SCOTTISH LAW COMMISSION (Scot Law Com No 154) Multi-Party Actions Report on a reference under section 3(1)(e) of the Law Commissions Act 1965 Presented to Parliament by the Lord Advocate by Command of Her Majesty July, 1996 EDINBURGH: HMSO £10.45 The Scottish Law Commission was set up by section 2 of the Law Commissions Act 1965 for the purpose of promoting the reform of the law of Scotland. The Commissioners are: The Honourable Lord Davidson, Chairman Dr E M Clive Mr W A Nimmo Smith, QC Professor K G C Reid Mr N R Whitty The Secretary of the Commission is Mr K F Barclay. Its offices are at 140 Causewayside, Edinburgh, EH9 1PR ii SCOTTISH LAW COMMISSION Multi-Party Actions Report on a reference under section 3(1)(e) of the Law Commissions Act 1965 To: The Right Honourable the Lord Mackay of Drumadoon, QC, Her Majesty's Advocate We have the honour to submit our Report on Multi-Party Actions: Court Proceedings and Funding. (Signed) C K DAVIDSON, Chairman E M CLIVE W A NIMMO SMITH KENNETH G C REID N R WHITTY KENNETH F BARCLAY, Secretary 13 May 1996 iii Contents Paragraph Page PART I INTRODUCTION 1 The background to this report 1.1 1 The Working Party Report 1.4 2 The Dundee University Research Report 1.6 2 Scope of this report 1.7 3 PART II THE NEED FOR REFORM 5 Introduction: terminology 2.1 5 Types and characteristics of multi-party actions 2.4 6 Sudden mass disasters 2.5 6 Creeping disasters, product liability or medical claims 2.6 7 Consumer claims 2.8 8 Perceived advantages and disadvantages of class action procedure 2.9 8 Advantages 2.10 8 Disadvantages 2.11 9 Are Scottish reforms needed? 2.13 9 Our provisional views 2.13 9 Respondents' views 2.15 10 Discussion 2.17 10 Our recommendation 2.19 11 A new procedure not a panacea 2.20 11 A new procedure does not remove the need for other reforms 2.21 11 Our approach to procedural reforms 2.22 12 PART III THE CLASS ACTION PROCEDURE 14 The representative action as a possible model 3.1 14 The representative action and the class action compared 3.2 14 Class action procedures 3.4 15 The British Columbia procedure: class proceedings 3.5 15 Grounds for certification: a "preferable procedure" 3.6 15 Certification of non-class member as a representative party 3.7 16 Unclaimed residue of monetary award 3.8 16 Provisions on cost and other financial matters 3.9 16 Class action procedures in other jurisdictions: a summary 3.11 17 Proposals with regard to Group Actions in England and Wales 3.13 19 A new rule of court proposed 3.14 19 The new rule 3.15 19 Case management under the new rule 3.16 20 iv Case management: the most suitable approach 3.17 20 Lord Woolf's Access to Justice Inquiry 3.18 20 Conclusion 3.19 21 PART IV RULES FOR A SCOTTISH PROCEDURE 22 Introduction 4.1 22 Jurisdiction: in which courts should a Scottish procedure be available? 4.3 22 The questions posed 4.3 22 Discussion 4.4 22 Respondents' views 4.5 23 Our concluded view 4.6 23 Our recommendation 4.7 23 Related matters 4.7 23 The form of the implementing legislation establishing the procedure 4.9 24 Introduction 4.9 24 Our provisional conclusion and respondents' views 4.10 24 Our recommendation 4.11 24 The general shape of the new procedure 4.13 24 Certification 4.15 25 Should there be a certification requirement 4.18 26 Our recommendation 4.19 26 At what stage in the case should an application for certification be made? 4.20 26 The views of respondents 4.21 27 Our recommendation 4.22 27 Should the Act of Sederunt prescribe the information which the court requires in support of an application for certification? 4.23 27 Procedure in connection with the application for certification 4.24 27 Our recommendations 4.25 27 Content of certification order 4.26 28 Our recommendation 4.27 28 Criteria for certification 4.28 28 Introduction 4.28 28 Background 4.29 28 The matters on which we sought views 4.30 29 General suitability and an identifiable group raising claims with a common basis 4.31 29 Numerosity 4.32 30 A preferable procedure 4.33 30 A satisfactory representative party 4.34 30 Our recommendation 4.37 31 Court to enquire into the adequacy of representative party's legal advisers? 4.38 32 Our recommendation 4.39 32 v Court discretion to refuse certification 4.40 32 Can the court withhold certification? 4.40 32 Respondents' views 4.41 32 Our concluded view and recommendation 4.42 32 Revocation of certification (Decertification) 4.43 33 What can the court do if the criteria are no longer met, after certification has been granted? 