Rollingson v Hollingsworth & Ors

Particulars of claim must plead the material facts needed to establish the cause of action and remedy, rather than the evidence by which those facts will be proved. Allegations involving fraud, dishonesty, conspiracy or subjective states of mind require primary facts capable of supporting the relevant inference on the balance of probabilities.

A pleading may rely on alternative combinations of defendants and inference upon inference where the circumstances justify that approach, particularly before disclosure in a secretive case. Defects which can be cured by amendment do not necessarily justify strike-out.

Summary judgment should be approached cautiously where fuller evidence may affect the outcome, and subsidiary issues should not ordinarily be summarily determined when the wider claim will proceed to trial. A bid for assignment of claims in an insolvency process is not, without more, a settlement negotiation attracting without-prejudice protection.

The claimant, a solicitor and alleged assignee of claims belonging to an insolvent solicitors’ company, brought proceedings against former employees and a company alleged to have received the company’s staff, clients and business. The claim alleged breaches of contract and fiduciary duty, misuse of confidential information, conspiracy, inducement and related economic torts.

The first, second and fifth defendants applied under CPR 3.4(2) and CPR 24.2 to strike out or obtain reverse summary judgment on pleading paragraphs concerning an insolvency-assignment bidding process, common design, participation in misuse of confidential information, knowledge of likely injunctive action, and causation of financial loss and administration.

The court also determined whether the bidding communications attracted without-prejudice protection.

1. Disposition. Paragraph 8 of the particulars of claim, concerning the bidding process, was struck out under CPR 3.4(2)(b)
2. Pleading principles. Under CPR 16.4(1)(a), particulars of claim must state the material facts relied upon to establish the cause of action and remedy. They should not ordinarily plead evidence or general history. Serious allegations must be clearly and adequately particularised. Facts supporting an inferred state of mind must be pleaded, and must be capable of making the suggested inference more likely than innocence or negligence.
3. Inference upon inference is not inherently impermissible. Alternative cases identifying different combinations of defendants may also be legitimate where the claimant cannot yet know the precise participants or dates, especially in an allegedly concealed scheme. The pleading must nevertheless distinguish primary facts from the secondary facts from which inferences are drawn and should be clarified by amendment where necessary.
4. Summary disposal. The court adopted the established approach that a claim must have a realistic, rather than fanciful, prospect of success; the court must avoid a mini-trial and should consider evidence reasonably expected at trial. It should be slow to determine subsidiary issues summarily where the broader claim will proceed to trial.
5. Without prejudice protection. The bidding communications were not made in negotiations for settlement or compromise. They concerned a statutory assignment process, left the causes of action in existence, did not address the merits, and were conceptually distinct from release or compromise. The communications therefore did not attract without-prejudice protection merely because they were headed “Without Prejudice”.
6. The allegations that the defendants’ conduct caused loss of profitable departments, declining profits and eventual administration were sufficiently arguable at the pleading stage. The question could properly be tested by evidence and expert material at trial.

First-instance decision. The judgment records no prior appellate decision.