VE Vegas Investors IV LLC v Evelyn Partners LLP & Ors

This is the defendants’ application dated 20 February 2024 seeking to strike out parts of the claimant’s statements of case under CPR 3.4(2) (a) and/or (b).

The parties and the claim are described in my judgment dated 27 July 2023 (“the first judgment”)

That judgment and this application arise out of the particulars of breach of duty made in paragraphs 37 and 40 of the particulars of claim (“PoC”):

The alleged consequences of those breaches are set out at paras 41 and 42 of the PoC:

On 29 July 2022, the defendants made a Request for Further Information (“the July 2022 Request”) which included the following Request (4) for information in respect of paras 37(3) and (4) of the PoC:

The claimant’s responses to the July 2022 Request were on 2 November 2022 (“the November 2022 Replies”). Its response to request 4 was:

In their letter dated 14 December 2022, the defendants’ solicitors made the following complaint about that response:

On 13 February 2023, the claimant served amended Replies (“the February 2023 Replies”) to the July 2002 Request, including expanded responses to requests 4 and 5.

These amended responses identified many more persons and business entities as Potential Purchasers (“PPs”), divided into 2 categories:

The first category comprised both named persons or entities, and descriptive categories e.g. minority owners of the Company’s subsidiaries. This prompted the defendants’ application dated 8 March 2023 (“the first application”). In it, they sought to require the claimant to identify all PPs it relied upon, and to preclude it from relying upon categories of PPs. I note that the defendants did not seek to strike out any passages in which individual PPs had been identified.

The first judgment determined that application. I decided that if and to the extent that the claimant relied upon individual PPs additionally to those already pleaded, it must identify them in its statement of case. The defendants abandoned (in the course of the hearing of the first application) that part of it which sought to prevent the claimant from relying on categories of PPs. The claimant is not therefore restricted to a closed list of individuals, and remains entitled to rely upon descriptive categories of PPs.

This outcome was reflected in my order dated 27 September 2023 at para 1:

The schedule to that order (“the Schedule”) included the names of all the persons or entities alleged to be PPs in the PoC, Reply and the February 2023 Replies – 48 in total.

On 25 October 2023, the claimant served a list (“the List”) pursuant to paragraph 1 of the order of 27 September 2023. This comprised a total of 292 persons and entities. There is some limited overlap between the List and the Schedule. Thus, the List includes:

This overlap was, in my judgment, plainly an oversight or error: the Schedule was intended to list all persons or entities who had been identified in the statements of case served to date; whilst the purpose of the List was to identify only those additional persons or entities not yet identified on which the claimant wished to rely.

On 3 November 2023, the defendants served a further RFI (“the November 2023 Request”). This relevantly included requests 3 and 4. The claimant’s Replies were dated 24 November 2023 (“the November 2023 Replies”):

The claimant served a revised List of the Potential Purchasers (“the Revised List”) attached to its November 2023 Replies. This grouped the PPs under the categories set out in its reply to request 4.

The defendants’’ application as issued sought:

The passages to be struck out were not identified in the application notice. They were provided under cover of the defendants’ solicitors’ letter dated 23 February 2024, by providing marked-up copies of:

CPR 3.4(2) provides, so far as relevant:

For present purposes, it is sufficient to gratefully adopt the summary of the relevant principles by Joanna Smith J in Ashraf v Lester Dominic Solicitors [2023] EWHC 2800 (Ch) at paras 68-76.

To this must be added:

The grounds of the application are set out in the defendants’ solicitors’ letter dated 26 January 2024, exhibited to the 1^st witness statement dated 20 February 2024 of the defendants’ solicitor, Rowena Lewis in support of the application.

The primary ground is that the first part of second sentence of Reply 3:

The defendants therefore seek to strike out the following parts of Replies 3 and 4:

The starting point is the first sentence of Reply 3 (“sentence 1”), which states:

The claimant’s counsel accepted that “each” has the same meaning in this sentence as “each and every” or “all”. This is the claimant’s primary case.

