» Foreword
» How to Respond
» Introduction
» Representative Claims Working Group
» Defining Representative Claims
» Representative Parties, Group Litigation
Orders and Representative Claims
» The Scope of Representative Claims
» The application for permission to
proceed
» Considerations relevant to the application
for permission to proceed
» Pre-action behaviour
» Identifying the group to be represented
» Identifying the applicant's suitability
to act in the matter
» Other interested parties
» The extent of the claims/remedies
available
» Costs
» Representative Defendants
» Other Issues
» Annex A: Summary of proposals
» Annex B: Representative Claims Working
Group: Terms of Reference
» Annex C: Representative Claims Working
Group: Membership
» Annex D: Partial Regulatory Impact
Assessment
» Annex E: Consultation criteria standard
text
As part of the Lord Chancellor's aim of providing wider access to justice this consultation paper sets out some proposals for a framework which would allow representative claims in the courts of England and Wales. This consultation is being conducted in line with the code of practice on written consultation issued by the Cabinet Office. It falls within the scope of the Code. The Code criteria set out in Annex E have been followed.
An initial impact assessment indicates that these proposals potentially affect all businesses, charities and voluntary organisations either as defendants of a representative claim or as a member of a represented group. The proposals are likely to lead to additional costs or savings for businesses, charities or the voluntary sector however, as these proposals create no new cause of action additional litigation should be minimised. A draft Regulatory Impact Assessment (RIA) is attached at Annex D. Contributions in terms of information and data from consultees for further development of this RIA will be appreciated.
Depending on the results of this consultation the government proposes to undertake further work on the likely costs and benefits of any detailed proposals before any decisions are taken on implementation.
Please send your response by 1 May 2001 to:
Hafsha Ali
Lord Chancellor's Department
Civil Procedure Branch
Rm 3.13, 3rd floor
Selborne House
54-60 Victoria Street
London SW1E 6QW
E-mail: Hafsha Ali
Representative groups are asked to give a summary of the people and organisations they represent when they respond
Respondents are invited to comment on each of the proposals, in the order set out in Annex A, and on any other related issues. The Department may wish to publish responses to this consultation document in due course.
Please ensure your response is marked clearly if you wish your response or name to be kept confidential. Confidential responses will be included in any statistical summary of numbers of comments received and views expressed.
Further copies of this consultation paper can be obtained from Hafsha Ali at the above address or by phoning 020-7210 0657.
At present in private law cases claimants must show that they themselves have a legal right that they are seeking to enforce. Consequently neither another person nor an organisation, for example a consumer group, can take action on behalf of an unnamed claimant or represent an individual whose rights have been infringed. Only that individual has the right to take action. However, in public law cases anyone with a sufficient interest may apply for a judicial review and, on the whole, the courts have taken an increasingly liberal view as to what constitutes sufficient interest. Organisations such as Greenpeace (Endnote 1) and the Consumers' Association (Endnote 2) have been allowed to take action in such cases.
The Government has already introduced reforms to allow members of the public to bring cases, which may benefit a wider group. Under the Access to Justice Act, which came into force on 1st April 2000, the Legal Services Commission has the power to fund a claim as part of the Community Legal Service on the grounds that it has a wider public interest ; a means test will apply.
Nevertheless, in some situations individuals may not be in a position to pursue a matter themselves, whilst organisations which would be willing to pursue the matter on their behalf at present have no right to do so.
The Government's policy of ensuring access to justice will be better served if a wider range of bodies is empowered to protect the interests of those they represent. Hence the Lord Chancellor is consulting on widening the scope for representative claims in the courts of England and Wales.
In keeping with the aims of the civil justice reforms, court proceedings to resolve disputes should be seen as a last resort and used after other more appropriate means, for example action by a statutory body, industry codes of practice and ombudsman schemes. Responsible representatives will have a good understanding of the various relevant non-court remedies and should aim to assist individuals towards satisfactory settlements without recourse to litigation.
Nevertheless, there will be some situations for example the protection of consumer interests or the rights of members of a group or association where a representative could usefully pursue court action on behalf of those directly affected.
Through implementation of the Injunctions Directive (Directive 98/27/EC) the Government will give public enforcement authorities and named private consumer bodies who meet objective criteria the power to seek injunctions in the United Kingdom to stop traders infringing the collective interests of consumers under eleven existing consumer protection directives (Endnote 4). Regulations to implement the Injunctions Directive will be made in early 2001. For any queries regarding the Injunctions Directive please contact Peter Deft at the Department for Trade and Industry on 020-7215 0339.
Other European Union initiatives (Endnote 5) incorporate the principle of representative claims as a tool to defend the rights of consumers or individuals or for environmental protection.
