“The parties intend that the Box Clever Group should be selffinancing and should obtain additional funds from third parties without recourse to its Shareholders. Subject to any contrary agreement, no shareholder shall be obliged to contribute to the working capital or other financial requirements of the Company, whether by further subscription per shares, by loans, by guarantee or otherwise.”
“352. We take from this that the ‘maintenance of appropriate employee relations’ was an important factor in the decision to establish a defined benefit rather than a money purchase scheme. The evidence shows that the stance of the Trade Union that represented many of the employees was a key consideration. The parties were keen to keep the Union onside by offering the pension proposal so as to assist with negotiations that would have to take place with the Union on other matters. Therefore, the new proposal was that separate sections were to be established within the Scheme providing mirror image defined benefits for ex-Granada and ex-Thorn members respectively who became members of the Scheme.”
“(a) to protect the benefits under occupational pension schemes of, or in respect of, members of such schemes, … (c) to reduce the risk of situations arising which may lead to compensation being payable from the Pension Protection Fund …”
“(a) the interests of the generality of the members of the scheme to which the exercise of the function relates, and (b) the interests of such persons as appear to the Regulator to be directly affected by the exercise.”
“(1) This section applies in relation to an occupational pension scheme other than— (a) a money purchase scheme, or (b) a prescribed scheme or a scheme of a prescribed description. (2) The Regulator may issue a financial support direction under this section in relation to such a scheme if the Regulator is of the opinion that the employer in relation to the scheme— (a) is a service company, or (b) is insufficiently resourced, at a time determined by the Regulator which falls within subsection (9) (“the relevant time”). (3) A financial support direction in relation to a scheme is a direction which requires the person or persons to whom it is issued to secure— (a) that financial support for the scheme is put in place within the period specified in the direction, (b) that thereafter that financial support or other financial support remains in place while the scheme is in existence, and (c) that the Regulator is notified in writing of prescribed events in respect of the financial support as soon as reasonably practicable after the event occurs. (4) A financial support direction in relation to a scheme may be issued to one or more persons. (5) But the Regulator may issue such a direction to a person only if— (a) the person is at the relevant time a person falling within subsection (6), and (b) the Regulator is of the opinion that it is reasonable to impose the requirements of the direction on that person. (6) A person falls within this subsection if the person is— (a) the employer in relation to the scheme, (b) an individual who— (i) is an associate of an individual who is the employer, but (ii) is not an associate of that individual by reason only of being employed by him, or (c) a person, other than an individual, who is connected with or an associate of the employer. (7) The Regulator, when deciding for the purposes of subsection (5)(b) whether it is reasonable to impose the requirements of a financial support direction on a particular person, must have regard to such matters as the Regulator considers relevant including, where relevant, the following matters— (a) the relationship which the person has or has had with the employer (including, where the employer is a company within the meaning of subsection (11) ofsection 435 of the Insolvency Act 1986 (c 45), whether the person has or has had control of the employer within the meaning of subsection (10) of that section), (b) in the case of a person falling within subsection (6)(b) or (c), the value of any benefits received directly or indirectly by that person from the employer, (c) any connection or involvement which the person has or has had with the scheme, (d) the financial circumstances of the person, and (e) such other matters as may be prescribed. (8) A financial support direction must identify all the persons to whom the direction is issued. (9) A time falls within this subsection if it is a time which falls within a prescribed period which ends with the determination by the Regulator to exercise the power to issue the financial support direction in question. (10) For the purposes of subsection (3), a scheme is in existence until it is wound up. (11) No duty to which a person is subject is to be regarded as contravened merely because of any information or opinion contained in a notice given by virtue of subsection (3)(c). This is subject to section 311 (protected items).” (a) a money purchase scheme, or (b) a prescribed scheme or a scheme of a prescribed description. (a) is a service company, or (b) is insufficiently resourced, at a time determined by the Regulator which falls within subsection (9) (“the relevant time”). (a) that financial support for the scheme is put in place within the period specified in the direction, (b) that thereafter that financial support or other financial support remains in place while the scheme is in existence, and (c) that the Regulator is notified in writing of prescribed events in respect of the financial support as soon as reasonably practicable after the event occurs. (a) the person is at the relevant time a person falling within subsection (6), and (b) the Regulator is of the opinion that it is reasonable to impose the requirements of the direction on that person. (a) the employer in relation to the scheme, (b) an individual who— (i) is an associate of an individual who is the employer, but (ii) is not an associate of that individual by reason only of being employed by him, or (c) a person, other than an individual, who is connected with or an associate of the employer. (a) the relationship which the person has or has had with the employer (including, where the employer is a company within the meaning of subsection (11) ofsection 435 of the Insolvency Act 1986 (c 45), whether the person has or has had control of the employer within the meaning of subsection (10) of that section), (b) in the case of a person falling within subsection (6)(b) or (c), the value of any benefits received directly or indirectly by that person from the employer, (c) any connection or involvement which the person has or has had with the scheme, (d) the financial circumstances of the person, and (e) such other matters as may be prescribed. This is subject to section 311 (protected items).”
“(2) The arrangements falling within this subsection are— (a) an arrangement whereby, at any time when the employer is a member of a group of companies, all the members of the group are jointly and severally liable for the whole or part of the employer's pension liabilities in relation to the scheme; (b) an arrangement whereby, at any time when the employer is a member of a group of companies, a company ([within the meaning ofsection 1159 of the Companies Act 2006 ]) which meets prescribed requirements and is the holding company of the group is liable for the whole or part of the employer's pension liabilities in relation to the scheme; (c) an arrangement which meets prescribed requirements and whereby additional financial resources are provided to the scheme; (d) such other arrangements as may be prescribed. (3) The Regulator may not issue a notice under subsection (1) approving the details of one or more arrangements falling within subsection (2) unless it is satisfied that the arrangement is, or the arrangements are, reasonable in the circumstances. (4) In subsection (2), “the employer's pension liabilities” in relation to a scheme means— (a) the liabilities for any amounts payable by or on behalf of the employer towards the scheme (whether on his own account or otherwise) in accordance with a schedule of contributions under section 227, and (b) the liabilities for any debt which is or may become due to the trustees or managers of the scheme from the employer whether by virtue ofsection 75 of the Pensions Act 1995 (deficiencies in the scheme assets) or otherwise.” (a) an arrangement whereby, at any time when the employer is a member of a group of companies, all the members of the group are jointly and severally liable for the whole or part of the employer's pension liabilities in relation to the scheme; (b) an arrangement whereby, at any time when the employer is a member of a group of companies, a company ([within the meaning ofsection 1159 of the Companies Act 2006 ]) which meets prescribed requirements and is the holding company of the group is liable for the whole or part of the employer's pension liabilities in relation to the scheme; (c) an arrangement which meets prescribed requirements and whereby additional financial resources are provided to the scheme; (d) such other arrangements as may be prescribed. (a) the liabilities for any amounts payable by or on behalf of the employer towards the scheme (whether on his own account or otherwise) in accordance with a schedule of contributions under section 227, and (b) the liabilities for any debt which is or may become due to the trustees or managers of the scheme from the employer whether by virtue ofsection 75 of the Pensions Act 1995 (deficiencies in the scheme assets) or otherwise.”
