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Arbitration & ADR
Hong Kong's Financial Dispute Resolution Scheme will be expanded with effect from January 1 2018 and July 1 2018 by amending the jurisdiction and terms of reference of the Financial Dispute Resolution Centre. Alongside the recent changes to allow third-party funding in arbitration, the changes to the scheme show that alternative dispute resolution is coming of age for financial disputes in Hong Kong where there is an imbalance of power between parties.
In the final chapter of the successful trademark infringement proceedings brought by Jack Wills Ltd against House of Fraser (Stores) Ltd, the High Court assessed the profits that the defendant retailer had to pay Jack Wills. The decision provides a useful explanation of the factors to be considered when undertaking an account of profits.
The Court of Appeal recently ruled on an outstanding aspect of the 'Glee' trademark dispute and confirmed the compatibility of Section 41 of the Trademark Act – concerning the registration of series marks – with EU law. Provided that series marks are sufficiently similar to meet the qualifying conditions set out in Section 41, they are individually entitled to the protection afforded to every trademark under EU law.
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.
A recent Supreme Court decision is now the leading case on negotiating damages. It has emphasised the compensatory basis of contractual damages and restricted negotiating damages to cases where the obligation breached by the defendant protected an asset with economic value. While the decision offers welcome clarity, it leaves some important questions unanswered.
In a recent case, the Supreme Court considered the application of Section 21(1)(b) of the Limitation Act 1980 with respect to claims against the directors of a company for an unlawful distribution of the shareholding. The court acknowledged that Section 21 was primarily aimed at express trustees, and that it was found to be applicable to company directors "by what may fairly be described as a process of analogy".
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.
In a recent case, the High Court confirmed the validity of a senior noteholder's directions under a note structure governed by the laws of multiple jurisdictions. In doing so, it highlighted the common ground between the London and New York markets with regard to the common law principles of contractual construction and demonstrated the efficiency of the speedy trial procedure in the Financial List.
The English courts can make draconian worldwide freezing orders. Such an order will usually contain an undertaking by the applicant to seek permission from the English court before enforcing the order outside England and Wales or seeking an order "of a similar nature". A recent commercial court decision provides welcome guidance on how it will approach the scope of this undertaking.
In a recent case, the High Court considered whether, in the event of the early termination of a transaction under the 2002 International Swaps and Derivatives Association Master Agreement, a party could 'remake' its determination of the close-out amount and the nature of that party's discretion in calculating the close-out amount.
In the first contested case of its kind since the Bribery Act 2010 came into force, a company was found guilty under Section 7 of the act for failing to prevent bribery after its defence of having adequate procedures in place to prevent bribery was unsuccessful. Given that there is no one-size-fits-all rule for what constitutes 'adequate procedures', it will be difficult for a company to assess whether it falls on the right side of the line.
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.
Belhaj v director of public prosecutions – court clarifies two issues relating to waiver of privilegeUnited Kingdom | April 17 2018
In a case concerning misconduct in public office, the claimants sought to challenge the decision not to prosecute by beginning judicial review proceedings against defendants that included the director of public prosecutions. The court recently held that a limited waiver of legal professional privilege prevented the use of the privileged materials in a related judicial review and that legal professional privilege could be reasserted over inadvertently disclosed privileged material.
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).
The Supreme Court recently held that the location of the incident from which damage arose in the context of a claim alleging the tort of conspiracy to injure by unlawful means was where a conspiratorial agreement was agreed. In this case, that location was England and the English courts therefore had jurisdiction.
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.
The High Court recently heard an appeal regarding the costs consequences of a withdrawn Part 36 offer where a second offer was made and neither was beaten at trial. In holding that costs flowed from the second offer only, the court provided useful guidance on how to structure multiple offers so that a party's original costs protection is preserved.
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.
The Court of Appeal recently handed down its much-anticipated judgment on the mis-selling and London Inter-bank Offered Rate (Libor) manipulation test case earlier this month. While the appeal was dismissed in full, the Court of Appeal's decision has clarified a number of aspects of the law in this area – in particular, the circumstances in which an implied representation in respect of Libor would arise.
