Complete Facilities Solutions Limited v Livingston Consulting Limited & Ors.

Allegations of fraud, dishonesty, procuring breach of contract, conspiracy and joint tortfeasorship require pleaded primary facts capable of supporting the relevant inference. A claimant cannot defer particulars until disclosure. Company insolvency, unexplained financial irregularities and non-payment do not, without more, make dishonesty more likely than innocence or negligence.

A director or employee is generally protected from personal liability for procuring the company’s breach where acting within the scope of duties. Liability for joint tortfeasorship or conspiracy likewise requires conduct outside the constitutional or employment role. A promise to pay when paid concerns future intention and is actionable as deceit only if made without an honest intention to perform. A Quistclose trust requires objectively communicated intention to restrict use of the property, usually with segregation.

Complete Facilities Solutions Ltd claimed payment for maintenance works carried out at premises operated by Martin McColl Ltd. Livingstone Consulting Ltd had agreed to pay CFS when paid corresponding sums by MCL. MCL entered administration and Livingstone later entered liquidation.

CFS sued Livingstone and MCL in contract and also sued individual directors and an employee of Livingstone for procuring breach of contract, deceit, conspiracy to injure, joint tortfeasorship, alleged tortious duties and breaches of fiduciary duty connected with an alleged Quistclose trust.

The individual defendants applied under CPR 3.4(2)(a)/(b) and the court’s inherent jurisdiction to strike out the claims, alternatively for summary judgment under CPR 24.2(a)(i). The issues were whether the claims disclosed complete causes of action, whether dishonesty was properly particularised, and whether any claim had a realistic prospect of success.

1. Strike out for inadequate pleading. The allegations of procuring breach of contract, deceit, conspiracy to injure and joint tortfeasorship required primary facts from which dishonesty or deliberate wrongdoing could be inferred. The statement of case pleaded only that CFS had not been paid. It expressly disavowed knowledge of the alleged irregularities and of who was responsible. Those matters could not be supplied later through disclosure. The claims were struck out under CPR 3.4(2)(a)/(b) and the inherent jurisdiction.
2. Absence of complete causes of action. A director could be liable for procuring the company’s breach only when acting outside the scope of the director’s duties. The same principle applied to an employee. Liability for joint tortfeasorship required more than carrying out the company’s constitutional role, and liability for conspiracy with the company likewise required acting outside that role. The pleading alleged none of these matters. The alleged assumption of personal responsibility for tortious duties was also unsupported by any pleaded basis.
3. Summary judgment. The individual claims had no more than fanciful prospects. The evidence supported the conclusion that Livingstone paid CFS when MCL paid Livingstone. A promise to pay when paid was a statement of future intention and could amount to misrepresentation only if made without an honest intention to perform. There was no evidential basis for that conclusion, and CFS’s loss was caused by MCL’s non-payment.
4. Quistclose trust. There was no evidence of an objectively communicated intention by MCL and Livingstone that relevant funds should be restricted, segregated or held on trust. The contractual promise to pay when paid concerned timing and did not create such a trust. In any event, personal trusteeship by the individual defendants was neither pleaded nor supported by evidence. Summary judgment was therefore also appropriate.