The Claimant, Ms Claire Smythe, having experienced a flight cancellation, brought an action using the representative procedure under CPR 19.8 in an attempt to compel British Airways and EasyJet to pay statutory compensation to those passengers whose flights had been delayed or cancelled in the previous six years, but who had failed to lodge an application for compensation in accordance with the applicable regime (pursuant to Article 7(1) of EU Regulation 261/2004, which was retained post-Brexit). Rough estimates indicated that the value of the unclaimed and therefore unpaid compensation might amount to some £319 million. Ms Smythe intended to deduct 24% of any compensation awarded, estimated to exceed £70 million, to cover a funder's fee payable to her businessman backer, and the legal costs.
The Court found that, although Ms Smythe had attempted to cast herself as a consumer champion, there was a lack of transparency regarding her motivation, suitability and funding. In response to enquiries from the airlines' solicitors it had eventually emerged that the funding for the claim came from Australian businessman, Mr John Armour, for whom Ms Smythe ran a family office in London as his employee. Mr Armour had previously been investigated and sanctioned by the New Zealand Financial Markets Authority for mass-mailing unsolicited offers to consumers to buy securities which failed to give any warning that the prices offered were substantially below their market value.
In deciding that Ms Smythe could not act as a representative and striking out the claim, Master Davison held that it was hard to see how the proposed action would promote access to justice when eligible passengers already had easily accessible means of obtaining full compensation at no cost, including by applying directly to the airlines, thereby avoiding Ms Smythe's proposed 24% deduction. Master Davison also made findings that Ms Smythe had failed to meet the "same interest test" which forms part of the jurisdiction requirement of CPR 19.8 (a full copy of the judgment can be found here).
This case is a salutary reminder that the Courts are unlikely to countenance speculative representative claims which seek to benefit the funder without any clear benefit for members of the class.
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Authored by Theresa Hudson, Bethany Bowen, and Elspeth Aylett.
