Class actions: key developments in 2024 and what to look out for in 2025

The English courts have seen significant growth in class actions in the last decade, and 2024 was faithful to this trend. Here, we highlight five particular developments that caught our eye and focus on the issues to look out for in 2025.

1. The increased focus on funders is not going anywhere

Third party funding is a well established and critical part of the UK class action landscape. As recognised by the Civil Justice Council in its interim report of litigation funding, it provides access to justice. Without funding, claimants would not have the resource to enable them to bring class actions against corporations and other well-resourced bodies. Being backed by a funder can also provide reassurance to organisations who are being sued that, if the claimants are unsuccessful, there are sufficient financial resources available to meet any adverse costs award.

That said, developments in 2024 caused ripples in the litigation funding industry. How these play out in 2025 may well impact the attractiveness of UK class actions to the funding market.

Reversal of PACCAR postponed

First, the ultimate practical outcome of the Supreme Court's July 2023 decision in R (PACCAR) v Competition Appeal Tribunal [2023] UKSC 28 remains unknown. 

In March, the former Conservative government looked set to reverse the controversial Supreme Court PACCAR decision which found that funding agreements that calculated the funder's return by reference to a proportion of damages recovered were damages based agreements (DBAs). In practical terms, this meant that most funding agreements were unenforceable, particularly in opt-out class actions in the Competition Appeal Tribunal (the CAT) where DBAs are prohibited (read our briefing for more detail). The Litigation Funding Agreements (Enforceability) Bill would have restored the position pre-PACCAR, but it did not survive the change in government following the general election. 

The newly elected Labour government has since announced that it will wait for the outcome of the Civil Justice Council's review of the litigation funding market in England and Wales before deciding whether to reintroduce draft legislation on litigation funding. The CJC published its interim report in October 2024 and, following a consultation period that runs to the end of January 2025, their final report is expected by summer 2025. 

In the meantime, many funders have amended their funding agreements post PACCAR so that their return is expressed as a multiple of the amount of funding provided – and therefore not regarded as DBAs. This is particularly the case in class actions before the CAT, where focus is now likely to shift to issues such as the level of that multiple, with the CAT being asked to consider what level is acceptable.

With the Litigation Funding Agreements (Enforceability) Bill unlikely to be reintroduced to Parliament for some time, the Court of Appeal will also have an important role to play in determining the validity of funding arrangements. In particular, we eagerly await the Court of Appeal's findings in Justin Gutmann v Apple Inc and others (likely to be heard early this year), where Apple will argue that Gutmann's funding agreement is a DBA; that the CAT had erred in concluding that a funder's fee may be paid out of damages which are not "undistributed"; and that Gutmann's funding agreement creates "perverse incentives" and makes Gutmann an unsuitable class representative.

The funding market under review

Funding more generally has been under review at both a domestic and European level. In addition to the CJC review, which is looking at a broad range of issues, including the regulation of third party litigation funding, the extent to which funders’ returns should be capped, and other available sources of funding, the European Law Institute published its 'Principles Governing the Third Party Funding of Litigation'. The 12 principles are intended to constitute a "blueprint for guidance, decisions or light-touch regulation" of the market in third party funding internationally. It remains to be seen what influence, if any, this report will have on the CJC's final report, but it is worth noting that the ELI research project was jointly led by Mrs Justice Sara Cockerill who also sits on the CJC funding working party. 

2. An interesting development in funder-class representative dynamics

On 3 December, it was announced that Walter Hugh Merricks CBE v Mastercard Incorporated and Others has resulted in a settlement of £200m subject to approval from the CAT in due course. Mr Merricks' claim (in 2016) was the second claim to be issued under the opt-out collective proceedings regime that came into force in October 2015, and the first to be certified following the Supreme Court's judgment in Sainsbury’s in late 2020 (read our briefing on the Merricks certification). 

Though the claim value was originally announced to be worth £17bn and was widely considered to be the largest damages claim ever to be filed in the English courts, the quantum figure has been gradually eroded over time and after successive unfavourable rulings on a variety of issues.

The day after the announcement, however, the claim's funder (Innsworth) publicly criticised the "low and premature" settlement. Innsworth noted it would be challenging the settlement agreement and that it had already written to the CAT in this regard. The funder is reportedly seeking to intervene in the claim's settlement hearing (likely to take place early this year).

Having litigated the claim for over 8 years, Mr Merricks' professional advisers will inevitably have incurred considerable costs. With this mind, it is currently not clear whether a settlement sum of £200 million would enable Innsworth to receive the return that it expected when the litigation funding agreement was signed. At the settlement hearing, the CAT is likely to be asked to consider this issue and potentially the level of return that Mr Merricks agreed that Innsworth would receive. 

