Whitehead: Step towards true justice for consumers
More than 5,000 people with motor finance claims can use “multi-claimant” or omnibus claim forms and do not have to file them separately, the Court of Appeal ruled yesterday.
The successful lawyers, Manchester firm Barings Law, said the ruling “paves the way for millions more large-scale consumer claims to be issued” and gave motorists an alternative to the Financial Conduct Authority’s delayed motor finance redress scheme.
Giving the unanimous ruling of the court, Lord Justice Coulson said the size of most of the claims was “modest” and they were likely to be worth no more than £1,000 each.
“In those circumstances, the costs of preparation of 5,000+ individual trials allocated to the small claims courts around the country would be out of all proportion to the amounts to be recovered.
“If there are 5,000+ separate claims then, in theory, they would have to be determined by 5,000+ separate hearings. Given the disproportionate nature of the costs, that is most unlikely to happen.”
Coulson LJ predicted that it would be “the individual claimants who fall away” because they lacked the financial resources of the defendants, as the High Court judge in the case, Mr Justice Ritchie, had pointed out.
“It also suits the defendants for there to be separate claims because the stronger claims can be settled and the less strong claims can be run into the ground.”
The Court of Appeal “must have regard to that commercial reality”, he said.
Last year, Ritchie J overturned a ruling that the 5,823 claimants had to file individual claims and the Court of Appeal yesterday rejected the appeal of eight finance companies, including Black Horse, Close Brothers and Volkswagen Financial Services, which are each the subject of an omnibus claim..
It said that, on the assumption that each claim was worth around £1,000, Black Horse faced a potential liability in these cases of over £1.85m and “at the other end of the spectrum” Aldermore Bank a liability of £29,000.
Under CPR rule 7.3, claimants ‘may use a single claim form to start all claims which can be conveniently disposed of in the same proceedings’.
The claimants here have served a single, generic, particulars of claim and argued there was a “single simple premise” that underlay all of the claims and gave rise to a common issue that should be tried.
Coulson LJ said: “I am perhaps a little more sceptical about the utility of the common issues identified by the High Court judge. But my own view is immaterial.
“I cannot say that he was wrong, in the exercise of his discretion, to reach the conclusion that there are some common issues here, and that that was a relevant factor in any consideration of convenient disposal under rule 7.3.”
He agreed with Ritchie J’s analysis that “the trial of lead cases would plainly be a sensible step, and a clear pointer towards the convenient disposal of the claims under rule 7.3”.
The first element of Ritchie J’s case management directions was for the defendants to plead to the generic particulars of claim, and then provide disclosure, including all the relevant brokerage agreements.
“Although I am personally more doubtful than the High Court judge that the provision of a generic defence to the particulars of claim will add greatly to the progress of these claims, I again cannot say he was wrong to require such defences to be provided.
“The defendants claim that this will cost a good deal when measured against the value of the claims. But in my judgment, any such costs are minuscule compared to the costs of producing 5,000+ defences to meet every individual claim.”
Coulson LJ said Ritchie J was entitled to make the case management directions that he did and he removed the stay on those directions. He dismissed the defendants’ appeal and remitted the case to Birmingham County Court for further directions.
Coulson LJ added that he was “acutely aware that the claims in this appeal are, in some respects, the tip of an iceberg” and he did not underestimate “the huge increase in workload that such multi-claimant claims engender”.
It would be “useful if the relevant statistics could be compiled” by HM Courts and Tribunal Service.
The judge was critical of the “insupportable” level of costs incurred in the case, particularly given the value of each individual claim.
“It is a remarkable thing that so much effort and expense has been incurred in respect of claims that [were issued in 2022 but] have barely got going.”
Coulson LJ also said he was “aware that the possibility of a review” by the Civil Procedure Rule Committee of rule 7.3 was now “back on their radar” and it was “a topic that is well worth their reconsideration”.
Robert Whitehead, chairman of Barings Law, said: “This ruling is a step towards securing true justice for millions of drivers who were mis-sold car finance over many years.
“Those consumers have been left waiting while lenders challenged every decision made by the regulator and the courts. Today’s judgment finally brings certainty and allows these claims to continue progressing through the courts as they always should have done.”
Barings has launched a ‘My Free PCP Claim’ scheme, where claimants in an omnibus claim would lose none of their damages in legal fees, and Barings receive only the fees recovered from unsuccessful defendants.
Robert Whitehead will be speaking about motor finance claims at our Claims Futures conference on 21 October in Manchester. Early bird tickets are now available.
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