Order made today in high court against fraudster son of renowned Mayfair art dealer
CANDEY achieves a resounding victory on behalf of four individual investors in enforcing a £3.2m judgment in fraud against the pension interest of former London art dealer, Matthew Green.
In an innovative and hitherto little used mechanism to aid enforcement, litigation law firm CANDEY successfully persuaded the High Court to use its powers against a fraudster. Andrew Hochhauser QC, sitting as a Deputy High Court Judge, today ordered that CANDEY be granted powers of delegation to revoke enhanced protection and draw down on an occupational pension scheme worth millions to obtain access to funds to satisfy a judgment debt against fraudster Matthew Green.
In 2017, Matthew Green, son of renowned art dealer, Richard Green, fraudulently obtained loans from peer-to-peer lender, FundingSecure Ltd (“FSL”) (now in administration), leaving 1,393 individuals who had invested in the platform out of pocket. Mr Green dishonestly purported to secure the loans against artwork he either did not own or had already pledged or sold to third parties. On 29 January 2019, FSL obtained summary judgment in deceit and dishonest breaches of contract against Mr Green for over £3.2m (the “Judgment”). In February 2019, Mr Green was made bankrupt. However, as the Judgment debt arose due to Mr Green’s fraud, it survived bankruptcy by virtue of s.281(3) of the Insolvency Act 1986 ("Discharge does not release the bankrupt from any bankruptcy debt which he incurred in respect of, or forbearance in respect of which was secured by means of, any fraud or fraudulent breach of trust to which he was a party"). CANDEY’s clients, four of the investors in the loans made by FSL to Mr Green, took an assignment of the Judgment debt in March 2020 from FSL’s joint administrators and, instructing CANDEY on a contingency basis, sought to enforce the Judgment debt against Mr Green’s only known asset, his interest in the occupational pension scheme, Richard Green (Fine Paintings) Executive Pension Scheme (the “Pension Scheme”), worth millions of pounds.
In June 2021, the Claimants made an application in which they sought relief analogous to that obtained in Blight v Brewster [2012] EWHC 165 (Ch) (in which the Court held that debtors should not be allowed to hide their assets in pension funds when they had a right to withdraw moneys needed to pay their creditors (see [70])). In particular, the application sought the right to effectively step into Mr Green’s shoes and elect to draw down on the Pension Scheme upon Mr Green turning 55. Like in Blight v Brewster, the Claimant’s intended initial draw down was of a Pension Commencement Lump Sum (“PCLS”), being a tax-free lump sum typically calculated as 25% of the total pension up to the applicable lifetime allowance. Such a request was largely uncontroversial in light of the decision in Blight v Brewster where such an order was made (although Mr Green’s Counsel argued, unsuccessfully, that pensions are of a special category of asset, particularly post-bankruptcy, such that powers of execution over pension rights would be contrary to public policy).
The application further sought an order that Mr Green delegate to CANDEY the right to notify HMRC that he no longer wished to rely on his Enhanced Protection, in order to provide access to a Lifetime Allowance Excess Lump Sum (“LAELS”) worth in excess of £1m. Such a lump sum would be subject to a 55% tax charge. The principal objection made by Mr Green was that this revocation was an impermissible extension to the principle underlying Blight v Brewster as the power in question was said not to be tantamount to ownership or property, rather it sought to alter the tax treatment of property. It was said that whilst creditors have a right to payment, they have no right to make the debtor incur greater liabilities so that they can be paid. Matthew Green through his lawyer sought to argue that he was being persecuted by CANDEY’s clients to the detriment of his well-being. The Judge made clear that he would not entertain such baseless arguments.
Judge Andrew Hochhauser QC found that the Court had jurisdiction to make the orders sought. He did not deem the revocation of the Enhanced Protection to be an “impermissible extension” of Blight v Brewster. Specifically, he found that the act of revocation should not be viewed in isolation but as an “integral part” of the means of obtaining access to Mr Green’s property, his LAELS. Further, no public policy ground could be identified as impeding the court’s jurisdiction, under s.37(1) of the Senior Courts Act 1981, from being exercised. On the contrary the Judge was of the view that the overriding public policy consideration was that contained in s281(3) of the Insolvency Act 1986 such that “fraudsters should not prosper”.
Finally, Judge Hochhauser QC found it to be “just, equitable and convenient to make the orders sought” with “compelling reasons” for the Claimants to gain access to Mr Green’s multi-million-pound pension. The fact that Mr Green was already a discharged bankrupt, had not sought to abuse the system and that his interest in the pension scheme was distinct from the proceeds of his dishonesty did not outweigh the Claimants' rights to recover that which they are owed.
Paragraphs 6-7 of the order of Judge Hochhauser QC dated 8 March 2022 (the "Order") provide that, amongst other things, Mr Green shall delegate to CANDEY his powers to:
notify HM Revenue & Customs that he is revoking his Enhanced Protection concerning his lifetime allowance;
notify to HM Revenue & Customs that he is seeking Individual Protection 2016; and
elect to draw down on his pension under the Richard Green (Fine Paintings) Executive Pension Scheme upon reaching the age of 55.
Paragraph 8 of the Order gives CANDEY the authority to elect that Mr Green draws down on his pension, by way of taking a Pension Commencement Lump Sum, Lifetime Allowance Excess Lump Sum and/or any other pension, by providing notice in writing to the Trustees of the Pension Scheme (who, as a collective, was an interested party in the proceedings).
Mr Green, whose family had paid his legal costs for the hearing, was ordered to pay the Claimants' costs of the application summarily assessed in the sum of £46,506.36 (inclusive of VAT) and his application for permission to appeal the Order was refused.
If Mr Green disobeys the Order he may be committed to prison.
This case is significant as it is an enforcement action against Mr Green post-bankruptcy, unlike in Blight v Brewster, and where Mr Green’s only asset was his interest in an occupational pension scheme. Further, whereas in Blight v Brewster the order was made solely for the PCLS, this decision extends the Court’s jurisdiction to the revocation of Enhanced Protection.
Serene Allen was lead solicitor on the case at CANDEY who instructed barrister Saaman Pourghadiri of 4 New Square.
Says Ashkhan Candey, “Today’s Court Order of Andrew Hochhauser QC is a victory for the ordinary investor. It evidences that the judiciary will rightly intervene to protect the people against fraudsters. We hope that the CPS and the Director of Public Prosecutions takes action to extradite Green from Spain to face the criminal Courts and deliver justice to the many hundreds of his defrauded victims.”
