So What are the Risks? Should I take It?

Lawyers are often asked by their clients what they think about an offer that has been made by the other side. This is one of the most difficult parts of lawyering, but one of the most rewarding, and when I do this I feel that I am really earning my fees.

Because there are no end of factors to take into account. Some of the more obvious are:

  • How the offer compares with the amount claimed
  • What your chances of success are
  • How these will affect the likely result – might you lose, or only win less
  • And how much this depends on inponderables – like how key witnesses do at trial, or what the undisclosed documents might show

But you rapidly get on to more complicated areas:

  • Will the other side pay the amount of the offer?
  • Will they be able to pay any judgment for more?
  • Can your client afford to take the case to trial?
  • Can your opponent?

And then there is the nature of the advice that you give:

  • You need to give a young, inexperienced client more advice than an older, wiser one
  • But if the client has little money you can’t spend too much time or money in doing this
  • Some problems are legal and need detailed explanation
  • Some are really matters of business and more for the client to decide

However, few clients are aware of the possible cost, or risk, of substantial litigation, and most need to be advised on this, so that they can make an informed choice on what they want to do.

Of course, not all clients have the same goals. Some want certainty, and a rapid settlement even if they might get more by pushing on. Others want to get the most possible, even if they are taking a lot more risk of failure, or significant irrecoverable expense.

No, advice of this sort is where litigators really earn their money, and it was in the spotlight recently in the case of Graham Seery v Leathes Prior [2017]EWHC80(QB) which was a professional negligence claim against a firm of solicitors in Norwich by a disgruntled client who settled a claim, with their advice, and then felt that he might have got more if he has pushed on a bit further.

What I always like about this sort of thing is the chance to read the letters of advice written by other lawyers. This one, written by Dan Chapman, was a cracker. It was given against a background of a very slippery opponent, and a claim against a company wth a doubtful financial position. The Claimant had been made offers from the other side that were getting up to £310,000 but negotiations were stalling and a decision had to be made on whether to take the offer, or make tactical steps which might get more. Part of a letter quoted in the judgment reads:

“… I have a strong feeling that we might be at the end of the road in these negotiations; I know my counterpart feels that his clients are also being ’emotive’ about the dispute and thus perspective is being lost. He feels also there is not likely to be any more movement from his clients, rightly or wrongly.

So I suggest you discuss the current offer – which totals 310k with 210k being paid up-front (I think we should be able to reallocate the figures to get it all net, so assume this for the time being) and the remaining 100k paid over 18 mths with interest – with your wife tonight. It seems to me a huge financial decision for you and your family; if we reject this now I think we will be tied down to litigation for sometime. We will need to fight the Tribunal claim, issue winding up petitions and, to gain any real value (since the Tribunal claim is worthless in real terms), issue (and succeed on) a High Court unfair prejudice claim. The costs will be enormous (not by SJ Berwin standards, of course, but huge nonetheless) and no guarantee of any return whatsoever if FWA go bust in the meantime (or manage to reallocate their assets). So take some time to seriously consider your options, and check that you and your wife are comfortable with where we are going – as I say, my very strong hunch (and I am usually right on these things) is that their offer is now their final offer. Of course, that doesn’t make it right or mean you should accept it – but I need to advise you of the consequences of rejecting what might well be their final offer. As experienced litigators, we tend to have a feel for how these sort of cases pan out, and you don’t pay me to tell you what you want to hear, but what I would advise. In this particular case, if it were me then I would accept the offer, bank the cash (as galling as it undoubtedly is to you) and get on with my life. But it is not me who is living this case, and I shall do whatever you instruct me to do!

Please don’t misunderstand me – I (and my firm) will be more than happy to fight this all the way. However, I have a duty to ensure that you (and your family) are fully aware of what you are getting yourselves into. I don’t want to be walking out of the High Court in 2 years time, telling you that whilst we have won the total damages you are able to recover from FWA amount to zero since the company has gone into liquidation, and then handing you my firm’s bill for 70k, at which point you might wish you had accepted the 310k on offer! You would not be too pleased with me, either, if I had not have advised (sic) you to accept that 310k! And then I would be getting sued for negligence!”

