Developing jurisprudence

Partco Group Ltd and another v Wragg and another (CA LSG 7 June)

In a take-over of the first claimant by the second claimant it was alleged that the defendants, directors of the first claimant, had failed either fraudulently or negligently to disclose a serious deterioration in the company’s financial circumstances. The defendants applied to strike out those parts of the claim alleging breach of a duty owed personally by them to the company on the grounds that there was no adequate basis on which to found such an action. Their application was dismissed on the grounds that while the test and principles for striking out under CPR rule 3.4(2)(a) were well established, the notes to that rule contained in Civil Procedure Volume I (autumn 2001) averted to the principle that it was not appropriate to strike out a claim in an area of developing jurisprudence. Since the nature and extent of duties of care owed personally by directors of a target company to a bidder company was such an area, it was important to preserve a degree of latitude in approaching the terms of the pleadings where it was reasonable to suppose that facts might emerge to assist a claimant to establish his cause of action in a ‘fact-sensitive’ area of law.