“(1) An application may be made to the Regulator under this section for the issue of a clearance statement within paragraph (a), (b) or (c) of subsection (2) in relation to circumstances described in the application and relating to an occupational pension scheme. (2) A clearance statement is a statement, made by the Regulator, that in its opinion in the circumstances described in the application— (a) the employer in relation to the scheme would not be a service company for the purposes of section 43, (b) the employer in relation to the scheme would not be insufficiently resourced for the purposes of that section, or (c) it would not be reasonable to impose the requirements of a financial support direction, in relation to the scheme, on the applicant. (3) Where an application is made under this section, the Regulator— (a) may request further information from the applicant; (b) may invite the applicant to amend the application to modify the circumstances described. (4) Where an application is made under this section, the Regulator must as soon as reasonably practicable— (a) determine whether to issue the clearance statement, and (b) where it determines to do so, issue the statement. (5) A clearance statement issued under this section binds the Regulator in relation to the exercise of the power to issue a financial support direction under section 43 in relation to the scheme to the applicant unless— (a) the circumstances in relation to which the exercise of the power under that section arises are not the same as the circumstances described in the application, and (b) the difference in those circumstances is material to the exercise of the power.” (a) the employer in relation to the scheme would not be a service company for the purposes of section 43, (b) the employer in relation to the scheme would not be insufficiently resourced for the purposes of that section, or (c) it would not be reasonable to impose the requirements of a financial support direction, in relation to the scheme, on the applicant. (a) may request further information from the applicant; (b) may invite the applicant to amend the application to modify the circumstances described. (a) determine whether to issue the clearance statement, and (b) where it determines to do so, issue the statement. (a) the circumstances in relation to which the exercise of the power under that section arises are not the same as the circumstances described in the application, and (b) the difference in those circumstances is material to the exercise of the power.”
“My Lords, it would be impossible now to doubt that the court is required to approach questions of statutory interpretation with a disposition, and in some cases a very strong disposition, to assume that a statute is not intended to have retrospective effect. Nor indeed would I wish to cast any doubt on the validity of this approach for it ensures that the courts are constantly on the alert for the kind of unfairness which is found in, for example, the characterisation as criminal of past conduct which was lawful when it took place, or in alterations to the antecedent national, civil or familial status of individuals. Nevertheless, I must own up to reservations about the reliability of generalised presumptions and maxims when engaged in the task of finding out what Parliament intended by a particular form of words, for they too readily confine the court to a perspective which treats all statutes, and all situations to which they apply, as if they were the same. This is misleading, for the basis of the rule is no more than simple fairness, which ought to be the basis of every legal rule. True it is that to change the legal character of a person's acts or omissions after the event will very often be unfair; and since it is rightly taken for granted that Parliament will rarely wish to act in a way which seems unfair it is sensible to look very hard at a statute which appears to have this effect, to make sure that this is what Parliament really intended. This is, however, no more than common sense, the application of which may be impeded rather than helped by recourse to formulae which do not adapt themselves to individual circumstances, and which tend themselves to become the subject of minute analysis, whereas what ought to be analysed is the statute itself. My Lords, my purpose in stressing this point is not to suggest that the courts below approached the question in a mechanistic way. Their careful judgments show that this was not the case. It is simply to explain why I do not find it necessary to cite and analyse the numerous authorities on retrospective effect, but prefer to proceed directly to the ascertainment of the intention which Parliament intended section 13A to achieve, by a reference to the following statement by Staughton L.J. in Secretary of State for Social Security v. Tunnicliffe [1991] 2 All E.R. 712, 724, quoted by Sir Thomas Bingham M.R. in the present case, ante, p. 495: “In my judgment the true principle is that Parliament is presumed not to have intended to alter the law applicable to past events and transactions in a manner which is unfair to those concerned in them, unless a contrary intention appears. It is not simply a question of classifying an enactment as retrospective or not retrospective. Rather it may well be a matter of degree - the greater the unfairness, the more it is to be expected that Parliament will make it clear if that is intended.”
“Then there is the general presumption that legislation is not intended to operate retrospectively. That presumption is based on concepts of fairness and legal certainty. These concepts require that accrued rights and the legal effect of past acts should not be altered by subsequent legislation. But the mere fact that a statute depends for its application in the future on events that have happened in the past does not offend against the presumption. For a recent example of this point reference may be made to R v Field[2003] 1 WLR 882 . In that case it was held that the making of a disqualification order undersection 28 of the Criminal Justice and Court Services Act 2000 against a defendant from working with children in the future did not offend against the presumption where the offending behaviour had occurred before that Act came into force. It illustrates the point that there is an important distinction to be made between legislation which affects transactions that have created rights and obligations which the parties seek to enforce against each other and legislation which affects transactions that have resulted in the bringing of proceedings in the public interest by a public authority. The concepts of fairness and legal certainty carry much greater weight when it is being suggested that rights or obligations which were acquired or entered into before2 October 2000 should be altered retrospectively.”
“Although the charges which can be recovered are only those that are incurred after the coming into force of the Bill and the liability to pay Ministers arises only where a compensation payment is made after the coming into force of the Bill, there is an element of retrospectivity in the imposition of the machinery of direct liability on employers. The liability imposed, though only in respect of future charges, is retrospective, as it is a new liability owed directly to Welsh Ministers which arises only by reason of negligence or breach of statutory duty which had occurred prior to the coming into force of the Bill. It is not simply an obligation to make future payments to an employee in respect of a recognised head of damages for an established liability, as would be the case if the machinery adopted had been to impose charges directly on the employees and recovery been obtained from employers. In the case of the employers, prior to the Bill, they would have had no such direct liability to Welsh Ministers. Thus the second aim and effect of the Bill has an element of retrospectivity.”
“It is clear from this analysis that the application of new legislation to existing circumstances does involve a degree of retrospectivity which may create a degree of unfairness or hardship. The court is therefore required to consider whether Parliament had intended legislation to have that effect. But this is not a binary question of whether the legislation is or is not retrospective and therefore whether the presumption against retrospectivity is or is not engaged. Whether Parliament had that intention depends on the degree of unfairness involved, the greater the unfairness the less likely it is that Parliament intended that result.”
“215. In our view, s 43 is not retrospective legislation as that term is defined by Bennion as stated at [198] above. We agree with the Regulator’s characterisation of s 43 as providing a present solution to a present problem; namely an employer being insufficiently resourced relative to its pension liabilities. That current situation may well have arisen because of the way in which the employers and those connected with them had been run historically. It may well be a result of events and transactions that took place some time before PA 2004 came into force. The purpose of the legislation is to create a rescue framework for pension schemes which are in deficit through the medium of imposing new liabilities on those who have had the necessary degree of association and connection with the relevant scheme at the relevant time. The legislation clearly could not meet those objectives if the Regulator was not able to take into account events which had occurred prior to the legislation coming into force, even if those events had sown the seeds of the problems that exist at the time when the exercise of the powers in the legislation is under consideration. 216. In our view the legislation is a paradigm example of legislation which does alter existing rights and duties but does not do so in a manner which is retroactive. There are new financial obligations imposed by reference to transactions that have been entered into before the legislation came into force but they only operate prospectively and donot alter the legal effect of transactions that have already been entered into. Granada entered into the Joint Venture transaction and received consideration for the sale of the assets that took place pursuant to the transaction. At the time of the transaction, it may well have assumed that there was no prospect of any future liability being incurred in respect of that transaction as a result of a change of legislation in the future. But, as Lord Rodger said at [192] of Wilson, individuals and businesses run the risk that Parliament may change the law governing their affairs and, as was the case in West v Gwynne, may suffer financial detriment because of the imposition of a new liability. … 219. In our view Lord Pannick’s reliance on Welsh Asbestos is misplaced. Unlike the position in Welsh Asbestos, s 43 does not seek to impose a new liability, or augment an existing one, arising out of a past wrong. We do not accept that the issue of an FSD isproperly characterised as an imposition of a financial sanction in respect of acts and omissions committed before the legislation came into force. As will become apparent later in this decision, we accept that the transactions that led to the establishment of the Joint Venture were perfectly legitimate business transactions which were not designed to enrich the Targets at the expense of other parties. The Regulator’s decision to issue an FSD arose out of its consideration of the circumstances of the Scheme as at the lookback date, a date which is sometime after the legislation has come into force, and whether it would be reasonable to impose an FSD in the light of those circumstances. Seen in that light, we cannot accept Lord Pannick’s submission that the imposition of a liability in respect of existing circumstances without the attribution of any wrongdoing makes the Regulator’s action more objectionable. It is not a matter of whether there is fault or criticism or no fault or criticism; rather it is the fact that the test for the issue of an FSD is not necessarily linked to one or more events or transactions but is linked to a state of affairs that exists at a particular time. 220. We therefore conclude that the presumption against retrospective legislation is engaged only lightly, if at all, in this case.”
