Case No: A2/2001/2215
Neutral Citation Number: [2002] EWCA Civ 594
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
(Mr Justice Leveson)
Royal Courts of Justice
Strand, 
London, WC2A 2LL

Wednesday 1st May 2002
Before :

THE PRESIDENT OF THE FAMILY DIVISION
LORD JUSTICE POTTER
and 
LORD JUSTICE KAY
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Between :

	(1)	JAMES PHILIP WRAGG
(2)	CHRISTOPHER GEORGE SCOTT	Appellants/
Defendants	
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	(1)	PARTCO GROUP LIMITED
(2)	UGC LIMITED	Respondents/
Claimants	

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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040,  Fax No:  020 7831 8838
Official Shorthand Writers to the Court)
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Iain Milligan QC, Timothy Howe Esq and Patrick Goodall Esq (instructed by Wragge & Co, Birmingham) for the appellants
Miss Elizabeth Gloster QC and Ian Gatt QC (instructed by Clifford Chance, London) for the respondents

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Judgment
As Approved by the Court

Crown Copyright ©

Lord Justice Potter: 

INTRODUCTION
1.	These proceedings arise out of a ‘friendly’ take-over of the first claimant (“Partco”) by the second claimant (“UGC”) in June 1999 when UGC acquired the entire issued share capital of Partco for the sum of £178.9m pursuant to a public offer made on 30 April 1999 by CCF Charterhouse Finance Ltd. (“Charterhouse”) on UGC’s behalf and recommended by the Partco Board.  The defendants (“Mr Wragg” and “Mr Scott”) were at the time of the take-over Partco’s executive directors, Mr Wragg being the Chief Executive and Mr Scott the Finance Director.  In addition, Partco had three non-executive directors.  In the course of negotiations leading up to the acquisition, Mr Wragg and Mr Scott performed the central role in providing UGC with financial information about Partco’s trading and profit expectation upon which UGC asserts that it relied in making its decision whether to make the offer and, if so, upon what terms.
2.	It is the case for UGC that between 30 April 1999 and 22 June 1999 when the offer was declared unconditional, Mr Wragg and Mr Scott were aware of, but failed to disclose, a serious deterioration in Partco’s trading performance and profitability with the consequence that UGC was unaware that conditions of the offer were not satisfied and it was deprived of the opportunity (which it would have taken) to withdraw the offer pursuant to a condition which entitled it to do so if there was a material change in Partco’s financial circumstances.  UGC pleads its claim against each of the defendants in fraud, or alternatively negligence.
3.	Partco, which, prior to these proceedings had been sued by Mr Wragg and Mr Scott for wrongful dismissal following the takeover in an action commenced in the Birmingham District Registry (since consolidated with these proceedings), alleges that the defendants acted fraudulently and in breach of their fiduciary duties as Partco’s directors, or alternatively in breach of their duties of care and skill during the period of the offer, relying upon this plea as justifying the dismissal of the defendants.  Partco also seeks an indemnity from the defendants in respect of any liabilities which it has incurred to UGC as a consequence of their wrongful acts and omissions as set out in the Amended Particulars of Claim, and in particular any claim which UGC may bring against Partco for fraudulent, or alternatively negligent mis-statement.
4.	By an application notice issued on 5 June 2001, the defendants sought:
(1)	pursuant to CPR 3.4 and/or the inherent jurisdiction of the court, to strike-out those parts of the Particulars of Claim which alleged breach of an actionable duty of care owed personally by the Defendants to UGC on the grounds that the Particulars of Claim disclosed no reasonable grounds for bringing that claim (“the strike-out application”).  The relevant passages of the Particulars of Claim were paragraphs 25, 63 and 64, the reference to “alternatively, negligently” in paragraph 65 and the words “alternatively negligently” in paragraph (4) of the Prayer;

(2)	pursuant to CPR 24.2, summary judgment against Partco on its claims in paragraph 67 of the Particulars of Claim at paragraphs (1)-(3) of the Prayer, that it was entitled to dismiss the defendants by reason of the matters set out in the Particulars of Claim and be indemnified by them in respect of any loss it might sustain as a result of their breaches of duty (“the summary judgment application”).

By his judgment (now reported at [2002] 1 Lloyds Rep 320) and paragraphs (1) and (2) of his Order dated 25 September 2001, Leveson J. dismissed both the strike-out application and the summary judgment application.  By paragraph (3) he ordered that the claimants pay 30% of the defendants’ costs of the strike-out application and by paragraph (4) that the defendants pay the claimants’ costs of the summary judgment application.  By paragraph (5) he granted leave to the claimants to file and serve amended particulars of claim to reflect the basis upon which he had decided the strike-out application.  By paragraph (6) of the Order he granted permission to appeal against his orders in paragraphs (1), (3) and (5).
5.	There is no appeal in respect of the judge’s decision to dismiss the defendants’ summary judgment application.  There is before us the appeal of the defendants against the Judge’s decision refusing to strike-out the claim, together with a cross-appeal by the claimants on the ground that the strike out application was not one which was suited to summary disposal, involving as it did complex questions of fact and law, prolonged argument and unresolved questions of fact.  It is asserted that the judge should not have entertained the application unless he was satisfied (as in the result he clearly was not) that striking out would obviate the need for, or substantially reduce the burden of, a trial.
6.	The basis of that assertion, advanced both here and below by Miss Gloster QC on behalf of Partco and UGC is that the strike-out application applies solely to the claim advanced against Mr Wragg and Mr Scott in negligence, and rests on a submission that the pleaded case advanced by Partco and UGC based on a duty of care owed personally to UGC when negotiating on behalf of Partco is unsustainable as a matter of law.  However, no such submission is made in respect of the cause of action for fraudulent misrepresentation which will involve investigation of essentially identical facts and events and the states of mind of Mr Wragg and Mr Scott in an action of substantial length and in which the matters complained of by Partco and UGC by way of breach of duty are in any event raised by way of defence to the wrongful dismissal claims brought by the defendants in which they seek damages in excess of £1m.  Mr Wragg and Mr Scott do not appeal against the judge’s dismissal of their application under CPR 24.2 whereby they sought summary judgment against Partco on the basis that Partco had no real prospect of succeeding on its claims in paragraph 67 of the Particulars of Claim and paragraphs (1)-(3) of the Prayer, in which Partco rely upon the facts pleaded as constituting breaches of the defendants’ employment contracts and/or fiduciary duties as directors of Partco with consequential claims for relief based upon such breaches.
