Historically, while ‘opt-out’ class actions have been available to England and Wales claimants for many years, outside competition/antitrust claims, they have never really taken hold as they have in the US or Australia, for instance.
Recently, however, there has been a renewed focus on such claims, which are available through the representative action procedure embodied in CPR 19.8 (formerly 19.6). This allows a claim to be brought by a representative claimant on behalf of all those with the ‘same interest’ in the claim, with no need for the represented parties to be named or joined to the action.
Until recently, CPR 19.8 had not been used widely, largely because of the strict manner in which the courts interpreted the ‘same interest’ requirement.
This was thought to act as a barrier to claims brought for damages, given the difference in losses suffered between individual claimants.
Additionally, there were practical challenges in sourcing funding for such actions, given the perceived lack of economic viability for such claims (in part due to the damages issue).
However, recent cases have breathed new life into the regime, creating opportunities for claimants and litigation funders, as well as potential additional risks for defendants.
Of particular note is the Supreme Court case of Lloyd v Google in 2021. This brought helpful clarity and expanded the forms in which the representative action could be used – albeit that, on the particular facts, the claim was eventually held to be unsuitable for CPR 19.8.
A breakthrough then arrived in the form of Commission Recovery Ltd (CRL) v Marks & Clerk LLP before the Court of Appeal.
As well as being the first time the appellate courts in England authorised the use of this class mechanism since Lloyd v Google, it is also understood to be the first commercially funded claim under the CPR 19.8 representative action procedure that has been allowed to proceed in this way. The case has since been settled on confidential terms.
However, for each case that succeeds, multiple others fail to get off the ground or pass the jurisdictional requirements, including the recent cases of Smyth v British Airways and Wirral Council v Reckitt.
Nonetheless, what emerges from those decisions are useful themes and lessons as to the types of case that are suitable for and capable of being determined under CPR 19.8.
Jurisdictional requirements
The premise and benefit of the representative action codified in CPR 19.8(1) is that claims affecting a large number of people may be tried by one claimant acting as representative of the group as a single claim, but with any decision binding on all parties falling within the defined class, irrespective of whether they actively participated in the proceedings.
As the Supreme Court held in Lloyd v Google, the only jurisdictional requirement for the application of the rule is the ‘same interest’ requirement.
As Lord Leggatt explained, it is enough that there is ‘a common issue (or issues)’ such that ‘the representative can be relied on to conduct the litigation in a way that will effectively promote and protect the interests of all members of the represented class’.
The only situation where that is not possible is where there is ‘a conflict of interest between class members’.
Helpfully, as the Court of Appeal set out in CRL, the enquiry as to whether a case is appropriate for CPR 19.8 can be divided into two sub-questions: (1) did the claims of each member of the class raise a common issue (or issues)?; and (2) was there any relevant conflict of interest between them? If those requirements are satisfied, the court must then ask itself whether, nonetheless, in its discretion under CPR 19.8(3), it should direct that the claimant may not act as representative.
Recent examples
In the two most recent examples, the claimant failed to meet that test.
In Smyth, the court struck out a claim under CPR 19.8 to obtain compensation for delayed or cancelled flights on the basis that the claimant had failed to identify a common issue, such that the ‘same interest’ requirement had not been met.
The court went on to hold that it would also not have permitted the case to proceed under CPR 19.8 on the discretionary ground. That was because it found that the claim was motivated by the financial interests of its funders and not the interests of the claimant class.
The court also noted that CPR 19.8 was not the only viable route for redress, as a statutory compensation scheme for affected air passengers also existed.
More recently, in Wirral Council, the Court of Appeal exercised its discretion and struck out a securities class action under CPR 19.8 on the basis that those claims were capable of being brought, and should have been brought, by ordinary multi-party proceedings.
What do we learn from these cases?
What kinds of cases are considered most unlikely to meet the strict thresholds of CPR 19.8?
First, there are those cases where the remedy sought, typically monetary relief in the form of compensatory damages, simply cannot be determined on a CPR 19.8 representative basis and the claimant has not proposed ‘bifurcation’ (as in Lloyd v Google).
That is an approach whereby certain common issues of law or fact are dealt with on a representative basis, with any issues requiring individual determination being left to be dealt with at a subsequent stage of the proceedings on an individual basis.
