Partners James Le Gallais, Lee Ellis and David Pickstone consider two recent decisions, McClean and others v Thornhill QC [2019] EWHC 3514 (Ch) and Lancaster and others v Peacock QC [2020] EWHC 1231 (Ch), in which Stewarts act for the claimants. In these cases, the High Court has given rare guidance on the approach to case management of large multiparty actions outside the Group Litigation Order (GLO) jurisdiction.

Introduction

Large, “non-GLO” multi-claimant claims are an increasingly common sight in the courts. Early case management conferences, in particular, are taking up multiple days of court time and, in some cases (in the days before lockdown), multiple courtrooms. General principles of sound case management, economies of scale, and the economics of litigation funding, in particular, incentivise (and in practical terms, mandate) the aggregation of similar individual claims into group actions, even if there is some degree of variation between the claims. The courts have shown willingness and flexibility in deploying their general case management powers under Part 3 of the Civil Procedure Rules (CPR) to case manage such claims, particularly where the formal GLO jurisdiction under part 19 of the CPR is not a clean fit.

Although CPR 19.1 permits “any number” of claimants or defendants to be joined to a claim, the CPR does not yet set out a detailed procedural framework for managing large multiparty litigation in circumstances where a representative action is not possible and a GLO may create more issues than it solves. This can arise where a group of claims are similar but not identical, such that the rules for common costs and binding of issues under CPR 19 are unlikely to be appropriate without careful amendment. In recent cases, rather than impose a GLO under Part 19, the court has instead sought to use its Part 3 powers to adjust the usual rules by a series of bespoke orders at intervals in the proceedings.

This article considers the court’s approach to the selection of “sample claimants” by reference to two recent reported decisions in which Stewarts acted for the claimant group. (Sample claimants are so called to distinguish them from “test claimants”, a term used in the CPR in the context of GLOs).

This is the first of a series of articles that looks at the court’s approach in such cases by reference to both reported and unreported decisions in which Stewarts has acted. In circumstances where there has been little in this area by way of reported authority giving guidance as to the approach that should be taken, it is hoped that they will be of interest to the increasing number of practitioners who act in these cases.

The common goal?

The claimants and the defendant(s) will often have similar goals in mind when considering case management for group litigation where the issues are similar, but not identical. The starting point is that the full litigation process in respect of all claims would be unmanageable in terms of costs and court time. The parties should, therefore, have a common interest in the efficient management of some form of sample claimant process that will allow the claims of the group to be determined (by the court or by agreement of the parties) with reference to decisions in a small group of claims that are selected to proceed to trial in the first instance.

However, they are likely to have different views as to the specifics, with each side seeking a system and process which favours its own strategic purpose. In many cases, this becomes a hard-fought area with key issues requiring the court’s determination at an early case management conference (CMC).

The key areas of dispute are likely to be:

• The size of the sample group
• The criteria to be applied for the selection of the sample group to ensure it is as representative as possible of the group as a whole
• The information that should be shared prior to selection to address any imbalance of information between the parties to allow a fair selection to be made by each party.

The claims

The two decisions in question were each made at the first Case Management Conference in two separate multi-claimant negligence claims brought by investors in film schemes against the Queen’s Counsel who had provided a written opinion on the tax consequences of investment. The investment schemes in question are called “Scotts Atlantic Distributors” and “Invicta 43”, and for ease, the claims are referred to as the “Scotts” claims and the “Invicta” claims.

The Scotts and Invicta claims are brought by 110 and 123 individual claimants respectively who apart from their investment in the scheme are not related to one another in any material way. Although the claims are similar and have been commenced on the same claim forms as permitted by CPR 19.1, each of the claimants has their own individual claim and would ordinarily be required to plead and prove at trial each constituent element of their claim.

The claimants’ claims share many common facts and common issues. In each case, the investment schemes were the same and were marketed to claimants in the same way, using the same documents. Counsel’s advice was the same, and the facts and circumstances that informed the question of whether counsel had assumed responsibility to the claimants for that advice were also largely identical.

Other facts and issues differ from claim to claim, such as the extent each individual claimant relied on counsel’s advice and each claimant’s state of knowledge for limitation purposes. Although these issues differ from claim to claim, it is still possible to identify groupings of claimants with similar facts that are relevant to these issues. For instance, many claimants were introduced to the scheme by the same independent financial advisor(s) (IFA(s)) who used the same standard letter template in each case. Many received the same documents and letters that are relevant to the question of when they acquired knowledge for the purposes of s.14A Limitation Act 1980.

These similarities notwithstanding, it is clear that the full litigation process (including pleadings, disclosure, witness evidence and trial) for all individual claimants would require a disproportionate use of the court’s time and the parties’ resources. It would run contrary to the court’s overriding objective of enabling the court to deal with cases justly and at proportionate cost. The question then, is how should all these individual claims be litigated and decided in a way that is fair to both sides and other court users?

The proposal

The case management process that was adopted and broadly agreed by the parties in both the Scotts and Invicta cases before the CMC was as follows:

1. The claimants served a single “generic” particulars of claim on behalf of all claimants, which set out the facts that were common to all claims, together with a schedule setting out key information relating to each claimant’s claim;
2. The defendants responded with a generic defence, and the claimants with a generic reply;
3. The claimants agreed to provide further information and documentation to facilitate the selection of a small number of “sample claimants” to proceed to trial;
4. The parties agreed that, following selection of sample claimants, all other claimants’ claims should be stayed pending trial in the sample claims (“the stayed claims”);
5. The parties agreed that the sample claimants and defendant should then exchange Individual Points of Claim/Defence/Replies and thereafter proceed through the normal stages of litigation to trial eg disclosure, witness evidence etc;
6. The parties agreed in principle that decisions in the sample claims on common issues be binding in all claims, and the decisions on issues that were individual to each sample claim be persuasive only in regard to the other claims.

