James Morgan QC successfully acts for trustee in bankruptcy in alleged “mistaken payment” claim (Elston v King [2020] EWHC 55 (Ch))

In late 2014, in compromise of a potential application for an income payments order, Mr Elston entered into an income payments agreement (IPA) with his trustee in respect of uncrystallised pension rights. Subsequently, in Horton v Henry [2017] 1 WLR 391 the CA held that – contrary to the decision of the High Court in Raithatha v Williamson [2012] 1 WLR 3559 – such pension rights did not constitute “income” for the purposes of an income payments order. Mr Elston therefore claimed that he had entered into the IPA under a mistake of law and was entitled to restitution of the resultant payments. In upholding the decision below, Marcus Smith J held that such a claim was barred because (1) Mr Elston had made a misprediction rather than a mistake, (2) as the IPA was a form of compromise it could not be avoided for mistake and (3) in any event the IPA remained possible to perform. In so holding, the Judge has closed the door to claims by bankrupts for repayment of pension contributions made pursuant to IPAs entered into during the period of uncertainty as to the status of uncrystallised pension rights.

A full Judgment on this case can be found here.