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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Wirral Council as Administering Authority of Merseyside Pension Fund v Indivior PLC [2023] EWHC 3114 (Comm) (05 December 2023) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2023/3114.html Cite as: [2023] EWHC 3114 (Comm) |
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FL-2022-000020 |
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
FINANCIAL LIST
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
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Wirral Council as administering authority of Merseyside Pension Fund (the Representative Claimant) |
RepresentativeClaimant |
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Defendant |
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And Between: |
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Wirral Council as administering authority of Merseyside Pension Fund (the Representative Claimant) |
RepresentativeClaimant |
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Reckitt Benckiser Group PLC |
Defendant |
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Conall Patton KC (instructed by Freshfields Bruckhaus Deringer LLP) for Indivior
PLC
Helen Davies KC, Tony Singla KC and Jonathan Scott (instructed by Linklaters LLP) for Reckitt Benckiser Group PLC
Hearing dates: 20 & 21 November 2023
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Crown Copyright ©
Mr Justice Michael Green:
Introduction
Background
The claims brought against the Defendants
"(a) The Defendant's published information between 2006 and the present (i) omitted information which it was required to include, including a full and fair description of the Scheme, and/or (ii) contained statements that were untrue or misleading in light of the Scheme and/or (iii) delayed in the publication of a full and fair description of the Scheme.
(b) One or more persons discharging managerial responsibilities within the Defendant (i) knew such omissions to be a dishonest concealment of a material fact, and/or (ii) knew or was reckless as to whether such statements were untrue or misleading, and/or (iii) acted dishonestly in delaying publication of the information."
The management of securities claims
"I am satisfied in this case that, on a matter which is absolutely central to the statutory form of action, that is to say, the issue of reliance, the court should be properly astute to ensure that sufficient particularity is supplied. That is both in order to ensure that the defendant knows precisely what is alleged, or sufficiently precisely what is alleged, and also to focus the mind of each of the individual claimants, who have brought very serious allegations, as to precisely the basis on which individually they have proceeded. Joinder of claimants to Group actions, whether or not subject to a GLO, should not be a matter of subscription but of orderly and careful assessment in respect of each claimant that the statutory requirements to establish liability are appreciated and satisfied. I would note parenthetically, without in any way suggesting that this applies in the particular case, that there is a danger in the case of group actions that people do subscribe to the action in the expectation, or at least hope, of settlement, without at that stage giving sufficient focus to the need for its case to be tested with the same degree of particularity as would be the case if they were fewer in number."
Hildyard J's concerns about inadequate assessment of individual claims at the outset and joinder as "a matter of subscription" could be a description of what the Representative Proceedings in this case seek to achieve.
"The next point concerns the allocation of the litigation burden as between the parties. The defendants are entitled to examine and scrutinise the claimants' case, just as the claimant is entitled to examine the defendant's conduct. The claimants' proposal would effectively mean postponing their burden until a later stage, while placing almost all the work on the defendant. Sometimes, by its nature, litigation is lopsided in that way: the claimant has no evidence to give and the case entirely concerns the conduct of a defendant. But, here, the imbalance would be created by the proposed order splitting the trial. It seems to me that the claimants, having brought the action, should be prepared to undertake substantial work in ensuring the expeditious progress of the proceedings to resolution."
(a) a process of claimant sampling on the issue of reliance, which she anticipated would be followed by disclosure from sample claimants (with the scope of that disclosure to be determined at a further CMC before the first trial).
(b) all claimants were ordered to "clarify their individual cases about what individuals relied on, when, and on what statements, and to disclose or provide details of any specific meetings or communications on which they rely". Falk J anticipated that this information would be used in the sampling exercise and would assist the defendant in understanding the reliance case, which would "promote the potential for settlement".
(c) Falk J also anticipated, subject to discussion at a further CMC, that the sample claimants (and possibly others) would provide witness statements in advance of trial 1, at least as regards any case on reliance by particular individuals on particular statements or documents.
CPR 19.8 and Lloyd v Google
"(1) Where more than one person has the same interest in a claim –
(a) the claim may be begun; or
(b) the court may order that the claim be continued,
by or against one or more of the persons who have the same interest as representatives of any other persons who have that interest.
(2) The court may direct that a person may not act as a representative.
(3) Any party may apply to the court for an order under paragraph (2).
(4) Unless the court otherwise directs any judgment or order given in a claim in which a party is acting as a representative under this rule –
(a) is binding on all persons represented in the claim; but
(b) may only be enforced by or against a person who is not a party to the claim with the permission of the court.
(5) This rule does not apply to a claim to which rule 19.9 applies."
