The Scottish Court gives important guidance on management of Scottish class actions

The Scottish Court of Session has recently issued a decision that provides important guidance on the management of Scottish class actions. In particular, the court made it clear that it will not unquestioningly follow procedures used in class actions in other forums and jurisdictions but will develop its own tailored approach based on the key policy objectives of increasing access to justice and determining cases as efficiently and expeditiously as possible.

Background

The application in the case was advanced on behalf of thousands of individuals who wished to raise a class action against the defenders in relation to vehicle nitrogen oxide (“NOx”) emissions from vehicles manufactured by the defenders. The application (often referred to as certification) was in two parts. The second stage of that application (permission to raise the class action) was not opposed by the defenders. Therefore, the key focus was the application to authorise the proposed representative party (“PRP”).

The Scottish class action regime (known as group procedure) was introduced in 2020. For more information, please see our previous LawNows: Scottish class action procedure to come into force on 31 July 2020 (cms-lawnow.com), New Scottish class action procedure how will the regime work Part 1 The certification stage (cms-lawnow.com), New Scottish class action procedure - how will the regime work? Part 2: beyond the certification stage (cms-lawnow.com).

Application for authorisation of the PRP

The applicant submitted that the basic requirement of a representative party was to prosecute the claim vigorously and efficiently and the main considerations for appointment of the PRP were the quality of the legal representatives, the availability of financial backing, and that there was no conflict of interest. They argued that all these requirements were satisfied. 

In response, the defenders focused on the following factors that the court rules indicate should considered in determining authorisation applications:

• The abilities/expertise of the PRP;
• Whether the PRP had sufficient competence to litigate the claims and sufficient financial resources to meet adverse costs; and
• The potential for conflict to arise.

The defenders argued that the applicant had not shown that he had sufficient ability/expertise to litigate the claim, especially given the complex nature of the matter. Instead, the defenders suggested that the court should order an advisory council to be appointed that included engineering experts. Regarding financial resources, the defenders argued that the court had not been provided with enough information. In respect of the conflict of interest, the defenders’ position was that, given the number of group members, law firms, funders and insurers involved, there was a potential for a conflict to arise and the court should guard against conflicts of interest. The defenders also urged the court to adopt procedures from other class action forums, referencing features of the Competitions Appeals Tribunal and English Group Litigation Procedure. 

The court granted the appointment of the PRP on the following bases:

• Suitability/expertise of the PRP: the court accepted that the PRP’s lack of experience of managing a litigation was not a barrier to his appointment. He was, in that regard, like any other client and would depend on the advice of his legal advisers. The court was not willing to order the appointment of an advisory council which would impose substantial cost and run counter to the policy objective of broadening access to justice. Moreover, the PRP would have benefit of expert advice on technical matters from the group’s expert witnesses.
• Financial resources: the court was satisfied that the arrangement to be put in place to meet the PRP’s adverse costs (an indemnity from a third-party funder) was sufficient as the third-party funder had many years of experience of funding Scottish litigations and its annual accounts demonstrated net assets of over £8m.
• Potential conflicts: the court viewed any potential conflicts as “speculative” at the time of the hearing. Moreover, the PRP’s solicitors were subject to professional obligations in respect of the advice and management of the case. It would also be open to the group members to have the PRP replaced if necessary.

Application for additional information

Having dealt with certification, the court went on to consider a number of questions regarding the future progress of the case, including requests by the defenders for additional information on the claims.

The defenders made two separate suggestions as to how this additional information should be provided:

1. The group register: They asked the court to require further information on the individual claims to be included in the group register. The court refused this motion, observing that the function of the group register was simply to record the members and to establish a date that proceedings began for each individual group member. If there was information that the claimants wished to include in the group register, it was open to them to do so but the court was not willing to order that at this stage.
2. The application for additional information: They asked the court to order the claimants to produce additional detailed information about their individual claims. It was suggested that the claimants should complete a questionnaire of 35 pre-prepared questions, signed off with a statement of truth. The court also refused this application on the basis that it would “not allow the progress of the litigation to be delayed, and substantial expense incurred, by extensive investigation into the detailed factual circumstances of each group member at the outset of proceedings”.

Comment

The decision helpfully provides further insight into the Scottish court’s approach to the early stages of class action procedure. The key takeaways are:

1. The Scottish courts will not unquestioningly follow class action procedure from other jurisdictions and will instead develop its own approach based on the underlying policy objectives. The key objective in this case that the court had regard to was access to justice. This led the court to taking a permissive, claimant-friendly approach to certification.
2. The policy objective of increasing access to justice also underpinned a number of the orders that the court made (or refused to make) regarding the future progress of the case. For example, its refusal to order the production of additional information prior to the first post-permission case management hearing and its refusal to appoint an advisory council. Both of these would have increased expense and caused delays.

Overall, the court has currently set a comparatively low threshold for certification. It has also expressed its expectation that parties should voluntarily exchange information and collaborate as to the way forward in advance of the first post-permission hearing. The court seemed to envisage that at that hearing, parties should be able to identify (i) the issues in dispute, (ii) the most efficient way to determine these and (iii) be able to plan the next steps required to progress the case. Going forward, we expect to see judges hearing Scottish class actions to take a permissive approach to certification, an active approach to case management, and to have a clear focus on efficiency and expeditious progress. It also appears that case management decisions later in the proceedings will be the battleground, rather than the certification stage.

After the certification application, the defenders sought permission to appeal the court’s decision to appoint the PRP. Permission to appeal was refused on the basis that the interest of both parties is in the expeditious resolution of the issues between them, and the appeal would delay progress of the proceedings.