High Court Emphasizes Stringent Pleading Standards in Various Claimants v Standard Chartered Plc Case

Citation: [2023] EWHC 2756 (Ch)
Judgment on

Introduction

In the recent case Various Claimants v Standard Chartered Plc [2023] EWHC 2756 (Ch), a number of legal principles were analyzed and applied by the High Court of Justice, primarily in the context of issuer liability under the Financial Services and Markets Act 2000 (FSMA). The case encompassed applications for strike out and summary judgment, alongside a request for further information under CPR Part 18, providing insights into the appropriate pleading standards for fraud and dishonesty, the identification of proper claimants in complex litigations, and the management of cases with multiple individual reliance claims.

Key Facts

The claim involved a consolidated set of pleadings from 230 claimants who were institutional investors in Standard Chartered plc. They contended that the bank made untrue and misleading market statements related to non-compliance with sanctions, financial crime control failures, and alleged bribery, thereby causing the claimants to suffer losses. The Defendant made applications for parts of the case to be struck out or, alternatively, for summary judgment to be entered, particularly for what were termed the “Brutus Allegations,” and for further information on individual reliance claims. The “Brutus Allegations” referred to claims that the bank’s non-compliance with sanctions and involvement in an alleged bribery scheme were more extensive than admitted in previous settlements with US authorities.

Several legal principles played a central role in the High Court’s analysis, including:

  1. Case Management and Plea Sufficiency: The court considered whether it was appropriate to strike out parts of the case at this stage, citing Potter LJ in Partco Group Ltd v Wragg and emphasizing that novel points of law should be based on actual findings of fact, particularly in areas of developing jurisprudence.

  2. Pleading Fraud and Dishonesty: The court reiterated that any facts pled in a statement of case must have an evidential basis to avoid improper, speculative claims, drawing on authorities such as Three Rivers District Council v Bank of England and Clarke v Marlborough Fine Art (London) Ltd.

  3. Standard of Directors as Persons Discharging Managerial Responsibilities (PDMRs): The G4S case provided guidance on who are considered PDMRs under Schedule 10A FSMA. It was held that this definition confines PDMRs to directors of the issuer understood in the context of company law, affecting claims related to the “Bribery Scheme” allegations.

  4. Provision of Further Information Under CPR Part 18: The necessity and proportionality of information required for the fair management of the case were evaluated, as highlighted by the Commercial Court Guide.

Outcomes

The court’s decisions were as follows:

  1. Brutus Allegations: The application to strike out or for summary judgment was dismissed. The court found the claims sufficiently pled, with a credible evidential basis, and SC plc had responded with a specific denial.

  2. Maxpower Allegations: The claim based on the knowledge of four non-executive directors of Maxpower was struck out. Without allegations that they were de facto directors of SCPLC, they could not be considered PDMRs under FSMA, as per G4S.

  3. Individual Reliance Claims: The strike out application was dismissed as abuse of process grounds were not met, and Claimants had authority to plead claims.

  4. Part 18 Application: The court ordered the provision of further information on standing and reliance by specific deadlines but found no need at this stage for further information regarding the knowledge of the bank’s senior management.

Conclusion

The case of Various Claimants v Standard Chartered Plc has reinforced the stringent requirements for pleading fraud and dishonesty and set clear expectations for case management in complex litigations involving multiple claimants and a myriad of claims. It further clarified the status of individuals who can be considered PDMRs with respect to issuer liability claims. Legal practitioners can draw from this case when structuring similar claims, particularly regarding the level of detail required in pleadings and the management of multi-party reliance cases. The court’s systematic approach in demanding clear, credible evidence for such serious allegations as fraud enhances the integrity of judicial proceedings and ensures that defendants are well-informed of the claims they have to defend.

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