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

This appeal concerned whether parts of the claimants’ pleadings should be struck out under CPR 3.4(2) as inadequate where they relied in part on allegations in a third-party United States "Brutus" complaint and on allegations about a purported bribery scheme at Maxpower. The Court of Appeal held that pleadings alleging fraud or dishonesty must be adequately particularised but need not disclose on their face a full evidential foundation. Where dishonesty is said to be inferable, primary facts that "tilt the balance" in favour of dishonesty should be pleaded, but a claimant need not plead all the evidence it will call at trial. Piggybacking on allegations made elsewhere is permissible provided the claimant gives sufficient particulars and verification. The Court dismissed the appeal, upholding the judge’s refusal to strike out the Brutus-related passages and generally allowing the Maxpower-related allegations to proceed while confirming that the specific allegation that certain Maxpower non-executive directors were persons discharging managerial responsibilities of SC plc should be struck out.

Background and parties. SC plc (the appellant) is the parent of Standard Chartered Bank and was subject to earlier US and UK settlement agreements concerning sanctions and anti-money laundering failings. The claimants (some 230 investors) brought consolidated claims under sections 90 and 90A of the Financial Services and Markets Act 2000 alleging that published information between 2007 and 2019 contained untrue or misleading statements and omissions, in part because of (i) alleged sanctions-evasion conduct described in a third-party US "Brutus" qui tam complaint and (ii) alleged bribery at Maxpower.

Procedural posture. The defendant applied under CPR 3.4(2) (and alternatively CPR 24.2) for strike out/summary judgment in respect of passages of the pleadings that relied on the Brutus Complaint and on Maxpower. At first instance Michael Green J struck out only limited parts (in particular allegations that certain Maxpower non-executive directors were PDMRs of SC plc) and otherwise dismissed the application. SC plc appealed.

Issues. The Court of Appeal addressed (i) the standard for pleading fraud/dishonesty and whether pleadings must disclose a solid evidential foundation on their face; (ii) whether a claimant may "piggyback" on allegations made in a third-party complaint; and (iii) whether the claimants had pleaded sufficient facts to treat members of SC plc’s Group Executive as persons discharging managerial responsibilities (PDMRs) and as having the requisite knowledge/dishonesty in respect of the Maxpower bribery allegations.

Reasoning. The Court emphasised established authorities on pleading fraud/dishonesty (including Three Rivers, Sofer and Kekhman) and reiterated that more serious allegations require greater particularity. However, it rejected a rigid rule that pleadings must show a full evidential foundation. The court accepted that a claimant may rely on third-party allegations where sufficiently particularised and verified, and that a claimant need not plead all primary facts or the full evidentiary material at the pleading stage. The Court found the Brutus-based passages, read with specified incorporated paragraphs of the Brutus Complaint, were sufficiently particularised to survive strike out. As to Maxpower and FSMA schedule 10A issues, the Court accepted the judge’s view that the claimants had made clear that members of the Group Executive who were not de jure directors were alleged to be de facto directors and that, on the pleaded material, it was reasonably arguable that at least one PDMR must have known of the bribery allegations before press exposure.

Relief sought and disposition. The defendant sought strike out/summary judgment as to parts of the claim. The Court dismissed the appeal and therefore upheld the judge’s order allowing the majority of the contested pleadings to stand while leaving narrow prior strike-out of certain PDMR allegations intact.

The appeal was dismissed. The Court held that (i) allegations of fraud or dishonesty must be adequately particularised but need not disclose on their face a full evidential foundation; (ii) primary facts sufficient to justify an inference of dishonesty should be pleaded where dishonesty is to be inferred, but a claimant need not plead all evidence it intends to adduce at trial; (iii) a claimant may adopt or 'piggyback' on allegations in a third-party complaint where the pleading, read with specified incorporated passages, gives adequate particulars and verification; and (iv) the judge was entitled to refuse strike out of most of the Brutus- and Maxpower-related passages while striking out the specific contention that certain Maxpower non-executive directors were PDMRs of SC plc.

Appeal to the Court of Appeal (Civil Division) from the High Court (Business and Property Courts) before Mr Justice Michael Green: [2023] EWHC 2756 (Ch). Permission to appeal was heard in the Court of Appeal, which delivered judgment on 17 June 2024: [2024] EWCA Civ 674.