RPC updates

Supreme Court holds defendant cannot be liable for greater loss than was caused by its negligent valuation
RPC
  • Litigation
  • United 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.

Costs orders are not an 'indemnity'
RPC
  • Litigation
  • 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.

Documents from which legal advice can be inferred – are they privileged?
RPC
  • Litigation
  • United Kingdom
  • December 05 2017

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 people
RPC
  • Litigation
  • United 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.

Solicitors owed no duty of care to other party to settlement
RPC
  • Litigation
  • Hong Kong
  • November 28 2017

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.

Regulator's use of Section 213 'combo' civil proceedings
RPC
  • Litigation
  • 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.

In the Matter of Agrokor DD: model laws and PIK toggle loans
RPC
  • Litigation
  • United Kingdom
  • November 21 2017

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.

When will pleading 'special circumstances' permit collateral use?
RPC
  • Litigation
  • United Kingdom
  • November 14 2017

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.

Court rejects mechanistic approach to strike-out of multiple proceedings
RPC
  • Litigation
  • 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.

UBS, the municipal water company and "the moral standards of the vicarage"
RPC
  • Litigation
  • United Kingdom
  • November 07 2017

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.

Court of Appeal brings conflict of laws rules to bear on third-party noteholder rights
RPC
  • Litigation
  • United Kingdom
  • October 31 2017

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.

The perils of using disclosed documents for a collateral purpose
RPC
  • Litigation
  • United Kingdom
  • October 24 2017

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.

Judgment clarifies scope of direct use prohibition
RPC
  • Litigation
  • 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.

LMA model form-based facility agreement does not constitute lenders' standard terms for Unfair Contract Terms Act
RPC
  • Litigation
  • United 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.

High Court upholds limitation of liability clause despite poor drafting
RPC
  • Litigation
  • United Kingdom
  • October 03 2017

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.

Quantifying restoration in Section 213 civil proceedings
RPC
  • Litigation
  • Hong Kong
  • October 03 2017

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.

High Court clarifies interplay of Civil Procedure Rules on valid service of claim form
RPC
  • Litigation
  • United Kingdom
  • September 26 2017

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.

Absence from trial ill-advised
RPC
  • Litigation
  • 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.

Shurbanova v Forex Capital Markets Limited: trading places unwound
RPC
  • Litigation
  • United Kingdom
  • September 19 2017

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.

Note to shareholders: avoid 'fishing'
RPC
  • Litigation
  • Hong Kong
  • September 05 2017

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.

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