BT Group Plc & Anor. v Justin le Patourel [2022] EWCA Civ 593

“1.1 Over the past decade, the landscape for fixed-line telecommunications in the UK has been transformed. Competition has brought new services, increased choice and delivered benefits to consumers. 1.2 While there remains a need to continue driving the industry to meet increasing demands for greater quality and reliability, on the whole customers who buy bundled services are getting more for their money than ever before. However, customers that do not take bundled services have not benefited from competition in the same way. In particular, customers purchasing voice-only services – often elderly people who have remained with the same provider for many years – are getting poor value for money. These consumers have less choice of suppliers and are not benefiting from strong price competition or promotional offers. Their loyalty to their provider is not being rewarded but is instead leading to ever higher prices. 1.3 …line rental prices have increased significantly since 2009. From December 2009 to June 2017, line rental prices rose by between 23% and 47% in real terms. At the same time, the wholesale cost of providing landline services fell by about 27% in real terms. 1.4 This fall in wholesale costs has allowed more competitive pricing in the bundled market but voice-only customers have faced price increases without receiving any significant corresponding benefits.”

“1.10 Since the February Consultation, we have been made aware that providers of standalone telephony services on Openreach’s network are in fact able to identify which of their customers are voice-only and which are split purchasers. Therefore, while providers have not so far set different prices (or other terms and conditions) between these two customer groups, they could do so if they wished. Accordingly, we are no longer of the view that voice-only and split-purchase customers should be considered part of the same market. 1.11 While we have concerns about the current outcomes for both customer groups, our concerns are more acute for voice-only customers. Voice-only customers generally do not engage with the market: 77% of voice-only customers have never switched provider or considered doing so. They tend to be older and less likely to shop around for a better deal. Over 40% of voice-only customers are at least 75 years old, and 40% live in DE socioeconomic group households (for comparison, 55% of dual-play customers are 75 or over, and 20% are in DE group households). Moreover there are now relatively few providers of landline only services for these consumers to choose from. 1.12 Even if measures to promote engagement and competition for voice-only customers are successful, they are likely to take time to have an impact (and there are challenges to them being successful, which requires both that voice-only customers engage more actively and also that this stimulates a growth in the existing, limited competition). BT currently holds a dominant position in the market for voice-only customers and the lack of competition enables it to maintain prices above the competitive level. 1.13 We therefore consider that a significant price cut is important to alleviate the detriment suffered by voice-only customers. We are also in favour of providing information to consumers, because of the potential benefits in encouraging their engagement in the market and greater competition. 1.14 Like voice-only customers, split purchasers have suffered increases in line rental charges in recent years without significant offsetting benefits. However, split purchasers are typically younger and more technologically literate, and, by definition, have internet access which allows them to access alternative offers more easily. Unlike voice-only customers, split purchasers have a wide range of choices available to them, such as dual-play (telephone and broadband) bundles, which should allow them to seek better value for money from providers if they increase their levels of engagement. 1.15 To address the detriment faced by split purchasers we have decided that it is more appropriate to allow time for split purchasers to become more actively engaged and potentially switch to dual-play bundles where that is a better option for them, than to include them in a price control at this stage. Split purchasers may benefit from being informed that, in many cases, they are not obtaining good value for money and can find themselves a better deal.”

“a) A line rental price reduction of £7 per month (inclusive of VAT) effective from April 2018; b) Raising prices of calls and line rental by no more than inflation (CPI) each year; c) Provision of reporting information to allow Ofcom to monitor its compliance with the voluntary undertaking; and d) A commitment to improve the information available to ensure voice-only customers are aware of possible savings available to them in this market.”

“… enables whole classes of consumers to vindicate their right to compensation and the large cost of the necessary litigation to be funded before an expert tribunal…”; the prospect that consumer rights can be vindicated in this manner “…also serves as a disincentive to unlawful anti-competitive behaviour of the type likely to harm consumers generally” (paragraph [2]). Later, in paragraph [37] it was stated that the statutory purpose was one “… of providing effective access to justice for claimants for whom the pursuit of individual claims would be impracticable or disproportionate…”

“The Act reflects an increasing recognition of the important advantages that the class action offers as a procedural tool … class actions provide three important advantages over a multiplicity of individual suits. First, by aggregating similar individual actions, class actions serve judicial economy by avoiding unnecessary duplication in fact-finding and legal analysis. Second, by distributing fixed litigation costs amongst a large number of class members, class actions improve access to justice by making economical the prosecution of claims that any one class member would find too costly to prosecute on his or her own. Third, class actions serve efficiency and justice by ensuring that actual and potential wrongdoers modify their behaviour to take full account of the harm they are causing, or might cause, to the public. In proposing that Ontario adopt class action legislation, the Ontario Law Reform Commission identified each of these advantages … In my view, it is essential therefore that courts not take an overly restrictive approach to the legislation, but rather interpret the Act in a way that gives full effect to the benefits foreseen by the drafters.”

