Class Member Take-Up: When Part of the Settlement Fund Remains Unclaimed
In September 2025, the Competition Appeal Tribunal (the CAT) ruled on how settlement funds, other than those which were earmarked for the class members in the collective proceedings concerning rail ticketing practices, should be distributed. This collective action was brought on behalf of rail passengers by Justin Gutmann against multiple rail operators on the basis that each defendant company effectively charged the passengers twice for a certain section of the journey on the route it operated.1 Although passengers technically had the option to avoid the alleged overcharge, the class representative argued that the defendants, each of which according to Mr. Gutmann holds a dominant position, did not take sufficient steps to bring that option to the class members' attention, thereby abusing that dominant position.
In 2024, Mr. Gutmann and one of the defendant companies, Stagecoach, agreed to a settlement, which the Settlement Tribunal subsequently approved. Stagecoach agreed to make available to the class up to £25 million. In addition, as part of the settlement, Stagecoach agreed to pay £4.75 million for costs, fees, or disbursements incurred by the class representative, and £750,000 by way of contribution to the costs of distribution. The Settlement Tribunal approved the terms of the proposed settlement agreement at the approval hearing in April 2024 and shortly thereafter published a collective settlement approval order (the CSAO) dated May 10, 2024.
Under the terms of the CSAO, class members were required to submit claims for payment by January 2025. By that deadline, class members had claimed only a little over £200,000, i.e., less than 1% of the £25 million settlement pot (and considerably less than the costs of distribution of the settlement fund).2 Accordingly, the question arose as to what should happen to the unclaimed balance. The CSAO envisaged this possibility, allowing Mr. Gutmann to apply for a "stakeholder hearing" to allocate the balance towards costs, fees, and disbursements in the event take-up by class members did not exceed £10.2 million. Therefore, as a result of the low take-up, Stagecoach will only be required to pay £10.2 million of the "up-to" £25 million fund. The modest amount claimed by the class members means that approximately £10 million, i.e., the vast majority of the amount which Stagecoach will be required to pay, will be distributed to charity, the class representative, its advisers, the funder Woodsford, and insurers.
Initial Outcome Following the Stakeholder Hearing
The stakeholder hearing took place on September 10-11, 2025, the first-ever hearing on distribution of unclaimed funds in the collective action regime before the CAT. The immediate outcome of that hearing is that nearly £3.8 million will be paid to the Access to Justice Foundation, a charity which focuses on providing pro bono legal services, and the remaining amount of approximately £6 million will be split between the legal and financial stakeholders who supported the class representative's claim, namely lawyers, Woodsford, and insurers. The Settlement Tribunal reserved its judgment on the proportions in which the £6 million pot should be shared.
Hodge Malek KC, the Chair of the Settlement Tribunal made clear that the outcome of this particular settlement should not be understood to be a blueprint for distribution of unclaimed funds in future collective settlements. The main reason is the fact that the remaining £6 million pot is relatively small. The Tribunal will assess each settlement on its particular facts, including the overall level of settlement and the proposed return to class members and the various stakeholders.
In parallel with the Stagecoach settlement, the Trains collective proceedings remain ongoing against other defendants, and it accordingly remains to be seen what, if any, returns the legal and financial stakeholders achieve either in the continued litigation or any further settlements, or if there is any greater take-up from class members in those proceedings.
Relevance to Other Collective Settlements
The Merricks Settlement Split: We addressed the outcome of the contested settlement approval hearing in Merricks v. Mastercard in our July 2025 Advisory. The upshot is that out of the £200 million settlement fund, the funder supporting Mr. Merricks' claim, Innsworth, will receive £68 million. This figure comprises the funder's costs of approximately £45 million and a return at a multiple of 1.5. Innsworth has challenged this outcome by way of judicial review, which is currently pending. Similar to the remarks at the Stagecoach stakeholder hearing, the Merricks Settlement Tribunal was careful to emphasize that the outcome of that settlement will not necessarily shape payout splits in future cases.3 Accordingly, as things stand, it appears that the CAT remains open to the prospect of funders receiving greater returns in the future, where the size of a damages award or settlement allows.
UK Government's Current Consultation on the Collective Action Regime: On August 6, 2025, the Department for Business and Trade published a consultation inviting submissions for the purposes of a review of the opt-out collective action regime, with the deadline to respond on October 14, 2025.4 Among other things, the consultation asks the following questions:
Question 2: Do you consider the way litigation funders' share of settlement sums or damages awards is approached currently to be fair and/or proportionate?
Question 26: What should happen to unclaimed funds from a settlement agreement?
Question 30: What should happen to unclaimed or residual damages?
The matters raised at the Stagecoach stakeholder hearing, as well as those relating to the Merricks settlement (which the consultation references directly), are highly relevant to these questions. It remains to be seen at this stage whether, and if so how, the eventual distribution in Stagecoach and any other future settlements will impact future policy and legislation in relation to collective proceedings before the CAT.
Footnotes
1 1304/7/7/19 Justin Gutmann v First MTR South Western Trains Limited and Another.
2 1304/7/7/19 Justin Gutmann v First MTR South Western Trains Limited and Another (2025) CAT 44.
3 1266/7/7/16 Walter Hugh Merricks CBE v Mastercard Incorporated and Others (2025) CAT 28 paragraph 208.
4 Department for Business and Trade, Opt-out collective actions regime review: call for evidence (August 6, 2025).
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