Representative actions under rule 19.6 of the Civil Procedure Rules have received considerable attention following the Court of Appeal’s 2019 decision to allow what is essentially an opt-out representative action to proceed in Lloyd v Google (see more here and here). The Supreme Court’s eagerly awaited decision in Lloyd is imminent and has the potential to shape the future of class actions in England & Wales.
Just last week the Court of Appeal in another opt-out representative action – Jalla v Shell – endorsed a strict approach to the “same interest” test which is an essential component in getting a representative action off the ground.
The appellants in this case are two members of the Bonga community of 28,000 people occupying land on the Nigerian coast (the Represented Parties) which had been affected by an oil spill for which Shell is alleged to be liable. The appellants are seeking remediation relief: either an injunction ordering Shell to clean-up or compensation for the Represented Parties themselves to clean-up. The primary issue that arose on appeal was whether the claims of the Represented Parties could be pursued by two named individuals by way of a representative action under rule 19.6.
Representative actions under rule 19.6 are relatively uncommon because historically “same interest” has been narrowly defined by the Courts and is much harder to satisfy than the “common or related issues of fact or law” threshold for a Group Litigation Order.
At first instance, Justice Stuart-Smith adopted this narrow approach, holding that the “same interest” test had not been satisfied and that therefore the claim could not proceed by way of a representative action.
The appellants raised two specific issues on appeal:
- whether the appellants and the Represented Parties had the “same interest”; and
- whether Justice Stuart-Smith had erred in failing to hold that this case was materially indistinguishable from Lloyd v Google.
The Court of Appeal upheld Justice Stuart-Smith’s first instance decision in respect of the “same interest” test.
- The Court made clear that the primary purpose of a representative action under rule 19.6 is to save time, costs and effort, and to avoid procedural complexity. This means that it is critical that representatives have the same interest in the claim as the represented persons. The court only tries the claims of the representatives; it does not consider the individual claims of the represented parties. The whole point of a representative action is that it avoids such granularity; otherwise its principal benefit is lost.
- The Court considered that in this case, the primary purpose of a representative action could not be achieved. It said, “This is not, and never could be, a representative action” and “These proceedings could (and perhaps should) have been brought by way of a GLO”.
- This was because issues such as limitation, causation, loss and damage would have to be addressed on an individual basis. In particular, an analysis on an individual case-by-case basis would be required on:
- whether damage was suffered at all for each parcel of land;
- whether the damage suffered was caused by this particular oil spill (as there were multiple instances of oil pollution in that area); and
- whether the damage suffered for a particular parcel of land justified the remedial works claimed. There may be individuals who had suffered damage which justified only small-scale remedial works whilst others may have suffered more extensive damage.
- The Court reiterated Justice Stuart-Smith’s analysis that the existence of individual claims may not preclude a representative action. The question is whether those individual claims can be regarded as subsidiary to the main issue that is the subject of the proceedings. The Court agreed that these issues were not subsidiary in importance but were just as critical as the common issues to any prospects of success or relief.
- The Court also made clear that there is a need for certainty at the outset about the membership of the represented class. In this case, there was not sufficient certainty because the Represented Parties could only become members of the class if they could show that their land was damaged by the oil spill, and this would require a trial.
Distinguishing from Lloyd v Google
The Court of Appeal agreed with Justice Stuart-Smith that this case is distinguishable from Lloyd v Google and highlighted the following key differences:
- In Lloyd, the cause of action is the same. The represented parties are alleged to have suffered the same breach and the same type of damage, i.e. the loss of control of data. However, in Jalla, proof of actual damage is necessary to complete each individual cause of action.
- The Court of Appeal found that membership of the class could be determined at the outset in Lloyd, whereas a trial would be required in Jalla to show that damage has been suffered before the represented individuals could show they qualify to be represented.
- In Lloyd, the alleged damage was loss of control of data and the represented parties did not seek to rely on any personal circumstances. In Jalla, the claim for remediation relief means that each Represented Party must establish that the damage they have suffered is sufficient to warrant the remediation relief.
- There were no limitation issues in Lloyd. In Jalla, some of the Represented Parties may have brought their claim within time but others may be time-barred.
- The causation issues were different in Lloyd. It was not alleged that a third party other than Google was responsible for the harm described complained of by the representatives. In Jalla, there was the possibility that the damage suffered may have been caused by other oil pollution in the area and so each Represented Party must show that the damage they suffered was caused by the specific oil spill in question.
The Court of Appeal’s endorsement in Jalla v Shell of a strict approach to the “same interest” test suggests that even if Lloyd v Google is ultimately upheld by the Supreme Court, the circumstances in which representative actions under rule 19.6 can be brought might be quite limited. Certainly, in cases where there is a need for individual analysis of causation and loss, claimants may well encounter difficulties in meeting the “same interest” test.