UT/2024/000069 - [2025] UKUT 00236 (TCC)

The purpose of pleadings and particulars within pleadings is to ensure that the opposing party knows the case it has to meet: see British Airways Pension Trustees Ltd v Sir Robert McAlpine & Sons Ltd [1994] 45 Con LR at pages 4-5; and McPhilemy v Times Newspapers Ltd [1999] 3 All ER 775 at 792j to 793b. This is a principle of fairness and natural justice.

Where allegations of misconduct are made, it is particularly important that the opposing party knows what is being alleged and can prepare for trial accordingly. This is so whether the allegations relied upon as part of the claim are of misconduct by the opposing party or by a non-party. The more serious the allegation of misconduct, the greater is the need for particulars of the basis for the allegation. There is ample authority for higher vigilance in relation to particularisation of allegations of dishonesty, bad faith or fraud: see, for example, Re H (sexual abuse, standard of proof) [1996] AC 563 at 586(Lord Nicholls); Three Rivers DC v Bank of England (No.3) [2001] UKHL 16; [2003] 2 AC 1 at [51] (Lord Hope), [184] - [187] (Lord Millet); Belmont Finance Corporation Ltd v Williams Furniture Ltd [1979] Ch 250 at 268(Buckley LJ); Armitage v Nurse [1998] Ch 241, 256-257 (Millet LJ); and Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400(Millet LJ).

Part 16 of the Civil Procedure Rules (“CPR”) requires a claimant to set out any allegation of fraud in the particulars of claim. The Chancery Guide at paragraph 4.8 requires a party who alleges fraud, dishonesty, malice or illegality to state it in a Statement of Case and give full particulars, including the primary facts from which any alleged fraud or dishonesty is to be inferred. An identical provision can be found in the Commercial Court Guide: see C.1.3(c). As paragraph 4.9 of the Chancery Guide says, a party must not make allegations of fraud or dishonesty unless there is credible evidence in support. These statements of well-established principles, conveniently summarised in those guides, are applicable to all proceedings, including those in the FTT: see Ingenious Games LLP v HMRC [2015] UKUT 105 at [63]; and Citibank NA v HMRC at [90(iii)], [103].

Most of the authorities are concerned with fairness to a party to the litigation but there also needs to be fairness to non-parties. In Vogon International Ltd v Serious Fraud Office [2004] EWCA Civ 104 the Court of Appeal held that a judge was not entitled to make findings of fraud against a witness appearing for the defendant when fraud had neither been pleaded nor put to the witness in cross-examination. May LJ (with whom Lord Phillips MR and Jonathan Parker LJ agreed) said:

“It is, I regret to say, elementary common fairness that neither parties to the litigation, their counsel nor judges should make serious imputations or findings in any litigation when the person concerned against whom such imputations or findings are made have not been given a proper opportunity of dealing with the imputations and defending themselves.”

In MRH Solicitors [2015] EWHC 1795 (Admin), Nicol J said;

“…[I]n the absence of good reason a Judge ought to be extremely cautious before making conclusive findings of fraud unless the person concerned has at least had the opportunity to rebut the allegations.”

The issue of whether a judge should make such findings against a non-party, however, is simply one of fairness and depends on the facts of the case. In HMRC v Katib [2019] UKUT 189, where no fraud or dishonesty was pleaded, the Upper Tribunal was satisfied that HMRC had been given sufficient notice of Mr Katib’s allegations of fraud on the part of a non-party in Mr Katib’s witness statement, and, in the circumstances of that case, it was fair for the FTT to have made findings of dishonesty against the non-party in his absence.

Where the non-party is a witness, fairness to both the defendant and the witness dictates that a witness is not ambushed with allegations of impropriety. That is usually not the way in which that witness can give their best evidence as the overriding objective requires: see rule 1.1(a) of the CPR and the corresponding rule in the FTT’s procedural rules. It has been said that specific allegations of dishonesty which are going to be put to a witness should be pleaded even where the allegations are not part of the claim being made: this is to ensure that the defendant has a proper opportunity to consider the allegations and decide how he may wish to defend himself (see Alta Trading UK Ltd v Bosworth [2025] EWHC 91 (Comm)).