Punter Southall Governance Services Ltd v Benge & Anor (High Court, 1 February 2022)

The High Court has approved a decision by the trustees of the BST Group Pension Scheme (the “Scheme”) to distribute death benefits in respect of a member to his partner, after objections were raised by the deceased member’s son.

In reaching his decision, the judge considered the meaning of “dependant”, which may be of use to other pension schemes.

Facts

The member died on 5 March 2010.  Under the relevant rules of the Scheme, the trustees had the power to provide a pension to a “dependant”, defined as “such other person who in the opinion of the Trustees is (or was at the date of his death) dependent or interdependent on him for all or any of the necessaries of life.”

In order to be an “authorised payment” for tax purposes, anyone receiving a pension death benefit must also meet the definition of dependant in the FA 2004.  The relevant limbs of the definition for the case are that, in the opinion of the trustees, at the date of death, the person was either “financially dependent” on the member or in a financial relationship with the member which was one of “mutual dependence”.

Based on the evidence provided, the trustees decided to award a pension to the deceased member’s partner.

Decision

In approving the decision of the trustees, the judge noted that the necessaries of life (the phrase used in the rules), “are those things that a person needs to maintain their life”.  In a narrow sense this could simply mean shelter, food and medicine, although the judge notes that the “better description” in that instance would be “necessities” not “necessaries”.  However, previous case law has made clear that “necessaries of life” takes account of the relevant status, in terms of class and position in life, of the person concerned, so in each case, what constitutes the “necessaries of life” will be fact sensitive.

The judge also considered that being dependant on someone for the “necessaries of life”, is materially the same as the definition of dependant under the FA 2004.

The judge agreed that mere cohabitation and the payment of expenses from a joint account are not sufficient to demonstrate dependency.  However, in this case, there was a evidence going beyond that, including:

• the member and his partner had been in an relationship for around 10 years and living together for approximately 18 months
• owning their main residence as joint tenants, together with a second property overseas equally. They considered that both properties were their homes, although the member had contributed 100% of the purchase price for both
• the member paid the majority of the outgoings in relation to one property and paid for the majority of the refurbishment work to the other property, as well the costs of furniture
• the member also paid for the majority of the couples’ day-to-day living expenses, including food and clothing.

In addition, his partner stated that she “could not have afforded to purchase either of these properties, or maintain them, without [the member’s] support.”  The fact that both properties were owned by them as co-owners is “material and a paradigm case of inter-dependency”.

The judge also considered that the evidence demonstrated that the member’s partner provided him with companionship, comfort and support.  In addition, none of the definitions require the partner to prove that they were in a romantic relationship.

Comment

Whilst there is nothing particularly ground breaking in this judgment, it serves as a useful reminder to trustees that any death benefit case must be assessed on its own facts, taking into account the particular lifestyle of any potential beneficiary.