Malcolm v MacKenzie & Anor

Rights under a retirement annuity contract are assets which vest in a trustee in bankruptcy under the Insolvency Act 1986, subject to later statutory protection. Section 11 of the Welfare Reform and Pensions Act 1999 applies only to bankruptcy orders on petitions presented after its commencement and has no retrospective effect.

The limited retrospective operation of section 22(4) of the Human Rights Act 1998 does not generally permit a bankrupt, bringing an application within bankruptcy proceedings, to challenge pre-commencement acts. The court cannot use its powers to direct a trustee in bankruptcy to achieve a result which the Human Rights Act itself does not provide.

The applicant entered into a retirement annuity contract in 1986 while self-employed. He was made bankrupt in 1996, and the contract vested in his trustee in bankruptcy under the Insolvency Act 1986. After the applicant reached retirement age, the trustee sought to realise the pension benefits for creditors.

The applicant argued that the trustee had no interest in the pension, that section 11 of the Welfare Reform and Pensions Act 1999 protected it, and that the difference between occupational pension schemes and personal pension arrangements was discriminatory under articles 14 and 1 of the First Protocol to the European Convention on Human Rights. The central issues were the effect of section 11, the scope of section 22(4) of the Human Rights Act 1998, and the substantive discrimination argument.

1. Application dismissed. The trustee in bankruptcy was entitled to realise the benefit of the retirement annuity contract. The applicant’s agreement concerning a property did not transfer the pension or the rest of his bankrupt estate.
2. Under the Insolvency Act 1986, the benefit of a retirement annuity contract, including the lump sum and annuity, was property vesting in the trustee in bankruptcy. The position differed from an occupational pension scheme containing a forfeiture provision, where no asset vested in the trustee.
3. Section 11(1) of the Welfare Reform and Pensions Act 1999 excluded rights under an approved pension arrangement only where the bankruptcy petition was presented after the section came into force. The applicant’s 1996 bankruptcy was therefore outside the provision. The trustee’s delay did not extinguish his right to realise an asset already vested in him.
4. Section 3 of the Human Rights Act 1998 operated prospectively. Section 22(4) made section 7(1)(b) available retrospectively only in proceedings brought by or at the instigation of a public authority. After a bankruptcy order, the relevant proceedings are the particular application within the bankruptcy proceedings. An application brought by the bankrupt himself was not brought at the instigation of the trustee in bankruptcy on these facts.
5. The vesting of the applicant’s rights was a completed divestment occurring before the Human Rights Act came into force. The continuing consequences did not convert it into a continuing act. The court’s powers to give directions under the Insolvency Act 1986 could not be used to overcome the temporal and subject-matter limits of the Human Rights Act.
6. In any event, the substantive article 14 challenge would fail. The appropriate comparator was not employees generally, but employees participating in occupational schemes containing bankruptcy forfeiture provisions. The difference resulted from the legal structures of the schemes and, even if the legislation were incompatible, no relevant unlawful act by a public authority was established.

First-instance decision. No prior appellate decision is stated in the judgment.