18 April 2024

Representative Actions Under CPR 19.8: High Court To Consider Important Questions Relating To Funding And Damages For Class Members

According to a list of issues that has recently become publicly available in the Commission Recovery v Marks & Clerk case...
UK Litigation, Mediation & Arbitration
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According to a list of issues that has recently become publicly available in the Commission Recovery v Marks & Clerk case, a trial early next year is likely to determine important questions that could affect the broader viability for claimants and funders of bringing "opt-out" representative actions under CPR 19.8, which allows claims to be brought on behalf of all those who have the "same interest" in the claim.

The background to the case is outlined in our blog post on the Court of Appeal's decision, which confirmed that claims in respect of secret commissions for referrals to an IP renewal services provider could proceed as a representative action. As the parties accepted, however, the "same interest" requirement under CPR 19.8 means that the procedure can be used to determine only those issues that are truly common to the class, and do not require consideration of claimants' individual circumstances. The case will therefore require a "bifurcated" approach, as outlined by Lord Leggatt in Lloyd v Google [2021] UKSC 50 (considered here), determining common issues at an initial trial and leaving individual issues to be addressed at a later stage.

The list of issues to be determined at the initial trial, which has been scheduled to begin in mid-January 2025, includes the key issue envisaged by the Court of Appeal, namely as to the ingredients class members must prove to establish liability in bribery and/or breach of fiduciary duty on the part of the defendant. However, it also includes very significant questions as to the future shape of the action if that key issue is determined in the claimant's favour. These issues include:

  • Whether class members have to commence individual claims in order to pursue a claim for relief.
  • Whether the court can order the defendants "to make payments (whether to a common fund or otherwise) save where it has given judgment in favour of a particular person for a particular amount" – ie whether the court can award damages or other compensation on a collective basis.
  • The rights and entitlements of the representative claimant, its funder and lawyers (if any) over any sums recovered by class members.

How the court decides these issues will have important implications for the future viability of representative actions under CPR 19.8 in the vast majority of potential cases where there are common issues that affect all class members equally (eg as to whether a defendant's conduct breached applicable standards) but at least some aspects of the claims (eg as to causation and loss) depend on class members' individual circumstances.

The potential to bring a representative action on a "bifurcated" basis is, in principle, attractive to claimants as it allows a case to proceed to the determination of common issues without identifying individual claimants – in contrast to a fully "opt-in" procedure such as the Group Litigation Order (or GLO) – thereby saving costs and making it easier to get a claim off the ground. However, the question for claimants, and their funders, has been whether such a process is economically viable. This depends principally on whether funders can be confident of obtaining a share of any class recoveries, without the need for their consent – since a decision on common issues is unlikely to result in any monetary award, but there is no guarantee that class members will enter into a funding agreement (at any rate, with the same funder) for their individual claims.

At first instance, the High Court suggested, somewhat tentatively, that it may be possible to allow a funder to be paid out of recoveries before distribution to class members, by analogy with the position of insolvency practitioners being paid out of assets recovered. The Court of Appeal did not comment directly on this point, but its judgment suggests the analogy is less than straightforward, since it is "not immediately obvious" how the representative claimant could obtain a money judgment on claims that do not belong to it (but rather to each class member) – which is an obvious contrast to the position of an insolvency practitioner recovering assets for an insolvent estate.

It is therefore significant that these questions (including whether the court can award compensation on a collective basis and whether claimant firms and funders can be paid out of such sums) are to be considered as part of the representative stage of this case, at least if the claimant is otherwise successful at the representative stage. And, given the complexity of these issues, it would not be surprising if there is an appeal by one side or the other.

We will be watching this case closely and will report further on developments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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