Crypton Digital Assets Ltd & Anor v Blockchain Luxembourg SA & Ors

On an application under Civil Procedure Rules 1998 Part 3.4, a claim should be assessed from the pleading itself, assuming its factual allegations are true. A pleading may rely on cross-reference where the allegations are reasonably ascertainable. Allegations of dishonesty require primary facts from which dishonesty is more likely than innocence or negligence.

Inducement may be pleaded through conduct amounting to persuasion, encouragement or assistance, including dealings inconsistent with the contract. An unlawful means conspiracy claim requires a combination, intention to injure by unlawful means, unlawful acts pursuant to the combination and resulting loss; knowledge that the means are unlawful is unnecessary. A claim lacking essential particulars may be amended before being struck out.

The claimants alleged that the defendants had appropriated a cryptocurrency trading platform opportunity after negotiations for an acquisition failed. Claims against the first and second defendants included inducing breach of contract, dishonest assistance, knowing or unconscionable receipt and unlawful means conspiracy, alongside intellectual property claims.

The first and second defendants applied under Civil Procedure Rules 1998 Part 3.4 to strike out the disputed causes of action, contending that the particulars of claim did not identify the relevant conduct, knowledge, intention, unlawful means or receipt of trust property with sufficient clarity.

1. The application succeeded only to a limited extent. The knowing or unconscionable receipt claim was struck out as unsustainable as pleaded. The dishonest assistance claim was deficient only insofar as it failed to identify assistance with the alleged fiduciary breaches concerning control of the board, technology, assets and data. The claims for inducing breach of contract and unlawful means conspiracy, and the remaining dishonest assistance allegations, were allowed to continue.
2. Under Civil Procedure Rules 1998 Part 3.4(2)(a), the court assumed the pleaded facts to be true and assessed whether they disclosed a legally recognisable claim. The pleading had to be read as a whole and within its four corners. Clear allegations made by cross-reference were capable of satisfying the requirements of a statement of case. A witness statement could not save an otherwise deficient pleading (paras [9]–[19]).
3. For inducing breach of contract, the pleaded coordination and solicitation of resignations, offers of employment and dealings inconsistent with the contracts were capable of amounting to persuasion, encouragement or assistance. Knowledge of contractual terms, together with the pleaded acts and an allegation of intentional inducement, sufficiently pleaded knowledge and intention. Intention could also be inferred from the primary facts (paras [25]–[39]).
4. Dishonest assistance required a breach of trust, assistance or inducement, and dishonesty. The allegations of knowledge of contractual and fiduciary obligations, coordinated solicitation, exploitation of the platform opportunity and a false explanation for withdrawing from negotiations were, read in context, sufficient to support an inference of dishonesty. They did not, however, identify assistance in relation to the first category of fiduciary breach (paras [40]–[51]).
5. A knowing or unconscionable receipt claim required a plea that the defendant received property subject to a trust, together with a sufficient connection between the receipt, the breach and the defendant’s knowledge. Paragraph 103 did not plead receipt of trust property and therefore disclosed no reasonable grounds (paras [52]–[56]).
6. An unlawful means conspiracy claim required a combination or agreement, an intention to injure by unlawful means, unlawful action pursuant to the combination and loss caused by that action. Following [2021] 2 WLR 469, knowledge that the means were unlawful was unnecessary. The pleaded coordination, involvement, knowledge of relevant obligations and alleged use of intellectual property were capable of supporting the necessary inferences (paras [57]–[73]).
7. Where a pleading defect was capable of cure by amendment, the claimant should generally have an opportunity to amend before final strike-out. The claimants were given 14 days to serve proposed amendments. The court did not decide whether a more generous pleading ambit applicable to cartel claims extended generally to conspiracy claims (paras [74]–[77]).