Well, it is now settled and it probably comes as little surprise to know that trustees in England cannot insist upon a bankrupt taking a payment from their pension so that it then falls into the estate. The Court of Appeal judgement in the long-awaited appeal (the hearing and submissions were on three dates in April, May and June of this year) of the decision in Horton -v- Henry has just been handed down.
The analysis of the legal position giving rise to the result is set out quite succinctly in paragraph 38 of the decision of Lady Justice Gloster. It is refreshing to see her use the phrase: “It would drive a coach and horses through the protection afforded to a bankrupt’s pension rights by the Insolvency Act and pension legislation” (in actual fact, she uses the expression twice!) and you may recall that this was my general view when the decision in Raithatha -v- Williamson was first published in 2012. Following the Pension Reforms introduced by George Osbourne, the already dramatic affect that the earlier case would have had on a bankrupt’s pension was greatly magnified and the decision of the Court of Appeal seems to be that most rare of beasts; both correct in law and right as a matter of common sense.
In Scotland, I am aware that trustees had been cautious about seeking to apply the decision in Raithatha and were doubly so following the decision in Horton. It did seem that the decision was, at best, harsh and that the Scottish courts would be unlikely to follow the lead of the High Court. Whilst the legislation north and south of the border is different and has developed in many areas along different lines, it would be a brave (I hesitate to say “foolhardy”) trustee in Scotland who would now seek to argue that they were entitled to use the powers vested in them to seek an order for a Debtor to draw down a lump sum from their pension to pay their creditors.
On the positive side, from a creditor’s point of view, however, is the recent decision (also in England) in Stanley and Barber -v- Wilson and others. Apparently, contributing £550,000 to your pension in the three-and-a-half years leading up to your bankruptcy is excessive. Good to know!