A group litigation order (GLO) can be made where there are a number of claims giving rise to common issues of law or fact. By this method, one claim proceeds as a test and the rest are stayed until the conclusion of the test claim. The parties are bound by its outcome.
If the test claim succeeds, all the other claimants whose claims have been stayed under the GLO would have the benefit of the judgment. To enable claims to be managed, a group register is maintained so that claimants can subscribe to particular common issues.
The provisions relating to class actions of this type can be found in the Civil Procedure Rules Part 19 which came into force in 2002. They include cost sharing and funding the costs of the lead solicitors. A claim form must be issued before entry on a group register and there are provisions relating to advertising a GLO to minimise the risk of individuals starting their own claim later on.
The rationale of the GLO is of course to case manage claims involving common issues and to reduce costs by spreading the risk to other members of the group. Class actions are common in the US and the usage of the GLO is likely to become more widespread in appropriate claims including personal injury, product liability and financial loss, for example, mishandling of investments.
One of the recent issues to emerge is the effect of the stay on claims. This has important implications if pleading points are then taken against those claims. For example, a defendant claims that it is not bound by the judgment on a stayed claim because an essential component is not stated in the claim form and the claimant is now statute barred from amending it.
The effect of a GLO was examined in Boake Allen v Inland Revenue (2007). The House of Lords had to consider a claim against the Inland Revenue for payment of tax made under mistake of law. In his judgment, Lord Woolf took the opportunity to make some observations if pleading points are taken on GLOs. He stated that the objective of the GLO is to avoid unnecessary costs being incurred and to reduce the number of steps litigants individually have to take. His Lordship considered that it would be wholly inconsistent to spell out the nature of the remedy sought in the claim form in the case because the Revenue knew the issues from the GLO. Furthermore, for the purposes of limitation, a claim form under a GLO need only be a simple document which is read together with the GLO at the time of registration.
Europcar UK Ltd and others v Inland Revenue (2008) involved a number of claims covered by a GLO made under mistake of law. Some claim forms did not include the word 'mistake' and the Revenue refused to accept them as valid. The claimants were not able to amend them because the Finance Act 2003 prevented new claims being brought under mistake of law. Mr Justice Henderson endorsed the views of Lord Woolf that the claim form should be read together with the GLO. He said that it was implicit from the claim forms that mistake was pleaded as it was referred to in the GLO.
This judgment is to be welcomed. Taking pleading points in relation to claims stayed under a GLO undermines its usefulness by requiring claim forms to be updated. This is not always possible if there are novel legal points to be determined. The claim form must still mention the basic facts and cause of action to which it relates to enable a defendant to know what case it has to meet.
The Revenue has been granted permission to appeal so we may still have to await a decision from the Court of Appeal before being able to determine the effectiveness of a GLO.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
