Paccar Inc & Ors v Road Haulage Association Ltd & Ors [2021] EWCA Civ 299
This case concerned the important point as to whether funding agreements entered into with claimants by third parties who play no part in the conduct of the litigation, but whose remuneration is fixed as a share of the damages recovered by the client, are damages-based agreements (DBAs) within the meaning of the relevant legislation. The consequences of a positive finding would be that most agreements would be unenforceable. Hence, ALF took a healthy interest in the outcome and intervened in the Appeal. A DBA is defined as an agreement between a person providing one of three specified types of services (advocacy, litigation or claims management) and the recipient of those services, which provides for the recipient to make a payment to the provider the amount of which "is to be determined by reference to the amount of the financial benefit obtained". It was the claims management type that caused the potential difficulty because the legislation underpinning that type of service made reference to “the provision of financial services or assistance” as being a criterion for being a claims management company (CMC), and therefore being within the DBA legislation. The CAT had held that the provision needed to be in relation to the management of the making of a claim, rather than the funding of a claim. The Court of Appeal found it relevant that Parliament had provided for the regulation of litigation funding but the Government had chosen not to proceed with it, whereas it had with claims management companies. That did suggest that the two were separate businesses. The Court of Appeal therefore agreed with the CAT that claims management services should be interpreted as applying in the management of a claim.
The issue is complex because some of the activities of litigation funders are somewhat similar to those of claims management companies, and indeed some funders and registered as CMCs. Litigation funders are now involved in the building of books of claimants and in the finance of those groups. It is therefore no real surprise that the Supreme Court will be hearing the case in February 2023.