ITV PLC, Granada Ltd and others v The Pensions Regulator and Box Clever Trustees Ltd: Case Management: FS/2012/0001-5
| Jurisdiction | UK Non-devolved |
| Judge | Judge Herrington |
| Subject Matter | Pensions,13 December 2013 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Date | 13 December 2013 |
| Published date | 01 December 2016 |
Reference numbers: FS/2012/0001-5
PENSIONS REGULATOR – Financial support direction – procedure –
whether Regulator and Trustee should be barred from pursuing parts of
their pleaded cases on grounds that to do so would amount to an abuse of
the Upper Tribunal’s Procedure and breach of the Upper Tribunal
Procedure Rules – no – whether disclosure of documents should be directed
in relation to certain matters pleaded by the Targets in reply to the
Regulator’s Statement of Case – yes in part – whether the Regulator should
disclose documents relating to its decision not to seek a financial support
direction against Joint Venture Partner of one of the Targets – no
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
GRANADA UK RENTAL & RETAIL LIMITED
GRANADA MEDIA LIMITED
GRANADA GROUP LIMITED
GRANADA LIMITED
ITV plc
Applicants
- and -
THE PENSIONS REGULATOR Respondent
- and -
BOX CLEVER TRUSTEES LIMITED
Interested Party
TRIBUNAL:
JUDGE TIMOTHY HERRINGTON
Sitting in public in London on 25-26 September 2013
Michael Furness QC and Edward Sawyer, Counsel, instructed by Hogan Lovells
International LLP, for the Applicants
Jonathan Hilliard and Ben Faulkner, Counsel, instructed by Eversheds LLP, for
the Interested Party
Nicolas Stallworthy QC and James Walmsley, Counsel, instructed by the
Pensions Regulator, for the Respondent
© CROWN COPYRIGHT 2013
DECISION
Introduction
1. This decision relates to various applications for procedural directions involving 5 a reference made under s 103 of the Pensions Act 2004 (“the Act”). The reference
relates to a determination made on 21 December 2011 by the Determinations Panel
(“DP”) of the Respondent, the Pensions Regulator (“TPR”) that the five companies
from the corporate group of the well-known broadcasting company ITV should be the
subject of a Financial Support Direction (“FSD”) issued pursuant to s 43 of the Act so 10 as to require them to provide funding to address an estimated deficit of £70 million in
the Box Clever Group Pension Scheme (“the Scheme”).
2. The companies which are the subject of the DP’s determination are the
Applicants in the reference and are referred to in this decision as “the Applicants” or
the “Targets”. Box Clever Trustees Limited, the Trustee of the Scheme (“the 15 Trustee”), has been joined to the reference as an interested party. In the applications
now made the Targets contend, inter alia, that in the light of the manner in which the
subject matter of the reference was put to them and decided pursuant to the
Respondent’s administrative decision making process, the Respondent and the Trustee
should be precluded from pursuing certain allegations before this Tribunal. 20
3. TPR’s case for an FSD is based on the Targets’ involvement in a Joint Venture
known as “Box Clever” which existed between 1999 and 2003. Mr Furness helpfully
set out in his skeleton argument the basic facts of the life of the Joint Venture, which
are not in dispute, as follows:
(1) The Box Clever Joint Venture was established in 1999-2000 when the 25 Granada group of companies (now part of the ITV group) agreed to
combine its TV rental business with the TV rental business of its
competitor, the Thorn group.
(2) Granada and Thorn each sold their respective rental businesses to the
newly-created Box Clever group of companies, which was owned 50-50 30 by Granada and Thorn.
(3) The transaction was agreed in 1999 and completed in June 2000.
(4) The purchase price payable by Box Clever for the rental businesses it
acquired was £980 million, of which £600 million was payable to Granada
and £380 million was payable to Thorn. 35
(5) The purchase was funded by Box Clever borrowing £860 million from
Westdeutsche Landesbank (“WestLB”); the loan was secured on the Box
Clever group’s assets. Using the loan monies, (simplifying somewhat)
Box Clever paid approximately £530 million to Granada and the rest to
Thorn in respect of the purchase price. The balance of the purchase price 40 was left outstanding. Neither Granada nor Thorn was liable for the
monies lent by WestLB, the borrower being Box Clever.
(6) From June 2000, Box Clever operated the combined rental business.
3
(7) In October 2001, Box Clever established the Scheme to provide pension
benefits for its employees. The Box Clever companies (and not Granada
or Thorn) were the employers of the Scheme and were liable to fund it.
(8) Unfortunately, the Box Clever business did not prosper; it fell behind with
the repayments to WestLB and ended up deeply insolvent. During 5 September-November 2003, WestLB appointed Administrative Receivers
over the principal Box Clever operating companies.
(9) Thereafter, the Administrative Receivers took over the Box Clever
business and sold it. All the proceeds of sale went to WestLB as secured
lender. 10
(10) Neither Granada nor Thorn had anything further to do with the Box
Clever business after the Administrative Receivers were appointed in
2003.
(11) According to figures provided by the Trustee, at the time of the
Administrative Receiverships, the Scheme had a funding deficit of some 15 £25 million on a gilts-matching basis, which Box Clever was unable to
meet due to its insolvency. The reported deficit has since grown to around
£70 million.
4. TPR and the Trustee contend that the Targets were “connected” with or an
“associate” of the employer in relation to the Scheme pursuant to s 43(6) of the Act 20 and that it is reasonable for an FSD to be issued to them, as permitted by s 43(5) of
the Act, having regard in particular to the approximately £530 million which Granada
received upon the transfer of its rental business to Box Clever in 1999-2000.
5. The Targets deny that they were “connected” or “associated” at any time
within the two year time limit then provided for in s 43(9) of the Act and they also 25 deny that it would be reasonable to issue an FSD to them in any event.
6. All the provisions of the Act to which I refer are set out in Appendix 1 to this
decision.
Events after the failure of the Joint Venture
7. This brief summary is taken primarily from TPR’s Statement of Case, which in 30 this respect is not materially disputed.
8. Following the failure of the Joint Venture discussions and negotiations took
place from 2004 onwards between the Trustee and the ITV Group as to whether ITV
would be prepared for ex-Granada group members of the Scheme to be transferred
back into what had been the Granada Pension Scheme (now the ITV Pension 35 Scheme).
9. These proposals became conditional upon the Trustee withdrawing any request
to TPR for the issue of an FSD and the Trustee supporting any application that ITV
might make to TPR for a “clearance statement” under s 42 and s 46 of the Act in
respect of the Joint Venture (explained below). 40
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