Emerald Supplies Ltd v British Airways Plc

JurisdictionEngland & Wales
JudgeLord Justice Mummery,Lord Justice Toulson,Lord Justice Rimer
Judgment Date18 November 2010
Neutral Citation[2010] EWCA Civ 1284
Docket NumberCase No: A3/2009/1003
CourtCourt of Appeal (Civil Division)
Date18 November 2010
Between
(1) Emerald Supplies Limited
(2) Southern Glass House Produce Limited
Appellants
and
British Airways Plc
Respondent

[2010] EWCA Civ 1284

Before: Lord Justice Mummery

Lord Justice Toulson

and

Lord Justice Rimer

Case No: A3/2009/1003

HC08C02648

IN THE HIGH COURT OF JUSTICE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

The Chancellor of the High Court (The Rt Hon Sir Andrew Morritt Cvo)

MR IAIN MILLIGAN QC and MR BEN RAYMENT (instructed by Hausfeld & Co LLP) for the Appellants

MR KENNETH MacLEAN QC and MR ROBERT O'DONOGHUE (instructed by Slaughter & May) for the Respondent

Hearing dates: 17 th December 2009 & 8 th March 2010

Lord Justice Mummery

Lord Justice Mummery :

Introductory

1

This appeal is a bold attempt at keeping a procedural novelty alive. At the instance of the defendant, British Airways PLC (BA), the Chancellor struck the representative part of the action out for failing to conform to the requirements of Civil Procedure Rule 19.6 (“Representative parties with same interest”). The claimants, Emerald Supplies Limited (Emerald) and another, appeal.

2

The claims are for global infringements of competition law by illegal price-fixing cartels operating in the area of air freight charges. The aim of the litigation is to obtain collective redress for consumers of the services. They are a very extensive group, numerically and geographically. It is asserted that forms of collective redress are now widely regarded as essential for breaches of competition law. Without them there are difficulties in ensuring effective compensation for law-abiding businesses and consumers on whom huge costs are imposed by illegal price-fixing. The issue of redress for price-fixing is so pressing that it is currently under consideration by the EU Commission, the UK Office of Fair Trading and the Civil Justice Council.

3

Procedures under CPR 19 for representative parties and for group litigation and the problems posed by them are concisely put in context by Professor Zuckerman in his valuable pioneering exposition of the principles of procedural law, Civil Procedure-Principles of Practice (2 nd ed-2006):

“12.22 There is no limit to the number of persons who can be claimants or defendants to an action. There is therefore no impediment to a large number of claimants suing together or to a large number of defendants being sued together, but the multiplicity of parties, all of whom exercise their right to participate in the proceedings, may hinder the effective resolution of a dispute by causing duplication and confusion. Yet, it might be equally inefficient if each of a multitude of claimants with similar cases were required to establish their claims independently of each other, because it would require the court to deal with identical issues many times over. As Uff observed, two different sorts of interest may arise in the multi-party proceedings context. One is the true collective interest, where all those concerned share a single common interest (e.g. pollution; anti-discrimination). The second arises where individual substantive rights happen to be shared by several persons relating to a single event or similar transactions (e.g. personal injury claims following mass disasters; product liability claims). The procedural process suitable for administering one such sort of claim is not necessarily suitable or most appropriate for administering the other. Accordingly CPR 19 provides two principal devices for handling multi-party actions. One is the representative action. The other is the group litigation order…”

