Representative Actions – the lesser known opt-out regime
Attractive as it is, the CPO regime is limited to competition law claims. This has prompted some novel attempts to clothe complaints within the language of the Competition Act, typically through alleged abuse of a dominant market position. But this only goes so far, and there are a very large number of claims which even with the most creative legal tailoring cannot be made to fit that description. Often those claims could be run under the courts’ general case management powers (or as GLOs), and many are, but the claimant representative will there of course often face the challenge of book-building, which can be impracticable where the individual claims are very small.
Outside of the CPO regime, the RA procedure provides an alternative mechanism by which claimants may advance mass claims on an “opt-out” basis. At one point it was commonly perceived that the decision of the UK Supreme Court in Lloyd v Google9 had effectively curtailed the potential of the RA procedure as a viable mechanism for many mass claims. In Lloyd, the Supreme Court concluded that a group of claims for which the assessment of damages would be a highly individualised exercise – which is of course very typically the case – would not satisfy a requirement of the RA procedure that all claimants have the “same interest“.
That view arguably gives insufficient weight to the Supreme Court’s observation in Lloyd v Google that the modern RA is “not a rigid matter of principle but a flexible tool of convenience in the administration of justice…[to be] applied to the exigencies of modern life as occasion requires.”10 Claims are now emerging which seek to use this flexibility to push at the regime’s boundaries. In January 2024 the Court of Appeal in Commission Recovery Ltd v Marks & Clerk LLP11 confirmed that an RA may be used to determine discrete issues (such as questions of liability) in which claimants might have the requisite “same interest”, even if there are other individualised issues (e.g. the assessment of damages) that will need to be dealt with at a later stage or by way of separate proceedings. This has been referred to as the “bifurcated approach”. Interestingly the Court of Appeal accepted that the RA might not be capable even of determining liability in its entirety, but considered that it was still appropriate for the RA to proceed, as it could resolve those issues of liability that were common to the class.
The courts might be slow, however, to allow such piecemeal approaches where alternatives exist to resolve claims in their entirety. In Wirral Council v Indivior PLC12 the claimant attempted to bring a shareholder section 90/90A claim (essentially a form of securities claim) using an RA. The claimant argued that it was entitled to bifurcate the claim such that certain “defendant-side” issues (in essence, issues of liability) should be determined by way of RA, leaving “claimant-side” issues (such as standing, reliance, causation and quantum) to a later stage.
As the Court pointed out, section 90 claims have previously been successfully case managed without recourse to the RA procedure. Rather than using the RA regime to make possible a claim that otherwise could not get off the ground, here the proposal of the RA was plainly tactical, and the Court rejected it as effectively attempting to deprive it of its ability to case-manage the claim justly13, and failing to provide a clear blueprint through to the conclusion of the claims resulting (if successful) in an award in damages.14 Had there been an absence of an established alternative, then these two concerns may not have sufficed to prevent an RA being made.15
