Claire Smyth v British Airways Plc

Hearing dates: 10 & 11 July 2024

Approved Judgment

This judgment was handed down remotely at 10.30am on 2 September 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

Introduction

This claim raises some novel and interesting points about the permissible scope of a representative action under CPR rule 19.8. It arises in the following way. The claimant, Ms Claire Smyth, was booked on a British Airways flight scheduled to fly from London Gatwick to Nice at 1740 on 18 June 2022. On 14 June (less than 7 days before departure) the flight was cancelled. The cancellation gave rise to a right on the part of the claimant to claim compensation under Article 7(1) of EU Regulation 261/2004. This Regulation (which was retained post-Brexit) establishes, under specified conditions, minimum rights for passengers when: (a) they are denied boarding against their will; (b) their flight is cancelled; or (c) their flight is delayed. For short-haul flights of less than 1,500 kms (such as the one the claimant was booked on) the level of compensation was €250 and, post-Brexit, is now £220.

The defendants to the claim, British Airways and easyJet, both maintain portals through which passengers may claim the compensation, free of charge. Ms Smyth did not utilise that method. Instead, on 2 August 2022, direct access counsel, Mr Hugh Preston KC (who has acted for the claimant throughout) wrote a letter before action on behalf of a very large class whose members were, in summary, those who had booked a flight with BA or easyJet scheduled to depart from, or arrive at, an airport in the UK during the period from 1 December 2016 to 31 August 2022 and whose flight was then either cancelled or delayed by three hours or more. (I will have to return to the precise delineation of the class as it was first framed in this letter. For present purposes, suffice it to say that it was intended to include, and only include, those passengers who had an indisputable right to compensation.) For reasons that are not clear to me, the letter did not identify Ms Smyth as the representative. She was not identified until 5 months later. The letter of 2 August 2022 referred to a schedule of flights believed to fall within the relevant criteria, which would be served in due course and which would be adjusted as necessary in order to eliminate cases in which there was, or there came to be recognised, an arguable defence. The stated purpose of the claim was to recover compensation where that was legally due but had not been paid, “for example because the customers have not been made aware of their right to claim compensation”. An important element of the claimant's case is that there is low awareness of the passenger rights conferred by the Regulation and that airlines, including BA and easyJet, do the bare minimum to inform passengers of their rights and to allow those rights to be satisfied. The claimant's position is that this claim will, effectively, force BA and easyJet to take a proactive stance and to pay the compensation in all cases where it is indisputably due.

The schedule was served with the Part 8 Claim Form, which was issued on 10 January 2023. The schedule contained approximately 116,000 flights. Various estimates can be made as to the scale of the claim. For the purposes of the hearing, the rough and ready estimate offered by Mr Béar KC for easyJet was as follows. Assuming approximately 200 passengers per flight (i.e. 23.2 million passengers) and on the further assumptions that 25% of the flights were indisputably compensable and that 25% of passengers had not already been compensated, then the claim would be worth £319 million. The assumptions might prove to be inaccurate one way or another. But on any view, the claim, if properly constituted as a representative action, will be a very large one.

A feature of the claim is that it is funded by a Mr John Armour, an Australian citizen who is a resident of Monaco and who is Ms Smyth's employer. The exact funding arrangements have not been disclosed and this is a topic that I will have to return to. But on 24 May 2024, Ms Smyth obtained an order from Master Pester in the Chancery Division of the High Court on a without notice basis whereby it was declared that she would be entitled to deduct “an aggregate sum equivalent to 24% of any compensation recovered by her on behalf of the Represented Persons” in this action. The order was based upon trust law principles permitting remuneration out of trust assets for work done in relation to those assets. It did not, as I understand it, approve the funding arrangements as such, nor did it sanction the claimant as an appropriate person to act in a representative capacity. The material upon which the 24% percentage was approved has not been disclosed. It appears from the face of the order that the percentage comprises two elements: (1) a funder's fee payable to Mr Armour and (2) fees payable to her legal representatives. The proportions in and/or the contingencies upon which the percentage is to be split are unknown. But simple arithmetic, based upon the estimates set out above, suggests that there would be a sum in excess of £70 million available for payment to what might loosely be called the claimant's “team” – again, a topic to which I will have to return.

The defendants strongly oppose the constitution of the claim as a representative action and seek an order striking it out and/or an order under CPR rule 19.8(2) directing that the claimant “may not act as a representative”.

The Regulation

Article 5(1)(c) of the Regulation provides for a right to compensation in the event of the cancellation of a flight which falls within its scope. It is established law that a delay of more than three hours amounts to a cancellation for the purposes of the Regulation and so attracts the same rights to compensation. There are various preconditions or exceptions to the right to compensation, which affect both individual flights and individual passengers. These include (but are not limited to) the following:

i) The rights arise only where the delay or cancellation was not caused by “extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken” (Articles 5(3) and 6(4)). The meaning of “extraordinary circumstances” is not defined in the Regulation and has been the subject of significant jurisprudence at UK and EU levels.

ii) The Regulation applies only to those passengers with a confirmed reservation on the flight concerned who have (except in the case of cancellations) duly presented themselves for check-in (Article 3(2)(a)).

iii) The Regulation does not apply to passengers travelling free of charge or at a reduced fare not available directly or indirectly to the public (Article 3(3)).

iv) The Regulation does not apply in cases where a package tour is cancelled for reasons other than cancellation of the flight (Article 3(6)).

Article 7(1) provides for varying compensation levels (€250, €400 or €600, or roughly equivalent GBP sums under the post-Brexit retained version of the Regulation) which are prima facie payable to passengers whose flights are relevantly delayed or cancelled. The sums at Article 7(1) vary according to the distance of the flight. However, those sums represent only a starting point. The Regulation further provides that passengers may receive reduced or no compensation depending on the circumstances of their case. In particular:

i) In respect of cancellations, Article 5(1)(c)(iii) of the Regulation provides that passengers are not eligible for compensation where they are offered an alternative flight which allows them to depart no more than one hour before the scheduled time of departure and to reach their final destination less than two hours after the scheduled time of arrival.

ii) In respect of cancellations, Article 7(2) of the Regulation provides that passengers may be entitled to a reduced amount of compensation (i.e. 50%) depending on the length of their journey and the final arrival time of their alternative flight.

Operating carriers are not required to compensate passengers automatically under the Regulation. The Regulation adopts a framework under which passengers are provided with information about their entitlement to claim compensation, thereafter leaving the onus on them to make a claim if they wish to. Pursuant to Article 14, operating carriers are required to: (i) ensure that at check-in a clearly legible notice containing the following text is displayed in a manner clearly visible to passengers: “If you are denied boarding or if your flight is cancelled or delayed for at least two hours, ask at the check-in counter or boarding gate for the text stating your rights, particularly with regard to compensation and assistance”; and (ii) provide each passenger affected by a cancellation with a written notice setting out the rules for compensation and assistance in line with the Regulation.

The airlines' direct claims procedures (“DCPs”)

British Airways and easyJet, in common with other airlines, maintain their own direct claims procedures. These are accessed via an online portal. In the case of easyJet (whose example I will...