The Class Actions Law Review

I INTRODUCTION TO CLASS ACTIONS FRAMEWORK

There is no legislative framework in Ireland to facilitate class actions. However, multiparty or multi-plaintiff litigation does occur and is often brought by way of 'representative actions' and 'test cases'.

The legal basis for representative actions is set out in the Rules of the Superior Courts,1 which provide that where numerous persons have the same interest in a cause or matter, one or more persons may sue or be sued or may be authorised by the court to defend a matter on behalf of or for the benefit of all interested persons. In addition to this legal basis, various statutory provisions allow for a person or persons to sue in a representative capacity. By way of example, Section 28 of the Civil Liability Act 1961 allows an action for damages to be brought where death is caused by a wrongful act, neglect or default. The action may be instituted by the personal representative of the deceased or by all or any of the dependants 'for the benefit of all the dependants'.2

The basis for test cases is the inherent jurisdiction of the court to make directions in respect of the trial of proceedings and the duty of the court to ensure that its resources and the resources of parties to litigation are not inappropriately wasted by unnecessary duplication. Consequently, where a number of cases have similar issues it is possible for one case to be selected as a test case and the subsequent cases to be stayed pending resolution of the test case. Multiparty litigation commonly arises in financial services litigation, particularly in cases involving the mis-selling of a financial product to a large number of consumers. Cases involving latent defects in buildings caused by the use of pyrite in the construction process that involve multiple litigants have also been brought by way of representative actions or test cases. Other examples of multiparty litigation in Ireland include claims relating to army deafness, contaminated blood products and tobacco-related illnesses.3

The Law Reform Commission has previously recommended (as part of its Report on Multi-Party Litigation in 2005), that a formal opt-in procedure be introduced. However, such a structure is yet to be implemented.

The question of shareholders or unitholders in collective investment vehicles having jurisdiction individually and collectively through representative actions was considered in the Thema Shareholder litigation in Ireland. The court held that the correct plaintiff was the company and dismissed the actions brought by the shareholders. It did so on a number of grounds, including the rule in Foss v. Harbottle. A copy of the ruling is available on courts.ie.

II THE YEAR IN REVIEW

Litigation funding is often considered in the context of multiparty litigation. As the law currently stands in Ireland, professional third-party funding is prohibited on the basis that it offends the rules of maintenance and champerty that exist under the Maintenance and Embracery Act (Ireland) 1634. While professional third-party funding arrangements are unlawful in this jurisdiction, the Irish courts have found that third parties who have a legitimate interest in proceedings, such as shareholders or creditors of a company involved in proceedings, can lawfully fund them, even when such funding may indirectly benefit them. Therefore, funding of representative actions by the class members does not offend the laws of maintenance and champerty, as the class has a preexisting legitimate interest in the litigation. The impact of the 1634 Act was considered by the High Court in Ireland in a number of cases between 2013 and 2015 and was considered again in 2016 in the context of the legality of professional third-party litigation funding in the case of Persona Digital Telephony Ltd & Another v. Minister for Public Enterprise & Other. In that case an application was made to assess the legality of a third-party funding agreement. The plaintiff, Persona Digital Telephony Limited, was unable to fund the proceedings. A professional third-party funder from the UK was prepared to enter into a litigation funding arrangement. The plaintiff sought a declaration from the High Court that the litigation funding arrangement did not constitute an abuse of process or contravene the rules on maintenance and champerty.

While the High Court had some sympathy for the plaintiff, it affirmed that both maintenance and champerty are part of Irish law and are torts and criminal offences. The High Court found that to permit a litigation funding arrangement by a third party with no legitimate interest in the proceedings would necessitate a change in legislation and this could not be done by the High Court. This decision was unexpected, given some obiter dicta comments from the High Court in a judgment approving ATE insurance to the effect that the laws have to be interpreted in the context of modern social realities (Greenclean Waste Management Ltd v. Leahy [2014] IEHC 314). Further, the High Court in SPV OSUS Limited v. HSBC Institutional Trust Services (Ireland) Limited, HSBC Securities Services (Ireland) Limited, Optimal Investment Services, SA and Banco Santander, SA indicated that litigation funding could be deemed by the court to be legitimate in future as reflecting 'modern social realities'. The plaintiff, Persona Digital Telephony Limited, appealed the decision of the High Court.

Given the issues of public importance raised in the case, the Supreme Court allowed the plaintiff to bypass, or 'leapfrog', the Court of Appeal in order to have the appeal heard directly by the Supreme Court itself. The decision of the Supreme Court was handed down in May 2017. In dismissing the appeal and finding that the third-party litigation funding was unlawful (where none...