“(2) The Tribunal may make an award of damages in collective proceedings without undertaking an assessment of the amount of damages recoverable in respect of the claim of each represented person.”

“77. … A central purpose of the power to award aggregate damages in collective proceedings is to avoid the need for individual assessment of loss. While there may be many cases in which some approximation towards individual loss may be achieved by a proposed distribution method, there will be some where the mechanics will be likely to be so difficult and disproportionate, eg because of the modest amounts likely to be recovered by individuals in a large class, that some other method may be more reasonable, fair and therefore more just. For that purpose the statutory scheme provides scope for members within the class to be heard about the proposed distribution method. In many cases the selection of the fairest method will best be left until the size of the class and the amount of the aggregate damages are known.”

“Certification of the claims as eligible for inclusion in collective proceedings (1) The Tribunal may certify claims as eligible for inclusion in collective proceedings where, having regard to all the circumstances, it is satisfied by the proposed class representative that the claims sought to be included in the collective proceedings— (a) are brought on behalf of an identifiable class of persons; (b) raise common issues; and (c) are suitable to be brought in collective proceedings. (2) In determining whether the claims are suitable to be brought in collective proceedings for the purposes of paragraph (1)(c), the Tribunal shall take into account all matters it thinks fit, including - (a) whether collective proceedings are an appropriate means for the fair and efficient resolution of the common issues; (b) the costs and the benefits of continuing the collective proceedings; (c) whether any separate proceedings making claims of the same or a similar nature have already been commenced by members of the class; (d) the size and the nature of the class; (e) whether it is possible to determine in respect of any person whether that person is or is not a member of the class; (f) whether the claims are suitable for an aggregate award of damages; and (g) the availability of alternative dispute resolution and any other means of resolving the dispute, including the availability of redress through voluntary schemes whether approved by the CMA [Competition and Markets Authority] under section 49C of the 1998 Act(a) or otherwise.”

“… the listing of a number of factors potentially relevant to the question whether the claims are suitable to be brought in collective proceedings in rule 79(2), within the general rubric “all matters it thinks fit” shows that the CAT is expected to conduct a value judgment about suitability in which the listed and other factors are weighed in the balance. The listed factors are not separate suitability hurdles, each of which the applicant for a CPO must surmount …”

“(3) In determining whether collective proceedings should be opt-in or opt-out proceedings, the Tribunal may take into account all matters it thinks fit, including the following matters additional to those set out in paragraph (2) - (a) the strength of the claims; and (b) whether it is practicable for the proceedings to be brought as opt-in collective proceedings, having regard to all the circumstances, including the estimated amount of damages that individual class members may recover.”

“Distribution of award (1) Where the Tribunal makes an award of damages in opt-out collective proceedings, it shall make an order providing for the damages to be paid on behalf of the represented persons to - (a) the class representative; or (b) such person other than a represented person as the Tribunal thinks fit. (2) Where the Tribunal makes an award of damages in opt-in collective proceedings, it may make an order as described in paragraph (1).”

“(3) An order made in collective proceedings in accordance with paragraphs (1) and (2), may specify - (a) the date by which represented persons shall claim their entitlement to a share of that aggregate award; (b) the date by which the class representative or person specified in accordance with paragraph (1)(b) shall notify the Tribunal of any undistributed damages which have not been claimed; (c) any other matters as the Tribunal thinks fit.”

“(1) The Tribunal may at any time, on the request of a party or of its own initiative, at a case management conference, pre-hearing review or otherwise, give such directions as are provided for in paragraph (2) or such other directions as it thinks fit to secure that the proceedings are dealt with justly and at proportionate cost.”

“Case management of the collective proceedings 88 - (1) The Tribunal may, at any time, give any directions it thinks appropriate for the case management of the collective proceedings. The combined effect of Rules 88 and 93 is that in relation to distribution the CAT is empowered (i) “at any time” (ii) to “make any direction” (iii) on “any matter”

