Fisher & Ors v Harrison & Ors

A pension-scheme forfeiture clause directed at dealings with benefits may be confined to future pension payments. It does not extend to an absolute right to a lump sum or instalments that had already become payable. Sections 91 and 92 of the Pensions Act 1995 protect future pension rights by preventing assignment and court orders restraining receipt, but do not invalidate dealings with payments already due. A consent order expressed to transfer all scheme benefits therefore included future instalments and was unenforceable to that extent. Because it formed a unitary agreement, the unlawful part could not be severed without making a new agreement. The consent and freezing orders were set aside, and the appeal was dismissed.

The appellants, as assignees of Oakstone Limited, held a judgment debt against Mr and Mrs Harrison arising from proceedings concerning warranties in a share sale agreement. Mr Harrison was a member of an occupational pension scheme established by his former company.

A freezing order was made in 1998. A consent order made on 30 May 2000 provided for the scheme benefits and proceeds to be paid to the appellants’ solicitors in discharge of the judgment debt. HHJ Kershaw QC held that the consent order activated rule 19(b) of the scheme rules and forfeited Mr Harrison’s benefits, subject to possible hardship payments. The appeal concerned the construction of rule 19(b), the scope of sections 91 and 92 of the Pensions Act 1995, and the construction and severability of the consent order.

Appeal dismissed. Lord Justice Mance gave the leading judgment, with which Lord Justice Latham and Lord Justice Aldous agreed.

1. Rule 19(b). The clause was a collection of provisions addressing different matters. Its language, context and purpose showed that the forfeiture mechanism in rule 19(b) was directed to dispositions or dealings affecting future pension provision. It therefore applied only to future pension payments. It did not forfeit absolute rights to the lump sum and pension instalments which had become payable before 30 May 2000. The reasoning was supported by In re Scientific Instrument Pension Plan Trusts [1999] Ch. 53 and Caboche v. Ramsay (1993) 119 ALR 215 (paras [20]–[25]).
2. Statutory protection. The court treated sections 91 and 92 of the Pensions Act 1995 as having the same general ambit because they used effectively the same trigger wording. Read with section 124(2), the provisions concerned future pension rights and did not extend to an absolute right to a sum already due for payment. The Act therefore did not invalidate an order confined to such matured rights. The distinction was consistent with the discussion of the Goode report in Krasner v. Dennison [2000] 3 AER 234 (paras [23]–[26]).
3. Consent order. The consent order covered all benefits and proceeds under the scheme. It was not confined to sums already payable and was not limited to the amount required to discharge the judgment debt. Its general wording, the background of the freezing order and the course of the proceedings supported that construction. So far as it embraced future pension instalments, it recorded an unenforceable assignment contrary to section 91(1)(a) and implicitly restrained receipt of those instalments contrary to section 91(2) (paras [27]–[34]).
4. Severance and orders. The consent order recorded a unitary agreement. Removing future benefits would alter its scope and intention and create a new agreement for the parties. It could not therefore be severed. The freezing order and consent order were set aside. A fresh freezing order was substituted in respect of sums to which Mr Harrison had acquired an absolute entitlement as at 30 May 2000. Any discretion under rule 19(b) to make hardship payments from forfeited future benefits was for the trustees. The appellants’ claim to enforce the consent order failed, with the costs directions set out in the order (paras [35]–[40]).

1. Court of Appeal (Civil Division), [2003] EWCA Civ 1047 (29 July 2003): appeal dismissed. The consent order and freezing order were set aside, with a fresh freezing order substituted.
2. Queen’s Bench Division, Liverpool District Registry: HHJ Kershaw QC, judgment dated 31 January 2002 and order dated 8 March 2002. The judge held that rule 19(b) forfeited Mr Harrison’s benefits, subject to possible hardship payments.