The Court of Appeal has upheld a decision that claims pursued in a “representative action” on behalf of over 28,000 members of the Bonga community in Nigeria affected by an oil spill will be struck out.
This was a claim on behalf of individuals and communities based on the coast of Nigeria spanning Bayelsa State and Delta State.
It relates to the impact of an oil spill in 2011. In general terms, the Claimants allege that responsibility for the spill and its consequential impact lay with companies forming part of the Shell group. The Defendants deny liability.
We previously blogged about various issues decided by the trial judge (including his decision to strike out the representative aspect of the claims) here and here. In January, we blogged on the Court of Appeal’s judgment dealing with limitation issues in the same litigation.
There are two key points to note from the Court of Appeal’s new judgment.
First, the judgment sets out in very clear terms the highly restrictive nature of the CPR r. 19.6 representative action and its general unsuitability for large-scale environmental litigation (except perhaps in a limited category of cases, discussed below).
Second, it illustrates the need for legal representatives to take the utmost care when deciding how to formulate proceedings in multi-party litigation in circumstances where limitation issues may make it impossible to fix procedural problems at a later stage.
Coulson LJ began his analysis by commenting on the rarity of representatives actions in England and Wales:
Standing back for a moment, it is right to note that, as a matter of law and practice in England and Wales, representative actions are relatively uncommon
This is because there exist alternative tools available for courts to use in cases involving large numbers of claimants, such as the making of a GLO:
In cases where there are a large number of claimants with some or even many facts common to their individual claims, but where there are also not insignificant differences, the parties and/or the courts will usually choose one of two other options. The first is the making of a GLO, as discussed by Mummery LJ at [3] of his judgment in Emerald Supplies.
The second is the selection of “lead” claimants from amongst a cohort of individual claims:
The other methodology, also common in TCC cases, is for all the claimants to be parties to the action in their own name, and where a representative sample are then taken to be lead claimants for the purposes of deciding the substantive issues in the case.
The “lead claims” approach in particular has some clear advantages:
Careful sampling by both sides to arrive at a representative group of lead claimants is, in my experience, by far the best way of ensuring that, in such cases, the claimants as a whole can take advantage of those matters on which they have a genuine common interest, whilst also allowing decisions on the range of individual points and defences that may arise, some affecting one group of claimants, some another.
By contrast, the CPR r. 19.6 representative action procedure was much more restrictive. After reviewing the authorities, Coulson LJ summarised the requirements in comprehensive guidance:
a) A representative action is a particular form of multi-party proceeding with very specific features. One such feature concerns the congruity of interest between representative and represented. Another is the need for certainty at the outset about the membership of the represented class.
b) The starting point (or threshold) for any representative action is that the representing parties must have “the same interest in a claim” as the parties that they represent.
c) “The same interest” is a statutory requirement which cannot be abrogated or modified (see [74] of Lloyd v Google). It was described by Gloster LJ in Re X and others [2015] EWCA Civ 599, [2016] 1 WLR 227 as “a non-bendable rule”.
d) The reason why the represented parties need to have the same interest in a claim as the representative claimant is because the represented parties are bound by the result of the representative action. That is what Mummery LJ in Emerald Supplies called “the binding effect of the proceedings”.
e) The court will adopt a common sense approach to this issue. It must be the same interest “for all practical purposes” (the expression used by Staughton LJ in Irish Shipping at 227G); or it must be “in effect the same cause of action or liability” (the expression used by Akenhead J in Millharbour at [22(3)]. This avoids the sort of rigidity deprecated by Megarry J in John v Rees.
f) In this way, it is easy to see why all the stallholders in Duke of Bedford v Ellis, and all the shareholders in Prudential Assurance, had the same interest in the injunction and the declarations sought. Similarly, in Lloyd v Google, the Chancellor said of the relationship between the representative and the represented parties that “the wrong is the same, the loss claimed is the same. The represented parties do, therefore, in the relevant sense have the same interests.”
