RBS has lost a fight to have former chief executive, Fred Goodwin, excluded from the coming trial over its ‘misleading’ £12.3 billion rights issue.

Sonia Tolaney QC, the bank’s lead barrister, told the High Court in London last week that the case’s four director defendants, including Fred Goodwin could feel “a sense of injustice” at “having their feet held to the fire”.

She hinted that, because the RBoS Shareholder Action Group, the claimant group that named them as defendants in its writ, may no longer be the lead claimant, and was previously said to be struggling with funding the four should be removed as defendants to streamline proceedings for the judge and the bank.

Since the near-collapse of RBS in 2008, successive new bank leaders have made strenuous efforts to distance themselves from Goodwin. They are understood to be uneasy about being co-defendents with disgraced former colleagues in the pooled litigation process now underway.

The other two claimant groups in the litigation, represented by the law firms Quinn Emanuel Urquhart & Sullivan and Stewarts Law have not named any former RBS directors as defendants, only the bank itself.

However the presiding judge Mr Justice Hildyard made clear last week that Goodwin, and his ex-colleagues Sir Tom McKillop, Johnny Cameron and Guy Whittaker would remain as defendants.

He said: ‘We have to assume, in case [the four directors] are in any doubt, that until advised otherwise in categorical terms, the action is proceeding in its entirety, including against them,’ said Hildyard. ‘If there is any doubt, they should be told there isn’t.’

Tolaney has replaced Jonathan Gaisman QC as the state-rescued bank’s lead silk to structure its defence against its own angry shareholders. Gaisman has had to step down.

In her pleadings Tolaney said, ‘If people’s feet are held too closely to the fire, then there will always a sense of injustice.’ She asked Hildyard to step back and consider the ‘position of the four individuals’. She said that to ‘suggest that individuals facing this sort of claim, when they haven’t even known whether these claims are going to be brought for a few weeks, and there doesn’t seem to have been…’ However Hildyard interrupted her asking, “What do you mean by that? That they thought it would all go away?”

Jonathan Nash, QC, representing the RBoS shareholder action group, said it has no intention of dropping Goodwin or the other three ex-RBS directors as defendants. ‘As far as our position is concerned, those claims are being pursued and Ms Tolaney and her clients must proceed on that basis.’ He acknowledged that the trial would be a cause of ‘concern and anxiety’ to Goodwin and his ex-colleagues.

Tolaney also sought to have the case delayed, but Hildyard ruled this out. Counsel for the various action groups said they were not prepared to accept delays, with Nash adding that because many of the 35,000 members of the action group were retired people who are in need of compensation sooner rather than later, ‘we would certainly oppose any delay in getting this matter resolved.’

Tolaney blamed delays in obtaining documents on the claimants, and cited these as a reason to push back trial. But Hildyard gave her short shrift, accusing her of constructing a “paper tiger”.

The claimants in the group litigation order allege that the prospectus for RBS’s April 2008 rights issue was defective and contained “material misstatements and omissions”. They also claim the rights issue prospectus portrayed the bank as being in good financial health but that the reality was that it was virtually bankrupt. The total value of the claims is up to £6bn.

The bank has said its legal costs, including those relating to the defence of Goodwin, are £42m excluding VAT. Its lawyers Herbert Smith Freehills had 22 lawyers in court on Tuesday and Wednesday last week.

On Friday it emerged that the Treasury Agency UK Financial Investments is intending to sell as much as ten per cent of its £30 billion stake in RBS shares at a 30% loss in the next few weeks. That suggests that £3 billion worth of RBS shares will be sold to private investors. In recent days about 11m to 15m RBS shares have been traded but that surged to 31m shares being traded by last Thursday when the bank released some mixed half-year results.

The Action Group on Friday confirmed on Friday that it has secured funding and that its status within the three claimant group is unchanged. Last week’s High Court case management conference was the seventh to be held since proceedings began in 2013. The trial is set for late 2016.