7.	It should be recorded in this introduction that it is in any event the plea of Mr Wragg and Mr Scott that at all material times they were acting honestly and with integrity, conducting themselves entirely in accordance with the wishes and support of Partco’s Board and the advice of Close Brothers, Partco’s merchant bank.  They also contend that they acted honestly and in accordance with the terms of a Confidentiality Agreement which expressly exempted them from responsibility for the accuracy, completeness or reasonableness of any information supplied by them, to which I will turn in more detail below.
THE PLEADED CASE IN NEGLIGENCE.
8.	The application to strike-out was mounted upon the basis of the draft Amended Particulars of Claim which couched the personal duty of Mr Wragg and Mr Scott as directors in general terms, based principally upon the provisions of the Financial Services Act 1986 and the applicable Listing Rules and City Code governing the behaviour of directors during the course of an acquisition.  The judge indicated at an early stage, in response to a submission made for the defendants, that if the matters pleaded at that stage, and in particular the provisions of the regulatory code, were sufficient to impose a personal duty upon the directors in tort, it would affect every company take-over and he indicated a preliminary view that the pleadings were insufficient to disclose a viable cause of action.  Since, however, it was apparent to him that the claimants sought to place substantial reliance on the personal relationship and dealings between UGC on the one hand and Mr Wragg and Mr Scott on the other, not merely to demonstrate breach of duty, but to ground the existence of such duty in the first place, he dealt with the application on the basis of a second draft Amended Particulars of Claim proffered by Miss Gloster to meet the initial objection.  
9.	In the extracts from the pleading set out below, I have highlighted in italics the substantial additional amendments made.
“21.	In the course of the Acquisition and the preceding negotiations between Partco and UGC, Mr Wragg and Mr Scott were principally responsible for the provision of financial information to UGC regarding the trading and profit expectation of Partco.
21A	At all material times, Mr Wragg and Mr Scott by their conduct, manner and demeanour in their dealings with UGC, respectively held themselves out to be highly experienced and professional company directors exercising reasonable care and skill in the performance of their duties and implicitly representing by their conduct, manner and demeanour that they were conducting themselves in accordance with the high personal standards required of them by the Listing Rules and the City Code and that they could personally be relied upon by UGC to be exercising reasonable care and skill to ensure their compliance with such obligations.
21B	Further, at all material times, it was contemplated by Mr Wragg and Mr Scott and by UGC that, in the event that UGC’s offer became unconditional in all respects and UGC acquired the entire issued share capital of Partco, both Mr Wragg and Mr Scott would remain employed by Partco and Mr Wragg would become a Director of UGC.  At all material times, particularly after 30 April 1999, Mr Wragg and Mr Scott conducted themselves in their dealings with UGC in a manner consistent with them becoming employees within the UGC group of companies in the event that the offer was successful and consistent with them performing their current obligations with the high standards of professionalism to be reasonably expected of them personally, alternatively with reasonable care and skill.
21C	Mr Wragg and Mr Scott each knew (as was in fact the case) that:
(1)	The financial information concerning Partco’s current, budgeted and forecast trading position provided by them to UGC was limited
(2)	They had, and professed to have, and UGC perceived them as having, specialised, detailed and comprehensive knowledge, as the only executive directors of Partco, to its financial position.
(3)	They regulated the availability of Partco’s financial information to the non-executive directors and its advisors.  The non-executive directors and Partco’s advisors were never at any material time shown copies of the Weekly Sales Figures for the period covering 1 April 1999 to 22 June 1999.
(4)	Partco’s financial position and its ability to generate the forecast profits were central to UGC’s decision to purchase the entire issued share capital of Partco.
(5)	UGC was heavily reliant upon the accuracy of the financial information provided by them to it.
(6)	On 26 May 1999, as appears below in paragraph 43 and Appendix 22, they were advised by Close Brothers that if they decided to answer questions that UGC or its advisors asked of them, the information that they provided should be truthful and accurate and should not omit anything which would otherwise make it misleading.

21D	Mr Wragg and Mr Scott impliedly warranted as a consequence of their specialist knowledge and expertise and by their conduct, manner and demeanour in their direct dealings with UGC that the financial information provided by them to UGC had been carefully and diligently considered and that they personally had taken reasonable care to ensure that it was correct and did not omit anything which might make it misleading.
22.	At all material times prior to the Offer becoming wholly unconditional in all respects on 22 June 1999, Mr Wragg and Mr Scott knew that UGC was not only relying upon the accuracy of the financial information which they provided to it, initially to decide whether to make an offer for Partco’s share capital and, if so, upon what terms and subsequently to decide whether to proceed with the Acquisition or withdraw the Offer, but also upon the fact that such information was being provided to UGC by Mr Wragg and Mr Scott as prospective employees of a subsidiary of UGC and, in the case of Mr Wragg, a prospective director of UGC.
23.	Furthermore, at all material times, Mr Wragg and Mr Scott were subject to the following regulatory and/or statutory constraints (of which UGC was aware) which governed their behaviour during the course of the Acquisition, with which they impliedly represented by their conduct, manner and demeanour they were complying, and with which UGC expected them (and Partco) to comply and, in fact, reasonably assumed they were complying with:
(1)	Section 47 of the Financial Services Act 1986 (misleading statements and practices).
(2)	Rules 9.1 and 9.2 of the Listing Rules (General Obligation and Disclosure for Companies).  Rules 9.1 and 9.2 imposed upon Partco a duty to make a ‘profit warning’, if the shortfall in its expected profits would, if made public, cause a significant movement in the price of its listed securities.  A predicted shortfall in expected profits of 10% or more would be regarded as significant for these purposes.
(3)	Rule 16.2 of the Listing Rules (assumption by directors for full responsibility of the company’s compliance with the Listing Rules) provided that 
(a)	“A listed company must ensure that its directors accept full responsibility, collectively and individually, for the company’s compliance with the Listing Rules.”
(3A)	The City Code.
(a)	“The Introduction to the City Code stated under the heading “Code Responsibilities: The responsibilities described in the Code apply most directly to those who are actively engaged in the securities market.  They are also regarded by the Panel as applying to directors of companies which are subject to the Code and to persons….who otherwise participate in, or are connected with, transactions to which the Code applies.”
(b)	The Introduction to the General Principles further stated:
“Each director of an offeror and of the Offeree Company has a responsibility to ensure, so far as he is reasonably able, that the Code is complied with in the conduct of an offer”.
(c)	General Principle 6 stipulated that:
“All parties to an offer must use every endeavour to prevent the creation of a false market in the securities of ... the Offeree Company.  Parties involved in offers must take care that statements are not made which may mislead shareholders or the market.”
