What is a group action?
Group actions are a way for multiple parties with similar complaints to join together to take on a common problem. They are often referred to as group litigation, collective redress, or by the American term, class action. Of course, there are many different ways that claims can be handled. A group action may not always be suitable, so a judge must deem it the best way for a court to manage the claims for it to go ahead.
Litigation is the act of settling a dispute in court. For an individual or small business, litigation can be a daunting and costly experience. By clubbing together, smaller entities reduce the risk of litigating against a larger, and likely more highly resourced opponent. Claimants are often made to feel like the underdog and are put off by the risks associated with bringing a claim forward. Group actions work on the basis of strength in numbers. Individual claimants share legal knowledge and advice, split costs and share the risks that they may not be able to take on alone. It is a way to redress the legal balance and allow individuals lower-risk access to justice that might otherwise be denied.
What kind of claims are settled with group litigation?
In the past, personal injury claims made up the majority of group actions. However, since 2009 there have been several high-profile claims against financial services companies. This includes RBS in 2013 and Lloyds/HBOS in 2014. As more people become aware of group litigation, it is likely we will see an increase in this type of action.
Group Litigation Orders
Group litigation is prevalent in the US and is becoming far more common in the UK. While the basic premise is similar, there are notable differences between the two types of action. UK courts generally manage group actions through a Group Litigation Order (GLO). This means that a claimant must opt to join the group action. In the American class action system, claimants must opt out.
A GLO must establish:
- The group register – captures all the details of the claims to be managed by the GLO
- GLO issues – shows which claims fall under the GLO
- The management court responsible for the claims
Each claim within a GLO is classed as individual. The GLO is the mechanism used by the court to manage individual claims where they have common or related issues. When a GLO is used it usually means that all claims are heard by management court which helps reduce the risk of inconsistent outcomes.
For an action to go ahead, the court must be satisfied that there are sufficient claims to justify the grant of a GLO and make it an efficient mechanism to proceed. While there is no specific number of claimants that must sign up to a group action, it is generally accepted that at least five claims are necessary to justify a GLO.
Once a GLO has been made, a copy should be supplied to the Senior Master of the Queen’s Bench Division at the Royal Courts of Justice and the Law Society.
The terms of the GLO can be changed but an application to do so must be made to the management court.
For a detailed look at the GLO process, take a look at the Ministry of Justice website.
Who can bring a group action?
Group actions can be brought by any person or legal entity that has a claim. They can also be brought by a representative body. In some circumstances, the court may allow a company’s shareholders to bring a claim against the company’s directors. It is often the case that large, multinational companies find themselves the defendant in a group action.
The group register
The group register is used to collect the relevant information about the individual claimants. It will usually include name, address and claim number as well as any other relevant details such as the number of shares held if it is a shareholder action. The register will include information on all parties that wish to claim as part of the group action.
The court may order a cut-off date for parties to join the group register. This is usually put in place to stop disruption to proceedings by late-comers and to help assess the potential size and scope of the action. This cut-off date can be extended if the court agrees that the claimant meets certain conditions. These late joiners may sometimes be managed as a separate group within the GLO and will commonly be stayed by the outcome of the first set of claims.
Publicising the GLO
When the court approves a GLO, it will usually order the parties involved to publicise it so that all relevant claims can be managed within it. Solicitors will also publicise their involvement in order to try and bring in more claimants.
In the case of the Group Action against Clydesdale and Yorkshire Bank, allSquare has been working with RGL management to publicise the action and bring in eligible claimants.
Trial by judge
Once a GLO has been made, the court will appoint a judge to case manage the litigation. They will commonly hear the trial of the case and may be assisted by another judge on certain procedural matters.
Lead or test cases establish findings in law that may allow for compromise or for a simplified resolution of the rest of the litigation by focusing on further proceedings and clarifying any remaining points. If a judgement is made on one of the GLO issues, it is binding on all of the other claims unless the court orders otherwise. However, the outcome of the test case does not automatically determine the outcome of all claims within the action.
In general, the parties involved will appoint experts on technical issues rather than the court. However, they must have the court’s permission to present evidence. Experts may only offer opinion on their area of expertise and their evidence must remain independent. At trial, expert witnesses present oral evidence unless specifically ordered otherwise by the court. It is unlikely that an expert witness will be called to give evidence via pre-trial deposition unless they are unable to attend the trial. In many cases, if a witness is abroad or too ill to attend the trial, they will give evidence via video conference, thus negating the need to give a deposition.
How long do group actions take to get to trial?
There is no fixed timescale for a group action. The time it takes to get to trial is largely dependent on the complexity of the case and value of the claim. Statistics published by the Ministry of Justice in 2018 showed that on average it took 57 weeks from the issue of proceedings until trial in County Court. Equivalent statistics for High Court actions were not available but these tend to be more complicated and therefore take longer to get to trial. Of course, there is always a possibility of the defendant settling before a trial begins.
Is there an appeal process?
The court can grant permission for an appeal. They will grant permission only if there is a real prospect of success or compelling reasons for the appeal to be heard. In general, the appeal will only apply to a review of the lower court’s decision but the court can order a re-hearing in the interest of justice. An appeal will be granted if the decision was wrong (based on an error of law or fact, or in the exercise of its discretion) or unjust because of a serious procedural or other irregularity.
The cost of litigation
Litigation can be expensive. For a standalone claim, claimants must pay their own legal fees. There is also the possibility of paying their opponent’s legal costs if the case does not go in their favour.
Claimants share the costs of a group action.
In general, each claimant involved in the action is liable for:
- Any individual costs that relate specifically to their claim.
- A proportion of common costs incurred by the group. (This could include the cost of the solicitor leading the litigation, for example). The group generally shares common costs equally unless the court deems it would be unfair.
However, private litigation funders often cover the cost of group actions which reduces the risk to the claimants further.
What is litigation funding?
Litigation funding is sometimes provided by a third party funder. When a claimant secures funding, it further reduces the risk as the funder is liable for costs if the group action goes in favour of the defendant. Funders have no direct interest in cases but in the result of a win, receive a share of the settlement. If the claimants lose the case, the funder loses their investment. It is therefore in their interest to only fund actions that have strong success prospects.
In recent years, litigation funding has become more accessible. This is due to a rise in litigation funders in the market. As more funding becomes available, it is possible that we will see an increase in group actions being brought forward.
Read more about litigation funding on the Association of Litigation Funders website.
The Legal Group Action against Clydesdale and Yorkshire Bank
We’re bringing a Group Action against Clydesdale and Yorkshire Bank. Could it affect your business? Are you eligible to join? What are the papers saying about the Group Action? Click here to find out more.