BA appear to be relying on this part of EU Regulation 261/2004:
"An operating air carrier shall not be obliged to pay
compensation in accordance with Article 7, if it can prove that the cancellation is caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken".
However, while that paragraph would obviously apply to, say, fog-bound airports, it seems questionable as to whether it should apply to a mechanical defect of one of their aircraft.
See Articles 5 & 7, here:
http://europa.eu.int/eur-lex/pri/en/oj/dat/200 4/l_046/l_04620040217en00010007.pdf
The EU recognises the CAA as one of the two UK enforcement bodies, in relation to Regulation 261/2004, but the Air Transport Users Council (which is based at the CAA's offices) should probably be your friend's point of contact. Details are here:
http://ec.europa.eu/transport/air_portal/passe nger_rights/doc/2005_01_31_national_enforcemen t_bodies_en.pdf
Chris