The EC Directive on combating late payment in commercial transactions (Directive 2000/35/EC) allows organisations that are officially recognised as having a legitimate interest in representing small and medium-sized enterprises (SME's) the right to take action before the courts or competent administrative bodies to prevent the continued use of grossly unfair terms.
The Small Business Service will shortly publish a Consultation Document that explains the Directive in greater detail and seeks views on a number of implementation options and other related matters. Copies of this document can be requested from Lesley Mitchell (Small Business Service Investment Directorate) on 0114-259 7670.
This Consultation Paper sets out proposals for procedures to deal with representative claims. Views are sought on all of these proposals and any other related issues. A summary of the proposals is attached at Annex A.
The Lord Chancellor's Department established a Working Group to take forward his initiative: this Consultation Paper has been informed by the variety of views expressed in the Group and we are grateful to those involved for their time and assistance. The Group's terms of reference are at Annex B, and a list of its Members is at Annex C.
For the purpose of this Paper representative claims are defined as claims made by, or defended by, a representative or representative organisation on behalf of a group of individuals who may, or may not be individually named in a situation where an individual would have a direct cause of action. More detail of how this definition was reached and the discussions of the Group are set out in the remainder of this Paper.
There are already some circumstances where an individual may act in a representative capacity; existing rules (Endnote 6) allow, in certain cases, for one or more persons to bring proceedings on behalf of numerous other persons who have the same interest.
There is also provision for the case management of a group of claims which give rise to common issues of fact or law. Often these group litigation orders are complex and involve a large number of individual claims. Procedures are already in place which achieve a balance between the rights of claimants and defendants to pursue and defend cases individually, and the interests of a group of parties to litigate the action as a whole in an effective manner (Endnote 7).
Empowering representatives and representative organisations (for example consumer groups, environmental organisations or trade associations) to bring proceedings takes the law a step further and provides an additional and complementary way for cases to be handled. Organisations would be able to bring proceedings on behalf of persons whose collective interests they support. It would not be necessary for those acting in a representative capacity to have a direct interest in the proceedings.
It is intended that courts will enable the parties to use the procedure, or combination of these procedures, best suited to achieving a just settlement of the issues involved in their case.
that the representative party is an appropriate body or person with sufficient interest to be bringing the claim,
whether the claim is an appropriate way to proceed, and,
the identity of those represented.
Concerns about the potential costs to defendants and the need to ensure a balance between the rights of claimants and defendants could be addressed by a permission to proceed requirement together with an effective case management approach. The permission stage could act as a filter enabling the court to give preliminary consideration to aspects of the claim peculiar to its representative nature.
The Group considered how arrangements for the permission stage should be organised, and agreed that defendants should be served with a copy of the application at the permission stage and have the opportunity to ask for an oral hearing to reconsider the application where permission has been granted on a written application.
| It is proposed that: in order to bring a representative claim those wishing to act in a representative capacity would require permission from the court to issue proceedings. The application should be in writing, and served on the defendant. If permission is refused an application may be renewed orally by the applicant; if it is allowed, the defendant may apply for the decision to be reconsidered at an oral hearing. |
pre-action behaviour,
identifying the group to be represented,
identifying the applicants' suitability to act in the matter,
other interested parties,
the extent of the claims/remedies available,
costs.
The applicant should demonstrate compliance with any relevant pre-action protocol. Pre-action protocols set out the steps, which should be taken by parties, or their legal advisers, before proceedings are issued. Their purpose is to achieve early identification of the issues and evidence, leading to more informed and earlier settlement, and where possible, avoid the need to start court proceedings. The Working Group agreed that a pre-action protocol may be useful.
| It is proposed that: Further consideration should be given to the use of a pre-action protocol in representative claims. |
The Working Group discussed whether representative claims would be appropriate on behalf of unidentified as well as identified individuals. Also, whether a case could be brought on behalf of a mixed group where some individuals could be identified but others who existed could not. The discussions focused on various different types of representative claims which could arise:
Representing named and therefore identifiable individuals, with a direct cause of action, for example a trade association or trade union suing on behalf of its members and seeking injunctions to restrain any breaches that may be adversely affecting their interests. Some members felt that there would be some advantages in allowing only identified or named individuals - this may act as a deterrent against unreasonable proceedings and make it easier; for the defendant to answer the claim; to demonstrate the link between the representative and those they claim to represent; for any individuals who would otherwise be part of that group to disassociate themselves from the proceedings should they wish.
Representing unnamed but identifiable individuals, with a direct cause of action, for example all the purchasers of a product or service who had been overcharged. Some large groups might be difficult or impracticable to name individually even though the group to which they belong is clearly identifiable, for example customers of a public utility company serving a particular area.
