Mighty United

Last November the European Commission issued a green paper on Consumer Collective Redress which highlighted the need for a more comprehensive and united approach to group actions across Europe.

In December the Civil Justice Council recommended that the group litigation model (GLO) be reformed in England and Wales so access to justice barriers would be removed and more bodies could bring GLOs. Meanwhile, Deborah Prince, general counsel of consumer body Which?, the only body currently legally eligible to bring UK class actions, says the system is costly, time consuming and offers little reward.

All this underlines the case for reforming the representative action model here in the UK.

But last week the chancellor of the High Court Sir Andrew Morritt handed down a ruling that put the courts squarely at odds with parliamentary thinking on class actions in English and Welsh courts.

The claim was brought by US class action firm Hausfeld on behalf of two importers of cut flowers, Emerald Supplies and Southern Glass House Produce, against British Airways, which turned to Slaughter and May partner Richard Swallow and One Essex Court’s Kenneth MacLean QC.

The claimants issued proceedings against BA in September 2008, seeking damages in respect of losses they claimed to have suffered as a result of an alleged cartel in the provision of airfreight services. The airline is currently being investigated by the European Commission for its alleged involvement in the cartel.

The claimants sought to act as representatives of all “direct and indirect purchasers of airfreight services, the prices for which were inflated by the agreements or concerted practices”, in essence seeking to extend the number of potential claimants to an almost limitless number.

Hausfeld partner Anthony Maton instructed Ian Milligan QC of 20 Essex Street to argue that the scope of Civil Procedure Rule 19.6 should be broadened to allow the claimants to act as representatives for a wider action.

Writing in The Lawyer this week Maton argued that UK investors who lost money by investing in the Royal Bank of Scotland (RBS) would be left without redress because of the ineptitude of the class action model in England and Wales.

“Innovative practitioners will strive to bring these actions, seeking, for example, to use the remit of the representative action procedure under Rule 19.6 of the Civil Procedure Rules,” he wrote.

Unfortunately, Morritt had other ideas and stressed it was up to parliament to deal with representative actions and not for lawyers to stretch the use of Rule 19.6 to accommodate such cases. Morritt also stated that the representative class could not be defined until a judgment had been handed down.

“In my view this distinction demonstrates that Rule 19.6 doesn’t authorise these claimants to represent the class described in the particulars of claim. It’s impossible to say of any given person that he was a member of the class at the time the claim form was issued,” he said.

“It’s not that the class consists of a fluctuating body of persons, but that the criteria for inclusion in the class cannot be satisfied at the time the action is brought because they depend on the action succeeding.”

As Anthony Maton rightly reflected: “This leaves us between a rock and a hard place.”

The reform agenda on a European level is one which favours an opt-out class action system. On a domestic level, however, the UK courts are increasingly rejecting the US-style class action system.

And, as one of the most powerful figures in the senior judiciary, Morritt’s opinion carries much weight. Access to justice for all has again been put on hold.