Paccar Inc & Ors v Road Haulage Association Ltd & Ors [2021] EWCA Civ 299

“58AA Damages-based agreements (1) A damages-based agreement which satisfies the conditions in subsection (4) is not unenforceable by reason only of its being a damages-based agreement. (2) But… a damages-based agreement which does not satisfy those conditions is unenforceable. (3) For the purposes of this section— (a) a damages-based agreement is an agreement between a person providing advocacy services, litigation services or claims management services and the recipient of those services which provides that— (i) the recipient is to make a payment to the person providing the services if the recipient obtains a specified financial benefit in connection with the matter in relation to which the services are provided, and (ii) the amount of that payment is to be determined by reference to the amount of the financial benefit obtained. (4) The agreement— (a) must be in writing; (aa) must not relate to proceedings which by virtue of section 58A(1) and (2) cannot be the subject of an enforceable conditional fee agreement or to proceedings of a description prescribed by the Lord Chancellor; (b) if regulations so provide, must not provide for a payment above a prescribed amount or for a payment above an amount calculated in a prescribed manner; (c) must comply with such other requirements as to its terms and conditions as are prescribed; and (d) must be made only after the person providing services under the agreement has complied with such requirements (if any) as may be prescribed as to the provision of information. (5) Regulations under subsection (4) are to be made by the Lord Chancellor and may make different provision in relation to different descriptions of agreements. … (7) In this section— … “claims management services” has the same meaning as in Part 2 of the Compensation Act 2006 (see section 4(2) of that Act).”

“In this Part- (b). “claims management services” means advice or other 12. services in relation to the making of a claim, (c). “claim” means a claim for compensation, restitution, repayment or any other remedy or relief in respect of loss or damage or in respect of an obligation, whether the claim is made or could be made- (i). by way of legal proceedings, 15. … (3). For the purposes of this section- (a). a reference to the provision of services includes, in particular, a reference to- (i). the provision of financial services or assistance, 19. …”

“419A Claims management services (1) In this Act “claims management services” means advice or other services in relation to the making of a claim.

“1. By its decision in Case 39824 - Trucks adopted on 19 July 2016 (the “Decision”), the European Commission found that five major European truck manufacturing groups had carried out a single continuous infringement of Article 101 of the Treaty on the Functioning of the European Union, by inter alia exchanging information on their future gross prices, over a period of some 14 years between 1997 and 2011. It is convenient to refer to the addressees of the Decision by the shorthand name of the corporate groups to which they belong: DAF, Daimler, Iveco, Volvo/Renault and MAN. Together, they are referred to as original equipment manufacturers or “OEMs”. 2. Two applications have been issued before the Tribunal for a Collective Proceedings Order (“CPO”) pursuant to section 47B of the Competition Act 1998 (“CA”) in respect of damages claims resulting from what the Commissioner for Competition described as a cartel. The first application is brought by UK Trucks Claim Ltd (“UKTC”), a special purpose vehicle (“SPV”) set up to pursue these claims, and was filed on 18 May 2018. The second application is brought by the Road Haulage Association (“RHA”), the well-known trade association of those engaged in the haulage industry. The Respondents to the two applications are addressees of the Decision, but they are not identical. The UKTC application is brought against Iveco and Daimler; the RHA application is against Iveco, MAN and DAF. On 12 December 2018 the Tribunal ordered that the two applications be heard together. 3. In each case, several of the addressees of the Decision, although not respondents to the application, have objected to the grant of a CPO, on the basis that they are persons with an interest since they expect that if a CPO is granted they will be subject to additional claims for contribution or indemnity pursuant to rule 39 of the Competition Appeal Tribunal Rules 2015 (“CAT Rules”). The Tribunal therefore allowed DAF, MAN and Volvo/Renault to be heard as objectors to the UKTC application and Daimler and Volvo/Renault to be heard as objectors to the RHA application. 4. Pursuant to section 47B(5) CA, the Tribunal can only make a CPO if two conditions are satisfied: (a) the person who brought the proceedings should be authorised to act as the class representative in accordance with section 47B(8); and (b) the claims are eligible for inclusion in collective proceedings in accordance with section 47B(6). 5. Pursuant to section 47B(8)(b) CA, the Tribunal may authorise a person to act as class representative only if the Tribunal considers it just and reasonable for them to do so. Pursuant to para 15B of Schedule 4 to the Enterprise Act 2002, rule 78 of the CAT Rules sets out various factors to be considered in that regard. Several of those factors relate to the adequacy of the representative’s funding arrangements, both as regards their own costs and their ability to meet the other side’s costs. 6. On 8 May 2019, the Tribunal ruled that in the light of a possible appeal to the Supreme Court in another case concerning a CPO application, Merricks v MasterCard Inc, against the judgment of the Court of Appeal that addressed the second of the two statutory conditions (i.e. eligibility of claims), these two applications for a CPO should be adjourned pending the outcome of the application in Merricks to the Supreme Court, but that there should be heard as a preliminary issue the question whether as a result of any aspect of the funding arrangements which they have entered into, UKTC and/or the RHA should not be authorised to act as class representative: see [2019] CAT 15.”

