The Dekagram: 29th January 2024

Articles, News

29/01/2024

This week saw developments in Ryanair’s ongoing battle with online travel agencies. On the one hand, Ryanair has cut a deal with Loveholidays and Kiwi, allowing the agents to sell packages including Ryanair flights. On the other, the airline’s profit projections for this year are down, partly due to the decision in December of a number of online agents to remove Ryanair flights from sale. And only last week the Irish courts ruled in favour of Ryanair in Ryanair DAC v Flightbox SP ZOO [2023] IEHC 689 in determining that it had jurisdiction to hear a screen-scraping claim against the online agent. Because Flightbox had not entered an appearance before the Irish courts, Ryanair obtained default judgment against them with associated injunctions. It is worth noting that Flightbox has brought a competition claim against Ryanair in the Polish courts and that the submissions it makes in those proceedings would have afforded it a defence to the Irish claim, had it made them in that jurisdiction. We can only speculate as to why it chose not to do so.

This week’s Dekagram brings us up to date on representative actions, a growth area of interest and importance to practitioners dealing with claims as diverse as those arising from The Great Refund Saga, product liability and holiday sickness, as well as those quality complaints made by holidaymakers who have the naivety to believe that the AI generated pictures of hotels they see in the brochures of the less reputable operators may bear some resemblance to real life. These cases all require particularly deft case management on the part of both claimants and defendants if costs are not to spiral out of control.

Representative Actions: The Dawn of a New Age?

The main procedural limits on representative actions in English law can be stated briefly:

  • A person can bring a representative claim on behalf of a broader class of persons if they have the “same interest in the claim”: CPR 19.8(1).
  • Where the ‘same interest’ requirement is met, a defendant may nevertheless seek a direction from the Court that a person may not act as a representative: CPR 19.8(2).

It will be clear from the above that the rules are not prescriptive (in any sense).

The substantive limits on representative actions can be sourced in a body of case law which dates back to the procedure of the Court of Chancery before the Judicature Act of 1873.

The leading modern authority on CPR 19.8 is Lloyd v Google LLC [2021] UKSC 50. In Lloyd, it will be recalled that Lord Leggatt outlined an important variant on what might be termed a ‘typical’ representative action, namely, the ‘bifurcated approach’ to CPR 19.8: see, e.g., [84].

A typical representative action is one involving various common issues of fact and law which, if determined in favour of the class, would entitle the class to claim damages on a standardised basis. Issues which require individualised assessment (e.g., the assessment of quantum in each class member’s claim for ‘distress and inconvenience) are not easily accommodated within this framework: see [80]-[81] in Lloyd. 

The ‘bifurcated approach’ offers an alternative. The ‘bifurcated approach’ involves splitting the proceedings into two (or more) stages. Common issues of fact and law are dealt with at stage one, typically via the grant of declaratory relief. Any issues which require ‘individualised assessment’ (e.g., context-specific defences; limitation; or quantum) are ‘left over’ to a subsequent stage. Thus, by accommodating issues which require ‘individualised assessment’, the ‘bifurcated approach’ significantly expands the remit of CPR 19.8. 

Unsurprisingly, the ‘bifurcated approach’ has been subject to particular scrutiny in the years followings Lloyd: see, e.g., Wirral Council v Indivior Plc [2023] EWHC 3114 (Comm). Most recently, the issues were considered for the first time by the Court of Appeal in Commission Recovery Ltd v Marks & Clerk LLP [2024] EWCA Civ 9.

Background

The claim in Commission Recovery concerns an allegedly unlawful arrangement whereby D1 agreed to refer its clients to a third-party service provider (“CPA”) in return for payment of a commission to D2 (if the client retained CPA). The critical issue is whether the arrangement for and payment of that commission constituted a breach of D1’s fiduciary duties to its clients.

C was never a client of D1. Nevertheless, C brought a representative action (i) as assignee of claims held by one of D1’s former clients and (ii) as representative of other affected clients of D1 who met specified parameters: see [41]. D applied under CPR 19.8(2) for an order that C should not be permitted to act as a representative. Robin Knowles J dismissed D’s application ([2023] EWHC 398) and D was granted permission to appeal. 

