We have seen a spike in collective actions since the introduction of the opt out collective proceeding regime back in 2015. The decision in the first of these cases to actually go to trial is now eagerly awaited in Justin Le Patourel v. BT Group PLC.
Opt-out collective actions can progress without each member of the class being contacted or in any way participating in the claim. In England & Wales such claims can currently only be brought in the Competition Appeals Tribunal, with most mass class actions operating on an 'opt in' basis.
The impact of PACCAR
The recent growth in collective actions can be attributed to growing consumer scepticism of corporations, increased activism, and more ready access to litigation funding. However, the Supreme Court's decision in R (PACCAR Inc and others) v Competition Appeal Tribunal and others [2023] UKSC 28 ("PACCAR") in July 2023 threatened to turn the tide on funding and posed a significant obstacle to access to justice for those individuals seeking to bring claims against powerful companies.
More specifically, the decision determined that litigation funding arrangements ("LFA") which entitle funders to a proportion of the damages award, in reality amount to a Damages-Based Agreement ("DBA"). This meant that LFAs must comply with the requirements of the Courts and Legal Services Act 1990 ("CLSA 1990") and those which do not are rendered unenforceable. Further details about this decision can be found in our article here.
This resulted in significant additional hurdles for collective actions to overcome in order to reach trial and the Court of Appeal being inundated with revised funding agreements.
The government's response
The UK government responded to the decision in PACCAR, announcing that it would be looking into introducing new laws that make access to LFAs far less stringent.
As part of the announcement Lord Chancellor, Alex Chalk, said: "It’s crucial victims can access justice – but it can feel like a David and Goliath battle when they’re facing powerful corporations with deep pockets."
The Litigation Funding Agreements (Enforceability) Bill is now at the committee state in the House of Lords and making good progress.
Justin Le Patourel v. BT Group PLC
Without such funding arrangements, it's unlikely the first UK opt-out collective proceeding, since the introduction of the regime in 2015, would have ever made it to trial. On 29 January 2024, the CAT began hearing the case of Justin Le Patourel v. BT Group PLC. This landmark £600 million claim against BT Group is brought on behalf of 2.3 million people who allege that it engaged in unfair practices which resulted in their being overcharged. The judgment will almost certainly provide crucial guidance for future collective proceedings.
There were many obstacles for Mr Le Patourel to overcome for this collective action to ever reach trial. These included defending an appeal brought by BT in the Court of Appeal, in addition to the decision in PACCAR as above. So, if the costs of litigation can be made less of a barrier through the availability of litigation funding arrangements, this can only aid access to justice.
Comment
The announcement of legislation to reverse the consequences of PACCAR demonstrates a growing recognition for the need for litigation funding to be front and central in future collective actions. No doubt, the Post Office Horizon scandal, and the significant media attention that story received, has both bolstered and highlighted the role of litigation funders, in bringing much needed justice and collective redress.
The judgment in Justin Le Patourel v. BT Group PLC, coupled with the legislative response will change the course of and set the tone for future collective proceedings.
We shall report back on the decision as soon as it's to hand.
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