Whessoe Oil & Gas Ltd & Anor v Dale

A claim for breach of contract and statutory duties by a managing director is not necessarily a claim in professional negligence requiring preliminary expert evidence. The duties of a managing director arise from contract, company law and statute, and may differ from the professional standard applicable to an independent contractor. Nevertheless, pleadings must identify the material facts constituting breach, causation and loss. A substantial damages claim cannot be pleaded merely by referring to earlier matters and stating an aggregate loss. An otherwise viable but seriously deficient pleading should generally receive a final opportunity for amendment where there is a realistic prospect of curing the defects. A claim for an account or equitable compensation does not remove the need to plead the factual basis of the remedy.

The claimants alleged that the defendant, their managing director, breached contractual and statutory duties in managing a major construction project. They claimed damages of approximately £50.6 million, together with an account or equitable compensation. The defendant applied under CPR r. 3.4(2)(a) and (b) to strike out the first claimant’s claim and initially also sought summary judgment under CPR Part 24. The summary judgment application was not pursued.

The application concerned whether the pleaded allegations of inadequate project management, and the pleaded loss and causation, disclosed a legally recognisable claim or were so vague and embarrassing that the claim should be struck out.

1. Disposition. The striking-out application was adjourned on terms requiring the claimants to provide full particulars as a final opportunity. The particulars had to identify the breaches of duty, causation, losses and all material facts relied upon. A further hearing was fixed to determine whether the application should then be pursued or directions given for trial.
2. The court applied the principles governing CPR r. 3.4(2): striking out is appropriate for a claim which is unreasonably vague, incoherent, vexatious, abusive or legally unrecognisable, but not where a serious issue of fact requires oral evidence. The court must be certain that the claim is bound to fail before striking it out.
3. The pleading was extremely thin. It did not identify what the defendant should have done, when he should have done it, or in relation to which subcontractors. The allegation of breach of the duty to act in good faith was unsupported by pleaded facts indicating bad faith.
4. The pleading of causation and loss was particularly deficient. An assertion that the claimants had suffered £50.6 million loss by reason of the matters previously pleaded did not identify the causal link between any breach and any head of loss. A claim for an account or equitable compensation could not cure that deficiency where the pleaded facts did not show an entitlement to either remedy.
5. Expert evidence was not an absolute preliminary requirement. The claim was for breach of contract and statutory duty, not professional negligence. The contractual and statutory duties of a managing director were not necessarily governed by professional opinion or the Bolam standard. Expert evidence might nevertheless be useful, or close to essential, on appropriate management tools and quantum.
6. The court treated the deficiencies as capable of cure. In accordance with Kim v Park [2011] EWHC 1781 (QB), it was appropriate to give a party a final opportunity to correct a defective pleading where there was reason to believe that it could do so.