contemporaneous documents such as letters and file notes written at the time. In general I found them to be reliable witnesses.
Mr Bonney QC invited me to accept Mr Allan as an honest and reliable witness. He pointed out that it was Mr Allan who complained to the regulatory authorities about the operation of the scheme; it was Mr Allan who made a statement of complaint to 2 police forces about the conduct of Mr Nolan and/or Mr Thompson. It is Mr Allan who has brought this action and would not have done that if he intended to mislead the court. I see the force of Mr Bonney QC's comments. Mr Allan was cross-examined for the best part of the day by Miss Rogers and I thus had a good opportunity to see and hear him. I agree with Mr Bonney QC that in general Mr Allan gave his evidence in a straightforward way. He attempted to deal with the questions that Miss Rogers put to him however awkward they were. I certainly did not get the impression that he was trying to avoid them or deliberately trying to mislead me. I thus thought he was an honest witness. It has to be remembered that Mr Allan was in a desperate financial position in 1994 and 1995; furthermore most of the matters which were put to Mr Allan by Miss Rogers were corroborated by other documents. Indeed much of her cross-examination was taken from the witness statement that Mr Allan made to the police. In those circumstances whilst I felt that Mr Allan was now telling me what he believes to be the truth there were some respects in which his evidence was unreliable. I shall deal with these matters in more detail below.
4.1. Mr Allan
Stuart John Whiteley Allan ("Mr Allan") was born on 28 th November 1939. After being educated at Leeds University he joined the family company Elsie Whiteley Ltd ("Elsie Whiteley"). Elsie Whiteley was a textile firm in Halifax. Mr Allan was the director in charge of production; his brotherï - Graham Christopher Allan - was in charge of marketing and sales.
Mr Allan's family had 50% of the equity in Elsie Whiteley. He had 38%; his children had 12%. The remaining 50% was held by his brother's family.
Up until the 1990's Elsie Whiteley had prospered and Mr Allan received substantial remuneration and other benefits. As can be seen from a document provided by Mr Allan's accountant in February 1996 1 the total remuneration for the 10 years between 1981 and 1991 varied between £57,000 and £111,000.
In addition to his remuneration Mr Allan was the sole beneficiary of 4 pension policies under 2 pension schemes, the Elsie Whiteley Retirement Benefits Scheme and the Elsie Whiteley Group Directors Pension Plan.
The Trustees of the Elsie Whiteley Retirement Benefits Scheme were Mr Allan, his brother, Graham, and Wolanski & Co Trustees Ltd. The assets of the scheme to which Mr Allan was entitled comprised 2 policies with Equity & Law ("the AXA policies") - ME 10389, EP 103621. These had a combined value of at least £300,000 and are at the heart of this dispute.
The sole trustee of Elsie Whiteley Group Directors Pension Plan was Elsie Whiteley Ltd. It was not a small self-administered scheme ("SSAP"). Mr Allan was the sole beneficiary of 2 Allied Dunbar Policies - P00065/093/BC/001, 003. The value of these...
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