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

This is an appeal from a case-management decision of Deputy Master Cousins (“the DM”) given in his written judgement following a hearing on 8 December 2014 (“the Judgment”). I will refer to paragraph numbers of the Judgment as “Judgment [x]” or simply “[x]”. I will adopt the abbreviations used in the Judgment. One of the matters which the DM dealt with, and which is the subject matter of the present appeal, relates to expert evidence. By paragraph 11 of his Order made on 27 April 2015 it was ordered: “No expert evidence being necessary, that permission to call or rely on expert evidence is refused”. BA now appeals against that decision.

On this appeal, I have received lengthy skeleton arguments (25 pages plus 85 pages of appendices on behalf of BA and 22 pages on behalf of the Trustees) as well as conducting a hearing lasting more than a full day. The matter is of very great importance to the parties. For BA, possibly hundreds of millions of pounds turn on the outcome of the case, and it wishes to adduce all the evidence which could possibly help it. For the Trustees (and the beneficiaries of the Scheme), the final resolution of BA’s claim is required urgently. The Trustees have had to withhold the increases to which BA say the pensioners are not entitled. Many of the pensioners are elderly, with deaths occurring amongst their number as one would expect. Individuals are thus being deprived of payments to which, on the Trustees’ case, they are entitled and which they may not live to enjoy even if their estates benefit. The fear is that the admission of allegedly irrelevant expert evidence will delay yet further the resolution which is sought.

The DM dealt with the expert evidence issue in the section of the Judgment starting at Judgment [7] and running through to [26]. [7] sets out the background (with reference being made to the Case Summary set out at Annex 1 to the Judgment). [8] sets out the decisions of the Trustees challenged by BA: the Amendment Decision (by which the Scheme’s Rules were amended by the Trustees conferring on themselves a unilateral power to grant pension increases) and the Pensions Increase Decisions (by which the Trustees exercised the newly-conferred power at meetings in February, June and November 2013 by granting a 0.2% discretionary increase which amounted to a pension increase of 50% of the difference between CPI and RPI).

In [9] to [13], the DM summarised BA’s case; and in [14] to [20] he summarised the Trustees’ case. Although I consider that these paragraphs reflect the main thrust of the parties’ cases, the summary of BA’s case, whilst identifying the crucial questions in the case, does not identify each of the pleaded issues which, on the face of it, will need to be resolved as part of the trial.

As summarised by the DM, BA’s case is that the Amendment Decision was invalid because it involved the exercise of the amendment power for an “improper purpose”. The Pension Increase Decisions were invalid because (to quote from Judgment [9(2)]):

“(a)

The Trustees failed to give active or genuine consideration to the exercise of their discretion in making the Pension Increase Decisions;

(b)

The Pension Increase Decisions involved the exercise of the discretionary increase power for an “improper purpose”;

(c)

The Trustees failed to comply with the requirement of Rule 15 of the Rules in the exercise of the discretionary power;

(d)

The Pension Increase Decisions were “irrational” or “perverse”;

(e)

The Pension Increase Decisions were invalid under the rule in Re Hastings Bass {[1975] Ch 25} as explained in Pitt v Holt {together with Futter v Futter [2013] UKSC 26 [2013] 2 AC 108}, dealing with the duties of Trustees when providing advice; and

(f)

The scope of the actuarial advice the Trustees received went beyond the scope of the advice upon which a professional actuary could advise.”

I might add that these decisions were taken (i) despite the fact that the Scheme already had, as of 31 March 2012, a substantial funding deficit of approximately £680 million on an ongoing basis and £1.5 billion on a solvency basis and would require BA’s support to fund the existing benefits let alone any increases and (ii) against the wishes of BA and in the face of concerns expressed by the Pensions Regulator.

The DM identified a “central part of BA’s case” as being that, since the Government’s policy change from the use of RPI to the use of CPI in relation to pension increases in the public sector, the Trustees did a number of things:

As the DM saw it, the allegation was one of “predetermination” (which is denied by the Trustees) which permeated each of the legal bases upon which the decisions of the Trustees were being challenged by BA.

The DM noted, in Judgment [13], the reliance of BA on a table annexed as Appendix 2 to BA’s skeleton argument before him. This has become Appendix 1 to BA’s skeleton argument before me and I will refer to it as Appendix 1. It is a (non-exhaustive) table of issues (by reference to the pleadings) where, on BA’s case, expert actuarial evidence will be necessary. I will be referring to it in due course.

The DM dealt with the law relevant to the application in Judgment [21] and [22]. In Judgment [24] he concluded that this was not a case where expert evidence should be admitted. In that paragraph, he said this:

“……The various examples set out on behalf of BA, to which I have made reference above in paragraphs 9 to 13 are not supportable. I find that the various points which are raised in the pleadings are eminently capable of being determined by the Judge at trial as issues of fact and law without the assistance of expert evidence……”

It is clear, therefore, that the DM had in mind, and had not overlooked, the contents of Appendix 1 when he reached his conclusion. He decided that not only the crucial questions which I have referred to at paragraph 4 above but also the “various points” raised in Appendix 1 and on the pleadings were “eminently capable of being determined” without the assistance of expert evidence. This is of some importance since, so its seems to me, the DM was not simply deciding that expert evidence was unnecessary to decide those crucial questions but he was deciding also that it was not necessary to decide any of the pleaded issues, at least insofar as he considered that it would be necessary to resolve the pleaded issues in order to answer the crucial questions.

Having reached that conclusion, the DM had something to say about Pitt v Holt. BA had submitted that the Trustees’ case demonstrated confusion about what Pitt v Holt actually decided. The DM disagreed. He recorded BA’s case as being that the decision in that case did not protect the Trustees because they had obtained professional advice in circumstances and in a manner which precluded reliance on it. BA suggested that expert actuarial evidence would assist the court by establishing what advice could appropriately be given and acted upon. The DM, however, considered that these assertions were “supremely matters of fact and law and do not require the assistance of expert evidence in order to resolve the issues which are raised”.

BA repeats before me the bases on which it challenges the Trustees’ decision as recorded above. The skeleton argument for BA on this appeal describes a central part of BA’s case in this way (which, of course, has resonances with what the DM said):

BA’s primary case, therefore, is that this element of predetermination renders the purported exercise of the power of amendment invalid: there was no exercise of discretion at all. Alternatively, the power was exercised for an improper purpose. Although BA acknowledges that this allegation of predetermination permeates each of the legal bases on which the decisions of the Trustees are challenged by BA, it is, on BA’s case, only one of the allegations being run against the Trustees and their decision-making process for which expert actuarial evidence is considered by BA to be required. Quite apart from that, the pleadings raise issues which go, or may go, to resolving the central issue of predetermination. It is not right simply to focus on the central issue when deciding whether expert evidence is appropriate: due consideration must be given to the pleaded issues which are in dispute.

Mr Tennet submits that the interaction between the Trustees and the actuary is important because it is relevant to the issue of predetermination. His case is that Mr Pardoe’s advice was wrong. And yet, against BA, that advice is held up as why the Trustees should prevail. BA needs, and wishes, to show that the advice was wrong and this can only be done by way of expert evidence. Mr Tennet disavows any allegation of negligence (in the sense of conduct giving rise to the tort of negligence or to any negligent breach of Mr Pardoe’s or Towers Watson’s retainer) but he does, nonetheless, say that the advice was wrong.

BA’s case is that Mr Pardoe’s advice changed and became progressively less and less prudent and more and more unorthodox. The AMT methodology which was eventually arrived at purported to reconcile what, on BA’s case, are irreconcilable elements with the result that Mr Pardoe did not, in the end, advise against the grant of discretionary increases when his original advice had been against it. Mr Tennet says that the way in which this advice changed will assist BA’s case on predetermination; and to understand the way in which this advice changed and the reasons for it can only be elucidated in the light of expert evidence going to the sort of advice which an actuary in Mr Pardoe’s position could properly have given.

