Arcelormittal USA LLC v Ruia & Ors

Applications to amend pleadings must be assessed by reference to the material facts required to formulate the claim, the realistic prospect of success, the overriding objective and the need for clear particularisation of fraud or misconduct. Amendments may be permitted where an allegation could be probative and forms part of the factual case already requiring investigation, even if its ultimate evidential value is uncertain. Amendments should be refused where they rely on irrelevant or vague material, or where the pleaded facts do not provide a realistic basis for liability. A person’s corporate role, previous involvement in another transaction and general relationship with the relevant principals do not, without more, establish participation in an alleged conspiracy.

The claimant sought permission to substitute draft amended particulars of claim in proceedings alleging unlawful means conspiracy concerning the dissipation or waiver of assets of an insolvent group company. Most defendants consented to the amendments subject to objections concerning allegations relating to Algoma, earlier restructuring transactions and the clarity of certain pleaded allegations. One defendant, Mr Seifert, opposed all amendments and contended that no properly pleaded case against him had a realistic prospect of success.

The application followed earlier enforcement proceedings and a judgment of Henshaw J dated 30 March 2020 refusing a worldwide freezing order. The central questions were whether the disputed amendments pleaded material and sufficiently particularised facts with a real prospect of success, and whether the proposed case against Mr Seifert met that standard.

The application was granted in part and refused in part.

1. Applicable principles. Pleadings should generally contain material facts necessary to formulate a cause of action or defence, rather than background facts or evidence. An amendment may be rejected where the proposed case is fanciful, inherently implausible, self-contradictory, unsupported by contemporaneous documentation, unsupported by evidence or purely speculative. The court must also apply the overriding objective and require allegations of fraud or misconduct to be clearly and distinctly pleaded and properly particularised, following Tchenguiz v Grant Thornton [2015] EWHC 405 (Comm) and Clarke v Marlborough Fine Art (London) Ltd [2002] 1 WLR 1731.
2. Algoma amendments. The proposed reliance on the Canadian proceedings as having binding or preclusive effect had no real prospect of success. The relevant defendants were not parties or privies, control of Algoma was irrelevant to the claim under s. 241 of the Canada Business Corporations Act, and the Canadian court’s discussion of control was obiter. References to oppression of stakeholders and conduct in bad faith were also immaterial or insufficiently defined. The amendments were therefore refused, although a more precise plea based on specific facts capable of supporting an inference of control was not excluded.
3. Anti-creditor animus. The proposed allegation concerning the 2013 transactions was allowed. Those transactions would in any event be examined in detail, and the claimant was entitled to give notice that it relied on them as evidence of a preparedness unfairly to prejudice creditors. The court regarded the possible evidential value as sufficient, while leaving its ultimate weight to be assessed at trial.
4. Clarity amendments. Amendments replacing or clarifying wording concerning what apparently occurred and the consideration for the promissory-note assignments were allowed, because the proposed additions made the case to be met sufficiently clear.
5. Mr Seifert. The pleading gave no particulars of when, with whom or by what means he entered the conspiracy; no unlawful act by him; no basis for saying he could procure unlawful conduct; and no adequate explanation of the advice allegedly given or how knowledge or acquiescence would amount to active participation. His formal roles, previous involvement in Algoma and sponsorship of an earlier promissory-note assignment did not themselves support the necessary inferences. The amendments relating to him were refused.

not stated in the judgment.