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Proper Particularisation, Delay & Strikeout: A Practical View from the Bar
In our regular column for Practical Law Ashley
Cukier discusses the High Court’s decision in Khosravi v British American
Tobacco plc and others [2016] EWHC
123 (QB) and the importance of properly particularising a claim.
A recent high court decision illustrates the dangers of failing properly to particularise a claim. In some instances, failure to do so might simply occasion an application to amend a statement of case under CPR 17; in others, such as in the case of Khosravi v British American Tobacco plc and others [2016] EWHC 123 (QB) (see Legal update, Extension of time for service of the claim form not to be granted lightly (High Court)), the consequences can be fatal to a claim in its entirety.
THE FACTS
The facts generally alleged by the claimant can be summarised as follows: the second defendant (Al Aqili Trading LLC) was authorised to supply British American Tobacco (BAT) products within Iran between 1994 and 2006, by way of a licence granted by the state-owned Iranian Tobacco Company (ITC). The claimant alleged, inter alia, that ITC had repeatedly warned BAT that individuals within the second defendant’s organisation were prepared to resort to violence, including murder, as part of a general desire, allegedly common to all six defendants to the claim, to have terminated an enquiry into the smuggling of cigarettes into Iran, initiated by President Ahmadinejad following his assumption of power in 2005.
The claimant contended that, at some point in early 2008, the BAT defendants (the first, fifth and sixth defendants) threatened to cease their supply of cigarettes to the Al Aqili group (the second, third and fourth defendants) unless they found a way of bringing the enquiry to a close; with the implication that the BAT defendants were prepared to sanction violence, via Al Aqili, in order to achieve that purpose.
The claimant further alleged that at a subsequent meeting, a plan was devised to use unlawful means to bring about an end to the enquiry by implicating the claimant. The claimant described himself in his pleaded case as a “pro-democracy (anti-Iranian) activist” who had left Iran in 2006 after causing the government some offence.
The claim form as served on the defendants in September 2014 alleged that the second, third and fourth
defendants were responsible, inter alia, for committing a series of very serious physical assaults upon the claimant back in September 2008. Accordingly, the claimant sought to attribute responsibility directly and/or indirectly to the defendants, and sought damages running “into the hundreds of millions of pounds”.
THE PROCEDURAL BACKGROUND AND THE APPLICATIONS BEFORE THE COURT
In what might now be seen as an understatedly ominous introduction, Sir David Eady noted the “difficult hurdles”
that the claimant had already had in setting out his case, and that the procedural background was “informative in this context” (see paragraph 7). The claim had been issued as far back as 10 January 2014, which, the judge noted, was some 20 months prior to service upon the sixth defendant, whose applications (together with the first defendant’s) were before the court. Moreover, the first defendant (who had been joined originally to the action) ought ordinarily to have been served no later than 10 May 2014; yet on seven separate occasions, the claimant had sought and obtained extensions of time from masters pursuant to CPR 7.6.
The second and sixth defendants made three applications:
- The first application sought to set aside the various orders made by the masters whereby extensions of time were granted for service of the claim form, pursuant to CPR 3.1(7), CPR 11(1) and/or CPR 23.10(1).
- The second application sought to strike out the claim form and particulars of claim, pursuant to CPR 3.4(2).
- The third application sought, in the alternative, summary judgment and an order dismissing the claims in their entirety, pursuant to CPR 24.2.
THE TECHNICAL ISSUE
Whilst noting that counsel for the second and sixth defendants had, in the course of his oral submissions, placed the strike out and summary judgment applications at the forefront of his argument, “as his clients wished to emphasise the perceived merit of their proposed defence – rather than rely upon any procedural or technical deficiencies” (see paragraph 4), the judge himself was evidently rather more interested in the procedural and technical issues that had presented themselves. He explained that, given the “elastic notion of inherent implausibility” against which he would have to assess the alleged factual background to the applications, he would instead:
“concentrate, primarily, on whether they [the defendants] had been given anything approaching the degree of particularity to which they are entitled, so as to enable them to know the case they would have to meet in respect of such serious charges. That is in the context of the strike-out application.”
(Khosravi, at paragraph 14.)