(d)	Rule 19.1, which provided that:
“Each document or advertisement issued or statement made, during the course of an offer must, as is the case with a prospectus, satisfy the highest standards of accuracy and the information given must be adequately and fairly presented.”
UGC contends that each statement made by Mr Wragg and Mr Scott to UGC after 30 April 1999 and before the offer became unconditional in all respects on 22 June 1999 (as identified below), was subject to Rule 19.1 and that Mr Wragg and Mr Scott were each under a personal obligation under the City Code to ensure that it satisfied the highest standards of accuracy.  
(e)	Rule 19.2. which required, amongst other matters, that documents issued to shareholders in connection with the offer to state that the directors of the offeree accepted responsibility for the information contained  in it and that “to the best of their knowledge and belief (having taken all reasonable care to ensure that such is the case) the information contained in the document… is in accordance with the facts and, where appropriate, that it does not omit anything likely to affect the import of such information.”
(4)	Rule 19.2(a) of the City Code (acceptance of responsibility of offeree’s directors for the information contained in the Offer).
(5)	Rule 23 and Note 1 of the City Code (the general obligation as to information) and Rule 27 of the City Code (material changes).
24.	UGC contends that:
(1)	The effect of Rules 9.1 and 16.2 of the Listing Rules was to impose a general and personal obligation upon each of Mr Wragg and Mr Scott to issue a profits warning in the event that they became aware of a shortfall in expected profits of Partco of 10% or more.  That obligation existed notwithstanding the existence of the Offer.
(2)	Such an anticipated shortfall would have amounted to a ‘material adverse change’ (for the purposes of Condition (g)(i) of the Offer Document or for the purposes of Rule 9.1 and the requirement to issue a profits warning) which would have entitled UGC to withdraw the Offer and terminate the Acquisition
(3)	Mr Wragg and Mr Scott knew of the facts and matters set out above and they knew or ought reasonably to have known that UGC would rely, and was entitled reasonably to rely, upon Mr Wragg and Mr Scott complying with their personal obligations under Rules 9.1 and 9.2 of the Listing Rules to issue a profit warning if the appropriate circumstances arose.
25.	As a consequence of the foregoing and the matters hereinafter set out and, in particular, the extensive, direct and personal dealings between Mr Wragg and Mr Scott and the directors and officers of UGC identified below, set against these relevant background matters, Mr Wragg and Mr Scott each owed to UGC and Partco:
(1)	a duty to exercise reasonable care and skill in the provision of financial information to UGC during the course of the Acquisition and/or each of them assumed personal responsibility to UGC for the accuracy and completeness of the information supplied by them to UGC at all material times prior to the Offer becoming wholly unconditional in all respects on 22 June 1999 and;
(2)	a duty to exercise reasonable care and skill in considering whether or not to issue a profits warning under rule 9.1 of the Listing Rules, and/or each assumed a personal duty to UGC in this respect; and
(3)	a duty to exercise reasonable care and skill in answering any questions or requests for information made of them (or Partco) by UGC during the course of UGC’s bid for the issued shares of Partco.”
10.	Elsewhere in the claim, particulars were pleaded of various dealings between Mr Wragg and Mr Scott on the one hand and UGC on the other which were relied on, and of the supply (and non-supply) of information relating to what, on the pleading, was the fast deteriorating position of Partco over the period of the negotiations of which complaint was made.
11.	Allegations of breach of duty of care are contained in paragraphs 63-64 and are essentially two-fold.  In paragraph 63, it is alleged that the responses to the Due Diligence Questionnaire were made negligently and, in paragraph 64 that Mr Wragg and Mr Scott were in breach of their duty of care by failing to cause a profits warning to be issued.  It is not necessary to set out further aspects of the pleading at length in the light of the issues as they were eventually resolved by the judge and have been argued on this appeal.  It can be seen that, in the paragraphs already quoted, four matters are essentially relied upon by UGC/Partco as giving rise to a personal liability in tort on the part of Mr Wragg and Mr Scott.  (1) The obligations imposed upon them under the particular provisions of the FSA, the Listing Rules and the City Code pleaded.  (2) The 'conduct, manner and demeanour' of Mr Wragg and Mr Scott holding themselves out as highly experienced and professional directors acting in accordance with the high standards set by the Rules and Code.  (3) The contemplation of the parties that Mr Wragg and Mr Scott would be employed by Partco following the take-over.  (4) A continuing representation/warranty by their ‘conduct, manner and demeanour’ in their direct meetings and dealings with UGC that the information provided had been carefully considered and did not omit anything which might make it misleading.  In connection with head (4), it is pleaded in later paragraphs of the Amended Particulars of Claim that in respect of certain of the information provided, the defendants gave their ‘personal endorsement’ and ‘personal assurance’ of accuracy.  Thus, by way of example, at paragraph 32B it is asserted that, at a Due Diligence meeting on 26 April 1999, the Defendants ‘gave their personal endorsement to the reasonable achievability of the Full Year Forecast’.  However, generally, no specific words or further particulars relating to the manner of such endorsement or assurances are given whereby the distinction between a personal assurance, as opposed to an assurance simply on behalf of Partco might be tested.
12.	As the judge rightly analysed the matter, the only averments of express remarks or assurances given by the defendants are as follows.  
(1)	In paragraph 32D it is pleaded that on 27 April 1999 in a telephone conversation with Mr Neill, UGC’s Chief Executive Officer, Mr Wragg stated in relation to an expression of concern about the Full Year Forecast, that the Partco management (by which it is pleaded he meant himself and Mr Scott) were ‘up to it and up for it’.
(2)	In paragraph 55B it is stated that “The tenor of the conversation’”between Mr Wragg (alternatively Mr Scott) and a Mr Mourgue of UGC was to the effect that the speaker could give his personal assurance that conditions (g)(i) and (h)(i) of the Offer had not been breached, careful advice having been taken on the question.  In this respect the reliance is based on notes prepared by Mr Wragg containing a proposed answer:
“The point is, Tony that I am telling you the conditions haven’t been breached and I’ve taken careful advice on that.
If you press for more, that’s outside the rules of engagement and I’ll need to talk to Close and probably convene a Board Meeting.  You’ll understand my difficulty in this situation.”