The claimants in a recent case applied to inspect certain documents created in foreign proceedings over which the defendants – companies belonging to the mining company Glencore – had asserted litigation privilege. Glencore controlled these proceedings but was not a party to them. It unsuccessfully argued that this was a permitted exception to the general principle that a party cannot claim litigation privilege out of proceedings to which it is not a party.
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.
The English High Court recently considered the correct approach to the redaction of documents in civil proceedings. The court held that the right to redact irrelevant material applies both to standard disclosure and the right to inspect documents referenced in statements of case. In the short term, this case confirms a party's ability to redact documents in order to protect commercially sensitive information. In the long term, the practice of redacting such information will likely be confirmed by way of an express rule.
In a recent case, the Court of Appeal upheld a decision that the appellant bank had breached the Quincecare duty of care which it owed to its corporate customer by making payments without proper enquiry, in circumstances in which a reasonable banker would have been on notice that the customer's director was perpetrating a fraud.
Integrated bank accounts are very common in financial hubs such as Hong Kong. In addition to sub-accounts categorised by different currencies, an integrated account may also have sub-accounts with other features (eg, credit cards, investments and insurance). A recent case shed light on the approach of the courts to such accounts in the context of enforcement proceedings and rival claims by different judgment creditors.
In a recent case, the Court of Appeal upheld the High Court's decision to strike out certain breach of warranty claims on the basis that the buyer had given the seller inadequate notice of those claims. The buyer's attempt to keep its options open by drafting its notices widely proved fatal to its claims, as it failed to identify the specific warranties to which its claims related as required by the share purchase agreement.
High Court confirms availability of Bankers Trust orders to trustee claimants seeking to recover misappropriated assetsUnited Kingdom | February 06 2018
The High Court recently confirmed for the first time the availability of the commonly encountered Bankers Trust order to trustee claimants of stolen or misappropriated property, highlighting the flexibility of the court's equitable jurisdiction when presented with new situations. The decision also illustrates the court's willingness to grant Norwich Pharmacal relief to facilitate the recovery of unlawfully dissipated assets and the complimentary interim remedies available for that purpose.
In Bespark Technologies Engineering Ltd v JV Fitness Ltd the High Court recently took the opportunity to remind liquidators of their duty to give full and frank disclosure when making an ex parte (without notice) application to the court. A failure to do so could have serious consequences, including a refusal to approve the appointment of a liquidator or an order for his or her removal. The duty to be full and frank applies to all ex parte applications, so there are general lessons to be learned.
A recent Commercial Court decision concerned a claim against three former directors of the claimant companies in respect of fraudulent schemes involving construction projects and land acquisitions in Kazakhstan. The decision provides guidance on what is required to prove a complex fraud and when foreign limitation periods will be disapplied because they cause the claimant undue hardship.
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.
In Sharp v Blank the High Court considered the defendants' application for approval of their revised cost budget on the basis that there had been significant developments in the litigation. The judgment provides helpful clarification of the court's jurisdiction to approve costs that have already been incurred between the date of the original approved budget and the date of the application hearing.
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.
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.
In The ECU Group plc v HSBC Bank plc the High Court held that HSBC, the proposed defendant, had to provide pre-action disclosure of Bloomberg messages, emails, trading data and compliance documents. The decision is a useful example of the categories of documents that the court may be prepared to order against a bank in respect of pre-action disclosure. However, the scope of disclosure was kept narrow, a factor which no doubt played in ECU's favour.
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.
The English High Court recently found that service by email of arbitration proceedings was not valid under Section 76 of the Arbitration Act 1996 on the basis that the correspondence had been directed to the email address of an employee who did not have the authority to accept service. The judge found that in circumstances where service is by way of an individual email address, validity of service depends on the application of agency principles.