The principles to be applied, in the context of a strike out application based on a defective pleading, were those explained by Lord Millett (albeit specifically in the context of alleged fraud), in Three Rivers District Council V Governor and Company of The Bank of England (No 3) [2001] UKHL 16:
“Having read and re-read the pleadings, I remain of opinion that they are demurrable and could be struck out on this ground. The rules which govern both pleading and proving a case of fraud are very strict. In Jonesco v Beard [1930] AC 298 Lord Buckmaster, with whom the other members of the House concurred, said, at p 300: ‘It has long been the settled practice of the court that the proper method of impeaching a completed judgment on the ground of fraud is by action in which, as in any other action based on fraud, the particulars of the fraud must be exactly given and the allegation established by the strict proof such a charge requires’.
It is well established that fraud or dishonesty (and the same must go for the present tort) must be distinctly alleged and as distinctly proved; that it must be sufficiently particularised; and that it is not sufficiently particularised if the facts pleaded are consistent with innocence … This means that a plaintiff who alleges dishonesty must plead the facts, matters and circumstances relied on to show that the defendant was dishonest and not merely negligent, and that facts, matters and circumstances which are consistent with negligence do not do so.
It is important to appreciate that there are two principles in play. The first is a matter of pleading. The function of pleadings is to give the party opposite sufficient notice of the case which is being made against him. If the pleader means ‘dishonestly’ or ‘fraudulently’, it may not be enough to say ‘wilfully’ or ‘recklessly’. Such language is equivocal. A similar requirement applies, in my opinion, in a case like the present, but the requirement is satisfied by the present pleadings. It is perfectly clear that the depositors are alleging an intentional tort.
The second principle, which is quite distinct, is that an allegation of fraud or dishonesty must be sufficiently particularised, and that particulars of facts which are consistent with honesty are not sufficient. This is only partly a matter of pleading. It is also a matter of substance. As I have said, the defendant is entitled to know the case he has to meet.”
(Three Rivers No 3, at paragraphs 183 to 186.)
Also relevant, Sir David Eady explained, were the words of Teare J in Towler v Mills [2010] EWHC 1209 (Comm):
“Time and costs will, or may, be wasted if the defendant seeks to respond to a vague and incoherent case. It is also necessary for the Court to understand the case which is brought so that it may fairly and expeditiously decide the case and in a manner which saves unnecessary expense. For these reasons it is necessary that a party’s pleaded case is a concise and clear statement of the facts on which he relies”.
(Towler v Mills, at paragraph 18.)
He then turned to the claimant’s pleading itself, noting that a “general case” regarding the defendants had been advanced in the particulars of claim that an unidentified manager of the first defendant had instructed an unidentified manager of the fifth defendant to “do anything they could” to bring the enquiry to a halt. The judge held that this was, as a matter of pleading, “plainly unsatisfactory” as the defendants “cannot know what they would have to do to meet or challenge that case” (see paragraph 20). The allegation that the defendants had used unlawful means to influence the investigation was, currently, “no more than the barest assertion”. The further allegation that the first defendant knew that the fourth defendant would employ unlawful means to secure the acquiescence of the claimant was “hopelessly vague and uninformative”. The repeated refrain that the fifth defendant was instructed to do anything it could to avert the investigation was wholly insufficient. In the words of the judge, “no further flesh has been put on this very bare bone”. The entirety of the pleading (“woefully lacking in particulars”) was, accordingly, to be struck out under CPR 3.4 (see paragraph 35).
The application for summary judgment would, Sir David Eady explained, also succeed. The judge noted that any
credibility in the pleaded case had been undermined by the fact that the 86-page letter before action “appears to put the complaint rather differently, and by reference to another (albeit overlapping) cast of characters”, and that two short witness statements, from “unnamed persons” lacked “cogency and coherence” and were inconsistent with the contemporaneous documents to which he had been referred. These, and the “number of quasi expert opinions put forward in addition” were no more than “bare assertion … incapable of plugging the gaps in the pleaded case” and unable to offer “any assistance on the issues I have to determine”. Accordingly, the “troubling lack of cogency” of the pleaded case meant that there was no realistic prospect of success. Adopting the language of Lord Hobhouse in Three Rivers (No 3), there was, quite simply, “an absence of reality”.
