On 23 January 2025 the Court of Appeal gave judgment in Wirral Council v Indivior Plc [2025] EWCA Civ 40, dismissing Wirral’s Appeal against the striking-out of “representative” proceedings for compensation under FSMA s.90A/Sch.10A. Wirral’s aim had been, by use of CPR 19.8, to evade what has become standard case management in such claims, by forcing a liability-only trial without the need to engage (even preliminarily) with any issues requiring a claimant investor’s full participation in the litigation.
The Court of Appeal’s decision is another step in the gradual – but accelerating – development of a body of law and practice in FSMA s.90 and s.90A/Sch.10A claims. The outcome itself should not be at all surprising: the decision is, in this writer’s respectful opinion, obviously correct. It is nonetheless important in its circumscribing effect, limiting “book-building” opportunities for the future.
25 years on
The recent flow of s.90 and s.90A decisions is also timely, it might be said well overdue, when it is getting on for 25 years since FSMA s.90 entered the statute book, and near 20 years since FSMA s.90A created the cause of action for shareholders’ complaints about a company’s public statements. The fact is that in that time only one case, ACL Netherlands BV v Lynch [2022] EWHC 1178 (Ch) (a FSMA s.90A/Sch.10A claim), has reached a trial, and then on facts and issues well removed from what has become the common shape and content of s.90/s.90A litigation.
For those hoping for trials of those more common cases, bringing with them analysis and rulings on a full set of contested facts, the last year or two has been a disappointment – the RSA, G4S, Serco and Barclays cases have all settled, as RBS and Tesco did before them. The trial in Serco at least started – see further below. Frontrunners for definitive decisions are now Standard Chartered and Glencore (both heading for trial in October 2026 under s.90 and s.90A, and both already contributors to the body of law and practice).
So in this article I look first at the Wirral Council decision, and then remind readers of the (in my opinion) top 6 FSMA S.90 and s.90A/Sch.10A decisions of recent years, some of which have already featured in the 3VB Blog.
Wirral v Indivior
Wirral brought representative proceedings under CPR 19.8 (on behalf of a large number of institutional and retail shareholders) against Indivior plc, and its former parent company Reckitt Benckiser Pharmaceuticals Inc. The defendants were alleged to have participated in a dishonest scheme, not disclosed to investors, for the marketing and sale of anti-opioid-addiction medication. Wirral sought compensation under FSMA s.90 and s.90A/Sch.10A for losses suffered as a result of statements in, and omissions from, the defendants’ published information and a prospectus issued by Indivior, alleged to have inflated the market price of their shares.
The key feature of the proceedings was Wirral’s insistence that it was entitled to confine the representative proceedings to claims for declarations of (in summary) the defendants’ liability – in which Wirral shared a “common interest” under CPR 19.8 with all the represented investors. So the trial would include all “defendant-side” issues – most obviously whether their published documents were deficient as Wirral alleged, and as to dishonesty (in the s.90A/Sch.10A claim) and negligence (the availability of the “reasonable belief” defence in the s.90 claim) – but exclude all issues of standing, reliance, causation, loss and limitation, for some or all of which claimants would ordinarily need to plead and prove a case, give disclosure and provide witness evidence if they were to make a financial recovery.
In other words, the representative proceedings were – Wirral said, and made no bones about it – a mechanism for the represented investors to secure findings on key common issues without having to take any of the steps invariably required of parties to civil litigation, i.e. regardless of whether they could in fact prove their title to bring claims; (for the s.90A/Sch.10A claim) whether they had relied on the defendants’ published information; whether they had suffered any loss; or whether they had a good answer to any limitation defence. They said that the Supreme Court decision in Lloyd v Google LLC [2022] AC 1217 – in which Lord Leggatt (with the agreement of the whole Court) comprehensively reviewed the history and availability of representative proceedings – endorsed such a course.
The result
It is perhaps not a surprise that this bold attempt did not succeed, and that the Court of Appeal dealt with Wirral’s arguments as firmly as it did.
Wirral faced three main problems.
The first problem was that CPR 19.8 makes the bringing and continuation of representative proceedings a matter for the Court’s unfettered discretion, with no preference for such a course (if available): “there is no hierarchy of different procedures” (paragraph 124 of the Court of Appeal’s judgment).
The second was that, in other FSMA s.90 and s.90A/Sch.10A cases, the Courts had established case management procedures which – while splitting off some claimant-side issues to a second trial – required claimant-side steps to be taken in advance of any liability trial: see Allianz Global Investors GmbH & Ors v RSA Insurance Group plc [2021] EWHC 570 (Ch), Various Claimants v G4S Ltd [2022] EWHC 1742 (Ch). (See further this 3VB blog.) The Court accepted the importance of requiring some claimant-side progress to be made (paragraphs 126-127).
