RGI International Ltd & Anor v Synergy Classic Ltd & Ors

Serious allegations of bad faith, inducing breach of contract and conspiracy must be supported by adequate particulars. A director’s office, including chairmanship of a remuneration committee, does not by itself establish knowledge of, or responsibility for, payments made in breach of contract. Silence in response to questions cannot, without other evidence, found a positive allegation where the person was under no duty to answer. Advancing serious and unparticularised allegations with no real prospect of success may constitute an abuse of the court’s process.

Timothy Fenwick, an independent non-executive director of RGI International Ltd, applied to set aside the order joining him as a party and to strike out or summarily dismiss Synergy Classic Ltd’s counterclaim against him.

The counterclaim alleged that Mr Fenwick had knowingly induced or procured RGI’s breach of the Subscription and Option Agreement, conspired with others to injure Synergy, and acted in bad faith. The pleaded particulars relied principally on his position as chairman of RGI’s remuneration committee and his alleged knowledge of payments to other directors.

The issues were whether the allegations disclosed reasonable grounds, constituted an abuse of process, or had a real prospect of success.

1. Application granted. The counterclaim against Mr Fenwick was struck out because it disclosed no reasonable grounds, was an abuse of process and had no real prospect of success.
2. The allegation of bad faith was unsupported by effective particulars. The fact that Mr Fenwick chaired the remuneration committee did not permit an inference that he knew, or ought to have known, that payments were being made in breach of clause 7.1 of the Subscription and Option Agreement. The evidence showed that he was not involved in authorising or processing payments to directors.
3. For the same reason, the allegation that Mr Fenwick knowingly and intentionally induced or procured the contractual breach lacked adequate factual support and had no real prospect of success.
4. The conspiracy allegation was wholly unparticularised. The pleading identified no facts from which a conspiracy to injure Synergy could be inferred and did not enable Mr Fenwick to understand the case he would have to meet at trial.
5. Serious allegations involving bad faith and conspiracy, advanced without adequate particulars or a real prospect of success, amounted to harassment and an abuse of the court’s process. Mr Fenwick had no duty to answer Synergy’s solicitors’ questions. His silence was equivocal and could not, without other evidence, found a positive allegation.