Supreme Court holds that a defendant cannot be liable for a greater loss than was caused by its negligent valuationUnited Kingdom | December 12 2017
The Supreme Court recently clarified that when applying the 'but for' test in the context of a negligent valuation, the basic comparison is between the position that the claimant would have been in if the defendant had fulfilled its duty of care and the claimant's actual position. This means that a defendant cannot be liable for a greater loss than was caused by its negligent valuation.
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.
The High Court recently considered the extent to which legal advice privilege could attach to documents which were not communications of legal advice between lawyer and client, but from which privileged legal advice could be inferred, and held that privilege could indeed apply to such documents. The test is whether there is a "definite and reasonable foundation" for such an inference to be made as opposed to material that would merely make the reader speculate what the legal advice was.
Ghosh test overturned: dishonesty according to the standards of ordinary, reasonable and honest peopleUnited Kingdom | November 28 2017
The Supreme Court recently held that the test for dishonesty should be assessed only by reference to whether the defendant's conduct is dishonest by the objective standards of ordinary, reasonable and honest people. In its ruling, the Supreme Court concluded that there were convincing grounds for holding that the second limb of the well-known Ghosh test did not correctly represent the law and that directions based on it should no longer be given.
First Asia Finance International Ltd v Tso Au Yim & Yeung appears to be another example of a misconceived claim against a defendant solicitors' firm. In this case, the court held that the solicitors owed no duty of care to the plaintiff company (which was not a client) with respect to the preparation of a settlement agreement. The plaintiff also failed with a claim that it had informally retained the defendant solicitors with respect to the drafting of the settlement agreement.
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.
A recent application made by the insolvency practitioner of Agrokor, a major Croatian conglomerate, resulted in recognition in England of a stay of civil proceedings against the group. The purpose of the application was to halt any proceedings in relation to Agrokor's securities and debt obligations containing English law and jurisdiction provisions, pending the restructuring in the Croatian insolvency proceedings of the group's affairs.
The Commercial Court recently clarified the test for 'special circumstances' in applications for permission to use previously disclosed documents. The court did not grant permission to the applicant in this instance, on jurisdictional grounds. However, in setting out a number of factors which influence its discretion to waive or vary the restriction, the court has given useful guidance to those that may pursue applications for collateral use in future.
The Court of Appeal recently heard an appeal relating to whether complex, loss-making financial transactions were enforceable against the respondent in circumstances where they had been entered into against the backdrop of a corrupt relationship between the appellant counterparty and the respondent's agent. The court's decision demonstrates that appellate courts are willing to apply equitable principles creatively in order to avoid what they perceive to be substantial injustice.
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.
The Court of Appeal recently applied established English conflict of laws rules in holding that a non-bearer holder of issued notes was not entitled to sue under those notes for breach of contract. In doing so, the court has provided commercial certainty to downstream holders of interests in securities, but left open important questions as to third-party redress under these structures.
In Grosvenor Chemicals Ltd v UPL Europe Ltd disclosed documents were used by the UPL companies for a collateral purpose in breach of Civil Procedure Rule (CPR) 31.22. Grosvenor applied to the court under CPR 81.14(1) for permission to bring committal proceedings against the UPL companies and their law firm. The decision underlines the difficulty involved in persuading a court to allow an application for committal proceedings.
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.
LMA model form-based facility agreement does not constitute lenders' standard terms for Unfair Contract Terms ActUnited Kingdom | October 10 2017
The Court of Appeal recently upheld a decision to allow summary judgment for sums due under a facility agreement, rejecting the defendants' arguments that the facility agreement – based on the Loan Market Association model form – constituted the lenders' standard terms for the purposes of the Unfair Contract Terms Act 1977. Had the act applied, the terms of the facility agreement would have been subject to a reasonableness test.
The Technology and Construction Court was recently asked to determine the enforceability of a limitation of liability clause in an IT services agreement. The case provides a useful reminder to practitioners of the importance of clear contractual drafting to ensure that the agreement accurately reflects the parties' intentions as to their respective obligations and liabilities.
