Paccar Inc & Ors v Road Haulage Association Ltd & Ors

A litigation funding agreement is not a damages-based agreement merely because the funder’s return is calculated by reference to damages recovered. “Claims management services” under the Compensation Act 2006, as incorporated into the statutory definition of a damages-based agreement, must be understood in the context of managing a claim. Pure third-party litigation funding, where the funder does not manage or prosecute the claim, is outside that definition. Funding arrangements involving a genuine claims-management function may fall within it. An appeal from a Tribunal decision is available only where the statutory conditions in section 49 of the Competition Act 1998 are met; a ruling on funding which is relevant to, but not decisive of, authorisation as a class representative is not a decision as to the award of damages.

DAF challenged preliminary rulings of the Competition Appeal Tribunal concerning proposed collective proceedings arising from the trucks cartel. The Tribunal held that litigation funding agreements whose remuneration was linked to recovered damages were not damages-based agreements and approved the applicants’ funding arrangements subject to conditions: [2019] CAT 26. It refused permission to appeal, holding that section 49 of the Competition Act 1998 did not confer jurisdiction over the DBA issue: [2019] CAT 28.

DAF sought permission to appeal, alternatively judicial review. The Court of Appeal, also constituted as a Divisional Court, had to decide whether it had appellate jurisdiction and whether the Tribunal had misconstrued the statutory definition of “claims management services”. A further issue concerned insurance arrangements made by UKTC’s funder.

1. Jurisdiction. The applications for permission to appeal were dismissed. Section 49(1A) of the Competition Act 1998 does not confer a general right of appeal from every decision made in collective proceedings. The words “as to the award of damages” describe the type of decision capable of appeal, not merely the proceedings in which it was made. The Tribunal’s ruling on whether funding arrangements were DBAs was an interim ruling relevant to, but not decisive of, authorisation of the proposed class representatives. It therefore was not a decision as to the award of damages.
2. Ground 1 of judicial review. Permission to apply for judicial review was granted, but the claim was dismissed on the merits. Although a literal reading of section 4(2)(b), read with section 4(3)(a)(i), could include pure litigation funding, the statutory language had to be construed purposively and in context. The composite expression “claims management services” colours the definition. Financial services or assistance are included only where supplied in the context of managing a claim. A pure litigation funder, which finances litigation but does not manage the claim, is therefore outside the definition of claims management services and its agreement is not a DBA under section 58AA of the Courts and Legal Services Act 1990.
3. The conclusion was reinforced by the existing, unrepealed statutory scheme for litigation funding in section 58B of the Courts and Legal Services Act 1990, the detailed consumer-protection scheme in Part 2 of the Compensation Act 2006, and the absence of any indication that Parliament intended pure litigation funders to be regulated under both regimes. The court also applied the presumption against absurdity: DAF’s construction would potentially regulate ordinary financial assistance, including a bank loan linked to litigation.
4. Ground 2. Permission to apply for judicial review was refused. The insurance arrangements made by Yarcombe were essentially arrangements to support adverse-costs funding and did not concern management of the underlying claims. In any event, the point had not been separately argued before the Tribunal and was too late to raise.

• Court of Appeal (Civil Division): applications for permission to appeal from the Competition Appeal Tribunal’s decisions were dismissed for lack of jurisdiction. Sitting as a Divisional Court, the court granted permission for judicial review on Ground 1 but dismissed the claim on its merits, and refused permission on Ground 2.
• Competition Appeal Tribunal: held that the relevant litigation funding agreements were not damages-based agreements and approved the funding arrangements subject to conditions: [2019] CAT 26. Permission to appeal was refused: [2019] CAT 28.