4.43 33 Respondents' views 4.44 33 Our concluded view 4.45 33 Our recommendation 4.46 33 Group membership: opting-out or opting-in 4.47 33 Introduction 4.47 33 An opt-out scheme 4.49 33 An opt-in scheme 4.50 34 Our provisional view 4.51 35 Respondents' views in favour of an opt-in scheme 4.52 35 Respondents' views in favour of an opt-out scheme 4.53 35 Our concluded view 4.54 36 Our recommendation 4.55 37 Provision for persons who join the group late or leave early 4.56 37 Our recommendation 4.57 37 Notices to group members 4.58 37 Introduction 4.58 37 Our provisional view 4.59 37 Respondents' views 4.60 38 Matters to be dealt with in the rules 4.61 38 Notice of certification 4.62 38 Notices on other occasions 4.63 38 The content of the notice of certification 4.64 38 Provision of further information 4.65 39 The procedure for giving notice of certification 4.66 39 Our recommendations 4.67 39 Other notices 4.68 40 Our recommendation 4.69 40 The cost of giving notice 4.70 40 Court's power to control the conduct of the proceedings 4.71 40 Introduction 4.71 40 What powers might be needed? 4.72 41 Special provisions in class action procedures in other jurisdictions 4.73 41 Change of attitudes in Britain to court control of litigation 4.74 41 Court of Session Commercial Actions 4.75 42 Review of Business of Outer House of the Court of Session 4.76 42 Developments in England and Wales 4.77 42 English Law Society's Report on Group Actions 4.78 43 vi Our provisional view 4.80 43 Respondents' views 4.81 44 Our concluded views 4.82 44 Our recommendations 4.85 45 Abandonment or settlement to be subject to court's approval 4.87 46 Introduction 4.87 46 The provisions in other jurisdictions 4.88 46 Some difficult questions likely to arise 4.89 46 Our provisional view 4.90 47 Respondents' views 4.91 47 Our conclusions and recommendation 4.92 47 The substitution of a new representative party 4.93 48 Introduction 4.93 48 Our provisional view 4.94 48 Respondents' view and our recommendation 4.95 48 Aggregate assessment of monetary awards 4.96 49 Introduction 4.96 49 Our provisional view on whether aggregate assessment is in principle acceptable 4.97 49 Respondents' view 4.101 50 Our concluded view 4.102 50 Our recommendation 4.103 50 Contribution by group members towards the expenses of the representative party 4.105 51 Introduction 4.105 51 Background 4.106 51 Our provisional views on determination of liability of the individual class members 4.107 51 Respondents' views 4.108 51 Our recommendation 4.109 52 Sums due by the defenders to the group to be paid into and disbursed by the court 4.110 52 Our provisional view 4.110 52 Respondents' views 4.111 52 Our concluded view 4.112 52 Our recommendation 4.113 53 The binding effect of the judgment 4.114 53 Introduction 4.114 53 Our provisional view 4.115 53 Respondents' views 4.116 53 Our concluded view 4.117 53 Our recommendation 4.118 54 Ministerial or official participation in group proceedings 4.120 54 Introduction 4.120 54 When might intervention be desirable 4.121 55 Arguments against intervention 4.122 55 Our provisional view 4.123 55 vii Respondents' views 4.124 55 Our concluded view 4.125 55 Our recommendation 4.126 55 Remits 4.127 55 Introduction 4.127 55 The present law: remits from the Court of Session 4.128 56 The present law: remits to the Court of Session 4.129 56 Our provisional view 4.130 56 The questions posed 4.131 56 The views of respondents and our recommendation 4.132 56 The value rule 4.134 57 Respondents' view and our conclusion 4.135 57 Prescription of obligations and limitation of actions 4.136 57 Introduction 4.136 57 Our provisional view 4.137 58 Respondents' views 4.138 58 Our concluded view 4.139 58 Our recommendation 4.140 58 Certification on the application of the defenders 4.141 58 Introduction 4.141 58 Our provisional view 4.142 59 Respondents' views 4.143 59 Our recommendation 4.144 59 Appeals 4.145 59 Introduction 4.145 59 Two policy questions in connection with group proceedings in the Court of Session 4.146 59 Specific appeal provisions 4.147 59 Introduction 4.147 59 Our provisional view 4.148 59 Respondents' views 4.149 60 Our recommendation on the competency of an appeal without leave 4.150 60 Appeal by another group member 4.151 60 Introduction 4.151 60 Our provisional view 4.152 60 Respondents' views and discussion 4.153 60 Our recommendation on whether it should be competent for another group member to reclaim 4.154 61 The arrangements for another group member to reclaim 4.155 61 Reclaiming by another group member where certification refused or revoked 4.156 61 Our recommendations on the arrangements to enable another group member to reclaim 4.157 61 Matters relevant to the introduction of our recommended procedure 4.158 61 Resource implications: how many cases likely? 4.159 62 Recent multi-party actions 4.160 62 viii The likely use to be made of a new group proceedings procedure 4.162 62 Conclusion 4.164 63 Promoting the new procedure: legal education 4.165 63 Introduction 4.165 63 The Ontario recommendation 4.166 63 Our