In MCP Pension Trustees Ltd v Aon Pension Trustees Ltd (June 2009) Jeremy Cousins QC, in the High Court, held that the trustee of a pension scheme was liable to former members of the scheme who were overlooked when the scheme was wound-up. The Court further held that section 27 of the Trustee Act 1925 did not protect the trustee from liability even though the trustee had carried out an “extensive advertising campaign calling for former members of the scheme to notify it of claims”.
Under section 27 of the Trustee Act 1925, trustees distributing the assets of the trust will not be liable to any person that they overlook if the trustees advertised their intention to distribute the assets and requested interested persons to contact them. However, section 27 will not protect trustees against a “claim” of which they had “notice”.
In this case, the parties disagreed on whether the trustee on the facts could be treated as having notice of the former members’ claims. They further disagreed on whether the overlooked scheme members’ accrual of benefits amounted to a claim, in respect of which the trustee could have relevant notice under section 27.
Jeremy Cousin QC (sitting as a deputy High Court judge) held that the trustees did have notice of a relevant claim and could not rely on the section 27 protection. The reasons given in his judgment are as follows:
- Section 27 was broad enough to protect pension scheme trustees (previously there had been judicial authority that section 27 applied in a pensions context);
- However, on the facts of the case the trustee knew of the former members’ claims in 1996 and so had “actual notice” within the meaning of section 27. Therefore they could not rely on the protection under section 27;
- The trustee also had notice under section 27 because their agent’s (the scheme’s administrator) “knowledge” was to be attributed to them;
- Notice of a claim is not only determined at the time of distribution. Under section 27 trustee can be held liable if they have notice of a claim no later than the time of distribution – on the facts they had such notice. They will not be liable if they receive notice after that time;
- Notice is not negated if the trustee previously had notice of a fact and “forget” this fact (in this case there was a seven year gap between the trustees receiving actual notice and the scheme beginning to wind-up); and
- The former scheme members had a relevant claim of which the trustee had notice. To establish a claim under section 27 it is necessary to have “a right to maintain a claim” and the overlooked scheme members were always entitled to have the scheme correctly administered, and when the scheme went into wind up, to be paid out appropriate benefits.