Mr David Smyth

David Smyth

Updates

Litigation

Qualifying shareholders' access to company records
Hong Kong | 11 December 2018

The recent decision of the High Court in Ninotre Investment Ltd v L & A International Holdings Ltd is a further example of the court's statutory power to grant a qualifying shareholder access to and inspection of company records. Section 740 of the Companies Ordinance (Cap 622) has become an established mechanism for aggrieved shareholders, with legitimate complaints in their capacity as shareholders, to obtain access to and inspection of company records.

Charging order over funds in court
Hong Kong | 13 November 2018

The High Court recently considered whether in principle a judgment creditor is entitled to a charging order over funds paid into court by a judgment debtor in a different action involving another party. The case is an interesting review of the respective interests of the parties when funds are paid into court pursuant to a court order. It concerns the application of established principles to what appears to be a different situation, but one that may give other litigants pause for thought.

Mis-selling claim dismissed
Hong Kong | 04 September 2018

A recent decision of the Court of First Instance confirms the conventional thinking that a relationship between a bank and a customer does not of itself give rise to a duty of care to advise on the part of the bank. The court dismissed the claimant investor's mis-selling claim against the bank on the basis that neither the terms of the relevant contracts entered into with the bank nor the circumstances of the case suggested that there had been an assumption of a duty to advise by the bank.

Cross-border insolvency regime – past and future
Hong Kong | 21 August 2018

There are no statutory provisions empowering the Hong Kong courts to provide assistance and recognition to foreign insolvency office holders. The courts therefore rely on their inherent power (where appropriate) under the common law principle of modified universalism to provide such assistance. Although the application of this principle is not without its problems, the courts in recent years have shown some willingness to assist the effective implementation of cross-border insolvency and restructuring regimes.

Court of Appeal on expert evidence
Hong Kong | 07 August 2018

The Court of Appeal's judgment in Shenzhen Futaihong Precision Industry Co Ltd v BYD Co Ltd is another recent example of the courts in Hong Kong trying to narrow the issues in respect of which parties seek permission to adduce expert evidence. In this case, the court refused to interfere with a lower court's case management decision that had granted the defendants permission to adduce expert evidence with respect to only one issue out of 10 contested issues that the defendants sought to raise.

More dismissal of 'dormant' claims
Hong Kong | 10 July 2018

Defendants should welcome the recent judgment in Fiscalink International Ltd v Yiu Yu Sum Alex, in which the court struck out the plaintiffs' claims against a majority of the defendants on the basis that the lack of progress over many years was an abuse of process such that the entire action against those defendants should be dismissed. The court's judgment is another example at first instance of a pragmatic application of the relevant principles concerning dismissal for abuse of process.

Court clarifies admissibility of mainland court judgment
Hong Kong | 26 June 2018

The High Court recently analysed the rationale behind the common law principle in Hollington v F Hewthorn & Co Ltd when determining the admissibility of parts of an earlier judgment of a Beijing court arising out of criminal proceedings. The court clarified that under Hong Kong common law, the Hollington principle did not prevent the courts from admitting factual evidence referred to in an earlier judgment of another court or tribunal.

Top court rules on protective costs orders
Hong Kong | 12 June 2018

A recent landmark judgment of the Court of Final Appeal confirms that in deciding whether it is fair and just to grant a protective costs order in public interest litigation, the courts should be apprised of an applicant's financial position. In the case of a corporate applicant, it is proper to inquire not only into the assets belonging to the company, but also other sources of funding to which it has access. The case is the first in Hong Kong in which the courts have extensively set out the relevant legal principles in this regard.

Court upholds privacy rights in face of disciplinary proceedings
Hong Kong | 29 May 2018

The High Court recently dismissed proceedings seeking to compel the Hospital Authority to disclose confidential patient records in connection with professional disciplinary proceedings. The decision serves as a good reminder of the tension that exists between the competing interests of preserving client (or patient) privacy rights and the necessity and public interest in the proper administration of professional disciplinary proceedings.

Production of company documents to liquidators
Hong Kong | 15 May 2018

A recent case involved a contested dispute over the liquidators' access to certain documents stated to be in the respondent's possession or control. At first instance, the court refused to order the respondent to give wide-ranging production of documents to the liquidators on the basis that the documents sought did not fall within Section 221(3) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance. This judgment was recently successfully appealed by the liquidators.

Flawed claim against solicitors struck out
Hong Kong | 24 April 2018

In defending themselves against a claim for professional negligence brought by a former client, two law firms and the individual solicitor recently successfully applied to strike out the entire claim against them, with costs awarded on a more generous ('indemnity') basis. The two related judgments are a salutary reminder of the need for a plaintiff to plead all material particulars, failing which there is a real prospect that their claim could be struck out as plainly defective.

