Change Red Ltd v Barclays Bank Plc

Expert opinion evidence is inadmissible where it addresses the legal meaning of contractual or statutory language which the court must construe. The question whether accounting terminology satisfies the meaning of “turnover” in an agreement is for the judge, not an accountant. The same principle applies where evidence is offered to explain how accountants would understand wording in a contractual notice. Under CPR 35.1, expert evidence must be reasonably required to resolve the proceedings. Where expert opinion is excluded, corresponding non-expert opinion evidence on the same issue is also inadmissible.

The claimant brought a Part 8 claim concerning the construction of agreements between the defendant bank and the Financial Conduct Authority. The issue was whether the bank had to consider the claimant’s revised annual accounts when deciding whether the claimant fell within the scope of an interest-rate-hedging-product review.

At the case management conference, the principal dispute concerned the defendant’s application to adduce expert accountancy evidence addressing the meaning and calculation of “turnover”. The court also considered opinion evidence contained in the claimant’s witness statement.

1. The defendant’s application concerned whether expert accountancy evidence was reasonably required under CPR 35.1. The proposed evidence addressed whether “net interest income” represented “turnover” and how the relevant accounting treatment should be understood.
2. The court held that the accounting treatment was not the issue for the expert. The issue was the meaning of “turnover” in the FCA agreement, read in the context of the claimant’s business, and the claimant’s turnover for 2007 in that legal sense. Construction of the agreement was a matter for the judge.
3. The court applied the reasoning in Camden v The Inland Revenue Commissioners [1914] 1 KB 641 (CA), where evidence of a professional meaning of “nominal rent” was excluded because statutory interpretation was for the court.
4. The court also applied LHS Holdings Limited v Laporte Plc [2001] EWCA Civ 278. Expert evidence was unnecessary where the court itself had to decide whether contractual wording supplied reasonable details of the grounds of dispute.
5. The proposed expert accountancy evidence was therefore inadmissible. It followed that the claimant’s non-expert opinion evidence on the same accounting issues could not properly stand merely because fairness required the defendant to answer it. The court was minded to strike out specified passages from the claimant’s witness statement, subject to further submissions.