High Court compels another judgment debtor to drawdown pension to pay creditor

In Manolete Partners Plc v White [2023], the High Court granted the claimant’s application to require a pension scheme member to drawdown pension benefits to satisfy an unpaid judgment debt of some £996,000 for breach of director's duties. 

The order was granted against White, a defaulting director of a company which had gone into liquidation in 2016, then subsequently into a creditors’ voluntary liquidation process. In the 20 months leading up to the company’s liquidation, White had made numerous payments out of company assets, including the purchase of luxury cars and holidays, expenditure on his own and his son’s properties, and the acquisition and operation of a helicopter. 

Judgment for breach of fiduciary duty, namely causing the company to make payments for his own financial benefit, had been obtained. The debt, and other substantial sums, were due to the company's creditors, including the claimant. The respondent had not made a bankruptcy application.

The court directed payment of the respondent's pension pot to a nominated UK bank account in the respondent's name, and there was thus no contravention of the prohibition in section 91 of the Pensions Act 1995 as the respondent was not restrained from receiving his pension benefits but rather the opposite: the payment of the pension pot was made to the respondent, rather than remaining within the scheme wrapper.

The court held that White should not be entitled to retain his pension, derived entirely from company monies, whilst the judgment debt entered against him remained wholly unpaid.

In recent years, there have been several cases in which a pension saver has been compelled by the Court to access their pension fund to pay a creditor. There is now an established principle that debtors cannot protect assets in pension funds when they have a right to make withdrawals which could be used to satisfy a judgment debt. For more detail, please see our December 2022 briefing: Hands off my pension! How safe are judgment debtors’ and bankrupts’ pensions from creditors?