Amendments that do more than 'relate back'
Hong Kong | 10 April 2018

The recent judgment in Tao Soh Ngun v HSBC International Trustee Ltd arose from an interesting piece of litigation. In this case, the plaintiff appears to have tried to amend her pleading to add new allegations of breach and loss based on matters that did not exist at the time when the proceedings commenced. To have allowed such amendments would not have sat comfortably with the 'relate back' principle (ie, that an amendment takes effect from the date of the original pleading).

Accountants' final appeal against disciplinary decision fails
Hong Kong | 03 April 2018

In Registrar of Hong Kong Institute of Certified Public Accountants v Wong & Anor, the accountants appealed a disciplinary committee's decision the substance of which was that they had failed to observe a professional standard in connection with an audited company's compliance with Hong Kong Accounting Standard 39 in respect of an available-for-sale financial asset, before issuing an unqualified audit opinion. That appeal failed. More recently, the accountants' final appeal to the Court of Final Appeal was also dismissed.

Court of Appeal clarifies reviews of taxed costs
Hong Kong | 20 March 2018

In a recent case, the Court of Appeal took the opportunity to clarify the lower courts' role when reviewing disputes over taxed costs. In doing so, the Court of Appeal appears to have come to a sensible compromise in allowing some costs that had been approved by the taxing master but disallowed by the judge on review.

SFC collective redress: reliance on misstatement in a real but not ideal world
Hong Kong | 06 March 2018

The Securities and Futures Commission (SFC) in Hong Kong has been very active in using civil proceedings pursuant to Section 213 of the Securities and Futures Ordinance to seek redress for investors. A recent judgment confirms that the SFC can seek restorative orders not only against parties to impugned transactions, but also against individuals who aid or abet or who are involved.

Scope of auditor's duty to blow the whistle
Hong Kong | 23 January 2018

The Court of First Instance recently considered some of the legal principles surrounding the scope of an auditor's duty to detect alleged irregularities in a company's financial statements and, in appropriate circumstances, to report alleged wrongdoing to the relevant regulatory authorities. The judgment is an interesting review of some of the legal issues involved, including the applicability of the defence of illegality in the context of a claim brought by a liquidator on behalf of a company against its former auditor.

No enforcement of judgment against joint account
Hong Kong | 16 January 2018

A recent case provides a nice illustration of some of the problems associated with seeking to enforce a judgment debt against money in a bank account. The defendant judgment debtor was a joint account holder together with his brother. The brother successfully applied to discharge a provisional garnishee order obtained by the plaintiff judgment creditor on the basis that, as a matter of law, money held in a joint bank account could not be attached unless both account holders were judgment debtors.

New year, new start for recoverable costs
Hong Kong | 02 January 2018

The long-awaited increase in the guideline solicitors' hourly rates adopted for party and party taxation in civil proceedings was announced towards the end of 2017. The new rates came into effect on January 1 2018 and should serve to narrow the gap between successful litigants' incurred and recoverable costs.

Shareholder 'activism' by access to company records
Hong Kong | 19 December 2017

Section 740 of the Companies Ordinance can be a powerful tool in assisting shareholders to obtain inspection of a company's documents. Two new cases demonstrate the continued use of Section 740 by shareholders to obtain inspection of corporate documents. While they show that the courts are generally willing to assist shareholders in appropriate cases, the courts will often rein in applications either by limiting the scope of the inspection or imposing conditions to the order granted.

Costs orders are not an 'indemnity'
Hong Kong | 12 December 2017

There has been a number of recent cases in Hong Kong in which successful parties have been awarded their costs on a more generous basis against unsuccessful parties – known as an 'indemnity' basis (in contrast to what is commonly called a 'standard' or 'party and party' basis). A recent example in the Court of Appeal is Qiyang Ltd v Mei Li New Energy Ltd. One might be forgiven for sometimes thinking that orders for indemnity costs are a norm, but they are not.

Regulator's use of Section 213 'combo' civil proceedings
Hong Kong | 21 November 2017

The Securities and Futures Commission (SFC) has cast a wide net with its use of civil proceedings pursuant to Section 213 of the Securities and Futures Ordinance. Recently, the Court of Appeal dismissed an appeal arising out of the SFC's use of Section 213 proceedings to obtain declarations that three defendants based in Hong Kong had contravened Section 300 of the ordinance by engaging in a deceptive course of business in transactions involving shares listed on an overseas stock exchange.

