UK - Personal pension holders who were made bankrupt prior to May 29, 2000 face the prospect of losing their pension after the Court of Appeal confirmed that the Insolvency Act 1986 - insofar as it relates to a bankrupt's pension entitlement pre-May 2000 - is indeed compatible with the European Convention on Human Rights.
Law firm Halliwell Landau successfully represented a trustee in bankruptcy in the hugely significant Rowe v Sanders Court of Appeal case last week. The decision upholds earlier rulings in the cases of Kraser v Dennison and Lawrence v Lesser.
David Grant, Halliwell Landau’s London head of insolvency said: The Court of Appeal’s ruling means that anyone who held an annuity policy and was subsequently made bankrupt before May 29, 2000 will lose the proceeds of the policy to the trustee in bankruptcy in the absence of a valid forfeiture clause in the policy.
Here, the applicant, Mr Rowe, held an annuity policy under which he received monthly payments after he retired. The terms of the policy prevented it from being assigned or transferred to anyone else. Mr Rowe was then made bankrupt.
The trustee in bankruptcy received the proceeds of the annuity policy on the basis that the right to the proceeds were property that had formed part of Mr Rowe’s estate at the time of his bankruptcy and accordingly under section 306 of the Insolvency Act 1986 those proceeds should go to the trustee.
Mr Rowe appealed on the grounds that by holding that the right to the annuity was ‘property’ the authorities had not correctly interpreted the meaning of the word in the Insolvency Act 1986 and that the authorities were not consistent with the European Convention on Human Rights.”
The Court of Appeal dismissed Rowe’s appeal deciding that the trustee in bankruptcy was entitled to his annuity payments. Crucially the Court of Appeal also held that The Insolvency Act 1986 insofar as it relates to a bankrupt’s pension entitlement pre-May 2000, is compatible with the Convention and Human Rights Act 1998. Permission to appeal to the House of Lords was also refused.
Grant concluded: Although the Welfare Reform and Pensions Act 1999 provides some protection for personal pension holders made bankrupt after May 29, 2000 the Act is not retrospective and therefore the personal pension rights of those made bankrupt pre-May 29, 2000 are fair game for creditors.
David Grant and Michael Mulligan headed the legal team at Halliwell Landau.
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