Belfast Telegraph

Thursday 2 October 2014

Directors of failed textiles firm Desmonds lose High Court challenge over staff pensions

Desmonds, a Derry-based clothing company, went into liquidation in 2004, leaving a huge gap in an employees' pension fund.
Desmonds, a Derry-based clothing company, went into liquidation in 2004, leaving a huge gap in an employees' pension fund.

Two former directors of closed-down textiles firm Desmonds have failed in a High Court challenge over being ordered to pay a combined £1 million by the pensions regulator.

Denis Desmond and Donal Gordon were seeking a declaration that determinations made against them had no legal validity.

But a judge threw out their case after rejecting arguments about the procedures applied.

Desmonds, a Derry-based clothing company, went into liquidation in 2004, leaving a huge gap in an employees' pension fund.

Hundreds of staff who feared they had lost out have since qualified for compensation under the government's Financial Assistance Scheme.

They are expected to receive a minimum 90% of their entitlements.

In February 2010, amid lobbying by the trustees, the pensions regulator commenced regulatory proceedings against shareholders Denis Desmond, Annick Desmond and Donal Gordon.

It argued that the Members Voluntary Liquidation was orchestrated to avoid the company having to pay the deficit in the scheme.

There is no suggestion of any wrongdoing, but the regulator sought an order for the three shareholders to make a contribution of £10.9m to the scheme.

In May 2010 a determinations panel decided Mr Desmond should pay £900,000, and Mr Gordon £100,000.

No determination was made in the case of Mrs Desmond.

Mr Desmond and Mr Gordon referred the decision made against them to the Upper Tribunal in London.

That hearing was put on holding pending their separate judicial review challenge at the High Court in Belfast.

Their lawyers argued that the pensions regulator failed to properly determine the procedure under the Pensions (Northern Ireland) Order 2005.

As part of a wide-ranging case, they sought a declaration that the panel's determinations were nullified.

But in a ruling issued today, Mr Justice Treacy said the overriding objective of procedural requirements is to secure fairness and the interests of justice.

Refusing leave to seek a judicial review, he said: "In the present case upholding the applicants claim would deprive the members of the scheme of any relief against them."

The judge also held that the application to quash notices issued in 2010 was made far too late.

He added: "Even if there were good reason to extend time, to do so would be contrary to the interests of the members of the scheme represented by the Trustee and contrary to the public interest.

"I further agree with the respondent (regulator) that allowing such matters to proceed to judicial review after such a long period of time will tend to undermine public confidence in pensions regulation."

Desmonds closed its textile warehouse and headquarters at Drumahoe, Co Londonderry in 2004 with the loss of 260 jobs.

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