A long-running case over the Box Clever Group Pension Scheme is continuing after the Court of Appeal rejected an application for appeal by ITV, former co-owners of the TV rental business, with a substantive hearing at the Upper Tribunal due next year.
ITV was seeking to appeal the Upper Tribunal's decision in June 2016 not to strike out new allegations brought by the Pensions Regulator in relation to the Box Clever scheme.
It will be very good to get an Upper Tribunal full decision on the Pensions Regulator’s powers and what they are allowed to do, regardless of the merits of ITV
Vikki Massarano, Arc Pensions Law
The regulator had originally issued a financial support direction to ITV in 2011, a decision ITV had referred to the Upper Tribunal.
Following protracted legal exchanges, ITV’s application for a second appeal has now been rejected, meaning a substantive two-week hearing is due at the tribunal on January 29 next year.
It will be the first time an anti-avoidance case has been heard in full in the Upper Tribunal.
ITV and TPR dig their heels in
The 2,800-member Box Clever scheme has a buyout deficit of about £90m. The scheme is currently paying Pension Protection Fund-level pensions, but until the case is decided it will not be able to enter the PPF.
Box Clever was a TV rental company formed as a joint venture between subsidiaries of Granada, now ITV, and Thorn. The business became insolvent in 2003.
While the regulator let Thorn off the hook when it sought clearance, it did not do so with ITV.
In its statement, the Pensions Regulator said: “Prior to the collapse, ITV extracted significant value from the joint venture.”
ITV stressed the regulator does not allege that there was anything improper or negligent about ITV's conduct.
The broadcaster has complained that the regulator has not specified the sum it is seeking, and said the body was looking to exercise its current powers retrospectively. Box Clever’s collapse predates the creation of the regulator in 2005.
“ITV is being pursued for unquantified sums in relation to a transaction that took place 17 years ago, before the regulator ever existed, and before the current powers it seeks to evoke were even on the statute book,” a spokesperson said.
“ITV believes strongly that there will be cases in which it is appropriate for the regulator to use its powers, but equally strongly that Box Clever is not one of them, and that the case against it is wholly unmeritorious.”
The spokesperson added that the basis on which the regulator has taken action will be “vigorously challenged”.
Final date set for Box Clever trustee and ITV showdown
Trustees of the Box Clever Pension Scheme and ITV were in court in summer 2016, in a further round of a six-year legal battle to force the broadcasting giant to help make good the fund’s £90m deficit.
If the Upper Tribunal finds in favour of the Pensions Regulator, ITV could in theory appeal again.
Full tribunal hearing would clarify TPR powers
Previous FSDs, such as those issued to Nortel, Lehman Brothers or BHS, resulted in a settlement before a full hearing took place, but the fact ITV put up a legal fight spanning six years could indicate that this is less likely to happen this time.
Whether the Upper Tribunal finds in favour of ITV or the Pensions Regulator, if the case does get to a substantive hearing, this will provide greater clarity about how the regulator can use its powers, said Arc Pensions Law partner Vikki Massarano.
“It will be very good to get an Upper Tribunal full decision on the Pensions Regulator’s powers and what they are allowed to do, regardless of the merits of ITV,” she said. “Having some clarity on how to exercise the powers it has already got would be very helpful.”
She added: “The irony for these members is, it probably won’t make much of a difference.”
