Emerald Supplies Ltd v British Airways Plc
| Jurisdiction | England & Wales |
| Judge | THE CHANCELLOR OF THE HIGH COURT,The Chancellor |
| Judgment Date | 08 April 2009 |
| Neutral Citation | [2009] EWHC 741 (Ch) |
| Docket Number | Case No: IHC 46/09 |
| Court | Chancery Division |
| Date | 08 April 2009 |
[2009] EWHC 741 (Ch)
Before: The Chancellor of the High Court
Case No: IHC 46/09
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MR I MILLIGAN QC & MR B RAYMENT (instructed by Hausfeld & Co LLP) for the Claimant
MR K MacLEAN QC & MR R O'DONOGHUE (instructed by Slaughter & May) for the Defendant
Hearing date: 1 st April 2009
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
The Chancellor:
Introduction
The claimants import cut flowers from, respectively, Columbia and Kenya. For that purpose they use the air freight services of the defendant British Airways (“BA”) and other international airlines. They claim that BA has been party to agreements and concerted practices with Lufthansa, Korean Airlines, Qantas, Japanese Airlines, Air France, Cathay Pacific, KLM, SAS, Martinair and other undertakings directly or indirectly to fix the prices at which air freight services are supplied or to control or share the market for that supply. They contend that the object or effect of such agreements or practices has been to prevent or distort competition within the EEC, EEA Member States or within the UK so as to affect trade between such member states or within the UK. The claimants aver that the agreements and concerted practices were and are secret so that they are unable further to particularise them but that their overall effect was to inflate air freight prices. Accordingly they claim that BA is liable for infringing Article 81(1) EC Treaty, Article 53 EEA Agreement and s.2 Competition Act 1998.
In September 2008 the claimants instituted proceedings against BA seeking damages for those infringements. In addition, in their particulars of claim they asserted (in the amended form for which they may, in due course, seek permission) that:
“8. The Claimants were direct or indirect purchasers or both of air freight services the prices for which were inflated by one or more of the agreements or concerted practices. As such they are representative of all other direct or indirect purchasers of air freight services the prices for which were so inflated.
9. By virtue of the inflated prices, the direct or indirect purchasers, including the Claimants, have suffered losses, including losses, under one or more of the following three heads:
(1) the inflated element of the price, in so far as it was passed on to them, [and/or]
(2) loss of sales volume in so far as the inflated price was passed on by them to their own buyers, and
(3) loss of sales volumes of other products as a result of brand damage.
10. In the circumstances the Claimants claim on their own behalf and on behalf of all other direct or indirect purchasers of air freight services the prices for which were inflated by the agreements or concerted practices, a declaration that the Defendant is liable to pay damages are recoverable in principle from the Defendant by to those purchasers in respect of each of those three types of loss.”
The ability of a claimant to sue on behalf of himself and others is regulated by CPR Rule 19.6. That rule provides:
“(1) Where more than one person has the same interest in a claim –
(a) the claim may be begun; or
(b) the court may order that the claim be continued,
by or against one or more of the persons who have the same interest as representatives of any other persons who have that interest.
(2) The court may direct that a person may not act as a representative.
(3) Any party may apply to the court for an order under paragraph (2).
(4) Unless the court otherwise directs any judgment or order given in a claim in which a party is acting as a representative under this rule –
(a) is binding on all persons represented in the claim; but
(b) may only be enforced by or against a person who is not a party to the claim with the permission of the court.”
On 31st October 2008 BA issued the application now before me seeking an order that the purported representative element of the claim be struck out. The grounds for that application are twofold. BA claims, first, that the “other persons” whom the claimants seek to represent do not have “the same interest” so as to fall within sub-rule (1). BA claims, second, that, even if those other persons do have the same interest I should direct, pursuant to sub-rule (2) that the claimants may not act as their representative. I shall, as necessary, deal with those issues in due course. First it is appropriate to set out some of the factual background and refer to the reported cases on which the parties rely.
The factual background
The application is supported by a witness statement of Mr Swallow, a partner in the firm of solicitors acting for BA. He explains the extent of the business of BA in the provision of air freight services. The exact details are not material and the general picture those details paint is not disputed. That picture is relevant in giving some idea of the scale of the allegations made in the particulars of claim. That scale can be judged by the following figures relating to the air freight services provided by BA:
(1) their flights go from 299 points of origin to 316 points of destination across 122 different countries;
(2) there are 11,463 flights per week giving a figure of 3.5m flights transporting 5m tonnes of freight over the period of the complaint;
(3) 18% of the freight carried does not touch the EU and 28% does not touch the UK;
(4) the distribution chain of goods carried from producer to consumer contains at least 8 links the details of at least 5 of which are unknown and unknowable to BA.
The claim is not limited to direct or indirect purchasers of air freight services from BA. It extends also to the direct or indirect purchasers of air freight services from any other undertaking providing air freight services which was party to the alleged agreements or concerted practices. Paragraph 4 of the Particulars of Claim alleges that the undertakings included the 9 airlines specified in that paragraph and referred to in paragraph 1 above. Further the claim is not limited to direct or indirect purchases of air freight services effected within the Common Market, EEA Member States or the United Kingdom. Although a necessary ingredient of the alleged infringements is that the object or effect of the agreements and concerted practices relied on was to prevent, restrict or distort competition within those territories, if those conditions are satisfied the direct or indirect purchase and the supply of the relevant air freight services at inflated prices may be concluded and performed anywhere in the world.
These considerations led Mr Swallow, in paragraph 9 of his witness statement, to observe that:
“.. the class that purportedly forms the representative element of the claim, on the face of the pleadings, is not only unidentified, but unknowable, potentially comprising every conceivable 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 shipping services during the relevant period (1999–2006).”
In a witness statement made by Mr Smith, a partner in the firm of solicitors acting for the claimants, the extent of the world-wide air cargo business of BA is not disputed. He contends that the size of the class of represented claimant is the unavoidable consequence of the infringements alleged and irrelevant to the proper construction and application of CPR rule 19.6. He emphasises that the background to the claim lies in the conviction of BA and other airlines in the United States for participating in a world-wide price-fixing cartel. He relies on a Plea Agreement made by BA with the US Department of Justice Antitrust Division dated 31st July 2007, by an employee of BA, Keith Packer, dated 17th October 2008 and similar proceedings in Australia and New Zealand. In addition he points out that the European Commission is currently investigating an alleged cartel in the provision of air freight services under reference 'Case COMP 39.258' and has sent out Statements of Objections to a number of air freight undertakings including BA, Air France-KLM and SAS. The existence of that investigation has at least two consequences. First, as the parties have agreed, further proceedings in this action must be stayed pending the conclusion of the European Commission's investigation. Second, the lack of particularity in the present particulars of claim may be capable of being cured by amendments made later in the light of the Commission's findings.
In addition it is relevant to note that the claimants' solicitors have also received instructions to act for at least 178 further potential claimants. They have indicated that, as and when the agreed stay is lifted, they intend to apply for permission to add them as claimants both in their own right and, if I do not accede to the present application, as representatives.
The reported cases
I have been referred by counsel for both parties to many reported cases decided under CPR Rule 19.6 and its predecessors RSC Ord 15 r.12 and Rule 10 of the rules scheduled to the Supreme Court Act 1873. Though there have been minor variations in their terminology all of them have required that the plaintiff or claimant shall have “the same interest” in the proceedings as those he purports to represent. As the parties have relied on them for different propositions and varying dicta it is convenient, as a necessary preliminary to a consideration of the parties' submissions, briefly to describe the circumstances of each of them....
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