“Since provisions which affect existing rights prospectively are not retroactive, the presumption against retroactivity does not apply. Nor is there any general presumption that legislation does not alter the existing legal situation or existing rights: the very purpose of Acts of Parliament is to alter the existing legal situation and this will often involve altering existing rights for the future. So, as Dickson J went on to point out in Gustavson Drilling[1977] 1 SCR 271 , 282-283, with special reference to tax legislation: “No one has a vested right to continuance of the law as it stood in the past; in tax law it is imperative that legislation conform to changing social needs and governmental policy. A taxpayer may plan his financial affairs in reliance on the tax laws remaining the same; he takes the risk that the legislation may be changed.”
“We must also have regard to the Regulator’s statutory objectives. One of these is, as we have observed at [14] above, to reduce the risk of situations arising which may lead to compensation being payable from the PPF. The provisions relating to the PPF came into force at the same time as s 43. As Mr Stallworthy submitted, that objective would be substantially undermined if the PPF were immediately exposed to liabilities in respect of under-funded schemes but because of an inability to rely on events prior to the coming into force of PA 2004 no FSD could be issued. In our view, the legislation should be read so as to regard the powers in s 43 and the support for under resourced schemes available through the PPF as a package of measures which are available inrelation to all circumstances concerning the relevant schemes which happen to be in existence after the relevant provisions come into force.”
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No-one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in the general interest or to secure the payment of taxes or other contributions or payments.”
“52. I conclude that there is Strasbourg authority testing the aim and the public interest by asking whether it was manifestly unreasonable, but the approach in Strasbourg to at least the fourth stage involves asking simply whether, weighing all relevant factors, the measure adopted achieves a fair or proportionate balance between the public interest being promoted and the other interests involved. The court will in this context weigh the benefits of the measure in terms of the aim being promoted against the disbenefits to other interests. Significant respect may be due to the legislature's decision, as one aspect of the margin of appreciation, but the hurdle to intervention will not be expressed at the high level of “manifest unreasonableness”
“38. An interference with the peaceful enjoyment of possessions must strike a “fair balance” between the demands of the general interest of the community and the requirements of the protection of the individual's fundamental rights. The concern to achieve this balance is reflected in the structure of Article 1 as a whole, including therefore the second sentence, which is to be read in the light of the general principle enunciated in the first sentence (see para. 33 above). In particular, there must be a reasonable relationship of proportionality between the means employed and the aim sought to be realised by any measure depriving a person of his possessions. Compensation terms under the relevant legislation are material to the assessment whether the contested measure respects the requisite fair balance and, notably, whether it imposes a disproportionate burden on the applicants. In this connection, the taking of property without payment of an amount reasonably related to its value will normally constitute a disproportionate interference and a total lack of compensation can be considered justifiable under Article 1 only in exceptional circumstances (see, as the most recent authority, the Holy Monasteries judgment cited above, pp. 34-35, paras. 70-71). 39. In the present case the 1988 Act quite simply extinguished, with retrospective effect going back thirty years and without compensation, claims for very high damages that the victims of the pilot accidents could have pursued against the Belgian State or against the private companies concerned, and in some cases even in proceedings that were already pending.”
“[55] An interference with peaceful enjoyment of possession must nevertheless strike a ‘fair balance’ between the demands of the public or general interest of the community and the requirements of the protection of the individual’s fundamental rights. The concern to achieve this balance is reflected in the structure of Art.1 as a whole which is to be read in the light of the general principle enunciated in the first sentence. In particular, there must be a reasonable relationship of proportionality between the means employed and the aim sought to be realised by any measure depriving a person of his possessions or controlling their use. Compensation terms under the relevant legislation are material to the assessment of whether the contested measure respects the requisite fair balance, and notably, whether it does not impose a disproportionate burden on the applicant. [56] Although Art.1 of Protocol No.1 contains no explicit procedural requirements, the proceedings at issue must also afford the individual a reasonable opportunity of putting his or her case to the responsible authorities for the purpose of effectively challenging the measures interfering with the rights guaranteed by this provision. In ascertaining whether this condition has been satisfied a comprehensive view must be taken of the applicable procedures.”
“[60] The court agrees with the applicant that a transfer of property effected for no reason other than to confer a private benefit on a private party cannot be 'in the public interest'. Nonetheless, it is settled case-law that the compulsory transfer of property from one individual to another may, depending upon the circumstances, constitute a legitimate means for promoting the public interest. Thus, a transfer of property effected in pursuance of legitimate social, economic or other policies may be 'in the public interest', even if the community at large has no direct use or enjoyment of the property transferred (see James v United Kingdom(1986) 8 EHRR 123 , at paras 40–45). The debt adjustment legislation clearly serves legitimate social and economic policies and is not therefore ipso facto an infringement of Art 1 of Protocol 1. [61] The court must, however, also satisfy itself that the application of the 1993 Act in the concrete case before it did not impose an excessive burden on the applicant. [62] It is true that at the moment when the applicant agreed to guarantee N's loan he could not foresee the economic recession and the subsequent legislation allowing for the adjustment of N's debts. The detriment which this adjustment caused to the applicant was no doubt significant in monetary terms. It is equally true, however, that when guaranteeing N's loan the applicant had to calculate the risk that N would fail to comply with his payment obligation. He also had to consider the possibility that N might be declared bankrupt, in which case his claim against N would most likely become worthless. The fact that in the case of a bankruptcy the applicant's claims would have remained legally valid and enforceable at a possible later stage does not change the fact that by entering into the guarantee agreement the applicant took upon himself a risk of financial losses. [63] The court would not exclude that a court-ordered irrevocable extinction of a debt, as opposed to the scheduling of payments of a debt over a longer period of time or the bankruptcy of a private individual, could in some circumstances result in the placing of an excessive burden on a creditor. The question whether such a burden was placed on the applicant also depends on whether the procedure applied provided him with a fair possibility of defending his interests as one of some 70 debtors. [64] In this respect, the court recalls that the applicant was heard by the District Court and was thus able to put forward his views on N's request for debt adjustment and the proposed payment scheme. The court is satisfied that the District Court carried out a thorough and careful assessment of the case and finds no indication of any arbitrariness in the conclusions reached. The applicant was further entitled to a full review by an appellate court as regards both the decision to grant the debt adjustment and the details of the adopted payment scheme. Finally, the applicant was able to seek leave to appeal to the Supreme Court.”
“Turning to the retroactive effect of the 1993 Act, the Court notes that neither the Convention nor its Protocols preclude the legislature from interfering with existing contracts. The Court considers that a special justification is required for such interference, but accepts that in the context of the 1993 Act there were special grounds of sufficient importance to warrant it. The Court observes that in remedial social legislation and in particular in the field of debt adjustment, which is the subject of the present case, it must be open to the legislature to take measures affecting the further execution of previously concluded contracts in order to attain the aim of the policy adopted. Also other Council of Europe Member States such as Norway and Sweden have introduced legislation allowing for the adjustment of debts contracted prior to its entry into force.”
