British Airways Plc v Spencer & Ors (Trustees of the Airways Pension Scheme)

Factual and Procedural Background

This opinion concerns an appeal from a case-management decision made by Deputy Master Cousins ("the DM") in a written judgment following a hearing on 8 December 2014. The matter on appeal relates to the DM's refusal to permit expert actuarial evidence in ongoing litigation between the Appellant and the Trustees of a pension scheme. The dispute arises from the validity of certain decisions by the Trustees, including an Amendment Decision granting themselves unilateral power to award pension increases and subsequent Pension Increase Decisions granting discretionary increases. The Appellant challenges these decisions on multiple grounds, including allegations of improper purpose, irrationality, failure to comply with scheme rules, and predetermination by the Trustees. The DM concluded expert evidence was unnecessary and refused permission to call or rely on such evidence. The Appellant now appeals that refusal.

Legal Issues Presented

1. Whether expert actuarial evidence is reasonably required to resolve the proceedings under CPR 35.1.
2. Whether the DM applied the correct legal test in deciding to exclude expert evidence.
3. Whether the DM erred in failing to consider the scope of the expert evidence conceded necessary by the Trustees on a narrow point.
4. Whether the DM properly addressed the pleaded issues, including those set out in the Appellant's detailed appendix identifying areas where expert evidence would assist.
5. Whether the exclusion of expert evidence improperly tied the hands of the trial judge and prevented the Appellant from presenting its case properly.
6. Whether expert evidence is necessary or helpful in relation to the "safe harbour" principle derived from Pitt v Holt and related authorities.

Arguments of the Parties

Appellant's Arguments

• The Trustees predetermined to grant pension increases above those required under the scheme rules to counteract a government policy change from RPI to CPI indexing.
• The Trustees used professional advisers not to obtain impartial advice but to justify predetermined increases, including tailoring advice and disregarding contrary professional advice.
• Expert actuarial evidence is necessary to show that the advice given by the Trustees' actuary was progressively less prudent and unorthodox, supporting the allegation of predetermination.
• Expert evidence is needed to assess whether the Trustees properly relied on professional advice to avail themselves of the "safe harbour" defense under Pitt v Holt.
• Excluding expert evidence would impair the Appellant's ability to cross-examine witnesses effectively and present its case fully.
• The DM applied an incorrect test by focusing on whether expert evidence was necessary to resolve the entire proceedings rather than whether it was reasonably required or helpful to resolve pleaded issues.
• The DM failed adequately to address the detailed pleaded issues and the specific appendix identifying where expert evidence would assist the court.

Trustees' Arguments

• The validity of the Trustees' decisions is a matter of fact and law, not requiring expert actuarial evidence.
• The Trustees contend that the advice given by their actuary was competent and within the scope of his professional role.
• The Trustees submit that expert evidence should be restricted to that reasonably required to resolve the proceedings under CPR 35.1, and that the Appellant has failed to show that expert evidence is necessary.
• The Trustees rely on the "safe harbour" principle that trustees acting on apparently competent professional advice are not in breach of duty even if the advice turns out to be incorrect.
• The DM's refusal to admit expert evidence was a proper exercise of case management discretion and should not be lightly interfered with on appeal.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by identifying the central legal framework governing expert evidence, primarily CPR 35.1, which restricts expert evidence to that reasonably required to resolve the proceedings. It acknowledged the policy objective of limiting unnecessary expert evidence to avoid delay, expense, and complexity.

The DM had concluded that the issues raised by the Appellant were primarily matters of fact and law that could be resolved without expert evidence, particularly focusing on the ultimate validity of the Trustees' decisions rather than the detailed pleaded issues. The court found this approach flawed because it did not properly consider whether expert evidence was necessary or helpful for resolving specific pleaded issues, as opposed to the entire proceedings.

The court undertook a detailed review of the pleaded issues and the Appellant's appendix identifying areas where expert actuarial evidence might be necessary or helpful. It found that in several respects expert evidence would not only assist but in some cases be necessary to resolve disputes concerning the scope of the actuary’s role, the evolution and prudence of actuarial advice, the Trustees' adherence to or tailoring of advice, and actuarial issues related to the funding and cost of discretionary increases.

The court also addressed the narrow concession made by the Trustees regarding the need for expert evidence on whether the actuary exceeded his professional role in expressing personal opinions. It held that expert evidence should be permitted on this narrow point.

Regarding the "safe harbour" principle under Pitt v Holt, the court accepted that most related issues were factual and legal matters for the court to resolve without expert assistance, except where pleaded issues might require such evidence.

The court emphasized that expert evidence should be admitted where necessary to resolve pleaded issues or where it would assist the court, balancing this against considerations of proportionality, cost, and delay. It noted the significant sums at stake and the importance of allowing the Appellant to present its best case, provided this did not result in unfairness or disproportionate court time.

The court found that the DM had failed adequately to address the detailed pleaded issues and the specific expert evidence sought, instead focusing on the broad ultimate issue. This was a procedural irregularity undermining the DM's decision.

In exercising its discretion, the court concluded that expert actuarial evidence should be permitted within a circumscribed scope, with safeguards to avoid an overbroad or roving brief. The trial judge would retain case management powers to exclude or limit evidence if it proved unhelpful or disproportionate.

Holding and Implications

ALLOWING THE APPEAL IN PART

The court set aside the DM's decision refusing permission to adduce expert actuarial evidence and directed that such evidence be admitted within defined limits. It held that the DM had applied an incorrect test by focusing on the entire proceedings rather than the pleaded issues and failed to properly consider the detailed expert evidence sought.

The decision permits the Appellant to adduce expert actuarial evidence relevant to the pleaded issues where it is necessary or would assist the court, subject to case management controls to prevent abuse or disproportionate burden. The Trustees are to state whether they rely on certain actuarial opinions as part of their defense.

No new precedent was established; rather, the ruling clarifies the application of CPR 35.1 and case management principles in the context of expert evidence relating to complex actuarial disputes. The trial judge retains discretion to manage the evidence and ensure proportionality.