Barings Investment Services Limited v Adam Hugh Wheeler

Strike out is a proportionate, last-resort remedy. Under CPR rules 3.4(2)(a) and (b), the court first asks whether the pleaded case discloses no reasonable grounds or constitutes an abuse of process. It then decides whether strike out is appropriate in the circumstances.

A damages claim may be based on a hypothetical counterfactual that differs from the claimant’s actual subsequent conduct. Affirming an employment contract does not necessarily waive an accrued damages claim based on what would have happened had earlier duties been performed. Alleged inconsistencies between related proceedings will amount to abuse only where the inconsistency is clear, the earlier position materially procured a judicial decision, and allowing the later position would cause unfairness or bring the administration of justice into disrepute. Issues of loss, causation, quantum and equitable relief generally require pleading and trial where they have a realistic prospect of success.

Barings Investment Services Limited brought claims against its former senior employee, Adam Wheeler, arising from an alleged team move to a competing business. It pleaded breaches of contract and fiduciary duty and sought damages or equitable compensation, an account of profits, repayment or forfeiture of bonuses, a constructive trust over alleged equity interests, and a possible clawback claim.

Mr Wheeler applied to strike out the claim or parts of it under CPR rule 3.4(2)(a) and (b), or alternatively for summary judgment under Part 24. He alleged internal inconsistency, inconsistency with related proceedings brought in North Carolina by Barings LLC, absence of loss, defects in the quantum case, and failure of the equitable remedies. The central issue was whether any part of BISL’s pleaded case was bound to fail or constituted an abuse of process.

1. Application dismissed. The claim and the challenged remedies were not struck out and no summary judgment was entered.
2. CPR rule 3.4 requires a two-stage approach: whether a specified ground is established, followed by whether the court should exercise its discretion to strike out. Under rule 3.4(2)(a), the court ordinarily focuses on the pleading, assumes pleaded facts to be true unless contradictory or obviously wrong, and asks whether the case is hopeless or bound to fail. Strike out remains a proportionate, last-resort remedy. The same proportionality requirement applies to abuse of process.
3. BISL’s affirmation of Mr Wheeler’s contract did not waive its accrued claim for damages. The pleaded damages depended on a counterfactual in which earlier disclosure would have enabled BISL to terminate before bonus payments were made. That hypothetical was not the same as the actual contractual history. At most, affirmation prevented BISL from asserting that the contract had in fact terminated earlier. The basis and quantum of damages remained matters for trial.
4. The alleged inconsistency between the English and North Carolina proceedings was not clear. The US pleading was broad and insufficiently particularised to establish that Barings LLC claimed the same remuneration losses. The North Carolina court’s forum decision was not shown to have depended on that issue. There was no demonstrated unfair advantage or detriment, and the rule against double recovery remained applicable.
5. BISL had realistic arguments that its recharging arrangements produced collateral benefits independent of the alleged breaches. It also had tenable arguments concerning transferred loss. The issues of profits, bonus allocation, LTIP construction, account of profits, constructive trust and bonus forfeiture required pleading, evidence and trial.
6. Even if a strike-out ground had been established, strike out would not have been proportionate. A stay pending clarification or conclusion of the US proceedings might have been appropriate, but the court gave the parties an opportunity to make further submissions on that issue.

First-instance application. The judgment records no prior appellate decision.