Background
Denaro (UK) Limited’s liquidators alleged that the company’s directors operated a Ponzi scheme through Denaro and a related limited liability partnership from 2013 onward. Denaro and the partnership held accounts with Barclays. The liquidators claimed approximately £37.8 million from the bank, alleging that relationship manager Andrew Wileman dishonestly assisted the directors’ breaches of fiduciary duty and that Barclays breached its Quincecare duty by processing transfer instructions issued without authority.
Barclays Bank UK PLC and Barclays Bank PLC applied to strike out both claims for disclosing no reasonable grounds. The liquidators subsequently sought permission to amend their particulars of claim. The parties agreed that liabilities relating to the accounts had transferred to Barclays Bank UK PLC under a ring-fencing order and that Barclays Bank PLC should therefore cease to be a defendant.
The Court’s Holding
HHJ Cadwallader held that the original dishonest-assistance pleading was defective because it did not sufficiently identify the facts said to establish Wileman’s knowledge regarding several allegedly false representations and did not adequately plead the true position in two instances. Nevertheless, the pleaded facts, considered cumulatively, were capable of supporting an inference of dishonesty, and the defects were curable. The proposed amendments produced a sufficiently coherent, particularised, and viable claim for trial.
The original Quincecare claim disclosed reasonable grounds for proceeding. The claimant did not have to match every alleged red flag to each transfer instruction because its case was that Barclays accumulated notice of a single continuing scheme over time. The amended claim was also adequately intelligible and answerable, although it could not reserve reliance on unspecified circumstances.
The court granted permission to amend subject to two clarifications: the pleading must distinguish knowledge attributed to Barclays for the Quincecare claim from Wileman’s personal knowledge relevant to dishonesty, and it must confine the Quincecare case to particularised circumstances. The court dismissed the strike-out application, ordered the revised pleading to be filed and served within 14 days, and removed Barclays Bank PLC as a defendant.
Key Takeaways
- A dishonest-assistance pleading must identify the natural person alleged to have acted dishonestly and plead the primary facts supporting that person’s knowledge; a corporation’s aggregated knowledge cannot itself establish dishonesty.
- Alleged acts that might individually suggest only negligence may cumulatively support an inference of dishonesty sufficient to take a properly pleaded claim to trial.
- A Quincecare claimant alleging accumulated notice of a continuing fraudulent scheme need not map every red flag to every payment, but must identify the circumstances on which it relies rather than reserve unspecified grounds.
Why It Matters
The decision illustrates the distinction between testing whether allegations are adequately pleaded and deciding whether they will ultimately be proved. The court found that the liquidators’ revised allegations warranted a trial without determining that Wileman or Barclays had acted dishonestly or breached any duty.
For claims against financial institutions, the judgment underscores the need to separate the knowledge relevant to corporate notice under Quincecare from the subjective knowledge of an identified individual required for dishonest assistance.