Expansion Of 'Same Interest' Requirement For Representative Claims

• Jurisdiction: European Union
• Law Firm: Norton Rose Fulbright
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation, Civil Law
• Author: Mr Aditya Badami
• Published date: 19 May 2023

In Commission Recovery v Marks & Clerk LLP [2023] EWHC 398 (Comm), the first high-profile assessment of the 'same interest' test for representative actions under the Civil Procedure Rules (CPR) since the Supreme Court's ruling in Lloyd v Google [2021] UKSC 50, the High Court held that a dispute relating to secret commissions could proceed as a CPR 19.6 'opt out claim'. The High Court determined that, although there were differences between the claims, there was no conflict of interests between the claimant class, i.e. information and arguments advanced by one class member would not prejudice the interests of another. This lack of conflict was a crucial factor in the Court's decision to permit the representative action to proceed. The decision suggests a change in approach from previous cases, with the Court taking a wider view of the 'same interest' requirement.

Background

The claimant, Commission Recovery Limited (CRL), brought a claim against Marks & Clerk LLP (Marks & Clerk), an IP (intellectual property) law firm, and a company associated with it, named Long Acre Renewals. The claim was brought in relation to an arrangement whereby Marks & Clerk referred its clients' IP renewals to CPA Global, an IP renewal service provider, in exchange for an undisclosed commission to be paid to Long Acre Renewals.

CRL was never a client of Marks & Clerk. Rather, it was assigned claims against the defendants by one of the first defendant's clients (Bambach Europe), subsequently dissolved. The defendants applied to strike out the claims on the primary ground that the assignment from Bambach to CRL was an unlawful champertous assignment of a bare right to litigate. The defendants also applied to disallow the claim to proceed as a representative action for failing to meet the "same interest" test set by CPR 19.6.

A champertous assignment?

The Court considered whether the assignment of the right to seek recovery of any undisclosed commissions was champertous (i.e. improperly permitted an otherwise unaffected party to prosecute the claim in exchange for a share of any ultimate proceeds). The judge held that secret commissions are, in the hands of a defendant as agent, and as between the agent and the client, property (i.e. the client is entitled to say to the agent, 'that commission is mine not yours'). An assignment of property was not champertous. Incidental rights of action could validly accompany an assignment of property. These included a claim for money received and...