All excellent stuff, especially the bit that I have emphasised.

In the light of this you won’t be too surprised to hear that Sir David Eady, an immensely experienced judge, now sitting in retirement, dismissed the claim. A warmer judge (Sir David being notoriously unemotional) might have congratulated the solicitors on the quality of the advice given. I do so here, for what it’s worth.

 

 

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Aurel Sari: Biting the Bullet: Why the UK Is Free to Revoke Its Withdrawal Notification under Article 50 TEU

Not my normal area of interest, but a very good piece here by Aurel Sari of the University of Exeter on whether an Art 50 notice can be revoked.

UK Constitutional Law Association

aurel-sari‘There is no going back.’ These were the words of Lord Pannick, uttered before the High Court in response to the question whether the United Kingdom could rescind its notification to withdraw from the European Union once issued under Article 50 TEU (Santos and M v Secretary of State for Exiting The European Union, uncorrected transcripts, p. 17). The claimants and the Government appear to agree on this point and accept that the UK cannot reverse its notification of withdrawal.

It is easy to see why this position should be attractive to both parties. For the Government, it means that once the notification has been issued in accordance with the UK’s constitutional requirements, it would be shielded from any subsequent domestic legal challenge. For the claimants, the irreversibility of the withdrawal notification is of ‘vital importance’ (uncorrected transcripts, p. 14). It is this irreversibility which…

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More on Right to Rent – and Yet Another s8 Notice

You will remember that the Government decided that illegal immigrants would be deterred from coming to Britiain (or more specifically England) if they weren’t allowed to rent a place to live, or take lodgings, or indeed to stay in anybody else’s rented flat or house. They set up the Right to Rent provisions, which originally just covered the Midlands – see my piece here – and then extended them to the whole of England (but not Wales, Scotland or Northern Ireland) – see here.

The original penalty on landlords, and their agents, who didn’t carry out the necessary checks was a civil penalty of up to £3,000 per immigrant. However, somebody thought that this wasn’t severe enough, and as from 1st December 2016 landlords who knowingly let to people who don’t have a right to let can be prosecuted, along with their agents, and fined or imprisoned for up to 5 years. So it is vitally important to not only carry out the checks, but be able to prove that you have done so.

However, there is another way out of a criminal conviction. If the landlord takes steps to evict the offending tenant within a reasonable time – defined in the statutory guidelines as 3 months  from discovering that they had no right to rent – then no offence is comitted.

The landlord can of course take the normal steps to evict the tenant, such as serving a s21 notice, but he (or she) has been given two new weapons by the Immigration Act 2016:

  • Ground 7B  – inserted into the Housing Act 1996. This allows the landlord to end a tenancy, even during a fixed term, by serving an appropriate s8 notice, waiting 14 days and then bringing possession proceedings in the County Court in the normal way. If not all the tenants are prohibited from renting the Judge can either end the whole tenancy, or he can alter the tenancy so that it is transferred to the legal occupants only, provided the illegal occupants leave. It’s complicated to explain but here is the provision in the Act. There is an equivalent provision for the (very) few remaining Rent Act tenancies.
  • A 28 Day Notice – This is most unusual. If the Home Office send a formal notice to the landlord telling them that their tenant or all of their joint tenants in one property are renting illegally then the landlord can serve a prescribed notice unded s33D(3) on the tenants, giving them 28 days’ notice to end their tenancy. After the 28 days are up the tenancy comes to an end, the occupants lose their rights not to be evicted without an order of the court, and the landlord can either exclude them peacefully, or get them removed by a High Court Enforcement Officer, because the notice can be enforced “as if it were an order of the High Court” – see here.

