High Court strikes out novel bid to bring securities class action using CPR 19.8 representative action as "opt-in" procedure

The High Court has refused to allow a securities class action to proceed as a representative action under CPR 19.8, finding that any claims should be pursued as ordinary multi-party proceedings with the investors as claimants: Wirral Council v Indivior PLC [2023] EWHC 3114 (Comm).

CPR 19.8 allows a claim to be brought by (or against) a party as representative of any other persons with the "same interest" in the claim. It is ordinarily seen as an "opt-out" procedure, as there is no requirement to identify the represented parties or join them to the action but any judgment will be binding on them. In this case, unusually, the representative claimant sought to use CPR 19.8 as an "opt-in" procedure on behalf of investors who agreed to funding arrangements and were identified to the defendants. More specifically, it wished to adopt the “bifurcated process” envisaged by Lord Leggatt in the Supreme Court’s landmark decision in Lloyd v Google [2021] UKSC 50 (considered in our blog post here), which allows a representative action to proceed in order to decide issues that are truly common to the represented class, leaving any individual issues to be dealt with later.

Accordingly, the claim sought declarations on "defendant-side" issues only, such as whether the defendants had published untrue or misleading statements to the market, and did not include "claimant-side" issues such as standing to sue, reliance, causation and quantum. In fact, that was the advantage of the procedure, so far as the representative claimant and the investors were concerned: if allowed to proceed, the burden would fall squarely on the defendants to deal with defendant-side issues, and the investors could avoid spending time and money developing their case on the claimant-side issues until the later stage.

The court, however, rejected the claimants' attempt to tie its hands in that way. The question of how to manage the claims, including which issues should be progressed at which stage, was for the judge managing the claims to consider by reference to the court's overriding objective of dealing with cases justly and at proportionate cost. It would be unfair and unjust, and contrary to the overriding objective, to allow the representative proceedings to oust the court's jurisdiction to case manage the claims from the start.

This decision is good news for defendants as it suggests claimants will not be permitted to use the CPR 19.8 representative action procedure to gain tactical advantages as to how a securities class action (or other action) will be managed, and in particular to place the whole burden on the defendant for the initial stage. The proper split of issues, and how the burdens of the litigation should be shared between the parties, will in every case be for the court to consider in exercising its case management powers.

For more information see this post on our Banking Litigation Notes blog.

Note: Permission to appeal allowed on 17 May 2024. The appeal hearing has been fixed for 10 December 2024.