Storm Funding Ltd, Re

Contribution notices issued under sections 47–50 of the Pensions Act 2004 are not subject to an implied aggregate cap equal to the shortfall sum. Each notice may specify the whole or a specified part of that sum. Where notices are issued to several qualifying targets for the same non-compliance, the aggregate sums specified and recovered may exceed the shortfall sum.

The statutory maximum applies to each individual notice. The optional joint and several liability provisions do not create a general aggregate limit. Nor does the relationship between contribution notices and a section 75 debt establish that the liabilities are the same debt.

The administrators of 14 insolvent Lehman group companies sought directions concerning potential liabilities to the Lehman Brothers Pension Scheme. The principal question was whether contribution notices issued after non-compliance with a financial support direction could specify, or permit recovery of, an aggregate amount exceeding the shortfall sum under section 48 of the Pensions Act 2004.

The parties also agreed that, in the circumstances, the shortfall sum was limited to the certified section 75 debt owed by Lehman Brothers Limited. A separate question concerning the reasonableness of proposed financial support arrangements was withdrawn.

1. The application was determined against the administrators and Lehman Brothers Holdings Inc. On the true construction of sections 47–50 of the Pensions Act 2004, contribution notices may be issued to more than one qualifying target in respect of the same non-compliance, specifying in aggregate more than the shortfall sum. An aggregate amount exceeding that sum may also be recovered.
2. Section 48(1) limits the sum specified in each contribution notice to the whole or a specified part of the shortfall sum. It does not impose an aggregate cap. The statutory scheme expressly contemplates separate notices to several persons and requires each notice to identify the other notices and their specified sums.
3. The financial support direction regime is materially wider than the section 75 debt regime. Financial support may secure ongoing scheme support and may cover contributions, section 75 liabilities and liabilities arising otherwise. Contribution notices respond to non-compliance with a financial support direction, not merely to non-payment of a section 75 debt.
4. Sections 49(7)–(9) provide a specific, optional mechanism for joint and several liability where corresponding notices specify the same sum. Those provisions do not support implying a general aggregate limit, particularly where notices specify different sums or are not made joint and several.
5. Section 50(6), which treats payments under contribution notices as reducing the section 75 debt, does not establish that the liabilities are the same debt. The statutory regimes differ in their creation, discretionary character and assessment. The principle against double recovery therefore did not require the proposed aggregate cap.
6. The separate question concerning the reasonableness of financial support arrangements was withdrawn. The agreed answer to the shortfall-sum question was that, in the circumstances, it was limited to the certified section 75 debt.