A claim issued by an individual seeking to act as a representative under CPR 19.8 has been struck out on the basis that the represented class did not share the same interest, or alternatively that the claimant’s motive was not suitable to allow them to act as a representative.

Background

The claimant, Claire Smyth, was booked on a British Airways flight from London Gatwick to Nice that was cancelled. Under Article 7(1) of EU Regulation 261/2004 (the Regulation) (which was retained post-Brexit), a passenger is, subject to specified exceptions or conditions, entitled to compensation when their flight is cancelled or delayed by three hours or more. The defendants, British Airways and easyJet, in common with other airlines, maintain portals through which passengers may claim compensation under the Regulation. However, rather than submitting her claim through the portal, Ms Smyth issued a representative action against British Airways and easyJet. 

Ms Smyth proposed to represent a class of passengers who had booked a flight with British Airways or easyJet scheduled to depart from, or arrive at, a UK airport during the period from 1 December 2016 to 31 August 2022 and whose flights were then either cancelled or delayed by three hours or more (engaging the passengers’ potential rights to compensation under the Regulation). The Claim Form appended a schedule containing 116,000 flights believed to fall within the relevant criteria. Ms Smyth proposed a series of steps whereby the class would be progressively reduced by removing claims which did or might not qualify for compensation or which would or could be met with an arguable defence available under the Regulation – e.g. under the "extraordinary circumstances" exception. The resulting class would comprise claims where passengers had not been paid compensation and there was no defence available to the airline. 

A particular feature of the claim was that it was funded by Ms Smyth’s employer, a private individual. The exact funding arrangements were not disclosed, but Ms Smyth had obtained a separate Court order permitting her to deduct 24% of any compensation recovered to pay the funder and her legal representatives. The claimant said the motivation for the claim was low awareness of the passenger rights conferred by the Regulation. Ms Smyth accepted that the claim would effectively force the airlines proactively to pay compensation in all cases where it is indisputably due (in contrast to the regime outlined in the Regulation, where the onus is on the passenger to make a claim).

The airlines sought an order striking out the claim on the basis that it was not a properly constituted representative action, and an order directing that Ms Smyth may not act as the class representative. 

What did the Court decide?

Favouring the airlines’ submissions, the Court found that Ms Smyth and the class she sought to represent did not share the “same interest” in their claim, as required for a representative action under CPR 19.8. Master Davison also held that, as a matter of discretion, he would not allow the claim to proceed as a representative action because its dominant motive lay in the financial interests of its backers, and not the affected class. 

On “same interest”, the Court considered that there were in effect multiple different claims, all raising their own discrete issues concerning entitlement to compensation. The claims would therefore require individualised assessment making them unsuitable for the representative action procedure. The deficiencies identified could not be addressed by Ms Smyth’s proposed "Russian doll" procedure whereby divergent claims (i.e. those which would or might not qualify for compensation) would be hived off from the represented claims in the course of the action, ultimately leaving a single class of represented claimants to whose claims the defendants would have no defence. The Court determined that such a process of subsequent amendment would create a “rolling representative action” which the Court of Appeal had previously found impermissible in Jalla v Shell International Trading and Shipping Co Ltd [2021] EWCA (Civ) 1389. It would also place an undue burden on the defendants at the early stages of the claim. Further, on Ms Smyth’s approach, there would at no time be a “common issue” between the represented parties: by the time congruity of interest had been achieved by trimming the class, there would in fact be no issue at all to be resolved. 

In considering the exercise of the Court’s discretion, Master Davison also refused to allow the claim to proceed. He found that the proposed representative action would not further the Overriding Objective to deal with cases justly and at proportionate cost, particularly since:

• it would not improve access to justice in circumstances where the airlines maintained free, easy-to-use direct claims procedures by which they could achieve the compensation sought in the represented action; 
• the dominant motive for the claim lay, not in a desire to secure redress for consumers, but in the financial interests of its backers, who stood to recover almost a quarter of any compensation payable. The Court considered this an excessive and disproportionate amount both overall and by comparison to the alternative direct compensation route, where there would be no deduction at all; and
• the proposed representative claim would run contrary to the will of Parliament, which made a choice not to implement a scheme of automated compensation under the Regulation, which is what Ms Smyth’s proposed procedure would ultimately achieve. 

Comment

The Smyth decision is the latest in a series of recent Court judgments regarding the scope of the representative action procedure under CPR 19.8. It demonstrates the limits of the “same interest” and the factors which will weigh heavily on the Court when considering the exercise of its discretion. 

The judgment cites extensively the analysis by the Supreme Court in Lloyd v Google of how to determine whether claims have a sufficient “same interest” to found a representative action. In Lloyd, (a case pursuing damages on behalf of all iPhone users affected by the so-called Safari workaround), the Court considered that an individual assessment of each prospective class member’s position would be required in order for a claim to be advanced on their behalf – so the representative action procedure was not appropriate. 

However, the Supreme Court’s detailed decision reflected a less restrictive approach to determining “same interest” compared to previous precedent. That less restrictive approach was followed in a case relied on heavily by Ms Smyth - Commission Recovery Limited v. Marks & Clerk LLP - where a representative action on behalf of clients of an IP law firm which had received secret commissions was allowed to proceed (by both the High Court and Court of Appeal). That was so even though the claim had a number of characteristics which meant it might previously have failed the “same interest” test (including that the claims arose from separate contracts entered into at markedly different times and therefore some level of individual, class member-specific enquiry would be required).

Overall, the approach in both Lloyd and Marks suggests the Courts in England and Wales now adopt a more liberal approach to the “same interest” test and are therefore more likely to allow representative actions to proceed. 

However, the Smyth decision shows that that approach only goes so far. The Courts will still analyse prospective representative actions carefully and will not allow use of the CPR 19.8 procedure simply where claims have common features and/or similar underlying circumstances. What is required, as the Court made clear in Smyth, is a common issue or issues evident from the outset of the claim, the resolution of which would benefit all the represented parties.

Smyth is also a good example of the extent to which the Court will scrutinise the representative claimant’s underlying motive, even when the CPR 19.8 requirements are otherwise met. Master Davison determined that the dominant motive for Ms Smyth’s claim was clearly not the interests of consumers, but financial, and therefore should not be permitted to proceed.