ITV Plc v Pensions Regulator

The appeal concerned whether, in proceedings under the Pensions Act 2004 for the possible issue of Financial Support Directions (FSDs), The Pensions Regulator (TPR) may rely in the Upper Tribunal on grounds or evidence that were not contained in its Warning Notice (WN) to the proposed targets.

The Court of Appeal held that although a WN is an important procedural protection and must describe the bases on which TPR considers regulatory action to lie, the statute (in particular sections 96 and 103 PA04) does not impose a prior threshold requirement that TPR must show "good reason" before it may introduce matters not set out in the WN. The Upper Tribunal therefore has a broad discretion to admit additional evidence or arguments on a reference, but that discretion must be exercised by weighing all relevant factors including prejudice to the targets, the nature of the new allegations, reasons for the late reliance, loss of evidence, conduct and delay by TPR, and whether the targets can fairly meet the new case.

The Court set aside the Upper Tribunal's narrower approach, emphasised that the same constraints on adducing new matters apply to an intervening trustee who supports TPR, and remitted the matter to the Upper Tribunal to reconsider the targets' strike-out/application in light of the correct approach.

This was an appeal from the Upper Tribunal (Tax and Chancery Chamber) concerning FSDs sought by The Pensions Regulator in relation to the Box Clever pension scheme, which had a significant deficit after a 1999-2003 joint-venture "hive-down" transaction. TPR issued lengthy Warning Notices in September 2011 to five target companies. The Determinations Panel authorised FSDs in December 2011, giving reasons in January 2012. The targets referred the Determinations Panel's decision to the Upper Tribunal; in those proceedings TPR sought to rely on allegations and material not contained in the original Warning Notices. The targets applied to strike out those parts of the pleadings.

The key question was whether TPR (and by analogy the trustee supporting the regulatory action) is precluded from relying in the Upper Tribunal on grounds or evidence that were not set out in the WN unless it can show "good reason" for the departure, or whether the Upper Tribunal has an unfettered discretion (subject to ordinary fairness) to admit such matters on a de novo reference.

The Court of Appeal analysed the statutory scheme (notably sections 43, 93-96 and 103 PA04), the role of the Determinations Panel, and the de novo nature of a reference under section 103(3). It accepted that a WN must properly inform targets of the case to be met and that public authorities owe duties of fairness, but concluded that Parliament did not include a strict statutory limitation of the "good reason" kind. Instead the Upper Tribunal must exercise a case-management discretion in the light of all relevant factors: the nature and seriousness of new allegations (fraud or bad faith attracts special caution), reasons for lateness, prejudice or inability of targets to meet the new case (for example loss of evidence), TPR's conduct and delay, and any relevant public interest considerations. The Court emphasised parity between TPR and a supporting trustee so that restrictions that bind TPR should generally bind the trustee.

Outcome: the Court allowed the appeal, set aside the Upper Tribunal's narrower test and remitted the matter to the Upper Tribunal for reconsideration in accordance with the guidance given.

Appeal allowed. The Court of Appeal held that the Pensions Act 2004 does not impose a statutory threshold requirement that TPR must show "good reason" before relying on matters not contained in a Warning Notice. Instead the Upper Tribunal has a broad discretion on a de novo reference to admit or exclude such matters and must exercise that discretion by weighing all relevant factors (including prejudice to targets, the nature of the new allegations, reasons for late reliance, loss of evidence, and conduct and delay). The Court set aside the Upper Tribunal's narrower tests and remitted the matter to the Upper Tribunal to reconsider the targets' application in light of these principles.

Determinations Panel of The Pensions Regulator: determination to issue FSDs 21 December 2011 (reasons given 26 January 2012); Determinations Panel decision referred to the Upper Tribunal (Judge Tim Herrington) (case FS/2012/0001-5), Upper Tribunal judgment dated 13 December 2013; appeal to the Court of Appeal (A3/2014/0443) decided [2015] EWCA Civ 228.