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30. Januar 2025
Disputes Quick Read – 3 von 103 Insights
Wirral Council v Indivior plc: Court of Appeal upholds strike out of opt-in representative action securities claim
- Quick read
In its recent judgment in Wirral Council v Indivior plc [2025] EWCA Civ 40, the Court of Appeal upheld the High Court's decision to strike out a representative action relating to claims under section 90A and Schedule 10A of the Financial Services and Markets Act 2000 (FSMA) in respect of alleged fraudulent statements and dishonest omissions in published information.
This judgment provides important guidance on pursuing representative actions in the context of securities claims and what factors the Court can take into account when exercising its discretion when considering whether to allow a representative action to continue.
Background
Representative actions can be brought under CPR 19.8 by a class representative who must have the 'same interest' in the claim as all of the members of the class that they represent.
In this case, the claim was brought by Wirral Council (as Administering Authority of Merseyside Pension Fund) (Wirral) on behalf of institutional and retail investors in Indivior and Reckitt. Wirral sought to adopt a bifurcated approach in bringing the claims, seeking declarations as to common (defendant-sided) issues on a representative basis under CPR 19.8, with individual claimant-sided issues (such as standing to sue, reliance, causation and quantum) to be determined separately.
The defendants sought to strike out the claim on the basis that the representative action mechanism was not an appropriate procedure, and that the claims should instead be brought as ordinary multi-party proceedings (which had already been commenced) with each investor being a claimant.
High Court decision
The High Court struck the representative claim out, finding that it would be unfair and unjust to allow the representative proceedings to oust the jurisdiction of the English courts to case-manage the claims from the start.
The multi-party proceedings had already been started and should continue, although the Court left open the possibility that the managing judge in those proceedings could decide to adopt a bifurcated approach as part of their case management powers.
Court of Appeal decision
Wirral appealed the Court of Appeal's decision for a number of reasons, including on the basis that the characterisation of the representative action as "ousting" the case management powers of the Court was misconceived.
The Court of Appeal held that, in striking the claim out, the High Court judge was well within the ambit of his discretion to decide whether to allow the representative action to continue. In exercising its discretion, the Court must assess the advantages and disadvantages of any available procedures (in this case, the representative action and the extant multi-party proceedings).
There was no doubt that one of Wirral's objectives in using the bifurcated representative procedure was to avoid the Court using its case management powers to order Wirral and the represented claimants to advance some of the claimant-sided issues in parallel with the defendant-sided common issues (as had invariably been done in similar FSMA claims). The Court of Appeal noted in this regard that it was "extremely unsatisfactory" that in the draft pleading produced by Wirral in the multi-party proceedings, it had declined to identify which claimants relied on which category of reliance (and how many fell into each category) on the basis that the information was contended not to be relevant in the representative proceedings.
The Court of Appeal dismissed Wirral's appeal, noting that pursuit of the claims by way of the existing multi-party proceedings would not prevent Wirral from asking the Court to adopt a bifurcated approach, but with the obvious advantage of the Court having additional case management powers to order some disclosure or evidence in relation to individual issues to be produced in tandem.
Comment
The Court of Appeal's judgment is clear that, when considering whether to allow a claim to continue by way of representative action, the Court must have regard to striking a fair balance between the parties and furthering the overriding objective. In this case, it was important that the case management powers available to the Court in multi-party proceedings would ensure that the case would be dealt with expeditiously and fairly and that the litigation would not be one-sided.
Whilst the use of bifurcation in representative actions may be a means of enabling the representative to satisfy the 'same interest' requirement (because it allows issues requiring individual assessment to be hived off for determination at a later date), this case shows that the Court will not permit bifurcation to be used by claimants seeking to push defendant-side issues only in order to gain strategic advantages.
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