The High Court recently adopted an interesting approach to the well-known principles of contractual interpretation in a dispute concerning the financing of a wind farm development. The application of these principles remains tricky, particularly in cases where defined terms provide for flexibility. As a result, while parties should strive for clarity in drafting, they should also give particular consideration to possible options for terminating contracts when they are no longer needed.
The High Court recently considered a prospective witness's application to set aside a subpoena directed at him. The subpoena combined directions to the witness to give evidence at trial on behalf of the plaintiff and to produce the originals of certain transaction documents. The court set aside the part of the subpoena directed at giving evidence but not the part directed at producing documents. The decision provides useful guidance as to the general practice for issuing subpoenas.
The Court of Appeal recently set out the relevant circumstances in which a Quistclose trust can arise in the context of bank transfers. The decision reinforces the understandable reluctance on the part of the courts to erode the basic principle that a banker-customer relationship is no more than a contractual one of debtor and creditor.
The issue of liability for costs plays a big part in the settlement of protracted civil litigation in Hong Kong. In particular, where the parties refuse to bear their own costs, which party will pay the other's costs becomes an important consideration. As another recent case demonstrates, without prejudice settlement offers can (among other things) seek to protect a party's position as to costs. Such offers are a common feature of the local litigation landscape for good reason.
A recent Court of Appeal case considered the proper interpretation of exceptions or force majeure clauses and provided guidance on the correct application of the compensatory principle of damages. This case provides yet another warning about the need for clarity in drafting contractual clauses and the implications of getting it wrong.
According to the Court of Appeal, giving up a right which a debtor does not even know it has is sufficient consideration for settling a debt. However, the vexed question of what amounts to 'good' consideration remains uncertain enough for those entering into a contract to always consider whether good consideration has been given. Among other things, parties should consider whether good consideration has been provided and, if there is any doubt, pay the contractual counterparty a nominal amount.
In a recent decision concerning the sale of a Gauguin painting, the Court of Appeal confirmed that if an agent sells a principal's property and fails to disclose to the principal that it received a higher offer for the property, it will not lose its commission unless it acted dishonestly or in bad faith. As such, agents should be careful to pass relevant information to their principal, particularly if they are under a contractual obligation to do so.
Hong Kong has a high incidence of litigants in person, which is largely explained by the cost of civil litigation generally, the absence of class actions, contingent fee arrangements and third-party funding of most civil claims, and the financial eligibility limits for civil legal aid. As recent decisions show, the rates at which litigants in person are awarded costs are far from generous and, to get more, they have to prove that they had to work on the case during their working hours or that they suffered actual pecuniary loss.
In a case which has attracted public, press and legal attention, the High Court recently found that the directors of a family-run business should have ensured that the company's interests took precedence over any personal and private loyalties felt towards their family members where those competing interests came into conflict. The court's findings offer a number of helpful reminders of crucial considerations for both businesspeople and legal professionals.
In a recent case, the High Court allowed the plaintiff's application for an order that the first defendant and a representative of the second defendant attend a court hearing to be cross-examined on affirmations made by them in the proceedings. The case is a timely reminder of the seriousness of making affidavits or affirmations and of the need to be mindful of the documents to which they refer.
The High Court has issued a reminder that the duty of full and frank disclosure applies to any application made without notice to the other party. Although this is most typically an issue in applications for injunctions, permission to serve a claim out of the jurisdiction was recently set aside on the grounds of the claimant's failure to disclose to the court a potential limitation defence to the claim.
The costs of pursuing related arbitration proceedings and fighting extradition proceedings could be costs incurred in the 'ordinary and proper course of business' according to a recent Court of Appeal decision. In terms of arbitration expenditure, the decision illustrates that where the proposed expenditure or transaction is complex, the court may not be in a position to make the factual findings necessary for it to authorise the expenditure in advance.
The High Court recently reiterated the general principles which govern its power to order a non-party to pay the costs of another party to court proceedings. The court's power is statutory but the general principles that govern the exercise of its discretion arise out of case law. The case law demonstrates that the court's discretion to make an order for costs against a non-party is wide. The interests of justice are paramount.
The Court of Appeal has ordered rectification resulting in one party being in breach of warranty and liable to pay damages. It is rare for the court to order rectification as it is often difficult to satisfy the test to do so. This case serves as a welcome reminder that the court is willing to order rectification to prevent one party from seeking to take advantage of a situation when a mistake is discovered.
The Court of Appeal recently upheld a High Court decision highlighting the risk that English and Italian courts may reach different decisions on the underlying factual background of related disputes even where the disputes could be said to fall under different agreements. The decision clarifies that the English courts put the certainty of industry standard documentation first when determining the applicable jurisdiction.
The High Court recently struck out a claim by the beneficial owner of certain notes that had sought a declaration that an event of default had occurred. The case illustrates how administrative decisions in a foreign state in relation to EU directives are recognised in the English courts and the reluctance of courts to make decisions based on the anticipated outcome of foreign proceedings.
A High Court judge recently dismissed a party's appeal against a refusal to grant permission to issue subpoenas directed at another party's legal representatives. At the same time, the judge reminded litigants and their legal representatives that subpoenas (directing a witness to attend court to give evidence, produce documents or do both) should be issued in a timely manner, and that late subpoenas which upset the court's case management of trial dates are likely to be frowned upon.
The Court of Appeal recently examined the circumstances in which a threat not to enter into a contract can amount to economic duress and found that, broadly speaking, it is when pressure is exerted in bad faith. The main thread running through the court's decision is the need for clarity and certainty in contract law, particularly in commercial dealings.
The Norwich Pharmacal order is an important tool for combating fraud. Given the prevalence of electronic and identity fraud, the ability of victims to recover lost money through the civil courts has assumed a high profile of late. For plaintiffs who fall prey to such fraudsters, the ability to obtain a court order prohibiting a defendant from disposing of (among other things) money in a bank account (ie, a Mareva injunction) and to obtain timely disclosure of details of alleged wrongdoing from a defendant's bank (eg, Norwich Pharmacal relief) is often crucial.
The chancellor of the High Court recently clarified to which cases the disclosure pilot scheme applies. He also provided useful guidance on the extent to which the court should exercise its discretion to inspect allegedly privileged documents under the new regime and emphasised the change in behaviour and culture envisaged under the pilot.