In a cautionary tale, a group company and its current liquidators have had their claim against the group company's former liquidators struck out under the 'no reflective loss' principle. The strike-out was granted on the basis that the group company's subsidiaries had a closer nexus to the relevant loss than the group company. The appeal judgment demonstrates that the courts will not shy away from dismissing defective claims against professional advisers without trial.
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.
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.
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 held that there was no legitimate interest in having a provision in a settlement letter between the defendant and a material witness which precluded the witness from giving a witness statement to the plaintiff. Therefore, the settlement letter was not 'without prejudice' and could be referred to in a witness statement for the plaintiff.
Pursuing a civil claim in Hong Kong can be a costly exercise. In bigger commercial disputes, opportunities for financial assistance from a commercial third-party funder can help to alleviate and manage the cost and ensure that a party's lack of financial resources does not prevent its pursuit of a meritorious claim. However, such opportunities are limited by the crimes and torts of maintenance and champerty that continue to survive in Hong Kong.