“2. The procedure for collective proceedings introduced by the Act applies to claims by two or more persons for damages, money or an injunction in respect of a breach of specified provisions of statutory competition law: see sections 47A(2) and 47B(1) of the Act. It enables whole classes of consumers to vindicate their rights to compensation and the large cost of the necessary litigation to be funded, before an expert tribunal, the Competition Appeal Tribunal (CAT), which is given exclusive jurisdiction over collective proceedings. The prospect that the rights of consumers can be vindicated in that way also serves to act as a disincentive to unlawful anti-competitive behaviour of a type likely to harm consumers generally. But collective proceedings may not proceed beyond the issue and service of a claim form without the permission of the CAT in the form of certification by a Collective Proceedings Order (“CPO”) under section 47B of the Act... 3. There are (at least for present purposes) three key features of collective proceedings. The first is that claims by any number of claimants may be pursued on their behalf by a single representative who may, but need not, be a member of the class. The claims need not be identical, and they need not all be against all the defendants, but they must all raise the same, similar or related issues of fact or law. Secondly, the remedy sought may, but need not always, be the award of what are called aggregate damages. This type of damages provides just compensation for the loss suffered by the claimant class as a whole, but the amount need not be computed by reference to an assessment of the amount of damages recoverable by each member of the class individually. Thirdly, the CAT has a discretion as to how aggregate damages (if recovered) are to be distributed among members of the class. Any unclaimed residue of an aggregate award is to be given to a charity specified by the Lord Chancellor, or used to meet the litigation costs and expenses of the representative. 4. The CAT is given an important screening or gatekeeping role over the pursuit of collective proceedings. First, collective proceedings may not be pursued beyond the issue and service of a claim form without the CAT’s permission, in the form of a CPO, for which the representative must apply. The obtaining of a CPO is called certification. Secondly, collective proceedings may be terminated by the CAT at any stage by the revocation of that CPO. Thirdly, the CAT may accede to an application by one or more defendants to strike out collective proceedings if they disclose no reasonable cause of action (or are otherwise abusive) or to an application for defendants’ summary judgment, just as in any ordinary civil proceedings.”

“A class action procedure which has these features provides a potent means of achieving access to justice for consumers. But it is also capable of being misused. The ability to bring proceedings on behalf of what may be a very large class of persons without obtaining their active consent and to recover damages without the need to show individual loss presents risks of the kind already mentioned, as well as giving rise to substantial administrative burdens and litigation costs. The risk that the enormous leveraging effect which such a class action device creates may be used oppressively or unfairly is exacerbated by the opportunities that it provides for profit. As the Court of Appeal observed in the present case, “the power to bring collective proceedings ... was obviously intended to facilitate a means of redress which could attract and be facilitated by litigation funding”: [2019] EWCA Civ 674; [2019] Bus LR 3025, para 60. Those who fund litigation are, for the most part, commercial investors whose dominant interest is naturally to make money on their investment from the fruits of the litigation.”

“We consider that, having regard to the mischief at which this part of the [Compensation Act] was directed, Mr Kirby was therefore correct in his submission that the reference in section 4(2) read with section 4(3)(a)… to “the provision of financial services or assistance” “in relation to the making of a claim” is to be interpreted as applying in the context of the management of a claim. This gives effect to the fact that the term employed in the statute, which is the subject of the definition, is “claims management services” and avoids the potential for an undesirable outcome discussed above. Litigation funders, by contrast, are engaged in the funding of a claim, not the management of the making of a claim. On that basis, since litigation funders are not engaged in providing “claims management services”, a LFA will not come within the definition of a DBA in section 58AA(3) CLSA.”

“A damages-based agreement is unenforceable if it relates to opt-out collective proceedings.”

