The case of Lindsay v O'Loughnane involved a creditor seeking to enforce a judgment debt by obtaining payment from the debtor's pension funds.  

The debtor was a member of three personal pension schemes.  It appears that at the date of the hearing the debtor was aged 53, so not yet at an age at which he could demand immediate payment of benefits.  The judge made an order requiring the debtor to give written notice to each of the three pension providers requesting that they continue to hold his pension funds and requesting drawdown from the date at which he reached an age at which he was entitled to request drawdown.

The hearing took place before the Brake v Guy judgment had been handed down, and there are some notable differences between the two cases.  Brake v Guy involved the making of a third party debt order (TPDO), ie an order which required that the amount owed by the scheme trustee as a debt to the scheme member should be paid directly to the member's creditor.  In Lindsay v O'Loughnane, the application had originally been for a TPDO, but the judge commented that such an application could not be made in respect of the pension schemes because there was no debt currently owed by the schemes to the member.

The judge noted that the funds held in one of the personal pension schemes concerned had originally been held in an occupational pension scheme and therefore been subject to section 91 of the Pensions Act 1995 which restricts the enforcement of creditor rights against occupational pension schemes.  However, he held that as the fund was now held under a personal pension scheme, section 91 was not relevant.  However, following the reasoning in the High Court's judgment in the case of Bacci v Green, he said that in any event, section 91 would not have prevented the making of the type of order sought.

The debtor also objected to the order on the grounds that he was short of money and should be entitled to his pension funds as his remaining source of income.  The judge said that if the debtor had wanted the court to find that he was short of money and contend that was a reason the order should not be made, it was incumbent upon him to fully and frankly set out his position in his evidence, including explaining how his accommodation was paid for, his lifestyle was funded and so on, which he had not done.  The judge also noted that the original trial judge had found that the debtor had lied in court and that his evidence should not be accepted in the absence of corroborating independent evidence. 

Our thoughts

This case shows that the courts may be prepared to make an order to allowing a creditor to obtain payment from a debtor's pension fund even when the debtor has not yet reached the age of 55 and there will therefore be a gap between the making of the order and the debtor being able to draw down the funds.  In this case it appears that the debtor was aged 53 at the time of the hearing.  The courts may be more reluctant to make such orders in cases where the member is many years away from being able to withdraw benefits.

In this case the judge at the original hearing had found that the defendant's evidence could not be trusted, and the judge was clearly suspicious of the defendant's arguments that allowing enforcement against his pension funds would cause financial hardship.  It remains to be seen whether the courts will attach more weight to arguments about financial hardship if faced with a more credible defendant who engenders their sympathy.

Jade Murray

Jade Murray

Partner, Pensions
United Kingdom

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