Alexander Gerko v Jonathan Seal & Ors.

A claim in unlawful means conspiracy based on deceit must plead a clear and concise account of the essential facts, including the alleged dishonest acts, the primary facts supporting dishonesty, and each defendant’s participation in the combination. Facts equally consistent with honesty, negligence or an ordinary contractual explanation do not provide a realistic prospect of proving fraud. The court must assess the pleaded case as a whole, while avoiding a mini-trial and allowing for the claimant’s limited knowledge of concealed conduct. Each defendant must be told what they are alleged to have known, why they are said to have known it, and what they did to further the conspiracy. A claim may be struck out where those requirements are not met.

The claimant purchased a newly developed property from the third defendant. The fifth defendant issued a practical completion certificate, which the claimant alleged was knowingly false. The claimant alleged that the defendants had combined to deceive him into not exercising a contractual right to rescind and ultimately completing the purchase.

The claimant applied to amend his particulars of claim. The first to fourth defendants applied to strike out the claim. The fifth defendant had not applied for summary determination but argued that the claim against it should fall if the conspiracy claim failed. The central issues were whether the pleaded facts gave the fraud and conspiracy allegations a realistic prospect of success and whether the proposed amendments were adequately particularised.

1. Outcome. The particulars of claim were struck out and the amendment application was dismissed. The claim against the fifth defendant was also struck out, notwithstanding that it had made no separate application.
2. A claim in dishonest conspiracy must identify the essential facts supporting both the alleged deceit and the alleged combination. The pleading must state the primary facts said to justify an inference of dishonesty, rather than repeat conclusions that a document was fraudulent or that defendants must have known it was false.
3. The relevant question at the pleading and summary determination stage was whether the pleaded facts, taken at face value and in the round, gave the claim a realistic prospect of success. The court had to avoid a mini-trial, but was not required to accept implausible, incoherent or unsupported assertions. A cautious and realistic approach was appropriate in fraud cases, particularly where relevant facts might be concealed.
4. The pleaded case relied principally on general allegations about numerous defects, a remark about a contractual deadline, photographs, the absence of a site visit on the certification date, and a covering letter. Those matters did not identify what each defendant knew, when they knew it, or how that knowledge made the certificate dishonest. The contractual and construction context supplied innocent explanations. The covering letter, read fairly, indicated the fifth defendant’s view that practical completion had occurred despite outstanding work and was inconsistent with a dishonest common plan.
5. The conspiracy claim also failed because the particulars did not identify acts by each defendant showing that the defendant had joined the common plan with knowledge of its objective and had done something to further it. The fifth defendant’s involvement was essential to the conspiracy as pleaded, and there was no adequate basis for finding that it had participated.
6. It was sufficient for an unlawful means conspiracy that at least one conspirator had the intention to injure by using the unlawful means, while the others joined knowing or turning a blind eye to that objective. It was unnecessary for every defendant to possess the same specific means or ends intention. That principle could not assist the claimant because the necessary facts of participation and knowledge had not been pleaded.
7. Inducement and causation were generally matters for trial. The existence of the practical completion certificate could realistically have affected the claimant’s decision-making, even if he suspected that the property had greater defects than those identified. The court therefore declined to strike out the claim on causation grounds, although it struck out the claim for inadequate pleading of deceit and conspiracy.
8. The proposed amendments alleging a second deception were in substance a new allegation of dishonesty. They required particulars identifying the representations, the works, the persons responsible, and the primary facts supporting deception. No such particulars were provided.