The third problem was that Wirral was inviting the Court to read too much into Lloyd v Google: while “Lord Leggatt wanted to encourage more use of the representative procedure as a flexible tool to achieve justice, he was not saying that the representative procedure would always be appropriate” (paragraph 133). Wirral’s approach allowed claimants to pursue a claim in respect of common issues, when they might not have a claim at all. That would seem “inimical to the overriding objective” and Lord Leggatt cannot have had such a case in mind (paragraph 130).
It was enough for the Court of Appeal to conclude (as they did) that the first-instance Judge was entitled to reach the decision he did. But it is also plain that the Court of Appeal agreed with practically every aspect of his reasoning.
Comment on book-building
The Judgment of Sir Julian Flaux (Chancellor), with whom Nugee L.J. and Flaux L.J. agreed, is also of wider interest, because it touches on many aspects of FSMA s.90/90A litigation. One point which stands out is deprecation of the form of “book-building” which Wirral’s approach would encourage – “which gets as many claimants as possible joined up to the representative proceedings without having to engage in any work relating to their individual claims in relation to the claimant-sided issues …”. The Court echoed the concerns expressed by Hildyard J. in the Tesco case about “subscription” litigation.
The future for representative securities claims
So, present and future claimants seeking to take the representative action route in standard FSMA s.90 and s.90A/Sch.10A litigation face obvious difficulties. One such claim is currently being made by a claimant group in Glencore: it remains to be seen whether it will be pursued.
Wirral, and some of the claimants they represent, still have a claim on foot, because they also issued conventional multi-party proceedings, which were stayed pending the outcome of the challenge to the representative action. Some of the claimants have not issued such a claim, because the funders have declined to fund retail investors’ participation in the multi-party proceedings, which might highlight the need for a viable representative action.
Top 6 Securities Cases of Recent Years
And so to this writer’s top 6 cases, in chronological order:
Case (1) – Tesco and standing
SL Claimants v Tesco Plc [2020] Bus L.R. 250 (Hildyard J., Financial List (Ch.D)).
Subject: standing to sue
Tesco argued that intermediated dematerialised shares held through CREST and chains of custodians are not within the scope of FSMA s.90A at all, because they are not “securities” or “interests in securities” within FSMA Sch.10A paragraph 8(3). Those terms denoted (it was said) only proprietary interests in the shares as held by the registered CREST member, when all that investors held was a contractual right against their custodians and a “mere” economic interest in the shares.
If the argument was correct it would have meant that FSMA s.90A (and FSMA s.90) were ineffective to provide a remedy in respect of the overwhelming bulk of traded securities.
The Court held that the argument was not correct, because the investor’s “right to a right” was, or could be equated to, an equitable property right amounting to an interest in the securities.
That decision has not been seriously challenged since, although the argument continues to be a feature of defendants’ pleaded cases (for example in Glencore). It will likely be endorsed at a higher level at some point in the future.
Case (2) RSA (etc.) and split trials
Allianz Global Investors GmbH v RSA Insurance Group Ltd [2021] EWHC 570 (Ch)
Subject: case management and split trials
This subject is considered in detail in an earlier 3VB Blog. A simplified summary follows.
In a series of cases (RSA (noting that the Judge initially included sample reliance issues in Trial 1, but reversed his decision in an unreported judgment on 28 February 2022); Various Claimants v G4S Ltd [2022] EWHC 1742 (Ch); Various Claimants v Serco Group plc [2023] 119 (Ch)) the Courts have established what has become a common (although not universal) case management structure for s.90A/Sch.10A cases: a split trial with “defendant-side” issues (essentially liability) for Trial 1, and “claimant-side” issues (reliance, causation, loss, limitation) for Trial 2, but with two important qualifications.
The first qualification is that issues of standing to sue (did the investor claimant own the shares?) are to be part of Trial 1, even possibly by way of a separate preliminary trial.
The second is that the claimants, or a sample of them, may be directed to give disclosure and provide witness statements for all issues ahead of Trial 1. That has the obvious benefits of requiring claimants to take fully active steps in the litigation, and of promoting settlement by giving defendants a clearer view of the merits of the claimants’ case.
As already recounted, in the Wirral case the claimants sought to avoid even those steps – the availability of the RSA split trial structure was one of the reasons the attempt failed.
This “standard” structure has been followed in Standard Chartered and Glencore, although not in Barclays, in which Leech J. directed a full trial (quantum apart) of 7 sample claims.