13.	The reference to ‘rules of engagement’ in the passage last quoted was to the  Confidentiality Agreement to which I have earlier referred at paragraph 7 above.  That agreement was in the form of a letter from Partco to UGC, signed by both parties, in which they agreed that, subject to the provisions of the Agreement, UGC might use the information received from Partco in negotiations for the purpose of assessing the group and implementing the take-over, but for no other purpose.  It is not necessary to refer to its terms in detail.  It provided that all communications in question regarding information to be provided to UGC should be made only to Mr Wragg or Mr Scott.  Its importance for the purposes of the strike-out application is that by paragraph 7(General Agreements) it provided as follows:
7.2	You acknowledge and agree that neither the Company [Partco] nor any of its subsidiary undertakings or any of its or their respective directors, officers, employees or agents, nor CBCF nor any other of the Company’s advisors: - 
7.2.1	Accept any responsibility for, or make any representation or warranty, express or implied, as to truth, accuracy, completeness or reasonableness of, any Information;
7.2.2.	Are obliged to update any Information or to correct any inaccuracies in any Information;
7.2.3	Will be liable to you or any other person in respect of any Information or its use, provided that nothing in the foregoing shall operate to limit or exclude any liability for fraud…
7.8	The Company, in entering into this agreement is entering into it for itself and as trustee for and on behalf of each of its subsidiary undertakings and each of its and their respective directors, officers, employees, agents and advisors.”  (emphasis added)
14.	That agreement was not referred to in the Amended Particulars of Claim, but is relied upon in the defence and is plainly relevant to the existence of any duty or liability of Mr Wragg and Mr Scott for negligence as pleaded (c.f. Killick –v- PriceWaterhouseCoopers (a firm) [2001] Lloyds LR (Professional Negligence) 17).
THE JUDGMENT OF LEVESON J.
15.	The Judge first dealt as a preliminary point with the argument of Miss Gloster that neither application for summary relief was appropriate on the grounds that the case was neither plain or obvious, that complex issues of fact and law were involved and that to consider the issue before trial would not further the overriding objective in that it would do little to shorten or reduce the issues which had to be resolved.  The Judge approached the matter in the light of the observations of Lord Templeman in Williams & Humbert Ltd –v- W & H Trademarks (Jersey) Ltd. [1986] AC 368 at 435H that:
“…If an application to strike-out involves prolonged and serious argument, the Judge should, as a general rule, decline to proceed with the argument unless he not only harbours doubts about the soundness of the pleading but, in addition, is satisfied that striking out will obviate the necessity for a trial or will substantially reduce the burden of preparing for trial or the burden of the trial itself.”
16.	The judge rightly observed that the CPR does nothing to affect this principle.  He then went on to refer to the observations of Lord Woolf M.R. in Swain v Hillman [2001] 1 All ER 91 at 94A, recently endorsed by the House of Lords in Three Rivers District Council v Bank of England (No.3) [2001] UKHL 16, [2001] 2 All ER 513 (per Lord Hope at para. 92-98) in relation to the need for the court in appropriate cases to make use of the powers contained in Part 24 in order to save expense, achieve expedition and avoid waste of court’s resources.
17.	He then stated as follows.
“How do these principles apply to this case?  I return to the central background fact.  Messrs Wragg and Scott do not seek to strike-out the allegation of fraud; it follows that this issue must go to trial.  At that trial, the Judge will have to consider the following, among other, issues of fact.  What was the true financial and trading position of Partco at all material times?  What did the two men know of the true position?  What was actually said, either orally or in writing by the two men to UGC in relation to the financial position of Partco?  What had they been advised to say?  All this must be determined against the background of the relevant contextual scene which includes but is not, of course, limited to the provisions of the Listing Rules of the L.S.E., the City Code issued by the Panel on Take-overs and Mergers and the Confidentiality Agreement under which the negotiations for the acquisition took place.  In the light of the wholesale support which the two men have had from the then non-executive Directors of Partco, what they in fact knew and their input will also be relevant to the issue of fraud.  Suffice to say, it is difficult to think of any significant issue of fact generated by these pleadings which would still not fall to be considered, even if both these applications to strike-out were successful.
9.	Assuming that the Judge concludes that what they said was not accurate, in reaching a conclusion on the question of fraud, the possibility of what they said having been made negligently (as opposed to fraudulently) will also have to be considered.  Similarly, precisely what was authorised by the other members of the Board of Partco, and the state of their knowledge at the time, may also be material to the issue of deceit.
10.	I accept that the arguments of law which flow from the facts will be more extensive if the case remains both in negligence and breach of contract, but I do not accept that the argument will be very much more extensive than it has to be for the purpose of this interlocutory application.  On the other hand, by the end of the trial, the Judge will be far better informed of the facts and will have had the advantage of not having to make assumptions when determining issues such as duty and the like.”
18.	The Judge then stated that, if that had been a full account of the circumstances surrounding the case, he would have taken the view that it was inappropriate to proceed with the application to strike out.  However, he proceeded to hear the matter on the basis of the information given to him on behalf of the defendants that there was available to them insurance (stated to be up to £15m) against personal liability in negligence in their capacity as directors or officers of Partco, which insurance would not cover them for fraud.  It was stated that if the negligence allegation was struck out, the insurers would drop out of the action in consequence of which UGC and Partco would be unlikely to proceed with an expensive fraud trial against two comparatively impecunious men, with the result that the fraud and wrongful dismissal actions would be likely to compromise in some way.
19.	In that respect, the judge stated:
“I observe that there is no suggestion of any offer having been made of compromise on any basis and I am not prepared to speculate about the possibility of saving time one way or the other.  All I will say is that, although the position of insurers can certainly not determine the approach of the court to applications of this nature, it is only appropriate to examine the arguments in somewhat greater detail as a potential exception to the rule that the court should decline even to proceed with the argument unless, among other things, it is satisfied that striking out will obviate the need for trial or will substantially reduce the burden of the trial.  The impact of interlocutory resolution of issues upon the court is obviously important, but the parties are, in my view, entitled to require the court to consider issues which in their resolution may have significant commercial consequences (for example in relation to insurance cover) beyond saving court time.”
He then proceeded to go into the merits of the applications.
20.	The Judge dealt with the strike-out application at paragraphs 14-35 of his judgment.  He referred first to the decision of the Court of Appeal in Morgan Crucible Co. Plc v Hill Samuel [1991] Ch.295, a case raising similar issues in which the bidder in a contested take-over alleged negligence inter alia against the directors of the target company and, in the face of a strike-out application, the court held that it was arguable that the directors owed a duty of care to the bidder company in relation to the accuracy of statements made to it.  However, the judge then turned to the more recent analysis of the House of Lords in Williams  v Natural Life Products [1998] 1 WLR 830 in which the circumstances in which a director of the company might be held liable personally for negligent mis-statement received analysis in terms which emphasised the need for the claimant to demonstrate that the director has objectively assumed personal responsibility for the mis-statement and the claimant has reasonably relied on that assumption of responsibility, in which context:-
“..the primary focus must be on the exchanges, (in which term I include statements and conduct) which cross the line between the defendant and the plaintiff…the inquiry must be whether the director or anybody on his behalf, conveyed directly or indirectly to the [claimant] that the director assumed personal responsibility towards the [claimant]”.  (per Lord Steyn at 835G-H).
