Diversity and Inclusion - best laid plans
Fintech meet up
Out-Law Analysis | 04 May 2018 | 3:45 pm | 5 min. read
In my article of 23 February 2018, I looked at how universities could minimise the risk of claims being made by students affected by the industrial action taken by members of the Universities and College Union (UCU) in response to changes to the Universities Superannuation Scheme (USS). I looked at how universities could ensure that their terms of contract covered the risk of forthcoming UCU industrial action, and how good contingency planning could reduce disruption being caused to students and the risk of claims.
Although UCU members have now agreed to suspend further industrial action, the legacy of the 14 days of industrial action is still being felt by the affected universities. A consequence of the industrial action is that a number of law firms have been actively seeking students to join class actions against their universities, and those firms are estimating that the value of those claims could exceed £10 million in total.
However, this apparent rush to litigation seems extremely premature, given the overriding expectation of the courts that parties will first explore all appropriate forms of alternative dispute resolution before claims are issued. In the case of the university sector, it is much harder to justify going to court when each institution has its own internal complaints mechanisms and a student has the ability to refer cases to the statutory appointed ombudsman, the Office of the Independent Adjudicator (OIA), if he or she is dissatisfied with the institution's response.
It would seem surprising if the courts did not express some reservation in cases where students have attempted to 'leap frog' these well-established alternatives to litigation, or set down a marker when determining costs. Indeed, at least one of the law firms involved has acknowledged that students may need to consider exhausting these complaints procedures before contemplating litigation.
The majority of universities have terms in place to cover strike disruption. Should future claims proceed to litigation, the courts will first have to assess whether these 'force majeure' clauses are competent and operate to protect a university from liability for non-performance or late performance of its contractual obligations in the event that issues, such as industrial action, arise which are beyond its reasonable control.
Force majeure provisions can be challenged in the courts, or indeed by the Competition and Markets Authority (CMA), as they operate as an exclusion of liability in a consumer contract. The courts will expect a university to demonstrate that its force majeure provisions are fair and reasonable, and that it has taken all reasonable steps to avoid the operation of the event and made reasonable steps to mitigate its effects on the other party.
There is strength in the argument that the recent industrial action should be classified as a force majeure event. The strikes were widespread and were a consequence of decisions taken by the USS, not the individual universities themselves. Support for this view can be found in the recent guidance to students from the Office for Students (OfS), which states that the industrial action was arguably beyond the reasonable control of any individual institution.
Any decision may also be fact specific and depend on the individual case. The court will need to assess the reasonableness of applying the provision in the case in question. This will depend on the evidence that the university holds to demonstrate that it did all that it reasonably could to avoid any disruption affecting a particular course, cohort or student. This evidence could include details of the rearranging of lectures and assessments to address any lost teaching hours, as well as reviewing or making changes to academic regulations in cases where assessment criteria changes are required to address any more significant impacts on subject teaching.
If force majeure is not accepted, the courts will be required to consider the question of the breach itself: whether the late delivery of some teaching commitments over the 14 strike days would be sufficient to constitute a breach of contract in relation to the delivery of a degree and thereby give rise to a claim in damages, or for a reduction in price under the 2015 Consumer Rights Act.
This is not as straightforward as the claims lawyers would suggest, as the university and student contract is unusual and does not sit easily with other consumer relationships. Consumers are usually simply buying a product or service which is delivered to them completed, rather than having to participate in an endeavour to achieve the eventual outcome.
In the context of higher education, a student receives support from their university but is also expected to engage in a significant amount of self-directed work which contributes to their eventual award. Therefore, in a situation where there may have been disruption to teaching over a short period but alternative solutions are in train, an argument that the contract to educate has not been delivered with reasonable skill and care and within a reasonable time, or that the service delivered does not conform to the contract, may be hard to evidence.
In addition to these contractual arguments, there are also questions about the viability of class actions being brought by students who claim to have had their academic commitments disrupted.
In order to proceed with a class action in the UK courts, a group litigation order (GLO) must first be obtained. A GLO is used by the UK courts to manage litigation where multiple claimants or defendants are involved in claims where there is sufficient commonality of fact or law to make the grant of the order appropriate. In the case of student 'strike' claims, it seems highly unlikely that even a consolidated group of test cases could be heard in this way. Although the basic cause of the claims is the industrial action, the other characteristics of each claim will vary significantly depending on the university, course and student. There is unlikely to be sufficient commonality of either fact or law to make those claims appropriate for a GLO.
Another issue is funding, and whether there are sufficient students to make a class action viable. Those promoting a class action estimate that there could be as many as 20,000 students eligible to claim and a potential liability of over £10m, but the present numbers quoted are significantly lower and must be subdivided by institution: we understand that the largest single group is of fewer than 90 students. It is therefore harder to see the attraction for the student - or, indeed, a litigation funder - of investing in what could be protracted, costly and uncertain litigation.
In the end, it may be that commercial realism will give universities the opportunity to resolve student claims without the cost and stigma of legal action. In the meantime, universities still have a window in which they can be proactive in reviewing complaints internally, with a view to minimise the risk of litigation in the future.
Julian Sladdin is a university dispute resolution expert at Pinsent Masons, the law firm behind Out-Law.com.
Diversity and Inclusion - best laid plans
Fintech meet up