Representing the interests of an affected group where the individuals are unnamed and non-identifiable but a direct cause of action can be identified, for example where a consumer group has difficulty finding suitable individuals to run a test case. Allowing unnamed individuals would enable the representative body to bring a representative claim for a non-specific or potentially very large number of people for example "all consumers".
Where a representative may be permitted to take action as a preventative measure where no cause of action has yet arisen, for example where a consumer group wishes to demonstrate that a product is potentially harmful prior to the damage occurring. This would create a new cause of action which does not currently exist and would require primary legislation. This idea is not developed further in this Paper.
Representative claims on behalf of the first three groups could provide a useful mechanism to deal with individually small instances of harm affecting a large number of people, or to enable a representative organisation to bring or defend a claim on behalf of its members. Responsible organisations acting on behalf of others, who they may be unable to name but whose interests they can genuinely represent, may have a useful role to play within a legislative framework that addresses the concerns identified above.
| It is proposed that: Representative claims could be made on behalf of a group whose individuals may or may not be named but where a situation exists in which an individual would have a direct cause of action. |
| Views are sought on whether the area of Representative Claims could be expanded in future to include the possibility of making a claim on behalf of a group where a situation exists in which, an individual would have a direct cause of action arising out of a conduct complained about but not necessarily against that defendant. |
It is also considered that the applicant should confirm whom they are seeking to represent by:
In the case of named individuals . confirming, where practicable that they consent to being represented by the applicant;
In the case of a named group (e.g. membership of a Trade Union) where the individuals the action is sought to represent can be easily notified of the litigation, that they are given an opportunity to opt out, for example, where a newsletter could be circulated to all members.
In the case of an unnamed but identifiable group - clearly defining the identity of the group, for example everyone in a stated geographical area; all those who purchased a particular item during a given period; all those belonging to a specific organisation;
In the case of an unnamed and unidentifiable group - by providing any evidence of support from those who the applicant seeks to represent for example signed petitions; statements of support from relevant recognised organisations; prominent persons; relevant local groups; statutory bodies etc.
| It is proposed that: Where practicable the applicant
should provide the court with the names of those they represent and
demonstrate that they consent to being represented by the applicant.
Alternatively, where they can be easily notified, individuals could
be given the opportunity to opt out if they do not wish to be represented
by the applicant, for example where a newsletter could be circulated
to all members of a union.
Where it is not possible to name the individuals they should be identified as clearly as possible. |
There is a need to ensure that those who are empowered to take representative claims act responsibly and that they can truly be said to represent the interests of the individuals. Various ways to achieve this were considered, including whether an approved list of organisations would be feasible. It was felt that maintaining an up to date list would be problematic; it would be difficult to decide who should approve the list and to ensure that the scope of the list was sufficient to meet all needs.
It was concluded that there should be some form of indicative criteria that a body or person wishing to bring a representative claim should meet. Such criteria could be set out in the rules or practice direction, and an application could be made to the court for permission to bring a representative claim on the basis that a representative or representative organisation satisfied the criteria. The applicant should demonstrate their suitability to act - in the case of an organisation this may mean that it:
has an appropriate constitution, for example elected officers, membership rules, statement of purpose etc;
is able to satisfy the court that it is a responsible organisation with a sufficient interest in the issue concerned, for example by providing evidence of any previous history of campaigns; assisting individuals; general involvement in the area concerned; that it is a nationally or locally recognised organisation; or it is affiliated to or supported by any national organisation or network, local authority etc; or
is a qualified entity from another EU Member State, which may include independent public bodies, and private organisations who may bring proceedings on behalf of the group(s) they represent.
However the above list is not exhaustive, nor is it intended that a group formed specifically in response to a particular incident or issue of concern, for example, a group of neighbours acting together, to be excluded. Whatever criteria the applicant may be required to meet, the court would have discretion to override this where it considered it appropriate to do so. This could be either to allow an applicant, who does not meet all the criteria to bring proceedings or to exclude an applicant from bringing proceedings despite meeting all the criteria, if the court believes it appropriate to do so in the individual circumstances of the case.
The Working Group considered that a representative or representative organisation should not be prevented from litigation on the grounds that they may be unable to pay costs and that this should not be used as a criteria to determine their suitability to act. However, the court would have discretion to refuse permission to litigate if it considered that the representative claim was being brought as a device to avoid costs liability.
The courts discretion would not be so wide as to enable the court to entertain any claim that could not be brought by an identified and named individual as a claimant in his own right. It would not allow the court to entertain new causes of action that are not currently recognised under existing law.
| It is proposed that: The applicant should satisfy the court that they are an appropriate body or person to represent the interests of the individuals concerned and, that they have a sufficient interest in the matter, including by demonstrating an awareness of the issues involved. |
| It is proposed that: Applicants should be expected
to assist the court to determine whether they are the best body or
person to represent the interests of the individuals concerned by
identifying other interested parties.