21.	Having referred to other authorities and considered the detail of the second draft Amended Particulars of Claim the Judge made it clear that, had the claim remained in the form in which it had come before him prior to further amendment to include the italicised passages, he would not have considered that the pleading disclosed a viable cause of action against the directors personally.  He said that, whereas the decision in Morgan Crucible appeared to have opened the door to the possibility of personal liability of directors supplying information pursuant to the Code and Rules, it was clear on the basis of later authorities that the regulatory regime alone was insufficient.  However, having considered the position under the newly amended Particulars of Claim the judge decided that they were sufficient to rescue the pleading, at least for the purposes of the strike-out application.  His reasoning may best be summarised by reference back to the four aspects of the new pleading to which I have referred in paragraph 11 above.
22.	Having first decided that the express provisions of the Act, Rules and Code were insufficient on which to base an assertion of personal responsibility, he stated, second, that the mere plea that by their ‘conduct, manner and demeanour’, Messrs Wragg and Scott held themselves out as complying with the standards of the Code added nothing by way of an assumption of personal responsibility. (Paragraph 28).  Third, he rejected the submission that because Mr Wragg and Mr Scott were to continue to be employed by UGC’s new subsidiary Partco, they should be regarded as assuming, or having imposed upon them prior to such employment, any additional duty to UGC in relation to information provided.  However, as a background fact which might explain why the directors might in fact have gone further than would otherwise have been prudent in the course of negotiations, he declined to strike-out that aspect of the pleading in the light of his decision not to strike-out the major allegations. (Paragraph 34).
23.	The Judge dealt with the question of the assumption of personal responsibility on the basis of things actually said or done as follows.
“Mr Boswood submits that the words ‘conduct, manner and demeanour’ are literally meaningless and that there is no more than bare, unparticularised, assertion which does not even allege reliance on the directors’ pocket books and does not plead that UGC believed that the two individuals were assuming personal responsibility which is not surprising given the Confidentiality Agreement.  Miss Gloster answers these points by submitting that it is enough for the pleading to allege that in addition to giving information, the directors were doing something more to assume personal responsibility as described by the objective test described by Lord Steyn in Williams (supra).  By way of example..”
24.	The Judge then referred to the conversations, which I have already set out at paragraph 12 above.  He went on:
“32.	As to reliance, she [Miss Gloster] points to paragraph 57A (to the effect that as a consequence of the foregoing pleading, it is contended that Mr Wragg and Mr Scott personally assumed responsibility to UGC … and that UGC reasonably relied upon that personal responsibility) and paragraph 65 (that had Mr Wragg and Mr Scott not acted (among other things) negligently, UGC would have relied on a condition of the offer which would not have become unconditional).
33.	The context (including the legal framework) weighs heavily against personal assumption of responsibility and I am far from convinced (although I make it clear that I am not deciding one way or the other and, given that the fraud allegation has to go to trial in any event, I am not encouraging further interlocutory application) that there is a real prospect of successfully claiming that Messrs Wragg and Scott did render themselves personally liable for the answers which were given.  On the other hand, I am conscious that this is not the test and that I can only strike it out if satisfied that it raises an unwinnable case where continuance of the proceedings is without any possible benefit to the respondent and would waste resources on both sides (Harris v Bolt Burdon [2000] LTL,2 February 2000 CA).  Given the extent to which I have had to descend into the facts, and the prospect that the cause could turn on the live evidence of those involved in the meeting on which UGC relies, it is sufficient for me to indicate that I am not satisfied that all the relevant facts can be identified and that they are not incontrovertible.  Albeit with some hesitation, I have come to the view that, on this formulation, it would not be appropriate summarily to deprive UGC of a trial on these issues.
25.	In relation to the Confidentiality Agreement the judge completed the relevant part of his judgment by observing of Clause 7.2:
“35.	...  On the face of it, this provides an answer to the allegation of assumption of personal responsibility but, here again, the issue may turn on the facts: it is not without significance that both sides rely on the notes set out in paragraph 32 above [which refer to ‘the rules of engagement’], UGC to demonstrate personal responsibility and the fact that they were prepared to speak using their personal authority on the basis of advice received, the directors point to the caveat that if UGC wanted to go further, it would be outside the rules of engagement (i.e. the Confidentiality Agreement).  Bearing in mind Miss Gloster’s submission that the provision offends the test of reasonableness in Section 2(2) of the Unfair Contract Terms Act 1997 (which is clearly a fact sensitive issue and requires consideration of issues of general principle in relation to acquisitions of this nature and detail in relation to this particular transaction).  I do not consider that the Agreement either on its own or in combination with the hesitation I have expressed in relation to the primary facts, creates a knockout blow at the strike out stage.”
THE GROUNDS OF APPEAL
The Respondents’ Notice
26.	In the light of the conclusion I have formed as to the outcome of the appeal, it is not necessary to refer at any length to the respondents’ notice, which pursues the question of whether or not the judge ought to have dismissed the strike-out application on the grounds that it was unsuitable for summary determination (see paragraph 6 above).  However, such reference is appropriate because (1) the considerations which it raises were likely, in my view, to have been present as a factor in the judge’s mind when coming to his decision upon the strike-out application; (2) the notice also raises the point that, albeit unwittingly, the judge was misinformed in relation to the insurance position of the defendants which was, of course, the very feature which led him to proceed with the application rather than treating it as one unsuitable for disposal under CPR 3.4; (3) leave was granted for the cross-appeal to be pursued in relation to that part of the judge’s order which required the claimants to pay 30% of the defendants’ costs of the strike-out application.
27.	It seems to me that the following principles are well established, at least as articulated in relation to summary disposal under Part 24 of the CPR.  (1) The purpose of resolving issues on a summary basis and at an early stage is to save time and costs and courts are encouraged to consider an issue or issues at an early stage which will either resolve or help to resolve the litigation as an important aspect of active case management: see Kent –v- Griffiths [2001] QB 36 at 51B-C.  This is particularly so where a decision will put an end to an action.  (2) In deciding whether to exercise powers of summary disposal, the court must have regard to the overriding objective.  (3) The court should be slow to deal with single issues in cases where there will need to be a full trial on liability involving evidence and cross examination in any event and/or where summary disposal of the single issue may well delay, because of appeals, the ultimate trial of the action.  (4) The court should always consider whether the objective of dealing with cases justly is better served by summary disposal of the particular issue or by letting all matters go to trial so that they can be fully investigated and a properly informed decision reached.  The authority for principles (2)-(4) is to be found in: Three Rivers District Council v Bank of England (No.3) [2001] UKHL 16; [2001] 2 All ER 513 per Lord Hope at paras 92-93 (pp.541-542),considering Swain v Hillman [2001] 1 All ER 91 at 94-95; Green v Hancocks [2001] Lloyds Rep. PN212, per Chadwick L.J. at para 53 page 219, Col. 1; and Killick v Price Waterhouse Coopers [2001] Lloyds Rep. PN17 per Neuberger J. at p.23 Col.2, 2-27.
