Whessoe Oil & Gas Ltd & Anor v Dale

The claim was for damages and equitable relief against the defendant, a former managing director, for alleged breaches of contract and statutory duties under the Companies Act 2006 (notably sections 172 and 174) arising from the fixed‑price Dragon LNG engineering, procurement and construction contract. The defendant applied to strike out the First Claimant's Particulars of Claim under CPR r.3.4(2) and for summary judgment under Part 24. The court found the pleaded case to be embarrassingly thin in relation to causation, quantum and the particulars of the alleged breaches, and held that the expert reports provided by the claimant were preliminary and insufficient to plug those pleading defects.

Nevertheless, the judge concluded there was a vestigial cause of action pleaded and, in the interests of fairness (and having regard to the Master Eyre order requiring an expert report), refused to strike the claim out forthwith. Instead the court gave the claimants a final opportunity to provide full particulars of the breaches relied upon, of causation and of loss and damage, and re‑listed the strike out application for further hearing.

Background and parties: The First Claimant, Whessoe Oil and Gas Ltd (WOGL), and the Second Claimant, Cleveland Bridge UK Ltd, brought proceedings against William Jon Dale arising out of his role as managing director of WOGL on the Dragon LNG Project (a fixed‑price EPC contract). The pleaded claim alleged breaches of contract and statutory duties under the Companies Act 2006 (section 172(1) and section 174) and sought damages of approximately £50.6 million together with equitable relief, including an account of profits.

Procedural posture and interlocutory history: Proceedings began in the Queen's Bench Division General List. Master Eyre made an order requiring the parties to serve expert reports; the claimants changed solicitors and served preliminary expert reports from Mr Sickles (two reports, described as preliminary) and the defendant served a critique and his own preliminary expert report. The defendant sought to strike out the First Claimant’s Particulars of Claim under CPR r.3.4(2) (on grounds of no reasonable grounds and abuse/obstruction) and alternatively summary judgment under CPR Part 24; the claimant abandoned the summary judgment limb during argument.

Issues framed by the court:

• Whether the Particulars of Claim disclosed reasonable grounds for the claim or instead were so unparticularised/embarrassing or otherwise vexatious/ill‑founded as to warrant striking out under CPR r.3.4(2).
• Whether the claimant was obliged, as a prerequisite to pursuing its case, to produce expert evidence supporting allegations of breach and causation (drawing on authorities such as Pantelli and subsequent TCC authorities).
• Whether the preliminary expert material served by the claimants and the pleadings as they stood permitted the defendant to understand and meet the case against him, and whether the court should strike out the claim or allow further particulars.

Court’s reasoning and decision: The judge distinguished a claim for breach of contract and statutory duties by a managing director from a pure professional negligence claim, observing that the former is not necessarily governed by the same requirement for immediate expert corroboration as the latter. The court accepted that expert evidence may be required on particular issues (for example quantum and industry standards) but held there is not an absolute rule that expert corroboration must precede pleading of breaches by a managing director. Nevertheless, the Particulars of Claim were found to be extremely thin: the pleadings failed to particularise causation and loss (the claim to £50.6 million was pleaded merely as resulting "by reason of the matters aforesaid"), and the claimant’s expert reports were preliminary and largely unresearched. The court observed that the Master’s earlier order demanding an expert report indicated the need for amplification. On balance, because a vestigial cause of action was present and in order to give the claimants a final opportunity to cure the defects, the court adjourned the strike out application and ordered the claimants to provide full particulars of the alleged breaches, causation and losses (all material facts relied upon), with a fixed further hearing date to test compliance.

Practical implications noted by the court: The judgment emphasised the need for adequate pleading of causation and quantum and that claiming equitable remedies does not excuse the need to plead material facts. It also recorded that expert evidence is likely to be important on quantum and possibly on standards of project management, but it is not always a precondition to pleading breaches of director or managerial duties.

The defendant’s strike‑out application was adjourned and the claim was not struck out. The court held that the Particulars of Claim were embarrassingly unparticularised in relation to breaches, causation and quantum and the claimant’s expert reports were preliminary and inadequate, but there remained a vestigial cause of action. Consequently the claimants were given a final opportunity to provide full particulars of the breaches relied upon, of causation and of losses (material facts), and the matter was re‑listed for further hearing to test compliance (hearing fixed for 1 August 2012).