Emerald Supplies Ltd & Anor v British Airways Plc

Under Civil Procedure Rules r 19.6, a representative action requires a class whose members can be determined to have the same interest at every stage of the proceedings. The class may fluctuate and need not be fully listed when the claim begins. Its membership cannot, however, depend on a future judgment establishing liability.

Further, persons do not have the same interest where a defence may be available against some, but not all, of them. In that event the proceedings are not equally beneficial to the proposed class. A declaration framed as one of liability or recoverability in principle cannot cure either defect.

Emerald Supplies Ltd and its co-claimant alleged that British Airways had participated in air-freight price-fixing agreements or concerted practices. They sued on their own behalf and purportedly on behalf of direct and indirect purchasers of affected air-freight services. They sought declarations concerning the infringement and the recoverability of damages in principle, while accepting that individual loss would require separate proof.

The Chancellor struck out the representative element of the claim: [2009] EWHC 741 (Ch). He held that the proposed class could not be identified when proceedings began and that differing passing-on positions created conflicting interests. The claimants appealed and sought permission to amend their particulars. The central issue was whether the proposed purchasers had “the same interest” for the purposes of Civil Procedure Rules r 19.6.

1. Appeal dismissed. Mummery LJ gave the judgment, with Toulson and Rimer LJJ agreeing. Permission to amend was refused because the proposed amendments would not cure the defects in the representative claim.

2. The fundamental requirement of Civil Procedure Rules r 19.6 is that every person represented has the same interest in the action. A class may be large, indefinite and fluctuating. It is not necessary to compile a complete list of members at the outset. Nevertheless, at every stage it must be possible to determine whether a particular person qualifies for membership of the class.

3. The proposed class failed that requirement. Whether a purchaser fell within it depended on first obtaining a judgment that the alleged cartel caused an actionable overcharge. The proceedings could not properly be representative if liability had to be tried before it could be known who was represented and bound by the judgment. Duke of Bedford v. Ellis [1901] AC 1 did not assist the claimants, because in that case a person’s membership of the class could be determined before judgment even though the class could fluctuate.

4. The proposed class also lacked a common interest if British Airways could raise a passing-on defence against some members but not others. Persons with different exposure to such a defence have different interests in recovering competition-law damages. This conclusion did not decide whether the defence would in fact be available; its potential availability was sufficient to show the conflict in the pleaded representative claim.

5. As the claim fell outside r 19.6, it was unnecessary and undesirable to consider how the court’s discretion would have been exercised. The Chancellor’s order striking out the representative element therefore stood.

• Court of Appeal (Civil Division) — In [2010] EWCA Civ 1284, dismissed the claimants’ appeal and upheld the strike-out of the representative part of the claim.
• High Court of Justice, Chancery Division — The Chancellor granted British Airways’ application to strike out the purported representative claim: [2009] EWHC 741 (Ch).