28.	(5) Summary disposal will frequently be inappropriate in complex cases.  If an application involves prolonged serious argument, the court should, as a rule, decline to proceed to the argument unless it harbours doubt about the soundness of the statement of case and is satisfied that striking out will obviate the necessity for a trial or will substantially reduce the burden of the trial itself: see the Three Rivers case per Lord Hope at 94-98 (pp.542-544), considering the Williams & Humbert case.  (6) It is inappropriate to deal with cases at an interim stage where there are issues of fact involved, unless the court is satisfied that all the relevant facts can be identified and clearly established: see Killick v Price Waterhouse at 20, Col.2 and 21 Col.1.  (7) It is inappropriate to strike-out a claim in an area of developing jurisprudence.  In such areas, decisions should be based upon actual findings of fact: see Farah v British Airways (unreported) 6th December 1999 (CA) per Lord Woolf M.R. at para 35 and per Chadwick L.J. at para 42, applying Barratt v London Borough of Islington [1999] 3 WLR 83 and X (Minors) v Bedfordshire CC [1995] 2 AC 633 at 694 and 741.
29.	As rightly submitted by Miss Gloster, and it would appear largely if not wholly accepted by the Judge, the application involved consideration of a previously undecided point of law of some wide importance, namely the nature and extent if any, of the duties of care owed personally by directors of a target company to a bidder company in the course of a recommended take-over bid for a publicly quoted company and could be said to be an area of developing jurisprudence.  It was nonetheless not the major issue in the action, the gravamen of which was reflected in the allegations of fraud, which would persist regardless of the outcome of the strike-out application.  Thus, resolution of the duty of care issue would not dispose of the action and substantial issues between the parties would remain which rendered a trial necessary.
30.	The duty of care issue could be more effectively resolved at trial when the trial judge was appraised of the facts of the case and could make a fully informed decision, the position on the application being that full disclosure and exchange of witness statements had not yet taken place, thus limiting the amount of information available as to the relevant factual matters which would be considered at trial and in particular the terms of any personal assurances said to have been given by the defendants.
31.	The issues of what the defendants knew, when they knew it, and whether their failures to issue a profit warning and accurately to answer the Due Diligence Questionnaire were fraudulent or negligent would be issues which the trial judge would have to consider in any event, not least because the issue of the defendants’ negligence was relied on by Partco both defensively, to justify the termination of the defendants’ contracts of employment, and offensively in support of its claim to be indemnified in respect of liabilities incurred as a result of their conduct.  Bearing in mind that, dealt with at trial, the issue would be subsumed within the other issues to be considered, it was even arguable that the application would serve to increase rather than reduce costs.
32.	By the respondents’ notice and before us, Miss Gloster submitted that in the light of all those factors, the judge was wrong to decide nonetheless to consider the strike-out application on the basis of what he was told as to the insurance position.  It has further been made clear to us, and it is not challenged by Mr Milligan for the defendants, that the information which the judge was given as to the detail of the insurance position of the defendants was in any event incorrect in one respect.  There is no suggestion that this was other than by mistake or oversight.  However, the position was not, as the judge was informed, that, if the negligence allegation was struck out the insurers would drop out of the action.  The insurers were in fact obliged to fund the defendants’ costs up to a limit of £1.5m unless or until a finding of fraud was made.
33.	It may or may not be that that would have affected the judge’s decision to hear the application at length.  However, in my view nothing turns upon this point at this stage.  Miss Gloster has submitted that the insurance position should have been ignored in any event (a) on the basis that the interests of third party insurers do not warrant the court adopting an approach which could not otherwise be justified under the principles to which I referred at paragraphs 27-28 above; and (b) because in any event the existence, nature and effect of the insurance arrangements were simply raised by leading counsel in argument, without notice and unsupported by any evidence.  As such, the insurance position was no more than speculative and should have been ignored.  In this latter respect, I accept that Miss Gloster’s criticisms have force.  I do not say that, in an appropriate case, when considering whether or not to entertain a summary application of this kind, the court should ignore the reality and likely effects of the insurance arrangements of one or other party upon the likelihood of a matter proceeding to trial.  If such arrangements are likely to be decisive, that would be to ignore a matter of obvious practical relevance to the saving of costs and court time.  However, if such arrangements are to be taken into account, the court must be satisfied that the information which it has received is reliable and that the opposing party has had a proper opportunity to consider and comment upon any evidence in this respect.  That was unfortunately not so in this case.
34.	Having said that, it seems to me that the issue raised by the respondents’ notice essentially relates to water under the bridge in view of the judge’s decision to proceed as he did.  In any event I am not prepared to say that his decision to proceed was a wrongful exercise of his discretion in the light of the deficiencies in the claim as it first came before him.  Prior to the amendments consequent upon his original indication (see paragraph 8 above), it was in my view inadequate to lay the basis for the plea of assumption of personal responsibility and thus was, on the face of it, a legitimate subject for attack by means of the strike-out application as a deck-clearing operation.
The Appeal
35.	The defendants’ strike-out application was made under CPR 3.4(2)(a) on the grounds that the statement of case disclosed no reasonable grounds for bringing the claim so far as the allegation of the defendants’ personal liability in negligence was concerned, alternatively that the relevant paragraphs were an abuse of the court’s process under CPR 3.4(2)(b). It appears that before the judge (and it is certainly the case that before this court) no reliance was placed on the latter alternative, the application being argued on the basis that the matters pleaded were insufficient to raise or sustain a case of personal negligence in all the circumstances and against the contractual background of the case.  For this purpose, the case was argued for the defendants upon the basis of the facts and matters pleaded in the Amended Particulars of Claim and on the assumption that, discovery having taken place, the claimants should be taken to have put all their cards on the table in the pleadings.  Thus the nature of the application was essentially one to strike out on the basis that, in pre-CPR terms, the case disclosed no reasonable cause of action (as the judge recognised by the reference to the Williams & Humbert case in paragraph 6 of his judgment), although the CPR test now to be applied (namely ‘no reasonable grounds for bringing the action’) may in an appropriate case bring into the reckoning factors ranging wider than the simple form of the pleading.