“Whether proceedings should be opt-in or opt-out 6.38 As mentioned above, a judgment in opt-out proceedings binds all persons within the class, save for those who have opted out (or foreign class members who have not opted in), whereas a judgment in opt-in proceedings binds only those class members who have opted in to the proceedings. Where the class representative seeks approval to bring opt-out proceedings, it will need to make submissions as to why that form of proceedings is more appropriate than opt-in proceedings. 6.39 The Tribunal will consider all matters it thinks fit in determining whether proceedings should be opt-in or opt-out. Rule 79(3) lists two specific factors the Tribunal will consider: - Strength of the claims (Rule 79(3)(a)) Given the greater complexity, cost and risks of opt-out proceedings, the Tribunal will usually expect the strength of the claims to be more immediately perceptible in an opt-out than an opt-in case, since in the latter case, the class members have chosen to be part of the proceedings and may be presumed to have conducted their own assessment of the strength of their claim. However, the reference to the “strength of the claims” does not require the Tribunal to conduct a full merits assessment, and the Tribunal does not expect the parties to make detailed submissions as if that were the case. Rather, the Tribunal will form a high level view of the strength of the claims based on the collective proceedings claim form. For example, where the claims seek damages for the consequence of an infringement which is covered by a decision of a competition authority (follow-on claims), they will generally be of sufficient strength for the purpose of this criterion. Whether it is practicable for the proceedings to be brought as opt-in proceedings (Rule 79(3)(b)) The Tribunal will consider all the circumstances, including the estimated amount of damages that individual class members may recover in determining whether it is practicable for the proceedings to be certified as opt-in. There is a general preference for proceedings to be opt-in where practicable. Indicators that an opt-in approach could be both workable and in the interests of justice might include the fact that the class is small but the loss suffered by each class member is high, or the fact that it is straightforward to identify and contact the class members.”

“Collective proceedings, and in particular opt-out collective proceedings, require intensive case management by the Tribunal, so as to ensure that the interests of the class are adequately protected.”

“As regards collective proceedings and collective settlements, the jurisdiction of the Tribunal is novel. In prescribing directions and providing guidance for such proceedings and settlements, the Tribunal therefore has no prior practice from any part of the United Kingdom on which to draw. While the Guide seeks to provide as much assistance as possible, it is expected that the Tribunal will further develop its approach on a case-by-case basis, and the Guide is likely to need revision accordingly in the light of experience.”

“111. BT’s overarching point is that in this case, because all the potential claimants are or have been in the recent past, customers of BT, they are easily identifiable and indeed contactable (subject to changes of address etc). …. Therefore, it will be relatively straightforward for such customers (a) to be informed of this action and (b) then to decide whether or not to join it. BT points to the fact that the PCR now relies upon this feature of the claim to explain how simple it would be to distribute any damages or equivalent remedy, since the class to be compensated can be identified. 112. The PCR’s core response is that there is a real difference between the option to join a legal action at the outset and claiming a damages entitlement later on once the case has been won. Especially with the demographic of at least most of the potential claimants here, there may well be a reluctance to sign up to a legal action where the risks and complexities will have to be explained to them, and that this scenario differs from that in which they are simply asked to collect a defined amount at the end. Indeed, and as canvassed with counsel during the hearing, the distribution of damages could be achieved without any active participation of the relevant customers at all because their BT accounts could simply be credited with the relevant amount - a method noted albeit in passing by the President during argument in the recent CPO hearing in Gutmann v MTR South West Trains Gutmann v First MTR South West Trains and others: “Similarly, if a telecoms operator overcharged subscribers, well they will know who the subscribers are, they can credit them on their phone bills or their account, even if it’s only £4.50. One couldn’t say, “No you shouldn’t bring a collective action because it’s only £4.50 and that’s trivial”, if the mechanism is straightforward.” 113. We say more about this feature of the claim below. 114. In more detail, the PCR contends that there is little prospect that the 2.3m customers who would be within the scope of the action would be sufficiently proactive to opt-in given the demographic of most of them. The claim is a technical one. It is also correct that paragraph 6.39 of the Guide does pre-suppose that individual customers will have conducted their own assessment of the strength of the case before opting in. That seems unlikely here. Of course, legal advice is not mandatory and the proposed Litigation Plan here does set out the nature of the action. Nonetheless, in our judgment, the position at this stage is not at all the same as at the distribution stage, for the reasons already given.” “Similarly, if a telecoms operator overcharged subscribers, well they will know who the subscribers are, they can credit them on their phone bills or their account, even if it’s only £4.50. One couldn’t say, “No you shouldn’t bring a collective action because it’s only £4.50 and that’s trivial”, if the mechanism is straightforward.”

