Commission Recovery Limited v Marks & Clerk LLP & Anor

An assignment of an undisclosed commission is not an unlawful assignment of a bare right to litigate where the commission constitutes property and related rights of action accompany that property. Under the representative rule, the same-interest requirement is satisfied where class members share common issues and advancing the claims of some does not prejudice others. Differences in contracts, dates, limitation, remedies, quantum and information do not themselves defeat jurisdiction if they can be managed without conflicts of interest. The court retains a broad discretion to permit representative proceedings, including on an opt-out basis, where this promotes justice and proportionate cost. A representative claim may determine common issues while leaving individual matters for a later stage. The court may revisit the permission if later developments warrant it.

The claimant acquired claims concerning allegedly undisclosed renewal-service commissions paid in connection with clients of Marks & Clerk LLP. It sought to proceed both as assignee of a former client’s claims and as representative of current and former clients under the representative rule. The defendants applied to strike out the claim, contending that the assignment was champertous and that the claimant could not satisfy the same-interest requirement or should not be permitted to act as representative.

The application required consideration of the nature of secret commissions, the validity of assignments combining proprietary rights with related claims, the jurisdictional and discretionary requirements for representative proceedings, and the adequacy of the pleaded case.

1. Assignment. The claim was not struck out as based on an unlawful champertous assignment. An undisclosed or secret commission received by an agent is property as between agent and client. The client may assert that the commission belongs to it. Ancillary rights of action, including claims for money had and received and restitution, may accompany the assigned property. They are not thereby bare rights to litigate requiring the assignee to show a separate genuine commercial interest.
2. Representative jurisdiction. The same-interest requirement under Civil Procedure Rules 1998, CPR 19.6, was satisfied. The relevant question was whether a representative could conduct the litigation so as effectively to promote and protect the interests of all class members. Differences in contractual dates, commission amounts, limitation, client information, possible remedies and quantum did not involve one member advancing an argument that prejudiced another. Those matters could be addressed through evidence, amendment and case management.
3. Discretion. The court exercised its discretion to permit the claimant to act as representative on the proposed opt-out basis. The focus on recovery of commissions was suitable because the entitlement could potentially be calculated on a common basis, or common issues could be determined first with individual issues dealt with later. The practical alternative for many clients might be no claim at all. The court stressed that the discretion depends on the facts and may produce a different result where collective proceedings are oppressive, conflicts emerge, or participation becomes unworkable.
4. Procedure and outcome. The court declined to strike out the Particulars of Claim. It was unnecessary to plead separately, member by member, every fact constituting each cause of action. The parties were directed to review and simplify the pleadings and prepare for a later case management conference. The court could reconsider the representative position under CPR 19.6(2) if later circumstances justified it.

First-instance decision on the defendants’ applications to strike out the claim and prevent the claimant acting as a representative. Other applications were stood over for consideration at a later case management conference.