The claimant’s alternative case is the defendants should have identified the “vast majority” of the persons on the List. The defendants criticize this expression as vague and embarrassing. Their position is that they are entitled to know in respect of each and every PP in the List whether the claimant alleges that they should have identified it. Their counsel submitted that the effect of sentence 1 was that it was not negligent to identify some of the PPs in the List, but the defendants do not know which ones.

I reject that submission. The persons and entities in the List reflect the categories of PPs alleged by the claimant. In the first judgment, I decided that the claimants are entitled to rely upon categories of PPs, and that only insofar as it sought to rely upon individuals within those categories, was the claimant required to identify them. The claimant is not required to identify every individual within a category, and it follows that the categories may contain individuals not identified by the claimant.

The defendants’ submission is premised on the assumption that the court will consider and determine in respect of each and every PP on the List whether it was in fact a potential purchaser of the Company. This seems to me to be unrealistic. The issues of who were the PPs and whether the defendants should have identified them will be addressed by expert evidence dealing with the categories of PPs, whether the defendants should have identified those categories, and, insofar as the claimant identifies persons said to fall within them, whether those persons fell within the categories.

Correspondingly, the trial judge will be making findings on those issues. The judge will not be carrying out a detailed evaluation of each PP on the List to decide whether they were a potential purchaser. There may be factual issues about whether a particular person or entity falls within an identified category, but the defendants know what the claimant’s case is on this.

As to the expression “vast majority” I agree that it lacks specificity. The defendants submitted that even if the expression were more specific, for instance, by identifying a proportion or percentage, the claimant’s case would remain unclear, because it would remain unclear in respect of any particular alleged PP whether it is alleged that the defendants should have identified it. As their counsel put it, the claimant’s case could be that there was an irreducible minimum list of named or identified PPs which the claimant says the defendant should have identified in any event.

In my judgment, this is a reformulation of the submission I have already rejected above. The claimant’s position is entitled to rely on categories, and it follows from that that it is not obliged to particularise its case in respect of each and every PP. Whether that is correct will be a matter for the trial judge – it is not in my judgment plainly unarguable.

Sentence 2 states:

It follows from the above that sentence 1 is inconsistent with and cannot stand with the first part of sentence 2, such that they both cannot remain in the November 2023 Replies. I will therefore allow the claimant a short period to put forward amendments to remedy the position.

As to the second part of sentence 2, whether the claimant is obliged to so plead is an irrelevant allegation if sentence 1 stands; and, on that basis, is liable to be struck out. Again, I will allow the claimant a short period to formulate amendments that deal with this deficiency.

Sentence 3 states:

As noted above, the claimant’s case is that the defendants should have identified categories of PP. This sentence sets out what is implicit in that case: that the categories may include PPs which the claimant has not named in its statements of case. This sentence is not therefore in my judgment strikable.

Request 4 asks:

The claimant’s reply states that this is sufficiently pleaded and refers back to the paragraphs 37(2) –(11) of the PoC (set out above) and Replies 4, 5, 11, and 14-15 of the February 2023 Replies. It is not necessary to set these passages out in full. They contain multiple allegations as to information about PPs that the defendants should have obtained from the Company, and that the defendants should have asked the Company’s management for that information. It also sets out knowledge that the defendants had about the Company and the various categories of PPs, alleging that with that information the defendants should have identified and contacted them. As to when, this is alleged to be by 13 April 2017. The persons in the List are all said to fall within the categories identified in the February 2023 Replies. I am therefore satisfied that the information sought has already been provided.

The defendants seek to strike out the following passage in the PoC:

The position is the same in respect of the November 2022 Replies, where the passages sought to be deleted refer to Mr Astrachan, Mr Binion, Mr Ranson (and by addition in the course of the hearing, the Clerkenwell Consortium).

Again, the position is similar. As sent to the Claimant on 23 February 2023 (and only withdrawn in the course of the hearing), the defendants sought to strike out those passages in the Replies alleging that the defendants should have identified PPs which were later listed in the Schedule. That was plainly misconceived when the complaint made in the application relates to the List.

The only remaining passages sought to be struck out at the hearing were those referring to Mr Astrachan, the Binion family office, Mr Binion, Mr Charles Allard, Mr Ranson, and the Clerkenwell Consortium (the latter again added in the course of the hearing). That fails for the reasons already given.