We shall see how this all works, but I don’t think the courts are going to be very happy with the way in which the Minister can serve a notice, and the landlord can get it enforced as if it were an oreder of the High Court, all without involving the courts at all.

New s8 Notice

Because there is a new ground for possession under s8 Housing Act, there is a new prescribed form of s8 Notice, whoch must be used in all cases from 1st December 2016 onwards, which refers to s41 of the Immigration Act 2016 in the heading, and to ground 7B a few times in the text. It must be used in ALL CASES even if the claim is based on non-payment of rent or whatever, or it is invalid. So if you are a landlord or a tenant, or advise either of them, do check the notices that are used from now onwards, or the court won’t make a possession order. The new form of notice is here.

As usual these matters are covered in more detail elsewhere, and probably the easiest to follow is on the Landlord Law Blog. But at least you know there’s a problem here.

 

Ilott v Mitson in the Supreme Court – Newsflash only

Well, its been and gone. The hearing lasted one day on 12th December and the decision will be out some time in the New Year – if not too badly delayed by the Brexit kerfuffle, we hope.

For links to my previous comments on this energetic case (just having had its 6th hearing, including 2 trips to the CA) see here and here and here.

PS As at 22.2.17 no sign of the judgment coming out. 

Ilott v Mitson – NEWSFLASH

This is the case where a mother excluded her estranged daughter from her will in favour of three charities and the daughter successfully applied for provision under the Inheritance etc Act. I have reported on it before, most recently here. It has been to the CA and been given leave to appeal to the SC.

The Supreme Court has now given a date for the hearing – 12th December 2016 – and before a bench of 7 Justices. So some time reasonably early in the New Year we’ll finally have a result. Watch this space.

Can I Come In? – Enforcing Suspended Possession Orders

Now some of you may remember that in a previous life (when I really was Coventry Man) I worked for a firm who acted for some major social housing providers. They, unlike private landlords, usually let properties on assured tenancies (rather than assured shorthold tenancies) and played a much longer game. If a tenant was in arrears then they were quite prepared to let them pay off the arrears by instalments and sometimes they encouraged this by getting possession orders that were suspended on payment of say

“the current rent as it falls due plus the arrears of £800 at the rate of £100 a month, commencing on 1st November.

Now from time to time, indeed surprisingly often, the tenants would fall down on the payments and we would issue a warrant for possession and the tenant would be stirred up by a visit from the merry County Court bailiff who would give them an appointment for eviction in 4 weeks, and the form to apply to have the warrant suspended, so they could rush back to the court and explain to the cynical DJ why they had failed to keep the promises that they had made only a couple of months ago.

This might happen several times before either they got their priorities in order, or the DJ lost his remaining patience and the eviction went ahead.

Now it always surprised me that we could get the warrant issued just on our say-so. We signed the Request and cerified that they were in arrears and that was that. Indeed, if there were more complicated terms, such as the removal of a noisy dog, or the clearing of rubbish from the garden, we still just had to certify that they were in breach. No evidence was needed. Naturally our clients were fair about things, and my colleagues were decent honest and truthful, but I couldn’t help think that not everybody was like that, and that the courts were being very trusting, especially when more and more litigants were doing without lawyers and acting for themselves.

Anyway, things have changed now, and when the bits of the County Court Rules that governed enforcing judgments and warrants (rr25-26) were taken into the CPR in April 2014 (along with RSC 45-47) the powers that be took the opportunity of tigntening things up. I hadn’t noticed because I have moved on and don’t act for social housing providers any more, but it would seem that before you can apply for a warrant for possession after a suspended order you have to get permission by making an application supported with evidence.

The rules are in CPR 83.2 and spell things out pretty clearly:

(1)

This rule applies to—

(d)

warrants of possession.

(2)

A writ or warrant to which this rule applies is referred to in this rule as a “relevant writ or warrant”.