Jurisdictional requirement

The first issue was whether C and the represented class had the “same interest in the claim”: CPR 19.8(1). At [29], Nugee LJ summarised the relevant enquiries:

What this means in practice is explained by Lord Leggatt at [70ff]: 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 [71]. That is not possible where there is a conflict of interest between class members, that is where an argument which would advance the cause of some members would prejudice the position of others; but it is no impediment if the class members merely have divergent interests, that is where an issue may affect only some class members but advancing their case will not prejudice the position of others in the class [72].”

C’s core proposition was that (subject to various possible defences, which would need to be determined at a ‘second stage’ on an individualised basis) all that needed to be proved to establish liability was the fact of contracting on D1’s standards terms of business and the fact of payment of commission. By contrast, D contended that there was widescale variability across the claims – the scope of any fiduciary duty, for example, would necessarily be dependent on the particular circumstances of the retainer [44] and there were various defences available which (by their nature) required individualised assessment. There was insufficient commonality of issues and the ‘same interest’ requirement was not met.

Nugee LJ held that the issue of whether C’s ‘core proposition’ was correct was one which arose across the class and which all members of the class had the same interest in: [51]. The fact that this issue would not resolve all other issues (e.g., the defences of (1) disclosure and informed consent and (2) limitation) was irrelevant [52] as it is “not an impediment to the use of a representative action that not all issues can be resolved on a class basis” [54]. There was nothing “wrong in principle with resolving common issues on a representative basis even if they do not lead to a conclusion on liability” [55]. Nugee LJ held further that there was no conflict of interest because “it is in the interests of all the members of the class to establish [C’s] core proposition because it will make each of their claims easier to establish”: [62].

The ’same interest’ requirement in CPR 19.8(1) was therefore satisfied.

Discretion

The Court then considered whether the Judge had erred in failing to exercise the power in CPR 19.8(2) to direct that C may not act as representative, notwithstanding that the ‘same interest’ requirement had been satisfied.

D contended that (i) no member of the class would get to a money judgment without their individual participation and they would need to ‘come forward’ to do so; (ii) there was no evidence of any enthusiasm among the members of the class to do this; (iii) CRL put forward no plan as to how the litigation would be taken to a point where there are actually money judgments in favour of those who have opted in; (iv) and the Court’s resources would be wasted by trying common issues when it was unclear whether anything would come from it.

The Court disagreed and considered that it “should be slow…to prevent a claimant with an arguable case from taking it forward” on the grounds that litigation was pointless. In any event, CRL’s purpose was to advance the claims; it had received advice from solicitors and counsel; it had the backing of a commercial funder; and it had evidently formed the view that there are sufficient prospects in obtaining a substantial money recovery: [74]. There was “no sufficiently good reason to stop it from seeking to do just that”: ibid.

It was noted finally that Ds’ application did not seek for a new representative to be appointed but rather to bring the claim to an end entirely. Nugee LJ said this at [75]: 

“[…] the question is whether, under the guise of an application under CPR r 19.8(2), the defendants to a claim should be able to have the claim stopped in its tracks entirely. Here I think it is worth recalling the guidance given by Lord Leggatt in Lloyd v Google at [75] (paragraph 38 above) that many of the considerations included in the overriding objective:

“are likely to militate in favour of allowing a claim, where practicable, to be continued as a representative action rather than leaving members of the class to pursue claims individually.”

That seems to me applicable to the present case.”

Conclusion

Following on from the decision in Lloyd, it is increasingly clear that the Courts are intent on preserving the flexibility inherent in CPR 19.8. It is suggested that the decision in Commission Recovery represents a low water mark in terms of the sort of claims which are likely to be suitable for the ‘bifurcated approach’, and no doubt in the coming years we will see many more claims brought along these lines.

About the Author

Henk Soede was called to the Bar in 2019. He has developed a specialist practice in the field of travel and private international law and is a contributing editor to the leading practitioner text in this area, Saggerson on Travel Law and Litigation (7th Ed.). Henk has built up expert knowledge in all private international law matters, including issues relating to jurisdiction, foreign applicable law and the enforcement of foreign judgments. He also acts in contractual disputes between travel business which necessitate detailed understanding of the package travel legislation landscape. He is presently instructed by a major UK tour operator as sole counsel in a high value arbitration concerning the Covid-19 pandemic and various indemnity provisions linked to liability under package travel legislation. Henk is listed in the Legal 500 2023 as a Rising Star.

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