Creditors successfully recover bankrupt’s pension

A company obtained judgment against an individual, including findings of deceit and dishonesty. The individual was subsequently made bankrupt and the company then went into administration. Creditors took an assignment of the company’s claims against the individual.

The creditors applied for an order seeking recovery of the judgment debt from the individual’s pension, which had not vested in the bankruptcy estate as it is exempt as a matter of statute. The debt was also not bound by the bankruptcy as it arose from fraud. Such an order was made and the individual appealed that order.

The Court of Appeal dismissed that appeal and upheld the judge’s order. The individual argued that the pension rights were not property under the Senior Courts Act 1981 (the Act), that to deprive him of his pension rights was a breach of public policy and that the revocation of such rights would create large tax liabilities making such relief inappropriate.

On the question of property, the Court of Appeal held that, as the individual accepted that the rights could be subject to the appointment of a receiver, they fell under the definition of property in the Act and could also be subject to an injunction.

On the question of public policy, the Court of Appeal disagreed with the individual that, as pensions had been excluded from bankruptcy estates under statute, they could not be recovered under the Act. As for tax, the Court of Appeal agreed with the judge that, just because an order may create a tax charge on a defendant, that is not a ground to refuse to make the order.

Bacci v Green [2022] EWCA Civ 1393

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