CA-2025-000517 - [2025] EWCA Civ 1061

The evidence before the CAT

What happened was that an issue arose as to evidence relating to BT’s indirect costs. The costs in question related to BT’s Consumer division. This was not something that BT, in its everyday business, generated data upon. However, it would have been possible, as the CAT observed (Judgment paragraphs [703] – [704], [764], [816] and [885]), as an ex post exercise conducted for the purpose of the earlier Ofcom regulatory investigation and/or the CAT proceedings, for BT to have generated such data at a reasonable cost and within a reasonable time frame. The CAT stated:

… Given the sums at stake here, such an exercise might be regarded as involving only modest costs and not disproportionate.

…

Clearly, the only party which could have produced that information was BT. It did not do so.”

Instead, BT relied upon an assessment of indirect costs made by its expert, Dr Helen Jenkins. A summary of the process by which BT’s expert came to address the issue is described at Judgment paragraphs [526] – [532]. In summary: (i) Dr Jenkins was provided with the data disclosed by BT of the indirect costs for BT Consumer as a whole; (ii) she identified which she considered to be common costs by considering the descriptors for each costs item in the disclosure and “scoring” each in terms of its likelihood of being a common cost; (iii) she then derived a “Baseline” estimate of BT Consumer’s common costs (£390m), as well as a “Low” estimate (£262m); (v) where there was no or a limited description of a cost item, she, “as a guide and no more”, used the way Ofcom classified certain cost items of BT Consumer in its VULA Margin Statement; and (vi) she performed what is referred to the “TSO Cross-Check”.

The applicant highlights methodological criticisms made by the CAT. Dr Jenkins was not given the relevant costs data or even any assistance in assessing what those data might be, by BT, or its employees, witnesses or auditors. She was provided only with the disaggregated indirect costs of BT Consumer, which were not the relevant costs. The CAT observed, “… there was a very substantial amount of disclosure from BT on the question of costs. However, it was not suggested - nor could it be - that this opened the window, as it were, to indirect costs information that was specific to SFV Services. Had it done so, no doubt Dr Jenkins would have availed herself of it” (Judgment paragraph [702]). Dr Jenkins’ approach to the evidence was based upon her subjective judgment which, as the CAT found (Judgment paragraph [816]), was “… inferior to an approach that would have been based on BT’s own detailed knowledge of cost causation, and which BT chose not to undertake for the current case”. Unlike the CR’s expert (Mr Duckworth) Dr Jenkins was not, and was not suggested by BT to be, a telecommunications costs expert. The CAT found that the VULA Margin Statement was not “an answer” to the problems with Dr Jenkins’ approach (Judgment paragraph [807]) and although the TSO Cross-Check was of “some value”, it did not provide a “complete answer” to the problems with her approach (Judgment paragraph [815]). The CAT also subjected Dr Jenkins’ analysis to certain substantive criticisms: see Judgment paragraph [817ff].