Court rejects mechanistic approach to strike-out of multiple proceedings
Hong Kong | 07 November 2017

In Far Wealth Ltd v Lo Ki Mou the High Court dismissed the proceedings as an abuse of process because the plaintiffs could have protected their position by way of a counterclaim in prior proceedings commenced against them by the defendants. While fact specific, it is clear from the judgment that the court was exercising a wide discretion based on the "underlying objectives" of the court rules.

Judgment clarifies scope of direct use prohibition
Hong Kong | 17 October 2017

In Competition Commission v Nutanix Hong Kong Ltd a High Court judge recently considered the scope of the 'direct use prohibition' contained in Section 45(2) of the Competition Ordinance, which protects a person who is required to answer questions as part of an investigation by the Competition Commission pursuant to Section 42. The case decides that the protection does not extend to a third party, even where the third party is the subject of the commission's investigation.

Absence from trial ill-advised
Hong Kong | 19 September 2017

Karla Otto Ltd v Bayram is another recent case that has its origins in misappropriated money being transferred from overseas to Hong Kong. The case took several years to get to trial and when it did, the defendants were absent. Whether that absence was a strategic decision on their part or explained by the first defendant's illness became an issue. The case demonstrates that the courts will be careful to scrutinise applications to adjourn a civil trial on the basis of a party's illness.

Hong Kong court reins in crown immunity
Hong Kong | 25 July 2017

The Hong Kong Court of First Instance recently ruled that a Chinese state-owned enterprise was not entitled to invoke crown immunity against the execution of a charging order of assets in Hong Kong. The decision provides welcome clarity on the approach that the courts will take in deciding whether, and when, a claim of crown immunity against enforcement of a judgment or an arbitral award might succeed in Hong Kong.

Reserving right to challenge jurisdiction
Hong Kong | 30 May 2017

A recent decision underlines the need for caution on the part of defendants and their legal advisers when considering a jurisdictional challenge. In particular, prior to the determination of a challenge to jurisdiction, defendants should think carefully before making any application to the court for relief, to ensure that in doing so they are not invoking the court's jurisdiction. While defendants may seek to reserve their rights to challenge jurisdiction, their conduct could suggest otherwise.

Sanctioned offers and alternative costs provisions
Hong Kong | 28 February 2017

Recent lower court cases in Hong Kong have clarified that a sanctioned offer which seeks to deprive a plaintiff of an entitlement to costs, if accepted in time, is not a properly constituted sanctioned offer in this context. Therefore, where such a sanctioned offer is not accepted and the plaintiff fails to better the offer at trial, the defendant (as offeror) should not expect to reap the costs and interest benefits that would otherwise normally follow under the relevant costs rules.

Pleading inconsistent alternative claims
Hong Kong | 24 January 2017

The High Court recently revisited the often thorny issue concerning the permissible boundaries for a plaintiff to put forward inconsistent alternative claims in a court pleading. In doing so, the court has confirmed that much rests on the knowledge of the relevant party at the time of advancing the alternative claims. While the general principles are not new, they are of significant practical importance to civil litigation in Hong Kong (and in jurisdictions that have similar civil procedural rules).

Civil appeals of accountants' disciplinary proceedings
Hong Kong | 10 January 2017

The Court of Appeal recently declined to interfere with a disciplinary committee's finding that the respondent accountants had failed to observe a professional standard when issuing an unqualified opinion regarding the financial statements of a listed company. The outcome in the case confirms a general caution on the part of the courts when asked to review the decision of a professional body's disciplinary committee that a member failed to observe a technical standard or guideline.

Market Misconduct Tribunal orders sanctions for disclosure of false or misleading information
Hong Kong | 29 November 2016

In the past few years, the Securities and Futures Commission (SFC) has actively pursued those alleged to have committed market misconduct in Hong Kong. The SFC has a number of enforcement tools at its disposal, including initiating civil proceedings in the Market Misconduct Tribunal. A recent decision marks a rare ruling by the tribunal regarding the disclosure of false or misleading information inducing transactions contrary to Section 277 of the Securities and Futures Ordinance.

Exception to 'fraud exception' for summary judgment
Hong Kong | 01 November 2016

Earlier this year, in Universal Capital Bank v Hong Kong Heya Co Ltd, the High Court of Hong Kong confirmed that the 'fraud exception' to the jurisdiction to order summary judgment applied where the plaintiff's claim raised an allegation of dishonesty against the defendant. In a more recent case, the court endorsed the attempt in Universal Capital to limit the otherwise wide ambit of the fraud exception.