“[25] … the group action procedure suffers from the drawback that it is an “opt-in” regime: in other words, claimants must take active steps to join the group. This has an administrative cost, as a solicitor conducting the litigation has to obtain sufficient information from a potential claimant to determine whether he or she is eligible to be added to the group register, give appropriate advice and enter into a retainer with the client. For claims which individually are only worth a few hundred pounds, this process is not economic as the initial costs alone may easily exceed the potential value of the claim. [26] Another limitation of opt-in proceedings is that experience has shown that only a relatively small proportion of those eligible to join the group are likely to do so, particularly if the number of people affected is large and the value of each individual claim relatively small. For example, a group action was recently brought against the Morrisons supermarket chain for compensation for breach of the DPA 1998 arising from the disclosure on the internet by a Morrisons’ employee of personal data relating to other employees. Of around 100,000 affected employees, fewer than 10,000 opted to join the group action: see Various Claimants v Wm Morrisons Supermarkets plc [2017] EWHC 3113 (QB); [2019] QB 772 (reversed on the issue of vicarious liability by the Supreme Court: [2020] UKSC 12; [2020] AC 989). During the period of more than 12 years in which collective proceedings under the Competition Act 1998 (discussed below) could be brought only on an opt-in basis just one action was commenced, based on a finding of price fixing in the sale of replica football shirts. Although around 1.2 - 1.5m people were affected, despite widespread publicity only 130 people opted into the proceedings: see The Consumers' Association v JJB Sports Plc [2009] CAT 2, para 5; Civil Justice Council Report “Improving Access to Justice through Collective Actions” (2008), Part 6, para 22; and Grave D, McIntosh M and Rowan G (eds), Class Actions in England and Wales, 1st ed (2018), para 1-068. [27] Likely explanations for the low participation rates typically experienced in opt-in regimes include lack of awareness of the opportunity to join the litigation and the natural human tendency to do nothing when faced with a choice which requires positive action - particularly if there is no immediate benefit to be gained and the consequences are uncertain and not easy to understand: see eg Thaler R and Sunstein C, Nudge: The Final Edition (2021), pp 36-38; Samuelson W and Zeckhauser R, “Status Quo Bias in Decision Making” (1988) 1 Journal of Risk and Uncertainty 7-59. As the New Zealand Court of Appeal has recently said of opt-in class actions: “Whichever approach is adopted, many class members are likely to fail to take any positive action for a range of reasons that have nothing at all to do with an assessment of whether or not it is in their interests to participate in the proceedings. Some class members will not receive the relevant notice. Others will not understand the notice, or will have difficulty understanding what action they are required to take and completing any relevant form, or will be unsure or hesitant about what to do and will do nothing. Even where a class member considers that it is in their interests to participate in the proceedings, the significance of inertia in human affairs should not be underestimated.”

“115. Next, the PCR contends that if (as he predicts) too few customers opt in, the required third-party funding will not be attracted and in reality the claim would never get off the ground. It is hard to see an answer to this point, save the one which we have rejected which is that in reality a large number of the relevant customers would opt in. It might well be obvious that the ability of a claimant to fund a claim will be a matter of central importance and it is probably a truism that it is easier to fund a claim on an opt-out basis than it is upon an opt-in basis.”

“… the distribution of damages could be achieved without any active participation of the relevant customers at all because their BT accounts could simply be credited with the relevant amount - a method noted albeit in passing by the President during argument in the recent CPO hearing in Gutmann v MTR South West Trains Gutmann v First MTR South West Trains and others: “Similarly, if a telecoms operator overcharged subscribers, well they will know who the subscribers are, they can credit them on their phone bills or their account, even if it’s only £4.50. One couldn’t say, “No you shouldn’t bring a collective action because it’s only £4.50 and that’s trivial”, if the mechanism is straightforward.”

“117. In the course of argument, a point was taken by BT as to whether, if the PCR won, the Tribunal would actually have jurisdiction to enable the damages to be paid out to each customer via a credit to their account or something similar. It is pointed out that Rule 93 (1) … stipulates that damages can only be paid to the class representative or such other person other than a represented person as the Tribunal thinks fit. Thus this direct method of compensation is simply not available. For our part, we do not accept that the position is as clear as that. The “other person” could be a claims administrator instructed by the PCR who would then, with the assistance of BT’s records and technology, be able to effect the relevant credit or something similar. Indeed, on the face of it, the “other person” could be BT itself on a specific direction of the Tribunal. 118. In a case of this kind, it would be extremely odd if Rule 93(2), interpreted in a common-sense way, would prevent this obvious way of compensating the customers who have won. We appreciate that Rule 93(3) states that the relevant CPO may specify the date by which represented persons shall claim their entitlement to a share of that aggregate award …. However, that is a discretionary power and we do not accept that this power must entail that in a case like this a customer must positively claim the remedy as opposed to simply collecting it.”

“An account credit does not equate to a claim for a sum of money since it is not fungible in the manner of a monetary payment and can only be applied against charges for future telephony services.”

“124. At this stage, the strength of the claim features again. But that could only assist BT here, in our view, if it could persuade us that this is a very weak claim even if it could surmount the summary judgment/strike-out threshold. For all the reasons given, however, we are not so persuaded.”