(3)

A relevant writ or warrant must not be issued without the permission of the court where—

(e)

under the judgment or order, any person is entitled to a remedy subject to the fulfilment of any condition, and it is alleged that the condition has been fulfilled; or

(4)

An application for permission may be made in accordance with Part 23 and must—

(a)

identify the judgment or order to which the application relates;

(b)

if the judgment or order is for the payment of money, state the amount originally due and, if different, the amount due at the date the application notice is filed;

(e)

where the case falls within paragraph (3)(c) or (d), state that a demand to satisfy the judgment or order was made on the person liable to satisfy it and that that person has refused or failed to do so;

(f)

give such other information as is necessary to satisfy the court that the applicant is entitled to proceed to execution on the judgment or order, and that the person against whom it is sought to issue execution is liable to execution on it.

(5)

An application for permission may be made without notice being served on any other party unless the court directs otherwise.

Now the problem is that there is no reference to any of this on the form of application for a warrant – N325 – which is the form needed under r83.26. Indeed there are several references in the order that make it look as if nothing has changed:

83.26 (1)

A judgment or order for the recovery of land will be enforceable by warrant of possession.

(2)

An application for a warrant of possession—

(a)

may be made without notice; and

(b)

must be made to—

(i)

the County Court hearing centre where the judgment or order which it is sought to enforce was made; or

(ii)

the County Court hearing centre to which the proceedings have since been transferred.

(4)

Without prejudice to paragraph (7), the person applying for a warrant of possession must file a certificate that the land which is subject of the judgment or order has not been vacated.

(5)

When applying for a warrant of possession of a dwelling-house subject to a mortgage, the claimant must certify that notice has been given in accordance with the Dwelling Houses (Execution of Possession Orders by Mortgagees) Regulations 2010.

(6)

Where a warrant of possession is issued, the creditor will be entitled, by the same or a separate warrant, to execution against the debtor’s goods for any money payable under the judgment or order which is to be enforced by the warrant of possession.

(7)

In a case to which paragraph (6) applies or where an order for possession has been suspended on terms as to payment of a sum of money by instalments, the creditor must in the request certify—

(a)

the amount of money remaining due under the judgment or order; and

(b)

that the whole or part of any instalment due remains unpaid.

You always had to certfy this sort of thing. The difference is that you shouldn’t apply for the warrant at all before you get permission under r83.2(3). Easily overlooked.

Well, what happens if you get it wrong, and haven’t got permission and the court doesn’t notice? Because the issue of a warrant is dealt with by the court office, not the DJ, and court offices are busy understaffed places. Is your warrant invalid, and can the tenant get it set aside? Or can you rely on good old r3.10 that allows the court to fix things when there has been a mess-up by somebody:

3.10 Where there has been an error of procedure such as a failure to comply with a rule or practice direction –

(a) the error does not invalidate any step taken in the proceedings unless the court so orders; and

(b) the court may make an order to remedy the error.

There has been some interest in this among the frantically overworked heroes who represent tenants expecting immenent eviction, as some courts and DDJs had one idea and some had another, and there has now been a decision by the CA in Cardiff CC v Lee [2016] EWCA Civ 1034 .

The CA decided, after some navel-gazing,  that if the failure to apply for permission was “an error of procedure” then an application under r3.10 could put things right. In the particular case the tenant had applied to set aside the warrant anyway without success so the facts had been examined and nothing would be gained by going into things again, so the court below had been right to allow the warrant to go ahead.

Had the failure to apply been intentional however they might have taken a different view. And given there has now been a case in the CA on this point, which is being reported and commented on in interested circles (like here), it is going to be much harder for any landlords who merrily sign the N325 without getting permission to enforce first.

Applications can be made without notice and dealt with on the papers, but it will mean another delay of several weeks in most courts before the order can be enforced in any event.

As usual this is covered in the Nearly Legal blog in a lot more detail that I do here. However, you all know this now, so there’s now one less thing to trip over.

