Judgment

Judgment of the Tribunal in relation to proposed opt-out collective claims by Ms Elisabetta Sciallis, the proposed class representative (PCR), against five manufacturer groups: Fender Musical Instruments Europe Limited and Fender Musical Instruments Corporation (Fender), Korg (UK) Limited and Korg Inc. (Korg), Roland Europe Group Limited and Roland Corporation (Roland), Yamaha Music Europe GmbH and Yamaha Corporation (Yamaha) and Casio Electronics Co. Ltd (Casio) (together, the PDs). The collective proceedings claim forms were filed in 2022 and 2023.

The proposed claims involve a mix of follow-on and stand-alone claims and are for breaches of statutory duty by infringing the Chapter I prohibition contained in s. 2(1) CA98 and/or Article 101 TFEU. The essence of the proposed claims is that the PDs’ resale price maintenance (RPM) policies suppressed intra-brand price competition at the retail level, causing UK consumers to pay higher prices for relevant musical instruments and accessories during the relevant infringement periods (around 2013 to 2018).

By early 2026 the claims had made no progress in the Tribunal, and the PDs had expressed concerns about the PCR’s funding and legal representation arrangements. The Tribunal therefore listed a case management conference (CMC) on 19 March 2026. At that CMC it became apparent that the PCR had not secured funding, so the Tribunal listed a preliminary issue hearing for 10 June 2026 to determine the adequacy of the PCR’s funding, insurance and legal representation. 

On 3 June 2026 the PCR confirmed that she had still not secured funding and would therefore be seeking to withdraw the proceedings. The 10 June 2026 hearing therefore considered solely the issue of whether, in light of that withdrawal, the PDs’ costs should be assessed on the standard or the indemnity basis. 

The PCR’s witness statement filed in March 2022 in the Fender claim stated that she was entering into a litigation funding agreement with North Wall Capital LLP (North Wall) and she exhibited a letter from North Wall dated 21 March 2022 confirming that it had agreed to enter into a litigation funding agreement to fund the proposed collective proceedings up to a total of £6.5m. 

The PCR’s witness statements filed in the Korg and Roland claims, five months later in August 2022, continued to refer to “[t]he funding arrangements that my legal representatives have put in place”.

The witness statements exhibited a letter from North Wall dated 25 August 2022 in which North Wall confirmed that it had agreed to enter into a litigation funding agreement with the PCR for all five proposed collective proceedings. The letter stated that it superseded the 21 March 2022 letter filed in the Fender claim. 

The PCR’s witness statement in the Yamaha claim in September 2022 was in the same terms as for the Korg and Roland claims, exhibiting the same letter from North Wall. 

The negotiations between North Wall and the PCR’s solicitors, Pogust Goodhead, regarding the possibility of funding the proceedings then ceased at some point between January and March 2023. The result was that by the time of the filing of the Casio claim in May 2023, the August 2022 letter from North Wall was not filed. However, as with the other witness statements, the PCR continued to refer to “[t]he funding arrangements that my legal representatives have put in place”.

Neither the Tribunal nor the PDs were informed that North Wall had withdrawn its involvement. Instead, in extensive correspondence between the solicitors for Yamaha, Roland and Korg and the PCR’s solicitors, the latter repeatedly refused to confirm the status of the PCR’s funding arrangements.

In considering the PDs’ application for their costs to be assessed on the indemnity basis, the Tribunal referred to Excelsior v Salisbury [2002] EWCA Civ 879 and noted that the award of costs on an indemnity basis depends on whether there is something in the conduct of the action or circumstances of the case which takes it “out of the norm”. While that does not require conduct deserving of moral condemnation, the conduct must be unreasonable to a high degree: Kiam v MGN (No. 2) [2002] EWCA Civ 66, [2002] 1 WLR 2810; Royal Mail v DAF Trucks [2023] CAT 31.

Where costs are summarily assessed on the indemnity basis, following the approach set out in CPR r. 44.3(3), the Tribunal will normally resolve any doubt which it may have as to whether costs were reasonably incurred or were reasonable in amount in favour of the receiving party; and will not normally limit the recoverable costs by reference to considerations of proportionality.

The Tribunal observed that the requirement for scrutiny of a proposed class representative’s funding arrangements at the certification stage is an essential and central part of the balance struck by the collective proceedings regime: it would be oppressive and unfair to a proposed defendant who is subject to a claim of this nature to allow a claim to be maintained without the Tribunal being satisfied both that the proposed class representative has adequate arrangements for its own costs, and that there is suitable adverse costs cover in place to enable the defendant to recover costs if it is ultimately successful in defeating the claim. A prudent proposed class representative will therefore normally wish to ensure that its funding arrangements are finalised before its collective proceedings claim form is filed.

If at any time during the proceedings the facts and matters set out in the claim form and accompanying evidence change in a material way relevant to the authorisation or eligibility conditions for certification of the collective proceedings, the (proposed) class representative and their legal representatives have a duty to bring that matter promptly to the attention of the Tribunal and the other parties to the proceedings. 

The Tribunal did not consider that the PCR behaved unreasonably when she filed the first four claims (in the Fender, Korg, Roland and Yamaha proceedings) between March to September 2022, with evidence stating that she was in the process of “finalising” the terms of a funding agreement with North Wall.

Once the negotiations with North Wall had broken down, however, the PCR was under a duty to inform both the Tribunal and the PDs in the Fender, Korg, Roland and Yamaha proceedings of that fact. This was a highly material change of which the Tribunal and the PDs were entitled to be aware. The Tribunal therefore concluded that the failure of the PCR to inform the Tribunal and the PDs of the breakdown of negotiations with North Wall, and the consequent absence of any funding agreement, was unreasonable to a high degree and outside the norm of litigation practice.

The Tribunal determined that the costs of the PDs prior to April 2023 be assessed on the standard basis, and the costs from April 2023 onwards be assessed on the indemnity basis. The Tribunal summarily assessed the costs of Fender, Korg and Roland. The PCR was ordered to make payments on account to Yamaha and Casio, with the remainder of those PDs’ costs to be the subject of detailed assessment if not agreed.