esquire (electronics) ltd v hong kong and shanghai banking corp ltd case digest

8/13/2019 Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corp Ltd Case Digest

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Status: Positive or Neutral Judicial Treatment

Esquire (Electronics) Ltd & Another v Hong Kong and Shanghai Banking Corp Ltd &

Another

Court of Appeal

12 October 2006Case Analysis

here !eported 200!" # $%&'( )#*+ 2006" $%,C 1-*0+

Case "igest Su#$ect%A.enc/ Associated su#$ect(s)%Contract la+ Courts and udicials/stem+ an3in. and finance

Suary%A.enc/+ fiduciar/ dut/+ mort.a.ee+ ban3 procured mort.a.or+client to enter into poer of attorne/ 4POA5 b/ a/ of securit/ and for

purpose of sale of propert/+ 7et7er mort.a.ee+ ban3 breac7ed dut/ b/7ast/ sale in risin. mar3et to alle.ed close associate+ e8tent of dut/resolved b/ terms of POA+ dut/ same or similar to t7at of mort.a.ee undersale9 namel/ to obtain proper price+ no breac7: full mar3et value ac7ieved

and not close associateContract la+ economic duress+ 3e/ as ille.itimac/ of pressure

Contract la+ undue influence+ 7et7er mort.a.ee+ ban3 e8erted undueinfluence on mort.a.or+ client to sell propert/+ claim not made out

Courts and udicial s/stem+ trial+ dela/+ 1!+ /ear dela/ beteen events andtrial meant contemporaneous documentation and in7erent probabilities

particularl/ important

Courts and udicial s/stem+ ud.ment+ dela/+ 16+ mont7 dela/ beteen trialand ud.ment unacceptable

an3in. and finance+ mort.a.e+ fiduciar/ duties or mort.a.ee+ ban3

A#stract%

n 1*-19 provided a loan and ban3in. facilities to P9 a business9 of up to;#00 million9 secured b/9 inter alia9 a mort.a.e over a propert/ 4t7ePropert/5 t7at P 7ad purc7ased for ;1-0 million< Subse=uentl/9 P fell intofinancial difficulties< T7is necessitated a restructurin. arran.ement in 1*-)it7 a consortium of ban3s led b/ < / 1*->9 t7e value of t7e Propert/7ad fallen to some ;-0 million< P?s financial difficulties continued and 9 atP?s re=uest9 periodicall/ .ranted ne facilities and for.ave part of t7e debt9 periodicall/ proposed sellin. P?s properties9 includin.t7e Propert/9 and P indicated it ould be a.reeable at t7e ri.7t price

provided .rant it furt7er relief< n arc7 1*-!9 meetin.s too3 place todiscuss furt7er restructurin. for t7e eventual complete disc7ar.e of P?s debt9durin. 7ic7 insisted t7at t7e Propert/9 no valued at ;161 million besold< Alt7ou.7 P no lon.er is7ed to sell it .iven t7e risin. propert/mar3et9 it a.reed and e8ecuted a poer of attorne/ in favour of 4t7ePOA5 b/ a/ of securit/ to effect t7e sale< Bnder an April 1*-!a.reement9 as to receive t7e net proceeds of t7e sale of t7e Propert/+ ould aive more of P?s debt+ and folloin. pa/ments b/ P over a five/ear period9 t7e remainin. balance ould be aived and released 4t7e 1*-!A.reement5< n a/ 1*-!9 t7e Propert/ as sold to a compan/9 D9 for ;1-0million 4t7e Sale5< P e8ecuted t7e Sale document< Some of D?s directorsere also directors and minimal s7are7olders of a ban3 7ic7 as asubsidiar/ of + ?s .eneral mana.er as also a director of t7at ban3+ andt7e c7airman of t7at ban3 as an adviser to ?s oard< n 1**)9 P brou.7t

proceedin.s a.ainst < @irst9 P claimed 7ad breac7ed its fiduciar/ dut/ asP?s a.ent to act in its best interests9 b/ a 7ast/ sale of t7e Propert/ to D9 a

close associate< Second9 t7at 7ad e8erted economic duress and undueinfluence on P on t7e basis t7at P as forced to a.ree to sell t7e Propert/and e8ecute t7e POA as a result of an ille.itimate t7reat b/ at a meetin.
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on 129 $ospital Products &td v Bnited States Sur.ical Corp 41*-)5 1>6 C&')1 applied5< 4See paras6 C&' )19 $enderson v erret S/ndicates&td1**>" 2 AC 1)>+ applied+ ,8 parte @order 41--15 2> Sol Journ !209urrell v urell?s Trustees41*1>5 SC ###+9 'obertson v 'obertson 1*2)"

NG&' >>29 oardman H Anot7er v P7ipps 1*6!" 2 AC )6+ 9 ristol andEest uildin. Societ/ v ot7e 1**-" C7 1+ 9 %ao &ee H Iip v %ao $oi
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Ian H Ot7ers 200#" # $%&'( 2*6+9 Silven Properties &td v 'o/al an3of Scotland Plc 200)" 1 E&' **!+ considered5< 4See paras1


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contemporaneous documentation and in7erent probabilities to 7ic7 t7eJud.e paid too little re.ard and conversel/9 too muc7 upon 7is assessmentof c7aracter< n t7e event9 t7ere as not onl/ an absence of sufficientevidential foundation for t7e core findin.s of fact9 but t7e contemporaneousdocumentation9 t7e contradictions beteen t7at and t7e oral evidence9 andt7e in7erent probabilities in t7eir 7istorical conte8t9 pointed clearl/ in ?s

favour on t7e t7ree issues at 7and 4,8pectation Pt/ &td v P'( 'ealt/ Pt/&td H Anot7er 4200)5 1)0 @C' 1! applied+ enma8 v Austin otor Co &td1*>>" AC #!0+9 Tin. %o3 %eun. v Tam (ic3 Iuen H Ot7ers 420025 >$%C@A' ##6+ considered5< 4See para

esquire (electronics) ltd v hong kong and shanghai banking corp ltd case digest

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