UK - A pension scheme has lost its battle to force a bankrupt trustee to repay £437,000 of bad investments which cut members' benefits by half.
The pensions ombudsman ordered Robert Woodland-Ferrari to make recompense to the UCL Group Retirement Benefits Scheme.
Woodland-Ferrari, though, refused to pay after declaring himself bankrupt. And his refusal has been upheld by the High Court.
UCL had argued that a bankrupt could not be discharged from bankruptcy debts incurred in respect of any fraudulent breach of trust. But the court pointed out that under the Insolvency Act 1986 a bankrupt is released from all his debts provided they are not connected with fraud.
Simmons & Simmons solicitor Kirsty Bartlett said: “The court held that though the applicant had been in ‘wilful default’ in making investments in breach of trust, it did not necessarily involve fraud.”
Ashurst Morris Crisp senior associate John Sabel added: “The outcome of the case may have been different if the claim had set out details of the alleged fraud, or if the decision of the pensions ombudsman had reflected the precise words of the Insolvency Act.”
But Sabel said that there was no reason why the ombudsman should have mirrored the Insolvency Act in his determination, because he was answering the question of maladministration not fraud.
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