Section 37(1) of the Senior Courts Act 1981 says that :
The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so.
The High Court has in the case of Lindsay v O'Loughnane [2022] EWHC 1829 (QB) held that a debtor be required to give notice to his pension providers to draw down the entire fund at the age of retirement and pay the sums directly to the Claimant.
The underlying case which gave rise to this decision relates to a judgment obtained in 2010 where the Defendant was ordered to pay £565,000.00 plus interest and costs. There had been some recovery made but a large portion of the debt remained outstanding.
Initially a third party debt order was sought to require the pension providers to pay the sums held to him. A third party debt order is where a creditor can obtain an order requiring the person or company who holds funds on behalf of the debtor to pay those sums to them. This predominately and usually is used in respect of bank accounts.
Having accepted that there was no sum currently owed to the debtor under his pensions, no such order could be made. Instead the Claimant requested an injunction that he be required to make a written request to his pension providers to draw down his pension at retirement age and pay the sums directly to the Claimant. He also sought further injunctive relief requiring any person acting as agent to give the notice if the debtor is in default.
The court held that it had jurisdiction to make such an order under s.37(1) of the Senior Courts Act 1981. It was held that it is just and equitable to make such an order. As there was a substantial debt outstanding and the court can assist with the recovery of a debt due to a creditor, there was no reason to not grant this order. The court however declined to order the request of an agent being required to do so in response as there was no default yet.
This appears to be a trend currently in the High Court. In Brake and another v Guy and others [2022] EWHC 1746 (Ch) the court had ordered one of the claimants to draw down his remaining pension entitlement to satisfy an unsuccessful appeal to satisfy a costs order in favour of the defendant. Unlike the first case, there had already been a draw down by the claimant and there were no discretions which could be exercised by the pension provider to prevent the claimant from having access to these further funds. Like in Lindsay, the court was considering a third party debt order and then was asked to consider making an injunction pursuant to s.37(1).
HHJ Paul Matthews sitting as a High Court Judge felt that there were strong public policy reasons as to why debtors should not be able to hide assets in pensions where they have a duty to draw down on these to pay creditors. As the claimant had already exercised his discretion to draw down part of his pension up to the 25% tax free amount, the pension provider had not discretion not to allow him to draw down further.
These cases and indeed this small trend, is an important reminder that although funds are held within a pension scheme, they are not out of the reach of creditors. In my view, it will be interesting for the court to consider a request for an injunction under s.37(1) of the Senior Courts Act 1981 against a debtor who is not nearing pensionable age but has substantial funds held in the same would be treated. Creditors who know that their debtors have a pension or have already made a draw down should consider whether such an injunction is appropriate.
Written by : Frances Boxall, Associate Solicitor
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