Securities and Futures Commission v Sun Min is another recent example of the Securities and Futures Commission using Section 213(2)(b) of the Securities and Futures Ordinance to obtain restitution, in the form of so-called 'restorative' orders, on behalf of counterparties to impugned transactions. What is interesting about this particular case is that the judge expressed some concern as to whether the amount of restoration sought might result in a windfall for the counterparties involved.
The High Court recently considered the "unfortunate tension" between Civil Procedure Rules (CPR) 6.14 and 7.5 regarding effective service of a claim. The judgment provides a helpful analysis of the purpose of CPR 6.14 in circumstances where there is uncertainty surrounding the validity of service of a claim form.
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.
The High Court recently upheld the contractual right of an online foreign exchange retail trading broker to revoke trades entered into by a customer, on the basis that the customer had breached a contractual duty not to trade abusively. The court held that the broker's right to revoke was not subject to a Braganza duty to exercise it in a way which was not arbitrary, capricious or irrational in a public law sense.
The High Court of Hong Kong has a wide discretion to grant shareholders access to company documents, pursuant to Section 740 of the Companies Ordinance (Cap 622). The court has been astute in assisting shareholders to protect their legitimate interests by allowing access to company documents while, at the same time, preventing them from launching so-called 'fishing' expeditions. What may amount to fishing, in this context, was recently considered by the court.
The High Court recently considered and applied the principle that the right to waive privilege is not property of a bankrupt which is capable of being vested in the trustee in bankruptcy, thus confirming the Court of Appeal decision in Shlosberg v Avonwick Holdings Ltd and rejecting the application of the Crescent Farm principle in bankruptcy cases. The decision prevented the trustees in bankruptcy from using potentially privileged documents as evidence to support a claim.
The Court of Appeal recently allowed an appeal of a first-instance decision not to order the deletion of a privileged email disclosed by the appellant to the respondent. In arriving at its decision, the court extended the principles around inadvertent disclosure identified in Al-Fayed v The Commissioner of Police for the Metropolis to cover situations where an inspecting solicitor does not identify that a document has been mistakenly disclosed, but another solicitor acting for the same party subsequently does.
The Hong Kong Legislative Council recently passed the Apology Bill with the aim of removing certain legal disincentives for parties to convey an apology in the context of civil disputes. In the footsteps of many overseas jurisdictions which have already adopted apology legislation, Hong Kong is the first Asian jurisdiction to enact this type of legislation, which generally precludes an apology from being taken into account in the determination of fault and liability.
The High Court recently held that an oral contract for waste removal services had been entered into by a company and not by the company's owner in his personal capacity. The waste removal company, which had provided its services to a company that had gone into liquidation, was therefore unable to recover outstanding sums payable to it. This case demonstrates the importance of ensuring that parties agree contractual terms in writing and document their negotiations with sufficient detail.
Injunctive relief to freeze a defendant's assets (ie, a Mareva injunction) can extend to third parties under the so-called 'Chabra' jurisdiction where there is good reason to suppose that the assets held by the third parties are in fact assets belonging to the defendant. This jurisdiction is described as exceptional. However, as a recent case demonstrates, while the courts are careful in exercising their jurisdiction in this regard, they will do so in deserving cases.
Supreme Court considers damages where innocent party avoided greater loss by selling asset following breachUnited Kingdom | August 01 2017
The Supreme Court recently overturned the Court of Appeal in a judgment which considered the proper measure of damages in a situation where the party suffering loss had avoided a greater loss as a result of the breach by the other party. This decision highlights the issues that parties can encounter following repudiatory breach and disputes that arise regarding alleged acts of mitigation. However, the facts were unusual and the court was limited to considering whether the arbitrator had erred in law.
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.
Lord Sumption, a UK Supreme Court justice, recently delivered a lecture on the development of the English law of contractual interpretation and its potential future direction. He described the shift in the late 20th century from a focus on the language used by the parties to using the "surrounding circumstances" and "commercial common sense" as tools to elucidate the meaning of contractual provisions, but suggested that the Supreme Court is now retreating from this wider and more flexible approach.
