Company director compelled to draw down pension

The applicant was the assignee of claims by a company and its liquidators against the respondent, a former director, for breaches of fiduciary duty, and had obtained a judgment against the respondent.

The respondent had not paid any part of the judgment debt and there were substantial sums owing to the company’s creditors. The applicant applied for an injunction to compel the respondent to draw down his pension, which was granted.  

The respondent was the only beneficiary of the company’s occupational pension scheme and the scheme’s only asset had been purchased with company funds.

The respondent argued that the court could not compel him to exercise draw down rights as s.91(1)(a) Pensions Act 1995 prohibits the assignment, commutation or surrender of an occupational scheme to another and s.91(2) prohibited the court from making an order to the effect that a person entitled to an occupational pension would be restrained from receiving that pension.

The court held that by directing the respondent to make payment of the pension pot to a nominated UK bank account in the respondent’s name, there would be no contravention of s.91 as the order would ensure that payment of the pension pot was made to the respondent, rather than restraining the respondent from receiving his pension. It didn't matter that the order was motivated by the objective of enabling the pension pot to be paid in satisfaction of a judgment debt.

Given the judgment debt resulted from the respondent’s breaches of fiduciary duty whilst acting as a director, the court held it was not just, convenient or equitable for the respondent to retain his pension, derived from company monies, whilst the judgment debt in favour of the company remained unsatisfied.

Lloyds British Testing Ltd (In Liquidation), Re

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