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PrintBy Sinead O’Callaghan and Kajal Patel
Class actions
The past decade has seen a growing trend of complex group litigation in the English courts. Under this banner, there are three different regimes: (1) group litigation orders (referred to as GLO claims); (2) opt-in and opt-out proceedings in the Competition Appeal Tribunal (this regime is limited in scope to competition law infringements); and (3) representative actions under CPR 19.8. This article focuses on the latter regime, in which CYK has recent experience.
Representative actions
This type of action applies where more than one person has the “same interest” in the claim. CPR 19.8 cases are typically brought on an opt-out basis[1], meaning there is no requirement to identify the representative parties or join them to the action – indeed, there is no need for a member of the class to take any steps or even be aware of the action – but any judgment will be binding on them. This is in contrast to GLO claims (one of the other class action mechanisms available to parties in the High Court under CPR 19.22) in which individuals or entities must opt in to the litigation and be named as claimants on the claim form.
Establishing what constitutes a “same interest” is not always straightforward, particularly in relation to the degree of uniformity of class members’ losses that is required in claims for damages. In order to meet this test, representative claims can proceed on a “bifurcated” basis, where common issues are determined at an initial trial under the same interest arm (saving costs and time) and individual issues (e.g. assessing the level of damages for individual class members) are addressed later.
The public importance of the regime was recognised by the Supreme Court in the landmark case of Lloyd v Google LLC[2], where CPR 19.8 was described as a flexible tool of convenience in the administration of justice[3]. For instance, individually, each of the class members’ claims might be of low value, making it commercially unappealing to bring a claim at all. However, when combined as a class the claim value is often significant and therefore meets the threshold for consideration by the High Court.
Funding considerations
Despite the clamour surrounding the Supreme Court’s decision last year in PACCAR[4], litigation funding continues to play a key role in claimants’ ability to bring class actions.
In principle, CPR 19.8 is an attractive regime for third party litigation funders, as it saves costs at the outset, given there is no need for an extensive bookbuild, which makes it much it easier to get a case off the ground. By comparison, for GLO cases, claimants are often required to front-load work at the outset of a claim (including advertising the GLO and persuading claimants to sign up), and it is ultimately a matter for the court’s discretion, rather than the party’s right, to proceed under a GLO[5].
Further, the perception of the bifurcated approach for CPR 19.8 claims is that it works to increase settlement pressure on defendants, by heightening the risk of a potentially damaging early judgment on liability. Again, this model is likely appealing to funders who may, in theory, be able to avoid incurring significant costs on claimant-side issues before settlement.
However, a declaration on common issues will not in itself result in a pot of damages for a funder to share in. Without the need for consent of an ascertained class, funders may not be confident that they will obtain a share of any compensation awarded to the class, given there is no guarantee that individual members of the class will enter into funding agreements for their claims once the common issues stage has passed. This point was touched on in Lloyd v Google, where the Supreme Court queried how funders’ entitlements to damages could be established without individual consent from all class members[6].
From a defendant perspective, facing a representative action that is third party funded will impact on case strategy. Ascertaining the quantum of a CPR 19.8 action may already be challenging because the ultimate size of the class may be uncertain. When considering settlement, there may also be an additional layer of cost and complexity as sizeable funding commitments may have been made, which need to be accounted for separately.
CYK’s recent involvement in IP renewals litigation
We recently assisted Marks & Clerk LLP (“M&C”) and Long Acre Renewals (“LAR”) achieve a settlement of a representative action brought by Commission Recovery Limited (“CRL”). CRL was initially assigned the right to bring the representative claim by a former M&C client. In bringing the claim, CRL argued that its case was representative of other M&C clients (thereby meeting the “same interest” test).
As the first commercially funded claim issued pursuant to CPR 19.8, the case generated wide interest, with the trial (which was bifurcated, with the common issues scheduled to be addressed in early 2025), expected to determine important issues affecting the broader viability (for claimants and prospective funders) of bringing opt-out representative actions.
The first instance decision suggested that it might be possible to allow those funding such actions to be paid out of recoveries before distribution to class members, without the need for their consent (similar to the court’s jurisdiction to allow insolvency practitioners to be paid out of assets recovered).[7] However, the Court of Appeal gave short shrift to this, noting only that difficulties may lie ahead for CRL, as “it is not immediately obvious how [the claimant] can obtain a money judgment on claims that do not belong to it”.[8]
The 2025 trial was expected to address key questions of whether compensation can be awarded on a collective basis and whether amounts can be deducted to pay claimant law firms and funders. However, as the trial has now been vacated, it remains to be seen how litigation funders will be able to secure a return on their investment in this type of case.[9]
Sinead O’Callaghan, Kajal Patel and Sam Macintosh acted for Marks & Clerk LLP and Long Acre Renewals, having instructed John Machell KC and Ryan Tang of Serle Court and Russell Hopkins of Temple Garden Chambers.
