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The Pensions Regulator is successful in legal challenge concerning the Silentnight Group DB scheme

Ref: PN17-02
Thursday 12 January 2017

A group of claimants has failed to obtain permission to bring judicial review proceedings against The Pensions Regulator (TPR) in relation to an ongoing anti-avoidance case concerning the Silentnight Group defined benefit (DB) scheme.

A judgment handed down on 10 January 2017 by the Administrative Court found that judicial review is not the appropriate forum in which to resolve the issues raised by the claimants.

TPR’s General Counsel and Director of Legal Services, Anthony Raymond, welcomed the judgment, saying: “The judge agreed with our submission that these issues should not be resolved by the Administrative Court. We will defend what we consider to be unfounded judicial review applications and do all we can to ensure that these do not derail or delay the resolution of our cases before the Determinations Panel.”

The anti-avoidance case relates to the acquisition of the business of Silentnight, the bed manufacturer, by the HIG Group, a US private equity group, in May 2011. At the time Silentnight operated a DB pension scheme which was in deficit.

The scheme remains in deficit and is unable to meet its liabilities in full. Subject to action by TPR, the pension scheme is likely to enter the Pension Protection Fund.

In December 2014 TPR issued a Warning Notice warning the claimants of its intention to seek contribution notices for £17.16 million. In June 2016, following representations received from the trustees and claimants, TPR issued a second Warning Notice warning the claimants of its intention to seek contribution notices for a higher sum equivalent to the scheme’s entire deficit at the relevant time.

TPR’s decision to issue a second Warning Notice was challenged by the claimants on the ground that it was unlawful. The hearing of the judicial review application was fast-tracked at TPR’s request.

Mrs Justice Whipple’s judgment endorsed TPR’s position that permission should not be granted for the judicial review application to proceed as there is an alternative route available to the claimants for resolution of the issues through TPR’s Determinations Panel and, if a reference is made, the Upper Tribunal, under the regulatory framework established by Parliament in the Pensions Act 2004. Mrs Justice Whipple further held that there was nothing exceptional about the claimants’ challenge which warranted judicial review.

TPR’s anti-avoidance case now awaits receipt of representations from the claimants and other directly affected parties in relation to the June 2016 Warning Notice.

Editor's notes

  1. Mrs Justice Whipple also dismissed a secondary application made by the claimants seeking disclosure of certain categories of documents by TPR. In her reasoning Whipple LJ observed that TPR has an ongoing duty under the Case Team Procedure (May 2014) (PDF, 52kb, 12 pages) to keep disclosure under review. If a reference is made to the Determinations Panel, they will decide all procedural issues in accordance with the Determinations Panel Procedure (PDF, 50kb, 10 pages). Further, the Upper Tribunal has powers to order disclosure, if the case is referred to it in due course. Mrs Justice Whipple added that disclosure is much more appropriately considered by experts in the matters raised in the two Warning Notices, in the context of the statutory scheme.
  2. TPR is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of TPR’s functions under Part 3 of the Pensions Act 2004 only).

Press contacts

Matt Adams 01273 662086

David Morley 01273 662091

pressoffice@thepensionsregulator.gov.uk

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