ACCESS TO JUSTICE
As part of the work being undertaken in Stage II of Lord Woolf's Review, the Inquiry is examining the conduct of multi-party litigation. The Law Society's Civil Litigation Committee's Report "Group Actions Made Easier", published in September 1995, recognises that multi-party actions could be conducted more efficiently than they are under the current system and the Inquiry wishes to build on the work already undertaken by the Law Society and the Legal Aid Board in this area. This paper indicates the main questions which the Inquiry wishes to address or re-examine, taking as a basis the proposals in the Law Society's report, which should be read in conjunction with this paper.
The Issue of Principle: freedom of choice v efficiency
The Law Society recognises that the effective and economic handling of group actions necessarily requires a diminution, compromise or adjustment of the rights of individual litigants for the greater good of the action as a whole. These rights include the parties' freedom of choice of solicitor and the defendant's right to investigate all the plaintiff claims individually at the early stages in particular.
a) Can the Law Society's recommendations be accepted overall? If the group action procedure is to be effective and economic, plaintiffs within the group must surrender many of the rights of ordinary litigants in return for the benefits of group procedure. To what extent should the parties surrender individual rights so that the group has a better chance of success? Should the courts have the power to direct that all parties be represented by a named solicitor and counsel, for example, and, if so, how can proper links be maintained between the named solicitor(s) and large numbers of clients?
b) How can issues best be identified when there are a large number of plaintiffs, especially in rolling claims? Are test cases, or lead cases, leading to the isolation of issues the better approach? How should test or lead cases be selected and what part should the defendants and courts play in this and in the distillation of generic issues?
c) In many potential group actions, most of the key information on liability is in the possession of the defendants: should there be a general obligation on major transport operators, pharmaceutical companies, etc, to provide more information on their service and products generally? Should there be a specific right to pre-action discovery of important documents and evidence, including in non-personal injury cases? If so, how should this be cost-effectively organised?
d) There is a practical problem of reconciling the desire of the defendants to know the size of the claim against them with the huge waste of costs if all plaintiffs serve medical records and reports at the outset, and the generic action is withdrawn because of funding difficulties or fails on liability. Would it be appropriate in these cases to defer investigation of individual cases until generic liability has been established? What are the minimum steps to investigate individual cases before a decision can be made as to whether there are generic issues?
e) The needs of cases in which there is a finite and potentially knowable number of litigants eg. all the residents on a particular housing estate may differ from those where there is no easy method of ascertaining all who may be affected, including those yet unborn. Where the class is not finite, should all parties be presumed to be members of the class unless they make an application to the court not to be included, or should all parties have to positively "opt in" to the class? In the former case, should notice of the action be given by the court by eg. advertising?
f) Should there be an increased role for the court in adjudicating on reasonable settlements, to ensure that defendant corporations are able to continue trading so as to meet the majority of reasonable claims and any potential, as yet, unknown ones?
g) Does the role of the judge include determination of whether a settlement is reasonable and, if so, on what basis can he decide this without actually deciding the case? Should individual plaintiffs be required to participate in a global settlement if i) the group lawyers recommend it or ii) the majority of the group favours it or iii) the judge approves it? Should the majority decision of the group bind the minority?
Alternatives to Litigation
The Law Society's report considered various alternatives to litigation but found them generally unsatisfactory compared with determination of litigation through the court system. They did, however, suggest ways of improving the current system such as:i) introducing a presumption that findings of fact by an inquiry or inquest should be binding on the parties to any subsequent litigation;
ii) encouraging legal representatives to be actively involved in inquiries and inquests, and making legal aid available for representation;
iii) giving tribunals a role, under court supervision, in settling awards in individual cases after liability has been decided by the courts.
a) If this approach were to be adopted, for i) above, should consideration be given to possible changes in the "res judicata" rules to allow for an inquest or inquiry's findings to be binding in subsequent litigation? In addition, should there be changes in the evidential rule to allow findings of an inquiry or Ombudsman as to liability or fault to constitute prima facie evidence in any resulting litigation (even against parties who were not present or represented at the original hearing)?