In relation to the Hasting-Bass point, the Trustees’ case, according to Mr Tennet, requires them to have relied on Mr Pardoe’s advice to provide them with a safe harbour. He submits that the effect of Pitt v Holt is that ordinarily speaking the exercise by trustees’ of their discretionary powers cannot be challenged. Such a challenge could succeed only if there were breaches of duty by failure to take into account all relevant matters. If trustees’, acting within their powers, obtain and act upon apparently competent professional advice they will not be in breach of duty merely because that advice turns out to be incorrect. Relying on what Lightman J said in Abacus Trust Co (IoM) v Barr [2003] Ch 409 (in a passage cited with approval by Lord Neuberger in Pitt v Holt at [40]), and on what Lord Neuberger said at [78] to [80], Mr Tennet submits that this safe harbour is available only where the trustee has used all proper care and diligence in obtaining the relevant information and advice. BA’s case is that the Trustees did not do so and that, accordingly, the safe harbour in not available to them. If the safe harbour is not available, then it becomes important to know whether Mr Pardoe’s advice was correct or incorrect since, if it was incorrect, the Trustees have taken into account something which they should not, objectively, have taken into account and the exercise of their discretion is thereby, at least arguably, vitiated.

BA’s case is that the Trustees failed to give proper consideration to (at least) these two relevant factors:

Mr Tennet further submits that the Trustees’ response to BA’s case that the Trustees acted irrationally or perversely is, again, to rely on the advice which they received from Mr Pardoe. If his advice was wrong, then it is said that the foundation of the Trustees’ response crumbles away in the light of the expert advice which they should, properly, have been given.

Mr Tennet has taken me to a number of paragraphs of the pleadings. I will look at those (together with other paragraphs mentioned in his skeleton argument) in a moment. But before I do so, I want to consider the relevant law.

The starting point is CPR 35.1. It provides:

“Expert evidence shall be restricted to that which is reasonably required to resolve the proceedings.”

There is an instructive note at para 35.1.1 p 1161 of the White Book which repays reading. I do not propose to set it out at length but note the underlying policy objective of this rule which is to reduce the incidence of inappropriate use of experts to bolster cases. It is also to be noted that the rule refers to evidence required “to resolve the proceedings”. It does not refer, as well, to evidence required “to resolve any issue within the proceedings”. I will have more to say about this distinction later.

In the context of a suggestion that expert evidence is necessary in order to help understand the impact of actuarial considerations on how the Trustees should have acted, it is helpful to bear in mind what Aikens J said in his judgment in JP Morgan Chase v Spingwell [2006] EWHC 2755, [2007] 1 All ER (Comm) 549 at [23]:

“I should mention one further practical matter, which I think is relevant to large commercial disputes. It is inevitable when there is a dispute between commercial entities that covers a long period of time (as this case does) and concerns a very large sum of money, that a huge amount of documents will have to be considered. There is a natural tendency of parties and their advisors to consider employing experts to assist in digesting this material, particularly if it relates to any area that might be recondite, such as trading in Russian debt in the 1990s. There is a tendency to think that a judge will be assisted by expert evidence in any area of fact that appears to be outside the “normal” experience of a Commercial Court judge. The result is that, all too often, the judge is submerged in expert reports which are long, complicated and which stray far outside the particular issue that may be relevant to the case. Production of such expert reports is expensive, time-consuming and may ultimately be counter-productive. That is precisely why CPR Pt 35.1 exists. In my view it is the duty of parties, particularly those involved in large scale commercial litigation, to ensure that they adhere to both the letter and spirit of that Rule. And it is the duty of the court, even if only for its own protection, to reject firmly all expert evidence that is not reasonably required to resolve the proceedings.”

Mr Tennet (for BA) did not, in his oral submissions, go so far as to suggest that BA should be entitled to adduce the expert actuarial evidence which it wishes to rely on simply to help the judge understand some of the actuarial matters which, on its case, will arise. What he says is that BA ought to be allowed to adduce such evidence in the light of the pleaded issues and that one benefit of such evidence will be to help the judge in his or her general understanding of the technical complexities of the case. I bear that in mind; but I do not think that vague and generalised appeals to the assistance which might be given to the court in understanding actuarial matters should render admissible that which would otherwise be excluded. In any case, if there are areas where either of the parties thinks that the court would be helped by explanation, rather than the expression of a professional opinion, I would be surprised if it were not possible to produce an uncontentious explanation agreed by both sides to present to the Court.

As is clear from the authorities, most recently as it is put in Chartwell Estate Agents v Fergies Properties SA [2014] EWCA Civ 506 at [62], “appellate courts will not lightly interfere with a case management decision. Robust and fair case management decisions by first instance judges are to be supported”. I do not dissent from that but any exercise of a case management power must accord with the overriding objective. I do not suggest that there is any tension between the overriding objective and the restriction of expert evidence to that which is reasonably required to resolve the proceedings. But I do suggest that what is reasonably required is informed by the overriding objective and that the court should not be over-zealous in excluding evidence in order to save time and cost.

Although the DM had in mind Appendix 1, he did not address it in detail. It is necessary for me to do so to some extent in order to understand the pleaded issues which, according to the DM, did not lead to the conclusion that the expert evidence which BA sought to adduce fell within CPR 35.1. At the same time, I need to refer to some other paragraphs of the pleadings relied on by Mr Tennet.

I can start with PoC 79 and 80. These paragraphs deal factually with certain actuarial advice and decisions. Taken by themselves, I do not think it likely that there is any material to which it would be necessary or helpful to refer which needed the assistance of expert evidence for the court sufficiently to understand. The Particulars of Defence (“PoD”) admit the advice referred to, whilst denying that those paragraphs represent a fair balance and accurate summary of the advice given. In PoD 79.4, certain of the contentions of the Trustees are set out. In particular, it is said that the data provided “compared with the value of the Recovery Plan contributions due of £530m, was capable of supporting a decision to award a discretionary increase”. That is denied in BA’s Points of Reply (“PoR”) 32.3, a paragraph which also makes some other actuarial points. This is an issue the resolution of which will require, and not simply be assisted by, actuarial evidence.

The sets of issues set out in Appendix 1 are summarised in BA’s skeleton argument for this appeal in the following paragraphs.

The first set of issues: the issues concerning the scope of the role of a professional actuarial advisor to a pension scheme and the actuarial practice of a professional advisor in that role: see, in particular, PoD 130, 187.2 and 259 and PoR 48, 70.8 and 74.1. The pleadings:

The second set of issues: the issue of whether the extent to which and the way in which the actuarial advice obtained by the Trustees evolved over the relevant period evidences some or all of the Trustees having formed the “objective” or having made a predetermination to award discretionary increases. In this context the relevant period is the period to which the matters set out in the statements of case relate, which runs from the date of the announcement of the change in Government policy from RPI to CPI on 8 July 2010 to the Pension Increase Decisions. I consider the relevant pleadings in paragraphs 31 to 43 below.

