English Court of Appeal decides that ground-breaking £93m legal claim brought on behalf of rail passengers against train operating companies can proceed
London’s specialist competition court, the Competition Appeal Tribunal (CAT), decided in October 2021 that a class action should proceed on behalf of rail passengers who are allegedly being overcharged by the Southeastern and South Western rail franchises by not making ‘boundary fares’ sufficiently available. Southeastern and South Western could have taken last year’s decision as a prompt to do the right thing by their customers and offer compensation. Unfortunately, they sought to delay resolution of the case, and ultimately the payment of compensation, by pursuing an appeal. In yesterday’s unanimous decision of the Court of Appeal, Southeastern’s and South Western’s appeal was dismissed. The class action will proceed. The pursuit of justice for rail passengers has taken a significant step forward. Justin Gutmann, formerly of Citizens Advice, is the Class Representative. His standalone claim against Southeastern and South Western was the first of its kind to be filed in the UK and is estimated to be worth around £93m in damages for rail users. The Court of Appeal’s decision means that millions of passengers who have paid twice for part of their journey on Southeastern and South Western routes because they were not sold a boundary fare, will now automatically be represented at court, unless they choose to withdraw from – or opt out of – the claim. The defendants argued that some consumers might have suffered relatively small damages, some as little as “the price of a takeaway cappuccino”, and that such small losses should be excluded from the claim. The class representative, quite rightly pointed out “for some consumers even a cup of takeaway coffee is meaningful”, and the Court of Appeal clearly agreed. Delivering the single judgment of the Court of Appeal, Lord Justice Green stated: “In mass consumer claims quantum might characteristically be calculated by multiplying very small numbers (the individual claim) with very large numbers (the class) to arrive at a substantial aggregate award. An analysis of whether a claim or category of claims might be nominal or de minimis forms no part of such an exercise. There is no logic in the CAT calculating an aggregate award which is the sum of a multitude of small claims but then slicing off a percentage to reflect the fact that some (or even most) of the claims are small. To allow this would derogate from a central purpose behind the regime which is to vindicate the collective rights of consumers sustaining small losses.” Mr. Gutman’s case is funded by Woodsford, one of the world’s leading ESG and litigation finance businesses, which has provided a significant, multi-million budget for legal fees and other costs. Lord Justice Green acknowledged the access to justice benefits of litigation funding, and rejected the defendants’ arguments that the payment of a return to a litigation was a negative factor. He stated: “to enable mass consumer actions to be viable at all will invariably necessitate the assistance of third-party funders… and the [Court] must therefore recognise that litigation funding is a business and funders will, legitimately, seek a return upon their investment”. Woodsford’s Chief Investment Officer, Charlie Morris commented: “This is an important milestone in the promotion of collective redress in the UK, which allows consumers and small businesses to achieve compensation for the wrongs committed by big business. Woodsford, a business dedicated to holding corporates to account and delivering access to justice, is proud to support Mr. Gutman, who is now much closer to obtaining compensation for the millions of rail passengers.” Steven Friel, Woodsford’s Chief Executive Officer, commented: “This is a huge success for consumer redress in the UK, and I am proud of Woodsford’s significant part in it. This victory in Justin Gutman’s case relating to overcharging on the rail network follows hot on the heels of an important preliminary victory in Mark McLaren’s case relating to car delivery charges. Both are backed by the team here at Woodsford, which is now clearly established as the most successful ESG and litigation finance business in this area of UK collective redress. My only regret is that big corporate defendants continue to use their significant legal and financial resource to fight technical arguments, with the goal of delaying compensation payments to consumers. Now that the Court of Appeal has rejected Southeastern’s and South Western’s appeals, they should settle the case against them and allow rail users to receive the compensation they are owed.” Southeastern and South Western customers can find further information about the case at https://www.boundaryfares.com/