“a litigation funding agreement in the form of the RHA and UKTC LFAs, whereby the consideration paid to the funder is determined by reference to the amount of damages recovered in the litigation being funded, is not a DBA within the terms of s.58AA CLSA.”

“49. Further appeals from the Tribunal (1) An appeal lies to the appropriate court- (a) from a decision of the Tribunal as to the amount of a penalty under section 36; and (b) … (c) on a point of law arising from any other decision of the Tribunal on an appeal under section 46 or 47. (1A) 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. (1B) An appeal lies to the appropriate court from a decision of the Tribunal in proceedings under section 47A or in collective proceedings as to the amount of an award of damages or other sum (other than the amount of costs or expenses). … (2) An appeal under this section- (a) except as provided by subsection (2A), may be brought by a party to the proceedings before the Tribunal or by a person who has a sufficient interest in the matter; and (b) requires the permission of the Tribunal or the appropriate court. (2A) An appeal from a decision of the Tribunal in respect of a claim included in collective proceedings may be brought only by the representative in those proceedings or by a defendant to that claim. (3) In this section “the appropriate court” means the Court of Appeal…”

“Of course, there is no question of excluding further judicial scrutiny of any decision of the Tribunal. Where a decision of the Tribunal is not susceptible to appeal under s.49 CA, it may be challenged by proceedings for judicial review.”

“36. Secondly, DAF relies on the significant implications of the Tribunal’s decision for the potential parties in these collective proceedings or directly affected by it. That of course applies to most if not all substantial cases. It is not a good reason for giving permission to pursue an appeal which has no real chance of success. 37. Thirdly, DAF states that the legal issue is of wide importance not only for litigation funding but for claims management regulation. We fully accept that if we had decided that what is apparently the most commonly used type of LFA fell within the statutory definition of a DBA and was unenforceable, that would indeed have had wide-ranging implications. However, we reached the opposite conclusion, and thus a result consistent with the views and assumptions of other commentators and which does not disturb the existing practice of litigation funding. If an appeal against that conclusion does not stand a real chance of success, we do not see that this provides a compelling reason for the appeal to be heard.”

“The application for permission to appeal and the application by DAF for permission to seek judicial review will be adjourned to an oral rolled-up hearing before the full Court which will also sit as a Divisional Court for the purpose of considering the application for permission to seek judicial review. The hearing will (so far as may be necessary) determine the issue of jurisdiction and if permission is granted the appeal or application for judicial review (as the case may be) will follow.”

“Collective proceedings before the Tribunal (1) Subject to the provisions of this Act and Tribunal rules, proceedings may be brought before the Tribunal combining two or more claims to which section 47A applies (“collective proceedings”). (2) Collective proceedings must be commenced by a person who proposes to be the representative in those proceedings. … (4) Collective proceedings may be continued only if the Tribunal makes a collective proceedings order. (5) The Tribunal may make a collective proceedings order only- (a) if it considers that the person who brought the proceedings is a person who, if the order were made, the Tribunal could authorise to act as the representative in those proceedings in accordance with subsection (8), and (b) in respect of claims which are eligible for inclusion in collective proceedings. (6) Claims are eligible for inclusion in collective proceedings only if the Tribunal considers that they raise the same, similar or related issues of fact or law and are suitable to be brought in collective proceedings. (7) A collective proceedings order must include the following matters- (a) authorisation of the person who brought the proceedings to act as the representative in those proceedings, (b) description of a class of persons whose claims are eligible for inclusion in the proceedings, and (c) specification of the proceedings as opt-in collective proceedings or opt-out collective proceedings (see subsections (10) and (11)). (8) the Tribunal may authorise a person to act as the representative in the collective proceedings- (a) whether or not that person is a person falling within the class of persons described in the collective proceedings order for those proceedings (a “class member”), but (b) only if the Tribunal considers that it is just and reasonable for that person to act as a representative in those proceedings. (9) The Tribunal may vary or revoke a collective proceedings order at any time. … (12) Where the Tribunal gives a judgment or makes an order in collective proceedings, the judgment or order is binding on all represented persons, except as otherwise specified.”

