British Airways has 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 judgement[1] 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 CPR 35.1.

Blog by Greg Pooler and Tim Brown

Facts

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 increases in payments were correspondingly smaller, angering many of BA's 29,000 pensioners. 

The trustees of the pension scheme (and 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 £680m.  

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 the following five main grounds:

  1. The Deputy Master erred in fact/law in failing to take into account or even record in the judgment that the trustees had conceded the need for some actuarial evidence.
  2. The Deputy Master applied the wrong test in holding that in order for expert evidence to be admissible it must be reasonably required in order to determine a specific issue in dispute.
  3. It was wrong of the Deputy Master to refuse to admit the expert evidence because he thereby tied the hands of the trial judge, preventing BA from presenting its case
  4. The Deputy Master had failed to understand BA's case and therefore the importance of actuarial evidence in establishing that case.
  5. The Deputy Master failed to address, or even record, BA's case.

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 in understanding something (as opposed to the expression of a professional opinion on it), parties ought to be able to agree an uncontentious explanation that can be presented to the court.  While this is no doubt a sensible approach, whether in practice parties are likely to address their minds to 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 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 contain 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 was 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 needs to be assessed, taking into account factors such as the value of the claim, the effect of a judgment either way on the parties, which party bears the burden of the cost of such evidence and any delay that may be incurred by allowing the evidence (especially the effect on any trial date).

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:

  • Looking at each issue, is it necessary for there to be expert evidence before that issue can be resolved. If it is necessary, rather than merely helpful, it must be admitted.
  • If the evidence is not necessary, would it be of assistance to the court in resolving that issue?  If it would be of assistance, but not necessary, then the court would be able to determine the issue without it.
  • Where the court will be able to resolve the issue without expert evidence, the third question is whether, in the context of the proceedings as a whole, expert evidence on that issue is reasonably required to resolve the proceedings. (As an aside, the judge recognised that a particular piece of expert evidence may go to more than one pleaded issue, or evidence necessary for one issue may need only slight expansion to cover another issue where it would be of assistance but not necessary.)

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 is able to 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 2 and 5 and that as a consequence, grounds 1, 3 and 4 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.

Comment

This decision may be seen as part of a wider trend for judges to focus on issues of proportionality when addressing their minds to 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 their minds to 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 while 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.