Independent Trustee Services Ltd v Hope & Ors [2009] EWHC 2810 (Ch) (10 November 2009)

Independent Trustee Services Ltd v Hope & Ors [2009] EWHC 2810 (Ch) (10 November 2009)

The trustee may not lawfully exercise its discretionary power to buy out benefits for certain members in a manner designed to take advantage of the PPF compensation regime, as this would be an exercise of power for an improper purpose. The existence of the PPF is not a relevant factor for the trustee to consider in exercising its powers. The proposal would improperly prejudice the PPF and other members, and is not permitted under the scheme rules or trust law principles.

Citation
[2009] EWHC 2810 (Ch)
Parties
Claimant: Independent Trustee Services Limited; First Defendant: Paul Hope; Second Defendant: The Board of the Pension Protection Fund; Third Defendant: The Pensions Regulator; Fourth Defendant: Alan Slater
Jurisdiction
England and Wales
Judgment Date
10 November 2009
Procedural Posture
Part 8 Claim for Directions (trustee Application) / First Instance Judgment
Outcome
Claim dismissed (directions refused)
Legal Topics
Exercise of Trustee Powers, Pension Protection Fund (ppf) Regime, Improper Purpose Doctrine, Buy Out of Pension Benefits, Statutory Interpretation, Moral Hazard in Pensions
Trusts and Pensions Law Administrative Law Exercise of Trustee Powers Pension Protection Fund (ppf) Regime Improper Purpose Doctrine Buy Out of Pension Benefits Statutory Interpretation Moral Hazard in Pensions

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Parties

Independent Trustee Services Limited

Claimant

Paul Hope

First Defendant

The Board of the Pension Protection Fund

Second Defendant

The Pensions Regulator

Third Defendant

Alan Slater

Fourth Defendant

Procedural Posture

Part 8 Claim for Directions (trustee Application) / First Instance Judgment

Legal Issues

  1. 1 Whether the trustee may lawfully exercise its discretionary power to buy out benefits for certain members before PPF entry, in circumstances designed to take advantage of PPF compensation rules
  2. 2 Whether the existence of the PPF is a relevant factor for the trustee to consider in exercising its powers
  3. 3 Whether the proposed exercise of the power would be for an improper purpose

Ratio Decidendi

The trustee may not lawfully exercise its discretionary power to buy out benefits for certain members in a manner designed to take advantage of the PPF compensation regime, as this would be an exercise of power for an improper purpose. The existence of the PPF is not a relevant factor for the trustee to consider in exercising its powers. The proposal would improperly prejudice the PPF and other members, and is not permitted under the scheme rules or trust law principles.

Court Disposition

Claim dismissed (directions refused)

Orders

  • The Trustee is not permitted to implement the proposed buy-out of benefits in the manner described.
  • The existence of the PPF is not a relevant factor for the Trustee in exercising its discretionary powers under the Scheme rules.