“As originally enacted, section 49(1) granted a general right of appeal “on a point of law arising from a decision of an appeal tribunal” or from a decision as to the amount of a penalty. Between July 2004 and September 2015 (in the period pre-dating the introduction of collective proceedings) section 49(1) was in the following terms: “Further appeals (1) An appeal lies to the appropriate court – (a) from a decision of the tribunal as to the amount of a penalty under section 36; (b) from a decision of the tribunal as to the award of damages or other sum in respect of a claim made in proceedings under section 47A or included in proceedings under section 47B (other than a decision on costs or expenses) or as to the amount of any such damages or other sum; and (c) on a point of law arising from any other decision of the tribunal on an appeal under section 46 or 47. …”

“14. The introduction of a regime for collective proceedings (sections 47B-47C) and for collective settlements (sections 49A49B) involved major changes to the CA. It appears indisputable that the novel form of decision by the Tribunal making or refusing an order approving a collective settlement under sections 49A(1) or 49B(1) is not susceptible to appeal, although such a decision may undoubtedly be very significant for the parties. Having regard to the structure and framing of the reformulated section 49 CA, we consider that if the legislature had intended that the novel form of decision by the Tribunal making or refusing a CPO should be subject to appeal, the section would have included express provision enabling an appeal to the appropriate court from a decision as to the grant of a collective proceedings order.”

“24. What is now section 49(1A) adopts much of the terminology used in section 49 prior to the amendments made by [the Consumer Rights Act 2015]. The differences are that appeals on quantum are now dealt with separately in section 49(1B) and liability in stand-alone claims in section 49(1C). But section 49(1A) continues to use the phrase “a decision of the Tribunal as to the award of damages” and there is nothing in the structure or terminology of section 49(1A) which suggests that it was intended to be given a more restricted meaning. What has changed is the inclusion in the opening words of section 49(1A) of a reference to collective proceedings so that the words in dispute now govern both section 47A and collective proceedings and must be given effect accordingly. 25. The concession by Mr Hoskins QC on behalf of the defendants that section 49(1A)(a) would extend to both the grant or refusal of an application to strike out is necessitated by the decision in the EnronCoal Services Ltd case [2010] Bus LR 28. But that decision, he submits, is limited to saying that a “decision as to the award of damages” can include a strike-out decision because that involves a determination of the viability of the claim. A decision whether or not to grant a CPO is purely procedural in character and, as the Tribunal accepted, does not bar individual section 47A claims. It merely determines whether or not those claims should proceed individually or on a collective basis. 26. I accept, of course, that the court in the Enron Coal Services Ltd case … was only concerned to decide whether section 49(1)(b) as it then was extended to a decision not to strike out a section 47A claim. It was not necessary in that case to decide whether the right of appeal extended to any interlocutory decision. A strike-out decision, whether positive or negative, is a decision on the arguability of the claim and must be a decision as to the award of damages. 27. The present case is said to be of a different kind because it does not address the viability of the underlying claims. But it is, in my view, none the less a decision in collective proceedings as to the award of damages within the meaning of section 49(1A)(a). The refusal of a CPO is a determination by the Tribunal that the eligibility criteria have not been met and the proposed representative is not therefore entitled to seek an aggregate award of damages under section 47C(2) which is a remedy unique to collective proceedings. As explained earlier in this judgment, this class remedy has been introduced by legislation as part of the collective proceedings regime in order to address some of the difficulties inherent in the bringing of individual claims and, as the experience in comparable jurisdictions has shown, is likely to be a critical component for addressing section 47A claims in the collective proceedings regime. As the Tribunal itself observed in para 91 of its CPO decision, a refusal of a CPO is likely to prevent individual members of the represented class who have suffered loss from obtaining any compensation. It is therefore the end of the road for a class action of this kind and, as such, a decision as to the award of section 47C(2) damages. The fact that class members are left with their individual claims is nothing to the point. The disputed words in section 49(1A)(a) have now to be considered and construed in the light of the addition to the Tribunal’s jurisdiction of collective proceedings and in a way which accommodates the introduction of collective proceedings and the particular remedies available in them. It is not therefore necessary for us to decide whether Ms Demetriou [counsel for Mr Merricks] is right in her wider submission that section 49(1A)(a) applies (as it originally did) to any decision of the Tribunal. For the reasons I have given, it does operate to provide a right of appeal on a point of law arising from the section 47B(4) decision in this case.”

“I agree with Patten LJ that the Court of Appeal has jurisdiction to determine this appeal. As he explains in paragraph 27 above, the decision not to grant a CPO is a decision as to the award of damages within the meaning of section 49(1A)(a) because it denies the unique remedy of an aggregate award of damages under section 47C(2). It is not merely procedural in character.”

