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High Court rules that reliance should usually be tried first in FSMA investor claims
High Court rules that reliance should usually be tried first in FSMA investor claims
12 May 2026
Series
Blogs
12 May 2026
In California State Teachers' Retirement System & Ors v Boohoo Group PLC [2026] EWHC 335 (Comm), the High Court ruled that reliance should usually be assessed at the first trial in s.90A FSMA investor claims. This decision will be of interest to issuers and investors alike, as it has important implications for the dynamics and case management of group proceedings involving reliance as a central element of the cause of action.
This decision came in the context of a claim brought by various investors against Boohoo Group PLC (“Boohoo”), the online fashion retailer. In July 2020, media reports alleged that a Leicester factory supplying Boohoo had been unlawfully underpaying workers and subjecting them to unacceptable working conditions. After a report by Alison Levitt KC concluded that these allegations were substantially true (and that the issues were endemic in Boohoo’s Leicester supply chain), certain shareholders launched a claim under s.90A FSMA on the basis that Boohoo’s public statements had been misleading.
A key component of this claim was that the shareholders had acquired (or otherwise dealt with) their shares in Boohoo in reliance on Boohoo’s (allegedly misleading) statements.
A key issue in the case management conference before Mr Justice Michael Green was whether the shareholders’ reliance on Boohoo’s published information should be determined at “Trial 1” or subsequently at “Trial 2”. It is common in large complex claims like this that the disputed issues are split over multiple trials to ensure proceedings progress efficiently. However, as the Judge recognised, the allocation of issues between trials could have a significant bearing on settlement dynamics.
The shareholders argued that reliance should be deferred to Trial 2, pointing to other FSMA claims (i.e., namely Allianz Global Investors GmbH and Ors. v RSA Insurance Group Limited [2021] EWHC 2950 (Ch); Various Claimants v G4S Limited (formerly G4S PLC) [2022] EWHC 1742 (Ch); and Various Claimants v Serco Group plc [2022] EWHC 2052 (Ch)) where similar approaches had been taken and to the close link between reliance and causation (which had been agreed for Trial 2). Boohoo disagreed, advocating that as much as possible should be tried at Trial 1, which (it said) was a better use of resources.
The Judge held that reliance should usually be assessed at a first trial
Green J held that reliance should be addressed at Trial 1, highlighting the following key points:
Comment: If reliance is a necessary element of the cause of action, the Court will expect the parties to deal with it in a trial of the merits
This decision is important for the dynamics of group investor claims where reliance is a key element of the cause of action. Deferring reliance can, in practice, allow claimant groups to postpone the costs and effort of preparing their own case while requiring the defendant to incur the full burden of establishing its position on duty and breach. The hope is that a favourable outcome at Trial 1 can be leveraged as a settlement tool, without the claimants’ case on reliance ever being put to proof. This decision makes clear that such an approach is unlikely to find favour with the Court, and that claimants should be prepared to engage fully with all aspects of their case from the outset.
Authors Nick O’Neal-Kenny, Associate and Nathan Salter, Solicitor Apprentice, London.
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