Ilya Zubarev & Anor v Ratna Singh & Anor

A pension provider’s obligation to pay a judgment debtor does not arise merely because the debtor has a right to request a drawdown. A third party debt order therefore requires an identifiable debt due or accruing due when the order is made. An order under section 37 of the Senior Courts Act 1981 may first require the debtor to take steps to crystallise the entitlement. A third party debt order may then be sought when money is actually owed.

The statutory protection in section 91 of the Pensions Act 1995 applies directly to occupational pensions, not personal pensions. The court must nevertheless examine the relevant pension rules and the trustee’s discretion before making a section 37 order. In exercising discretion over enforcement, the court should give substantial weight to the enforceability of a judgment, particularly where the judgment resulted from fraud.

The claimants had obtained substantial judgments for fraudulent misrepresentation and breach of warranty against the defendants. They sought enforcement against personal pensions held with Mattioli Woods PLC and Phoenix Life Limited.

Master Davison had made section 37 orders requiring the defendants to take steps to draw down their pensions and had also made interim third party debt orders. The applications were transferred for consideration of whether the pensions attracted occupational-pension protection, whether the interim orders could properly be made, and whether final orders should be made.

The court held that the pensions were personal pensions. The central issues were the relevance of Manolete Partners Plc v White, the meaning of debt under CPR Part 72, and the proper exercise of discretion in the circumstances.

1. Section 37 orders. The court declined to review the existing orders under CPR rule 3.1(7) or its inherent jurisdiction. They had been sealed, implemented by the pension providers, and were not properly challenged. In the case of Phoenix, the pension had already been terminated and tax liabilities crystallised.
2. Occupational and personal pensions. The pensions were personal pensions. Section 91 of the Pensions Act 1995 had no direct application. The reasoning in Manolete Partners Plc v White, which concerned the statutory protection of occupational pensions, did not determine the issues concerning these personal pensions. Parliament could have extended section 91 to personal pensions but had not done so.
3. Relationship between section 37 orders and TPDOs. A right to elect to draw down a pension is not itself a debt. The section 37 jurisdiction is properly viewed as the primary enforcement mechanism. It may require the judgment debtor to take the steps necessary for a debt to arise. A TPDO may then be sought once the pension provider actually owes money to the debtor.
4. Trustee and scheme rules. Before making a section 37 order, the court must examine the pension rules, the nature of the fund, the steps required for payment, and the scope of any trustee discretion. The court must be satisfied that the position is analogous to the principle in Saunders v Vautier, so that the beneficiary can require the trustee to act in the relevant way. Those considerations did not require reconsideration of the existing orders.
5. Interim TPDOs. CPR Part 72 requires money or a debt owed at the time of the application. Speculative applications based on a debt that may arise after a drawdown are not permitted. The court respectfully declined to follow the obiter reasoning in Lindsay v O’Loughnane insofar as it supported an interim TPDO in anticipation of a future debt.
6. Although there were compelling merits in favour of enforcement, the interim TPDOs could not be made final on the basis on which they had been made because no debt existed when they were issued. By the hearing, debts had arisen pursuant to the section 37 orders. The court therefore invited submissions on whether the interim-order requirement could be waived and whether final TPDOs could properly be made in respect of those debts.

The judgment records earlier first-instance enforcement proceedings and orders made by Master Davison. No appeal from the section 37 orders was brought. The applications were transferred to the Chancery Division for determination of the pension and TPDO issues.