2009 City Law News

22/12/2009 - Jirehouse Capital v. Beller - correspondence headed "without prejudice and subject to contract"

The main question for the court to determine in a claim for alleged fraud was whether an action had been settled in pre-trial negotations despite emails being marked "without prejudice and subject to contract".
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30/11/2009 - Schemes of Arrangement

(1) Is Lehman Brothers testing the ground?

In recent years the corporate world has seen a substantial increase in the use of schemes of arrangements (under Part 26 of the Companies Act 2006) both in solvent and insolvent cases. The legislation in this area has remained untouched for the best part of a hundred years but the world of business has changed dramatically in that period, resulting in the courts being asked to opine on issues which were far from contemplation at the time of the legislation.
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23/11/2009 - Record fine imposed by LSE on AIM company (November 2009)

The London Stock Exchange recently imposed hefty sanctions - a public censure and record £600,000 fine - on Regal Petroleum plc ("Regal"), an AIM listed company, for acting in serious breach of the AIM Rules.
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18/11/2009 - Destruction, falsification and alteration of evidence: Dishonest conduct in litigation and its consequences

The falsification, alteration or destruction of evidence are matters not taken lightly by the court. While the court may not always strike off an action where a party has acted dishonestly, this will not prevent them from punishing the dishonest party in a manner that they may think fit. This could include punishment by way of contempt or perjury proceedings.
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03/08/2009 - Directors have a fundamental duty of loyalty and employees have a duty of fidelity

The High Court recently found in Berryland Books Ltd v. BK Books Ltd and others that a director may not undermine his fundamental duty of loyalty to the company and has a good faith requirement to act in the best interests of the company. Similarly, employees have a duty of fidelity which requires them to be loyal and act with good faith in the company's best interests for as long as they are employed by the company.
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01/07/2009 - When will a sale of assets at undervalue be regarded as ultra vires?

The Court of Appeal recently had to determine in what circumstances a sale of assets at an undervalue by a company at the request of a shareholder should be held ultra vires on the ground that the sale was an unlawful distribution.
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01/07/2009 - Rules Update - service of Claim Form

Despite the amendment to the provisions in relation to service of a claim form by fax in October last year, the formalities that have to be carefully complied with for there to be valid service of a claim form.
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19/06/2009 - Jurisdiction clauses in complex financial transactions to be construed widely and generously

In UBS AG and UBS Securities LLC v. HSH Nordbank AG the Court of Appeal has ruled that jurisdiction clauses in complex financial transactions should be construed widely and generously. Where there are conflicting jurisdiction clauses the Court will look to the transaction as a whole to determine which is the most appropriate. There will also be an assumption that the parties acted in commercially sensible way in not wanting similar claims to be capable of being brought in multiple jurisdictions.
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08/06/2009 - Investor recovers potential loss of profits

The decision in Parabola Investments v. Browallia CAL received quite a deal of media attention when it was delivered last month. Part of the attention related to its factual content, but part related to the decision of the judge in awarding damages for loss of profits to a previously successful investor who made large losses on investments based on fraudulent misrepresentations.
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05/06/2009 - The Court may not always prevent a party from benefiting from its own breach.

The Commercial Court has held that where a party has acted in breach of contract, there is not always an implied term that the party in breach may not entitled to benefit from that breach.
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01/06/2009 - Right to inspection of redacted documents so as to disclose names depends on balancing of rights under Article 8 of the ECHR with openness of litigation.

A Year 11 pupil brought proceedings against a school following an incident at the school's tennis courts, where he was severely beaten by four other students and three adults. The pupil's family also brought proceedings for post traumatic stress, including the pupil's younger brothers. The seven assailants were all convicted of wounding with intent contrary to s 18 of the Offences Against the Persons Act 1861.
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27/05/2009 - Are Signing Meetings Back?

A recent case, R (on the Application of Mercury Tax Group Limited and another) v. HMRC (the "Mercury Tax Case"), has brought into focus for lawyers the requirement that documents be executed correctly - indeed the decision has caused some lawyers to move back to the traditional "signing meeting" and away from recent trends to exchange and/or complete transactions electronically.
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25/03/2009 - Rights of BVI hedge fund investor upheld

BVI: SV Special Situations Fund Limited v Headstart Class F Holdings Limited (2008)
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18/02/2009 - Market Abuse - FSA Final Notice in Relation to Darwin Clifton (Mr Clifton) and Byron Holdings Limited (Byron)

The FSA has, under a Final Notice, issued fines to Mr Clifton and to Byron in relation to their actions between 19 November 2007 and 8 February 2008 (Relevant Period).
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18/02/2009 - Insider Trading - FSA "Tightening Up" Enforcement

The Financial Services Authority (FSA) is to bring a prosecution against Malcolm Calvert, a former trader and partner at Cazenove, for insider trading. Mr Calvert retired from Cazenove in 2000. The offences he is charged with are alleged to have taken place between 2003 and 2005 and relate to allegations that Mr Calvert acquired shares on 12 different occasions in certain companies which he was aware were variously involved in negotiations relating to management buy outs, takeovers and mergers.
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18/02/2009 - A Brief Update on Short Selling Restrictions

The Financial Services Authority (FSA) has recently published a discussion paper on short selling (DP09/01). The background to this discussion paper was the introduction (on 18 September 2008) of (much publicised) measures prohibiting the active creation or increase of net short positions in the stocks of UK financial sector companies. There were, in addition to the prohibition, certain disclosure requirements in relation to net short positions in the stocks of UK financial sector companies.
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05/02/2009 - Solicitor/Barrister relationships and Counsel's accountability in matters resulting in loss.

The claimant, McFaddens ("the firm") was a firm of solicitors who acted for a company and its two directors, G and C (who was also the Chief Executive of the company) in respect of a claim against a firm of architects (the underlying action). The defendant, Platford, was a barrister briefed by McFaddens to advise in respect of this matter.
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05/02/2009 - Worldwide Freezing Orders - UK Court co-operate with the SEC to combat fraud

This was an appeal of a worldwide freezing order sought by the SEC and granted in February 2008 over assets of the Appellant, Mr Manterfield.
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05/02/2009 - Obtaining security for costs where claimant is a UK based individual or company.

Security for costs is outlined at Parts 25.12 and 25.15 of the CPR.
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28/01/2009 - Mere suspicion sufficient for banks to delay transactions - Proceeds of Crime

The Claimant suffered substantial loss as a result of the Defendant Bank delaying the execution of four transfers from the Claimant's account, offering no explanation other than that of compliance with their statutory obligations. As a result, rumours circulated that the Claimant was involved in money laundering activities and their reputation was unjustly stigmatised.
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