Horton v Henry – The Final Round – The Pension Lives!

I have written about this case and the associated one of Raithatha v Williamson previously here and here. Horton went on appeal to the CA and after a delayed hearing, and then a reserved judgment they have finally come to a conclusion, reported at  Horton v Henry [2016]EWCA Civ 989

And the result was an emphatic win for the preservation of the pension against the attempts by the Trustee in Bankruptcy to get at it.

For those of you who have a life outside these columns the problem they was addressing was whether a pension, which would normally be exempt (by s11 Welfare Reform and Pensions Act 1999) from seizure by a Trustee, could be attacked by making an income payment order under s310 Insolvency Act 1986 requiring the bankrupt who was not yet drawing his pension but was aged over 55 to require his pension provider to pay him a lump sum and then pay it over to the Trustee. And this was given a lot more bite by the abolition of the former 25% cap on lump sums by the pensions reforms in 2015.

There were conflicting decisions from Deputy High Court Judges – in Raithatha the court said you could make such an order, but in 2014 another Deputy High Court Judge said you couldn’t in Horton – and so the CA had to break the tie.

The CA Judgment – the Problem

The lead judgment was given by Gloster LJ and is clear and comprehensive, and compulsory reading for anyone who is relying on it.

The brief facts are that Mr Henry went bankrupt on his own petition with debts of up to £6.5m (the exact figure was disputed). He had generous pension provision, with a SIPP worth about £850,000 and 3 personal pensions giving rise to additional rights at various ages. He was 58 on bankruptcy, and wasn’t receiving any of his pension entitlements because he was being maintained by his family and had no need for them. The trustee made an application under s310 (see above) for orders requiring him to claim his lump sums and pension incomes, which he was entitled to do, being over 55, and pay them over to him. He refused, claiming that these benefits were not income to which he had “become entitled” and derived from funds which were not part of the “bankrupt’s estate” and so not susceptible to these orders. The Judge below agreed.

I won’t set out all the statutory provisions as they are set out in full in the CA judgment. But the argument went:

  • s306 Insolvency Act 1986 provides for the bankrupt’s estate to vest in the Trustee;
  • s283(1) IA defines the bankrupt’s estate as being all his property at the date of bankrupty, apart from certain exemptions, including property excluded by other legislation;
  • s91 Pensions Act 1995 excluded rights under occupatioal pension schemes;
  • s11 WRPA (see above) excluded rights for approved personal pension schemes (such as his);
  • s307 IA allowed the trustee to claim after-aquired assets, but not if they were excluded;
  • nor if they were income and so susceptible to a claim for an income payment order under s310;

s310 is key so I will set it out. It provides:

“Income payments orders

(1) The court may make an order (“an income payments order”) claiming for the bankrupt’s estate so much of the income of the bankrupt during the period for which the order is in force as may be specified in the order.

(1A) An income payments order may be made only on an application instituted–

(a) by the trustee, and

(b) before the discharge of the bankrupt.

(2) The court shall not make an income payments order the effect of which would be to reduce the income of the bankrupt when taken together with any payments to which subsection (8) applies below what appears to the court to be necessary for meeting the reasonable domestic needs of the bankrupt and his family.

(3) An income payments order shall, in respect of any payment of income to which it is to apply, either–

(a) require the bankrupt to pay the trustee an amount equal to so much of that payment as is claimed by the order, or

(b) require the person making the payment to pay so much of it as is so claimed to the trustee, instead of to the bankrupt.

(4) Where the court makes an income payments order it may, if it thinks fit, discharge or vary any attachment of earnings order that is for the time being in force to secure payments by the bankrupt.

(5) Sums received by the trustee under an income payments order form part of the bankrupt’s estate.

(6) An income payments order must specify the period during which it is to have effect; and that period–

(a) may end after the discharge of the bankrupt, but

(b) may not end after the period of three years beginning with the date on which the order is made.

