Factual and Procedural Background
This appeal arises from a procedural dispute in a competition law claim concerning alleged illegal price-fixing cartels in air freight charges. The claimants, Company A and another, brought proceedings against Defendant, Company B, alleging breaches of statutory duty and competition law by fixing air freight prices, seeking collective redress for a broad and geographically widespread group of consumers. The claimants appointed themselves as representatives of groups of direct and indirect purchasers of air freight services affected by the alleged price-fixing.
The Defendant challenged the representative element of the claim under Civil Procedure Rule 19.6 (“Representative parties with same interest”), arguing that the purported represented class was too broad, indeterminate, and included parties with divergent or conflicting interests. The Chancellor struck out the representative part of the claim for lack of jurisdiction under CPR 19.6, holding that the class did not have “the same interest” at the time the claim was issued and that the criteria for inclusion depended on the success of the claim itself.
The claimants appealed against this order, with permission granted by the Court of Appeal. The appeal also involves an application to amend the pleadings to address the identified deficiencies. The proceedings are stayed pending a decision of the European Commission on related competition matters.
Legal Issues Presented
- Whether the claimants and those they purport to represent have “the same interest” within the meaning of CPR 19.6 to sustain a representative action.
- Whether the class of persons to be represented must be identified or capable of identification at the date the action is commenced, or if identification can occur at any time up to judgment.
- Whether the representative action is equally beneficial to all members of the represented class, considering potential conflicts such as the availability of a “passing on” defence.
- Whether the court should exercise its discretion to allow the representative claim to continue if it falls within CPR 19.6.
- The appropriateness and effect of proposed amendments to the pleadings in meeting the requirements of CPR 19.6.
Arguments of the Parties
Appellant's Arguments
- The class size is not numerically limited by CPR 19.6, and the size does not affect whether the preconditions of the rule are satisfied; the claimants submit the conditions are met.
- The class membership may fluctuate between the start of the proceedings and judgment; it is sufficient that a class with the same interest exists at the relevant times, not necessarily fixed at commencement.
- The claimants rely on the House of Lords decision in Duke of Bedford v. Ellis to support the proposition that a representative class may be large, indefinite, and fluctuating, provided there is a common interest and grievance.
- The claimants contend that the claim is beneficial to all members of the class and that potential conflicts, such as the “passing on” defence, do not preclude a representative action.
- The claimants argue that damage is not a necessary element for declaratory relief sought “in principle” and that the relief sought is common to all represented persons.
- The proposed amendments to the pleadings would clarify and restrict the class to purchasers identifiable at the outset and address issues relating to the “passing on” defence.
- The claimants submit that the judgment below erred in its interpretation of CPR 19.6 and that the representative action rule has evolved to be broader and more flexible.
Appellee's Arguments
- The Defendant contends that the purported represented class is indeterminate, vast, and includes persons with conflicting interests, thus failing the “same interest” requirement of CPR 19.6.
- The Defendant argues that the class cannot be identified at the date the claim was issued, as membership depends on the success of the claim itself, making the action improperly constituted as a representative claim.
- The Defendant submits that the claim is not equally beneficial to all members of the class due to the availability of a “passing on” defence, which may apply differently to different members.
- The Defendant opposes the proposed amendments as pointless, contending they do not cure the fundamental legal deficiencies in the representative claim.
- The Defendant also notes that the proceedings are stayed pending the European Commission’s investigation, limiting the utility of amendments or continuation of the claim at this stage.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Duke of Bedford v. Ellis [1901] AC 1 |
Representative actions may be brought by plaintiffs on behalf of a large, indefinite, and fluctuating class sharing a common interest and grievance. |
Distinguished by the court because, unlike Duke of Bedford, the class in this case could not be identified at the start independent of the outcome of the claim. |
| John v. Rees [1970] Ch 345 |
Representative actions as a flexible procedural tool; common interest and grievance suffice even if not all members are represented. |
Distinguished; the court noted potential conflicts in the present case that undermine the “same interest” requirement. |
| Pan Atlantic Insurance Co Ltd v. Pine Top Insurance Co Ltd [1989] 1 Lloyd's LR 568 |
Three conditions for representative actions: same interest, common grievance, and relief beneficial to all. |
Applied to affirm that all conditions must be satisfied; the court found these conditions unmet here. |
| Markt & Co Ltd v. Knight Steamship Co Ltd [1910] 2 KB 1021 |
Requirement that the class be defined and identifiable for representative actions. |
Applied to highlight the necessity of defining class membership, which was lacking in the present case. |
| Irish Shipping Ltd v. Commercial Union [1991] 2 QB 206 |
Representative actions require identifiable class members with the same interest arising from identical contractual relationships. |
Referenced to support the need for identifiable and common interest among class members. |
| Radcliffe v. Coltsfoot Investments (1984-86) Manx Law Reports 386 |
Common questions of fact or law alone do not satisfy the common interest requirement for representative actions. |
Applied to distinguish the present case where the class did not share the same grievance or remedy. |
| Prudential Assurance Co Ltd v. Newman Industries Ltd [1981] Ch 229 |
Common ingredients of causes of action suffice for representative actions; individual damage need not be proven for declaratory relief. |
Referenced in appellant’s submissions; the court rejected this as overcoming the fundamental “same interest” problem here. |
| Devenish Nutrition Ltd v. Sanofi-Aventis SA [2008] EWCA Civ 1086 |
Consideration of “passing on” defence and its impact on class actions. |
Not decided at interlocutory stage; court noted potential conflicts arising from this defence. |
| BCL Old Co Ltd & Ors v. Aventis SA & Ors [2005] CAT 2 |
Explanation of “passing on” defence in competition law claims. |
Applied to illustrate potential conflicts within the represented class undermining “same interest.” |
Court's Reasoning and Analysis
The court analysed the scope and application of CPR 19.6, focusing on the requirement that the representative party and those represented have “the same interest” in the claim. It emphasised that this identity of interest must exist throughout the proceedings, not only at judgment. The court found that in this case the criteria for class membership depended on the success of the claim itself, rendering it impossible to identify any member of the class at the time the proceedings were commenced.
The court distinguished the present case from precedents where the class was identifiable independently of the outcome, such as Duke of Bedford, and noted that the wide and indeterminate class here, including direct and indirect purchasers worldwide, failed to meet the requirement.
Further, the court considered the potential for conflicting interests within the class, particularly due to the availability of a “passing on” defence that could apply to some members but not others, undermining the notion of a common interest and equal benefit from the proceedings.
The court rejected the claimants’ arguments that the class could fluctuate or that the relief sought was equally beneficial to all, concluding that the fundamental requirement of identity of interest was not met at any relevant stage.
Regarding the proposed amendments to the pleadings, the court held that they would not cure the fundamental legal defects and thus refused permission to amend. It also declined to consider exercising discretion to allow the representative claim to continue, as the case fell outside CPR 19.6.
Holding and Implications
The court’s final decision is to DISMISS THE APPEAL and refuse permission to amend the pleadings.
This ruling means that the representative element of the claim is struck out for failure to satisfy the “same interest” requirement of CPR 19.6. The claimants and those they purport to represent do not constitute a properly defined class capable of being represented in this action. The presence of potential conflicts within the class and the indeterminate nature of class membership render the proceedings unsuitable as a representative action.
No new precedent is established beyond the application of established principles governing representative proceedings under CPR 19.6. The decision underscores the necessity for clear, identifiable classes with common interests throughout the litigation for representative actions to be permitted under the rule.