Unlike an order for the transfer of property, a pension sharing order cannot be implemented by the parties themselves. It must be implemented by the trustees or managers of the pension scheme. What happens if they are unable to implement the order when requested to do so?
The recent Scottish Sheriff Court case G AGAINST G dealt with just this issue. I suspect that it is not the first time that it has happened.
Now, before I proceed I should say a few words about the judgment in the case. I am not a Scottish lawyer, and obviously the judgment uses Scottish legal terminology. I believe I have understood the judgment, but I did not find it entirely straightforward to follow. It may just be my ignorance, but it seems to me that the Scottish legal system may have an even greater penchant for legal jargon and Latin phrases than the English system. Which seems strange, because in many ways the Scottish family justice system is considerably more advanced than the English one.
Anyway, to the case. As I’ve said, it concerned the implementation of a pension sharing order. The order provided for the husband’s shareable pension rights in the wonderfully named ‘Hornbuckle Mitchell Self-Invested Personal Pension’ be subject to a pension sharing order for the benefit of the wife in the sum of £120,000, with interest at the rate of 8% per annum from one month after the date of decree until the date of transfer of the appropriate pension credit into a qualifying scheme for the wife. In short, the pension trustees had to transfer £120,000 from the pension fund, into a pension scheme in the wife’s name.
There was just one problem. As the trustees explained, there was not enough liquid cash within the fund to make the transfer. As a result, the trustees could not comply with the order. The transfer was therefore ‘queued’ until June 2018, by which I presume that the trustees would expect by then to be able to implement the order.
Needless to say, the wife was not very happy about this turn of events. Accordingly, she asked the court to order the husband to execute a mortgage in her favour in respect of two properties he owned, with the aim, it seems, to persuade the husband to put further funds into the pension scheme, so that the pension sharing order could be implemented.
The court was not prepared to agree to this. By completing the relevant documents the husband had done all that was required of him to allow the pension trustees to implement the order. The order did not require him to implement the order – that requirement lay with the trustees.
Further to this, the husband had already separately been ordered to pay a lump sum to the wife. Just as in England, the order was final. It was not therefore possible to order him to make a further lump sum payment.
Accordingly, the wife’s application was misconceived. As the judge said, she was seeking to overcome a difficulty which had arisen in the course of seeking to have her pension sharing order implemented, but this was not the appropriate avenue to cure that problem. Her application was therefore dismissed.
As the judge also said, this was an unusual application. However, I wonder how unusual it is for pension trustees not to be able to implement pension sharing orders, at least at the time they are requested to do so (the order should have been implemented within four months of the trustees receiving it)? The moral is clear: if you are seeking a pension sharing order, first make sure that it can be implemented.
If you want to read the full report of the case, you can find it here. Just be aware of the Scottish version of legal jargon, and have your Latin dictionary available.
Excellent result especially the last sentence:
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” I shall find the pursuer liable to the defender in the expenses of the action.”
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Which is as it should be. In England I would expect the same result on the same facts – but the weak-minded rule of not ordering costs would mean that the husband was further punished. In Scotland the wife is made to bear the consequences of her action. I hope there is some process by which he can make sure that when they make the payment the trustees pay the expenses “off the top” to him – he shoud not be left out of pocket. Do you agree, John?