Panasonic Europe BV v Core Communication Investments Ltd

Permission to amend should be granted where the proposed claim has a real, not fanciful, prospect of success. The court must assess the pleading sufficiently to determine whether it has substance, but must not conduct a mini-trial or resolve factual disputes.

A fraud claim must be distinctly alleged and supported by sufficient particulars. At the interlocutory stage, the pleaded primary facts need not be consistent only with dishonesty, but must justify an inference of dishonesty. There is no fixed form of pleading, although greater vagueness makes the threshold harder to satisfy. Fraudulent knowledge must ordinarily be established separately against each defendant.

The claimant sought permission to amend its existing claim concerning the acquisition of Alan Dick Communications Ltd. The proposed amendments added fraudulent misrepresentation claims against the vendors and related parties, based largely on alleged overstatement of financial information and profits on the Nexus contract.

The defendants opposed the amendments on pleading, representation, falsity and fraud grounds. The application required the court to decide whether the proposed claims had a real prospect of success and whether the pleaded facts justified allegations of fraud against each defendant.

1. Applicable threshold. Applying the approach summarised in Slater & Gordon (UK) Ltd v Watchstone Group plc [2019] EWHC 2371, the court treated the real-prospect test as materially similar to the test on summary judgment. The court could reject a fanciful or wholly unsupported factual case, but was not to conduct a mini-trial or determine disputes of fact.
2. Fraud pleading. A fraud claim had to be distinctly alleged and supported by sufficient particulars. The pleaded facts need not be consistent only with dishonesty. They had to justify an inference that dishonesty was more likely than innocence or negligence. There was no fixed form of pleading, although the pleading had to be clear and particularised.
3. Representations. The authorities relied on by the defendants concerned whether contractual warranties could themselves constitute representations. The claimant advanced a different case based on separate pre-contractual representations. That case was at least arguable. The disclosure letter did not clearly exclude representations arising from matters outside or preceding the letter, and any contractual estoppel would not preclude a fraud claim.
4. Application. The pleaded evidence and emails gave the claims against Mr Lovell and Mr Pearce a real, rather than fanciful, prospect of success concerning alleged knowing overstatement of Nexus profits. Since Mr Lovell was a director of CCIL, the amendment was also permitted against that company. The material did not provide a sufficient evidential or particularised basis against Mr Weller or Mr Greaves. General assertions that all directors must have known were insufficient.
5. Order. The amendments, as modified during the hearing, were permitted against CCIL, Mr Lovell and Mr Pearce, and refused against Mr Weller and Mr Greaves.