Darby Properties Ltd & Anor v Lloyds Bank Plc

Expert evidence is admissible only where it concerns recognised expertise capable of assisting the court and the witness has sufficient knowledge and experience. Under CPR 35.1, such evidence must also be reasonably required to resolve the proceedings. The court should consider, issue by issue, whether the evidence is necessary, whether it would assist, and whether it is reasonably required in the proceedings as a whole, including proportionality. Factual or tutorial evidence about complex products may be admissible without permission where it is ordinary factual evidence. Opinions on suitability, adequacy of explanations and breach require permission, but are not reasonably required merely because the subject matter is commercially complex. The court must confine expert evidence to pleaded issues and should refuse evidence which merely expresses what the expert would have done.

The claimants sought damages for alleged breach of contract, negligence and misrepresentation arising from interest-rate hedging products recommended by the defendant bank in 2009. They alleged that the products were unsuitable and that the bank had failed adequately to explain their risks, including break costs. At a case management conference, the claimants sought permission for expert evidence concerning the products, available alternatives, suitability, adequacy of information and loss.

The central issue was whether the proposed evidence was admissible expert opinion and, if so, whether it was reasonably required under CPR 35.1.

1. Applicable principles. Expert opinion is an exception to the general rule excluding opinion evidence. Under section 3 of the Civil Evidence Act 1972, the evidence must concern a recognised expertise governed by recognised standards and rules of conduct, capable of influencing the court’s decision, and the witness must possess sufficient familiarity and knowledge. CPR 35.1 imposes a separate requirement that expert evidence be reasonably required to resolve the proceedings.
2. The court adopted the three-stage approach identified in British Airways Plc v Spencer [2015] EWHC 2477 (Ch): whether expert evidence is necessary to resolve the issue; if not, whether it would assist the court; and, if it would assist, whether it is reasonably required in the context of the proceedings as a whole. The assessment is issue-based and includes proportionality, value, cost and delay.
3. Experts may give relevant factual evidence arising from their experience. Such evidence is not necessarily expert opinion evidence requiring permission under Part 35. Tutorial evidence explaining the characteristics of interest-rate products and aspects of their market might therefore be given as factual evidence. If it amounts to opinion evidence, however, it must satisfy the admissibility and reasonable-requirement tests.
4. The proposed evidence concerning suitability and adequacy of information was not necessary. The pleaded allegations concerned matters capable of determination through factual evidence and judicial assessment. Whether products were unsuitable because of their tenor, notional amount, refinancing effect, funding requirements or risks did not require expert opinion. Whether information or break-cost warnings were given was likewise factual.
5. The proposed evidence also extended to unpleaded issues, including the range of hedging options and relative suitability of available options. Permission could not be granted for those issues. Loss was capable of assessment without expert evidence of the proposed kind. Permission for the proposed expert evidence was therefore refused.