Momenta Holdings (PPI) Ltd v Cheval Legal Ltd [2024] EWHC 3333 (Ch)

This Chancery Division judgment arose from a dispute between Momenta Holdings, a claims handling company, and Cheval Legal Ltd, a licensed litigation entity, in the context of payment protection insurance claims. Cheval had outsourced its PPI claims handling to Momenta under contractual arrangements that were financed by Spectralegal Finance, a litigation funding entity. The multi-party funding structure involved Spectralegal providing finance to support the claims processing operation, with Cheval retaining legal responsibility for the claims and Momenta carrying out the practical work of claims assessment and submission. The dispute arose when Momenta alleged that Cheval had breached its contractual duties in the management of certain PPI claims, resulting in claims being lost or inadequately pursued. The court was required to assess the damages flowing from the alleged breaches, which raised novel questions about the quantification of loss in funded claims arrangements. The court applied a loss-of-chance methodology, assessing the probability that the affected claims would have succeeded had they been properly handled and calculating damages based on that probability.

Significantly, the court included among the recoverable heads of loss the litigation funding costs that had been wasted as a result of the claims failures. This included the cost of the funding provided by Spectralegal that was attributable to the failed claims, as well as associated court fees and compensation. The inclusion of litigation funding costs within the scope of recoverable loss was a notable feature of the decision, as it recognised the funder’s financial outlay as a legitimate component of the claimant’s damage. The case illustrated the contractual complexities that can arise from multi-party funded claims arrangements, particularly where claims handling is outsourced to third parties under funding structures involving multiple commercial entities with overlapping obligations and interests.