It would help to have a confirmation that the request is coming from the Contacts App when running

GET /ocs/v2.php/apps/files_sharing/api/v1/sharees?format=json&itemType=file&search=test&perPage=25&shareType[]=0&shareType[]=1&shareType[]=4&shareType[]=7&lookup=false

The idea is that when sharing a file, the same request is executed and should only returns Circles to which the current user is a member. But in the contacts app, the request should returns also visible Circles, in case the current user wants to add a Circles he is not currently member as a Member.

I think changing the itemType from 'file to contacts will be enough.
It is not the perfect solution but it will work better, unless we switch to another endpoint to catch the list of users.

Right now, this is how the Circles App detect the origin of the request is from the contacts app:
https://github.com/nextcloud/circles/pull/724/files#diff-85950fb08bcb016579e9da6fb82f2335314fe42638d0ae76f5cb8828681ebfb8R101-R103