BA’s skeleton argument refers to PoC 188-204 and PoD 215. Although not all of those paragraphs are referred to in Appendix 1, many of them are. The relevant issues are sufficiently identified in the paragraphs which are referred to. It is, however, also necessary to refer to PoC 184 to 187 and PoD 211 to 214. The relevance of PoC 184 to 187 to the present dispute about expert evidence stems from PoD 211.6, 7, 8, 214.2, 5, 216.2, 216.4, 223.2, 230, 231.5 and 232.4, replied to in PoR 70.21. It is said, according to BA, that the Trustees seek to assert that the AMT/DIF (a possible framework for providing an agreed structure and set of criteria that could be applied each year in determining whether any and if so what increases should be granted that year) was more appropriate than the Two-Stage Test on the purported basis that the AMT/DIF was in some way more consistent with the discretionary power. It is alleged that the Trustees’ assertion is confused and the paragraphs are denied. The issue is said to be the level of prudence that the Trustees were setting and whether the Trustees’ preference for DIF over the Two-Stage Test and the Standard Valuation Approach discloses their preference for lower levels of prudence and for pursuing a framework that purported to make discretionary increases easier to justify. Whether that is a correct description of the Trustees’ case turns on the actual pleading as follows.

As to PoD 211.6 (and a similar issue arises in relation to PoD 228.3), the Trustees say that the framework (ie DIF) ultimately recommended to be adopted by the Trustees “comprised a number of different factors and required the balancing of such factors to arrive at a decision, subject to the security of guaranteed benefits remaining the primary objective”. In PoR 70.20, BA denies (if it is alleged) that the Trustees’ decision to grant discretionary increases in the circumstances was consistent with the security of guaranteed benefits remaining the primary objective or that the DIF facilitated the reconciliation of what were inconsistent and incompatible objectives. BA’s case for expert evidence here is, I consider, strong. The court will, clearly in my view, at least be assisted by evidence which shows not only the fact of that inconsistency, but the level and consequences of it. Inconsistency may have no serious consequences; or it may pose a very serious risk indeed and go to the weight to be attributed to it. At least if the Trustees cannot rely on the safe harbour, this aspect could well be of importance.

As to PoD 211.7 and 8, these really go together with the point just made in relation to PoD 211.6.

PoC 187 commences by stating that the evolution in the form and substance of the actuarial advice obtained by the Trustees in relation to discretionary increases is apparent from comparing the advice received by the Trustees over a period of time. Taken at face value, no question of expert evidence arises about that: the court will be able to look at the evolution and form of the actuarial advice to be found in the documents as supplemented by oral evidence. I have not been shown anything which would justify the adducing of expert evidence simply to provide the court with an explanation of something which it could not understand. Indeed, there seems to me to be an objection in principle to doing so because the advice was directed to the Trustees who are not actuarial experts. I would hope and expect that the court would be able to understand – especially with the assistance of counsel – the advice which was given just as much as the Trustees.

I do not consider that that conclusion is affected by the reference in PoC 187 to a “Standard Valuation Approach” in the first period, to a hybrid approach in the second period and to a framework “premised entirely on taking full advanced credit for assets not yet received” in the third period.

Nor do I consider it is affected by BA’s reliance on PoR 70.24 in reply to PoD 214.5 and the same goes to the submissions made to me in respect of PoD 214.4. In PoD 214.5, the Trustees assert that the Two-Stage Test was not adopted by the Trustees because it was considered too rigid and too sensitive to fluctuations in gilt yields. By PoR 70.24, it is not admitted, and the Trustees are put to proof, that the Trustees did not adopt the Two-Stage Test for the reasons given. They are required to prove the advice given in respect of the decision to abandon or reject or not pursue the Two-Stage Test and the instructions given to elicit that advice. I do not understand how expert evidence will assist on this element of dispute (if any remains after full disclosure). What the Trustees were advised, and how they reacted to the advice, are matters of fact whether or not the advice was right or wrong. It is not alleged by BA that the Trustees knew that the advice was wrong. If that were alleged, the expert evidence would be of assistance; but that is not the case.

However, Mr Tennet relies on PoD 214.2 where it is denied that there is a “Standard Valuation Approach” or any standard method for determining whether to award discretionary increases. It seems to me that this is in issue and it may be a relevant issue. I do not see how it can be resolved without expert evidence albeit of limited scope.

There is also a related point. In PoD 108, there is reference to a meeting of the Trustees on 9 February 2012. It is alleged, in PoD 108.2, that the Scheme failed the Closed Fund Test and Projected Gilts Funding Level Test “but this was attributable to a fall in gilts yields”. PoR 39.2 contains a non-admission that the failure to pass the tests was attributable to a fall in gilts yields as opposed to being a consequence of the weak funding position of the Scheme. Further, it is averred in PoR 39.2 that

“a negative movement in markets such as a fall in gilt yields was precisely the sort of reason why discretionary increases ought not to have been granted in the circumstances in order to protect the security of members’ benefits in an environment of falling gilt yields. It is accordingly denied, if it is alleged, that sensitivity to a fall in gilt yields was or ought to have been considered a weakness of the Two-Stage Test rather than a sensible and prudent safeguard to protect the security of members’ benefits.”

It is my view that expert evidence, whilst perhaps not strictly necessary, would be of considerable assistance to the Judge in resolving this issue.

As to PoC 188, it is alleged that over the three periods, Mr Pardoe was instructed or encouraged to adopt methodologies which were successively less prudent until he produced one which the Trustees were able to claim justified the discretionary increases that the Trustees were determined to make. There is no need for expert evidence to determine whether or not the Trustees pushed Mr Pardoe to take progressively less prudent positions, still less that they were determined to grant the discretionary increases referred to. I do not consider that such evidence would be of any real assistance, and certainly not assistance reasonably required to resolve the issue. The Trustees, after all, admit that the methodologies became less prudent (albeit not imprudent). Even if the final methodology was imprudent (so that Mr Pardoe’s advice was wrong, as BA maintains) it is not alleged that either Mr Pardoe or the Trustees knew it was wrong. Again, I would hope and expect that the court would be as able to understand the advice which was given and that the methodologies were, if they were, progressively less prudent.

The denial in PoR 70.21 includes a denial of PoD 216.4; that latter paragraph acknowledged that the actuarial approach and methodology within the framework as adopted was less conservative than the Two-Stage Test but it is alleged that it was an appropriate test and more consistent with the fact (i) that the discretion had been granted in general terms rather than in a manner which set a mechanical fail/pass test (ii) that the Trustees ought to take into account all relevant factors in accordance with leading counsel’s advice. Further it was said that the AMT was more consistent with the funding assumptions used for the Scheme and the agreed schedule of contributions. This is denied in PoR 70.25.

Items (i) and (ii) would not be assisted by expert evidence in their resolution. The more general point, which is in issue on the pleadings, is that the framework represented an appropriate methodology. In my view, actuarial evidence will not only assist, but will also be necessary to resolve that issue.

Although BA relies on PoD 223.2 and its response in PoR 70.29, for my part I do not consider that expert evidence will be of material assistance in resolving any issues arising out of those paragraphs.

Although PoR 70.21 refers to PoD 230, I do not consider that this adds anything to the debate. There is certainly nothing in PoD 230 or PoC 197.6, to which it responds, or in PoR 70.21 which expert evidence would assist to resolve.

The third set of issues: whether and the extent to which the decisions taken by the Trustees over the relevant period reflected the actuarial advice they had received or evidence the Trustees failing to follow that professional advice: see, in particular, PoC 176, 177.2-177.3 and 177.5(2) and (3) and the Trustees’ denials at PoD 195, 197.2, 198.1 and 200.4.

PoC 176 is an allegation of seeking out and tailoring professional advice so as to justify the granting of discretionary increases in accordance with the Trustees’ stated “objective”. This is denied in PoD 195. I do not understand how the resolution of this dispute would be assisted by actuarial evidence unless the specific matters relied on do require such assistance.

As to that, PoC 177 refers to particular facts and matters relied on in support of PoC 176. PoC 177.2 and 3 allege that the MNTs voted in favour of awarding discretionary increases contrary to professional advice which had been received with one of the MNTs describing the advice as “biased”. PoD 197.1 denies that they acted contrary to professional advice. PoD 197.2 specifically denies that (if it is so alleged) the professional advice received was that it was impermissible or improper to grant increases. I do not consider that expert evidence will assist in resolving this dispute. There is no allegation in this paragraph of the PoD that Mr Pardoe could properly advise that increases were permissible: the dispute is about what, if anything, he did advise. The same points can be made in relation to PoD 198.1.