Respondents are asked to comment on whether there should be provision to publicise the court's decision and, if they agree to indicate how this should be done. |
The applicant should provide the court with any knowledge they have regarding any other interested parties or potential objectors to the application (including other organisations who may wish to bring a representative claim in the matter, individuals who may wish to pursue their own claim or object to being part of any proceedings commenced by the applicant and any relevant statutory bodies with an interest). The court will also be able to give directions as to who else should be served with any notice of application, claim or hearing.
The Group discussed whether it would be appropriate for the court to publish their reasons for approving a representative or representative body as this would enable other organisations or interested parties to come forward.
The Working Group considered a range of possible options - limiting proceedings to injunctions, allowing corrective action, or extending the range of proceedings to include claims for damages. The remedies, which should be available, were largely thought to depend on whether the claimants were identified.
Clearly it would not be possible to distribute a monetary award to a wholly unidentifiable group of individuals. The Working Group discussed ideas for allocating damages in these situations, for example through provisions intended to benefit consumers more generally by a reduction in the price of a product or an investment in health and safety, or research provisions equivalent to the cost of the overall damage caused. Alternatively the court could direct that a Trust Fund be set up with defendants, passing funds to the control of the Trustees to distribute damages to those affected, with liberty to apply. Such ideas, if developed further would certainly require primary legislation.
This could lead to damages being viewed as a penalty imposed on defendants rather than restitution to individuals who have suffered actual loss, with obvious difficulties if another individual subsequently identified himself as a claimant and sought damages. It was suggested by some members of the Group that the position regarding damages and the range of proceedings on behalf of unnamed individuals should be reviewed again in the future.
It is important that the applicant should confirm what relief is being sought - for example damages or injunctive relief. This should be included as part of the applicant's Statement of Case - either in the claim form or separately as particulars of claim. The court may wish to consider particular issues relating to the type of proceedings and the representative nature of the claim, for example the appropriateness of the type of proceedings and remedy sought.
| It is proposed that: In the interests of justice to both parties, the applicants should have a duty to establish that the representative claim is an appropriate way to proceed and the range of claims and remedies available for representative claims on behalf of named individuals should be the same as if they had brought the claim themselves. |
| Respondents are invited to comment on whether the question of damages for unnamed claimants should be reconsidered in the future and how useful and appropriate it might be to set up a trust fund to distribute damages to those affected. |
| Views are sought on how the difficulties identified regarding fair recompense for actual loss and equitable distribution could be addressed. |
The Working Group discussed whether specific provisions should be made for security of costs, in representative claims and whether the ability of a representative or representative organisation to pay costs should be used as criteria to determine their suitability to act in a representative capacity. The Group considered whether named individuals should also have a liability for costs and whether there is a need to ensure that individuals were not able to avoid costs by forming an impecunious organisation to bring an action on their behalf. Also the court would have the power to refuse permission to litigate if it considers that the representative claim was being bought as a device to avoid costs liability. It is relevant to note that, where the court considers it appropriate, provisions already exist to order costs against non-parties . Rule 48(2)
The issue of how the representative organisation and the claimants determine their responsibility for costs should be a matter between themselves, certain costs are insurable and some associations might have agreement to pay legal costs on behalf of their members. However, it was decided that as people had the option of bringing their own claims it would not be unreasonable to consider specific provisions regarding costs in representative claims.
| Views are sought on whether additional specific provisions are needed in respect of costs in representative claims, and if so, what these should be. |
| It has been suggested that organisations should be able to apply to the judge for a determination at an early stage that if the proceedings are in the public interest against government or a plc then the case should be conducted on a no costs basis, or on the basis that if the action fails, the body is not liable for costs. Respondents are asked to comment on such a provision. |
There may be potential representative defendants who wish to defend proceedings in a representative capacity. This would be allowed subject to the consent of the named defendants and permission from the court.
Some members of the Group thought that a new cause of action should be created to allow a representative or representative organisation to seek measures to prevent harm being caused. The Group discussed whether adequate remedies currently exist to deal with potentially harmful products and whether there is a need for consumer groups to be able to act in support of Trading Standards Departments. This could allow representative organisations to complement the existing regulatory powers of statutory organisations but may have potential disadvantages.
The Working Group discussed whether a mechanism was needed to ensure that if a statutory body did not take action, another interested organisation could do so, enabling statutory and non statutory bodies to act in a complementary way. It was felt by some that judicial review of a decision made by the public body not to take action in a particular situation may not provide adequate redress because it does not provide an appeal on the merits of a decision but only asks whether a correct legal basis has been used to reach that decision.
