Last month the Pensions Regulator was finally able to
publish its decision on the Desmond & Sons case.
The delay in the Pensions Regulator's publication was caused
by a confidentiality clause in relation to the Upper Tribunal's
judgment. Once that restriction was lifted and the Upper Tribunal
published its conclusion earlier last month, the Pensions Regulator
was also free to publish its own decision.
In February 2004 Desmond & Sons became aware that its sole
customer, Marks & Spencer, was planning to terminate their
relationship. Following this news Desmond & Sons entered into a
members' voluntary liquidation. The Regulator believed the aim
of the reorganisation was to exploit a loophole because it allowed
the employer to be treated as an insolvent company, meaning its
section 75 debt would be calculated on the less generous MFR basis.
Indeed, there was no deficit on the MFR basis at that time and the
employer paid just £4m into the scheme in May 2004, in the
meantime the targets are said to have received in the region of
£17.2m from the reorganisation.
In April 2010 the Determinations Panel ordered the Pensions
Regulator to issue two contribution notices against Desmond &
Sons owners Denis Desmond and Donal Gordon. Those two contributions
notices equated to just £1m. At the same time the
Determinations Panel said it would not be reasonable to issue
contribution notices against a further two ex-shareholders of
Desmond & Sons Ltd.
The Trustees wanted to challenge the Determinations Panel's
decision and took the case to the Upper Tribunal, claiming a
contribution notice should have been issued against a third person,
increasing the total value of the three contribution notices to
The two parties who were subject to contribution notices also
appealed to the Upper Tribunal, saying the notices should either
not have been issued or should have been valued at zero rather than
a total of £1m.
In a preliminary hearing in February 2011 the Upper Tribunal struck
out the claim against the third person because the six year time
limit on the exercise of the Regulator's contribution notice
powers had been exceeded stating that "the Tribunal cannot
enlarge the Regulator's authority". Limitation periods can
often be the downfall of legitimate claims and the Regulator, akin
to claimants, must remain minded of the time restrictions for
The Upper Tribunal, did however, remove the £1m cap of the
first two contrbution notices. This was on the basis that the
contribution notices, issued during the period in which the
determination could be referred to the Tribunal, were issued
prematurely. We await the substantive appeal to the Upper Tribunal
with keen interest.
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In October 2012, the Court of Appeal confirmed that a Service Provision Change ("SPC") TUPE transfer can only occur where the client who receives the service, before and after the change, remains the same (Hunter v McCarrick  EWCA Civ 1399).