Competition Appeal Tribunal Rejects Salmon Cartel Collective Proceedings Order

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A collective proceedings order application over an alleged salmon production cartel has been refused by the Competition Appeal Tribunal after judges found the litigation would ‘principally benefit the lawyers and the funder’.

In a unanimous judgment, Justin Turner KC, sitting as chair, Lesley Farrell, and Professor Alasdair Smith said their concerns ‘are the proposed legal costs of the proceedings as weighed against the anticipated sums which will be returned to the class’. The estimated loss, the judgment stated, is between £3.10 and £16.91 per household, figures that ‘are dwarfed by the proposed cost of these proceedings’, which would reach more than £20m.

The judgment noted the claimants' application ‘raises immediate concerns about what proportion of damages will be distributed to members of the class’.

‘We find the costs spent by [Waterside Class Limited, the proposed class representative] to date, and the proposed costs to be spent in the future, to be inexplicably high,’ the judgment said. ‘It is incumbent upon a class representative and their legal advisers actively to address these matters and look for the most cost-efficient manner of pursuing this litigation. This has not been done.’

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• Funder penalised for failed challenge to Mastercard settlement Referring to Waterside’s costs budget, the CAT said it was ‘wrong, and potentially misleading’ not to present contingent sums, alongside other legal costs, on the application for certification. Such costs included an additional 50% success fee for solicitors, an additional 30% success fee for counsel, and contingent ATE premiums of up to £19.4m.

The judgment said: ‘It is within reasonable contemplation that take-up may be measured in the hundreds of thousands. That would mean the sums returned to the lawyers and funder would be likely to swamp the relatively small sums that would be returned to the class. The litigation in those circumstances would have principally benefitted the lawyers and funder.

‘We do not consider that, as currently formulated, the costs and benefits of the proposed collective proceedings come out in favour of certifying the claim.’

The judgment also noted that class representative Anne Heal, the sole director of Waterside Class Limited, is charging £300 per hour, a sum which ‘vastly exceeds the remuneration that would ordinarily be expected for a person engaged in public service’. The costs budget estimates her total charges as up to £316,950.

The judgment, which did not authorise Waterside as a class representative, said: ‘The receipt of remuneration at the levels claimed by Ms Heal gives the appearance of a motivation beyond pursuing the interests of the class. Being paid a commercial hourly rate, while the case is ongoing, may be seen as aligning the class representative’s interests with those of the legal advisers who are also charging commercial hourly rates.

‘We consider that the trend towards class representatives self-authorising fees of this magnitude is undesirable and gives rise to a potential blurring of the lines between the interests of the class representative and the interests of the legal advisers and funders which they are required to scrutinise.

‘If the class representative is, by reason of the existence of the claim, engaged in a highly profitable activity, their interests are not the same as those of the class. Ordinarily we would expect the remuneration of a class representative to be in line with levels of remuneration received for work in the public sector.’

The CAT did not strike out the claim but invited the class representative to ‘reconsider how these proceedings could be reformulated to meet the tribunal’s concerns’.

This article is now closed for comment.

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