Other members of the Group felt that existing statutory bodies have powers to act effectively to enforce safety standards and if other groups became involved it could lead to uncertainty for industry and consumers. They thought this idea would extend representative claims too far and would create a new cause of action, which, if allowed, should also be available to individuals as well as representative organisations. This Consultation Paper does not propose any new cause of action.
It is proposed that: in order to bring a representative claim those wishing to act in a representative capacity would require permission from the court to issue proceedings. The application should be in writing, and served on the defendant. If permission is refused an application may be renewed orally by the applicant; if it is allowed, the defendant may apply for the decision to be reconsidered at an oral hearing.
It is proposed that: Further consideration should be given to the use of a pre- action protocol in representative claims.
It is proposed that: Representative claims could be made on behalf of a group whose individuals may or may not be named but where a situation exists in which an individual would have a direct cause of action.
It is proposed that: Where practicable the applicant should provide the court with the names of those they represent and demonstrate that they consent to being represented by the applicant. Alternatively, where they can be easily notified, individuals to be represented could be given the opportunity to opt out if they do not wish to be represented by the applicant, for example where a newsletter could be circulated to all members of the union. Where it is not possible to name the individuals they should be identified as clearly as possible.
It is proposed that: The applicant should satisfy the court that they are an appropriate body or person to represent the interests of the individuals concerned and, that they have a sufficient interest in the matter, including by demonstrating an awareness of the issues involved.
It is proposed that: Applicants should be expected to assist the court to determine whether they are the best body or person to represent the interests of the individuals concerned by identifying other interested parties.
Respondents are asked to comment on whether there should be provision to publicise the court's decision and, if they agree to indicate how this should be done.
It is proposed that: In the interests of justice to both parties, the applicants should have a particular duty to establish that the representative claim is an appropriate way to proceed and the range of claims and remedies available for representative claims on behalf of named individuals should be the same as if they had brought the claim themselves. Views are sought on how the difficulties identified regarding fair recompense for actual loss and equitable distribution could be addressed.
Views are sought on whether additional specific provisions are needed in respect of costs in representative claims, and if so, what these should be.
For future development, additionally views are sought on the following:
Views are sought on whether the area of Representative Claims could be expanded in future to include the possibility of making a claim on behalf of a group where a situation exists in which an individual would have a direct cause of action arising out of a conduct complained about but not necessarily against that defendant.
Respondents are invited to comment on whether the question of damages for unnamed claimants should be reconsidered in the future and how useful and appropriate it might be to set up a trust fund to distribute damages to those affected.
It has been suggested that organisations should be able to apply to the judge for a determination at an early stage that if the proceedings are in the public interest against government or a plc then the case should be conducted on a no costs basis, or on the basis that if the action fails, the body is not liable for costs. Respondents are asked to comment on such a provision.
Representative Claims Working Group: Terms of Reference
The Lord Chancellor 's Department established a Working Group to help develop proposals in respect of representative claims. The Group's terms of reference were to provide a forum to take forward the Lord Chancellor's initiative on representative claims, in particular to:
Consider to whom the new rights and duties might extend,
Make proposals to inform the new procedures and rules,
Consider the impact upon the courts of England and Wales,
Contribute to the preparation of a Consultation Paper on representative claims by the Lord Chancellor's Department,
Consider and advise on the responses to the Consultation Paper as part of the formulation of the final procedure.
Representative Claims Working Group: Membership
| Karen Ashton | Public Law Project |
| Peter Beaton | Scottish Court Service |
| Russell Brooks | Confederation of British Industry (Smith Kline Beecham) |
| Ian Edwards | Office of Fair Trading |
| Jane Giret | Bar Council |
| Jon Hands | Department of Environment, Transport & Regions |
| Vivienne Hodgson | LCD (Civil Procedure Branch) |
| Ashley Holmes | Consumers Association |
| Martin Hoskins | Association of British Insurers |
| Janet Howe (Chair) | LCD (Civil Procedure Branch) |
| Geraint Howells | University of Sheffield |
| Angela Johnson | Department of Trade & Industry (Consumer Affairs) |
| Dan Lambeth | Law Society |
| Barrie Mackay | Treasury Solicitors |
| Mark Mildred | University of Nottingham |
| Hilary Plattern | Finance & Leasing Association |
| Sara Rhodes | Department of Trade & Industry (Employment Relations) |
| Colin Stutt | Legal Aid Board |
| Jill Tupper | Court Service (Civil and Family Business Branch) |
| Helen Williams | LCD (Legal Aid/Costs Division) |
| Melanie Wiseman | Society of Motor Manufacturers & Traders Ltd |
| Michael Wrankmore (Secretary) | LCD (Civil Procedure Branch) |
| Paul Wright | LCD (Legal Adviser's Group) |
Draft Regulatory Impact Assessment
(i) Title of the proposed measure:
Proposals to allow Representative Claims in Civil Courts
2. (i) The issue and objective:
Issue
At present it is not possible for organisations such as consumer and environmental groups or trade associations to bring civil proceedings on behalf of the people whose interests they represent. Trade associations are not able to sue, for example, for damages in cases of passing off where competitors seek to benefit unlawfully from the goodwill and reputation traditionally associated with a particular product.