A recent High Court decision has provided some clarification of the scope of the compulsory jurisdiction of the Financial Ombudsman Service. The decision has left the scope of that jurisdiction open to discussion and appears to suggest that the courts will take a more mechanical approach to reviewing regulatory decisions.
In an age of electronic scams, with money passing through bank accounts in Hong Kong, foreign plaintiffs are increasingly pursuing defendants in Hong Kong to recover their money. In seeking summary judgment, some plaintiffs are careful not to allege fraud on the part of the defendants – rather, their claims may be for the return of money unjustly received by the defendants for no consideration. A recent case is a good example.
In Astor Management AG v Atalaya Mining plc the High Court was once again confronted with the task of interpreting an 'all reasonable endeavours' clause. While the decision confirms that the court will use its best endeavours to give such clauses (and their many infamous variants) legal force, it is a reminder to parties that it is preferable to try to achieve legal certainty by defining the degree of effort required with as much precision as possible.
In an important decision reported earlier this year, the Court of First Instance decided that the Securities and Futures Commission should adopt a generous test of relevance when giving disclosure of materials in director disqualification proceedings – an approach to disclosure that was more commensurate with the duty of a prosecutor in criminal proceedings.
The Court of Appeal recently held that an exemption clause providing that "liability for any claim in relation to asbestos is excluded" was drafted sufficiently widely to exclude liability for negligence where the party relying on it had allegedly failed to identify asbestos at an early stage. It also reiterated that the contra preferentem rule now has a very limited role in the interpretation of commercial contracts negotiated between parties of equal bargaining power.
The Judiciary Administration in Hong Kong has proposed to increase the monetary jurisdiction limits for civil claims in the District Court. The proposals were recently considered by the Legislative Council Panel on Administration of Justice and Legal Services, further to a report of the Judiciary Administration. The proposals appear to have broad agreement among different stakeholders and, subject to the passage of a necessary resolution in the Legislative Council, look likely to be implemented sometime in 2018.
The Supreme Court recently considered three questions relating to the total loss of the vessel Ocean Victory during a storm at the port of Kashima, Japan. The most controversial question was whether the terms of the insurance clause in the bareboat charterparty between the shipowners and demise charterers provided an exclusive regime for compensation for loss of the vessel that precluded hull insurers' subrogation rights.
In a case involving the shareholders of Lush Cosmetics, the Court of Appeal dismissed an appeal relating to the correct interpretation of two companies' articles of association in respect of the valuation of shares which were subject to pre-emption rights, applying Lord Neuberger's well-known judgment on contractual interpretation in Arnold v Britton.
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.
The High Court recently provided another landmark judgment reaffirming the narrow scope of legal professional privilege. In proceedings between the Serious Fraud Office and Eurasian Natural Resources Corporation Limited (ENRC), ENRC unsuccessfully attempted to protect documents created during internal investigations into suspected bribery and corruption, claiming legal professional privilege.
The Supreme Court recently dismissed an appeal in Wood v Sureterm Direct Ltd. The court upheld the Court of Appeal's decision on the meaning of an indemnity clause and agreed with its application of established contractual interpretation doctrine. The decision confirms the established judicial approach to contractual interpretation: that is, the focus on the words of a given clause.
A recent decision is a reminder of the statutory right of qualifying shareholders to seek access to a company's records or documents for the purpose of protecting their financial interests as shareholders. It confirms the principles arising in connection with the statutory provision. It also demonstrates a general willingness on the part of the courts to assist with the protection of shareholders' interests while, at the same time, preventing so-called 'fishing' expeditions.
The Supreme Court recently overturned the decisions of the Upper Tribunal and the Court of Appeal in respect of what it means to be 'identified' in a Financial Conduct Authority enforcement notice. It held that a person is 'identified' if he or she is referred to in such a notice by name or by a synonym. This confirms a narrower interpretation as to whether a person is identified for the purposes of Section 393(1) of the Financial Services and Markets Act 2000.
