Satisfying the ‘same interest’ criterion in English representative actions: Commission Recovery Ltd v Marks & Clerk LLP & Anor

With the decision[1] of 18 January 2024, the Court of Appeal approved a judgment[2] dated 24 February 2023 by Mr Justice Robin Knowles, which held that a claim by Commission Recovery Ltd against Marks & Clerk LLP for the payment of secret commission may proceed as a representative action under CPR r 19.8 on an opt-out basis. Applying the ‘same interest’ test as set out by Lloyd v Google,[3] the court followed a bifurcated approach, meaning that the case will deal with liability on certain points of law and fact while other issues regarding liability have to be decided on an individual assessment.

On 21 March 2024, the Supreme Court, involving Lord Reed, Lord Leggatt, and Lady Simler, refused to grant permission for an appeal against the judgment on the ground that the appeal does not raise an arguable question of law.[4] Notably, Lords Reed and Leggatt were among the five Supreme Court justices who adjudicated Lloyd v Google in November 2021.

Commission Recovery Ltd v Marks & Clerk LLP & Anor involves a well-known firm of patent and trademark attorneys named Marks & Clerk LLP (M&C). M&C provides various kinds of services concerning intellectual property rights for its clients, such as preparing, filing, and prosecuting applications for registration. Yet, M&C does not offer services to its clients concerning the payment of renewal fees, which are important to keep the intellectual property rights in existence. The payment of renewal fees is handled by an outside provider, CPA Global Ltd (CPA). For this purpose, M&C passes details about its clients’ intellectual property rights to CPA. Whenever clients made use of CPA’s renewal services, CPA paid a commission to M&C. M&C, however, did not disclose to its clients until February 2018 that it received these commissions.

The claimant of this case, Commission Recovery Ltd (CRL), has never been a client of M&C. As its name implies, CRL was specifically incorporated in 2019 to bring a claim against M&C for the recovery of the secret commissions paid by CPA. For this purpose, CRL received an assignment of £6,627 plus interest from one of M&C’s former clients concerning all claims or rights arising out of the payment of undisclosed commission. With the backing of a commercial funder, CRL brought a claim in its own name as an assignee and as a representative claimant pursuant to CPR r 19.8 (back then CPR r 19.6) for current or former clients of M&C where CPA had paid commission.

The crucial question was whether CRL was entitled to act as a representative claimant under CPR r 19.8. Such a representative action may be conducted on an opt-out basis if the representative claimant and all of the other class members have the same interest in the claim.

The Court of Appeal applied the same interest test, as set out by Lord Leggatt in Lloyd v Google. In this case, Lord Leggatt held that to apply CPR r 19.8, having the same interest is the only jurisdictional requirement. In general, it is enough if there are one or more common issues to conduct the litigation in a way that will effectively promote and protect the interests of all members of the represented class. However, that would not be possible if there is a conflict of interest between the class members, meaning that an argument would advance the cause of some members and prejudice the cause of others. Finally, even if the same interest test is satisfied, the court retains discretion on whether to allow a claim to proceed as a representative action.

Applying the test from Lloyd v Google to the case at hand, the Court of Appeal ruled on whether (1) the case is within the rule of CPR r 19.8 and (2) if so, whether it should make use of its discretion and order that CRL may not act as a representative.

Concerning the same interest test, it held that there is a common issue in which all class members share the same interest. Specifically, all members have the same interest regarding whether CRL is correct in its core proposition that the clients contracted with M&C on its standard terms of business and whether CPA paid commissions with regard to the renewal of intellectual property rights. But the Court of Appeal also stated that there are some issues which cannot be resolved in a representative action, referring to questions of disclosure, informed consent, and limitation. These questions require an individual assessment as they depend on circumstances which may differ from client to client. Following Lord Leggatt in Lloyd v Google, the Court of Appeal adopted a bifurcated approach, meaning that the representative action applies only to the issue of liability where the class members have the same interest. It further held that there is no conflict of interest with respect to CRL’s core proposition, which is the common issue in which all class members share the same interest. In conclusion, CPR r 19.8 is fulfilled when it comes to CRL’s core proposition. That being said, the representative action has only a limited effect as no member of the class would get a judgment for monetary compensation. This means that each class member has to come forward with an individual action to receive compensation for damages.

With regard to the continuation of the proceedings, the Court of Appeal did not make use of its discretion to order that CRL may not act as a representative. In its view, this case does not involve ‘pointless litigation’ which is not worth pursuing, but there are sufficient prospects of success. Therefore, CRL and every member of the class should have the chance to pursue damages individually once the common issue is decided.

While the case faces difficulties and its outcome is yet to be determined, the judgment further consolidates the requirements for pursuing a representative action under CPR r 19.8 following Lloyd vs Google. However, the case also highlights the practical obstacles to overcome when seeking monetary compensation through a representative action. In particular, the bifurcated approach reduces the effectiveness of the representative action and therefore leaves commercial funders with challenges. Despite all the uncertainties, one can still be optimistic, as Mr Justice Robin Knowles emphasized: “In a complex world, the demand for legal systems to offer means of collective redress will increase not reduce.”[5]

Linus Bättig[6] and Adrian Cordina[7]

[1]   Commission Recovery Ltd v Marks & Clerk LLP & Anor [2024] EWCA Civ 9.

[2]   Commission Recovery Ltd v Marks & Clerk LLP & Anor [2023] EWHC 398.

[3]   Lloyd v Google LLC [2021] UKSC 50.

[4]   Marks & Clerk LLP and another v Commission Recovery Ltd UKSC 2024/0023.

[5]   Commission Recovery Ltd v Marks & Clerk LLP & Anor [2023] EWHC 398.

[6]   Faculty of Law, University of Lucerne, Switzerland.

[7]   PhD Candidate, Faculty of Law, Erasmus University Rotterdam, The Netherlands.

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