‘Tip of the iceberg’: CoA clears way for car finance group action

Claimant lawyers have hailed what they call a landmark victory after appeal judges allowed mis-sold car finance cases to be grouped together as one class action. The Court of Appeal today upheld the High Court’s decision that thousands of claims can be conveniently dealt with under eight ‘omnibus’ claim forms.

More than 5,000 claimants served a single, generic particulars of claims against eight motor finance companies alleging they failed to make sufficient disclosure of commission arrangements with car dealers.

The decision was about procedure rather than liability. If the court were to allow fact-sensitive claims to be managed collectively, this would make it easier for lawyers to bring these cases and potentially attract more clients to join.

The Financial Conduct Authority has suggested that people eligible to claim for mis-sold motor finance should use its own redress scheme, but the timescale for receiving compensation is still unclear and the scheme faces a legal challenge from both lenders and the claimant lobby.

In Black Horse Limited v Angel & Ors, Lord Justice Coulson said the court had to have regard to the ’commercial reality’ that individual claimants would be less able to bring separate proceedings and would suffer from the imbalance of financial power compared to the defendants.

He added: ‘It also suits the defendants for there to be separate claims because the stronger claims can be settled and the less strong claims can be run into the ground.

‘The most practical way in which the court can achieve at least a measure of justice for the claimants in this case is by efficiently case-managing their claims to a convenient disposal. The defendants’ opposition to that outcome is commercially understandable, but… ultimately unrealistic.’

The judge said the case had achieved ‘almost nothing’ in three and a half years except to run up ‘extravagant’ costs. The claimants’ costs of the appeal alone were £1.3m, a figure which was likely to be similar if not more for the defendants. Such a level of costs was ‘insupportable’, particularly given that the individual claims in this case were likely to be worth around £1,000 each.

Remitting the matter to Birmingham County Court for further directions, Coulson added he was ‘acutely aware’ that these claims were the tip of an iceberg, and that allowing such multi-claimant claims would mean a huge increase in workload.

North west firm Barings Law, which brought claims and represented the respondents in the appeal, said the 'landmark ruling' paves the way for additional claims against lenders.

Robert Whitehead, chairman of Barings Law, said: ‘This ruling is a step towards securing true justice for millions of drivers who were mis-sold car finance over many years. Those consumers have been left waiting while lenders challenged every decision made by the regulator and the courts. Today’s judgment finally brings certainty and allows these claims to continue progressing through the courts as they always should have done.'

The firm has announced a new claims model which pledges that motorists who join will receive 100% of any damages recovered in a successful claim, with no deductions for legal fees.

Barings said its costs will be limited to whatever contribution the losing party pays towards its fees and, if the firm’s costs are higher than that, it will waive the difference.