“239. In this case, the relevant provisions of PA 2004 can be said to be legislation with a social remedial aim, namely to deal with the problems of underfunded pensionschemes. If extending the FSD power so that it can be exercised in circumstances where the lack of scheme funds arises from causes stretching back before s 43 came into force were not permissible under A1P1, the legislature would have been faced with two unattractive choices. Either the opportunity for scheme members to benefit from payments from the PPF would have to be delayed for several years so that the underlying reasons for the insufficient resourcing were more likely to post-date s 43 or there would be a substantial period when the PPF would take over the burden of insufficiently resourced schemes but without any assistance from an FSD. Either of those options would have significantly hindered the achievement of the objectives of the legislation. We agree with Mr Stallworthy’s submission that Parliament intended there to be a symmetry between the liabilities of the PPF and the FSD regime. 240. Furthermore, there is no automatic imposition of liability if the threshold conditions are satisfied. The legislation confers on a public body a discretionary regulatory power which cannot be exercised except where it is reasonable to do so on the facts of a particular case. The exercise of that power is subject to judicial oversightthrough an independent tribunal with a full merits jurisdiction. That is a factor that the ECtHR considered relevant in Bäck v Finland where the creditor whose debt was extinguished was entitled to and had obtained a thorough and careful assessment of the case and was also entitled to a full review by an appellate court. These proceedings offered him, the Court held, a reasonable opportunity of putting his case to thecompetent authorities with a view to establishing a fair balance between the conflicting interests at stake: see [64] of Bäck. 241. In our view, all of these factors clearly outweigh the features which the Targets rely on as being unfair, namely the lack of a clearance procedure and the moral hazard point. We therefore conclude that any interference with the Targets’ A1P1 rights inthis case is proportionate and justified. 242. We have therefore rejected the Targets’ case on a lack of jurisdiction on grounds of retrospectivity. However, as is apparent from the foregoing discussion, one of the reasons we have done so is because the Targets’ arguments on the issue are capable of being considered in the context of the assessment which we must make as to whether itis reasonable in the circumstances of this case to issue an FSD. Therefore, we shall revisit the Targets’ arguments in the context of our assessment of reasonableness.”
“Each Chargor … hereby as continuing security for the payment, discharge and performance of all the Secured Liabilities at any time owed or due to the Lenders (or any of them): (a) mortgages and charges and agrees to mortgage and charge to the Security Agent (as agent and trustee as aforesaid) all Group Shares held now or in the future by it and/or any nominee on its behalf, the same to be a security by way of a first mortgage; and (b) mortgages and charges and agrees to mortgage and charge to the Security Agent (as agent and trustee as aforesaid) all the Related Rights accruing to all or any of the Group Shares held now or in the future by it and/or any nominee on its behalf, the same to be a security by way of a first mortgage or charge. PROVIDED THAT: (i) whilst no Declared Default exists, all dividends and other distributions paid or payable as referred to in paragraph (b) above may be paid directly to the relevant Chargor free from the security created hereunder … and, if paid directly to the Security Agent, shall be paid promptly by it to the relevant Chargor; (ii) whilst no Declared Default exists, the Security Agent shall use all its reasonable endeavours to forward to the relevant Chargor all material notices, correspondence and/or other communication it receives in relation to the Group Shares; and (iii) subject to Clause 10.2, whilst no Declared Default exists, all voting rights attaching to the relevant Group Shares may be exercised by the relevant Chargor or, where the shares have been registered in the name of the Security Agent or its nominee, as the relevant Chargor may direct in writing, and the Security Agent and any nominee of the Security Agent in whose name such Group Shares are registered shall execute any form of proxy or other document reasonably required in order for the relevant Chargor to do so.”
“10.1 Registration on transfer Each Chargor hereby authorises the Security Agent … to arrange for the Security Shares to be delivered to any nominee of the Security Agent or to any purchaser or transferee … or registered as the Security Agent may feel appropriate to perfect the security thereover … and each Chargor undertakes from time to time promptly to execute and sign all transfers, contract notes, powers of attorney and other documents … which the Security Agent may reasonably require for perfecting its title to any of the Security Shares … 10.2 Powers The Security Agent … may at any time after a Declared Default has occurred or in any other instance where the Security Agent is of the reasonable opinion that it is necessary for the avoidance of an Event of Default or necessary for the protection of its material interests … exercise or refrain from exercising (in the name of each Chargor, the registered holder or otherwise and without any further consent or authority from each Chargor and irrespective of any direction given by any Chargor) in respect of the Security Shares any voting rights and any powers or rights under the terms thereof or otherwise which may be exercised by the person or persons in whose name or names the Security Shares are registered or who is the holder thereof … PROVIDED THAT in the absence of notice from the Security Agent each Chargor may and shall continue to exercise any and all voting rights with respect to the Group Shares subject always to the terms hereof. No Chargor shall without the previous consent in writing of the Security Agent exercise the voting rights attached to any of the Group Shares in favour of resolutions having the effect of changing the terms of the Group Shares (or any class of them) or any Related Rights or prejudicing the security hereunder or breaching the terms of any Finance Document, in each case, in any way which could reasonably be expected materially and adversely to affect the interests of the Lenders. Each Chargor hereby irrevocably appoints the Security Agent or its nominees its proxy to exercise all voting rights so long as the shares remain registered in the name of the relevant Chargor and to the extent that the Security Agent is entitled to exercise such voting rights in accordance with the terms of this Debenture.”
“156. In our view our analysis reflects the natural reading of the two provisions, when read together. This analysis also makes commercial sense in that it is consistent with the intention that the Chargor should continue to exercise the voting rights attaching to the shares despite the granting of security over them unless notice to the contrary is given by or on behalf of the mortgagee in accordance with the terms of the Debenture. Furthermore, there is no apparent business sense in there being a difference between whether the shares concerned are charged by way of a legal mortgage or by way of an equitable charge. On Mr Railton’s analysis, the position is different because where a legal mortgage had been perfected by the transfer of legal title into the name of the Security Agent, the voting rights would automatically vest in the Security Agent upon the occurrence of a Declared Default, but where there was only an equitable charge because the shares had remained in the legal ownership of the Chargor, it would be necessary for notice to be given under Clause 10.2 before the Security Agent could exercise its voting rights. In our judgment, it makes more commercial sense for the Security Agent to be given the option as to whether it wishes to exercise the voting rights in both circumstances. 157. Furthermore, as [counsel for the Regulator] submitted, and consistent with standard commercial practice, the lenders sought to enforce their security not through taking possession of the mortgaged property but through the appointment of Administrative Receivers over all the assets of the Chargors. That meant there was no commercial imperative for the Security Agent to assume the voting rights over the Group Shares. As a matter of law, the Administrative Receivers act as agent of the relevant company over whose assets they have been appointed receivers when they deal with those assets. They would nevertheless be able to act in the interests of the lenders when deciding how to exercise those rights in the same way as the Security Agent could have done, were it considered necessary at any point to exercise those rights.”
