Securities litigation: Wirral Council sues Indivior and Reckitt

The recent decision by the Supreme Court to reject Wirral Council’s request to appeal the Court of Appeal’s ruling on their securities claim against Indivior plc and Reckitt Benckiser Group plc has significant implications for securities group litigation in England and Wales.

This case began with Wirral Council’s attempt to file a representative action under sections 90 and 90A/schedule 10A of the Financial Services and Markets Act 2000 (FSMA). However, their claim was struck out by Mr Justice Michael Green and subsequently by the Court of Appeal. The essence of the claim was to act as a representative claimant on behalf of investors who had dealt with Indivior and Reckitt from 2006.

The court’s decision to strike out Wirral Council’s claim was based on concerns that a representative action would limit the court’s ability to manage the claims effectively and would cause unfairness to the defendants by delaying key aspects of the litigation. It was found that Wirral Council’s ambition exceeded what the court was willing to decide on a declaratory basis, indicating a need for a more focused approach in future representative actions under CPR 19.8.

Despite the setback of the representative action, Wirral Council’s claims can still progress through multi-party proceedings, which were initially stayed. The Court of Appeal explicitly mentioned that pursuing these securities claims through multi-party proceedings aligns with the overriding objective and could potentially lift the stay on the proceedings. This approach allows claimants to seek redress through multiple avenues even if a representative action is not feasible.

The decisions in the Wirral Council case offer valuable insights for practitioners and claimants in navigating securities litigation claims. By providing clear guidance on how these claims should be pursued, both the High Court and the Court of Appeal have set a precedent for future cases in this area.

Looking ahead, it is essential for claimants to adopt a more streamlined and strategic approach in representative actions to avoid limiting the court’s case management powers and causing unfairness to the defendants. The rejection of Wirral Council’s appeal signals a need for a more focused and balanced approach in securities group litigation in England and Wales. By adhering to the principles established in this case, claimants can effectively navigate the complexities of securities claims and seek redress through multi-party proceedings while upholding the integrity of the court’s case management process.