“As a matter of principle, a decision refusing to authorise a proposed class representative, unlike a decision that the claims are not eligible for collective proceedings, does not mean that the collective proceedings cannot be pursued. On the contrary, where such a decision concerns the nature of the proposed representative (e.g. because of a potential conflict of interest, or because the plan it put forward for the conduct of the proceedings was unsatisfactory), there is obviously scope for an alternative class representative to be proposed. More specifically, in the present case, if we had held that the current funding arrangements of both UKTC and the RHA constituted DBAs, the consequence would have been that UKTC and the RHA could not be authorised as class representatives so long as they relied on such a basis to fund the proceedings. But there would obviously have been scope for them then to put forward an alternative basis of funding, e.g. whereby the third party funder is rewarded not by a percentage of damages recovered but by a multiple of its investment. Indeed, the determination of the second part of the argument involved in the preliminary issue … in favour of UKTC and the RHA, against which no OEM seeks to appeal, was dependent in each case on the applicant making certain amendments to its funding arrangements, most significantly in the case of UKTC. As the RHA states in its response to this application by DAF, if the Tribunal had determined the DBA issue in DAF’s favour, “the RHA could simply have entered into a compliant LFA with its litigation funder.”

“In our judgment, s. 49(1A) CA, when considered in the context of the section as a whole, cannot be read as giving a broad right to appeal on a point of law against any decision made in collective proceedings. S.49 CA is the statutory provision concerning all further appeals from the Tribunal. It establishes, in effect, a hierarchy of the different kinds of Tribunal decision that are susceptible to appeal: (1) a decision concerning the amount of a penalty (on appeal from the CMA) or the amount of an award of damages or other sum (apart from costs or expenses), whether in ordinary proceedings under s. 47A or collective proceedings under s. 47B, may be appealed on any ground: s. 49(1)(a) and (1B); (2) any other decision on an appeal under ss. 46 or 47 may be appealed on a point of law: s. 49(1)(c); (3) a decision in proceedings for damages or an injunction (whether ordinary proceedings under s. 47A or collective proceedings under s. 47B) as to the award of damages or other sum (apart from costs or expenses), or as to the grant of an injunction, may be appealed on a point of law: s. 49(1A). In a stand-alone claim, that will include a point of law arising from a finding by the Tribunal as to an infringement of competition law: s. 49(1C).”

“The alternative construction put forward by DAF involves interpreting s. 49(1A) as if it had the same effect as s. 49(1)(c), and thus merging categories (3) and (2) above. It would mean that the additional language in the statute at s. 49(1A)(a) and (b) was entirely superfluous. That would be contrary to the presumption against surplussage that is an established principle of statutory construction: see Bennionon Statutory Interpretation (7th edn, 2017), para 21.2. We cannot accept that the additional language of (a) and (b) was included merely as descriptive of the proceedings involved: there is no similarly descriptive language in s. 49(1), as regards either the proceedings in which a penalty may be imposed under s. 36 or appeals under ss. 46 and 47. This would infer a different style of drafting for two immediately adjacent subsections in the same statutory provision. Moreover, the parallel language used in the following s. 49(1B), (“as to the amount of an award of damages...”) is clearly not descriptive but substantively prescribes the form of decision that can be appealed on fact as well as law. Nor can we accept DAF’s argument that unless this wider interpretation is adopted, there is no coherent way in which s. 49(1A) can operate. The Court of Appeal in Merricks articulated and adopted a narrower interpretation which, with respect, is entirely coherent.”

“(a) a claim for damages; (b) any other claim for a sum of money; (c) in proceedings in England and Wales or Northern Ireland, a claim for an injunction.”

“Subsection (7) defines the terms “payment” and “claims management services” for the purposes of the new section 58AA.”

“Statutory interpretation is an exercise which requires the court to identify the meaning borne by the words in question in the particular context. The task of the court is often said to be to ascertain the intention of Parliament expressed in the language under consideration. This is correct and may be helpful, so long as it is remembered that the “intention of Parliament” is an objective concept, not subjective. The phrase is a shorthand reference to the intention which the court reasonably imputes to Parliament in respect of the language used. It is not the subjective intention of the minister or other persons who promoted the legislation. Nor is it the subjective intention of the draftsman, or of individual members or even of a majority of individual members of either House. These individuals will often have widely varying intentions. Their understanding of the legislation and the words used may be impressively complete or woefully inadequate. Thus, when courts say that such-and-such a meaning “cannot be what Parliament intended”, they are saying only that the words under consideration cannot reasonably be taken as used by Parliament with that meaning. As Lord Reid said in Black-Clawson International Ltd v Papierwerke Waldhof- Aschaffenburg A G [1975] AC 591, 613: “We often say that we are looking for the intention of Parliament, but that is not quite accurate. We are seeking the meaning of the words which Parliament used.””

