The Persons Identified in Schedule 1 v Standard Chartered Plc
[2024] EWHC 836 (Ch)
The Persons Identified in Schedule 1 to the Re-Amended Particulars of Claim v Standard Chartered PLC
17 June 2024
[2024] EWCA Civ 674
Court of Appeal
A company (SC plc) was sued for misleading investors. The lawsuit relied on information from a separate whistleblower case and a bribery scandal. Even though the whistleblower case was dismissed in the US, a UK court let the lawsuit against the company proceed. The court said the lawsuit's claims were specific enough to continue, even if it didn't include every single piece of evidence. The company's appeal was rejected.
Key Facts
- •Standard Chartered plc (SC plc) appealed against the High Court's refusal to strike out parts of claimants' pleadings in a Financial Services and Markets Act 2000 (FSMA) claim.
- •Claimants alleged misstatements and omissions in SC plc's published information, relying on allegations from a US 'qui tam' action (Brutus Complaint) and a bribery scheme involving Maxpower.
- •The Brutus Complaint alleged SC plc's deliberate evasion of Iranian sanctions, while SC plc denied the allegations.
- •The claimants alleged that SC plc’s Group Executive had the requisite knowledge of the bribery scheme and sanctions evasion.
- •The appeal concerned whether the claimants' pleadings adequately particularised allegations of fraud and dishonesty, particularly regarding the Brutus Complaint and the Maxpower bribery scheme.
- •The High Court dismissed SC plc's application to strike out, except for allegations regarding non-executive directors of Maxpower being PDMRs of SC plc.
Legal Principles
In claims alleging fraud or dishonesty, pleadings must give fair notice but avoid excessive detail; the more serious the allegation, the greater the need for particulars.
Three Rivers DC v Bank of England (No 3) [2003] 2 AC 1
A claimant alleging dishonesty must plead primary facts that tilt the balance in favor of dishonesty over innocence or negligence; however, they do not need to plead every fact that will be used in the trial.
JSC Bank of Moscow v Kekhman [2015] EWHC 3073 (Comm), Sofer v SwissIndependent Trustees SA [2020] EWCA Civ 699
While allegations of dishonesty against a corporate body require pleading the relevant knowledge at the relevant time, a mere failure to identify individuals at the outset doesn't automatically justify striking out the claim.
Sofer v SwissIndependent Trustees SA [2020] EWCA Civ 699, Nokia Corporation v AU Optronics Corporation [2012] EWHC 731 (Ch)
Under FSMA, liability depends on knowledge/dishonesty of persons discharging managerial responsibilities (PDMRs); only de jure or de facto directors can be PDMRs.
Allianz Global Investors GmbH v G4S Ltd [2022] EWHC 1081 (Ch)
A pleading does not need to disclose a solid evidential foundation for allegations of fraud or dishonesty, but it must be adequately particularised.
This case
Outcomes
Appeal dismissed.
The Court found that the claimants' pleadings, read in conjunction with the Brutus Complaint, provided sufficient particularization of the allegations of fraud and dishonesty, despite the US Government's dismissal of the Brutus action. The court also found that the claimants adequately pleaded a case that members of SC plc’s Group Executive had the necessary knowledge of the bribery scheme.
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