The High Court recently found that a defendant bank owed and breached a duty to explain the financial implications of fixing the interest rate on the claimants' loans. This case is an as-yet rare example of the successful deployment of an argument that a bank owed a mezzanine duty to its customer of the form identified in Crestsign Limited v National Westminster Bank plc (falling somewhere between a full advisory duty and the standard duty not to make misrepresentations).
The Commercial Court was recently faced with an application by the defendants to strike out claims against them on the basis that the claimant had failed to serve claim forms that it had issued several years earlier. The claimant made a cross-application for alternative service or alternatively for service to be dispensed with under the Civil Procedure Rules. The court refused the cross-application and struck out the claim forms. The judgment contains a useful distillation of the principles relevant in this area.
For litigants involved in disputes concerning cross-border matters between Hong Kong and mainland China, the new Arrangement on Mutual Taking of Evidence in Civil and Commercial Matters between the Courts of the Mainland and the Hong Kong Special Administrative Region is a welcome development. It should speed up the process for Hong Kong parties seeking evidence in the mainland and provide more certainty in the scope of assistance available to them.
The Court of Appeal recently clarified the circumstances in which a party to litigation can use a subject access request under Section 7 of the Data Protection Act 1998 to obtain information which may be useful in litigation. This judgment provides clarification on issues relating to the legal professional privilege exception, the concept of disproportionate effort and the relevance of the data subject's motive in making the request.
The Supreme Court recently handed down a short but important judgment on jurisdiction under the EU Brussels Regulation. The court held in no uncertain terms that jurisdiction for the economic tort of inducing a breach of contract between a claimant and a third party lies with the home courts of the place where the harm was directly suffered as a result of the tortious acts.
Since the financial crisis, only a handful of mis-selling claims on behalf of investors have gone to trial in Hong Kong and even fewer have gone on to appeal. DBS Bank (Hong Kong) Ltd v Sit Pan Jit is one such case. That the investor took his case as far as the Appeal Committee of the Court of Final Appeal means that his mis-selling claim has gone as far as any other in Hong Kong in recent years.
The interest payable by losing parties in litigation, both pre and post-judgment, is an issue of considerable importance to all parties concerned – especially in long-running, complex commercial cases, in which millions of dollars in interest may be at stake. In a recent judgment which should attract the attention of lawyers and litigants, the High Court examined important questions of the court's power to award both pre and post-judgment interest.
The Court of Appeal recently emphasised the importance of independence and objectivity in expert evidence. If there is any conflict of interest, familiarity with a party or apparent interest in the outcome of the proceedings, this should be fully disclosed at the earliest stage. In this case the Court of Appeal upheld the trial judge's decision to take into account the "serious reservations" he had as to the expert's impartiality when considering the weight to afford to his evidence.
The High Court recently provided a helpful analysis of the circumstances in which a parent company owes a duty of care with regard to operations carried out by its subsidiary. In this case, establishing whether the parent owed a duty of care was central in determining whether the English courts had jurisdiction. The case is interesting in the context of the readiness of the English courts to hear claims relating to conduct outside the jurisdiction brought by foreign claimants.
The High Court recently rejected a €13.5 million claim for breach of contract, for the main reason that the parties had not manifested an intention to create legal relations, but also due to the absence of certainty in relation to other fundamental terms. The decision serves as a useful reminder of first principles in relation to contract formation and highlights the risks of taking a relaxed approach to documenting contractual arrangements.
In a recent case the Court of Appeal held that a term could not be implied into an agreement because, although it was linguistically consistent, it was substantively inconsistent with the express terms. In doing so, the court shed further light on the application of the "cardinal rule" that an implied term must not contradict any of the express terms of the contract.
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.
Court of Appeal provides timely reminder of principles relating to clear and unambiguous contractual negotiationsUnited Kingdom | February 21 2017
A recent Court of Appeal decision confirms established principles about the significance of the whole course of dealings when establishing whether a contract has been formed and the effect of denoting such dealings as 'subject to contract'. It also serves as a timely reminder of how to progress contractual negotiations so as to avoid uncertainty and potential disputes later on.