In cases under FSMA s.90 only, the split trial decision will always be more straightforward, because of the absence of a reliance requirement. So in RBS (a FSMA s.90 only case) the split was between liability (Were there misstatements and omissions? Did the Defendants have a reasonable belief defence?) and causation/loss (the impact on share price and value of the misstatements and omissions).
Case (3) Autonomy, reliance and measure of loss
ACL Netherlands BV v Lynch [2022] EWHC 1178 (Ch) (Hildyard J.) – the Autonomy case.
Subject: FSMA s.90A scope, reliance, measure of loss.
This is the only FSMA s.90 or s.90A/Sch. 10A claim (made among other claims against Mr Lynch) to have reached the stage of a final judgment. The judgment contains a wide-ranging review of FSMA s.90A/Sch.10A (at [446]-[539), introduced by the Judge’s observation (at [445]) that “the Court should not interpret and apply the section in a way which exposes public companies and their shareholders to unreasonably wide liability”.
The review includes endorsement of the application of a number of common law principles to the interpretation of FSMA s.90A/Sch.10A – for example, the requirement for actual knowledge, as in common law deceit; the applicability of the “presumption of inducement”; the unavailability of contributory negligence as a defence.
Contemporaneous conscious thought
The Judge also adopted a version of the “contemporaneous conscious thought” approach much argued about in recent cases: and now see case number 6 (Barclays) below. He accepted that statements or omissions might in combination create an actionable overall impression, but otherwise the principle was that “the statement must have been present to the claimant’s mind at the time when he took the action on which he bases his claim”: see [501]-[506]. There remains a strong view that the insistence on proof of contemporaneous conscious thought is artificial and wrong. The issue will no doubt reach the appeal courts in the foreseeable future.
The Judge did not separately consider the question of contemporaneous conscious thought in the context of omissions, although (in [505]) he treats non-review of forms of published information as barring both a misstatement and an omissions claim: but again now see Barclays.
FSMA s.90A measures of loss
In other areas the Judge recognised the special character of the FSMA regime, most significantly when considering the measure of loss and the relevant counterfactual (at [530]-[539]).
The Judge recorded, for example, the common ground that the relevant counterfactual is that accurate information would have been published (at [529]) – the usual common law counterfactual being simply that the misstatement would not have been made.
He then recognised the availability of a “no transaction” measure (the investor would not have bought if the truth had been told) and the “lower price” measure (the investor would have bought at a lower price), but rejected the claimants’ argument that they were entitled to elect between them and impose their choice on the defendant (at [537]). These observations are of reduced value in the standard FSMA s.90A/Sch.10A case, because acquiring or holding investors are not in a position to negotiate a lower share price for publicly traded shares.
On measure of loss, it should be noted that there remains much to be decided – most obviously, the availability of a “fraud” measure in FSMA s.90 cases; “holder” loss; the date for the assessment (acquisition, actual resale date, date of discovery?); the use of a US-style “event study”; the matching of sales to purchases (FIFO, LIFO, weighted average?); whether credit for profitable sales is to be given. These are all issues which will likely only be decided after a full trial of causation/loss issues, and those will be rare, given the common split of issues between two trials. A quantum trial has taken place in Autonomy, with 4. Allianz Globajudgment awaited; but given its special facts it appears unlikely to answer these questions.
Case (4) G4S and PDMR status
Allianz Global Investors GmbH v G4S Ltd [2022] EWHC 1081 (Ch); [2022] Bus. L.R. 566.
Subject: FSMA s.90A/Sch.10A, PDMR status.
In a FSMA s.90A/Sch.10A claim liability depends on proof of a dishonest state of mind on the part of a person “discharging managerial responsibilities within the issuer”, commonly termed a PDMR. Sch.10A paragraph 8(5) defines “PDMR”, the most relevant part of the definition being “any director of the issuer (or person occupying the position of director, by whatever name called)”.
In this FSMA s.90A/Sch.10A claim, none of the alleged PDMRs was a de iure director of G4S. In response to the defendant’s application to strike out the claim, the claimants argued that the “PDMR” extended beyond directors in the company law sense, to senior executives with a sufficient degree of managerial responsibility; and that in any case they had a real prospect of proving at trial that the named individuals were de facto directors, and so within the definition of PDMR.
Miles J. held that “PDMR” was limited to de iure, de facto and shadow directors; but that the issue of whether the individuals were de facto directors (and so PDMRs) should go to trial. His decision has been repeatedly cited since, without serious challenge.