4

No group litigation order was sought in this case, which relates to the jurisdictional and discretionary aspects of an order for representative parties. CPR 19.6 requires the parties in question (in this case the claimants and those whom they purport to represent) to have “the same interest.” As Professor Zuckerman explains, the key factor in representative proceedings is identity of interest in the relevant group. That identity of interest is determined with a view to promoting the litigation objectives of justice, economy, efficiency and expedition. Although the modern trend is to give the rule an increasingly liberal interpretation, so that the court can deal with as many claims as possible within one set of proceedings, Professor Zuckerman comments (at paragraph 12.27) that “it is not surprising that the use of this procedure has so far been confined to situations where the interests of the representatives and the represented were virtually the same.” That approach is conditioned by two principal considerations: first, the binding effect of the proceedings on the represented persons, who have not given their leave to litigate on their behalf and do not actively or actually participate in the proceedings; and, secondly, the limited powers of the court to ensure that the proceedings are conducted in the interests of all the represented persons. The potential presence of separate defences also militates against representative proceedings by claimants: a defendant should not be prevented from raising a defence that he may have against only some of the persons represented.

5

Consumer claims for overcharging are given (paragraph 12.30) as an example of a case in which each person's damage is small, but a representative action may not be very useful: although many people are affected by legal wrongdoing, that may not be to a sufficient extent to motivate any one of them to commence an action against the wrongdoers.

6

On 18 September 2008 the claimants brought their proceedings against BA for breach of statutory duty in allegedly fixing charges for air freight. This procedural dispute arises from the way in which Emerald and their co-claimant have, in their pleadings, appointed themselves as representatives of groups of consumers of the freighted goods, being direct or indirect purchasers of air freight services the prices for which were allegedly inflated by agreements or concerted practices. A declaration is claimed that BA is liable to pay damages to those purchasers.

7

BA has reacted strongly to the form of the proceedings and denies that “the so-called representative action” brought by Emerald is permitted by the CPR. BA makes no admission as to the nature or extent of the cargo services provided to Emerald which may be subject to the provisions of EC law and of the Competition Act relied on, or as to those claimants, who may be considered indirect purchasers of those services. BA contends that the so-called representative element of the claim constitutes a wholly indeterminate and vast range of potential claimants that far exceeds the scope of the proceedings contemplated or permitted as representative proceedings and whose interests may be divergent or even conflicting. The class of “indirect purchasers” is not only unidentified but unknowable: potentially it comprises every so-called direct and indirect purchaser worldwide who at one stage or another were arguably affected, directly or indirectly, by the cost of air transport during the relevant period 1999 to 2006.

8

The wide-ranging submissions of counsel covered many points on the procedural requirements of representative actions in general and the nature of these particular proceedings. Does the size of the represented group matter? Are common ingredients in individual causes of action sufficient for identity of interest? What is the identity of this represented group? Does that identity have to be determined or be determinable when the proceedings are constituted? Or is it sufficient if class identity can be determined at any time down to and including judgment in the proceedings? Is confining relief to a declaration of liability “in principle” prior to the quantification of individual damages claims an effective way of establishing identity of interest? Is this action equally beneficial to all members of the class? Are conflicts within the class inevitable if it is open to BA to raise a defence against the claims of some members of the class but not others? e.g. a defence that the inflated price paid by the customer has been “passed on”? If so, does that mean that the persons represented do not have “the same interest”? If the case falls within the rule, what factors are relevant to the court's discretion to make an order for the continuation of the representative action?

9

By an order dated 8 April 2009 (paragraph 1) the Chancellor granted BA's application to strike out the purported representative element of Emerald's claim. (I shall refer to the claim made by Emerald as including the claims made by its co-claimant without naming it separately). The Chancellor's judgment [2009] EWHC 741 (Ch) was based on lack of jurisdiction in this case to make a representative party order. As he concluded that the pleaded claim did not fall within the rule, he did not have to consider and did not in fact consider whether, if there is jurisdiction, this is a proper case for the exercise of discretion to make a representative party order. This court heard arguments on both the jurisdictional and discretionary aspects.

10

The Chancellor refused permission to appeal against his order. Permission was granted by Arden LJ on 24 June 2009. An application issued on 8 September 2009 for permission to amend the grounds of appeal and the Appellants’ Notice to deal with costs questions was initially opposed, but at the hearing there was no objection to the grant of permission for the proposed amendments. There is no appeal against paragraph 2 of the...

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