Court of Appeal rejects ITV appeal against TPR in Box Clever case

James Phillips
clock • 3 min read

The Court of Appeal has dismissed ITV's appeal against a financial support direction (FSD) issued by The Pensions Regulator (TPR) in a long-running case over the Box Clever Pension Scheme.

In a judgment delivered today (20 June), the Court of Appeal rejected overturning an Upper Tribunal ruling last year that said the regulator was right to use its powers to seek additional financial support from ITV, formerly known as Granada, for the scheme.

The Court of Appeal said ITV's arguments against the Upper Tribunal's judgment were both "without substance" and that the lower court had been "entitled to reach the conclusion which it did".

While the FSD does not in itself impose any financial obligations, ITV will now be expected to outline how it will fund the scheme in the future. 

TPR called on ITV to "accept its responsibility" and make plans to fund the scheme. 

The dispute arises from the creation of Box Clever, a TV rental company formed in 2000 as a joint venture between Granada, now ITV, and Thorn, now Carmelite.

When the company collapsed in 2003, the pension scheme was left with a significant blackhole, and TPR issued an FSD against ITV in 2010.

The case primarily focused on whether ITV was "connected or associated" with the scheme and the power it exercised over the scheme.

But there was also an additional nuance in the Upper Tribunal: the power TPR is seeking to use - and TPR itself - did not exist when Box Clever was established or collapsed. The court was asked to rule on whether the issuance of an FSD was reasonable, and if this perceived retrospectivity was permissible.

In today's judgment, the Court of Appeal said: "Retrospectivity, even in a case where the target is not at fault, is not necessarily a trump card."

As of last year, the scheme had 2,800 members and a £115m deficit.

TPR director of enforcement Erica Carroll said: "ITV has raised numerous legal challenges against our actions for over seven years in a bid to avoid responsibility for the Box Clever scheme.

"Both the Upper Tribunal and now the Court of Appeal have confirmed that ITV should provide financial support to the scheme. Disappointingly, ITV sought the Court of Appeal's permission to appeal the decision to the Supreme Court, however we are pleased that this was refused.

Carroll added: "We hope that ITV will finally accept its responsibility and work with us so that a good outcome can be achieved for members."

While initially denied permission to appeal, ITV said it would now apply directly to the Supreme Court.

A spokesperson said: "ITV is naturally disappointed with this decision and believes it is unfair. It relates to a legitimate and sensible commercial transaction that was undertaken for the benefit of ITV's shareholders, almost 20 years ago, and, crucially, before the relevant legislation came into force." 

Box Clever: History in brief

TV rental business Box Clever Technology (BCT) was established in 2000 with the merger of Granada and Thorn's respective TV rental businesses and an £860m loan from West LB. Members of Granada and Thorn's DB schemes were transferred into the BCGPS. Granada Group is said to have received a financial benefit of £587m from the joint venture.

Both Granada and Thorn sent two directors to sit on BCT's 10-person board, but in 2003 the company collapsed after being unable to pay off the leverage. Afterwards, certain parts of the BCT business were sold off to a new firm, while some Granada companies remained associates of the remaining BCT companies.

Later, ITV, which was formed through the merger of Granada and Carlton Communications, sought a clearance statement from the regulator but this was not provided and, in 2011, TPR issued an FSD each to five ITV group companies.

James Phillips
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James Phillips

Professional Pensions journalist from 2016-2022

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