Appeal dismissed: Trucks prospective representatives see-off DAF’s funding challenge

Following a rolled-up hearing comprising a panel of three judges sitting as both the Court of Appeal and the Divisional Court, a judgment earlier this month has provided helpful clarity on two important aspects relating to the collective proceedings regime: (i) the extent to which litigation funding agreements are subject to regulation concerning damages-based agreements (DBAs); and (ii) the manner in which an interim-issue judgment related to an application for a collective proceedings order (CPO) may be challenged.


In June 2019, the Tribunal considered the funding and insurance arrangements in two proposed opt-out collective claims following on from the European Commission’s Trucks cartel decision: one brought by the Road Haulage Association’s (RHA) and the other brought by UK Trucks Claim (UKTC). In a decision dated 28 October 2019 (the Tribunal’s Funding Judgment), the Tribunal ruled that – amongst other things – the funding agreements were not to be construed as DBAs, and thus was exempt from compliance with the statutory regime governing DBAs. We covered the Tribunal’s Funding Judgment in our previous article here.

DAF, one of the defendants in the RHA’s claim, persisted with its line of argument and sought permission to appeal the Tribunal’s judgment. The Tribunal found, in a decision of 17 December 2019 (the Tribunal’s PTA Judgment), that it did not have jurisdiction to grant permission to appeal to the Court of Appeal. DAF nevertheless then sought permission from the Court of Appeal and the Divisional Court (the latter by way of judicial review).


DBAs are defined by s.58AA of the Court and Legal Services Act 1990 (CLSA) as agreements between a person providing advocacy services, litigation services or claims management services where the amount to be paid is determined by reference to the amount of financial benefit obtained. DAF sought to argue that the litigation funding agreement was a DBA since it constituted the provision of “claims management services”.

The Court confirmed that a purposive approach ought to be taken to the interpretation of the legislation. It was clear that the purpose of introducing statutory regulation of claims management services through the Compensation Act 2006 (2006 Act) and its associated Scope Order was “to enhance consumer protection in areas where the activities of “claims intermediaries” had been causing widespread public concern”. As such, there was no suggestion that “regulation of non-champertous funding of litigation by professional third party funders […] formed any part of the explicit mischief” that the 2006 Act sought to remedy. Furthermore, s.58B CLSA was intended to regulate litigation funding and its introduction was expected to “help maintain standards and act as a deterrent against abusive practices”.

The Court therefore agreed with the Tribunal that the definition of claims management services is “to be interpreted as applying in the context of the management of a claim”. The Court held that had it sided with DAF’s interpretation, then the result would have been “anomalous and unreasonable”. The opening remarks of the judgment neatly encapsulate the sentiment behind this reasoning and the otherwise resulting chilling-effect on the regime as a whole: had the funding arrangements been construed as being DBAs, then “the likely consequence would be that most, if not all, litigation funding agreements currently in existence would be unenforceable, as would the specific agreements which the Tribunal was asked to approve in the present case”.

Jurisdiction of the Court of Appeal in collective proceedings

The DBA issue was in fact decided by the Divisional Court and not by the Court of Appeal, and so much of the judgment at hand deals with the question of the latter’s procedural jurisdiction. The central question at stake in this procedural issue concerns the correct interpretation of s.49(1A) of the Competition Act 1998 (1998 Act), which reads as follows (our emphasis added):  

“An appeal lies to the appropriate court on a point of law arising from a decision of the Tribunal in proceedings under section 47A or in collective proceedings - (a) as to the award of damages or other sum (other than a decision on costs or expenses), or (b) as to the grant of an injunction.”

As above, the Tribunal had previously found in its PTA Judgment that it had no jurisdiction to grant permission to appeal its ruling on the DBA argument. This was on the basis that the Tribunal’s Funding Judgment was not a decision “as to an award of damages” within the meaning of s49(1A). The Tribunal found, following Enron Coal Services Ltd (in liquidation) v English Welsh & Scottish Railway Ltd [2009] EWCA Civ 647, [2010] Bus LR 28 (Enron) and Merricks v Mastercard Inc and others [2018] EWCA Civ 2527, [2019] Bus LR 1287 (Merricks), that its Funding Judgment was not determinative as to the outcome of the RHA’s and the UKTC’s claims and so could not be considered a decision “as to the award of damages”. Had the Tribunal found for DAF in its Funding Judgment, the Tribunal said, it would have fallen to the prospective class representatives to amend their funding arrangements but this would not have been determinative of the success of the claim.

The Divisional Court first dealt with an argument by DAF that section 49(1A) ought to be interpreted widely such that the words “as to an award of damages” are purely descriptive of the proceedings in which the decision to be appealed is made. Henderson LJ firmly rejected this line of argument, holding that: “The fundamental problem, to my mind, is that when the subsection is read in the context of section 49 as a whole, the words “as to the award of damages” can only be read as descriptive of the type of decision from which an appeal may be brought, and not as a description of the type of proceedings in which the decision is made. As a matter of grammar, the words “as to the award of damages” must qualify the word “decision” in the opening limb of the subsection, and not the word “proceedings”.”

The Court then considered DAF’s narrower argument that the Tribunal’s Funding Judgment was a decision “as to an award of damages” because it would have been determinative of the success of those claims had the Funding Judgment been decided in DAF’s favour. Henderson LJ saw some force in DAF’s argument, albeit he concludes that the approval of the proposed funding arrangements is only one part of the several matters which the Tribunal has to consider in authorising a proposed class representative and that “the [Tribunal’s] decision would have been an interim ruling on an important matter of principle which was relevant to (but not decisive of) the authorisation of the two applicants as appropriate persons to act as representatives in the collective proceedings.

The Divisional Court therefore agreed with the Tribunal that there was no basis to treat the Tribunal’s Funding Judgment as one falling within the ambit of section 49(1A) and so the Court of Appeal did not have jurisdiction to hear DAF’s appeal.


This judgment adds to the growing body of case-law on the operation of the UK’s still young opt-out collective regime. The point which has thus far received most attention, that regarding the attempted labeling of funding agreements as DBAs, is not surprising but is nonetheless very welcome. Had the Court ruled the other way on this issue, it would have gone some way to undermine the role of litigation funding in opt-out collective redress. The second point above regarding the appropriate route of challenge of a decision of the Tribunal has thus far received less attention but is nevertheless very important as it sets down the parameters of the appellate courts’ jurisdiction in collective proceedings.

The full judgment can be read here.

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