G4S did not get to trial. The same issue was central in Serco, which settled in June 2024 after 3 days of trial. Both cases raised the question of PDMR status in the important context of a large public company, often a holding company with numerous subsidiaries conducting the group’s business, with a main board largely made up of non-executive directors; only two or three executives on the board (say the chief executive and finance director); and executive committees (with titles such as “Group Executive”) below main board level with autonomous management powers. The question was explored in detail in written and oral openings in Serco; but its answer will now be for some other case.
Case (5) Standard Chartered and pleading fraud
Person Identified in Schedule 1 to the Re-Amended Particulars of Claim v Standard Chartered Plc [2024] EWCA Civ 674; [2024] 1 WLR 4589.
Subject: FSMA s.90A/Sch.10A, pleading fraud.
In this FSMA s.90 and s.90A/Sch.10A claim the defendant bank sought to have allegations of fraud made in support of the FSMA s.90A/Sch.10A claim struck out. The allegations in question comprised some based on a complaint in US proceedings (the Brutus allegations) and others made “en bloc” against individuals making up the bank’s Group Executive, on the basis that they were all PDMRs – whether or not they were de iure directors.
The defendant’s essential point was that the claim was not supported by an evidential foundation or pleaded particulars sufficient to satisfy the requirements of a plea of fraud.
Their application and appeal raised important points for s.90A/Sch.10A claims, because a claimant may well start with not much more than third party allegations and reports, and only such information on the company’s management structure and allocation of responsibilities as is publicly available.
The Court of Appeal comprehensively reviewed the relevant pleading requirements, and concluded that there was nothing wrong in principle with the claimants’ approach, or with the way in which the case was in fact pleaded.
The analysis has some bearing on FSMA s.90 claims, despite the absence of the fraud and PDMR elements of a claim, because a claimant is often reliant on third party information for the pleading of misstatements and omissions, and because a defendant’s state of mind and the company’s management structure may well be relevant to meeting a “reasonable belief” defence.
Case (6) Barclays and price/market reliance
Allianz Funds Multi-Strategy Trust v Barclays plc [2024] EWHC 2710 (Ch).
Subject: FSMA s.90A/Sch.10A, reliance, dishonest delay.
This decision is fully covered in an earlier 3VB Blog. So, briefly:
Leech J. summarily dismissed claims made by a substantial proportion of the investor claimants – “passive” investors, who claimed to “rely” on the market price of the securities they acquired and so, indirectly, on the published information which influenced the price. The Judge held that the reliance requirement in FSAM s.90A/Sch.10A meant reliance in the common law sense; and, what is more, engaged the “contemporaneous conscious thought” principles most recently discussed in Loreley Financing (Jersey) No 30 Ltd v Credit Suisse Securities (Europe) Ltd [2023] EWHC 2759 (Comm) (at [374]-[425]) and Farol Holdings Ltd v Clydesdale Bank plc [2024] EWHC 593 (Ch) (at [220]-[225]). Investors must have read the published information on which they claimed to rely, or at least have had the contents communicated to them by someone else, who had read it.
This left the application of the reliance requirement in an omissions case (left open in Autonomy). The Judge held that, while a claimant investor (or relevant third party) must still have read the published information, it would be sufficient for the investor to plead and prove that, if the document in question had included the omitted information, they would not have invested. So the investor does not need to have directed their mind to the particular information omitted.
To add still further to the feast of FSMA s.90A/Sch.10A points, the Judge also dealt with aspects of the claimants’ dishonest delay case (under FSMA Sch.10A paragraph 5). Here he reached two important conclusions. The first is that there must have been an actual (albeit delayed) publication of the challenged information. The second confirms the correctness of the argument that a claimant alleging dishonest delay is not required to prove reliance, making a dishonest delay claim something of an outlier in the FSMA s.90A/Sch.10A regime.
The Barclays case settled before this decision could reach the Court of Appeal. Judgment is pending on a first instance decision on the same issues in Standard Chartered, and a similar application has been made in Glencore. It seems likely that at least one of these will engage the Court of Appeal, given that the viability of the price/market reliance theory – and so claims by a huge section of the market (passive funds) – depend on it.
The decision does not have any bearing on FSMA s.90 claims. Indeed, a bonus of the decision for FSMA s.90 claimants is the effective acceptance by the Judge that FSMA s.90 does not require proof of reliance by the claimant investor (at [102]-[107]). This has always been assumed by most litigants in this field, but that has not prevented some defendants from pleading the point.
The future – read the 3VB Blog!
Key FSMA s.90 and s.90A/Sch.10A decisions are sure to continue to flow. They will be covered by the 3VB Bloggers.