Needless to say, the process of seeking the CAT's approval of the settlement – the first one to be challenged and by the class representative's funder – is likely to be closely watched by litigation funders and the broader competition litigation community, and will have an impact on how future class representative's claims are funded.

3. Is the representative action procedure hanging by a thread? 

The representative action procedure under CPR 19.8 enables a claim to be pursued in the High Court by (or against) a representative of a class of individuals, provided they all have the "same interest" in the claim. Post Lloyd v Google, courts have taken a restrictive approach to the interpretation of the "same interest" requirement (read our briefing) and a series of cases have not been given permission to proceed as representative actions.

One area to look out for in 2025 is the use of the representative action rule in securities litigation. While the UK Supreme Court in Lloyd recognised the flexibility and convenience offered by the representative action procedure, in December 2023, the High Court made it clear in Wirral Council v Indivior plc and Reckitt Benckiser Group PLC that it should not be used merely as a manner of sidestepping the normal procedural requirements and burdens of litigation (read our briefing on the case). There, the claimants and their funders favoured the representative action procedure to avoid the risks and costs of pursuing ordinary multi-party litigation (involving potential disclosure or witness evidence prior to a first trial). This was deemed illegitimate as a basis for pursuing this procedure; to allow this would be contrary to the overriding objective. The Reckitt/Indivior case was heard by the Court of Appeal in December 2024 and its judgment this year will likely determine the use of the representative action in securities litigation. The impact of the Court of Appeal judgment is likely also to be felt more widely, given the current focus on claims relating to motor finance and other commission arrangements.

In this regard, it is noteworthy that one case which bucked the recent trend and was given permission by the Court to proceed as a representative action concerned secret commissions. In early 2024, the Court of Appeal handed down its judgment in Commission Recovery Ltd v Marks & Clerk LLP & Anor, and held a narrow 'common issue' was deemed sufficient to engage the rule despite the fact that the commonality between the class members did not extend to all questions of liability or quantum (read our briefing for more detail).

A preliminary issues trial was scheduled in early 2025 that was expected to offer answers to important questions around funding and the prospect of "opt-out" representative actions before the High Court. The trial will not proceed, however, as a confidential settlement was agreed in late October 2024. 

The Marks & Clerk settlement leaves important questions for the future of representative actions unanswered going into 2025. 

A further attempted representative action, Prismall v Google and Deepmind, was rejected by the Court of Appeal in December 2024. This claim concerned allegations that Google and Deepmind misused patients' data while working with the Royal Free Hospital. At first instance, it was held that the information shared with the defendants was anodyne in nature and so would not have resulted in damages for all in the class. The Court of Appeal agreed, holding that "relevant circumstances will affect whether there is a reasonable expectation of privacy for any particular claimant, which will itself affect whether all of the represented class have "the same interest"".

And in September 2024, the High Court struck out a representative claim brought on behalf of BA passengers in respect of delayed and cancelled flights. In Smyth v British Airways PLC, the claim was struck out on the basis that the claimant and the class did not share the same interest; the claimant had failed to identify a common issue – it was "just a collection of represented parties with undisputed or indisputable claims". In addition, the Court considered the action to be motivated by the financial interests of its backers rather than that of consumers (who had alternative cost free ways of pursuing their claims available to them). 

4. Securities group actions: no reliance, no dice

Securities (or shareholder) group actions are brought under sections 90 and 90A (and Schedule 10A) of the Financial Services and Markets Act 2000 (FSMA) by shareholders against listed issuers (and those responsible for listing particulars in the case of section 90) for losses resulting from, broadly speaking, untrue or misleading statements, omissions, or dishonest delays in information published to the market which have caused a fall in share price.

Recent years have seen a sharp increase in securities group litigation, and 2024 continued this trend. In October 2024, however, Mr Justice Leech handed down a pivotal first instance judgment in Allianz Funds Multi-Strategy Trust v Barclays that is likely to have significant ramifications for securities litigation in the UK and a dampening effect on the appetite for funders in funding these sorts of claims. 

Leech J's judgment carefully considered the history of the statutory regime and the common law authorities which had preceded it and found that, in order to satisfy the reliance requirement under section 90A/Schedule 10A, claimants must prove that a person had read the publication containing the untrue/misleading statements or material omission in question (or the gist was communicated to them by third parties); and in order to make a claim for dishonest delay, there needs to have been a published statement/announcement (it does not suffice that there is a continuing delay in respect of publishing the delayed information, which remains unpublished).

