Representative actions under CPR 19.8: Settlement means key questions on funding and damages will have to wait

A preliminary issues trial that was scheduled to take place early next year in Commission Recovery v Marks & Clerk was expected to determine important issues affecting the broader viability for claimants and funders of bringing "opt-out" representative actions under CPR 19.8 (as we reported in our previous blog post here). However, a confidential settlement has now been agreed in that case and so the anticipated trial will not take place.

In principle, a representative action under CPR 19.8 is very attractive to claimants and funders as it allows the court to determine common issues without having to join all affected claimants to the action. This saves costs and makes it much easier to get a case off the ground. Where the resolution of the claims also depends on individual circumstances of class members, which cannot be determined on a representative basis, the court may allow the case to be brought using a "bifurcated" process, dealing with common issues first and leaving individual issues to be resolved subsequently (as established in Lloyd v Google [2021] UKSC 50, considered here). However, there is much uncertainty as to the economic viability of bringing claims on that basis, since – on the current state of the law – those funding the representative stage cannot be certain of obtaining a share of any class recoveries, unless class members consent.

The trial in Commission Recovery was expected to determine key issues affecting the viability of such actions, including:

• Whether class members would have to commence individual claims in order to pursue their claims for relief, or whether they could be resolved as part of the representative action.
• Whether the court could award damages or other compensation on a collective basis, ie for the benefit of all class members.
• The rights and entitlements of the representative claimant, its funder and lawyers (if any) over any sums recovered by class members.

In an earlier judgment in the case, the High Court had suggested that it may be possible to allow a funder to be paid out of recoveries before distribution to class members, by analogy with the position of insolvency practitioners being paid out of assets recovered, though the Court of Appeal had seemed more sceptical regarding the analogy (as outlined here). The point was also considered, but not resolved, in a more recent High Court decision in Smyth v British Airways (considered here) where the claimant had obtained an order from the Chancery Division, on a without notice basis, declaring that she would be entitled to deduct sums to pay her lawyers' and funders' fees from any compensation recovered on behalf of the class. The claim was struck out by the King's Bench Division on other grounds, but the judge was clearly less convinced of the court's jurisdiction to make such an order.  

The settlement reached in Commission Recovery means that the resolution of these issues will have to wait for another case – but, given their importance for claimants and litigation funders, it seems likely that they will be tested in the not-too-distant future.