Wirral Council (as Administering Authority of Merseyside Pension Fund) v Indivior Plc

Hearing dates: 10 and 11 December 2024

Approved Judgment

This judgment was handed down remotely at 10.30am on 23 January 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives

Introduction

The question raised by this appeal is whether the claimant (“Wirral”) can bring representative proceedings under CPR 19.8 on behalf of institutional and retail investors in the defendants who claim under sections 90 and 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. Wirral sought to rely upon the decision of the Supreme Court in Lloyd v Google LLC [2022] AC 1217 to pursue a representative action seeking declarations as to common issues relating to the defendants. Issues as to the individual investors such as standing to sue, reliance, causation and quantum, which are not common issues, do not form part of the representative proceedings. Wirral contended that this bifurcated approach was endorsed by the Supreme Court and was appropriate in the present case.

The defendants applied to strike out the representative proceedings on the basis that this was not an appropriate procedure for these claims under FSMA, contending that the claims should be brought in the usual way by ordinary multi-party proceedings with each investor being a claimant. Such multi-party proceedings had in fact been brought at the same time as the representative proceedings by many of the investors who had opted in to the representative proceedings.

By his judgment dated 5 December 2023, Michael Green J sitting in the Financial List acceded to the application and struck out the representative proceedings. Wirral now appeals against that decision with the permission of Males LJ. In giving permission, he said that although this was an exercise of discretion by the judge for what appear to be sound reasons, his decision may have wider significance for other cases and merits consideration by the Court of Appeal.

Factual and procedural background

The judge set out a summary of the background at [5] to [15] of his judgment. The essential features are as follows. The case arises from the decades-long opioid crisis in America. Indivior is the manufacturer of anti-addiction medication, Suboxone, aimed at combatting that crisis (and was previously a subsidiary of Reckitt known as Reckitt Benckiser Pharmaceuticals Inc). Between 2006 to 2013, the defendants are alleged to have been involved in a fraudulent scheme (the “Scheme”). The essence of the Scheme is said to have been to extend the period of patent protection over Suboxone. The defendants are alleged to have done so by changing Suboxone from tablet form to a film version and by making allegedly fraudulent claims that the film version was safer for children.

On 9 April 2019, details of the alleged Scheme were made public in a US federal indictment against Indivior. Following the indictment, and related Federal Trade Commission investigations, Indivior agreed to pay US$600 million in settlement of its civil and criminal liability. Its US subsidiary, former CEO and Medical Director all pleaded guilty to criminal charges related to the Scheme. Reckitt agreed to pay US$1.4 billion in settlement of its own potential liability.

On 21 September 2022, the current representative claims were commenced by Wirral. Also on 21 and 22 September 2022, three further claim forms were issued against the defendants on behalf of a large number of claimants (“the multi-party proceedings”). Those claim forms have not been served and the multi-party proceedings are stayed pending the outcome of this appeal.

Relevant provisions of the CPR

CPR 19.8 provides as follows:

“(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.”

The judgment below

At the outset of the judgment at [3] the judge noted that: “There is no dispute that the applications are to be resolved by the exercise of a discretion so as to give effect to the overriding objective.” The fact that the judge's decision involved an exercise of discretion is an important consideration in the determination of this appeal. In the same paragraph, the judge set out what he saw as the essential difference between the parties as being between (i) the defendants' submission that allowing the Representative Proceedings would deprive the Court of its case-management powers by having a bifurcated procedure imposed on it by Wirral, and (ii) Wirral's submission that it was entitled to commence proceedings under r.19.8 and, unless the defendants can show that there was a fundamental flaw in it doing so, the Court should not strike out the claim.

At [17] the judge said:

“The distinct advantage of the Representative Proceedings from Wirral's and the Multi-party proceedings Claimants' point of view is that there will be no front-loading of costs on claimant-side matters, such as standing and reliance. All the burden will be on the Defendants to deal with the common issues and defend the relief sought in the Representative Proceedings, namely the two declarations set out above. The Defendants say simply that it should be for the Court to decide how to case manage the proceedings and what should be done and when, taking into account both sides' positions and more generally the administration of justice and the overriding objective.”

The judge considered it helpful to look first at how securities claims under section 90A and Schedule 10A of FSMA had been managed by the Court since the provisions were introduced in 2010 and then to see if it was appropriate to proceed as Wirral had by reference to Lloyd v Google LLC. He observed at [20] that securities claims, like any other form of civil litigation, were to be case managed and tried according to the overriding objective (i.e., justly and at a proportionate cost) and at [21] that they typically gave rise to similar issues, including whether there should be a split trial.

The judge then reviewed the various previous cases of securities claims including Hildyard J in Manning & Napier v Tesco plc [2017] EWHC 3296 (Ch), Miles J in Allianz Global Investors GmbH & Ors v RSA Insurance Group plc [2021] EWHC 570 (Ch), and Falk J (as she then was) in Various Claimants v G4S Limited [2022] EWHC 1742 (Ch). The common theme which he drew from them was that a split trial was regularly ordered with the issue of reliance to be determined in the second trial. However, the Court would also typically require the claimants to provide sample disclosure, further particularisation and/or witness evidence on reliance in parallel with the first trial. This was to ensure that the claimants did not bring speculative claims, were required to undertake substantial work in prosecuting their cases, to mitigate against fading memories, and to assist with settlement efforts. He concluded at [28]:

“The Representative Proceedings however predetermine those issues of split trial and other matters of case management in the Claimants' favour without being put before the Court. Whether that is appropriate or not needs to be determined by reference to the scope of CPR 19.8 and Lloyd v Google.”

He then set out CPR 19.8. He noted at [31] that Mr Chapman KC for Wirral placed great reliance on the fact that so long as the “same interest” threshold is met, it was entitled “as of right” to bring the representative proceedings. He accepted that because that threshold was met, Wirral was entitled under CPR 19.8(1)(a) to commence the proceedings but considered that had no bearing on whether the court's discretion, which arises on an application under 19.8(2) and (3), should be exercised in favour of allowing the proceedings to continue.

The judge then considered Lloyd v Google in detail. He noted at [32] that there was no doubt that Lord Leggatt's extensive consideration of the history and availability of representative actions, albeit obiter, suggested that a bifurcated process could be appropriate for actions such as in Lloyd v Google. However, the judge said it was important to note that in that case the claimant was not seeking bifurcation because the proceedings were unworkable and...