High Court Allows Claim In Respect Of Secret Commissions To Proceed As "Opt-Out" Representative Action Under CPR 19.6

• Jurisdiction: European Union
• Law Firm: Herbert Smith Freehills
• Subject Matter: Litigation, Mediation & Arbitration, Class Actions, Trials & Appeals & Compensation
• Author: Mr Alan Watts, Julian Copeman and Maura McIntosh
• Published date: 07 March 2023

In what appears to be a major departure from previous case law, the High Court has adopted a liberal approach to the "same interest" requirement to bring a representative action under CPR 19.6, allowing a claim in respect of secret commissions to proceed on behalf of all clients and former clients of the defendants in respect of whom a commission was received: Commission Recovery Ltd v Marks & Clerk LLP [2023] EWHC 398 (Comm).

The decision is one of the first to consider the "same interest" requirement for a representative action in light of the Supreme Court's seminal decision in Lloyd v Google [2021] UKSC 50, considered in our blog post here. In that case, the Supreme Court held that a claim for damages under the Data Protection Act 1998 could not be brought as a representative action, as such a claim required proof of material damage or distress which would have to be assessed individually for each claimant - though it suggested that the claim could have been brought using a "bifurcated" process in which the representative action procedure was used to determine truly common issues (such as whether there has been an actionable breach), leaving any individual issues to be dealt with subsequently.

In the present case, the court appears to have accepted that some elements of the claim might differ depending on class members' individual circumstances, and that some information or decisions (eg as to remedy) might be needed from them in due course. However, it did not see this as an impediment to allowing the representative action procedure to be used, as there was no conflict of interest between the claims of class members. The decision does envisage that some aspects of the claims might in due course need to dealt with through individual arrangements outside CPR 19.6, but it is not clear that this is envisaged for all aspects which depend on individual circumstances.

The decision is particularly interesting in suggesting (somewhat tentatively) that the court might be able to find a way to allow those funding the action 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 an insolvency practitioner to be paid out of assets recovered. However, the court emphasised that the point did not have to be decided at this stage, commenting that it was really a question for the claimant and its funders to worry about as it would not affect the defendants' potential liability.

Subject to any appeal, this decision may pave the way for more claims than previously thought to proceed on a representative basis, despite the presence of differences between the claims of class members, so long as there is no actual conflict of interests. However, it leaves many questions unanswered, including the extent to which individual issues can be examined as part of the representative action or must be...