Unclaimed cash from opt-out collective actions where a settlement has been reached before trial should go to the Access to Justice Foundation rather than as a windfall to the alleged wrongdoer, the legal charity has told the government.
Under the Consumer Rights Act 2015, the Access to Justice Foundation is nominated as the recipient of unclaimed damages awarded in opt-out collective proceedings. The foundation, which awards grants and raises funds for free legal advice, was recommended by the Jackson Review of Costs, the Civil Justice Council and HM Treasury’s financial services rules committee as a suitable body to receive unclaimed sums.
However, responding to a Department for Business & Trade consultation on the collective actions regime, the foundation said no such provision has been made for cases that settle before trial. The rules currently state that reversion to the defendants of any unclaimed balance of the settlement ‘shall not of itself be considered unreasonable’ – wording that the foundation says should be struck out.
The foundation said: ‘The collective actions regime is designed to provide redress for victims. Even in the settlement context, it is contrary to the interests of justice for the entirety of unclaimed funds to revert to the alleged wrongdoer, who would receive an unjustified windfall from the fact that a low level of people entitled to compensation have made such claims (which is itself indicative of challenges with access to justice), or to the litigation funder.’
The foundation proposes new wording, such as: ‘Save in exceptional circumstances, a settlement shall not be considered reasonable unless it provides for a reasonable proportion of any unclaimed balance of the settlement amount to be paid to the Access to Justice Foundation, as the prescribed charity pursuant to s194(C) Legal Services Act 2007’.
Nominating the foundation to receive unclaimed cash from settlement agreements would avoid the Competition Appeal Tribunal having to make policy choices between worthwhile causes, the charity said. The foundation is also well-equipped to identify how funds can be distributed ‘to greatest effect’ and monitor how the cash is used.
The foundation also noted that in the £200m Merricks v Mastercard settlement, the tribunal selected the charity to receive unclaimed funds over an alternative organisation proposed by the defendants.
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