g) It may not affect the making of an order for a representative action if the represented parties also have their own separate claims for damages. In the copyright collection cases (such as Independiente), where the emphasis was on the injunction for breach of copyright, the damages were of secondary importance: they simply paid the costs of the policing operation. Individual claims for damages, which were regarded as “subsidiary” in Duke of Bedford v Ellis, can be the subject of an inquiry or an account, or they can lead to subsequent individual claims (outside the representative action), which was the approach adopted in Prudential Assurance.
h) Thus, the existence of individual claims for damages is not necessarily a bar to their being dealt with in some way via a representative action. It will always depend on the factual circumstances.
i) The analysis of “the same interest” is undertaken by the court at the time of the application under r.19.6. The court has to consider what the issues are likely to be by reference to all the information then available (see Akenhead J at [22] of Millharbour). To the extent that Lord Macnaghten in Duke of Bedford v Ellis was suggesting that the exercise should be carried out solely by reference to the claimants’ pleadings, that is emphatically no longer the practice, as demonstrated most recently by Emerald Supplies, Millharbour and Lloyd v Google.
j) These later authorities also show that it is necessary to consider the likely defences as part of the analysis. So in Irish Shipping, although potential defences were identified, at 227F Staughton LJ said that they were “unlikely to arise”. The suggestion is that, if they had arisen, the case would have been decided differently. In Emerald Supplies, on the other hand, Mummery LJ said at [64] that “if there is liability to some customers and not to others they have different interests, and not the same interests, in the actions.” In Lloyd v Google, the court expressly took into account the fact that it was “impossible to imagine that Google could raise any defence to one represented claimant that did not apply to all others.”
k) Likewise, depending on the circumstances, limitation defences may be a factor to be taken into account when assessing whether or not to make an order under r.19.6: see [22(7)] of the judgment in Millharbour.
l) As to the equally fundamental requirement that membership of the represented class must be capable of being ascertained at the outset of the proceedings, I can do no better than repeat Mummery LJ’s words in Emerald Supplies (see paragraph 46 above): “It cannot be right in principle that the case on liability has to be tried and decided before it can be known who is bound by the judgment”.
Having given that summary of the legal authorities, Coulson LJ went on to consider the point of the representative action. Its purpose was essentially the saving of time and costs:
If A and B can represent C-D, without C-D being parties to the proceedings, but with C-D being bound by the result, then there is a considerable saving of time, costs and effort.
Although data protection cases like Lloyd v Google represent a “paradigm example of a representative action”, it is “easy to see why, in a certain kind of pollution case, a representative action is an appropriate course”.
What kind of pollution case did Coulson LJ mean specifically? He explained this in the following way:
Say, for example, a group of residents are troubled by the emissions from the chimney of a chemical plant. If those residents sought an injunction against the company, it is overwhelmingly likely that they would have the same interest in the claim and therefore could be represented by one of their number.
But contrast that situation with one in which the residents go on to suffer personal injuries or other individual damage as a result of exposure to the pollution:
Conversely, it is much more difficult to see the requirement being met in a situation where the residents have claims for different personal injuries arising from the pollution caused by the chimney. In such a case, there will usually be a group litigation order (“GLO”) instead.
Coulson LJ took the time to shoot down assertions in some of the commentary on this litigation that the English courts were shying away from the management of large-scale environmental litigation:
Some of the reporting of and commentaries about the judge’s judgment in this case suggested that the English Courts were unwilling or unable to deal with multi-party environmental claims. That could not be further from the truth …
The point was simply whether the representative action had been properly put together:
It is not therefore in issue that, in an appropriate case, the English Courts will accept and then case manage claims like this through to judgment. But the issue here is very different and much more limited: it is whether these particular proceedings are properly constituted as a representative action.
And, in that respect, the conclusion was in straightforward and emphatic:
On a proper analysis of these proceedings, none of the purposes of a representative action can be achieved. This is not, and never could be, a representative action.
