Malcolm vMackenzie & Ors

Article 14 does not require equal treatment where the pension rights being compared are legally different. Before the protection introduced by the Welfare Reform and Pensions Act 1999, contractual pension rights were property which could vest in a trustee in bankruptcy. Rights under an occupational pension scheme with an effective bankruptcy forfeiture provision were treated differently because they arose within a trust structure. The difference was therefore based on the nature of the rights, rather than employment status. Convention rights may inform statutory interpretation only where the statutory wording is reasonably capable of the proposed construction; they cannot justify rewriting the Insolvency Act 1986.

The appellant was a self-employed graphic designer who became bankrupt after entering into a retirement annuity contract. His trustee in bankruptcy sought to realise the contractual benefits for creditors. The High Court dismissed his application and refused permission to appeal, holding that the Human Rights Act 1998 did not apply to the relevant pre-commencement events and that the difference between contractual and occupational pension rights was not discriminatory.

Permission to appeal was granted only on the Article 14 issue. Before the Court of Appeal, the appellant sought to add further statutory-construction grounds, but permission was refused. The central question was whether the pre-existing treatment of contractual pension rights, compared with rights under a trust-based occupational scheme, was incompatible with Article 14 read with Article 1 of the First Protocol.

Appeal dismissed. Chadwick LJ gave the leading judgment, with Tuckey and Mummery LJJ agreeing. Permission to amend the appellant’s notice and permission to appeal on the additional grounds were refused.

1. The parties accepted that the Human Rights Act 1998 could not be relied upon in relation to acts occurring before 2 October 2000, since section 22(4) did not apply. Accordingly, sections 3(1) and 4 had no application. The conclusion was supported by Wilson v First County Trust (No 2) [2003] UKHL 40. Convention provisions could nevertheless be considered as an interpretative aid.
2. Under the law applying before section 11 of the Welfare Reform and Pensions Act 1999 came into force, contractual pension rights vested in the bankrupt at the commencement of bankruptcy were property for the purposes of the Insolvency Act 1986 and vested in the trustee under section 306. By contrast, an occupational pension scheme could contain a forfeiture provision under which the member’s rights were forfeited and equivalent benefits held on discretionary trust. The bankrupt then had no relevant property capable of vesting.
3. Article 14 was not a freestanding right. It operated only in relation to the enjoyment of another Convention right, here Article 1 of the First Protocol. The appropriate comparator was not employees generally, but employees in occupational schemes containing effective bankruptcy forfeiture provisions. The two groups did not possess the same or similar rights. The difference arose from the contractual or trust-based legal structure, not from status as self-employed or employed. There was therefore no discriminatory treatment.
4. Domestic legislation should be construed consistently with Convention obligations where its words were reasonably capable of bearing that meaning. Sections 283(1) and 436 of the Insolvency Act 1986 could not reasonably be construed to exclude contractual pension rights. The approach in Krasner v Dennison; Lawrence v Lesser [2001] Ch 76, approved in Rowe v Saunders [2002] EWCA Civ 242, supported that conclusion.

The appellant did not pursue the permitted ground of appeal. The order below therefore stood, and the appeal was dismissed.

1. Court of Appeal (Civil Division): Malcolm vMackenzie & Ors [2004] EWCA Civ 1748. Appeal dismissed; permission to amend and to appeal on additional grounds refused.
2. High Court of Justice, Chancery Division: [2004] EWHC 339 (Ch). Application for injunctions dismissed and permission to appeal refused.