As the Supreme Court observed in Lloyd v Google, the ‘simplest application’ of the representative action procedure is claims for declaratory relief where liability is capable of being determined collectively.
Second, there are those cases that fail the ‘look and feel’ test. In short, the court is likely to treat with some scepticism those claims that appear to be funder constructs (as in the case of Wirral Council).
As the Supreme Court observed, in exercising its discretion, the court must seek to give effect to the overriding objective of dealing with cases justly and at proportionate cost – which means giving consideration as to whether claims brought on a representative basis can more meaningfully and efficiently be pursued individually or on a multi-party basis in the ordinary way.
Accordingly, prospective representative claimants need to be careful in how they present the case, not only in terms of the ‘same interest’ test, the remedy sought and specific issues to be tried, but also in terms of overall optics.
Future applications of CPR 19.8
It is clear that the class action regime under CPR 19.8 could provide access to justice for a variety of different causes of action, and so is a potentially powerful mechanism for bringing collective claims.
In particular, recent case law suggests that representative claims may in principle be brought in relation to declaratory relief arising from data breaches (Lloyd v Google), the misuse of private information (Prismall v Google), secret commissions (CRL), mis-selling, non-disclosure or other securities litigation (Wirral Council), provided they are framed appropriately.
One other area for growth which the authors consider may become a hotbed for class-action litigation, given the growing popularity and adoption of digital assets across jurisdictions, is crypto litigation.
There are legislative efforts, most recently through the Property (Digital Assets etc) Bill, to establish a clearer framework for the ownership, transfer and protection of digital assets.
If it passes, it will mean that digital holdings, including cryptocurrency, can be considered personal property, with all the protections that entails.
Claims relating to potential mis-selling of crypto-assets or digital currencies lend themselves to the CPR 19.8 representative action procedure in the same way that securities actions do. They enable actions to be brought by a single investor on behalf of a class of affected investors rather than each of those investors having to actively bring or join a claim.
In such actions, claimants could, in principle, use the CPR 19.8 ‘bifurcated’ procedure to obtain initial findings of liability on common issues affecting the entire class, such as misleading statements and defendant knowledge, without having to deal with issues requiring individualised assessment, such as quantum, until the secondary stage of proceedings.
Crypto-related disputes
Applying that to crypto-related disputes, an individual claimant could in principle bring a CPR 19.8 claim on behalf of itself and a group of investors that share with it the same: (1) direct contractual relationships with sellers/crypto-exchanges; (2) standard terms of business; and (3) form of damage as a result of the defendants’ behaviour – therefore engaging the ‘same interest’ requirement.
For instance, where there has been a contractual or tortious breach through the defendants’ misrepresentation or non-disclosure under the common law, that affected class could seek collective redress under CPR 19.8, in addition to any available statutory remedies.
It is difficult to see why the court would not allow such claims to proceed under the discretionary aspect of CPR 19.8, given that is likely to be the only viable route for redress for thousands (if not tens of thousands) of potential claimants where there has been a single act of wrongdoing. It is, the authors submit, the most efficient way of determining those claims.
Outstanding issues
Although the class action regime under CPR 19.8 has evolved significantly in recent years and is now a viable route through which to pursue claims affecting a large class of potential claimants, there is still a long way to go.
The issues which need to be resolved include, for instance, the need for individual class members to come forward to obtain individual relief, the method of distributing financial awards to the class, and the rights and entitlements of the representative claimant, its funder and lawyers over any sums recovered by class members.
Challenges ahead
As rightly acknowledged by Knowles J in CRL, we are still very much in the ‘foothills of the modern, flexible use of CPR [19.8]’. As the Court of Appeal observed, there are several challenges that lie ahead which require further consideration and careful case management.
While we will need to wait to see how the law develops, it is clear that CPR 19.8 representative actions will continue to feature significantly in English class action litigation. Crypto litigation may well prove to be the adrenaline shot that the regime needs to take it to the next stage in its development.
Daniel Spendlove and Neil Newing are partners and George Bazinas a senior associate at Signature Litigation, London.
The authors of this article acted for the claimant in Commission Recovery Ltd v Marks & Clerk LLP & Anor [2024] EWCA Civ 9
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