A recent landmark judgment of the Court of Final Appeal confirms that in deciding whether it is fair and just to grant a protective costs order in public interest litigation, the courts should be apprised of an applicant's financial position. In the case of a corporate applicant, it is proper to inquire not only into the assets belonging to the company, but also other sources of funding to which it has access. The case is the first in Hong Kong in which the courts have extensively set out the relevant legal principles in this regard.
In a recent case, a senior employee was found to have acted as a de facto director of the plaintiff company as a result of her position and responsibilities within the company. Consequently, the employee was held to have breached the fiduciary duties which she owed to the company by diverting business opportunities away from it and making unauthorised use of its resources.
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.
Lawmakers recently met to discuss a new bill to establish a policyholders' protection scheme to protect policyholders' interests in case an insurer becomes insolvent. This safety net will cover individuals, small and medium-sized enterprises and building owners' corporations. All authorised insurers in Hong Kong will have to participate and pay an initial levy to build up the two compensation funds – namely, the life fund (for long-term policies) and the non-life fund (for general policies).
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 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 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).
If a policyholder is dissatisfied with the conduct of an insurer, agent or broker, there are various channels for making a complaint. One such channel is the Insurance Claims Complaints Bureau, which was recently revamped to provide Hong Kong's insurance industry with improved methods of settling personal insurance claims and disputes by providing policyholders with an alternative dispute resolution process.
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.
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 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.
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 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.
The Insurance Authority has launched two new initiatives to promote the use of 'insurtech' in Hong Kong and encourage insurers and technology companies to team up to develop innovative insurance technology in light of recent market trends. The initiatives aim to promote the development of new technologies in Hong Kong's insurance sector and maintain Hong Kong's competitiveness in the Asian market.
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.
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.
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.
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.
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.