"This decision was important in demonstrating the potential for a bifurcated process whereby issues common to the claims of a class of persons may be decided in a representative action which, if successful, can then form a basis for individual claims for redress. More generally, the Prudential case marked a welcome revival of the spirit of flexibility which characterised the old case law."
Prudential was also relied on in [58] and [81] of Lord Leggatt's judgment and he clearly regarded it as an important decision, albeit that it was overturned by the Court of Appeal on the substantive point as to whether the shareholders had a personal cause of action against the directors. I will deal with Prudential in more detail below.
"(ii) The court's discretion
75 Where the same interest requirement is satisfied, the court has a discretion whether to allow a claim to proceed as a representative action. As with any power given to it by the Civil Procedure Rules, the court must in exercising its discretion seek to give effect to the overriding objective of dealing with cases justly and at proportionate cost: see CPR rule 1.2(a). Many of the considerations specifically included in that objective (see CPR rule 1.1(2)) - such as ensuring that the parties are on an equal footing, saving expense, dealing with the case in ways which are proportionate to the amount of money involved, ensuring that the case is dealt with expeditiously and fairly, and allotting to it an appropriate share of the court's resources while taking into account the need to allot resources to other cases - are likely to militate in favour of allowing a claim, where practicable, to be continued as a representative action rather than leaving members of the class to pursue claims individually."
"In cases where damages would require individual assessment, there may nevertheless be advantages in terms of justice and efficiency in adopting a bifurcated process - as was done, for example, in the Prudential case [1981] Ch 229 - whereby common issues of law or fact are decided through a representative claim, leaving any issues which require individual determination - whether they relate to liability or the amount of damages - to be dealt with at a subsequent stage of the proceedings."
The paragraph then continued to deal with limitation and [82] and [83] explained the difficulties of dealing with individual damages claims in a representative action.
"The practical effect of such a declaration would, it seems to me, be no greater and no less than the effect of declarations, first, that the circular was tricky and misleading; secondly, that the individual defendants conspired to procure its circulation in order to procure the passing of the relevant resolution; and thirdly, that in so doing they conspired either to injure the plaintiff and the other shareholders at that date or to commit an unlawful act, or to induce a breach by the first defendant company of its contractual duty to the shareholders…The members of the class who share a common interest in obtaining the declarations I have outlined are shareholders other than the second and fourth defendants as at July 29. A person coming within that class will be entitled to rely on the declarations as res judicata, but will still have to establish damage in a separate action".
The nature of such a separate action was not described and it never reached that stage because the Court of Appeal overturned the declarations on the personal action as being misconceived. But it was clearly limited to damages issues.
The Applications
The exercise of discretion in these cases
Wirral's arguments in favour of the Representative Proceedings
(1) Mr Michael G. Lange is a Massachusetts attorney working for what is called a third-party claims filer called Financial Recovery Technologies, LLC ("FRT"). FRT represents some 2500 institutional investors worldwide and Mr Lange says that they give very careful consideration to the cost and benefit of taking part in securities class actions and they make rational decisions, being "more likely to join efforts when recovery prospects are higher, and the related risks and burdens are lower." Apparently, according to Mr Lange, the UK is the only worldwide jurisdiction for litigation that is seen as high-risk for FRT's clients and that is because of the requirement to sign up publicly to a claim, to provide documents and information, such as reliance questionnaires, at an early stage and also the risk of an adverse costs order. Mr Lange said that an average of over 12 FRT clients register for any proposed Australian securities claim whereas only just over 2% sign up for any UK action.
(2) Ms Elisa Mendoza is an Oklahoma attorney who also works for a third-party claims filer called Securities Class Action Services, LLC ("SCAS"). SCAS represents some 600 institutional investors on the possibility of bringing claims in numerous jurisdictions. She says that a number of SCAS' clients have decided not to pursue claims in the UK despite being advised that they have potentially good claims. Ms Mendoza said that only 29% of clients with a potential claim sign up for UK claims as compared to 79% for New Zealand claims and 62% for Australian claims. Ms Mendoza opined that the "bifurcated approach…may remove or mitigate some of the barriers which I believe limit participation rates today."
(1) The Representative Proceedings are amended to bring in the represented persons as claimants and to pursue their individual claims;
(2) New Claim Forms would be issued by the represented persons, relying on the declarations and pursuing their own individual follow-on claims;
(3) The parties to the Multi-party Proceedings apply to lift the stay and pursue their claims in those revived proceedings; or
(4) The represented persons in the Representative Proceedings apply to join the Multi-party Proceedings and they all proceed with their individual follow-on claims.
Defendants' arguments against the Representative Proceedings
The exercise of discretion in this case
Conclusion
(1) That Wirral may not act as a representative pursuant to CPR 19.8(2); and
(2) That therefore the Claim Forms and Particulars of Claim in the Representative Proceedings be struck out.