Belfast Telegraph

Thursday 24 July 2014

Third Desmonds textiles shareholder could be forced by court to pay into employees' pension fund

Desmonds factory closed in 2003
Desmonds factory closed in 2003

A third former shareholder in closed-down textiles firm Desmonds could be forced to pay into its pension fund following a Court of Appeal ruling.

Senior judges in Belfast today backed a challenge to a decision that no contribution notice should be issued against Annick Desmond.

Her husband Denis Desmond and another director, Donal Gordon, have already been ordered to pay a combined £1 million.

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.The decision was referred to the Upper Tribunal in London, which held it would not be appropriate to direct the regulator to issue a contribution notice against Mrs Desmond.

That was based on the 2005 Pensions (Northern Ireland) Order being assessed as giving no such power to the regulator or tribunal.

A joint appeal was brought by the pensions regulator and trustees in a bid to overturn that finding.

They argued that the order does provide the power to issue a contribution notice.

Ruling on the case today, Lord Chief Justice Sir Declan Morgan said that a "careful reading of the statutory scheme indicates that it is for the tribunal to determine whether on a reference it should substitute a decision to exercise the power to issue a contribution notice in place of the determination not to do so".

Sir Declan, sitting with Lord Justices Higgins and Coghlin, confirmed that that appeal was being allowed.

A further hearing will take place on the issue of legal costs

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