Leech J's reasoning on reliance is likely to have particularly significant ramifications for future securities claims. The judge was persuaded by Barclays that Parliament must have intended the inclusion of the “reliance” requirement in section 90A/Schedule 10A to operate as a means of limiting the recovery of compensation to only active investors, being those investors who are able to prove something more than that they suffered loss as a consequence of a misleading statement or material omission being made to the market.

By reference to old common law authorities, the judge stated that the appropriate reliance test is that used in the tort of deceit, which requires a claimant both to prove inducement and causation as separate ingredients of the tort. He held that in order to prove reliance, as it applies to express representations (whether made orally or in writing), the claimant must prove that "they read or heard the representation, that they understood it in the sense which they allege was false and that it caused them to act in a way which caused them loss".

The decision also represents a major blow to passive investors (e.g. tracker or index-linked funds), with Leech J striking out 241 claims brought by passive investors on account of these investors not having read the publication containing the untrue/misleading statements and therefore not satisfying the 'reliance' requirement under FSMA. This effectively prevents passive investors from bringing securities group actions under FSMA, unless there has been a dishonest delay in the issuer publishing information. 

There will be no appeal as a confidential settlement was reached between the parties in December 2024. That means, for now, Leech J's decision represents the current state of the law on market/price reliance and dishonest delay. There are, however, likely to be further strike-out applications considering the same issues this year which means it is unlikely to be the final word on the subject and it may be necessary for the Court of Appeal to consider the issue in due course.

5. Are creative competition class actions here to stay? 

The majority of the CAT's class actions docket comprises standalone or hybrid claims for abuse of dominance. This reflects the current trend, encouraged by the CAT's generally permissive approach, for what might otherwise be regarded as consumer claims to be framed as abuse of dominance claims in order to benefit from the opt-out regime available in the CAT. 

A good example is the claim filed in December 2023 by Professor Carolyn Roberts against six major water companies in the UK, alleging that the companies had abused their dominant position in providing misleading information to the relevant regulatory bodies, resulting in customers paying higher prices for sewerage services that were allegedly not adequately performed. The first certification hearings in Professor Roberts’ claims were held by the CAT in September 2024, with further hearings to be held in January 2025.

While these claims may be labelled as environmental claims at their core, the fact that the proposed defendants are alleged to be monopolists in their local markets opens the possibility of a potential abuse of dominance allegation. 

While some of these novel claims have already been certified (see for example the claim against Meta), it remains to be seen whether the Water claims will also be certified and, more importantly, whether these claims will ultimately prove to be successful at trial. The CAT's December judgment in Le Patourel v BT is food for thought on the latter point (read our briefing on this case).

In summary, Justin Le Patourel's claim was brought on behalf of 3.7 million BT customers for Standalone Fixed Voice services, which are essentially contracts for access to BT's telephone network for voice calls only. The charges paid by customers consisted of a fixed line rental charge and a variable charge for calls made. Mr Le Patourel alleged, relying in part on provisional findings in an Ofcom report dating back to 2017, that these charges were excessive and that BT had thereby abused its dominant position in the market for those services.

Mr Le Patourel's claim was ultimately unsuccessful, with the CAT finding that although BT's prices were excessive, they were not unfair as a matter of law. Notably, the CAT did not have much regard to Ofcom findings, and preferred instead to rely on the other evidence presented in the proceedings.

While this was not the most novel collective claim to be brought before the CAT, the CAT's judgment signals a distinctively more restrictive attitude to the substantive merits of these hybrid abuse of dominance claims than suggested by its certification judgments to date. If nothing else, it is a stark reminder to claimants that neither the existence of prior regulatory findings nor the making of a collective proceedings order can be a guarantee of success. Future claimants – particularly those contemplating hybrid proceedings of this nature – will have taken note. 

The CAT's judgment in Riefa v Apple and Amazon, handed down on 14 January 2025, is another example of this more restrictive approach.  For the first time, the CAT refused to authorise Professor Christine Riefa to act as class representative in the claim against Apple and Amazon that alleged the two companies engaged in anticompetitive agreements that restrict third-party sales of Apple-branded products on the Amazon Marketplace. 

The CAT expressed concern that Professor Riefa did not sufficiently understand the funding arrangements she had entered into and, consequently, did not have the requisite understanding of the responsibilities she had to protect the interests of the claimant class she was seeking to represent. 

Authors: Tim West, Max Strasberg, Brihadeesh Murali and Jamie O'Neill