b) Although the Law Society concluded that there was no satisfactory alternative to litigation, the Inquiry wishes to examine the merits of possible alternatives. These include:i) Special tribunals/inquiries to determine generic cases in complex pharmaceutical or medical cases: should the Government or the courts be obliged to establish an inquiry in certain defined circumstances? How would this be resourced? What would be the rights of the parties, especially the victims, and would they be able to demand an inquiry, where one had not been established?;
ii) The adoption by the court of a more interventionist/inquisitorial role, going beyond the general case management recommended by Lord Woolf and proposed by The Law Society. In cases which are unmanageable either through traditional litigation or refined case management, should there be an ability for the judge to move into "inquiry" mode and, if so, what should the criteria be? How would a judge-led inquiry be staffed and resourced?;
iii) ADR, particularly in cases where there is a continuing relationship between plaintiff and defendant or where non-financial remedies may be more appropriate eg. in Quebec, the court can order specific performance or other tailored measures instead of payment of a sum of money;
iv) Should there be circumstances in which group litigation could be taken over by a public officer who could have power to stay existing proceedings, identify the common issues and have these brought before the court in such a way that provided a decision which bound all within a specified class? If so, who might suitably take on the public officer role - the Official Solicitor, the Attorney General, the Director General of Fair Trading or some other specially designated public officer? How would such a role be resourced? In Canada, notice is given to the Attorney General of every group action commenced and he has the right to intervene (although he hardly ever does so) in cases raising a matter of public interest, and to act as a representative plaintiff. In Quebec, a public fund has been created to finance group actions in need of financing;
v) Extension of the right to take legal action to non-government bodies, such as consumer organisations, on the lines of the "representative action" under consideration by the European Commission and already available in some jurisdictions such as France and Holland.
c) Given the variety of causes of action, should there be a variety of means for resolving disputes?
Case ManagementThe Law Society's report suggests a general rule for all group actions, which would be tailored to the proceedings in question by the designated judge. Case management techniques are recommended which follow the principles set out in Lord Woolf's Interim Report ie. judicial control from the outset should be an imperative, key issues should be identified and a clear timetable laid down as early as possible. Thereafter, there should be regular directions hearings.
a) There is now experience of multi-party actions in the following broad categories of case:i) Personal injury - a) Sudden disaster;
b) Industrial disease/accident;
ii) Financial loss -a) Mishandling investments;
b) Publishing misleading information;
c) Minority shareholders;
iii) Damage to property -a) Landlord's failure to repair properties with multiple tenants;
b) Claims by residents/businesses in a particular area affected by nuisance or diminution of value from a common cause.
The Law Society has suggested that this wide variety generally falls into three main categories:i) Sudden disasters;
ii) Rolling claims;
iii) Other consumer claims.
Do the many different causes of action require different approaches to case management or different approaches to resolution as suggested in 3 c) above?
b) There are some cases where the overall loss may be relatively small or, in damage to property cases, where the group and individual damages claimed may be small. Can they be dealt with on similar lines to those proposed for larger cases? Would it be possible to deal with them in the county courts rather than in the High Court?
The Law Society's report is not primarily concerned with the principles of funding litigation, since these are covered in "A Better Way Forward", the Law Society's response to the Legal Aid Green Paper. The report recognises, however, that there is no point in proposing reforms to deal with group actions which could lead to indefinite expenditure on an indefinite number of claims. The Legal Aid Board is attracted to the idea of having wider powers to refuse legal aid, on an overall view of the likely costs and outcome of the action.
a) To what extent can procedures for funding group actions be developed from those designed for individual actions? For example, should the legal aid test be the same for both group actions and individual actions or should a new test be devised, reflecting the public interest involved? The Law Society's response to the Legal Aid Green Paper, for example, puts forward a different merits test for high cost cases, including group actions. The Legal Aid Board, however, are not minded to apply a different merits test for group actions but have proposed that, for all cases, the merits test should be applied at the start of a case and then on a continuous basis throughout its life.
b) Is there a more cost effective and fairer way of using the resources to establish the issues and to decide on compensation?
- Costs The Law Society's report suggests:
- that all questions of costs should be at the court's discretion;
- that the court should have the power to identify and authorise solicitors who carry out common work, and to set ground rules for recoverable costs early in the litigation which will either be binding or highly persuasive on taxation;
- that, generally, work done to co-ordinate between plaintiffs and their solicitors and to publicise the group action, especially cut-off or other important court-set days, should be recoverable inter partes;
- that the general rule on plaintiff costs sharing should be that common costs are to be shared equally between all plaintiffs on the register, and apportioned on a quarterly basis regardless of the timing of their joining the group action;
- that the liability of plaintiffs for the defendants' costs on common issues should be several rather than joint;
- that in most actions inter partes, common costs should follow the common issues event, regardless of the outcome of individual plaintiff claims, and in any event, there should not be a right for the defendants to set off common costs against the damages of successful plaintiffs;
- that there should be general powers for the court over the treatment of common and individual costs;
- that there should be powers for the court to recognise a co-ordinating committee formally with the exclusive authority to incur recoverable common costs.
a) Is this the right approach and, if not, what alternative approach should be taken to these issues? Do the solutions suggested for cost sharing and cost shifting require further development?
b) Are there other costs issues which need to be addressed?
