A note on MCP Pension Trustees Ltd v Aon Pension Trustees Ltd [2010] EWCA Civ 377
A trustee is under a strict obligation to distribute the trust assets in accordance with the trust. In many cases, this is simple, as where one person is entitled to the distribution. In other cases, as where the trust requires a distribution among a class comprising many persons, it can be complicated to ensure that each person in the class is identified and provided for. Winding up an occupational pension scheme is one example, another example is a trust to distribute to the grandchildren of a particular person. In each case the problem is to ensure that all the members of the class are identified; for if not, and the trustee overlooks a beneficiary, it will (in principle) be liable to compensate the overlooked beneficiary. One way to control this risk is by advertising, but this did not succeed in the MCP case, and in the Isle of Man may not be available in relation to trusts which do not relate to land.
In MCP the claimant was the trustee of a final salary occupational pension scheme (the “scheme”). The defendant provided administration services to the scheme. In about 1996 the trustee agreed to a transfer of 32 members from another scheme together with the relevant assets. By an error which the trustee contended was due to the negligence of the defendant, the 32 transferees were not recorded as being members of the scheme. The trustee wound up the scheme in 2003 without providing for the 32 transferees. It was accepted for the purposes of the hearing that the trustees had genuinely forgotten of the existence of these members. During the wind-up of the scheme, the trustees undertook an extensive advertising campaign for claims in accordance with section 27 of the Trustee Act 1925 (the Isle of Man equivalent being section 26 of the Trustee Act 1961). None of the 32 transferees responded to the advertising. It was found on investigation that the trustee was personally liable to the 32 transferees, and it paid compensation to them. Fortunately, the trustee had purchased insurance against this risk, which funded the compensation. The trustee acting at the behest of the insurers sued the defendant administrators of the scheme for negligence. The defendants denied liability. The preliminary issue for determination was whether by virtue of section 27 of the Trustee Act 1925 the trustee had had no liability to compensate the 32 transferees at all.
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