The principal issue for the Commercial Court to determine in the case of EBS Building Society v Thomas Hefferon and Michael Kearns, was whether the pension funds of the applicants or any payment thereunder to them in the future was amenable to attachment by way of appointment of a receiver by way of equitable execution.
The applicants are members of small self-administered occupational pension schemes, established under trust. They have not yet retired and no benefits have been paid out of their respective schemes. In March 2012, the bank succeeded in appointing a receiver by way of equitable execution over the applicants’ pension funds. The receiver’s appointment was appealed to the Commercial Division of the High Court.
McGovern J. accepted the applicants’ argument that for a receiver to be appointed by way of equitable execution the asset in question must be capable of assignment or not otherwise inalienable. He also accepted the fact that the rules of the pension funds in question expressly provided that the benefits payable from them were not capable of assignment.
In deciding for the applicants McGovern J. confirmed that the nature of the trust underpinning the pension funds was irrevocable and the award of any benefits was at the discretion of the trustees. In addition, the fact that the rules of the pension funds prohibited the assignment of any benefits (and that such a rule was also a pre-condition for Revenue approval under the Taxes Consolidation Act 1997), was persuasive. McGovern J. concluded that the pension funds of the applicants were not amenable to attachment by way of appointment of a receiver by way of equitable execution.
Given that the features of the pension schemes in question in this case are common to the vast majority of Revenue approved occupational pension schemes in Ireland, this decision is of great interest to scheme members, trustees and practitioners. An appeal was lodged in this case by the Bank but has now been withdrawn.