Cosimo Borrelli & Ors v Mutaz Otaibi & Ors

On an application concerning a contribution claim, a party must plead facts showing a legally recognisable claim with a realistic prospect of success. A defendant cannot rely on general knowledge, participation or sanctioning of corporate structures, investment strategies or transactions without pleading facts connecting that conduct to the relevant wrongdoing.

For unlawful means conspiracy, the pleading must identify a combination pursuing a common object, knowledge of the unlawful means, intention to injure and resulting loss. Recklessness as to foreseeable harm is insufficient. Dishonest assistance requires properly identified assistance and facts making dishonesty more likely than innocence or negligence. An inducement claim requires facts showing how the defendant’s conduct operated on the will of the contracting party.

The Part 20 Defendants sought permission to amend their Particulars of Additional Claim against Mr Wang, or alternatively sought strike out or summary judgment. The proposed claims concerned unlawful means conspiracy, dishonest assistance, inducing breach of contract, knowing receipt and negligence, arising principally from alleged misuse of investment-fund assets to acquire and use artwork.

The application also concerned a contribution claim relating to a transaction fee on a bridge loan. Mr Wang argued that the proposed pleadings disclosed no coherent claim and had no realistic prospect of success. The central issue was whether the proposed amended pleading disclosed reasonable grounds for bringing a contribution claim and satisfied the applicable merits threshold.

1. Applicable standards. Under CPR 3.4(2), a statement of case may be struck out where it discloses no reasonable grounds, is abusive or would obstruct the just disposal of proceedings. Summary judgment and permission to amend involve the same essential merits inquiry: whether the claim has a realistic prospect of success, without conducting a mini-trial. The burden on an amendment application lies on the applicant.
2. Contribution. Under s. 1 of the Civil Liability (Contribution) Act 1978, contribution requires liability to the claimant in respect of the same damage.
3. Unlawful means conspiracy. The proposed pleading did not adequately allege a combination involving Mr Wang, a common object, knowledge of all facts making the means unlawful, or the requisite intention to injure PIF. General knowledge of Shanti’s ownership, investment strategy, acquisitions or use of artwork did not establish participation in the alleged conspiracy. The pleaded recklessness was insufficient. The approach to intention, distinguishing ends, means and consequences, was applied by reference to OBG Ltd v Allan and the authorities discussed in ED&F Man.
4. Dishonest assistance. The pleading did not identify assistance in the alleged breaches of fiduciary duty. Mr Wang’s personal use of artwork was arguably assistance, but there was no proper plea that he knew of or sanctioned the Floreat Defendants’ use. The dishonesty case also failed because the pleaded facts did not make dishonesty more likely than innocence or negligence.
5. Inducing breach of contract. The proposed pleading did not explain what Mr Wang did to operate on the will of the relevant contracting parties, nor did it plead facts supporting knowledge of the contracts.
6. Other claims. Knowing receipt was no longer pursued. The negligence claim lacked pleaded facts establishing a duty, the alleged advice, its timing, or reliance. Participation in the Blue Water Loan did not support an inference that Mr Wang sanctioned the separate Mahi Bridge Loan.
7. The court refused permission to amend and struck out the unamended Particulars of Additional Claim. The parties were directed to agree an order giving effect to those conclusions.