MCP Pension Trustees Ltd v AON Pension Trustees Ltd

Trustee Act 1925, section 27 protects trustees only against claims of which they had no notice at the time of distribution. The section applies in principle to pension schemes. “Notice” is distinct from “knowledge”: a trustee may have notice of a fact even if it has been forgotten, and the categories of knowledge in Baden v Société Générale do not define the statutory test. A notice once given does not lapse. A beneficiary need not have an immediately payable benefit; a right to maintain a claim to correct administration or payment is sufficient.

The claimant trustee of the Maxwell Communication Works Pension Scheme sought damages from the defendant’s former administrator for allegedly failing to preserve records of members transferred into the scheme. During the winding-up, the claimant distributed the scheme assets after advertising under section 27 of the Trustee Act 1925. The transferred members did not respond, and provision was not initially made for them.

The parties agreed a preliminary issue: whether, on the true construction of section 27, the claimant was not liable to the transferred members. For that issue, it was conceded that the claimant had known of the transfer and the members’ identities in 1996.

1. Preliminary issue determined against the defendant. On the assumed facts, the claimant remained liable to the transferred members. The action was therefore not dismissed on the basis of section 27.
2. Section 27 applies in principle to occupational pension schemes. Its wording is sufficiently broad, and such schemes fall within the statutory description of trusts for sale of personal property.
3. Section 27(2) concerns “notice”, not “knowledge”. Knowledge is central to constructive trusteeship, where the issue is whether the recipient’s conscience is affected. The present case concerned express trustees and the statutory protection afforded by section 27. The Baden classifications of knowledge were therefore of limited assistance and did not restrict notice under the section.
4. The timing words in section 27(2) mean that the trustee must have had notice no later than the time of distribution. They do not create a doctrine of lapsed notice. Forgetting a fact previously brought to the trustee’s attention does not remove notice of it.
5. The claimant had actual notice because it was assumed to have known in 1996 of the transferred members and their identities. The administrator was also the claimant’s agent, so the administrator’s knowledge was imputable to the claimant, although that issue was unnecessary to decide because of the concession.
6. The transferred members had claims for the purposes of section 27. It was sufficient that they had a right to maintain a claim to have the scheme correctly administered and, on winding-up, to receive appropriate benefits.

First-instance determination of an agreed preliminary issue. No appellate history is stated in the judgment.