Alex Neill Class Representative Ltd v Sony [2024] CAT 1

This was the first of a series of Competition Appeal Tribunal decisions addressing the enforceability of litigation funding agreements following the Supreme Court’s landmark ruling in R (on the application of PACCAR Inc) v Competition Appeal Tribunal [2023] UKSC 28. In PACCAR, the Supreme Court held that LFAs providing for the funder’s return to be calculated as a percentage of damages recovered constituted damages-based agreements within section 58AA of the Courts and Legal Services Act 1990, rendering them unenforceable unless they complied with the DBA Regulations 2013. In response, funders across the market restructured their agreements. In the Alex Neill collective proceedings against Sony concerning PlayStation Store overcharging, the class representative presented a revised LFA in which the funder’s return was calculated as a multiple of its capital commitment rather than as a percentage of damages.

The CAT considered whether this revised structure fell within the statutory definition of a DBA. The Tribunal held that it did not, reasoning that an agreement providing for payment by reference to a multiple of capital invested is fundamentally different from one providing for a percentage of the amount recovered. The funder’s return was fixed by reference to its own outlay, not the damages awarded. An older clause in the original agreement that had provided for a percentage-of-proceeds return was treated as having no continuing legal effect, on the basis that it would be addressed by forthcoming legislative reform. The Tribunal granted permission to appeal, acknowledging that the issue raised compelling reasons for appellate consideration given its market-wide significance, even though the CAT itself found no real prospect of the appeal succeeding. This decision set the template for the CAT’s subsequent consistent approach to revised LFAs in McLaren, BSV Claims, Visa v CICC, Kent v Apple, and others.