The Court of Appeal considered a group of litigation funding agreements entered into by various class representatives in collective proceedings before the Competition Appeal Tribunal (CAT). Each one had been amended after the original was rendered unenforceable by the Supreme Court’s decision that they were damages-based agreements, in R (PACCAR) v CAT [2023] UKSC 28.
The court held the funding agreements were lawful, in Sony Interactive Entertainment Europe & Anor v Alex Neill Class Representative [2025] EWCA Civ 841.
Sir Julian Flaux, delivering the main judgment, explained the funder’s fee in the original was calculated as a percentage of the proceeds recovered. In the revised agreements, the funder’s fee is calculated as a multiple or multiples of the funder’s outlay, and the funder’s recovery ‘is capped at the level of the proceeds recovered’.
Sir Julian said the appellants’ argument that the cap is linked to the amount of financial benefit obtained, therefore damages-based, would ‘produce the absurd result that funding under litigation funding agreements in the CAT would become practically impossible’. He referenced Lord Sales’ assertion in PACCAR that ‘the court will not interpret a statute so as to produce an absurd result, unless clearly constrained to do so’.
David Greene, NLJ consultant editor and senior partner at Edwin Coe, said: ‘A sensible purposive view of the legislation by the Court of Appeal is welcome and will be a fillip to the claimants that use funding to secure access to the court process.
‘Had the decision gone the other way, it would have been a huge blow to the funding industry and severely limited the availability for funding for competition and other cases. Following the recommendations of the Civil Justice Council now it remains to be seen if this win in the Court of Appeal will be followed up with the renewal of the PACCAR legislation reversing the PACCAR decision.’
Welcoming the judgment, NLJ columnist Professor Dominic Regan, City Law School, noted ‘it is predictable and likely that the losers in this case will try to go up again on appeal’.
A proposed bill to reverse PACCAR was dropped due to the general election last year, and has not yet been revived.
