New year, new claims: What might 2024 have in store for representative actions in the UK?

In the past few years, representative actions launched in the UK have faced significant hurdles, not least with issues concerning the ‘same interest’ test and with quantifying damages. It is not all doom and gloom, however, with several judges commenting on ways in which the industry may move forward. We examine several recent cases and explore what changes 2024 may bring.

Formerly more popular across the Atlantic, class actions – or collective actions in the UK – are developing an increasingly important place in the English legal system. In fact, the UK accounted for nearly half of the collective actions filed across Europe between 2018 and 2022, with a combined value of circa. £100bn.

Of the various forms that collective actions can take, a representative action presents a way in which individuals and businesses can hold global giants to account. Despite being an available regime for many years, it has seldom been used. As class action practices develop in the UK, we are beginning to see attempts by law firms to use the regime, with some teething issues. 

What are representative actions?

Representative actions are a formal mechanism of collective actions brought under section 19.8 (formerly section 19.6) of the Civil Procedure Rules. They allow a single claimant to bring a claim on behalf of a large group of individuals and/ or businesses, provided that they can demonstrate they have the ‘same interests’ as those whom they represent. 

With multiple claimants but only one claim, representative actions avoid the high legal costs associated with other forms of collective actions, such as Group Litigation Orders (GLO). They also allow claimants to seek redress through their representative, rather than developing and building a legal case themselves. For these reasons, representative actions are seen as a valuable mechanism in providing access to justice.

Despite these practical advantages, however, representative actions in the UK have faced several procedural issues when brought before the High Court, which has adopted a strict approach to approving and certifying claims.

The first hurdle – Lloyd v Google

Lloyd v Google was one of the first major claims filed as a representative action, which had been little used prior to 2021.

The claim, which concerned alleged secret data tracking during 2011 and 2012, failed to pass the ‘same interest’ test because the extent of the data breach – and therefore the level of damages – varied too greatly between each claimant.

“What limits the scope for claiming damages in representative proceedings is the compensatory principle on which damages for a civil wrong are awarded with the object of putting the claimant – as an individual – in the same position, as best money can do it, as if the wrong had not occurred,” explained Lord Leggatt in his judgment.

“In the ordinary course, this necessitates an individualised assessment which raises no common issue and cannot fairly or effectively be carried out without the participation in the proceedings of the individuals concerned. A representative action is therefore not a suitable vehicle for such an exercise.”

The second hurdle – Prismall v Google

Another representative action concerning data breaches – again, concerning Google – would face a similar fate, despite attempts to reframe the nature of the claim and seek “lowest common denominator” damages based on the irreducible harm each claimant had suffered.

In her judgment, The Honourable Mrs Justice Heather Williams reiterated the need to assess damages individually to “establish an entitlement to more than nominal compensation”.

“[This] precludes loss of control damages being pursued by a representative action,” she said.

The third hurdle – Wirral Council v Invidior

Data-related claims were not the only representative actions to suffer setbacks. Wirral Council v Invidior, which was rejected by the High Court in December 2023, concerned claims under sections 90, 90A and Schedule 10A of the Financial Services and Markets Act 2000.

In this case, the claimant tried to use a ‘bifurcated’ process, whereby proceedings are separated into judgment concerning the facts of the claim, and judgment concerning damages. This had previously been recommended in both Lloyd and Prismall as a possible solution to quantifying damages across a claimant group.

Nevertheless, the court rejected this approach because it focused too heavily on issues concerning the defendant, while avoiding any decisions relating to the claimant, including damages. This, according to the judge, was “unfair and unjust, and contrary to the overriding objective” because it would “oust the jurisdiction of the Court to manage the claims from the start.”

How might future representative actions resolve these issues?

Several possible solutions are already available. These include:

• Bifurcation. Although this approach was rejected in Wirral, it does have the potential to avoid the issues raised in Lloyd and Prismall by allowing claimants to examine their losses, and any damages, on an individualised basis once the representative has secured a judgment on the issues of the claim. In fact, such an approach was recently approved by the court, albeit to determine common issues against, rather than on behalf of, a class of individuals. However, this route is likely to be unpopular with third-party funders as it significantly reduces the potential return on investment and introduces an additional element of risk due to the additional procedural stage in the proceedings and how they might construct funding arrangements to secure a return.
• The Competition Appeal Tribunal. Created to hear collective actions concerning breaches of competition and consumer law, the Competition Appeal Tribunal (CAT) is a ‘purpose-built forum’ that generally avoids the technical issues faced by claims brought before the High Court. As such, many representative actions are being reframed as competition issues to be heard at this forum, such as the Gormsen v Meta claim for abuse of dominant position.

In addition to these is a growing recognition that systems need to be developed to support representative actions, whether that is through changes in legislation or development of other legislation-specific forums similar to the CAT.

This was stressed by Knowles J in his recent judgment concerning an appeal in Commission Recovery v Marks & Clerk. The defendant’s appeal has been dismissed, and thus the claim has been approved to proceed as a representative action.  

In the initial judgment, Knowles J highlighted the importance of representative actions, and the need for all relevant stakeholders to find a way to make them work.

“In a complex world, the demand for legal systems to offer means of collective redress will increase, not reduce,” he said. “It will be the legal systems that actively prepare, but choose well in that preparation, that are likely to fare best. 

“The Courts, the common law and equity all have their part to play. The case for further development through legislation may also be strong, in this area and areas connected with it. If legislative policy is to take this in steps, then it may be time for next steps.”

Does this suggest it is time for the legal system to fit around representative actions, rather than the other way around? As alluded to by Knowles J, it will be interesting to see the types of legislative changes that will be proposed to amend the landscape of representative actions in the coming months. 

In dismissing the appeal in Commission Recovery, Knowles J has given the green light to representative actions and provided helpful guidance as to when they may be used. Building upon the principles in cases like Lloyd, representative actions can facilitate the overriding objectives, and the regime is “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”.  

The case of Commission Recovery has largely left the setbacks from Lloyd, Prismall and Wirral in the rear-view mirror. The proceedings reinforce the utility of representative actions to provide access to justice and has acknowledged that the types of cases suitable to proceed go beyond data breaches. That said, it remains to be seen how narrow an interpretation will be applied when considering truly common issues in a claim. We envisage that 2024 will see a flurry of further activity in the representative action space and litigators and funders alike getting more comfortable with the representative regime.