PoC 117.5(2) and (3) relate to statements made by two individuals which are said to be contrary to the actuarial advice they had received. PoD 200.1 responds by saying that the PoC mischaracterise, by selective quotation, what these individuals in fact said. I do not understand how expert actuarial evidence can assist in resolving this dispute.

The fourth set of issues: the following actuarial issues pertaining to the issue of irrationality and perversity: see, in particular, PoC 240-242 and PoD 275:

PoC 240 refers to the focus on protection of benefits as the foundation for the SFO, namely to provide benefits with a high level of security without further reliance on further support from BA and that deficits should be eliminated as quickly as employers can reasonably afford. PoC 241 refers to this as “an obviously sensible and appropriate funding standard for the Trustees to adopt” in the circumstances of the Scheme. And it suggests that “getting to self-sufficiency… had to be an important objective for the Trustees if they were acting rationally and prudently”. PoC 242 is essentially argumentative, saying that the Trustees cannot have it both ways by relying on the weakness of BA’s covenant when it comes to discussions about funding and yet granting benefit increases on a basis inconsistent with the SFO and thereby increasing the reliance of the Scheme on BA’s covenant.

PoD 275 admits PoC 240, although it is denied that the Trustees’ decision to grant discretionary increases was inconsistent with the SFO. PoD 276, whilst emphasising that the SFO was always a subsidiary objective, admits part of PoC 241. As to the remainder (the third sentence) it is admitted that getting to self-sufficiency was and is an important objective, but it is denied (if it is so alleged) that (i) it was the sole or overriding objective for the Trustees acting rationally or prudently or (ii) it precluded the exercise of discretion under Rule 15 to grant the 2013 increase at a cost of £12 million. If BA contends that getting to self-sufficiency should have been an overriding objective of the Trustees (a proposition which is just about pleaded) then it would be of assistance to have expert evidence to that effect (and precisely what is meant) although I am bound to say that it is a pretty startling proposition that it would be perverse or irrational not to have had that as the sole or overriding objective. Again, if it really is BA’s case that benefit increases costing £12 million were inconsistent with that objective, then actuarial evidence would assist in establishing that, again startling, proposition. I am, of course, conscious that startling propositions are sometimes correct.

It is also said in BA’s skeleton argument that the court will need an explanation of the actuarial advice received by the Trustees and its significance, including how material factors such as the £250 million Contingent Payment (as to which see PoC 29.1) were factored into the advice received. This is altogether too vague a suggestion in order for the court to make an order for expert evidence to be adduced. In any case, Mr Tennet, in his oral submissions (see paragraph 24 above), does not suggest that the need for explanation, by itself, should lead in the present case to expert evidence being adduced.

In his oral submissions, Mr Tennet referred me to PoC 202, in particular to 202.5 and 7 and to PoD 234.5, which responds to the sub-paragraphs of PoC 202, and PoR 70.35 which replies to certain parts of that. In essence, BA attacks Mr Pardoe’s advice. Its case is as follows:

As to all of that:

In turn, PoR 70.35 denies, in relation to scenario testing, (i) that it was adequate and/or (ii) that any part of it was factored into or formed a part of the actual test deployed in the AMT. Further, there is, on the pleadings at least, a clear issue about the existence, and if they exist the substance, of applicable ordinary funding principles. Both of these areas, in my view, require expert evidence before the court can resolve them. It is not merely that the court might be assisted. Further, the allegation of inconsistency and incoherence is significant. It seems to me that the court would certainly be assisted on this aspect of the case by expert evidence and, indeed, it may even be necessary in order to resolve the issue.

PoC 158 raises a short point which is in dispute: see PoD 172.1 and PoR 66. This point concerns the rounding up from 0.15% to 0.2% of a discretionary increase on the basis of a practice generally (and adopted by the Scheme) for increases to be calculated by reference to one decimal place. Clearly, if this point needs resolving, it can only be resolved with the help of expert evidence. It seems to me unlikely that much, if anything, will actually turn on the point even if BA is correct; but that is for another day.

Mr Tennet also took me to different versions of Mr Pardoe’s papers concerning the development of the AMT. It is to be noted that the Trustees rely on the AMT in defence to the allegation of irrationality and perversity. The version at Tab 3 page 71 of the hearing bundle contains a box expressing Mr Pardoe’s views on the reasonableness and prudence of awarding a discretionary increase. A similar box was not found in earlier editions. Mr Tennet took me to various details of the paper. At trial, he wishes to make submissions to show that there were problems with the AMT as developed: it did not allow for de-risking in particular.

As part of this submission, there is the point that Mr Pardoe was acting outside the scope of his role as an actuary. This is a point to which I will return when considering Ground 1 of the Grounds of Appeal, to which I now turn.

Ground 1 is that the DM erred in fact and/or law in failing to take into account or even record in the Judgment that the Trustees had conceded the need for some actuarial evidence. Mr Tennet submits that this was not a minor matter and, if it is right that the relevant material should be admitted, it lends support to other material being admitted.

The alleged concession goes to the scope of Mr Pardoe’s role. As I have explained, it is said that he went beyond his professional role in expressing a personal opinion. The Trustees then relied improperly on that expression of opinion. It is said that the Trustees conceded before the DM that expert actuarial evidence was needed on this point. I have been referred to passages in the Transcript at p 50, (lines 2-5) p 58, (lines 2-5) p 62 (lines 1-3) and p 70 (lines 7-13). There is no doubt that a concession – said to be a very narrow concession by counsel representing the Trustees at the hearing before the DM and a very narrow concession in my view – was made. The concession went, however, only to what Mr Pardoe said at a meeting or meetings. It did not go to anything written in any Towers Watson report and not to what is said in the boxes which I have referred, as to which I do not think the court will be assisted by expert evidence since the box can be read for what it is. The DM was in (minor) error, in my view, in failing to deal with this concession. Expert evidence should be allowed on this very narrow point. I am sceptical that the issue will actually arise once it is clear what Mr Pardoe actually did or did not say and write. It is highly likely that it will be shown either (i) that he qualified what he said in a way which made it clear that it was an expression of personal opinion on which the Trustees could not rely (so that what he said was not even purportedly in the furtherance of his advisory role) or (ii) that he did express a personal opinion and should have known that the Trustees might rely on it as advice given in furtherance of his advisory role. I would be surprised, in either case, to find expert disagreement about whether what he did was within the scope of an actuary’s role. I totally reject, however, Mr Tennet’s submission that, because this evidence is admissible, it lends support to the admission of evidence going any wider. Whether the Trustees did or did not rely on Mr Pardoe’s expression of opinion is a different issue. Expert evidence will not assist in its resolution.

Ground 2 asserts that the DM applied the wrong test. In particular, it is said that he wrongly considered that in order to admit expert evidence it must be reasonably required in order to determine a specific issue in dispute. What he said can be found at [22], [23], [24] and [26]:

Mr Tennet submits that expert evidence need only be helpful in resolving an issue justly. He refers to Barings Plc v Coopers & Lybrand (No 2) [2001] PNLR 22, per Evans-Lombe J at [45]. What the judge actually said is that evidence can be excluded if the court comes to the conclusion that it would not be helpful in resolving an issue which needs to be decided where it is one of law or one on which the court can come to a fully informed decision without hearing such evidence but, whichever way one looks at it, evidence is admissible if it might be helpful. But that is not, in my view, to say that it must be admitted even if helpful because it may be disproportionate in the light of the overriding objective to admit it. I accept, of course, that evidence can be helpful even if it is not determinative of any issue: see Andrew Mitchell MP v News Group Newspapers Limited [2014] EWHC 3590 (QB), where Warby J held at [24]:

“Here, the trial judge could arrive at a decision on the central issue in these cases without reference to expert or any analysis of speech rates, but instead by assessing the witnesses, their credibility, and the probabilities in the light of all the other evidence including the CCTV. It is naturally a matter for concern that the position adopted on one side of the issue is that evidence of this kind, if adduced, will be inconclusive. In that event, the evidence would not have been helpful but its admission would have been wasteful. It does not follow, however, nor could I take the view, that this evidence will not be helpful in resolving the issue justly.”