(6A) An income payments order may (subject to subsection (6)(b)) be varied on the application of the trustee or the bankrupt (whether before or after discharge).

(7) For the purposes of this section the income of the bankrupt comprises every payment in the nature of income which is from time to time made to him or to which he from time to time becomes entitled, including any payment in respect of the carrying on of any business or in respect of any office or employment and (despite anything in section 11 or 12 of the Welfare Reform and Pensions Act 1999)[7] any payment under a pension scheme but excluding any payment to which subsection (8) applies[8].

(8) This subsection applies to–

(a) payments by way of guaranteed minimum pension; . . .

(b) payments giving effect to the bankrupt’s protected rights as a member of a pension scheme.. . ..

(9) In this section, “guaranteed minimum pension” has the same meaning as in the Pension Schemes Act 1993.

“protected rights” has the meaning given in section 10 of the Pension Schemes Act 1993, as it had effect before the commencement of section 15(1) of the Pensions Act 2007.”

There are also provisions to allow the recovery of excessive pension contributions under s324A  IA.

The HC Judge summarised the position very succinctly, with the CA’s approval:

“In short, the position since 1999 has been that rights under personal pension arrangements do not in general vest in a trustee in bankruptcy. Nevertheless, as has always been the case with occupational pensions, provision has been maintained for an IPO to be made in certain circumstances. It may be thought that the parenthetical words in section 310(7) were required in order to ensure that the position under personal pension policies did not diverge from that applicable to occupational pension schemes. There was to be no question of the 1999 Act going so far as to protect from creditors all income of a bankrupt even where such income stems from a pension. This was also the case as regards occupational pensions under the 1995 Act: see section 91(4).”

The CA set out the explanatory notes in the appropriate sections of the WRPA which explained what the Act was trying to achieve.

And finally, they quote s311 IA which imposes on the bankrupt a duty to assist the Trustee in the carrying  out of his functions.

The CA Judgment – the Answer

Gloster LJ set out the question as follows:

Whether section 333(1), read in conjunction with section 310, of the Insolvency Act enables a trustee in bankruptcy to require a bankrupt, who has reached the age at which he is contractually entitled to draw down or “crystallise” his pension (but has not done so), to elect to do so, so that the trustee may apply for an IPO under section 310 in relation to the funds drawn, or to be drawn, down;

And the two possible arguments:

i) The first is to argue that, even on the assumption that the bankrupt’s contractual rights to draw down or crystallise his pension after he has reached a certain age do not fall within the description of any “payment in the nature of income ……. to which he from time to time becomes entitled” for the purposes of section 310(7), nonetheless the trustee is entitled under section 333(1) to require the bankrupt to exercise such rights and elect to receive payment. The argument would run that, since one of the functions of the trustee is to obtain an IPO in respect of income that is potentially receivable by the bankrupt during the three-year period so as to satisfy creditors’ claims, the trustee is entitled to require the bankrupt to draw down income from his pension for the purpose of enabling the trustee to carry out his functions under section 310(7) in relation to the income payments under the pension once drawn down.

ii) The second approach (and this was the way in which Mr Davies [for the trustee] principally presented his argument before us, and indeed how the judge dealt with the case at first instance) is to argue that the italicised wording in section 310(7):

“For the purposes of this section the income of the bankrupt comprises every payment in the nature of income …… to which he from time to time becomes entitled,”

meant that, once a bankrupt pension holder had reached the required age, and was accordingly entitled to draw down his pension on request, his vested right to elect to do so, and the subsequent payments which would be made to him by the pension provider, were within section 310(7) and therefore were subject to the IPO procedure. It accordingly followed that, either under section 363(2), section 333 or the general jurisdiction of the court, the bankrupt could be compelled to elect to draw down his pension.

She doesn’t take any time to make up her mind between them:

In my judgment neither of these arguments is correct.

