The Persons Identified in Schedule 1 to the Re-Amended Particulars of Claim v Standard Chartered PLC

An allegation of fraud or dishonesty must be unequivocal and adequately particularised. A pleading need not disclose a solid evidential foundation or set out the evidence by which the allegation will be proved.

Where dishonesty is alleged by inference, the claimant must plead primary facts capable of tilting the balance towards dishonesty. That requirement does not apply in the same way where the pleaded facts directly describe dishonest conduct. A claimant may adopt allegations from a sufficiently plausible third-party source.

A claim should not be struck out merely because the claimant cannot initially identify every individual possessing the relevant corporate knowledge. The necessary particulars should be supplied as soon as feasible.

About 230 holders of securities issued by Standard Chartered plc brought claims under sections 90 and 90A of the Financial Services and Markets Act 2000. They alleged that published information and prospectuses contained misstatements or omissions concerning sanctions violations and an alleged bribery scheme involving Maxpower Group PTE Ltd.

Standard Chartered applied to strike out parts of the pleadings concerning allegations derived from a US whistle-blower complaint and knowledge of the Maxpower scheme. Michael Green J refused most of the application in [2023] EWHC 2756 (Ch), although he struck out an allegation that certain Maxpower non-executive directors were persons discharging managerial responsibilities within Standard Chartered.

The central issues on the appeal were whether the fraud allegations were adequately particularised and whether the claimants had sufficiently pleaded knowledge or dishonesty on the part of one or more persons discharging managerial responsibilities.

1. Appeal dismissed. The Court of Appeal unanimously held that the challenged allegations were sufficiently pleaded to proceed to trial.

2. The core pleading requirement was adequate particularisation, not disclosure on the face of the pleading of a solid evidential foundation. Particulars of claim must state concisely the facts relied upon. They need not set out all the evidence by which those facts will be proved. The seriousness of fraud or dishonesty makes proper particularisation especially important, but excessive requirements could make meritorious fraud claims impracticable where relevant information is initially limited.

3. The requirement to plead primary facts capable of tilting the balance towards dishonesty applies where the claimant invites the court to infer dishonesty. It is not invariably necessary to add further primary facts where the pleaded account directly describes dishonest conduct. A claimant may repeat or adopt allegations made by a third party. Whether that course is proper depends on matters including whether the source appears plausible and the allegation can properly be verified.

4. The allegations derived from the Brutus complaint were sufficiently particularised when the incorporated passages were read with the re-amended particulars of claim and reply. The US Government's rejection of the allegations went to their merits, not their adequacy as pleadings. The bank could properly seek further information, but the deficiencies asserted did not justify striking out.

5. For liability under section 90A and Schedule 10A to the Financial Services and Markets Act 2000, the relevant knowledge or dishonesty had to be that of a person discharging managerial responsibilities within the issuer. On the approach in G4S, that category was confined here to de jure or de facto directors, with shadow directors left as a possibility. The claimants had made clear that members of the Group Executive who were not de jure directors were alleged to be de facto directors. Any desirable formal amendment did not justify striking out.

6. The claim was not liable to be struck out merely because knowledge was initially alleged against members of the Group Executive collectively. It was enough at this stage to plead a sufficient basis for alleging that at least one relevant person had the requisite knowledge or dishonesty. The pleaded whistle-blower reports, investigations, remedial measures and termination of senior personnel adequately supported the alleged inference of knowledge. More individualised particulars should be supplied as soon as feasible.

1. Court of Appeal (Civil Division): In [2024] EWCA Civ 674, the court unanimously dismissed Standard Chartered plc's appeal and upheld the refusal to strike out the challenged Brutus and Maxpower allegations.
2. High Court, Business and Property Courts: Michael Green J, in [2023] EWHC 2756 (Ch), struck out the allegation that specified Maxpower non-executive directors were persons discharging managerial responsibilities within Standard Chartered, but otherwise dismissed the strike-out application.