Mr David Smyth

David Smyth

Updates

Litigation

Amendments that do more than 'relate back'
Hong Kong | April 10 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 | April 03 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 | March 20 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 | March 06 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 | January 23 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 | January 16 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 | January 02 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 | December 19 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 | December 12 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 | November 21 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 | November 07 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 | October 17 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 | September 19 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 | July 25 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 | May 30 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 | February 28 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 | January 24 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 | January 10 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 | November 29 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 | November 01 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 | October 25 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 | September 20 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 | August 09 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 | July 26 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 | May 24 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 | March 29 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 | December 15 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 | December 01 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 | September 08 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 | March 10 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 | February 03 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 | January 20 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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