She wastes no time on the first argument – that the Trustee has functions in relation to property that is expressly excluded from the bankrupt’s estate.

It would drive a coach and horses through the protection afforded to a bankrupt’s pension rights by the Insolvency Act and pension legislation if a trustee were able, in effect, to require a bankrupt to make the entirety of his pension available for satisfaction of his creditors’ claims, by the simple expedient of a request under section 333 or a court order under section 363(2), thereby converting excluded property into “income”.

The fact that before bankruptcy pension rights might be accessible to a creditor – as in Blight v Brewster – merely shows the difference caused by an bankruptcy order. They don’t support the argument that the same rules could apply after an order.

The second argument takes more consideration. In essence the question is whether a right to elect to take income is equivalent to payment of the income, under s310(7) IA. But again, the result is the same. Note the italicised words:

The contractual right to elect, by service of a notice on the pension provider, to receive a lump sum or income payment, in the pension context is very different in character from an actual payment or the right to receive that actual payment, once the relevant election has been made. Indeed, normally, until well after the relevant election has been made, there will be no legal right as such to receive any specific payment, particularly in the case of a SIPP, where the fund may comprise assets which are not readily marketable. In the context of section 310, payment and payment to which he from time to time becomes entitled mean just that; payment does not mean a chose in action or a bundle of rights which, if and when exercised, and only then, give rise to the making of a payment or the entitlement to a payment. The language of section 310 is addressed to capturing income; there is no suggestion in the language that it is conferring a power on the court to require the bankrupt to exercise a power – in relation to property expressly excluded from the bankruptcy estate – to generate income.

She points out that the legislation draws a clear distinction between payments under a pension scheme and rights under a scheme. And she concludes:

As with the first argument referred to above, it would drive a coach and horses through the protection afforded to private pensions and rights thereunder by virtue of section 11 of the WRPA, if, by the simple expedient of an application for an IPO, a trustee (subject to satisfying the court that the amount drawn down could be characterised as income and that the IPO did not reduce the bankrupt’s income below what appeared to the court to be necessary for meeting his and his family’s reasonable domestic needs) could in effect obtain payment of the entirety (or almost the entirety) of a bankrupt’s pension fund into the bankrupt’s estate so as to meet the claims of his creditors, notwithstanding that the pension was not in payment. In my judgment, Parliament has decided to draw the balance between, on the one hand, the interests of the State in encouraging people to save through the medium of private pensions (so that in old age or infirmity they will not be a burden on the resources of the State), and, on the other, the interests of creditors in receiving payment of their debts, by the mechanism of sections 342A to 342C of the Insolvency Act which enable a trustee to claw back excessive pension contributions made by the bankrupt where such contributions have unfairly prejudiced the bankrupt’s creditors.

And she decides that Raithatha was wrongly decided, and that Horton was correct, and as the other members of the court (Sir Stanley Burton and McFarlane LJ) agree, the appeal is dismissed.

And the Consequence Is?

Much relief all round. This is the position that everybody thought they were in from the WRPA in 1999 until 2012, and even after that Raithatha was widely disregarded as merely being one decision of a Deputy Judge. A policy decision had been takenin 1999 to protect pensions in the case of bankruptcies and this has been upheld.

A decision the other way would have opened the gates to large numbers of applications by IPs hoping to recover at least enough to cover their own fees from very modest pension funds. Many bankrupts have had some success in the past, and fail towards the end of their working lives, and these are the sort of people who have built up modest pensions, which would be most at risk.

No, a good decision all round.

Given the devastating logic of the CA decision the Trustee looks unlikely to try to appeal to the SC, but if I hear anything about this I will let you know.

As I’m a few days late (the decision was published on 7th October) there are many commenties available on the web. They range from the friendly and extremely practical piece on Debt Camel  to pieces on Lexis Nexis and by Eversheds and many other large firms. And there will be more. But if you’ve got this far you’ve probably read enough.