Debtor ordered to draw down personal pensions to pay creditor

In problem debt cases, the courts may be willing to order judgment debtors to draw down pension funds to pay creditors. Our debt recovery team consider recent developments.

The High Court has granted an order which requires a judgment debtor to draw down his pension fund on reaching the age of 55 and to pay those sums direct to the creditor.

Lindsay v O’Loughnane [2022] EWHC 1829 (QB)

In 2010, the defendant, Mr O’Loughnane, was ordered by the High Court to pay the claimant, Mr Lindsay, £565,000 plus interest and legal costs. Mr Lindsay had recovered some of the judgment debt, but a significant amount remained outstanding.

Mr Lindsay applied for an order requiring Mr O’Loughnane to make a written request to each of his three pension providers that they draw down his pension fund on his normal retirement date (or age 55, if later) and pay the sums direct to Mr Lindsay.

The High Court considered principles developed in similar cases, and determined that:

  • It had the power to make the order under s 37(1) of the Senior Courts Act 1981.
  • There was no reason why an order could not be made in respect of the entire pension funds if Mr O’Loughnane was able to access them at age 55.
  • It was not a concern that the order would not have immediate effect.

Applying the above to the particular facts of this case, the High Court said:

  • The starting presumption is that the court should assist the judgment creditor to recover the debt due to them. Delay in doing so was not a valid objection.
  • There remained a substantial judgment debt outstanding.
  • It was just, equitable and convenient to make the order.

Practical implications

The decision follows hot on the heels of a similar ruling in Brake v Guy [2022] EWHC 1746 (Ch). These cases reflect a wider justice policy that debtors should not be allowed to hide their assets in pension funds when they have a present or future right to withdraw those monies and pay their creditors.

Help and advice

If you would like advice and assistance in relation to debt collection, please contact our debt recovery team. The team recovers commercial and consumer debts of all sizes for businesses, organisations and individuals. We are transparent on costs and are willing to work on a fixed fee basis in many cases.

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