Home Information Cases Denny v Yeldon (1995)

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Denny v Yeldon (1995)

Summary

Company administrators' powers over the company's pension scheme to appoint and remove fund trustees.

Facts

A company's pensions fund trust deed provided for five trustees, three appointable and removable by the company and two appointable and removable by the members of the fund. The plaintiff was a company appointed trustee. On the company going into administration, an administration order under the Insolvency Act 1986 appointed the first and second defendants as administrators to approve a voluntary arrangement and realise the company's assets. Under s.57C Social Security Pensions Act 1975 the administrators were required to satisfy themselves as to the independence of at least one of the trustees and if they were not so satisfied to appoint an independent trustee. The administrators entered into a deed with the company amending the trust deed to reduce the number of trustees to two and vesting the power of appointment and removal of trustees in the trustees and removing all trustees except the plaintiff. The third defendant was appointed as an independent trustee. By the end of 1992 there were no employees of the company and the scheme was fully paid up because there were no members in pensionable service. The third defendant resolved the scheme should be wound up. The administrators purported to appoint the fourth defendant as the independent trustee in place of the third defendant on the ground that the third defendant's independence was in question. On the plaintiff applying to the court as to: (1) whether the amending deed was valid and (2) at what moment reg.4(2) Occupation Pension Schemes (Independent Trustee) Regulations 1990 disapplied s.57C so that the administrators had no power to replace the third defendant.

Held

(1) The powers of administrators under the 1986 Act included any power exercisable by the directors prior to the administration order and the power to amend the trust deed was included. The amendment was valid. (2) Regulation 4(2) disapplied the power to replace an independent trustee under s.57C as soon as the pension scheme was fully paid up and the company had no further trust connection with the scheme's management. By the end of December 1992 these events had occurred and the administrators no longer had power to remove and replace the third defendant. The removal was invalid and the third defendant continued to be a trustee.

Chancery Division
Jacob J
Judgment date
7 March 1995
References

(1995) 3 All ER 624 : (1995) 1 BCLC 560 : [1994] OPLR 115 : [1995] PLR 37

Practice areas