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22 September 2015
In British Airways v Spencer ( EWHC 2477 (Ch)) British Airways (BA) succeeded in partly overturning the decision of a deputy master who refused BA permission to adduce expert evidence in litigation against the trustees of one of its defined benefit pension schemes. The judgment is a useful resource for practitioners and litigants in providing guidance as to when expert evidence will be considered "reasonably required" for the purposes of Civil Procedure Rule (CPR) 35.1.
In 2013 BA brought legal proceedings against the trustees of one of its defined benefit pension schemes. The dispute is a legacy of BA's privatisation in the 1980s and arises out of the fund's classification as a civil service scheme. In short, this meant that the fund was subject to certain changes to the way payments made to pensioners were adjusted upwards for inflation; previously, this adjustment was calculated on the basis of the Retail Price Index (RPI). However, in 2011 the rules changed so that RPI was replaced with the Consumer Price Index (CPI). The CPI is a less generous measure of inflation, which in turn meant that increases in payments were correspondingly smaller, angering many of BA's 29,000 pensioners.
The trustees of the pension scheme (under pressure from pensioners) decided to increase payments from the fund by an amount that was half the difference between the RPI and CPI. BA retaliated, declaring that this decision was perverse, given that the scheme already had a deficit of approximately £680 million.
BA issued legal proceedings against the trustees in 2013 and sought to adduce actuarial expert evidence in relation to a number of pleaded issues. In broad terms, this evidence was directed at establishing the inaccuracy of actuarial advice on which the trustees had relied in exercising their discretionary powers to make pension increases above the CPI rate. BA's case was that the decision to increase the pension payments was pre-determined by the trustees and that the trustees' appointed actuaries had acted outside their role as professional actuarial advisers in recommending to the trustees what they considered was an appropriate increase. The trustees sought to argue that the professional advice afforded them a "safe harbour" against any challenge to their decision, so providing them with a complete defence to the litigation. It did not, they said, matter whether the advice was right or wrong.
At a case management hearing the deputy master rejected BA's application for permission to adduce expert evidence, finding that the pleaded issues "were eminently capable of being determined by the judge at trial as issues of fact and law without the assistance of expert evidence".
BA appealed the decision to the High Court on five main grounds:
The judgment provides instructive guidance for practitioners as to how the court should approach questions concerning the admissibility of expert evidence. Before tackling each ground of appeal, the judge commenced with a general consideration of the law and policy governing the use of expert evidence in civil claims, at the outset affirming the principle (enshrined in CPR 35.1) that expert evidence should be restricted to that which is reasonably required to resolve the proceedings.
The judge considered that in situations where expert evidence would help the court to understand something (as opposed to the expression of a professional opinion on it), parties ought to be able to agree an uncontentious explanation that could be presented to the court. While this is no doubt a sensible approach, whether in practice parties are likely to address this distinction and show a willingness to cooperate in this way remains to be seen.
Turning to the grounds of appeal, in relation to the first, BA had pleaded that the advice on which the trustees sought to rely in order to justify the pension increases amounted to personal rather than professional opinion. BA relied on the minutes of a meeting recording the trustees' discussion with the actuary from which it was clear that he was being asked to express his personal opinion on the appropriate level of increases in pension. BA argued that the actuary exceeded the advisory role of a professional actuary. The trustees had conceded that expert evidence should be allowed on this point and the judge agreed with BA that the deputy master had erred in refusing to allow BA to adduce it.
The discussion concerning grounds two to five contained the substance of the judge's observations on the admissibility of expert evidence. The judge expressed the view that expert evidence must not be admitted (as BA's counsel had submitted) just because it is helpful in resolving an issue; while expert evidence may indeed be helpful, its admission may still be undesirable on the basis that it is disproportionate in light of the overriding objective. The proportionality must be assessed, taking into account factors such as:
The judge formed the view that if expert evidence is reasonably required to resolve a pleaded issue, it will also be reasonably required to resolve the proceedings (observing further that if an issue is deemed not to affect the outcome of a case, then it should not feature at all). The judge emphasised the need to look at the pleaded issues and to ask the following questions:
The judge further commented that just because the court will be able to decide the matter without expert evidence, this does not mean that it should not be admitted. Even if the court can determine the issue without expert evidence, if it is nevertheless helpful the court must determine whether it falls within CPR 35.1 in accordance with the principles summarised above. The judge also emphasised the need to address the question of the admissibility of expert evidence in relation to each separate pleaded issue. In this regard, the judge disagreed with the deputy master's approach of failing to look at each of the pleaded issues in turn.
The judge concluded that BA had succeeded on grounds two and five and that as a consequence, grounds one, three and four added nothing. Other factors that the judge considered weighed in favour of admitting the evidence were the sums at stake for BA and the opportunity not to admit the expert evidence at a later date if it transpires not to be of assistance once the issues are more settled.
This decision may be seen as part of a wider trend for judges to focus on issues of proportionality when addressing case management decisions.
Admission or otherwise of expert evidence can be hotly contested in large complex cases where it frequently takes the form of expensive lengthy reports, the contents of which can often go beyond the issues in the case and be difficult to disentangle. The judgment is useful in providing a steer as to how questions concerning the admissibility of expert evidence should be approached and the factors that a court will consider in deciding whether to approve the use of expert evidence. Parties should address the questions referred to above and tailor their arguments accordingly when seeking permission from the court to adduce expert evidence. The mere fact that the evidence will be of assistance to the court in understanding technical matters will not by itself be enough to render the evidence admissible. Against this, it should be recognised that the judge did also say that the question as to whether expert evidence is "reasonably required" should be informed by reference to the overriding objective and the court should not be over-zealous in excluding evidence in order to save time and cost.
For further information on this topic please contact Tim Brown or Greg Pooler at RPC by telephone (+44 20 3060 6000) or email (firstname.lastname@example.org or email@example.com). The RPC website can be accessed at www.rpc.co.uk.
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