British Airways Plc v Paul Spencer and 11 Others (Present Trustees of the Airways Pension Scheme)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Warren |
| Judgment Date | 21 August 2015 |
| Neutral Citation | [2015] EWHC 2477 (Ch) |
| Docket Number | Case No: CH/2015/0209 |
| Court | Chancery Division |
| Date | 21 August 2015 |
[2015] EWHC 2477 (Ch)
Mr Justice Warren
Case No: CH/2015/0209
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Rolls Building
London, EC4A 1NL
Michael Tennet QC, Sebastian Allen, Emer MurphyandMichael Ashdown (instructed by Linklaters LLP) for the Appellant
Keith Rowley QC, Thomas SeymourandJonathan Hilliard (instructed by Eversheds LLP) for the Respondents
Hearing date: 23 July 2015
Introduction
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 Judgment
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:
(a) They formed the objective and determination to pay increases above those currently provided under the Rules in order to reduce the impact of the change in Government policy.
(b) They went to great lengths and expense in using their professional advisers to assist them in finding ways to purport to justify granting augmented benefits.
(c) They declined to follow the advice they had received which did not support the granting of enhanced benefits and/or deliberately "tailored" the professional advice which they received.
(d) They closed their minds to the possibility of not granting pension increases rather than consider the matter in a trustee-like manner so that it became a question of "when" and "how" to grant increases rather than "whether" such increases were appropriate.
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's central case
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):
(a) The Trustees, some of whom had been elected on a campaigning platform that the Scheme should pay RPI not CPI increases, had predetermined that the Scheme should pay increases above those required under the Trust Deed and Rules in order to reverse the impact of the change in the basis of increases from RPI to CPI.
(b) This "objective" and determination resulted in the Trustees using their professional advisers to assist them in finding ways to justify granting such augmented benefits, rather than simply advising them whether it was an appropriate thing to do in the circumstances.
(c) This resulted in:
i) the Trustees' failing to follow professional advice that did not support the granting of enhanced benefits;
ii) one of the Member Nominated Trustees even criticising the Trustees' actuarial advisor who provided such advice; and
iii) the Trustees seeking to tailor the professional advice they received in order to purport to permit enhanced benefits and thus to achieve their stated "objective", which...
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