“We hereby give you notice that, pursuant to clause 24.2 (Acceleration) of the Senior Facility Agreement, in our capacity as Facility Agent, acting on the direction of the sole Bank, we made formal demand (a copy of which is attached …) (the Demand) on Box Clever Finance Limited (as Borrower) under the Senior Facility Agreement as referred to in the Demand for the payment forthwith of the sums referred to in the Demand. No payment has been received from Box Clever Finance Limited following the Demand. Accordingly, pursuant to clause 19 of the Senior Facility Agreement, in our capacity as Facility Agent (acting on the direction of the sole Bank) we hereby make formal demand on each Relevant Guarantor for the payment forthwith of the aggregate sums unpaid referred to in the Demand being£48,480,446.31 …. We give you notice that as referred to in the Demand the security created by the Debenture is enforceable and failing payment to us forthwith of all amounts demanded herein, we reserve the right of the Security Agent under the Debenture without further notice to exercise the power to appoint a receiver or receivers over the undertaking, property and assets of each Relevant Guarantor, the power of sale and all other powers conferred on us by law or the Debenture, or by any other mortgage, charge or security created by each Relevant Guarantor in the Security’s Agent’s favour. This demand is made without prejudice to and shall not be construed as a waiver of any other rights or remedies which we in our capacity as Facility Agent under the Senior Facility Agreement, or the Security Agent may have or be owed including, without limitation, the right to make further demands in respect of the sums payable by each Guarantor under the Senior Finance Documents or otherwise.” “We hereby give you notice that, pursuant to clause 24.2 (Acceleration) of the Senior Facility Agreement, in our capacity as Facility Agent, acting on the direction of the sole Bank, we made formal demand (a copy of which is attached …) (the Demand) on Box Clever Finance Limited (as Borrower) under the Senior Facility Agreement as referred to in the Demand for the payment forthwith of the sums referred to in the Demand. No payment has been received from Box Clever Finance Limited following the Demand. Accordingly, pursuant to clause 19 of the Senior Facility Agreement, in our capacity as Facility Agent (acting on the direction of the sole Bank) we hereby make formal demand on each Relevant Guarantor for the payment forthwith of the aggregate sums unpaid referred to in the Demand being£48,480,446.31 …. We give you notice that as referred to in the Demand the security created by the Debenture is enforceable and failing payment to us forthwith of all amounts demanded herein, we reserve the right of the Security Agent under the Debenture without further notice to exercise the power to appoint a receiver or receivers over the undertaking, property and assets of each Relevant Guarantor, the power of sale and all other powers conferred on us by law or the Debenture, or by any other mortgage, charge or security created by each Relevant Guarantor in the Security’s Agent’s favour. This demand is made without prejudice to and shall not be construed as a waiver of any other rights or remedies which we in our capacity as Facility Agent under the Senior Facility Agreement, or the Security Agent may have or be owed including, without limitation, the right to make further demands in respect of the sums payable by each Guarantor under the Senior Finance Documents or otherwise.”
“(i) In the vast majority of cases, whether a person is entitled to exercise voting rights is to be determined simply by looking at the register of shareholders and the company’s articles of association. (ii) In such cases, it is not permissible to look outside those materials and to inquire whether there are contractual or fiduciary restraints, as between the registered shareholder and others, which inhibit him in exercising those rights. (iii) In general there is no warrant for distinguishing between different degrees of trusteeship. (iv) The Court of Appeal has expressed the view that where the question is whether a person has a controlling interest in a company an exception may be made in the case of a bare trustee (or nominee or ‘dummy’). In such a case control resides in the beneficial owner to the exclusion of the trustee. (v) In the case of a shareholder which is itself a corporation, in determining how its voting rights as shareholders are exercised it is permissible to look outside the register of shareholders and inquire whose voice is heard when its votes are cast.”
“The phrase I have to construe in section 435(10)(b) of the 1986 Act is a typically compressed piece of draftsmanship. The verb ‘entitled’ governs both the exercise of voting power and the control of voting power. In looking at control of voting power, the word ‘entitled’ must, in my judgment, mean ‘entitled as between the registered shareholder and the controller of the voting power’. Why, then, should the word ‘entitled’ in its application to the exercise of voting power be construed as meaning ‘as between the registered shareholder and the company’? There is a further slight clue to the meaning of section 435. Unlike sections 736 and 736A of the 1985 Act, which refer to ‘voting rights’, section 435 of the 1986 Act refers to ‘voting power’. The word ‘rights’ naturally directs attention to legal rights, especially since section 736A(2) of the 1985 Act goes on to explain that voting rights means ‘rights conferred on shareholders in respect of their shares’. The word ‘power’, by contrast, gives me some encouragement to look to the economic reality of the case. A registered shareholder who holds his shares on a bare trust under which he is required to cast his vote in accordance with the directions of the beneficial owner might be said to have voting rights, but I do not consider that in any real sense he can be said to have voting power. The Court of Appeal, in two cases I have mentioned (Inland Revenue Comrs v J Bibby & Sons Ltd[1944] 1 All ER 548 and Inland Revenue Comrs v Silverts Ltd[1951] Ch 521 ), were clearly impressed by the appeal to the common sense and economic reality of the case of a bare trustee. I do not consider that the wording of section 435 compels me to take a different view. In addition Holdings was a corporate shareholder. If I ask whose voice would be heard if, after the declaration of trust, Holdings were to cast the votes attached to the shares registered in its name at a general meeting of the company, the only answer, in my judgment, is Kozo’s.”
“Subject to the one case of a bare trustee who is bound to vote in accordance with the directions of his beneficiary, we can find nothing in the language of the subsection which points to an intended distinction between a beneficial interest and an interest held by a trustee. A trustee in whom shares are vested in such circumstances that he has the usual discretion to vote as he thinks fit in the interests of the beneficiaries as a whole appears to us to be a person who, if he holds more than half the voting power, is properly and naturally described as a person who has a controlling interest in the company. He is commonly so described in the language of those familiar with the law and practice relating to companies …. The case of a bare trustee is not, of course, before us. But it seems to us that, in such a case, the control would naturally be said to be in the beneficial owner and not in the trustee; so that, if the shares carried more than half the voting power and the beneficial owner was director, he would properly be described as having a controlling interest in the company.”
“The words ‘controlling interest’ mean ‘controlling voting power’: that is the interest in view, not beneficial interest. As at present advised I agree with the Court of Appeal in the view that there is no half-way house between a construction which restricts the controlling interest to shares which are in the absolute beneficial ownership of the trustees and a construction which includes all shares of which the directors are registered holders. It is true that the Court of Appeal except the case of what they describe as a bare trustee, but express a view that the control would reside in the beneficial owner of the shares. The case envisaged is no doubt the case of the director who puts shares into the name of a nominee, taking probably a blank transfer executed by the nominee. I prefer to express no definite opinion in relation to this question, but to keep it as an open question to be debated when the necessity for a decision thereon in fact arises.”
“We confess that we feel strongly … the weight of the argument based on common sense, and where the registered shareholder is a bare trustee, in the sense of being a mere name or ‘dummy’ for the true owner, we should feel strongly inclined to answer the question reserved by the House in the Bibby case in the same way as Lord Greene MR. In the present case, however—perhaps fortunately—the answer would not, on an appeal to common sense, appear so clearly.”
“The House has laid it down that you cannot ask the question, when the votes are cast, ‘is the voice of the voter affected by obligations imposed upon him by some external control?’ One cannot ask, so to speak, has the tune been called by some third party? But you surely can ask and must ask, since the company itself cannot speak, whose is the voice that you hear? … I have already supposed the case, by way of contrast to the facts in Silverts’ case, where the custodian trustee happened to be a private company incorporated by two of the directors, all the shares of which were held by two of the directors. In such a case the votes of such a company would in truth be the votes of the directors, their’s would be the voice, their’s the will and ordering of that company’s voting power, and the fact that the company had obligations as a trustee, which were imposed upon it from an external source, would not make it legitimate to consider the interest of that external source. Put the other way, the National Provincial Bank, for the present purposes, votes not with the voice of the management trustees in question but with the voice of its own management, the shareholders and directors controlling. It is no doubt in some degree a fine distinction …. But, where the registered shareholder is a body corporate, you nevertheless may, and indeed must, for certain purposes, look beyond the register; for since the company cannot itself speak you must find out with whose voice it must do so. You may therefore ask, who does control the body corporate by the necessary shareholding interest in it?”
