Nico Leslie represented Commission Recovery Limited (“CRL”) in defeating the defendants’ application to strike out proceedings brought further to the representative claim jurisdiction under CPR 19.6. Ben Valentin KC has also been closely involved in the proceedings for CRL.
The defendants are Marks & Clerk LLP (“M&C”), a high-profile firm of patent and trademark attorneys, and a related partnership. CRL’s claims are based on allegations that M&C made referrals of clients to external renewal service providers without disclosing that M&C or its related partnership were receiving secret commissions for the referral of that business. It alleges that M&C and its related entity are liable to account for the amount of those commissions.
A key feature of the claim is that individual client claims were assigned to CRL, a special purpose vehicle, such that CRL could seek to obtain litigation funding and pursue the claim in its own name. Moreover, the issued claims were brought on a representative basis further to CPR 19.6, which allows a person to commence claims on behalf of a class of persons who have the same interest. This was necessary because the claims were for relatively modest amounts in isolation, but the claims of the class together had a value of several tens of millions of pounds such as to be economically viable.
The defendants applied to strike out the claims on grounds that (i) the assignments were champertous; (ii) the proposed class members did not have the ‘same interest’ for the purposes of CPR 19.6(1); and/or (iii) the Court should exercise its discretion to direct that CRL should not act as a representative further to CPR 19.6(2).
After a three-day interlocutory hearing, Mr Justice Robin Knowles CBE handed down judgment on 24 February 2023 dismissing each aspect of the defendants’ application.
The Judge considered that the assignments of the right to an account of the commissions amounted to an assignments of property rights and so was not caught by the prohibition on champerty. He also held that in any event wider access to justice considerations, consistent with the trend of recent caselaw, militated in favour of permitting the assignments.
As to CPR 19.6, the Judge held that the proposed class was sufficiently conceptually certain and that the proposed class members all had the same interest notwithstanding that their claims concerned separate receipts and non-disclosures of commission. He determined that issues of limitation could also be addressed separately, as they did not affect the underlying cause of action. Turning to discretion and case management, the Judge held that he was persuaded that the case could proceed under CPR 19.6 on an ‘opt-out’ basis. This represents a powerful new tool in the hands of claimants.
By way of endnote, the Judge concluded that “we are still perhaps in the foothills of the modern, flexible use of CPR 19.6, alongside the costs, costs risk and funding rules and practice of today and still to come” and observed that, whilst “a detailed legislative framework would be preferable” in the area of class actions, “[w]e have the opportunity to combine the thinking and research of academic leaders with the thinking and experience of leading practitioners, and of the Courts as they fashion ways of managing in the meantime”.
The full judgment can be found here.
