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Gutmann v Stagecoach [2025] CAT 72
Last year the CAT approved the first consumer-facing settlement in a collective action, with that Settlement Decision reported here. Now the CAT has made the first post-distribution ruling between stakeholders in such a case. A link to that Stakeholder Decision is here. It deals with a number of interesting and by definition novel points, with questions left over for future cases and an emphasis on considering distribution earlier in these types of claims.
The Class Representative (CR) had secured a successful settlement on the eve of trial last year, but the take-up by class members upon distribution was disappointing. One consequence of this was that, after the majority of the funds had reverted to the settling Defendant, just under £10million remained in unclaimed damages for distribution between stakeholders against their costs and fees, these stakeholders including the funders, insurers and lawyers.
The first interesting aspect is that there was a payment to charity (the Access to Justice Foundation, intervening) agreed between the CR and the stakeholders in the sum of just under £4million. In the Settlement Decision the CAT had held it had no power to order a payment to charity upon settlement, but prior to the stakeholder hearing it had made clear its view that it expected such a payment. In any event, the parties agreed (in view of the low payout to the class). The Defendant did not object, but successfully resisted an application by the intervening funder that the Defendant should pay half the charitable sum. The CAT held it would not reopen the Settlement Agreement. Notably, the CAT did not revisit its power (or lack thereof) to order a payment to charity absent agreement. It did, however, indicate that in the future, the ability to pay sums out of unclaimed damages to charity or cy-près should be expressly covered in LFAs and settlements placed before it for approval.
Further interesting findings involved the distribution of the remaining funds. Under the funding agreements, most or all of the balance of the money would have gone to the funders, by way of a funders’ fee, there being insufficient funds to cover that and any outstanding legal and success fees. The CAT restated its supervisory jurisdiction at the point of distribution under section 47C(3) Competition Act 1998 and Rules 93 and 94 of the Tribunal Rules. It also relied on the fact that the ‘waterfall’ of payment priorities in the funding agreements was expressly “subject to any Order of the Court to the contrary”. The CAT accordingly rearranged the waterfall to achieve what it deemed a fairer, if rough and ready, distribution across all stakeholders, providing for a more modest additional return for funders and insurers and for further payments to solicitors and counsel, largely to cover deferred elements of their fees. The CAT did not have to (and thus did not) deal with situations where the funding agreements are either silent on the supervisory costs jurisdiction or even seek expressly to exclude such jurisdiction at the point of distribution, which may be a matter for future decisions.
Finally, another pointer for the future is that the CAT held that class representatives should provide more evidence as to distribution and likely take-up at the outset of claims, including relevant surveys of that interest of potential class members in claiming any compensation.
Philip Moser KC and Stefan Kuppen of Monckton Chambers acted for the Class Representative.