Crypton Digital Assets Ltd v Blockchain Luxembourg SA

A pleading must give the opposing party sufficient notice of the case to be met. Where an element of a claim is to be inferred, the pleaded facts relied on for that inference must be identified. The required degree of identification is case-sensitive and should not be applied rigidly.

Dishonesty must be distinctly alleged and particularised. The primary facts must, read as a whole and in context, justify an inference of dishonesty rather than innocence or negligence. They need not be consistent only with dishonesty.

A defined cross-reference to pleaded conduct may adequately particularise allegations of unlawful means conspiracy, inducement of breach of contract, and dishonest assistance. A strike-out application does not determine whether the pleaded facts will be proved at trial.

Crypton Digital Assets Ltd and its subsidiary alleged that Blockchain and former Crypton personnel combined to appropriate Crypton’s cryptocurrency trading-platform opportunity without paying for its business. The pleaded claims against Blockchain included inducing breaches of contract, dishonest assistance in fiduciary breaches, and unlawful means conspiracy.

Deputy Master Brightwell declined to strike out those claims, although other parts of the wider claim had been struck out. Blockchain appealed, contending that the amended particulars did not adequately identify the facts said to establish the combination, its objects, inducement, assistance, or dishonesty.

The central issue was whether the pleaded cross-references and factual allegations gave Blockchain fair notice of the cases it had to answer.

1. Permission to appeal was granted, but the appeal was dismissed. The appellate court had to undertake a granular assessment of whether the amended particulars pleaded facts which, if proved, could establish each relevant cause of action. It was not confined to identifying an error of principle by the Deputy Master. For that purpose, the pleaded facts had to be assumed true.

2. The pleaded unlawful means conspiracy was sufficiently particularised. The particulars identified the alleged original and evolved combination, its shared objective of exploiting Crypton’s business opportunity without payment, and the unlawful acts said to have been carried out pursuant to it. The cross-reference to the pleaded acts in the specified paragraphs sufficiently identified the primary facts from which the combination could be inferred.

3. The claims for inducing breach of contract were also adequately pleaded. The allegation that Blockchain coordinated resignations, solicited personnel, gave or was inferred to have given assurances of employment, and employed the relevant individuals was capable of amounting to inducement. The pleading made clear that Crypton relied on Blockchain’s pleaded conduct in the identified range of paragraphs; the subsequent Part 18 response gave further clarification.

4. The dishonest-assistance claim was sufficiently pleaded. The conduct said to constitute assistance was identified by the particulars and response. The dishonesty particulars had to be read together and in context. Taken as a whole, the alleged knowledge of obligations, participation in exploiting the business opportunity, staff solicitation, and alleged false pretext for ending acquisition negotiations were capable of supporting an inference of dishonesty rather than innocence or negligence.

5. The court did not need to decide whether claims alleging concealed wrongdoing attract a more generous approach to particularisation. The claims were adequately pleaded without that proposition. There would be an order granting permission but dismissing the substantive appeal.

• High Court, Chancery Appeals: permission to appeal from Deputy Master Brightwell was granted, but the appeal against the refusal to strike out the relevant claims was dismissed.
• High Court, Chancery Division: Deputy Master Brightwell refused to strike out the claims for inducing breach of contract, unlawful means conspiracy, and most of the dishonest-assistance claim.