Mr Tennet’s submission has some force. But Warby J’s observations must be read in the light of what he said later, being mindful of CPR 35.1 which also requires that the evidence must be “reasonably required to resolve the proceedings”. Thus at [27] he stated that he did not regard CPR 35.1 as imposing a test of absolute necessity. As he said,

“a judgment has to be made in the individual case, and it has to be made before the evidence is heard and evaluated. My conclusion is that evidence which it was credibly said could conclusively determine the single most important issue in the case meets the criterion in the rule.”

This, it seems to me, is saying something very different from the proposition that, because expert evidence may prove of assistance, it should be admitted. A judgment needs to be made in every case and, in making that judgment, it is relevant to consider whether, on the one hand, the evidence is necessary (in the sense that a decision cannot be made without it) or whether it is of very marginal relevance with the court being well able to decide the issue without it, in which case a balance has to be struck and the proportionality of its admission assessed. In striking that balance, the court should, in my judgment, be prepared to take into account disparate factors including the value of the claim, the effect of a judgment either way on the parties, who is to pay for the commissioning of the evidence on each side and the delay, if any, which the production of such evidence would entail (particularly delay which might result in the vacating of a trial date).

Let me get one point out of the way. CPR 35.1 refers to “the proceedings”. In the present case, a large number of pleaded issues arise. It may, in the end, be unnecessary to resolve some, perhaps many, of those issues and I rather suspect that that will be the case. But it is only at the trial that it will become apparent what issues actually need to be decided. I say “trial” but that needs to be qualified because the court can, in the exercise of its case management powers, restrict the issues for determination at a CMC: see CPR 3.1(2)(k). But no one has sought, thus far, to exclude any of the pleaded issues from consideration. Accordingly, it cannot be said, at present, that it will not be necessary to decide any particular pleaded issue in order to resolve the proceedings. It must follow that, if expert evidence is reasonably required to resolve a pleaded issue, it will also be reasonably required to resolve the proceedings. However, unless the evidence is necessary in order to resolve an issue, whether it should be admitted needs to be assessed in the context of the resolution of the proceedings as a whole. There would be nothing inconsistent in accepting that particular evidence ought to be admitted in resolving an issue within the proceedings if that issue stood alone but deciding, in the context of the proceedings as a whole, that such evidence was not reasonably required in resolving the proceedings (unless that evidence was necessary to resolve the issue).

Thus in Mitchell, the expert evidence was not necessary but it was, or might have turned out to be, helpful. Because the issue to which it went was central to the case and because the evidence might be conclusive, it was admitted. But if in another case a similar issue were to arise which, instead of being central, was merely peripheral, the court might take the view that the expert evidence was not reasonably required to resolve the proceedings. The balance could come down in favour of refusing to admit that evidence.

In the context of the points I have just made, Mr Rowley submits that if the actuarial outcome of an issue cannot affect the outcome of the ultimate case, then you do not admit the evidence. I would agree if it is possible to say that the outcome of an issue cannot affect the outcome of the ultimate case. But in that case, the issue should not feature at all: it should be struck out or be excluded from consideration. In any case, no argument has been advanced that any pleaded issue cannot affect the ultimate end result of this litigation so Mr Rowley’s submission takes us nowhere.

In the present case, I have a great deal of sympathy with the view, which the DM obviously held, that resolution of the central issues will not turn on whether Mr Pardoe’s advice was right or wrong. They will turn on what his advice actually was, and how it changed, and on how the Trustees (i) understood that advice and (ii) put pressure on him to give the advice which would allow them to award discretionary increases. And they will turn on the critical question of whether the Trustees had predetermined that they would grant increases and that, come what may, they would find a way to justify that course. I agree with the DM that, if one looks at the case that way, the court will be well able to resolve the proceedings without the expert evidence which BA seeks to adduce and possibly that the court would not even find the evidence of assistance.

But that is not the correct approach to the admissibility of the evidence. Instead, it is necessary to look at the pleaded issues and, unless and until a particular issue is excluded from consideration under CPR 3.1(2)(k), the court must ask itself the following important questions:

Further, although CPR 35.1 does not refer to issues, but only to proceedings, if evidence is not reasonably required for resolving any particular issue, it is difficult to see how it could ever be reasonably required for resolving the proceedings. I therefore see a test directed at issues as a filter. That, at least, is an approach which can usefully be adopted.

Mr Tennet submits that the DM applied the wrong test in saying that evidence should only be admitted if it was reasonably required to determine an issue. Mr Tennet thus reads Judgment [22] as saying that evidence is only admissible if it would be determinative, rather than helpful. I do not read the DM as saying, and do not think he can sensibly be read as saying, that evidence should only be admitted which (if accepted) would be determinative of an issue. The words he used reflect the words of CPR 35.1. He was simply saying that the evidence must be reasonably required; and what it must be reasonably required for is the determination of “the issues”. Nor, I think, can the DM be taken to have failed to understand that evidence might be admitted where it might be of assistance. Towards the end of Judgment [24] he expressly bases his decision on the proposition that the Judge will not be assisted by expert evidence. However, his reasoning appears as follows:

The difficulty, as I see it however, is that it is far from clear that, in this paragraph, he actually applied the test which he had identified, or if he did so, he did not explain clearly in the Judgment how he had done so. This is quite apart from his alleged failure to actually properly address BA’s arguments and the content of Appendix 1, a matter which arises under Ground 5 which I will come to in due course. It appears that he saw the question as turning on the submission recorded by him at sub-paragraph (d) of paragraph 70 above. But the question is not whether the court would be able to resolve the important issues in the case without the assistance of expert evidence. The question is whether the court would be assisted by such evidence (assuming in the first place that such evidence is not necessary to any pleaded issue) and whether it would be assisted on any issue, not just the important issues. I do not consider that his conclusion in paragraph (c) of paragraph 70 above can be taken as a finding that expert evidence could not even be helpful. Rather, it is part of the expressions of his decision that the evidence should not be admitted: it appears to me that he is saying that because the Judge will be able to decide the matter without expert evidence, therefore the Judge will not be assisted by it. That is not the correct approach. If the evidence might be helpful, the Court must determine whether it then falls within CPR 35.1 in accordance with the principles I have attempted to explain.

If that is a misreading of what the DM said – so that he is to be taken as having addressed the expert evidence and decided that it would not even be helpful – then it follows that he was right to refuse to admit the evidence provided that he could properly have decided that the evidence would not be helpful. That again is an issue which I will address when considering Ground 5.