The courts’ guidance

There were some variations in the parties’ approach between the Scotts and Invicta claims, including to the extent matters were agreed. Thus, the precise issues that fell for determination in each case were different. The court in each case (Mr Justice Zacaroli in the case of Scotts and Mr Justice Fancourt and Master Kaye in Invicta) approved the process described above and provided useful guidance and commentary on the detail of the approach to be followed. The following points of general interest can be derived from the decisions:

1. The jurisdiction to order a trial by sample claimants arises under the court’s broad case management powers designed to further the overriding objective (Scotts [2]). Although not specified in the judgment, the necessary powers arise under CPR r.3.1(2)(e) (direct that part of any proceedings be dealt with as separate proceedings), (f) (stay of claims until a specified date), (i) (direct a separate trial of any issue), (j) decide the order in which issues are to be tried) and (m) (take any other step or make any other order for the purpose of managing the case and furthering the overriding objective);
2. The defendant’s interests should not be given preference in exercising these powers on the basis that in agreeing to a trial by sample claimants they were making a concession from the default position of a full trial involving all claimants. Although it is true that the default position would be the trial of all claims, the overriding objective requires the court actively to case manage the proceedings, taking into account the interests of all claimants, the defendant and other court users (which necessarily involves some give and take from all angles). Nevertheless, whatever procedure is followed must result in a trial that is fair to the defendant (Scotts [2] and [3]);
3. The principal purpose of identifying sample claimants is so that the common issues can be determined and the court’s determination on the common issues in the sample claims be binding on all the stayed claims (Scotts [4]/Invicta[2]);
4. However, the secondary purpose in selecting sample claims is to ensure that the decisions made by the court in respect of issues that are individual to the sample claims provide as much guidance in respect of as many of the stayed claims as possible while recognising that the court’s decision on any of those issues will not be binding on any other claimant (Scotts [5]/Invicta [2]);
5. In deciding whether and to the extent that the sample claimants should be selected to cover individual issues, it is necessary to balance the potential advantage of getting guidance on as many individual issues as possible against the need to ensure that the trial is manageable. The former is a worthwhile aim, but not one that justifies overcomplicating the trial whose principal purpose, so far as the vast majority of claimants is concerned, is to resolve the common issues (Scotts [20],[23]/Invicta [3]);
6. In Scotts, the parties had not agreed the number of sample claimants that should be selected or the basis on which that number should be calculated. The claimants’ proposed selection process involved identifying fact patterns that were relevant to individual issues and were present in large groupings of claims (eg claimants with the same IFA who had introduced the scheme on standard terms or claimants who had/had not personally read the opinion in question). The claimants then proposed the smallest number of sample claimants needed to cover each of those bases, in addition to the common issues. The defendant took a broader approach and starting from the default position that all 110 claimants should be tried together worked backwards to arrive at a much higher number than proposed by the claimants. The court preferred the claimants’ approach, and first identified the various individual fact patterns that it would be helpful to have covered in the sample claims, then ordered a sufficient number of sample claimants to cover those variations, along with the common issues (Scotts [21] – [30]).
7.  In Invicta, a different dispute arose as to the nature of the information that fell to be provided by the whole claimant cohort so as to enable the selection of sample claimants. The parties had broadly agreed the form of the questionnaire to be sent (with certain exceptions), but the principal area of disagreement arose in relation to the provision of documentation alongside the questionnaire. The claimants proposed that an initial pool of claimants provide certain limited categories of documents, whereas the defendant proposed that all claimants provide documentation. The court preferred the claimants’ approach on the bases that the difficulties in general in overseeing such a large-scale document production exercise would be compounded by the Covid-19 pandemic and the lockdown that was then in force. Also, certain of the categories of documents may have elicited privileged material, and the exercise of reviewing that material and advising whether to waive privilege would be an onerous exercise (Invicta [15] – [17]).

Discussion

These claims are further illustrations of the court’s willingness to endorse flexible and creative solutions to the challenges of managing complex multiparty claims outside the GLO jurisdiction.

Every case will be different, but in all cases parties’ advisers should give early thought to the themes dealt with above. That is, how the common and individual issues are to be identified, whether it is desirable to select sample claimants to cover individual issues as well as common issues and how information is going to be shared to enable the selection of sample claims.

Typically (but not in every case), the main areas of disagreement are (i) the level and extent of documents and information that should be provided by all claimants prior to the selection of sample claimants and (ii) the number of sample claimants that should be ordered.

To the extent that these issues need to be determined by the court, both sides should take a realistic and practical view as to what is achievable. Defendants, in particular, should not assume that the court will take an indulgent approach to their proposals on the basis that they are already making concessions by agreeing to a trial by sample claims. To the extent that either party contends that sample claimants should be selected to cover issues that are individual to certain claimants and will not be binding on the others, then those issues should be carefully identified. A case should be made as to why the inclusion of sample claimants to cover those issues justifies the increased cost and complexity that they will inevitably bring.

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