A recent decision demonstrates the interplay between arbitration and litigation, considering whether legal proceedings commenced by A against C are an abuse of the court's process where arbitration proceedings between A and B have decided the issue in question. The Court of Appeal held that a prior arbitration award can found an argument that subsequent litigation against a third party is an abuse of process, but will rarely do so.
A recent Court of Appeal decision provides a useful reminder of the difficulty in establishing the high threshold of fraud and that the fraud exception to the principle of autonomy is likely to be relevant in only very few circumstances. The decision provides comfort that the courts should not second guess honest representations of law. In the absence of clear evidence that the signatory acted fraudulently, the autonomy principle should be upheld.
Applications for security for costs are a common feature of civil litigation before the first-instance courts in Hong Kong. Sometimes liability for security for costs and the amount can be agreed between the parties. On other occasions, while the liability of a plaintiff to give security for a defendant's costs may not be disputed, a more contentious issue is the amount and form of the security. Such was the case in the recent admiralty action in Dunham-Bush Industry Sdn Bhd v KLN Container Line Ltd.
The High Court recently granted an order to enforce a demand guarantee against a guarantor despite claims that the demand did not comply with the terms of the guarantee. The court held that the doctrine of strict compliance does not automatically apply to demand guarantees in the way that it applies to letters of credit and that it is necessary to consider the construction of the terms of the particular guarantee to determine the validity of the demand.
In another significant development in the Securities and Futures Commission's efforts to combat market misconduct-type activity involving listed shares in Hong Kong, the lead market regulator has commenced civil proceedings under Section 213 of the Securities and Futures Ordinance in respect of China Forestry Holdings Co Ltd (in official liquidation). The regulator's civil complaint also names two co-sponsors and the auditor involved with the company's initial public offering.
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).
Court of Appeal upholds Financial List decision on application of Rome Convention to derivative instrumentsUnited Kingdom | January 10 2017
The Court of Appeal recently unanimously upheld a Commercial Court decision from the first trial heard within the new Financial List. The decision provides further clarification on the application of the Rome Convention to derivative instruments, including in relation to the inconsistent approach between the decision in this case and the earlier decision in Dexia, and signals a strong start for the Financial List.
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.
The High Court recently rejected a claim by RBS that interview notes taken by the bank and its external lawyers in the course of two internal investigations were privileged, finding that neither legal advice privilege nor lawyers' working papers privilege applied. In doing so, it confirmed the narrow approach taken to the definition of a 'client' in Three Rivers (No 5).
The Court of Appeal recently held that where a contract would, on its face, be unenforceable because the parties failed to agree an essential term, the missing term cannot be implied. The dispute arose when an estate agent failed to mention what event would trigger payment of his commission until after a sale that he introduced had been agreed. The fact that the first-instance decision was overruled indicates how subjective the formation of contracts remains.
In an important recent judgment, the Court of Final Appeal clarified the general principles that underpin the exercise of the courts' discretion to grant Mareva injunction relief (freezing of assets) in aid of overseas court proceedings, pursuant to Section 21M of the High Court Ordinance (Cap 4). Following the outcome in the final appeal (and the overturning of the lower court judgment), the plaintiff has obtained a Mareva injunction over some of the defendant's assets in Hong Kong.
The Court of Appeal recently upheld the appeal of Anthony McGill, a licensed football agent, against a High Court decision which dismissed his claims against Sports and Entertainment Media Group (SEM) and others. McGill alleged that SEM had induced professional footballer Gavin McCann to breach an agency contract with him, which had deprived him of the fee that he would have earned for arranging a transfer for the player to football club Bolton Wanderers in 2007.
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.
The High Court recently held that a defendant's claim to privilege in respect of communications between employees and in-house counsel went too far. As well as a reminder of the limited application of legal advice privilege in a corporate context, this case is another warning to litigants (and their lawyers) that errors in disclosure can have costly consequences.