Background
Two groups of shareholder claimants—61 institutional investors and six retail investors—brought claims against Entain Plc under sections 90 and 90A of the Financial Services and Markets Act 2000, alleging that the company engaged in historic misconduct in Turkey involving the payment of bribes. The claimants contended that Entain’s published information and prospectuses contained materially misleading statements and material omissions regarding this bribery, and that directors and managers with regulatory responsibility (“PDMRs”) knew of these misstatements or omissions. The aggregate claims exceed £1.6 billion. The claims span a twelve-year period and reference 178 alleged misleading statements across 29 separate items of published information, including four prospectuses.
At a case management conference before Mr Justice Trower, the parties disputed whether Trial One should address only “defendant-side” issues (Entain’s conduct, the existence and extent of misstatements, omissions or delays, PDMR knowledge, and fraud/concealment for purposes of the Limitation Act 1980), or whether it should also determine “claimant-side” issues including reliance, causation, limitation period discovery, and quantification of loss. Entain contended that reliance, causation, and limitation should be tried together with defendant-side issues at Trial One. The claimants argued these should be deferred to Trial Two, with only quantum being uncontroversially reserved for a second trial.
The Court’s Holding
Mr Justice Trower undertook a comprehensive analysis of the applicable legal framework for split trials in section 90/90A Financial Services and Markets Act claims. The court applied Hildyard J’s pragmatic checklist from Electrical Waste Recycling Group Ltd v Philips Electronics UK Ltd, which requires courts to weigh factors including cost efficiency, trial management practicality, witness convenience, avoidance of complexity and appellate bifurcation, and overall fairness. The court examined varying approaches across recent precedents (Tesco, G4S, Serco, Standard Chartered, Glencore, Barclays, and Boohoo), observing that “one size does not fit all” and that each case must be decided on its own facts.
The court recognized that claimants face substantial practical challenges if reliance and causation must be tried at Trial One: parties estimate combined costs of approximately £15 million for these issues alone, expert evidence would need to address a potentially vast array of permutations and counterfactual scenarios across the twelve-year period, and costs may be wasted if Trial One establishes that only some misstatements or omissions are actionable or that PDMR knowledge is limited to certain periods. The court noted that deferring these issues to Trial Two would allow the evidence and expert analysis to be narrowed and tailored to the specific misstatements, omissions, and time periods found to be actionable at Trial One, thereby improving efficiency and avoiding duplication.
Key Takeaways
- In large multi-claimant securities fraud claims under FSMA sections 90 and 90A, split trials are often necessary to manage complexity and cost; however, the precise split point depends on case-specific factors and is not predetermined by precedent.
- Deferring claimant-side issues (reliance, causation, limitation period discovery) to a second trial is appropriate when the scale and duration of alleged misconduct create unmanageable permutations of evidence and scenarios for trial.
- Trial courts must balance efficiency and cost-saving against the overriding objective to resolve all issues on a single occasion, considering the realistic prospects of settlement, the litigation burden on both parties, and the manageability of trial itself.
- Expert evidence on share price impact, market reliance, and counterfactual scenarios is most effectively deployed after the court has determined which specific statements and omissions are actionable at Trial One.
Why It Matters
This decision provides significant guidance on procedural management of large securities fraud claims under the Financial Services and Markets Act. UK courts face increasing numbers of multi-billion-pound shareholder claims involving complex factual narratives spanning many years and affecting dozens or hundreds of institutional and retail claimants. The judgment clarifies that while Hildyard J’s Philips Electronics checklist provides a framework, courts retain discretion to order split trials calibrated to each case’s scale, duration, and evidentiary complexity. The reasoning also reinforces that deferring certain elements of claimant liability to a second trial—even though reliance and causation are technically elements of the substantive claim—is permissible and often preferable when it promotes efficiency without unfairly prejudicing either party.
For litigants, the decision confirms that in large FSMA cases, the trial will almost certainly be bifurcated, with defendant-side misconduct and knowledge issues addressed first, and claimant-specific reliance, causation, and loss issues reserved for later. This structure places pressure on defendants to resolve liability early but also allows claimants to defer significant discovery and expert disclosure until the scope of actionable conduct is clarified, potentially narrowing the issues in dispute and facilitating settlement.