The future of class actions – a light touch approach on the horizon?

Posted: 28/10/2024

Two key reviews, on bringing and funding class actions, have concluded that a ‘light touch’, flexible system is the best approach.

On the procedural side, the Civil Procedure Rules Committee has confirmed that the existing, flexible, Civil Procedure Rules (CPR) work well and that imposing more stringent requirements would unnecessarily complicate matters.

On the future of litigation funding, the European Law Institute (ELI) (in a report co-led by High Court judge Dame Sara Cockerill), has recommended that third party litigation funding should only be regulated in the event of ‘an identifiable problem or market failure’.

Court Civil Procedure Rules Committee review

Earlier this year, Penningtons Manches Cooper’s group actions team secured victory for a group of claimants when the Court of Appeal ruled in Morris v Williams[1] that they could continue to use just one claim form (saving time and money), if their claims could ‘conveniently’ be disposed of in the same proceedings. For more information, see the article here.

However, considering arguments raised by defendants, the Court of Appeal invited the procedural rules committee to identify whether the current CPR provisions worked well, or whether a more stringent requirement for ‘common questions of law or fact’ (required in earlier versions of the court rules) should be imposed.

The rules committee has now published its conclusion on this point. In a clear endorsement of the Court of Appeal’s decision, it found that the current CPR provisions were working well, provided a flexible approach and appeared to be uncontroversial.

The committee also concluded that the flexibility offered by the CPR was the right approach and that any attempt to elaborate on the existing wording could complicate matters, and might have ‘unintended consequences’.

While a future review of group litigation orders and practical matters concerning filing and court fees may be on the horizon, the rules committee will not be changing either CPR 7.3 (using one claim form to start two or more claims) or CPR 19.1 (joining parties to a claim).

This is clearly good news for claimants whose claims do not meet the ‘common interest’ requirements of group litigation orders or representative actions. It ensures that simple, flexible and cost-effective class action claims will remain available.

ELI third party funding review

Reaching a similar conclusion, the ELI review on litigation funding has identified significant risks in adopting a prescriptive regulatory approach to litigation funding. While funding, like any other financial arrangement, carries risk and may be subject to unfair practices, the report concludes that complex regulation might lead to funders ceasing to offer funding, which would impact on access to justice.

Instead of proposing prescriptive regulation, the report recommends a set of principles to be adopted to address four core objectives:

• facilitating and increasing access to justice;
• identifying and meeting valid concerns about third party funding;
• levelling the playing field internationally between the parties; and
• informing regulatory or legislative responses and assisting courts.

Next steps

The Litigation Funding Agreements (Enforceability) Bill, drafted to address the current uncertainties in the status of litigation funding agreements introduced by the Supreme Court’s decision in Paccar[2], is currently on hold. The new Lord Chancellor is expected to await the Civil Justice Committee’s findings on third party funding more generally, before setting up a consultation (and deciding on the future of the bill).

While it remains to be seen what conclusion that committee will reach, this detailed and considered report on the risks and rewards of future regulation suggests that a ‘light touch’ may be the best approach to ensure access to justice while providing adequate protection against risk.

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