Mr Tennet further submits that the DM erred in considering that expert evidence was to be ruled out where the issues the court has to decide are all questions of fact. He relies on passages in Judgment [24] and [26], in particular the latter where the DM referred to certain matters as being “supremely matters of fact and law”. This was in the context of BA’s arguments in relation to Pitt v Holt. BA’s case is that the Trustees cannot rely on the “safe harbour” of professional advice because, among other matters, Mr Pardoe, in expressing his own view, went beyond the role of a professional actuary. This is the point which gives rise to Ground 1 of the appeal, considered already above. For reasons already given, expert evidence of a very narrow compass is necessary. It was not, however, rejected by the DM because it went to an issue of fact but because it was not needed to resolve the issue. It seems to me, however, that the DM was well aware that expert evidence might, in principle, assist in relation to factual issues; he recognises this in Judgment [21] in noting cases where expert evidence has been excluded “notably in cases where the issue in dispute is factual and “obvious” and where the Court is unlikely to benefit from expert evidence”. He could not have written that if he had thought that, in principle, expert evidence was simply inadmissible in relation to a factual issue. I therefore reject this particular argument advanced by Mr Tennet.

I do not propose, at this stage, to express a final view on Ground 2 since it is closely linked with Grounds 4 and 5 which I wish to consider before doing so.

Ground 3 asserts that the DM was wrong to refuse to admit the expert evidence because he thereby tied the hands of the trial judge, preventing BA from presenting its case properly. Mr Tennet relies on Rich v Hull [2014] EWHC 1978 at [21]-[25]. It is right, of course, that a case-management decision may tie the hands of the trial judge and even result in a party being unable to present the case he wishes. A direction which has that effect must be viewed with great caution as Mr Tennet submits (referring me in addition to passages from Phipson on Evidence (18^th ed) at 33-35). This is particularly so in relation to evidence where it is the trial judge (or perhaps an assigned judge on a CMC) who will be in the best position to assess whether evidence should be admitted. That the hands of the trial judge may be tied is, however, an inherent part of our system; the mere fact that that is so does not, obviously, mean that there is no case where a Master, on a CMC, could decline to permit expert evidence to be adduced even if it might be of assistance. Mr Tennet’s real point, I think, is that the DM went outside the range of reasonable decisions open to him in failing to accept, on the facts of the present case, that the hands of the trial judge should not be tied.

One of the points raised before the Master, and repeated before me, goes to the cross-examination of Mr Pardoe. Without expert evidence, it is said that counsel will be hampered in cross-examination unless there is material (in the shape of expert evidence) to enable BA to challenge answers which Mr Pardoe gives. He, of course, will be a witness of fact, but it is inevitable that his evidence will include actuarial material. Mr Tennet gives as example:

“It is plain that in relation to the question of predetermination and the prudence (or otherwise) of the actuarial methodologies adopted at various times by Mr Pardoe and/or the Trustees, the absence of a proper evidential basis for cross-examination of Mr Pardoe will be a real and substantial disadvantage to BA in the presentation of its case. If Mr Pardoe denies under cross-examination that his later advice was based on less prudent methodologies than his earlier advice or denies that the way in which the subsequent advice was “watered down” facilitated the justification of discretionary increases, it will be difficult for BA to challenge his answers without any independent expert evidence to substantiate the submissions that BA will be looking to make to the Court on these issues. ”

The DM’s answer to that was that BA’s expert would be able to brief counsel on all of the relevant matters which would otherwise go into an expert report and would be able to sit behind the cross-examiner and feed material to assist the cross-examination. Mr Tennet says that that is no answer at all, and I think there is considerable force in his submission. The point is that BA will want evidence before the court about the true position so that it will be possible to resolve any issue which Mr Pardoe raises by way of non-expert testimony but which raises a point of expertise and Mr Pardoe’s understanding. Although there is force in the point, it raises a difficulty, namely the scope of the evidence which is to be prepared. But the answer, in turn, to that difficulty is for the scope of the evidence which BA is to be given permission to adduce to be carefully circumscribed in any order which the court makes.

Mr Tennet makes the point that where evidence is needlessly called, there can be a remedy in costs. In the present case, BA will ultimately be liable for the costs of adducing the expert evidence on both sides for two reasons. First, since it is BA’s covenant which underpins the Scheme, the burden of the Trustees’ costs falls on BA to the extent that they are entitled to be indemnified for their costs out of the Scheme. Secondly, BA has, since the date of the Judgment, admitted the Trustees’ counterclaim, the effect of which is that it is liable, under Clause 17(b) of the Trust Deed, to indemnify the Trustees for the costs of the proceedings. The second of those reasons will be a very powerful consideration if it comes to re-exercising the power under CPR 35.1 to admit expert evidence. At the time of the hearing before the Master, however, BA had made no such admission and indeed, as I understand it, it was not even accepted by BA that the Trustees would, in fact, be entitled to an indemnity out of the assets of the Scheme.

As with Ground 2, I do not propose to express a conclusion on Ground 3 until I have considered Grounds 4 and 5.

Ground 4 is to the effect that the DM erred in reaching his conclusion concerning the safe harbour principle in that (i) he failed properly to understand BA’s case and (ii) thus failed properly to understand the importance of actuarial evidence in establishing that case.

In Judgment [26] the DM recorded that BA alleged that the Trustees had, among other things, deliberately shaped the advice received with the result that the safe harbour was not available, describing this as an essential feature of BA’s case. He concluded that expert evidence would not assist in determining this dispute and refused to admit the evidence. Mr Tennet criticises the DM for failing to record that the safe harbour argument was not, in any event, available to the Trustees on the majority of BA’s case and says that he was therefore wrong to rely on the finding that expert evidence would not assist in resolving the safe harbour argument as the principal, or an important, ground for his decision not to permit BA to adduce any expert actuarial evidence.

For my part, I think that this Ground of Appeal is based on a misunderstanding of what the DM was deciding. Before getting to Judgment [26] he had already determined that expert evidence should not be admitted. Judgment [26] was, if I may describe it in this way, an “add-on” which, as I read it, was directed at expert evidence which might assist in the resolution of a single aspect of the case, namely the allegation relating to the shaping of the advice received by the Trustees and their seeking advice inappropriately. The DM was not saying that, because expert evidence would not assist in resolving that issue, it should be rejected on all aspects of BA’s case. In other words, he was rejecting a particular argument that expert evidence should be received in relation to a particular aspect of BA’s claim.

Were it correct to read Judgment [26] in the way that Mr Tennet reads it, then I would agree with him that the DM could not properly have refused to admit the entirety of the expert evidence on the footing that expert evidence would not assist in the determination of the safe harbour issue.

It is further submitted by Mr Tennet that the DM was wrong to say that expert evidence would not assist on the issue whether, in relation to BA’s argument based on Hastings-Bass, the Trustees are entitled to rely on the safe harbour. BA’s case will be (and I accept for present purposes that this is arguable) that the safe harbour principle is only available where trustees have reasonably and properly obtained advice and have acted on that advice, in which context BA will rely on, for example, Top Brands Limited v Sharma [2014] EWHC 2753 (Ch) at [33]. Expert actuarial evidence will, it is said, assist BA in making good its case that the Trustees’ did not properly obtain or follow advice but rather tailored the advice they received over time to the end of justifying a discretionary increase, such that the Pitt v Holt safe harbour is unavailable. Expert evidence will, it is said, assist the court in assessing (i) how the advice changed over time; (ii) the impact of those changes; (iii) why the advice might have changed; and (iv) what those changes therefore tell us about the Trustees’ states of mind.

Save to the extent, if any, that any pleaded issue should lead to the admission of expert evidence, I do not find this general appeal of assistance to the court or at all persuasive. The advice was just that, advice. Precisely what that advice was, and how the Trustees reacted to it, and indeed the extent to which the Trustees shaped or tailored it will be established, as a matter of fact, by the documents and the oral evidence from witnesses who will or may include Mr Pardoe and some at least of the Trustees. For my part, I do not see how the court will, apart from a specific pleaded issue which may need resolving (and which I have already addressed in detail), be assisted at all by expert evidence in determining the safe harbour issue (let alone that the evidence is reasonably required to determine the proceedings).

