Trains not delayed: CAT refuses to grant UK Trains collective action defendants permission to appeal and awards Justin Gutmann £780k in costs

Following the CAT’s judgment of 19 October 2021, approving our client Mr Justin Gutmann as class representative and certifying his opt-out collective proceedings on behalf of rail travellers on Southeastern and South Western routes, all three defendant train companies applied for permission to appeal the CAT’s certification judgment.

On 3 December 2021, the CAT published its ruling refusing permission to appeal and awarded adverse costs to Mr Gutmann. The CAT did not accept any of the arguments put forward by the defendants in relation to their proposed appeal.


In this case Hausfeld and Charles Lyndon act for Justin Gutmann, formerly a Head of Research and Insight at Citizens Advice, in his application to pursue an opt-out collective action against the operators of the South Western and Southeastern rail franchises in relation to their failure to make boundary fares readily available for Travelcard holders to purchase or make passengers aware of their existence. Mr Gutmann alleges that these failures left customers with little option but to buy a higher fare than required because their Travelcard already entitled them to travel for part of their journey. By contrast, boundary fares allow passengers who own a Travelcard to travel beyond the zones covered by their Travelcard without doubling up on payment. Mr Gutmann further alleges that this is an abuse of the rail companies’ dominant market position and in breach of UK and EU competition laws. The claim is estimated to be worth around £93 million in damages.

Refusal of permission to appeal

The CAT confirmed, in line with the Court of Appeal’s decision in Merricks, that defendants do have the right to appeal the granting of a CPO application.

The three defendants sought to argue that the CAT’s certification ruling was flawed in a large number of differing respects. Nonetheless, the CAT concluded that in this case none of the grounds raised by the defendants had a reasonable prospect of success on appeal and refused permission on all grounds.

Error in law in determining the merits threshold for opt-out collective proceedings

Stagecoach South Western Trains Limited (Stagecoach) argued the CAT was mistaken in the merits threshold for certification of opt-out proceedings, suggesting that the CAT had established that the threshold was the same as that of summary judgment. The CAT ruled that Stagecoach’s application was misconceived, as the strength of the claims was not a threshold for certification as opt-out proceedings, but a factor which the Tribunal may take into account (along with all other matters it thinks fit) when determining whether a proceedings should be opt-in or opt-out.  In this case, having reached a conclusion that the claims had a realistic prospect of success on the issue of summary judgment, the claims also easily satisfied the test for being certified as opt-out proceedings, and there was no need to conduct the analysis twice.

Error in law in determining the prospect of success of the abuse allegations

Here, the defendants argued, amongst a number of points, that the CAT was mistaken in its approach to establishing whether the applicant had adequately put forward a positive case as to the abuse allegations. The CAT observed that the Respondents’ application rehearsed arguments advanced at the hearing which were rejected and reaffirmed that the applicants had met the threshold in establishing that there was “exploitative conduct” by alleging the operation of an unfair selling system, with various particulars given of the alleged unfairness.  In the light of the developing jurisprudence of the EU courts, the alleged conduct stood a real prospect of being held to be an abuse, particularly since the categories of abuse were not closed.

Common issues and causation of loss

The London & South Eastern Railway Limited (LSER) and First MTR South Western Trains Limited (MTR) contended that the CAT had erred in determining that matters were “common” issues across the class, asserting that those issues would be decided in various and differing ways as between individual class members, and some class members would have suffered no loss. This ground is of particular importance as it raises the questions of how common issues and liability have to be established when the collective proceedings seek aggregate damages. The CAT recognised the importance of the issue but concluded that permission should be refused as the issue had already been resolved by the appellate courts.  In reaching this finding, the CAT relied upon the judgments in Merricks and the recent Lloyd v Google case which, it said, had already dealt with the approach to unrelated liability questions and common issues. On that basis, the CAT ruled that this ground had no real chance of success. 

Cost benefit analysis

The Respondents made further challenges to the ‘suitability’ of the claims to proceed as collective proceedings.  LSER argued that the CAT failed to give adequate weight to the conclusion as to the cost-benefit analysis set out in the judgment. The CAT rejected this challenge, noting that the weight of the various factors is a matter for the Tribunal’s judgement, and that, in any event, the compensation which class members actually receive was not the only measure of benefit for a standalone action, and that behaviour modification by potential wrongdoers was also a potential benefit.  The CAT also held that LSER’s contention that claims should be determined on an individual basis was “hopeless”. The CAT recognised the danger that if these claims cannot be pursued by way of collective proceedings they will not be brought at all. Further, if they were brought on an individual basis, the CAT would be faced with tens of thousands of individual claims, which is not conducive to “judicial economy”.

Credible or plausible methodology

It was argued by LSER that the CAT was incorrect in asserting that the applicant had a credible or plausible methodology to estimate damages. The CAT disagreed with LSER and noted that this argument did not raise a question of law. This was therefore not a ground that could be relied upon for appeal. 

Having concluded that the wide range of issues raised by the Respondents were all doomed to fail, the CAT observed in conclusion that the regime is novel and currently untested in many regards and there will inevitably be novel issues of wider significance decided in the early cases. However, if permission to appeal were to be given on that basis, even when the appeal is not considered to have a real prospect of success, all of these cases will be delayed.

Costs order

The defendants conceded that they should pay the costs of their unsuccessful applications for summary judgment/strike-out. As regards the costs of the CPO application, Mr Gutmann sought his costs insofar as they were incurred to counter the opposition to that application from the defendants, with a deduction to reflect the fact that some costs incurred after that date would have been incurred in any event.

The CAT ruled in support of Mr Gutmann’s interim costs application, determining that it was appropriate and fair for the adverse costs now ordered to start from the 1 July 2019.  The Tribunal took that view that, in addition to a deduction for costs that had been incurred in any event, additional issues justified deductions, including repleading following the Merricks judgment and amendments to the class definition.  The Tribunal then awarded Mr Gutmann all the costs of resisting the summary judgment / strike out applications, and 65% of his costs of countering the opposition to the application for certification, to reflect the above deductions.

For the purposes of an interim payment, the Tribunal noted that it was difficult in this case to estimate the likely recovery in the case, and so it was appropriate to impose a further reduction to the amount claimed in the costs schedule- (from over £1.7m excluding VAT to £1m excluding VAT).  The Tribunal then awarded the Claimant 65% of those costs as an interim payment – being £650,00 excluding VAT and £780,000 including VAT), with the total costs to be subject to detailed assessment, if not agreed.


This is a further indication of the CAT’s determination to progress these collective cases and follows the CAT’s robust approach to BT’s application for permission to appeal in Le Patourel v BT Group Plc and British Telecommunications Plc [2021]. While there was a long wait for the judgment in Merricks, the terms in which the CAT refused of permission to appeal in Trains sends a strong signal to defendants that the CAT will not entertain weak attempts to appeal its decisions on certification, and is looking for claims to progress to the substantive phase of the proceedings without undue delay. The ruling on costs also reminds Respondents that the costs shifting principles will be applied at the certification stage, and that unsuccessful challenges to certification will result in substantial costs orders for reasonably incurred costs.