PACCAR Inc & Ors, R (on the application of) v Competition Appeal Tribunal & Ors

Factual and Procedural Background

The appeal concerns proposed collective proceedings in the Competition Appeal Tribunal (“the CAT”) brought by truck purchasers (“the Respondents”) against several truck manufacturers (“the Appellants”) following a European Commission finding of anti-competitive collusion. The Respondents rely on third-party litigation funding agreements under which commercial funders advance the costs of the litigation in return for a percentage of any damages recovered.

The Appellants resisted certification of the collective proceedings, arguing that the funding agreements are unenforceable “damages-based agreements” (“DBAs”) under section 58AA of the Courts and Legal Services Act 1990 (“CLSA 1990”) because, they said, the funders supply “claims management services”. The CAT rejected that contention and certified the claims. The Divisional Court, on judicial review, upheld the CAT’s view. The present opinion is the dissenting judgment of Judge Rose in the Supreme Court; Judge Rose would have dismissed the appeal, thereby affirming the lower courts.

Legal Issues Presented

1. Whether commercial litigation funding agreements that entitle the funder to a share of damages fall within the statutory definition of a “damages-based agreement” in section 58AA CLSA 1990.
2. Whether, for the purposes of section 58AA, the funders are providers of “claims management services” as defined in section 419A of the Financial Services and Markets Act 2000.
3. If the agreements are DBAs, whether non-compliance with the Damages-Based Agreements Regulations 2010/2013 renders them unenforceable.

Arguments of the Parties

Appellants' Arguments

• The funders furnish “financial services or assistance … in relation to the making of a claim” and therefore supply “claims management services” within section 419A.
• Consequently, the funding agreements are DBAs under section 58AA and, because they do not satisfy the 2010/2013 DBA Regulations, they are unenforceable.
• Certification of the collective proceedings should therefore be refused.

Respondents' Arguments

• Litigation funders merely finance proceedings; they do not manage claims and are therefore outside the ordinary meaning of “claims management services”.
• Section 58AA was never intended to govern pure funding arrangements; such agreements were contemplated separately under the (un-commenced) section 58B CLSA 1990.
• The Damages-Based Agreements Regulations are drafted for legal representatives, not passive funders, and cannot sensibly apply to third-party funding contracts.

Table of Precedents Cited

Court's Reasoning and Analysis

Judge Rose adopted a purposive and contextual approach to statutory construction, deploying multiple interpretative canons:

• Ordinary meaning and “potency”. The phrase “claims management services” carries its normal sense of managing a claim. Funding alone does not satisfy that description.
• Presumption against absurdity. Reading section 419A literally would capture banks, barristers’ clerks and anyone “making inquiries”, an outcome Judge Rose deemed irrational and beyond Parliament’s intent.
• Statutory scheme coherence. Parliament created a separate, un-commenced provision—section 58B CLSA—for regulating litigation funders. It would be “most improbable” if section 58AA were intended silently to invalidate the very agreements section 58B contemplates.
• Regulatory context. The 2010 and 2013 DBA Regulations use concepts such as “client”, “representative” and hourly “costs”, language tailored to legal representatives, not passive funders. That drafting confirms legislative focus on lawyers, not funders.
• Ancillary-services clause. Section 419A lists ancillary acts (financial assistance, introductions, inquiries) that are included within claims management services only when provided as part of an overall claims-management package. Standing alone, those activities do not convert a financier into a claims manager.
• Policy considerations. Decades of case-law (e.g., Factortame (No 8), Arkin) recognise third-party funding as enhancing access to justice. An interpretation that invalidates most funding agreements would conflict with that settled line of authority and undermine collective proceedings.
• Use of later legislation. Subsequent instruments and parliamentary materials demonstrated that legislators assumed litigation funding to be lawful and outside section 58AA, thereby resolving any residual ambiguity.

Applying those principles, Judge Rose concluded that commercial funders are not providers of “claims management services” for the purposes of section 58AA. Therefore, the funding agreements are not DBAs, need not comply with the 2010/2013 Regulations, and remain enforceable.

Holding and Implications

Proposed Holding (Dissent): APPEAL DISMISSED.

Judge Rose would have upheld the CAT and Divisional Court, leaving the litigation funding agreements intact and allowing the collective claims to proceed. The dissent emphasises that treating pure funding as a DBA would jeopardise access to justice across hundreds of cases and contradict the statutory architecture that reserves regulation of funders to the (unused) section 58B mechanism. No broader binding precedent is set by this individual opinion, but it articulates a detailed framework for distinguishing funding from claims management.