Ground 5 alleges a number of procedural irregularities stemming from the suggestion that the DM failed to address, or even record, BA’s case.

The first point, in essence, is that the DM failed properly to address Appendix 1 making no mention of it in the Judgment. As to that last point, I hope I have not misunderstood the position in thinking that Appendix 1 (ie to Mr Tennet’s skeleton argument) is the same document as Appendix 2 to the skeleton argument on behalf of BA before the DM. The DM did refer to this document at Judgment [13] which is one of the paragraphs referred to in Judgment [24]. I am not clear what point Mr Tennet is making when he says that no mention was made of Appendix 1 in the Judgment. Of course, whether the DM properly addressed or had properly in mind the contents of Appendix 1 is an entirely different matter.

It is, however, certainly the case that the DM did not deal with the content of Appendix 1 at all in the Judgment. And so, Mr Tennet says, with some justification, that the DM instead proceeded on the basis of an overview of BA’s case on the desirability of expert evidence at the highest possible level, his submission then being that this did not do justice to the particular issues identified by BA in relation to which expert evidence would assist.

The content of Appendix 1 was addressed by both counsel for BA and for the Trustees during oral submissions. As can be seen from the Transcript, the issues in relation to which expert evidence was said in oral submissions to assist included:

In his reply submissions before the DM, counsel for BA again addressed the detail of Appendix 1, specifically enquiring whether the DM wanted any further assistance on any specific point from the list, and was told that this was not necessary. Notwithstanding this, the Judgment did not provide any reasons as to why expert evidence would not assist the court to dispose of each of the above issues.

Whether or not actuarial evidence directed at those issues would assist the Court is not, for the moment, the point. The point is that they were not addressed by the DM. Mr Rowley relies, of course, on the reference in Judgment [24] to the pleadings and to Appendix 1. But this, in my judgment, is wholly inadequate to show that the DM properly considered the pleadings in a way which it was necessary for him to do in order for him properly to judge whether expert evidence should be admitted. It is simply not possible to infer from that reference that he even embarked upon the exercise of examination of the pleaded case which I have carried out above. As I have said, I have great sympathy with his view of what the case is really about. But it is not by reference to what the case is really about that the admissibility of expert evidence is to be assessed. I do not say that he had to refer in his Judgment to each and every point. But I do consider that BA is entitled to see him address at least a few of the issues to show that he has actually applied his own approach and how his approach has led him to his conclusions.

Indeed, it appears to me that, following a rather dismissive and unreasoned rejection of reliance on the matters he referred to in Judgment [9] to [13] as “not supportable”, the DM moved away from the specific pleaded issues to the larger picture and asked himself whether the evidence would be reasonably required for the court to decide the issues (that is to say the proceedings as a whole) rather than address the relevance of the expert evidence to each separate pleaded issue.

Thus he referred, with apparent approval, to the argument of counsel for the Trustees. Counsel observed that BA had failed to address a fundamental aspect, namely the duty to restrict evidence to that which is reasonably required to resolve the proceedings. The DM recorded the point taken which was (to repeat the quote:)

“that the validity of the decisions made by the Trustees should not be the subject of expert evidence as it is the validity of such decisions which is being challenged, not any actuarial evidence of negligence arising therefrom…”

And so, it seems to me, he actually applied his own test to the wrong item, namely the ultimate issue of the validity of the decisions rather than the pleaded issues which may or may not, at trial, turn out to be of significance. The overwhelming impression which I gain from the Judgment is that he focused on the big picture without giving proper consideration to whether the evidence was either necessary or of assistance in resolving the pleaded issues.

The next point relates to costs. The DM failed, it is alleged, adequately to deal with, or even to record, the accepted fact that BA would ultimately end up paying for any expert evidence (called by either side). It is true that counsel explained that BA would not recover its own costs even if it were to win everything. As to the Trustees’ costs, the position as counsel for BA put it was that the Trustees had made it absolutely clear that they were not going to defend the proceedings unless they were indemnified out of the Scheme and that was the basis on which they sought Beddoe relief. As the ultimate sponsor of the Scheme it would be BA which would bear the burden of those Trustees’ costs. That, at least, is what counsel said, but there was certainly no direct indemnity from BA at that stage. I do not know (and I do not know whether the DM was told) whether the Beddoe relief which the Trustees already had would entitle them to an indemnity for their cost of commissioning expert evidence out of the funds of the Scheme. Mr Tennet submits that the recognition of the ultimate costs burden ought to have been a weighty factor in the exercise of the DM’s discretion, particularly in the light of the special need for caution in refusing to permit expert evidence to be adduced to which I have already referred: and yet the DM did not even mention it.

The next point is that the DM, in his Judgment at [23], appears to have adopted the Trustees’ submission that BA did not address the nature of the court’s role in controlling expert evidence to that which is reasonably required to resolve the proceedings pursuant to CPR 35.1. Mr Tennet’s submission is that BA did in fact expressly address this argument in its submissions. He has referred to the Transcript at p 25 (lines 19-23). Quite clearly the point was referred to by counsel – “The starting point of course is that the court has power to control expert evidence at all stages of litigation and evidence must be reasonably required to resolve the proceedings”. A considerable part of counsel’s submissions was directed at demonstrating why expert evidence was appropriate in the resolution of the proceedings. I do not know what the Trustees’ counsel, or indeed the DM, consider that BA’s counsel should have done other than to recognise that the court has ultimate control and then to submit why the evidence would be helpful and should be admitted.

There is one other point which I should mention in relation to Ground 5. Mr Rowley suggests that Appendix 1 has been superseded. We now have, according to him, a totally confused situation because something different appears in paragraph 15 of BA’s skeleton argument for this appeal which is stated to be, but is not, a summary of Appendix 1 and something different again appears in BA’s supplemental skeleton argument. As to paragraph 15.1, I do not detect any radical departure from Appendix 1: it is simply an attempt to shorten and simplify the rather complex contents of Appendix 1 for the purpose of the hearing although it does contain one additional element. After all, the document is only a skeleton of the argument. As to the supplemental skeleton argument, this was produced to rebut the suggestion that BA was asking for a roving brief and to make clear the specific questions which the expert would be asked. It has attached to it a document headed “Actuarial issues for experts” and is an attempt to show how the actuarial issues on which BA now wishes to adduce expert evidence would translate into a relatively short and concise set of instructions to the expert. If I were to allow the appeal, then the areas on which I should then, in the exercise of the court’s discretion under CPR 35.1, allow expert evidence to be adduced will need to be identified; if the appeal is allowed, it does not follow that every bit of expert evidence which BA wishs to adduce should be adduced. The “Actuarial issues for experts” is BA’s attempt to articulate those areas. If I allow the appeal, I may or may not agree with it. That it may differ from Appendix 1 is neither here nor there when it comes to deciding whether the DM did, or did not, err in the way in which he considered it.

Ground 6 is a sweep up ground of appeal – the DM was in error in failing to order expert evidence. It adds nothing to Grounds 1 to 5 in that, if none of Grounds 1 to 5 were to succeed, the appeal could not succeed on Ground 6. Really what is said is that, once the appeal is allowed, the court should re-exercise its powers under CPR 35.1 by admitting the evidence.

I do not propose to lengthen this already overlong judgment by an elaborate discussion. It seems to me that Grounds 2 and 5 are closely interlinked and that Ground 4 raises similar points. Subject to the safe harbour issue, taking Grounds 2 and 5 together, it is my view that the DM’s wholesale decision to reject any expert evidence is flawed. Whether that is because he applied the wrong test (in the sense discussed in relation to Ground 2) or because he failed to apply that test to the right issues (in the sense discussed in relation to Ground 5) does not matter; the answer, in any case, depends on where one starts the enquiry. I am satisfied that he did not give adequate consideration to Appendix 1 (alternatively, if he did do so, he did not adequately express his reasoning). The exercise of his discretion was flawed and his decision must be set aside (alternatively, it is entirely unsafe to leave his decision in place and it must be set aside).