“The modern approach to statutory construction is to have regard to the purpose of a particular provision and interpret its language, so far as possible, in a way which best gives effect to that purpose. … In seeking the purpose of a statutory provision, the interpreter is not confined to a literal interpretation of the words, but must have regard to the context and scheme of the relevant Act as a whole… The essence of this approach is to give the statutory provision a purposive construction in order to determine the nature of the transaction to which it was intended to apply and then to decide whether the actual transaction (which might involve considering the overall effect of a number of elements intended to operate together) answered to the statutory description. Of course this does not mean that the courts have to put their reasoning into the straitjacket of first construing the statute in the abstract and then looking at the facts. It might be more convenient to analyse the facts and then ask whether they satisfy the requirements of the statute. But however one approaches the matter, the question is always whether the relevant provision of statute, on its true construction, applies to the facts as found.”

“(1) The court seeks to avoid a construction that produces an absurd result, since this is unlikely to have been intended by the legislature. Here, the courts give a very wide meaning to the concept of “absurdity”, using it to include virtually any result which is impossible, unworkable or impracticable, inconvenient, anomalous or illogical, futile or pointless, artificial, or productive of a disproportionate counter-mischief. (2) The strength of the presumption against absurdity depends on the degree to which a particular construction produces an unreasonable result. (3) The presumption may of course be displaced, as the ultimate objective is to ascertain the legislative intention.”

“The more unreasonable a result, the less likely it is that Parliament intended it…”

“22. In 1990, Parliament passed the CLSA, which by s.58 allowed conditional fees (i.e. success fees paid to persons providing advocacy or litigation services) to be used in cases to be specified by order made by the Lord Chancellor. Under that provision, the success fee could not be recovered as part of a costs order against the other party. The Lord Chancellor subsequently made the Conditional Fee Agreements Order 1995, which specified a limited range of proceedings for this purpose: essentially, proceedings concerning personal injuries, insolvency and cases before the European Commission and Court of Human Rights. 23. The Access to Justice Act 1999 (“AJA”) set out several amendments to this part of the CLSA. In particular: (1) By s.27 AJA, the original s.58 CLSA was replaced by a new s.58 and s.58A. These expanded the range of cases in which conditional fees could be used, and also provided that the success fee was recoverable as part of costs. (2) By s.28 AJA, a new s.58B was inserted into the CLSA, entitled “Litigation funding agreements”

“58B. – Litigation funding agreements (1) A litigation funding agreement which satisfies all of the conditions applicable to it by virtue of this section shall not be unenforceable by reason only of its being a litigation funding agreement. (2) For the purposes of this section a litigation funding agreement is an agreement under which— (a) a person (“the funder”) agrees to fund (in whole or in part) the provision of advocacy or litigation services (by someone other than the funder) to another person (“the litigant”); and (b) the litigant agrees to pay a sum to the funder in specified circumstances. (3) The following conditions are applicable to a litigation funding agreement— (a) the funder must be a person, or person of a description, prescribed by the Lord Chancellor; (b) the agreement must be in writing; (c) the agreement must not relate to proceedings which by virtue of section 58A(1) and (2) cannot be the subject of an enforceable conditional fee agreement or to proceedings of any such description as may be prescribed by the Lord Chancellor; (d) the agreement must comply with such requirements (if any) as may be so prescribed; (e) the sum to be paid by the litigant must consist of any costs payable to him in respect of the proceedings to which the agreement relates together with an amount calculated by reference to the funder’s anticipated expenditure in funding the provision of the services; and (f) that amount must not exceed such percentage of that anticipated expenditure as may be prescribed by the Lord Chancellor in relation to proceedings of the description to which the agreement relates. (4) Regulations under subsection (3)(a) may require a person to be approved by the Lord Chancellor or by a prescribed person. … (6) In this section… “proceedings” includes any sort of proceedings for resolving disputes (and not just proceedings in a court), whether commenced or contemplated. (7) Before making regulations under this section, the Lord Chancellor shall consult— (a) the designated judges; (b) the General Council of the Bar; (c) the Law Society; and (d) such other bodies as he considers appropriate. (8) A costs order made in any proceedings may, subject in the case of court proceedings to rules of court, include provision requiring the payment of any amount payable under a litigation funding agreement. …”