The key reason was that there would be no saving in time or cost by managing the litigation as a representative action. It would be a representative action “in name only”:
This was because Mr Dunning accepted in argument that these proceedings would have to be case-managed and tried as if they were in excess of 28,000 individual claims. He expressly agreed that issues such as limitation, alternative causation, and whether the damage to each parcel of land justified the remedial scheme claimed for, would have to be addressed, in some way or other, on an individual basis, represented party by represented party.
There could also be no form of “rolling” representative action. If the representatives’ claims failed (for example, on limitation), then that could not simply be fixed by selecting new representatives from among the 28,000 plus cohort:
I venture to suggest that no representative action has ever been conducted in such a way. The reason? Because the existence of the manifestly different interests of the represented parties mean that it is not a representative action in the first place.
Moreover, such a suggestion presupposed that any new representatives had claims which were valid: but that assessment could only be made by the court, which would inevitably have to decide, on a case-by-case basis, whether the claims were viable on the basis of limitation, causation, etc.
Not only is that not a representative action (and instead the equivalent of the trial of 28,000 plus individual claims), but it is also wholly contrary to the authoritative decision of this court in Emerald Supplies.
Coulson LJ was scathing about a suggestion by the Claimants that striking out the representative action would amount to a denial of access to justice:
These proceedings could (and perhaps should) have been brought by way of a GLO. Each side blames the other for why this action was not so brought, but the fact remains that it was not. This action could also have been brought by the 28,000 plus represented parties as individual claimants with one consolidated particulars of claim, and then case-managed sensibly so that sufficient sample claimants and claims were determined by the judge for extrapolation purposes. It is not as if those acting for the appellants did not have the relevant information as to the identities of the represented parties; they were able to serve the particulars of claim with the 28,000 plus names in two Schedules. In consequence, if there is a problem now because the claim form was only issued in the name of the two appellants, that is of the appellants’ and the represented parties’ own making; it is not a question of access to justice.
And he noted that the real reason for the Claimants’ decision to persevere with the increasingly problematic representative action was that their claims were by now otherwise time-barred:
I am in no doubt that, in the present case, the appellants’ real concern is that, if the judge’s order stands, they will face yet another limitation difficulty.
But, unfortunately for the Claimants, that was no good reason for allowing them to persist with it:
But again, it seems to me that, if the court concludes that an action is not a representative action under r.19.6, then the fiction should not be maintained that it is, merely to protect the claimants from the limitation consequences of that conclusion.
In summary:
The reason why the appellants want the action to be designated a representative action is not concerned with the merits of such a designation at all; it is solely concerned with the tangential issue of limitation which is irrelevant either way.
Coulson LJ then dealt with the Claimants’ argument that their case was “indistinguishable” from Lloyd v Google. He considered that it was distinguishable for a number of reasons.
First, this case required proof of actual damage to land to complete the cause of action:
The present case involves a claim which, whether it is put in nuisance, negligence or howsoever, requires proof of actual damage to land to complete the individual cause of action.
Second, Lloyd v Google did not require an assessment of each individual’s circumstances. By contrast:
The claim for remediation relief in this case means that each represented party must be able to establish that the damage that they have suffered (whether individually or as part of their community) is sufficient to warrant either the injunction requiring the respondents to carry out the clean-up, or the award of compensation so they can pay for their own clean-up. That makes this a wholly different sort of case.
Third, limitation was a central issue in this case and was a defence which had to be assessed in relation to each individual separately:
What if the claims of the two appellants are statute-barred? In a representative action under r.19.6, such a result would mean that the claims of the represented parties also failed. Mr Dunning said that that would be unjust and unfair on all those represented parties whose claims were not statute-barred. So it would; but that simply underscores why this is not a representative action.
Finally, issues of causation were a significant difference between the two cases: each represented party would need to show the causative link between the oil spill and the damage they had suffered.
In conclusion, the appeal was dismissed:
For the reasons that I have given, this was not and could never have been a representative action. If my lords agree, I would dismiss the appeal against the order of Stuart-Smith J.