Brass Trustees Limited v Goldstone and the PPF (High Court) – 31 July 2023

The High Court has approved a trustee’s decision to issue petitions to wind up the sponsoring employers (“the Sponsor”) of its occupational pension scheme (“the Scheme”).


The Court has a general jurisdiction to give guidance to trustees in the exercise of their powers. In particular, trustees can seek the court’s approval for a proposed exercise of their powers where “there is no real doubt as to the nature of the trustees’ powers and the trustees have decided how they want to exercise them” but “the decision is particularly momentous”.

The Court can give its approval where it is satisfied that, in summary, the trustees:

  • have in fact formed the opinion that they should act in the way for which they seek approval
  • the opinion of the trustees was one which a reasonable body of trustees could properly have arrived at, including taking into account relevant considerations and ignoring irrelevant considerations, and
  • there was no conflict of interest.


The Scheme, a final salary occupational pension scheme with a DC section, had a funding deficit. The Sponsor had failed to meet its funding obligations to the Scheme from March 2020 onwards. While the Sponsor was “generally unforthcoming” with information, the Scheme’s trustee (“the Trustee”) assessed the Sponsor’s financial position based on communications and discussions with its management and other available information. The judge found that the Trustee had been “assiduous in its efforts” to understand the employer covenant.

The assessment presented a “bleak picture” of the Sponsor’s financial prospects, and it was clear that the Sponsor had “no prospect of meeting its financial obligations to the Scheme”.

As a result, the Scheme’s funding level was expected to worsen as benefits and expenses were paid out of available funds (known as “Scheme Drift”). This would weaken the security of remaining benefits, disadvantaging members whose benefits remained in the Scheme over a longer period. The Scheme rules permitted the Scheme to be wound up without the Sponsor’s agreement, but only on the Sponsor’s insolvency.

The Trustee considered it had “no alternative” but to take steps to protect the interests of the Scheme members as a whole. The Trustee decided that, if the Court approved and there was no material change in the circumstances, the Trustee would issue winding up petitions in relation to the Sponsor with a view to then winding up the Scheme (the “Decision”).

In reaching the Decision, the Trustee took into account the information it had about the Sponsor’s financial position, professional advice, its duties to administer the Scheme in accordance with the trust deed and rules, and its duties to protect the Scheme’s assets and the interests of members. The professional advice included actuarial and legal advice and advice on the estimated outcomes of the Sponsor’s insolvency.

Recognising the “momentous consequence” of deciding to place the Sponsor in a liquidation process, the Trustee sought the Court’s approval that this was a proper exercise of its powers.


Acknowledging that the Trustee found itself in an unenviable position, the judge found the Trustee had exercised its powers in a proper way in reaching the Decision and met the test for the Court to grant its approval. In particular, the Trustee had considered and taken into account relevant factors, including the financial circumstances facing the Scheme, Scheme Drift and the consequences for members if the Scheme were to continue without winding up. The Trustee had also taken appropriate advice on those matters.

Although it was not relevant to the outcome of the case, the judge agreed that, in accordance with ITS v Hope, the Trustee could not have sought to take advantage of the existence of the PPF to justify failing to take steps to prevent the Scheme’s funding deficit increasing further.


While the circumstances of this case are exceptional, it demonstrates the importance of trustees both closely monitoring the employer’s covenant and following proper decision-making processes.