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

The court considered an application under CPR Part 3.4 to strike out parts of the particulars of claim. The principal issues concerned the adequacy of pleaded causes of action in inducing breach of contract, dishonest assistance, knowing or unconscionable receipt and unlawful means conspiracy, and the particular requirements for pleading dishonesty.

The judge applied the established pleading principles (including the requirements in Three Rivers and Sofer) and examined whether, on a careful reading of the cross-referenced particulars, Crypton had pleaded primary facts from which dishonesty or other necessary elements could be inferred.

• The court declined to strike out the inducing breach of contract claim: the particulars adequately pleaded inducement by persuasion/assistance, knowledge of contractual terms and, on the pleaded facts, intention to induce.
• The court permitted dishonest assistance to proceed except insofar as it relied on alleged acts of assistance relating to the matters pleaded at paragraphs 66–71, which were not adequately particularised.
• The pleaded claim in knowing or unconscionable receipt was struck out because there was no pleaded receipt of property subject to a trust or sufficient factual linkage to the fiduciary breaches.
• The unlawful means conspiracy claim was not struck out: the particulars, read as a whole, sufficiently pleaded a combination, shared object and unlawful acts carried out pursuant to the combination.

This is a first-instance strike-out application under CPR Part 3.4 brought by the first and second defendants (Blockchain Luxembourg SA and Blockchain (GB) Ltd) seeking to strike out parts of the claim brought by Crypton Digital Assets Ltd and Crypton Partner Management Ltd. Crypton alleges that Blockchain and certain individuals conspired and combined to appropriate Crypton’s institutional trading-platform opportunity, culminating in resignations of key personnel, exploitation of Crypton’s intellectual property and the collapse of acquisition negotiations. The pleaded causes of action included breach of fiduciary duty, breach of contract, copyright and confidentiality infringement, inducing breach of contract, dishonest assistance, knowing or unconscionable receipt and unlawful means conspiracy.

The application focused on whether the particulars of claim disclosed reasonable grounds for the economic torts and equitable claims pleaded against Blockchain, and whether allegations of dishonesty were sufficiently particularised in accordance with Three Rivers and subsequent authorities (including Sofer and JSC Bank of Moscow v Kekhman).

Issues framed by the court included (i) whether the particulars adequately pleaded the conduct said to amount to inducement of breaches of contract, (ii) whether dishonest assistance was sufficiently particularised as to the acts of assistance and the primary facts from which dishonesty would be inferred, (iii) whether the knowing or unconscionable receipt claim pleaded receipt of property subject to trust, and (iv) whether the unlawful means conspiracy pleaded a combination, shared object, intention to injure by unlawful means and sufficiently particularised unlawful acts.

The court’s reasoning was as follows:

• On inducing breach of contract the particulars, read as a whole, pleaded offers of employment and coordinated solicitations amounting to persuasion/assistance and knowledge of the relevant contracts; intention to induce could be inferred from the pleaded facts. Accordingly this cause of action was not struck out.
• On dishonest assistance the particulars identified assistance in soliciting employees and in exploiting the platform opportunity, and pleaded factual material from which dishonesty could be inferred. However, the particulars did not adequately identify acts of assistance in relation to certain alleged breaches of fiduciary duty (those pleaded at paragraphs 66–71) and that part of the claim was not sufficiently particularised.
• The knowing or unconscionable receipt plea was defective because it failed to plead receipt of property subject to a trust and lacked adequate linkage to the fiduciary breaches; that claim was struck out as pleaded.
• The unlawful means conspiracy plea was held to be sufficiently particularised to proceed: the particulars alleged overt acts and coordination with Blockchain from which a combination and shared object could be inferred, and the alleged unlawful acts (breaches of contract, fiduciary duty and intellectual property infringements) were identifiable in the pleading.

The judge allowed Crypton an opportunity to amend the particulars where defects were curable, with proposed amendments to be served within 14 days if Crypton wished to do so.

This was a first-instance decision disposing of a strike-out application. The application succeeded in part. The court struck out the pleaded claim in knowing or unconscionable receipt as unsustainable as pleaded and struck out part of the dishonest assistance claim insofar as it relied on alleged acts of assistance relating to the matters pleaded at paragraphs 66–71. The remaining challenged causes of action (inducing breach of contract, dishonest assistance in relation to other pleaded breaches, and unlawful means conspiracy) were held to be sufficiently pleaded and were not struck out. The judge gave reasons based on CPR Part 3.4, the particular rules for pleading dishonesty (Three Rivers, Sofer) and a careful analysis of the cross-referenced particulars and primary facts pleaded.