There is also growing demand for consumers and environmental interests to be addressed more effectively by organisations that may have a great deal of expertise and knowledge to offer in support of existing statutory authorities. Such organisations are not able to take action in the courts to protect the interests of those they represent by bringing a claim on their behalf where, for example, customers of a particular product have suffered a detriment.
Objective
To standardise the civil procedure rules to widen the scope for individuals or organisations to bring or defend claims in the civil courts as the representatives of others, where they can demonstrate a sufficient interest in the matter.
2. (ii) Risk assessment:
The risk is that individuals will be unable to make claims on their own behalf because of barriers to access such as financial constraints. It may be that the costs of bringing the claim may outweigh the benefits that a successful claim would entail or that it may not be possible to identify named individuals who have been affected. As a result, access to justice suffers: claimants who possess valid claims are either unable to, or discouraged from bringing them.
Faulty goods and services are the most common legal problem experienced by the public. Such enquiries to Citizens Advice Bureaux numbered 1,146,093, or 19% of the total, in 1998/1999 (Endnote 8). Survey evidence, such as the Paths to Justice study by Professor Hazel Genn (Endnote 9), shows that a large number of complaints are not resolved.
A number of organisations, including the Consumers Association, Scotch Whisky Association, Equal Opportunities Commission, Disability Rights Commission and the Committee for Racial Equality, have indicated that the introduction of representative claims would be useful. A range of European Union initiatives (Endnote 10) either require, permit or advocate the use of representative claims as a measure to promote access to justice. As a result arrangements for representative claims are already being introduced on a piecemeal basis.
The patchy introduction of representative claims to specific areas in this way, without considering a wider approach risks confusion and portrays an image of uneven treatment, and denying such claims to a wider audience without good justification would be inequitable. A change is needed to provide a clear and certain framework.
3. (i) Identify options:
Do nothing.
Allow representative claims only where there is an existing cause of action and on behalf of named claimants.
Allow representative claims including those where claimants may be unnamed though are clearly identifiable, but a direct cause of action can be identified.
3. (ii) Issues of equity or fairness:
Representative claims will apply to all: for example, businesses may either find themselves the defendant of a representative claim or, through a trade association, as a claimant. Small businesses may face less risk of an increase in litigation since their dealings are likely to be with a smaller number of individuals, though they may find the measures useful in protecting their own interests, e.g. through trade associations.
Representative claims already exist in public law; anyone who can demonstrate a sufficient interest may be allowed to bring a claim for judicial review. These proposals address this disparity between public and private fields.
4. (i) Identify the benefits:
None.
Access to justice would be improved to the extent that claimants would be able to appoint a representative to act on their behalf. Additionally, there is potential for cost savings through more efficient use of resources because multiple claims would be avoided or aggregated.
Enabling trade associations to bring claims, for example in respect of passing off, will provide benefits such as protection of members' interests and the maintenance of their competitiveness. Consumer groups would be able to support statutory authorities in their endeavours to prevent traders from engaging in business practices that harm consumer interests. Consumers would benefit where representative groups could address the existence of individually small instances of harm.
Similarly, other representative groups may be permitted to act to protect the public interest in preventing or seeking redress for environmental damage.
More specifically, option 2b provides greater scope for claimants by including unnamed claimants, for example all those affected by an erroneous utilities bill or inadequate service where a defined group of claimants exists who could potentially be named.
4. (ii) Quantifying and valuing the benefits:
None.
Quantification and valuation of the benefits in question would be very difficult. First, it is hard to say how many representative claims would be made. Initial indications from consultees are that the number would be small, as individuals can already bring claims on their own behalf. Moreover, to the extent that representative claims simply consolidate and replace individual claims, the total number of claims may actually be reduced.
To illustrate this last point, it was estimated that serving one claim form on behalf of 1,001 claimants instead of individual claim forms would save £70,000 in court fees for the claim forms alone and £10,000 for each interlocutory summons (Endnote 11).
The experience of representative claims in other countries is that consumer associations make limited use of the procedure (implying little additional burden on businesses) but when they do, they are generally successful (implying a valuable increase in access to justice). In France, article 46 of the Loi Royer 27 December 1973 grants consumer organisations the right to bring civil actions concerning facts which either directly or indirectly damage the collective interests of consumers. In practice, consumer associations infrequently initiate such procedures, though if they do, they are usually successful. Intervention by way of consumer associations does not now raise principled objections, and is now completely accepted.