THE SET ASIDE APPLICATION
The judge’s obiter remarks on the applications to set aside the extensions of time are also of note. The jurisdiction
to extend time under CPR 7.6 had to be exercised in accordance with the overriding objective, and a good reason must be given (Hashtroodie v Hancock [2004] EWCA Civ 652, and Hoddinott and others v Persimmon Homes (Wessex) Ltd [2007] EWCA Civ 1203; see Legal update, Service of claim form). Over the course of the several previous applications for extensions of time, the claimant had invoked both a lack of funding and a need to gather further evidence as grounds for which extensions were being sought.
The judge noted that, in respect of the former, a mere lack of funding will not generally be recognised by the
courts as being a good reason for the granting of an extension (Bayat Telephone Systems International Inc and others v Lord Michael Cecil and others [2011] EWCA Civ 135; see Legal update, Significance of limitation defence when extension of time to serve claim form sought (Court of Appeal)). In respect of the latter, the gathering of evidence “might” have justified the seeking of a stay, at an inter partes hearing, once proceedings had been launched, but it was hard to see “how it would be a reasonable ground for holding up the service of the claim form for nearly 18 months”.
Importantly, the judge emphasised that, in respect of extensions of time, the question of prejudice is not a one-way
street:
“Defendants too are entitled to consideration and fair treatment in the litigation process. The longer the case is allowed to drag on, the greater the time and expenditure they will have to devote to it (with little prospect of recovering their costs if ultimately successful). They are entitled not only to clarity in the formulation of the claim, but also to be able to see at least the prospect of light at the end of the tunnel.”
(Khosravi, at paragraph 41.)
In this instance, the delay in the normal timetable could not be justified. This was, moreover, not an example of
where a defendant could be seen to be taking “unfair or tactical advantage of its own wrongdoing”, as might occasionally happen in personal injury or clinical negligence cases. Further, “such extensions should certainly not be granted as a formality, or go through ‘on the nod’”. Were it not for the orders proposed in respect of strike out and summary judgment, the judge explained, he would similarly have been willing to grant the defendants’ applications to set aside the extension orders.
CONCLUSIONS TO BE DRAWN
Practitioners will no doubt note the severity with which an unparticularised claim was treated in Khosravi, and the potential potency of applications for strike out predicated upon a lack of particularity, over and above any separate summary judgment-style arguments on the underlying substance of what is being claimed. Certainly, an approach where it is hoped that in time (or perhaps at the hearing of the claim itself!) the full particulars of an as-yet
unparticularised claim will be fleshed out is fraught with danger and should be avoided.
In circumstances where litigators are concerned that a statement of case, as issued, wants for particularity and is vulnerable to attack, the judicious course of action is swiftly to seek to amend the statement of case under CPR 17. As Sir David Eady stated:
“there was an element of fluidity in the case put forward on behalf of the Claimant, as to whether [counsel] sought to defend the current formulation of his claim, as pleaded, or whether he would prefer to amend the particulars and defend the reformulated version. No draft was placed before the court, however, and I must therefore proceed to address the case as currently presented.”
(Khosravi, at paragraph 4.)
One might doubt, given the forceful views expressed by the judge in respect of the applications for summary judgment and the setting aside of the extensions of time, whether in reality the provision of a draft amended particulars of claim would, in this case, have been sufficient to avert the orders ultimately made.
However, it is surely right that, in an alternative scenario, it is foreseeable that a properly particularised draft of an amended statement of case and/or the introduction of new facts might go some way to avoiding a strike out application, particularly if the concomitant deficiencies seen in the Khosravi case (on substance and on the grounds for extension) do not arise.
Indeed, one might read Sir David Eady’s comment that “evidence may be introduced which shows that an otherwise defective pleading could be reprieved if new facts are incorporated by amendment” as illustrative of the court’s preparedness to consider such applications to amend if the end result is a properly-particularised claim by which a defendant could now know “what they would have to do to meet or challenge that case”.
Khosravi re-emphasises that the English courts will not be put off per se by the “inherent implausibility” of scenarios alleged “when the subject matter of litigation turns upon allegations of skulduggery in international business transactions”. As he goes on to say, “that inherent implausibility is by no means a sure guide to the merits”.
However, to get to an assessment of those merits, the first and unavoidable hurdle to be scaled is to settle a properly particularised statement of case. As Khosravi shows, attempts to evade this requirement are at the client’s peril.
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