“40. The approach that we are about to commend will not be appropriate in the case of a funding agreement that falls foul of the policy considerations that render an agreement champertous. A funder who enters into such an agreement will be likely to render himself liable for the opposing party’s costs without limit should the claim fail… Our approach is designed to cater for the commercial funder who is financing part of the costs of the litigation in a manner which facilitates access to justice and which is not otherwise objectionable. Such funding will leave the claimant as the party primarily interested in the result of the litigation and the party in control of the conduct of the litigation. 41. We consider that a professional funder, who finances part of a claimant’s costs of litigation, should be potentially liable for the costs of the opposing party to the extent of the funding provided. The effect of this will, of course, be that, if the funding is provided on a contingency basis of recovery, the funder will require, as the price of the funding, a greater share of the recovery should the claim succeed. In the individual case, the net recovery of a successful claimant will be diminished. While this is unfortunate, it seems to us that it is a cost that the impecunious claimant can reasonably be expected to bear… 42. If the course which we have proposed becomes generally accepted, it is likely to have the following consequences. Professional funders are likely to cap the funds that they provide in order to limit their exposure to a reasonable amount. This should have a salutary effect in keeping costs proportionate… Professional funders will also have to consider with even greater care whether the prospects of the litigation are sufficiently good to justify the support that they are asked to give. This also will be in the public interest. 43. In the present appeal we are concerned only with a professional funder who has contributed a part of a litigant’s expenses through a non-champertous agreement in the expectation of reward if the litigant succeeds. We can see no reason in principle, however, why the solution we suggest should not also be applicable where the funder has similarly contributed the greater part, or all, of the expenses of the action.”

“4 Provision of regulated claims management services (1) A person may not provide regulated claims management services unless— (a) he is an authorised person, (b) he is an exempt person, (c) the requirement for authorisation has been waived in relation to him in accordance with regulations under section 9, or (d) he is an individual acting otherwise than in the course of a business. (2) In this Part— (a) “authorised person” means a person authorised by the Regulator under section 5(1)(a), (b) “claims management services” means advice or other services in relation to the making of a claim, … (e) services are regulated if they are— (i) of a kind prescribed by order of the Secretary of State, or (ii) provided in cases or circumstances of a kind prescribed by order of the Secretary of State. (3) For the purposes of this section— (a) a reference to the provision of services includes, in particular, a reference to— (i) the provision of financial services or assistance, (ii) the provision of services by way of or in relation to legal representation, (iii) referring or introducing one person to another, and (iv) making inquiries, and (b) a person does not provide claims management services by reason only of giving, or preparing to give, evidence (whether or not expert evidence). (4) For the purposes of subsection (1)(d) an individual acts in the course of a business if, in particular— (a) he acts in the course of an employment, or (b) he otherwise receives or hopes to receive money or money’s worth as a result of his action.”

“In so far as the Explanatory Notes cast light on the objective setting or contextual scene of the statute, and the mischief at which it is aimed, such materials are… always admissible aids to construction. They may be admitted for what logical value they have. Used for this purpose Explanatory Notes will sometimes be more informative and valuable than reports of the Law Commission or advisory committees, Government green or white papers, and the like.”

“28. The Better Regulation Task Force (BRTF) report: Better Routes to Redress published in May 2004 found that the “compensation culture” is a myth but that it is a damaging myth that needs to be tackled. The BRTF identified the activities of claims intermediaries as contributing to a ‘have a go culture’ and recommended that claims intermediaries should be subject to statutory regulation, if self-regulation did not work. … 30. The Government published a consultation and responses paper on the simplification of conditional fee agreements (CFAs) in June 2004 Making Simple CFAs a Reality which included a discussion of the widespread concern over claims intermediaries’ activities and work underway to try to produce a self regulatory solution. The Government responded to the BRTF’s report in November 2004 accepting the recommendation that regulation of claims intermediaries should be considered if self-regulation failed. 31. The legislative framework is flexible and allows the Secretary of State to designate a body to regulate claims management services, to establish a body to regulate (where he thinks that no existing body is suitable for designation) or to regulate himself. The Act provides the outline regulatory framework to authorise providers who would be required to comply with rules and codes of practice. The Act also includes power for the Regulator to investigate unauthorised activities and to prosecute those who try to evade regulation.”