German consumer organisations have no general right to defend the collective interests of consumers, though have been conferred specific rights under the Unfair Contract Terms Act and the Unfair Competition Act 1909 (modified 1965). In 1990, the Consumer Association initiated 176 Abmahnung (warning) procedures, this figure increased to 235 in 1991. Consumer associations bring 90% of such complaints coming from consumer organisations enabled by the Unfair Contract Terms Act, and consumer associations lose only 5% of those cases brought before the court.
However, these examples do not give an accurate indication of the likely number of representative claims that may result in England and Wales, because the domestic legislations differ and a permission stage would act as a filter mechanism. Furthermore it is not proposed that representative organisations would be able to fund their activities through litigation.
5. Compliance costs for business, charities and voluntary organisations
5. (i) Business sectors affected:
These proposals potentially affect all businesses, charities and voluntary organisations either as defendants of a representative claim or as a member of a represented group.
5. (ii) Compliance costs for a typical business:
None.
It is unlikely that businesses will be inundated with representative claims. Representative groups will have to judge whether the costs of a claim are justified by the likely benefits - they will not be able to fund their activities through litigation.
Courts will consider whether representatives are acting responsibly and in the interests of those they represent as discussed in this consultation paper - claimants would need to apply for permission to proceed. This initial written permission stage would allow recourse to an oral hearing if required by the defendant.
For judicial review, where the criteria required of organisations for standing was relaxed in 1994 (Endnote 12), there has not been a substantial increase in the number of applications brought (1,505 in 1994 compared to 1,577 in 1998 (Endnote 13)). Similarly, judicial review applications allowed stood at 640 in 1994 and 498 in 1998 (Endnote 14). Such evidence points to the low likelihood of a dramatic increase in the number of claims.
Neither option creates a new cause of action, so the burden of additional litigation should be minimised. However, potential for costs exist in the following areas:
Damages involved in representative claims would conceivably be larger than for many individual claims. However, the payment of additional damages as the result of unlawful behaviour should not be seen as an (undesirable) regulatory burden. It is not proposed to allow representatives to receive damages in the event of bringing a successful representative claim, such payments are only appropriate to those who have directly suffered detriment.
Businesses may face increased insurance premia as the proposals indicated in options 2a and 2b would increase the potential pool of litigants who are likely to bring a claim. There may also be some additional costs in dealing with claims, which are abandoned, settled out of court or which are defended successfully but where costs cannot be recovered.
Direct legal costs are presumed to be less for a single aggregated representative claim than for several individual claims. There is the possibility that claims will be brought which hitherto were not considered worthwhile to pursue by the individuals concerned.
Management resources may be diverted in order to secure compliance and explore the legal issues involved in being potentially subject to a representative claim. For a given level of litigation these costs may be greater for smaller businesses.
5. (iii) Total compliance costs:
Whilst the proposals discussed do not create any new causes of action, they do increase the potential pool of litigants. Against that, it should be cheaper to deal with a single representative claim than a larger number of individual claims.
Legitimate businesses have nothing to fear from this incentive -its purpose is to widen access to justice for individuals by permitting their representatives to bring claims on their behalf, for example against businesses which breach existing legislation.
Respondents are invited to comment on the costs outlined above, indicate any other costs they think might be involved that may not have been considered, and offer any further details. Quantification or suggestions as to how the costs might be quantified would be particularly welcome.
6. Consultation with small business: "The litmus test"
The Small Business Service and organisations representing the interests of small businesses are being invited to comment on both the likely benefits and costs. However, representative claims are less likely to increase litigation against small businesses because their activities are less likely to impact a large number of people
7. Identify any other costs:
Increased costs incurred to businesses may be passed on to consumers. Furthermore, many of the provisions of existing legislation conferring collective interests already carry legal sanctions. However, it is expected that parties would only view litigation as a last resort.
8. Results of consultation:
These proposals have been informed by the views of the working group that included representatives from business and consumer groups. Responses to this paper will be carefully considered and will be used to provide a more detailed regulatory impact assessment.
9. Summary and recommendation:
Access to justice may suffer if people cannot rely on representative claims to enforce their rights. Litigation is sometimes desirable and representative claims offer a more efficient means than individual litigation, reducing costs to both sides. Representative claims may lead to increased litigation, but proposed case management and filter mechanisms are designed to ensure litigation is proportionate and meritorious. It is unlikely that representatives would bring frivolous or vexatious claims and the proposed permission stage would prevent such claims from proceeding.
