Berkeley Square Holdings Ltd & Ors v Lancer Property Assets Management Ltd & Ors (Strike Out Application) (Rev 1)

A pleading must contain the material facts necessary to formulate a cause of action or defence. A fact which is irrelevant to the pleaded defence, and merely bears on the possible credibility or weight of later evidence, belongs in cross-examination or submissions rather than the pleading. A matter cannot be pleaded solely to obtain disclosure about an immaterial issue. Courting publicity does not, by itself, amount to an abuse of process. Where a pleading has a legitimate purpose, a collateral purpose will not ordinarily justify strike-out as an abuse, although an irrelevant pleading may be struck out because it discloses no reasonable grounds for defending the claim.

The claimants applied under CPR rule 3.4(2)(a) and (b) to strike out paragraph 8 of the defendants’ re-amended defence and counterclaim. The paragraph alleged that Sheikh Khalifa had suffered a debilitating stroke in January 2014 and that those instructing the claimants could not establish whether he had authorised or approved payments made before that date.

The court considered whether the allegation constituted a reasonable defence, and alternatively whether it was an abuse of process because it was intended to generate publicity or obtain disclosure. The court allowed the application on the first ground and therefore did not determine the proposed state-immunity, act-of-state, comity or diplomatic-immunity arguments.

1. Application granted. Paragraph 8 of the re-amended defence and counterclaim was struck out under CPR rule 3.4(2)(a).
2. Pleadings should contain the material facts necessary to formulate a cause of action or defence, rather than background facts, evidence, argument or rhetoric. Although not every pleaded matter must itself constitute a complete defence, it must be relevant to matters which do.
3. The alleged incapacity arose from January 2014. The defendants’ case concerning Sheikh Khalifa’s knowledge or approval of the payments depended on events said to have occurred in 2005, 2011 and 2012. His subsequent capacity was therefore irrelevant to whether he knew or approved the payments at the relevant time. It could, at most, affect the weight of any later evidence that he had confirmed a lack of knowledge or approval. That possibility was speculative and was a matter for evidence, cross-examination or submissions, not pleading.
4. The earlier case-management decision treating capacity as a key disclosure issue did not alter the result. That decision had been made against materially wider pleadings, including allegations concerning the validity of documents and the authority of the claimants’ solicitors.
5. The evidence relied on to support the incapacity allegation was largely hearsay and based on unidentified sources or non-medical opinions. Nevertheless, in the context of a strike-out application, the allegation was not incapable of proof and was not bound to fail. That conclusion did not save it from strike-out because it remained irrelevant to the pleaded defence.
6. The alternative abuse-of-process ground was not necessary to the decision. Had the allegation been relevant, a collateral wish to obtain publicity or disclosure would not, without more, have made it abusive. A matter should not be pleaded to obtain disclosure where it is immaterial, but relevance would provide the pleading with a legitimate purpose.