“34. …Only those claims management services that the Secretary of State prescribes by order under section 4(2)(e) will be subject to regulation. The Secretary of State can therefore target regulation in areas where he considers there to be a particularly high risk to consumers. 35. Subsection 3 gives examples of activities which constitute the provision of services (where they are connected with a claim). The list, which is not exhaustive, includes financial services (for example assisting with the purchase of insurance or loans); legal representation (for example acting on a claimant’s behalf in pursuing a claim); referring or introducing one person to another (for example referring a claim to a solicitor); and making inquiries (for example contacting witnesses in the course of investigating a claim)…”

“7. Policy Background 7.1 Claims management businesses gather cases either by advertising or direct approach. They then act either directly for the client in pursuing the claim, or as an intermediary between the claimant and a legal professional or insurer. Claims management businesses make money from several sources— from referral fees from solicitors; from commission on auxiliary services; from the sale of after-the-event insurance; and sometimes from loans to their clients. Concerns have grown over the unprofessional conduct by those who are providing the service for commercial gain—particularly as the activities of claims management businesses have extended into many areas of litigation, well beyond personal injury, and even into claims for certain kinds of benefits even though no litigation is involved. … Scope Order 7.6 The definition of claims management services in the Act is wide to allow new areas to be brought within the scope of regulation where problems arise, and for areas to be removed from scope where problems subside. The intention is that the regulation be applied initially in the areas where there is the greatest potential for consumer detriment. The Scope Order specifies the activities that will be regulated. The activities are those characteristically provided by claims management companies and have been described in such a way as to ensure that similar services provided outside the area of the claims management industry are not inadvertently regulated as claims management services.”

“It arose from widespread concern and disquiet over the activities of claims management companies, some of which appeared to exploit vulnerable consumers. As Mr Thompson put it, the legislation was essentially introduced as a form of consumer protection… Although [third party funding] existed well before 2006, there is no suggestion that it was envisaged in the passage of the [Compensation Act].” (5) Finally, at [40], the Tribunal recorded Mr Thanki’s acceptance that, on the extensive meaning of “claims management services” for which he contended, “it would cover, for example, a bank lending money for the particular purpose of enabling the borrower to fund litigation.”

“The statutory commencement day power continues to exist. The minister cannot abrogate it. The power, and the concomitant duty to consider whether to exercise it, will continue to exist despite any change in the holders of the office of Secretary of State… This obligation will cease only when the power is exercised or Parliament repeals the legislation. Until then the duty to keep under review will continue.”

“In order to facilitate access to justice, the RHA has sought the agreement of Therium to provide funding in respect of the RHA’s costs of pursuing the Collective Proceedings, and/or the Claimants’ costs of pursuing the Proceedings, as set out in the Project Plan and on the terms of this agreement…”

“In the case of a statutory definition the defined term may itself colour the meaning of the definition. Comment Whatever definition is given to a term, the natural meaning of the term is likely to exert some influence over the way that the definition is understood and applied by the court. It is impossible to cancel the ingrained emotion of a word merely by an announcement. This is sometimes called “the potency of the term defined”

“….a definition may give the words a meaning different from their ordinary meaning. But that does not mean that the choice of words adopted by Parliament must be wholly ignored. If the terms of the definition are ambiguous, the choice of the term to be defined may throw some light on what they mean.”

“Although successor is a defined expression, the ordinary meaning of the word is part of the material which can be used to construe the definition”.”

“… it is true that in construing a definition, one does not ignore the ordinary meaning of the word which Parliament has chosen to define. It is all part of the material available for use in the interpretative process.”

“Meadowside, which had a claim for the balance due in respect of repair works under a JCT Minor Works contract, had gone into liquidation and the liquidators engaged Pythagoras…, a company which acts on behalf of administrators and liquidators in relation to construction contracts, to take over pursuit of the debt. Pythagoras was appointed to “act as [the liquidator’s] agents and take all steps to ascertain and recover the amounts due to [Meadowside].””

“Pythagoras Capital can use its in-house legal and engineering/ building expertise to run the Adjudication (Pythagoras is not a law firm, but Adjudication proceedings are not a reserved legal activity). If Pythagoras Capital makes a recovery for the insolvent company then it will keep a pre-agreed percentage.”

“It is clear that the role carried out by Pythagoras in respect of the claim of Meadowside was very different from that of an independent third party litigation funder… Pythagoras’ funding of the claim was part of its overall management of the claim and the decision in Meadowside is therefore entirely consistent with the Judgment: see the Judgment at para 41. Accordingly, Meadowside does not give rise to a conflict of authority as DAF seeks to suggest.”