“(3) On a reference, the Tribunal may consider any evidence relating to the subject-matter of the reference, whether or not it was available to the Regulator at the material time. (4) On a reference, the Tribunal must determine what (if any) is the appropriate action for the Regulator to take in relation to the matter referred to the Tribunal. (5) On determining a reference, the Tribunal must remit the matter to the Regulator with such directions (if any) as the Tribunal considers appropriate for giving effect to its determination. (6) Those directions may include directions to the Regulator— (a) confirming the Regulator’s determination and any order, notice or direction made, issued or given as a result of it; (b) to vary or revoke the Regulator’s determination, and any order, notice or direction made, issued or given as a result of it; (c) to substitute a different determination, order, notice or direction; (d) to make such savings and transitional provision as the Tribunal considers appropriate.” (a) confirming the Regulator’s determination and any order, notice or direction made, issued or given as a result of it; (b) to vary or revoke the Regulator’s determination, and any order, notice or direction made, issued or given as a result of it; (c) to substitute a different determination, order, notice or direction; (d) to make such savings and transitional provision as the Tribunal considers appropriate.”
“37. … In my view, it is clear from section 103(3), (4) PA 2004 that it is for the tribunal to determine, in the light of the evidence before it, the appropriate action for the Regulator to take. There is nothing in these provisions, or elsewhere in PA 2004, which constrains the Tribunal's approach to its function in the way that an appellate court usually feels itself constrained on an appeal, whether the appeal is by way of review or rehearing (both of which terms have led to many pages of case reports). Nor is there anything in any other statute which has been brought to my attention or in the Upper Tribunal Rules which does so. Of course the Tribunal will pay due respect to the decision of the Panel and will usually be slow to depart from the Panel's decision if made after an oral hearing if there has been full evidence and argument. 38. The decision which the Tribunal makes is, however, its own decision, formed after its own assessment of the evidence before it (which may differ from that before the Panel) and after hearing the arguments addressed to it (which may differ from those presented to the Panel). The Tribunal does not sit as an appellate body from a decision of the Panel; it is not necessary to show that the Panel was in error. It is often the case that a committee or other body of persons (such as the Panel or indeed a tribunal or court) is faced with a range of decisions which it would be reasonable to make. On an appeal from a decision of such a committee or other body or persons, it might be necessary to show that they had acted outside that range even though the appellate court would, if the decision had been for it to make, have reached a different decision. The Tribunal's function in relation to the Panel is not of that sort. Rather, it is for the Tribunal to make its own decision; it may do so, indeed it is bound to do so, even if it thinks that the decision of the Panel fell within the range of the reasonable. …”
“This is an expert tribunal charged with administering a complex area of law in challenging circumstances. To paraphrase a view I have expressed about such expert tribunals in another context, the ordinary courts should approach appeals from them with an appropriate degree of caution; it is probable that in understanding and applying the law in their specialised field the tribunal will have got it right: see Cooke v Secretary of State for Social Security[2002] 3 All ER 279 , para 16. They and they alone are the judges of the facts. It is not enough that the decision on those facts may seem harsh to people who have not heard and read the evidence and arguments which they have heard and read. Their decisions should be respected unless it is quite clear that they have misdirected themselves in law. Appellate courts should not rush to find such misdirections simply because they might have reached a different conclusion on the facts or expressed themselves differently. I cannot believe that this eminent tribunal had indeed confused the three tests or neglected to apply the correct relocation test. …”
“I agree also with what Baroness Hale of Richmond says about the caution with which the ordinary courts should approach the decision of an expert tribunal. A decision that is clearly based on a mistake of law must, of course, be corrected. Its reasoning must be explained, but it ought not to be subjected to an unduly critical analysis. As your Lordships have indicated, there are passages in the decision that is before us which might, when read in isolation, suggest that the tribunal misdirected itself. But I am quite satisfied that the decision as a whole was soundly based, and that a more accurate wording of the passages that have attracted criticism would have made no difference to the Tribunal’s conclusion on the facts that the Secretary of State’s refusal of asylum in these cases should be upheld.”
“I, too, regard the Court of Appeal’s approach to have been wrong. There was no sound basis here for overturning the tribunal’s decision. Certainly, as both Lord Bingham (at para 11) and Baroness Hale (throughout her opinion) indicate, the tribunal’s determination could have been clearer. … I, too, conclude, however, that so expert and experienced a tribunal cannot readily be supposed to have committed any of these errors sought to be inferred from its sometimes infelicitous drafting. …”
“It may very well be that the multiplicity of issues with which it had to deal led the tribunal into making less plain than it should the issue it was addressing at some points in the judgment. I do not, however, think that the Court of Appeal was entitled to attribute to this experienced and well-qualified tribunal what would, if made, have been an egregious and inexplicable error, and read as a whole the judgment does not suggest that the tribunal made such error.”
“The submission that the court should consider the appeal in accordance with the usual approach inCPR r.52.11 ignores the limitation expressly imposed by s.13(1) of the 2007 Act. I do not accept the submission that the issue of justification raised in this appeal is an issue which was outwith the expertise of the Upper Tribunal, nor do I accept the submission that the issue before the Upper Tribunal was one of ‘constitutional significance’. It is common ground that there was no direct or targeted discrimination in these three appeals. In my judgment, the question whether the indirectly discriminatory effect of a particular rule in the benefits system because it does not distinguish between mental patients and other patients in hospital is, or is not, ‘manifestly without reasonable foundation’ is very far from being an issue of ‘constitutional significance’. On the contrary, it is precisely the kind of issue that is best left for evaluation and judgment by a specialist appellate tribunal with a particular expertise in the field of social security law. If, as in the present case, the First-tier tribunal has not applied the correct legal test when deciding the issue of justification, that specialist appellate tribunal is the Administrative Appeals Chamber of the Upper Tribunal. I will therefore consider whether the appellants have demonstrated an error of law on the part of the tribunal which has a particular expertise in the benefits system.”
“In conclusion, the references cited above show clearly in my view that to limit intervention to a ‘significant error of principle’ is too narrow an approach, at least if it is taken as implying that the appellate court has to point to a specific principle—whether of law, policy or practice—which has been infringed by the judgment of the court below. The decision may be wrong, not because of some specific error of principle in that narrow sense, but because of an identifiable flaw in the judge’s reasoning, such as a gap in logic, a lack of consistency, or a failure to take account of some material factor, which undermines the cogency of the conclusion. However, it is equally clear that, for the decision to be ‘wrong’ underCPR r 52.11 (3), it is not enough that the appellate court might have arrived at a different evaluation. As Elias LJ said in R (C) , Secretary of State for Work and Pensions[2016] PTSR 1344 , para 34: ‘the appeal court does not second-guess the first instance judge. It does not carry out the balancing task afresh as though it were rehearing the case but must adopt a traditional function of review, asking whether the decision of the judge below was wrong’.” ‘the appeal court does not second-guess the first instance judge. It does not carry out the balancing task afresh as though it were rehearing the case but must adopt a traditional function of review, asking whether the decision of the judge below was wrong’.”
“When the case comes before the court it is its duty to examine the determination having regard to its knowledge of the relevant law. If the case contains anything ex facie which is bad law and which bears upon the determination, it is, obviously, erroneous in point of law. But, without any such misconception appearing ex facie, it may be that the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal. In those circumstances, too, the court must intervene. It has no option but to assume that there has been some misconception of the law and that this has been responsible for the determination. So there, too, there has been an error in point of law.”
