BT: Case is the only one to reach a CAT ruling in a decade
Opt-out collective actions have seen tens of billions of pounds in damages claimed and hundreds of millions of pounds spent on legal fees, far more than was expected when they were introduced a decade ago, the government said yesterday.
A call for evidence [1] on how the regime is working said the original impact assessment for reforming private actions in competition law estimated the total cost to business, including legal fees, to be just £31m a year.
The Department of Business & Trade (DBT) said the 10-year anniversary of the Consumer Rights Act 2015, which introduced collective actions, marked a good time to review the regime’s operation and impact.
As well as the cost, the type of case being brought before the Competition Appeal Tribunal (CAT) has also developed in unexpected ways; it said. While it had been expected that majority of cases would be follow-on actions from regulatory decisions here or in Europe, around 90% of the current caseload is made up of standalone cases.
But only one case – Le Patourel v BT Group – has reached judgment in the CAT; it went against the class representative [2] and last week the Court of Appeal refused him [3] permission to appeal. There have also been a handful of settlements, including the Merricks v Mastercard case [4].
The key, said the DBT, was “finding the right balance between achieving redress for consumers and limiting the burden on business”.
A significant focus of the call for evidence is on their funding. While the DBT said it would take into account the Civil Justice Council’s (CJC) report on litigation funding [5], published in June, the “unique relationship” between funder, class representative and class members meant that “a bespoke policy approach” may well be required.
Among the questions was one on the CJC recommendation to consider an Access to Justice Fund, which would supplement government funding for civil legal advice and be funded by a small percentage of the profits from litigation funding, and both conditional fee and damages-based agreements.
“We would like to explore options for funding cases in the context of the CAT specifically,” the DBT said. “Are there lessons to be drawn from other models of funding that could support access to the regime?
“For example, contingent legal aid funds provide financial support for cases where funding would otherwise be unavailable, with the fund being replenished by a portion of settlement sums or damages where a case is successful. An example of this is the Ontario Class Proceedings Fund in Canada.”
The call for evidence also raises questions about the scope and certification of cases – one asks whether there were circumstances where it would be appropriate to provide protection to businesses from liability, such as where they have cooperated with the Competition & Markets Authority in a prior investigation.
It also seeks views on how to increase the role of alternative dispute resolution and the as-yet unused provision in the 2015 Act for voluntary redress schemes, as well as the current approach to distributing funds, including the role of funders in this.
David Greene, co-president of the Collective Redress Lawyers Association and senior partner of Edwin Coe, said: “The opt-out regime under the Consumer Rights Act is relatively young and like all fresh process regimes, is taking time to bed in.
“The regime is not perfect but it seems to be early to be reviewing it from a business perspective as the CAT and the Court of Appeal are working their way through the process and a body of law is developing.
“The flavour of the invitation from the department suggests that it questions the business case for the opt-out process but it remains at its base a procedural option that allows consumers access to justice which should be measured not just by the result of the tribunal process but also the changes in corporate behaviour that eventuate.
“Neither lawyers nor funders seek to run ‘speculative’ cases even if they did they would be sifted out at the certification stage. The core issue is corporate wrong which is likely to have already been recognised by regulators and often by the corporation. Whatever the result of the review the vital core must be ensuring access to justice for consumers.”
Jeremy Marshall, chief investment officer at Winward Litigation Finance, commented that the call for evidence was the product of difficulties caused by “successful defendant strategies of testing out every aspect of the new process”.
The opt out claim regime “would not function without the litigation funding industry”, he added.