Analysis of Representative Actions in Breach of Fiduciary Duties and Bribery Case: Commission Recovery Ltd v Marks & Clerk LLP Raises Questions on Common Interests and Monetary Relief

Citation: [2024] EWCA Civ 9
Judgment on

Introduction

The Court of Appeal case of Commission Recovery Ltd v Marks & Clerk LLP & Anor [2024] EWCA Civ 9 provides a comprehensive analysis of the principles applicable to representative actions under Civil Procedure Rule (CPR) 19.8. This case raises pertinent questions regarding the use of representative actions in claims seeking monetary relief for alleged breach of fiduciary duties and the tort of bribery arising from undisclosed commissions in the context of intellectual property rights renewals.

Key Facts

Commission Recovery Ltd (CRL), the Claimant, was granted permission to appeal from a previous judgment dismissing an application that challenged CRL’s ability to act as a representative under the then CPR 19.6 (now CPR 19.8). CRL, an assignee of a former client’s claims against a patent and trademark attorney firm, Marks & Clerk LLP (M&C LLP), and a related firm, Long Acre Renewals (LAR), contends that M&C LLP breached fiduciary duties and committed the tort of bribery by failing to disclose commission payments received from the renewal agency CPA Global Ltd (CPA) related to the renewals of intellectual property rights.

Several legal principles were essential to the Court’s analysis:

  • Same Interest Requirement: For a representative action under CPR 19.8, it must be shown that more than one person has the same interest in a claim. A common interest in one or more issues suffices, and individual causes of action are not a bar to a representative claim. The case examined whether all members of the proposed class shared a common issue of law or fact, and whether they had a conflict of interest relating to that issue.

  • Conflict of Interest: The Court distinguished between a conflict of interest, which would preclude a representative action, and a divergence of interests, where an issue may affect only some class members but does not prejudice others. A true conflict of interest would exist where arguments that advance some members’ causes would directly prejudice other class members.

  • Judgment for Monetary Relief in Representative Actions: Traditionally, obtaining monetary relief is complex in representative actions due to the need for individual assessments. However, the judgment explored the possibility of a “bifurcated” process allowing common issues to be determined in a representative claim, before addressing individual issues (liability or damages) in subsequent procedures.

  • Representative’s Role: Consideration was given to the suitability of the representative and whether the representative action would optimally utilise the court’s resources, aligning with the overriding objective of CPR to deal with cases justly and at proportionate cost.

  • Discretion under CPR 19.8(2): The Court’s discretion to prevent a party from acting as a representative is governed by CPR 19.8(2). This discretion is broad and must be exercised in a manner consistent with the overriding objective of the CPR.

Outcomes

The Court upheld the decision of the lower court, allowing the proceedings to go forward as a representative action and dismissing the appeal. It agreed that a common issue existed across the class of claimants, which related to whether proof of a contractual relationship under standard terms of business and the fact of payment of commission sufficed to establish M&C LLP’s liability. Furthermore, the Court found no relevant conflict of interest among the class members regarding this issue.

The Court declined the appellants’ argument that CRL should not act as a representative. It emphasized respect for the claimant’s decision to pursue a claim, the involvement of legal advisors and funders, and the practicability of resolving common issues through a representative claim.

Conclusion

The Court of Appeal’s decision in Commission Recovery Ltd v Marks & Clerk LLP & Anor affirms the viability of representative actions in complex litigation involving a class with similar legal issues, even where monetary relief and individual assessments of damages are sought. The ruling also reinforces the courts’ discretion under CPR 19.8 and their commitment to the overriding objective of the CPR to conduct cases justly, efficiently, and economically. The key takeaway for legal professionals is the Court’s recognition of the bifurcated process and its practical application in the context of representative actions where common issues of law and fact can be first determined on a class-wide basis.