36.	It is against that background that the defendants have framed their grounds of appeal which concentrate upon paragraph 33 of the judgment (see paragraph 24 above) in which the judge, having stated that he was ‘far from convinced … that there is a real prospect of successfully claiming that Messrs Wragg and Scott did render themselves personally liable’ went on to say:
(a)	that was not the test, and that it was necessary to be satisfied that the claim ‘raises an unwinnable case, where continuance of the proceedings is without any possible benefit to [Partco/UGC] and would waste resources on both sides’; and
(b)	that the case could turn on the oral evidence of those involved and he was not satisfied that all relevant facts could be identified and that they were not incontrovertible.
37.	In brief terms, it is the submission of Mr Milligan that the judge was correct in his reading of the statutory code contained in the Act, the Rules and the Code as imposing duties of a regulatory nature only and that he was similarly correct in his views that neither the incantation of ‘implicit’ representation ‘by conduct, manner and demeanour’, nor the contemplation of post-takeover employment, was sufficient to establish an assumption of personal responsibility on the part of the defendants.  However, he submits that the judge was wrong to hold that the pleas that various personal assurances were provided, together with the particular conversations pleaded in paragraphs 32D and 55B, were sufficient to justify the case in negligence proceeding to trial.  Mr Milligan submits that the judge should have confined himself to considering whether the terms of the pleading and such particulars as were set out raised a case arguably sustainable as a matter of law in the sense of supporting the plea that a personal duty of care existed in the circumstances of the case.  
38.	I should add that, rightly in my view, Mr Milligan submitted that the court should (as the judge did) take into account the Confidentiality Agreement because, while it was not referred to in the claim, its content was not in dispute, there was no issue that its existence and its terms were relevant to the question (a) whether in all the circumstances the words or conduct of the defendants when acting as directors could or should properly be viewed as an assumption of personal responsibility, and (b) whether or not UGC could reasonably have relied on any apparent assumption of personal responsibility: see Williams –v- Natural Life at 836E-837B.  Mr Milligan argues that the judge, instead of so confining himself, confused the issue by moving into the wider territory of whether continuance of the proceedings could not possibly benefit Partco/UGC and, in particular, whether live evidence might improve the position in respect of the relevant facts as by then identified.  Mr Milligan points out that it was expressly upon that formulation of the position that the judge concluded as he did.
THE PERSONAL DUTY OF CARE
39.	It is not necessary for me to set out at any length for the purposes of this judgment, the state of the authorities in relation to the circumstances in which a director may assume and/or owe a personal duty of care in relation to activities carried out or representations made by him in the course of carrying on the business of his company, because it has been expressly accepted before us by Mr Milligan that for the purposes of this appeal, paragraphs 14-18 of the judge’s judgment at [2002]1 Lloyds Rep 323 lhc-325 constitute an accurate encapsulation of the legal considerations involved, based upon the development of the principle in Hedley Byrne, through the Morgan Crucible case, with more recent discussion and analysis in Williams v Natural Life.  In the Morgan Crucible case which on its facts involved considerable similarities to this case, the court applied the principles and ‘three-stage test’ propounded in Caparo v Dickman when deciding, in relation to a strike-out application, that there was an arguable case of personal negligence against the defendant directors who had allegedly made negligent misrepresentations both in audited financial statements and in defence documents issued to their own shareholders, which they served on the plaintiffs’ advisors after a take-over bid had been made, being aware that the plaintiffs might increase their offer as a result (which they subsequently did).  However, it does not appear that the Court approached the case on the basis that it was necessary for the plaintiff to establish a voluntary assumption of risk by the directors on the extended Hedley Byrne principles discussed and illuminated by Lord Steyn in Williams –v- Natural Life.  Nor was the point taken in the Morgan Crucible case that the requirements of the take-over code were apt only to create personal duties of a regulatory nature upon the directors enforceable by the relevant disciplinary code as opposed to giving rise to a common law liability in negligence.
40.	Without deciding the matter, which in my view should be left open for argument at trial if the claimants see fit, it seems to me that the judge was right when he held that, in the light of the later authorities to which he referred, the decision in the Morgan Crucible case cannot be regarded as establishing that the mere supply of information by directors in the course of a take-over pursuant to the provisions of the Code and Rules can, without some additional indication of assumed personal responsibility for the supply of information, be sufficient to found liability to an action for common law negligence at the suit of the bidding company.  At the same time, it seems to me clear that, in relation to an assertion that by words or conduct a director has undertaken a personal assumption of responsibility for the giving or accuracy of particular information, the definition and extent of the obligations imposed on him under the statutory regime must be highly relevant in assessing the nature and extent of any responsibility undertaken.
41.	I also agree with the judge that a simple plea that the defendants represented by their ‘conduct, manner and demeanour’ that they were complying with the obligations contained in the Rules and Code adds nothing of substance upon the question of whether they personally assumed responsibility to UGC to do so.
42.	Finally, I also agree that the fact that it was contemplated that both would remain employed by Partco and conducted themselves on that basis, is not in itself sufficient to justify pleading that they thereby ‘impliedly warranted’ that they were undertaking a personal obligation of care, though again I agree with the judge that it is a background fact which might well explain why the directors gave or were willing to give personal assurances as to the accuracy of the information.  
43.	Accordingly, the question of assumption of responsibility seems to me to rest upon the statements in the pleading that in various respects the defendants gave personal assurances and upon the two matters specifically pleaded at paragraph 12 above.  So far as those two matters are concerned, it seems to me well arguable that the allegation in paragraph 55B is a statement by Mr Wragg which gave his (and it is contended, Mr Scott’s) personal endorsement to the accuracy of the information provided.  The words used appear to be those of personal assurance and personal activity.  It also seems to me that it is well arguable that the plea in paragraph 32D that Mr Wragg said that the management (including as it is said the two directors) knew what to do in order to achieve the forecast and were ‘up to it and up for it’ was similarly a personal assurance in relation to the ability and expectation of Partco to achieve the profit forecast.  Both will require further exploration in oral evidence.
44.	So far as the question of reliance is concerned, reasonable reliance by UGC upon the defendants’ alleged assumption of responsibility is pleaded at paragraph 57A of the Amended Particulars of Claim, without reference to the Confidentiality Agreement.  The existence of that agreement is plainly a substantial hurdle in the way of UGC’s plea of reliance (as well as proof that a personal duty existed in the first place) and particularly to the reasonableness of any such reliance in the light of the nature and setting of the negotiations.  However, in the course of his submissions, Mr Milligan acknowledged that it was not in itself a ‘knock-out’ blow in the strike-out application in the light of Miss Gloster’s argument that Clause 7.2 offended the Unfair Contract Terms Act 1997 (see paragraph 35 of the judgment set out at paragraph 25 above) and I consider that the judge was entitled to treat it as he did (c.f. Killick –v- PriceWaterhouseCoopers).  
