Sarah Wolffe QC secures major win for Pension Trustees with a £20 million claim in a Scottish Liquidation
28 January 2011
The Insolvency Judge, Lord Drummond Young, described the case as combining 'great intellectual interest with practical importance'.
The Ben Line Steamers Limited ('the Company') went into Liquidation in 2000. At the date of the liquidation, the Company had been participating employers in a pension scheme administered by the Trustees of the Merchant Navy Officers Pension Fund ('the Trustees').
The Trustees exercised powers of amendment under the Scheme on two occasions, both postdating the date of liquidation, which resulted in their submission of a claim in 2006 in excess of £20 million. That raised the question, which Lord Drummond Young characterized as 'the fundamental question', of whether the Trustees' claim based on the twice-amended Scheme fell within the meaning of a 'contingent debt' so as to be recoverable.
The Liquidator resisted this contention (ultimately, unsuccessfully), relying on a more restricted definition of 'contingent debt' as found in English case law and on the fact that the amendments to the Scheme postdated the date of liquidation and thus rendered the Trustees' claim impermissible on a variety of grounds.
Lord Drummond Young found in favour of the Trustees on all issues. The case is important in upholding a Scots law approach to the characterization of a contingent debt and in addressing fundamental public policy issues underpinning Scots insolvency law. The case is also important as the first express application in a Scottish insolvency case of the 'hindsight principle' as well as consideration of the public policy exclusionary rule stemming from the case of British Eagle International Airlines Ltd. Lord Drummond Young provided the directions sought on 21st January 2011, although the precise quantification of the Trustees' claim is still to be finalized.
Sarah Wolffe QC of Axiom Advocates appeared for the Pension Trustees.
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