Lead Issues/Lead Cases
A recurrent problem in group actions is whether the court should determine lead cases or lead issues. This is illustrated by the fact that the Law Society's Working Party did not specify the circumstances in which a lead case or a common issues approach should be adopted. One school of thought was that in reality there are no "common issues", only individual issues, and that in consequence the majority of individual claims need to be examined and pursued.
Should any new "group actions rule" give general guidance on this question (and, if so, what guidance) or should it be left to the judge in each action?
Quantifying Individual Claims
a) Once liability has been established, is the adversarial process the best way of establishing quantum or is the Law Society's suggestion that a tribunal be established to settle awards more appropriate?
b) To what extent should a lead solicitor have authority to press negotiation and discussion on settlements and quantum before referring back to individual clients?
Weak or Hopeless Cases
a) A group action involves significant expenditure by the Legal Aid Board, defendants and unassisted parties. Is there sufficient screening at the outset? How can screening by the Legal Aid Board or others be made more effective in order to reduce the risk of including large numbers of weak/hopeless claims within the overall group? Can this be done by those funding the claim alone or is it necessary to have some other mechanism activated by the court? The Legal Aid Board have suggested the possibility of using independent third party expert assessors at an early stage to advise on merits.
b) Are the Law Society's case management recommendations sufficient to ensure that the inclusion of these cases has a limited impact on the group as a whole? Is it fair that the costs of the action as a whole should be divided among those who have strong and weak or hopeless cases when the latter should possibly not have been allowed to start?
c) Where the generic case is weak, should there be a possibility of summary disposal, as recommended generally by Lord Woolf, to expose it?
The Law Society's report makes recommendations in relation to applications to join after the cut-off date, including the suggestion that the court should have a general discretion to deal with the problem of latecomers.
a) What is the legal basis for the court imposing a cut-off date given the possible effects? Can latecomers be excluded for all time and, if not, what arrangements should be made to deal with them? How would any "opt in/opt out" provisions operate regarding latecomers? If they issue a writ and have their actions stayed until the main action is concluded, they would get the benefit if the main action succeeds (since their claims would go through easily) but would not share the costs if it is lost. This might encourage claimants to miss the cut-off date.
b) A related issue is the need to establish a mechanism for dealing with as yet unborn parties. Should a trust fund be established for these parties? How would the sharing of costs rule operate?
The Law Society's report addresses the ethical issue of freedom of solicitors to advertise in group actions by recommending that the Law Society provide further guidance on advertisements placed in the early stages, and that the court should approve the timing and placement of advertisements/notices, for example in relation to cut-off dates, during the action.
a) Publicising the litigation may be beneficial to identify the size of the class and in enlarging the class so as to spread the cost and in enabling the public to identify solicitors with particular interest/expertise. Disadvantages include building up false hopes/expectations, encouraging litigation in weak cases and those cases then weakening stronger ones, and advertising by solicitors who do not have the appropriate experience or expertise. Do the Law Society's proposals go far enough to overcome these disadvantages?
b) Are there advantages of advertisements being issued by eg. the Official Solicitor in a public capacity? Is the public officer approach outlined in 3 b) iv) above more likely to identify a greater proportion of potential litigants or are solicitors, who have a direct knowledge of the market and experience in the area, better able to do so?
The Law Society's report suggests that interlocutory hearings should take place in Chambers and that any judgments or orders should be delivered in open court, unless there are exceptional circumstances.
Is this the right approach or should all interlocutory proceedings in group actions be treated as if in open court, save in respect of individual cases?
The Law Society's report suggests that lead cases should only be settled or discontinued with the leave of the court, to avoid undermining the viability of the group action; that the plaintiff should have 3 months to decide on a payment into court; that defendants should be allowed, with the court's approval, to make global sum offers to settle the entire action; and that any settlement of a group action should require a court hearing, and should only be effective after that hearing.
Is this the right approach and, if not, what regime for defendants' offers, plaintiffs' offers and payments into court should apply in group actions?
Responses to Issues Paper
Please return to Clare Funnell,
Lord Chancellor's Department,
54/60 Victoria Street,
London SW1E 6QW,
by 11 March 1996.