Accountant-trustees 'released' from final appeal
Hong Kong | 25 October 2016

The appeal committee of the Court of Final Appeal recently refused a plaintiff's application for permission to appeal the Court of Appeal's judgment. The Court of Appeal had struck out the plaintiff's claim in negligence against the defendant firm on the basis that it disclosed no reasonable cause of action. The grounds for the plaintiff's application appear to have been as creative as they were fanciful.

Update on expert witness disclosure case
Hong Kong | 20 September 2016

The Court of Appeal recently rejected an application for permission to appeal its judgment in Harvest Treasure Ltd v Cheung Fat Enterprises Ltd to Hong Kong's top court. The court decided that an expert witness has no obligation to disclose pending disciplinary proceedings against him or her when giving evidence in civil proceedings.

Expert witness's duty to disclose disciplinary matters
Hong Kong | 09 August 2016

The Court of Appeal recently ruled that an expert witness is not obliged under the Code of Conduct for Expert Witnesses to give voluntary disclosure of pending disciplinary proceedings against him or her. An obligation of disclosure would arise where the expert witness has been sanctioned by the relevant professional body in such a way as to curtail his or her right to practise.

Court orders disclosure of funding arrangements
Hong Kong | 26 July 2016

In an interesting recent case, the High Court confirmed that principles of open justice usually require a plaintiff to disclose to a defendant all the affidavit evidence filed at court in support of an ex parte application. The plaintiffs were ordered to disclose to the defendant the redacted parts of evidence filed in support of their ex parte applications to the court to extend time for service of the legal proceedings.

Fraud exception to summary judgment – court's approach hardens
Hong Kong | 24 May 2016

The courts in Hong Kong have traditionally held that the so-called 'fraud exception' to the jurisdiction to grant summary judgment is to be construed widely. Therefore, any allegation of dishonesty by a plaintiff against a defendant is caught by the exception, be it an allegation in a formal pleaded case, sworn statement or supporting legal submission. This was recently confirmed in an interesting decision.

Summary judgment and fraud exception
Hong Kong | 29 March 2016

In a judgment earlier this year, the Court of Appeal considered the ambit of the fraud exception to applications for summary judgment (judgment without trial) in Hong Kong. The court held that the fraud exception is construed widely; therefore, applications for summary judgment are barred if the plaintiff's claim raises an issue of fraud in the traditional sense or in a wider sense (ie, involving an allegation of a dishonest act intended to deceive).

Accountants' tax advice not privileged
Hong Kong | 15 December 2015

The Court of Appeal has ruled that legal advice privilege does not extend to communications by an accountant giving advice on tax law. Therefore, it is now clear that in Hong Kong the privilege applies only to confidential communications between a qualified lawyer (acting as such) and a client. Legal advice privilege does not extend to communications between an accountant and a client even if they are to do with advice on tax law (or on any other law).

Accountant-trustees 'released' on appeal
Hong Kong | 01 December 2015

The Court of Appeal recently overturned a lower court's ruling and struck out a claim sounding in alleged negligence against the accountant-trustees on the basis that the claim disclosed no reasonable cause of action. Strike-out applications may be made at any stage of civil proceedings. However, the earlier that they are made, the more potent they can be.

Update on ad hoc admission of overseas counsel
Hong Kong | 08 September 2015

Recently, the Hong Kong Bar Association (HKBA) revised its Practice Guidelines for Ad Hoc Admission of Overseas Counsel. Applicants and their instructing solicitors would be well advised to review the revised practice guidelines, particularly given the HKBA's role in such applications and the court's repeated emphasis on the need for timely engagement with the HKBA.

Important judgment on liquidators' ability to obtain documents
Hong Kong | 10 March 2015

In an important judgment handed down recently by the Court of First Instance in Hong Kong, the companies judge ruled on the ambit of the power to order a person to produce documents to a provisional liquidator pursuant to Section 221(3) of the Companies (Winding-Up and Miscellaneous Provisions) Ordinance.

Civil appeals – one shot as of right only
Hong Kong | 03 February 2015

The right of appeal to the Court of Final Appeal with respect to final judgments of the Court of Appeal amounting to HK$1 million or more has been repealed. This right of appeal was something of an anomaly compared to other common law jurisdictions. Final appeals in Hong Kong civil cases are now aligned with those other jurisdictions.

Modified universalism – privy to singular clarification?
Hong Kong | 20 January 2015

The Hong Kong High Court and the UK Privy Council recently issued significant decisions on cross-border insolvency. This update discusses the impact that these cases will likely have on the conduct of liquidations in Hong Kong, as well as on the jurisdiction of the Hong Kong courts when asked to provide assistance to foreign liquidations.


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