“… it is our view that it would be reasonable to issue FSDs to the Targets and to require them to secure that financial support is put in place for the Scheme, within six months of the issue of the FSDs. The factors that have weighed most heavily with us are the value of benefits received by the Targets from the Employers and the Targets’ relationship with those Employers. Overall it seems to us that this is a case where the Scheme’s principal employer, [BxC Tech], was set up by the Granada and Thorn groups as part of a transaction that aimed to extract value from the consumer rental businesses of those groups, but leave them able to share in any future profit. A requirement of that transaction was that a pension scheme be set up for transferring employees; no value could have been extracted without this. Valuable financial benefits were received by the Targets, while the structure used to obtain them required [BxC Tech] to borrow£860m from WestLB, left all of [BxC Tech’s] assets charged to secure that borrowing, and left the Scheme with a weak employer as a result. It is also relevant that this borrowing was not secured on any assets of Granada or Thorn group companies, insulating them from financial difficulties of [BxC Tech]. We do not find misconduct on the part of the Targets, but consider the issue of FSDs to be an appropriate and reasonable response to the events of 1999 to 2003 in relation to [BxC Tech] and the Scheme.”
“425. … We accept, as the Regulator submitted, that the jurisdiction in s.43 is primarily founded on there being a present or past relationship between the potential targets of an FSD and the scheme and the nature of that relationship making it reasonable for the potential target to provide financial support to the scheme. It is therefore apparent that the closer the relationship is or has been the more likely it will be that it will be reasonable to issue an FSD, whereas if the relationship in practice was more distant, or ceased to exist a long time before the issue of an FSD was being considered, it is less likely that the issue of an FSD would be reasonable, even if the potential target has received benefits directly or indirectly from the employer. 426. Therefore, the fact that a target has not received any substantial benefits directly or indirectly from an employer is not a bar to the issue of an FSD if, taking into account the nature of the relationship between the potential targets and the employer or the scheme, it is otherwise considered reasonable for an FSD to be issued in circumstances where the scheme is insufficiently resourced, particularly where those circumstances have arisen as a result of the breaking of the connection between the potential targets and the employer of the scheme. 427. However, if the potential target has in fact received substantial benefits from the employer in circumstances where there is or has been a close relationship between the potential target and the scheme or its employer, it is more likely that it will be reasonable to issue an FSD where the employer is insufficiently resourced.” insufficiently resourced.”
“430. Furthermore, in making our assessment, we should give the legislation a purposive interpretation, having regard to the policy objective of the legislation, which … is to create a rescue framework for pension schemes which are in deficit through the medium of imposing new liabilities on those who have had the necessary degree of association and connection with the relevant scheme at the relevant time. We should therefore consider whether the legislation was intended to embrace the circumstances pertaining to this case as being circumstances in which it is reasonable to issue an FSD. Therefore, we should not interpret the provisions restrictively and should give terms such as ‘relationship’ ‘involvement’ and ‘benefit’ a wide meaning.”
“431. It is also the case … that s.43 PA 2004, in contrast to the contribution notice regime created by s.38 PA 2004, is not a fault-based regime. The jurisdiction under s.43 is not established by reference to specific acts or omissions having occurred but by reference to the circumstances prevailing at the time the decision is taken to issue the FSD.”
“433. In our view, it is not necessary to find well-founded criticisms of the manner in which a particular transaction was structured or implemented, or the way that a business was operated before the jurisdiction can be exercised. As will become apparent, we do not seek to attribute any blame to the Targets as regards the manner in which the Joint Venture was structured or implemented but there is an important distinction between blame and responsibility. Even if all the decisions made by the Targets were taken for good commercial reasons at the time and, without the benefit of hindsight, were perfectly reasonable decisions to take, in our view the key question is whether the structure left the Joint Venture vulnerable to adverse movements in the market so that Granada should bear some responsibility for the risks which eventuated for the Employers and the Scheme. The fact that this is a matter of responsibility rather than blame is also relevant to the extent to which hindsight is a legitimate factor in our consideration.”
“118. The Targets also contend that they had no connection with the Scheme after the appointment of the Administrative Receivers and that the conduct of the Trustee in relation to the operation the Scheme is a relevant factor. In that regard they contend: (1) The Targets ceased to have an economic interest in the Joint Venture after the appointment of the Administrative Receivers and all the liabilities accrued in the Scheme after that date were at the behest of the Administrative Receivers. (2) There were avoidable delays in closing the Scheme to accrual after the appointment of the Administrative Receivers. (3) The additional liabilities arising from pay rises after the appointment of the Administrative Receivers could easily have been avoided. (4) No advice was sought about whether it was advisable to incorporate the Top-Up Arrangement into the rules of the Scheme in December 2003. (5) Continuing to run the Scheme after 2003 was very risky and was highly likely to result in the large increase in the deficit that has in fact occurred. (6) It was wrong not to put the Scheme into winding up soon after 2003 so as to take advantage of the anticipated creation of the PPF which has resulted in a large increase in the PPF’s exposure. (7) There was no justification for not winding up the Scheme after 2003 and not triggering a PPF assessment period after April 2005. 119. Finally, the Targets contend that Granada has already provided a degree of financial support to the Scheme.”
“453. … as it was the Shareholders who decided the level of risk that they would ask the Joint Venture to bear, and there was no independent assessment of those risks on its behalf, it is clear that there is a high degree of responsibility on the part of the Shareholders for what ultimately transpired, namely that many of these risks came to pass and the Joint Venture failed. We do not seek, however, to attribute blame to the Shareholders; to do so would be to exercise a degree of hindsight and we accept that at the time of the transaction the Shareholders hoped and expected that the Joint Venture would be a success.”
“459. … the responsibility of the Shareholders for the creation of the Joint Venture with the features that it had, in the context of which a decision was made to establish a defined benefit occupational pension scheme, is a highly relevant and important factor in our assessment of reasonableness.”
“482. … The initial financing of the acquisition, with the commitment to refinance the borrowings through a securitisation, were, as we have found, the result of decisions made by the Shareholders. Those decisions were made against a background of a long-term decline in the rental market as the Shareholders were fully aware. It is therefore plain that the failure of the Joint Venture was a direct result of the structure adopted by the Shareholders and they therefore must bear the responsibility for it, even if, as we previously said, we make no criticism of the choice they adopted. They were fully aware of the risks and they decided to accept them. This is therefore another clear factor demonstrating a close relationship between the Shareholders and the Joint Venture.”
“507. … we cannot say, so long after the event, in circumstances where both experts agree that it is impossible now to do a proper valuation of the business, that a price of£600 million is so obviously unreasonably high that it cannot reflect a proper valuation of the Granada rental business at the time. We therefore have not concluded that the price of£600 million paid overvalued Granada’s rental business at the time. 508. However, we do not conclude from this that the fact that the Targets may have paid an appropriate price for the business is a positive factor tending against the issue of an FSD. All we have concluded at this stage is that the Targets did not obtain any benefit from the Joint Venture having acquired the Granada rental business at an overvalue.”
“(1) An immediate cash realisation of its interest in a declining business. (2) Access to potential upside in the event the Joint Venture generated distributable funds or was listed in the future, with protection from any downside given the non-recourse structure of the Joint Venture. (3) The proceeds of the transaction helped Granada reduce its net debt and improve its financial position.”
“In summary the points that we have made regarding the benefits which arose out of the payment of the cash consideration and the structure of the Joint Venture transaction, reinforce the conclusions we have come to on the relationship issue, to which they are closely linked. We find that the other factors that we have considered in relation to the benefit issue are broadly neutral.”