This consultation paper proposes two options for a legal framework under which representative claims may be brought in England and Wales. Costs and benefits involved will depend not only on what sort of approach, safeguards and processes are adopted but also the extent to which representative claims are to be permitted in the future and how much use is made of such provisions.
Option 2a is likely to involve the least cost to businesses, charities and voluntary organisations because it more closely resembles the current position under the existing rules. However it does not fully meet the growing demands for a base approach designed to facilitate a range of representative claims and runs the risk of being further developed in a piecemeal fashion to bring representative claims on behalf of unnamed claimants in scope. For these reasons, we do not believe that option 2a should be implemented.
Implementation of option 2b would provide a complementary approach to recent EC legislation such as the Injunctions and Late payments Directives, and a framework for future such initiatives. It would limit representative claims to those where there is an existing cause of action. Neither option creates a new cause of action.
We invite responses from any interested parties, including businesses and voluntary sectors, with a view on the use that would be made of such provisions and the possible costs and benefits involved. (Statistics and data in support of such comments would be helpful in facilitating future analysis).
Consultation Co-ordinator
If you have any complaints or comments about the consultation process, you should contact the Lord Chancellor's Department's consultation co-ordinator, Bruce Eadie, on 020-7210 1344 or email him at Beadie. Alternatively, you may wish to write to the address below:
Bruce Eadie
Head of Corporate Services Secretariat,
Room 9.54
Lord Chancellor's Department
Selborne House
54-60 Victoria Street
London SW1E 6QW
General principles of consultation
The criteria in the Code of Practice on Written Consultation issued by the Cabinet Office is as follows:
Timing of consultation should be built into the planning process for a policy or service from the start, so that it has the best prospect of improving the proposals concerned, and so that sufficient time is left for it at each stage.
It should be clear who is being consulted, about what questions, in what timescale and for what purpose.
A consultation document should be as simple and concise as possible. It should include a summary, in two pages at most, of the main questions it seeks questions on. It should make it as easy as possible for readers to respond, make contact or complain.
Documents should be made widely available, with the fullest use of electronic means (though not to the exclusion of others), and effectively drawn to the attention of all interested groups and individuals.
Sufficient time should be allowed for considered responses from all groups with an interest. Twelve weeks should be the standard minimum period for a consultation.
Responses should be carefully and open-mindedly analysed, and the results made widely available, with an account of the views expressed, and reasons for decisions finally taken.
Departments should monitor and evaluate consultations, designating a consultation co-ordinator who will ensure the lessons are disseminated.
R v Inspectorate of Pollution, ex p. Greenpeace Ltd (No 2) [1994] 4 All ER 328
ECJ Case C-82/96 (Consumer Association v UK)
The Funding Code: A New Approach to Funding Civil Cases; report to the Lord Chancellor following consultation. Available from: Legal Aid Board 85 Gray's Inn Road, London WC1X 8AA
The eleven directives are:
Misleading advertising (84/450 as amended by 97/55/EC)
Contracts negotiated away from business premises ("doorstep selling") (85/577/EEC)
Consumer credit (87/102/EEC as last amended by 98/7/EC)
TV broadcasting activities (89/552/EEC (Articles 10 to 21) as amended by (97/36/EC)
Package travel, package holidays and package tours (90/314/EEC)
Advertising of medicinal products for human use (90/28/EEC)
Unfair terms in consumer contracts (93/13/EEC)
Timeshare (94/47/EC)
Distance contracts ("distance selling") (97/7/EC)
Sale of consumer goods and associated guarantees (99/44/EC); and Certain legal aspects of information society services, in particular electronic commerce (2000/31/EC).
For example the recent EC White Paper setting out proposals on environmental liability, for queries regarding this please contact Stephen Griffiths, Department of Environment Transport and Regions, on 020-7944 5302. The EC Directive on combating late payment in commercial transactions is to be implemented by 8/8/2002. The Aarhus Convention includes provisions on Access to Justice and the European Commission are rolling out a programme of proposals, for queries regarding this please contact Jayne Boys at Department of Environment Transport and Regions on 020-7944 6493.
CPR Part 19.6 Representative Parties With Same Interest
CPR part 19 Parties And Group Litigation
National Association of Citizens Advice Bureaux Annual Reports 1998/1999
Hazel Genn, Paths to Justice (Hart Publishing, 1999)
EU Employment Directive, EU White Paper on Environmental Liability, EU Injunctions Directive 98/27/EC
Guide For Use in Group Actions, at p.18
R v Inspectorate of Pollution, ex p. Greenpeace Ltd (No 2) [1994] 4 All ER 328
Excluding immigration, criminal & housing, which have seen an upward trend for other reasons
Court Service: Judicial Statistics "other" applications (i.e. excluding immigration, criminal and homelessness applications)