So far as the safe harbour issue is concerned, Judgment [26] provides, as I read the Judgment as a whole, a separate reason why expert evidence should not be admitted on that issue. It goes no further.

In the light of these conclusions, Ground 1 adds nothing. Grounds 2 and 5 taken together succeed so that nothing turns on Ground 4. As to Ground 3, nothing now turns on this either since, in exercising the discretion under CPR 35.1, I will certainly be cautious in tying the hands of the trial judge.

It will be apparent from my discussion of Appendix 1 and the few other issues raised by Mr Tennet the areas where I consider that the pleadings to which I was referred raise issues where actuarial evidence might be of assistance. I should emphasise that I have only considered those parts of the pleadings to which I was referred at the hearing or which are expressly mentioned in the body of the skeleton arguments. I have not carried out a full review of each and every paragraph mentioned in Appendix 1. Mr Tennet took me to the paragraphs which are important and which between them would provide the foundation for the totality of the evidence which BA wishes to adduce.

In my judgment, in all of the instances where actuarial evidence might be of some assistance to the court, it should be admitted and should not be excluded on grounds of proportionality or otherwise. In cases where actuarial evidence is necessary to resolve a pleaded issue, it should clearly be admitted; it should be excluded only if the issue is struck out or excluded from consideration pursuant to the court’s case management powers. In areas where the evidence would be of assistance, but not necessary, to the resolution of an issue, it should be admitted. I do not propose to set out an exhaustive list of factors, but the following point strongly in favour of admitting the evidence:

Against that conclusion, however, it can be suggested that the result is oppressive and unfair. In my view, the only points of any substance in relation to that suggestion are these:

I do not think that there is much in those points and certainly not enough to displace the factors in favour of admitting the evidence. As to (a) and (b) I do not anticipate wide-ranging instructions. Even the single-page “Actuarial issue for experts” will not, I consider, result in an over-burdensome report from BA’s expert even if that were the scope of the evidence to be admitted. I have not yet addressed the precise scope of the admissible evidence: my order must clearly be one which precludes the sort of roving brief which Mr Rowley fears and reflects a proportionate response to BA’s application. Quite apart from that, this is a case where the experts’ reports will be dealt with sequentially. Before the Trustees’ expert finalises a report, BA’s expert’s report will be available. Further, my order should be open to variation to allow for the possibility that BA’s expert’s report is overlong and tangential. If it transpires that the report is excessively long and goes to matters in relation to which the court will not really be assisted when a much shorter report covering less ground would enable the court to resolve a relevant issue, then it must be possible to refuse to admit it, or to redact it, at that stage.

As to (c), the trial is fixed for 25 days in February 2016. That time estimate was agreed on the footing that expert evidence would be adduced. I have not been given any indication that the estimate would need revision if BA is permitted to adduce the evidence which it wishes to adduce. The possibility of expert evidence being in the frame was thus in the contemplation of the parties when the trial date was fixed. It is true that BA did not want the date fixed: it was concerned that the timetable was too tight, but the date was nonetheless fixed on the basis that it could be re-fixed if that was necessary. The Trustees certainly do not want to lose the date, not least because many of the pensioners are elderly and some may not live to see the fruits of what they hope will be a successful defence of BA’s claim. It is important not to attach too much weight to that last point. Although the total sum at stake to BA is significant on any view and very substantial indeed on a worst-case scenario from BA’s perspective, individual beneficiaries will not receive large sums of money, but only a very modest increase in their annual pensions, in many cases only tens of pounds.

In any case, BA must take steps to serve its evidence just as quickly as possible. I see no reason why this cannot be done so as to give the Trustees time to respond in good time for the trial and, if BA’s expert’s report covers matters which do not really assist the court much, a judge (possibly me) can review the report to see whether it can sensibly be curtailed in its scope.

One solution would be for me to allow expert evidence to be adduced on the basis of the paper “Actuarial issues for experts”. Mr Rowley, however, has a number of criticisms of that.

Paragraph 1 is directed at the extent to which the Trustees failed to follow methodologies proposed by Mr Pardoe and whether those methodologies were flawed. Mr Rowley contends that this is not part of, and does not flow from, BA’s pleaded case. Mr Tennet’s response to that is that, on the contrary, it is part of the Trustees’ own case that the methodologies were not flawed, and this point is in issue. I agree with Mr Tennet. The disputes on the pleadings are indicated at paragraphs 4.1, 4.2, 4.3 and 4.4 of Appendix 1.

Paragraph 2 is directed at the extent to which the actuarial approaches rejected by the Trustees were replaced by methodologies which were less prudent and/or more likely to justify the result which BA say the Trustees were determined to achieve. This is said by Mr Rowley to suffer from a fatal lack of precision. Who, for instance, is to be the arbiter of what it is that the Trustees have rejected? In any case, he says that the Judge will not be assisted by this evidence. I disagree with Mr Rowley’s submission. Although there may be some lack of precision, I consider that the evidence will be both relevant and of assistance.

Paragraph 3 is directed at whether the AMT methodology represented an unusual and unorthodox approach. Mr Rowley contends that this is not a pleaded issue and is not relevant to any pleaded issue. Although paragraph 3.1 of Appendix 1 does not, in my view, justify expert evidence, parts of paragraph 3.4 do justify it. It is practically very difficult, if not impossible, to separate out the different paragraphs. I conclude that this evidence may be relevant and potentially of assistance.

Paragraph 4 is directed at whether the AMT methodology involved advising on or reconciling competing objectives which could not be reconciled, including whether the granting of discretionary increases could be reconciled with the de-risking programme, the achievement of the SFO and the Trustees’ own concerns about BA’s funding covenant. Mr Rowley contends that what is in issue here is the Trustees’ state of mind, as to which actuarial evidence will not assist. It is true that the Trustees’ state of mind is one issue. But paragraphs 2, 5.1, 5.6 and 5.7 of Appendix 1 raise wider issues. Thus evidence about the role of the actuary and the boundary on the scope of his/her functions will be relevant and of assistance although, as noted at paragraphs 29 and 59 above, should be of limited scope. Further, as explained at paragraphs 48 ff above, the court will be assisted by actuarial evidence going to de-risking and scenario testing, in turn going to the root of BA’s inconsistency arguments.

Paragraph 5 is directed at whether and if so how advice given exceeded the proper scope of what a professional actuary could advise on. As to this, see paragraphs 29 and 59 above. This overlaps with paragraph 112 above

Paragraph 6 is directed at certain discrete pleaded points:

The upshot of my long discussion is that there are many areas where expert actuarial evidence may be relevant and would assist the court, and some areas where it will not only assist but be necessary. I have identified these areas in paragraphs 27, 29, 32, 37, 38, 40, 50, 54, 55, 56 and 59 above, and in my analysis of the paper “Actuarial issues for experts”.

In my judgment, that paper reflects a reasonable approach to the evidence which BA should be entitled to adduce subject to the limitations expressed in paragraphs 109 to 114 above (and in particular the omission of expert evidence directed at paragraph 114(a)).

I hope that on the basis of this judgment the parties will be able to agree an order dealing with the scope of the admissible evidence and the timetable for its exchange. I will, of course, consider the matter further if an order cannot be agreed.

I do, however, make clear that any dispute about the extent of the admissible evidence or the timing of its production is not to be used as a reason or excuse for not getting on with its production now. BA can prepare what it thinks is to be allowed. The Trustees can get on with production of what they recognise is to be allowed in the light of this judgment: they should not sit on their hands until the full extent of the admissible evidence is finally determined.