The judgment in Gutmann v Apple Inc & Ors [2025] EWCA Civ 459 addresses long-standing ambiguity surrounding the interpretation of section 47C of the Competition Act 1998 and the application of the CAT Rules 2015 in the post-PACCAR litigation environment.
Background
The case arose from a collective action brought by consumer advocate Justin Gutmann against Apple over alleged competition law breaches. The claim is funded by a third-party litigation funder under a revised Litigation Funding Agreement (LFA), amended following the Supreme Court’s decision in PACCAR Inc v CAT [2023] UKSC 28, which classified certain LFAs as damages-based agreements (DBAs) and therefore unenforceable unless compliant with the requirements of s.58AA of the Courts and Legal Services Act 1990.
The CAT had certified the claim and approved the revised LFA. Apple appealed, challenging both the legality of the funding structure and the fitness of the class representative.
The Appellants’ Arguments
Represented by Lord Wolfson KC, Apple advanced two principal grounds:
1. Jurisdictional Overreach
Apple contended that s.47C(3) of the Competition Act 1998 mandates that damages be paid to the class representative or another authorised person on behalf of the class. In their view, this precludes any payment to litigation funders prior to class member distribution. They argued that only unclaimed damages (per s.47C(6) and Rule 93(4) of the CAT Rules) can be used to pay “costs or expenses,” including funder returns.
Apple submitted that the legislative intent was to prioritise compensation for represented persons, with funders bearing the residual risk if insufficient unclaimed damages remain.
2. Conflict of Interest and Fiduciary Concerns
Apple further argued that the LFA required the class representative to take all reasonable steps to prioritise payment to the funder, effectively subordinating the class’s interest. They claimed this breached the representative’s duty to act fairly and adequately in the interests of class members, rendering him unsuitable for authorisation under Rule 78.
The Respondent’s Case
Nicholas Bacon KC, for Mr. Gutmann, submitted that:
- The CAT has broad discretion under s.47C(3)(b) to direct that damages be paid to “such person other than a represented person as the Tribunal thinks fit,” which may include funders in appropriate circumstances.
- The LFA did not fetter the Tribunal’s discretion, which remains fully intact at the distribution stage. Safeguards—such as provisions for independent legal control and dispute resolution by a KC—preserved the integrity of the representative role.
- Excluding funders from pre-distribution remuneration would undermine the commercial viability of collective actions and restrict access to justice—particularly where unclaimed damages may be minimal or unpredictable.
He emphasised that Parliament had created a framework for CAT oversight, not for rigid prioritisation of class distributions in every case.
The Court’s Decision
Delivering the lead judgment, Sir Julian Flaux, Chancellor of the High Court, with Green and Birss LJJ concurring, dismissed Apple’s appeal.
1. Statutory Interpretation of s.47C
The Court held that s.47C(3)(b) confers a broad discretionary power that permits the CAT to direct damages to be paid to any person, including a funder, where justified. It rejected the argument that this discretion is limited solely to administrative facilitation of distribution to class members.
The Court noted that s.47C(6), governing the use of unclaimed damages, does not implicitly restrict the CAT’s discretion under s.47C(3). Parliament could have imposed such a restriction explicitly had it so intended.
2. CAT's Supervisory Role and LFA Terms
The Court confirmed that the CAT’s role in supervising funding agreements—both at certification and at the conclusion of proceedings—provides adequate protection against conflicts of interest. The Court found no reason to interfere with the CAT’s assessment that the LFA, while generous in potential return (3.8x committed capital), was not “sufficiently extreme” to warrant refusal of certification.
Crucially, the Court recognised that a rigid requirement to remunerate funders only from residual damages would deter funding and frustrate the policy aims of collective redress.
3. Confirmation of Le Patourel
The Court approved its earlier reasoning in Le Patourel v BT [2022] EWCA Civ 593, where it had recognised the CAT’s flexibility to allocate damages in a way that ensures funders and legal teams are paid. It affirmed that such discretion extends beyond merely dealing with unclaimed sums, contrary to Apple’s contention.
Implications for Litigation Funders and Class Representatives
This judgment provides welcome clarity for funders and class representatives navigating post-PACCAR collective actions. By confirming that funders can, in principle, be paid directly from damages (subject to CAT oversight), the Court has ensured that funding arrangements can remain commercially viable.
The decision also affirms the CAT’s wide discretion to balance the interests of class members and those enabling the litigation, preserving its procedural flexibility and access-to-justice objectives.
Conclusion
Gutmann v Apple is now the leading authority on the interpretation of section 47C in the context of third-party funding. While the decision will likely be welcomed by funders and practitioners in the competition and collective actions space, it also reinforces the CAT’s pivotal role as the gatekeeper for fair and proportionate funding arrangements. Further litigation on the consequences of PACCAR remains pending, with appeals expected to be heard later in 2025.