THE TEST UNDER CPR 3.4(2)(a)
45.	The test for striking out under Order 3.4(2)(a) is, in the words of the rule itself, that the statement of case discloses ‘no reasonable grounds for bringing or defending the claim’.
46.	The notes to CPR 3.4 Civil Procedure Vol.1 Autumn 2001 indicate that this ground applies amongst others to (i) statements of case ‘which raise an unwinnable case where continuance of the proceedings is without any possible benefit to the respondent and would waste resources on both sides (Harris v Bolt Burden [2000] LTL February 2, 2000 CA); (ii) a claim or defence which is not ‘a valid claim or defence as a matter of law’ (Pricemeats Ltd v Barclays Bank Plc, The Times, January 19, 2000, Ch.D). 
47.	Case (i) refers to a case which is unwinnable on the merits, whereas case (ii) refers to the failure of a claim which is misconceived or, upon the facts or matters pleaded is bound to fail as a matter of law (cf the test formerly applied under RSC 018 r19).
48.	However, both are methods by which a claim or part of a claim may be disposed of summarily, and without regard to all available evidence as to the matters of contest, and are therefore broadly subject to the considerations which I have earlier summarised at paragraphs 27-28 above.  It is no doubt because of those considerations that the notes to CPR 3.4 advert to the principle that it is not appropriate to strike out a claim in an area of developing jurisprudence, in which a decision as to a novel point of law should be based on actual findings of fact, and that a statement of case is not suitable for striking out if it raises a serious live issue of fact which can only properly be determined by hearing oral evidence.
49.	Mr Milligan’s criticism of paragraph 33 of the judgment appears to me to be a criticism that, whereas the argument of Mr Boswood below (and as pursued by Mr Milligan on appeal) was essentially an argument under case (ii) of the Practice Note, the judge expanded it into an argument on the merits, whereas he should have treated the matters pleaded as comprehensively definitive of the matters relied on.  That does not seem to me to be a valid criticism in the circumstances of the case.  Miss Gloster has made clear that the submissions made for the defendants below put the matter on both bases, i.e. first that there was no valid claim pleaded as a matter of law (the pleading point) and secondly on the basis that, even if the form of the pleading was technically sufficient, to raise a claim, nonetheless that claim was ‘unwinnable’ (the merits point).  In the light of that, it seems to me clear that in paragraph 33 the judge dealt with it on both bases and it is also clear what his reasons were.  
50.	Having dealt in paragraph 32 of this judgment with the personal assurances pleaded (which he plainly considered to have some, albeit limited, substance), he found himself in the state of mind to which he spoke in the first sentence of paragraph 33, namely that he was ‘far from convinced’ that there was a real prospect of successfully claiming that Messrs Wragg and Scott had rendered themselves personally liable.  Nonetheless, he was conscious that such a level of judicial doubt was insufficient to meet the test required for a strike-out on the basis of the pleading.  In that respect it seems to me he was correct.  He had to regard the claim as bound to fail as a matter of law.  That being so, he could only strike it out if satisfied on the merits test that the case pleaded was unwinnable and, in that sense, continuance of the proceedings (i.e. the claim in negligence) could not benefit the respondents and would waste resources on both sides.  He then went on to say that he considered that the matter could turn on the live evidence of those involved in the meetings on which UGC relied, being satisfied that all the relevant facts could not be identified on an ‘incontrovertible’ basis.  On the assumption that by use of that phrase, the judge simply meant “with sufficient certainty”, that view also seems to me to have been correct.
51.	Mr Milligan has criticised the judge for the erection of an unnecessary hurdle in the path of his judicial reasoning.  He submits that, for the purposes of a strike-out, the alleged facts are assumed to be true and to represent the claimant’s best case, so that no question of factual dispute arises.  I agree with that submission, and I have no doubt that the judge accepted, that the pleading issue fell to be decided on the basis that the facts pleaded were true; that is axiomatic.  It is also to be taken as representing the claimant’s best case at the stage when the application is brought on.  However, there may be cases, and plainly the judge thought that this was one, where pleaded issues are couched in terms of a broad assertion as to the words or conduct of a defendant and/or the nature of the case against him without fully or precisely pleading particulars in relation to every allegation.  In such cases, it may be that the effect of an assertion which has been particularised is open to argument; or that an insufficiently particularised assertion is open to a request for further information; or that it is reasonable and realistic to assume that either may be affected by the precise terms of the evidence when called.  To this extent, it is important to preserve a degree of latitude in approaching the terms of the pleading whenever the issues of fact are not undisputed or indisputable and when it is reasonable to suppose that facts may emerge at trial or in the pre-trial processes yet to come which will (or may) assist the claimant to establish his cause of action in a ‘fact sensitive’ area of the law.
52.	I have listened to the powerful and cogent submissions of Mr Milligan who has sought to persuade us that the judge was insufficiently robust in rejecting the pleaded claim as devoid of all legal merit or any prospect of success in establishing that the words or conduct on the part of the defendants amounted to a personal assumption of responsibility for the task of supplying accurate information in relation to the trading and profit expectations of Partco against the background of the Confidentiality Agreement.  However, he has failed to persuade me that the judge was not entitled to reach the decision which he did.  It seems to me that the potential liability of directors in a situation of this kind has still to be regarded as a developing jurisprudence, or at least one which is uncertain in its application.  Nor do I think the judge was wrong to hold that the case in negligence ought properly to be resolved on the basis of a full identification of the relevant facts to enable proper findings to be made as to the nature and effect of any assurances proved to have been given, particularly in a situation where these would fall to be dealt with in any event in the context of other allegations in the pleadings.
CONCLUSION
53.	Upon an overall consideration of the facts and matters pleaded, despite the difficulties facing the claimants in establishing breach by the defendants of the personal duty of care alleged against them, the judge was right to hold that it was not a plain and obvious case appropriate to be struck out, at a stage when the witness statements were yet to be exchanged and the relevant evidence had not been tested in cross-examination.  Accordingly, I would dismiss the appeal.  I would also dismiss the cross-appeal.
Lord Justice Kay:
54.	I agree
Dame Elizabeth Butler-Sloss:
55.	I also agree
Order: Appeal dismissed with costs
(Order does not form part of the approved judgment)