Firm awarded £4.2m over botched claims that were ‘sure-fire winners’

The High Court has ordered that a claims firm is owed almost £4.2m by an outsourcing company that failed to progress thousands of cases. 

His Honour Judge Johns KC ruled that Momenta Holdings should pay the sum to litigation firm Cheval Legal Limited after the claims were struck out, abandoned or not even issued. The judgment in Momenta Holdings (PPI) Ltd v Cheval Legal Ltd & Ors was made in December but was only published this week.

Cheval had taken on the Plevin PPI claims under damages-based agreements and outsourced the handling to Momenta under two agreements from 2020 and 2022.

But the relationship broke down and Momenta issued proceedings against Cheval in 2023 alleging it was owed money from the outsourcing agreements. Cheval defended and counterclaimed for breach of contractual duties, including as to skill and care owed by Momenta.

Momenta went into voluntary liquidation last year due to the loss of ongoing revenue and the costs of these proceedings. Its claim for missed payments was previously dismissed and is not being pursued by the liquidators.

It was argued by Cheval that the outsourced claims had been ‘sure-fire winners’ so there should be no discount to account for the possibility they might have failed.

The judge found that around a quarter were either ‘rogue claims’ or were ineligible, so he assessed the chance of recovering costs for Momenta’s breaches of duty at 72.5%.

The court heard that 742 claims were lost by strike out owing to procedural failings for which Cheval was owed around £553,000. Another 432 claims were abandoned due to Momenta’s failures to progress them and these were assessed as being worth £145,000.

The judge found there were 29,336 claims which were never even issued by Momenta despite having receiving litigation funding, and for which £1.4m was paid to the outsourcing company.

He added: ‘Cheval has, on the evidence, paid this money for a service which has not been provided. In my judgment, it therefore has a claim for the full total sum paid as damages representing wasted expenditure else as a remedy in unjust enrichment, namely repayment of a sum where consideration has failed.’

Further sums were due to cover Cheval’s outlay on acquisition costs paid to claims management companies, fees paid to the litigation funder and administration fees.

The judge further ordered that Momenta should pay Cheval the costs of the counterclaim to be assessed if not agreed. The costs of the claim have already been dealt with by an order from November 2024.