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“Dominant motive…lies in the financial interests of its backers”: High Court Strikes Out a Representative Action under CPR 19.8 by Passengers in 116,000 Delayed or Cancelled Flights

On 2 September 2024, the High Court struck out an application for a representative proceeding under CPR 19.8 that had been brought against certain airlines for cancelled and delayed flights: Smyth v British Airways Plc & Ors [2024] EWHC 2173 (KB). The Court considered that the “same interest” requirement under CPR 19.8 had not been met and that the claim was motivated by financial recovery for the litigation funder, and not the interests of the would-be class. The case highlights the importance of a well-defined class and a suitable representative claimant in order for representative proceedings to proceed.

Background

Ms Claire Smyth had booked a flight with British Airways (BA) from London to Nice. A week before she was due to depart, the flight was cancelled. Under Article 7(1) of the EU Regulation 261/2004 (retained post-Brexit), Ms Smyth had the right to claim compensation against BA (who manages a portal through which passengers may claim compensation). However, Ms Smyth chose not to use the portal and instead brought a representative proceeding on behalf of her fellow travellers – not just on her flight, but anyone who had booked flights with BA or easyJet scheduled to depart from, or arrive at,


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All Aboard the Omnibus Claim Form

In Adams and others v Ministry of Defence,[1] the High Court has recently followed the Court of Appeal judgment in Morris and others v Williams & Co Solicitors (a firm)[2], in confirming that multiple claimants can bring proceedings via a single Claim Form, provided that the test of convenience is satisfied.

The English Courts have shown intent in recent years on embracing group and class action litigation, not least in seeking to maintain a position as a pre-eminent litigation forum. Under the Civil Procedure Rules (CPR), there are a number of procedural routes that potential groups/classes can use to bring actions, subject to the specific circumstances of the cases at hand. These include, in particular:

  1. Use of a single Claim Form for multiple claimants in accordance with CPR 19.1 and CPR 7.3 (also referred to as omnibus claims).
  2. Multiple claims (with sufficient degrees of commonality) that are issued separately (or through an omnibus Claim Form), which are case managed together but proceed through lead or sample claimants.
  3. Multiple separate claims that are case managed under a group litigation order in accordance with CPR 19.21-19.26.
  4. A representative action pursuant to CPR 19.8 or 19.9, which is

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UK General Election: Anti-PACCAR Bill Torpedoed

In a previous blog post, we discussed the introduction to Parliament of the Litigation Funding Agreements (Enforceability) Bill (the Bill), which was designed to introduce legislation that would reverse the outcome of the UK Supreme Court’s decision in R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others.[1]

As we previously set out, the ruling in PACCAR was set to have significant ramifications for litigation funders, claimants and claimant law firms in the UK that rely on third-party funding, potentially threatening the financial viability of swathes of the litigation funding industry.  In PACCAR, the Supreme Court held that litigation funding agreements that entitle funders to be paid a portion of any damages recovered (as opposed to a multiple of the investment made by the litigation funder) are “damages-based agreements”, as defined in the Courts and Legal Services Act, and are therefore unenforceable unless they comply with the relevant regulatory regime.

The Bill proposed amending s58AA of the Courts and Legal Services Act, to insert a provision that “an agreement is not a damages-based agreement if or to the extent that it is a litigation funding agreement”.  A litigation funding agreement


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The Elusive ‘Anti-Anti-Arbitration Injunction’

The recent decision of the High Court in Euronav Shipping NV v Black Swan Petroleum DMCC [2024] EWHC 896 (Comm) illustrates when a party may be unable to enforce an arbitration agreement which is otherwise valid and enforceable. In the present case, Euronav succeeded in satisfying all of the elements of the test for an injunction which sought to restrain Black Swan Petroleum (BSP) from pursuing an anti-arbitration application before the Malaysian Courts. Nevertheless, in the exercising its discretion, the Court declined to award an injunction having regard to international comity and because it deemed that it would be vexatious and/or oppressive given the applicant’s earlier submission to Malaysian court jurisdiction. The case is a cautionary reminder of the need to pursue a carefully considered dispute resolution strategy.

 Facts

The applicant, Euronav, a firm involved in ocean transportation and storage of oil, entered into a contract with a Malaysian registered company, Silk Straits SDN BHD (Silk Straits), by which it made available certain tanks on the Motor Tanker Oceania (the Vessell) for storage of oil. A first addendum to the agreement provided for English governing law and exclusive jurisdiction of the English High Court, and recorded Euronav’s consent to prospective assignment


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High Court Issues First Judgment on Quincecare Duty After Landmark Supreme Court Ruling

The so-called Quincecare duty has come under consideration for the first time since the Supreme Court’s ruling in Philipp v Barclays Bank UK plc[1] in July 2023.

As we set out in our article here, the ruling in Philipp was widely seen as a welcome clarification of the scope of the Quincecare duty owed by financial institutions, particularly as the level of online fraud continues to soar.  This most recent judgment, handed down on 14 March 2024, suggests that, following the ruling in Philipp, focus will turn to the adequacy of a bank’s efforts to recover funds from second and third generation recipients.

The decision

In CCP Graduate School Ltd v National Westminster Bank Plc and Santander UK Plc[2], CCP Graduate School Ltd (CCP) claimed that it had been the victim of an “authorized push payment” (APP) fraud.  CCP argued that criminal actors fraudulently induced it to transfer money from its account with National Westminster Bank Plc (NatWest) to an account held with Santander UK Plc (Santander).  CCP argued that, at the time the payments were made, and unbeknownst to CCP, the Santander account was under the control of the criminal actors.

CCP


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The Quincecare Duty: A Victory for the Banks?

On July 12, 2023, the UK Supreme Court delivered a landmark decision on the so-called “Quincecare duty” owed by banks to their customers.

In a unanimous judgment in favour of Barclays Bank, the UK’s highest Court held that banks did not owe customers a duty of care in fraud cases where transactions were authorised by the customers directly. As Lord Leggatt said in his judgment: “It is not for the bank to concern itself with the wisdom or risks of its customer’s payment decisions”.

This important clarification will be welcomed by financial institutions, particularly as the level of online fraud continues to soar. However, there are a number of other claims that are currently before the courts that will still be watched with interest, as will this present case as it is remitted to the High Court to decide arguments about the scope of any duty to attempt to claw back payments once a fraud has come to light.

The Supreme Court’s decision also follows the recent passing of the Financial Services and Markets Act 2023, which provides for a mandatory reimbursement scheme, albeit limited to certain payment types within the United Kingdom. In practical terms, therefore, claimants may look


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