“522. … the decision to create a defined benefit scheme did create a funding risk to the Employers, and consequently a risk to pension benefits that former Granada members would in future earn in the Scheme. Furthermore, Granada made a conscious decision to approve the establishment of the Scheme as a defined benefit scheme against the background of the Employers being part of a highly leveraged Joint Venture, with the inherent risks of such a structure. Without the support of the Shareholders the Employers’ covenant was therefore undoubtedly relatively weak.”
“It is quite clear to us, therefore, that Henderson J was not seeking to lay down any general principle as to when it was legitimate for a trustee to take into account the availability of the PPF. The question has to be considered on a case-by-case basis. We accept the Trustee’s submissions that the circumstances in this case are quite different, and rather than having the objective of ensuring that the PPF would be available to provide compensation, its primary aim was to avoid that event occurring through its negotiations with the Shareholders or, if those failed, the regulatory process leading to the issue of an FSD. The fact that the Trustee knew that the PPF would be available were neither of those objectives realised, does not in our view make the Trustee’s strategy impermissible in the way that it was found to be in Hope. We accept that the Trustee was not seeking to justify by reference to the PPF a course of conduct that would otherwise have been improper. It was seeking to preserve the possibility of continuing negotiations with the Targets and to preserve the possibility of an FSD (and ultimately a contribution notice) if a compromise could not be reached, fully aware of the risks if either of those outcomes was not achieved.”
“580. … we accept that because, as we have found, the legislation is capable of imposing new financial obligations by reference to transactions that have been entered into before the legislation came into force, the question as to whether taking account of all the circumstances it is reasonable to direct such an imposition is a highly relevant factor to be taken into account in our assessment of reasonableness. As we observed at [16] above, account must be taken of the interests of the Targets as well as those of the members of the Scheme and the Trustee. 581. As we observed at [207] above, application of new legislation to existing circumstances does involve a degree of retrospectivity which may create a degree of unfairness or hardship. We should consider whether in the circumstances of this case that degree of unfairness or hardship is so significant that we should conclude that it would not be reasonable to direct the issue of an FSD to the Targets. 582. As Lord Pannick powerfully submitted, Granada arranged their affairs in 1999 to 2000 by entering into a particular transaction by which they disposed of the rental business for which they received a sum of money which they then applied in the course of their business. The Regulator is now seeking to upset those plans as to the sale and the proceeds of sale by imposing a liability that did not exist in 1999 to 2000. Although Lord Pannick had submitted that the basis of the Regulator’s case for the issue of an FSD is based on criticisms of the transaction, we seek to make no criticism of the choice that the Targets made in how they wished to structure the transaction. 583. As we have found, the transaction created risks for which the Targets are responsible because of the manner in which the Joint Venture was structured. At the time of the transaction, however, there was no basis on which the Targets could have foreseen that many years later they may be called upon to support the liabilities of the Scheme and the whole basis of the structure that the Shareholders created was that both the Joint Venture and the Scheme were to be non-recourse to the Shareholders. 584. Furthermore, as we have observed at [228] above, there was no opportunity for the Targets to seek clearance as to the transactions and thereby identify the potential consequences and decide whether or not to proceed in the light of the answers they received from the Regulator. There is clearly a disadvantage to those who entered into transactions prior to the coming into force of PA 2004 relative to those who entered into transactions once the legislation came into force. However, we decided at [229] above, degree of hardship created was a very qualified kind of hardship. 585. We therefore conclude that the fact that the Targets could not have known at the time of the transaction that further liabilities were liable to be imposed as a result of it and that they had no opportunity to seek clearance in relation to the transaction are significant factors tending against the issue of an FSD in this case.”
“(1) The circumstances relating to the relationship which the Targets had with the Employers point very strongly in favour of the issue of an FSD: see [492] to [494] above. By their choice of structure for the Joint Venture, the Shareholders extracted considerable cash from the business with no risk of recourse to their assets. They retained an ongoing interest in the merged business with the possibility of further value being generated if the business was successful, but without having to bear any responsibility if the business, whose strategy they continued to determine, subsequently failed. (2) These findings are reinforced by our conclusions on the benefits issue: see [518] above. (3) The Targets had a strong connection and involvement with the Scheme up to the point at which the Administrative Receivers were appointed, a factor which is not diminished significantly by the fact that the practical connection with the Scheme ceased once the Administrative Receivers were appointed or by the actions that the Trustee took after that time. (4) We place some weight on the other factors identified by the Targets, the most significant being the issue of retrospectivity.”
“587. The Targets’ case is, as they say, straightforward. The Joint Venture was a bona fide transaction undertaken in the belief that the new venture would benefit from synergies and deliver considerable further value in the future to the Shareholders. That belief was not an idle hope but was supported by the considerable success both Shareholders had had in acquiring declining businesses in the past. The structure adopted was a logical one, and the price paid was an appropriate one. The due diligence which was undertaken by the Shareholders for their own benefit was considerable, appropriate in the circumstances, and involved appropriate consideration of the risks of the transaction. The Tribunal must guard against being illegitimately influenced by hindsight. Questions of judgment of risk must be assessed by reference to what was actually known at the time. Furthermore, at the time of the transaction the Targets had no reason to believe that further liabilities would be imposed and there was no basis on which they could have obtained clearance for the transaction.”
“588. As we have said, we do not take issue with the commercial merits of the transaction or the manner in which it was structured. However, taking those factors together which we say point strongly in favour of the issue of an FSD, our conclusion is that the key issue of responsibility for the risks to the Scheme that the Shareholders agreed to create as a defined benefit scheme because it was in both the Joint Venture’s and their own interest to do so, and the substantial benefits received, all through a structure that the Shareholders created and which meant that the Scheme had a weak employer’s covenant, clearly outweigh on the facts of this case the strong points that the Targets make on retrospectivity. 589. We therefore conclude that it is reasonable in this case for the Regulator to issue an FSD to the Targets.”
“Put simply, it cannot be reasonable to impose a financial sanction on a party in respect of conduct which has been found to be bona fide, and has not been found to be legally or ethically improper, by reason of legislation which was not in force, and not even envisaged, at the time of the conduct in question and therefore in circumstances where he could not have had any opportunity to avoid such consequences or even become aware of the risk of them coming to pass. That is especially so where that very legislation, when enacted, provided a clearance mechanism specifically set up as a safeguard to allow persons who might be affected to establish their potential exposure and act accordingly.”
“1. The Tribunal failed to recognise that s.43(5)(b) and s.43(7) read with Article 1 of the First Protocol to the European Convention on Human Rights mean that an FSD cannot be ‘reasonable’ if it is applied with retrospective effect, unless there is a ‘special justification’. The Tribunal erred in the final sentence of paragraph 581 of the Decision by stating the test as being whether the ‘degree of unfairness or hardship is so significant that we should conclude that it would not be reasonable to direct the issue of an FSD to the Targets’, a reversal of the applicable principle. 2. In any event, the Tribunal erred in failing to understand at paragraphs 586 and 588 that there was and could be no special justification in the present case because: (1) Each of the facts relied on at paragraph 586(1)-(3) was based on retrospectivity. (2) The Tribunal found no fault or misconduct or even grounds for criticism of the Targets for the acts or transactions on which the Tribunal relied. (3) There was no basis for finding a special justification in the context of an Act which includes the clearance procedure in section 46 (the protection of which is ineffective if section 43 is applied with retrospective effect) and which provided for retrospective effect in section 38 and 52 where fault or misconduct is required but only back to April 2004. (4) The Tribunal (at paragraph 586(4)) wrongly relegated retrospectivity to a ‘factor’ on which ‘some weight’ should be placed.”