TENWOW INTERNATIONAL HOLDINGS LIMITED (IN LIQUIDATION) AND ANOTHER v. 普华永道中天会计师事务所(特殊普通合伙) PRICEWATERHOUSECOOPERS ZHONG TIAN LLP

Press Summary (English)

Press Summary (Chinese)

FACV No. 2 of 2025

[2025] HKCFA 17

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 2 OF 2025 (CIVIL)

(ON APPEAL FROM CACV NO. 522 OF 2024)

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JUDGMENT

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Chief Justice Cheung:

1.  I agree with the judgment of Mr Justice Fok PJ.

Mr Justice Ribeiro PJ:

2.  I agree with the judgment of Mr Justice Fok PJ.

Mr Justice Fok PJ:

A.     Introduction

3.  This appeal raises questions concerning the jurisdiction of a Hong Kong court to issue the letter of request sought by the respondent to be issued in this case to the Shanghai High People’s Court and the scope of the Arrangement on Mutual Taking of Evidence in Civil and Commercial Matters between the Courts of the Mainland and the Hong Kong Special Administrative Region (“Mutual Arrangement”).  As will be seen, it arises as an interlocutory appeal on the particular facts of this case.  Nevertheless, the circumstances are such that the questions of law raised are of more general application.

4.  To put the discussion of the questions into context, it is helpful to summarise briefly the background to the parties and their dispute subject to this litigation, the procedural history of the action to date and the decisions of the courts below leading to this appeal.

A.1    The parties

5.  Tenwow International Holdings Limited (“Tenwow”), the 1^st plaintiff, was an investment holding company incorporated in the Cayman Islands and listed in Hong Kong engaged in the manufacturing and distribution of beverages, food and snacks in the Mainland. It was wound up in March 2021 by the Cayman Islands court.  Nan Pu International Limited, the 2^nd plaintiff, was a company incorporated in Hong Kong and a wholly-owned subsidiary of Tenwow.  It was placed in creditors’ voluntary liquidation in June 2021.

6.  The 1^st defendant, PricewaterhouseCoopers (“PwC HK”), is a firm of certified public accountants practising in Hong Kong and was the auditor of Tenwow for the years 2013 to 2017.  The 2^nd defendant, PricewaterhouseCoopers Zhong Tian LLP (“PwC ZT”), is a firm of certified public accountants in the Mainland and carried out the audit work on the Tenwow Group companies in the Mainland. Various documents relating to the audits in question are held by the 2^nd defendant in its Shanghai office, some on its proprietary audit software platform and some in physical folders.  These documents were referred to in the courts below as “the D2 Documents” and will be referred to as such in this judgment.

7.  The plaintiffs’ liquidators allege that the defendant auditors breached their duties and were negligent in carrying out the audits of the 1^st plaintiff’s accounts, as a result of which defalcations by way of prepayments to suppliers and illegitimate financial assistance to a non-Tenwow Group company related to a director and his associates were undetected.  The liquidators claim in consequence that the 1^st plaintiff’s financial statements were materially misstated and that it suffered losses in excess of RMB 3.1 billion.  For their part, the defendants deny the alleged breaches of duties and negligence.  The defendants contend that the audits were carried out with the care and skill of a reasonably competent auditor.  PwC ZT further contends that it was not engaged by either plaintiff and was the component auditor tasked by PwC HK to perform audit work in respect of the Tenwow Group’s Mainland subsidiaries for the years in question and reported to PwC HK.  These are the sorts of allegations and contentions that are common in many disputes between liquidators of companies and their former auditors.

A.2    The procedural history of the parties’ dispute

8.  In March 2021, the plaintiffs issued a writ (in HCA 425/2021) against PwC HK alone.  In November 2021, the plaintiffs issued a further writ (in HCA 1724/2021) against both defendants.  The two actions were transferred to the Commercial List (as HCCL 5/2023 and HCCL 6/2023) and consolidated.

9.  Given the allegations raised by the plaintiffs, it is self-evident that the audit working papers in relation to the defendants’ audit work are highly relevant to the issues arising and to show what audit work was, or was not, undertaken by them and how it was performed.  Even as early as April 2020, before any action was commenced, the 1^st plaintiff’s liquidators had written to PwC HK requesting the working papers for its engagements by the plaintiffs between 2013 and 2017.  In May 2020, PwC HK responded to say that documents located in the Mainland were “subject to China legal impediments which prevent [it] from disclosing them unless with permission from the Mainland China regulators or through the regulator-to-regulator mechanism”.

10.  After proceedings had been commenced and the Statement of Claim served on the defendants, in 2022, the defendants averred in their Defence and Counterclaim that “Chinese laws and regulations applicable to [PwC ZT] prevent it from transferring [the D2 Documents] out of Mainland China without approval from relevant authorities in the PRC”.  The plaintiffs took issue with this in their Reply filed in April 2023.

11.  In response to case management directions proposed by the plaintiffs, the defendants proposed in May 2023, for the first time, a joint application for a letter of request to be issued by the Court of First Instance pursuant to the Mutual Arrangement but this proposal was rejected by the plaintiffs.  This stance on the part of the plaintiffs is puzzling, since one might have thought that the plaintiffs would be open to supporting this as a means to obtaining sight of the working papers.  As already observed, those working papers are clearly of crucial importance in determining if there was any negligence in the conduct of the audits in question.  It is all the more puzzling in the light of the pursuit of this appeal by the plaintiffs despite their asserted desire (see below) to obtain the D2 Documents to prove their allegations against the defendants.

12.  At the first case management conference in the action in November 2023, PwC ZT obtained directions that (1) the parties were to exchange lists of documents by 22 November 2023, (2) any application by PwC ZT for a letter of request relating to the transfer of documents held by it in the Mainland to Hong Kong be made by 1 December 2023, and (3) failing any such application, PwC ZT should produce its discovery documents by 22 December 2023.  PwC ZT has duly filed and served its List of Documents, listing 1,513 documents in its possession (in Shanghai), in compliance with those directions.[1]

13.  On 29 November 2023, PwC ZT partners met with the Supervision and Evaluation Bureau of the Ministry of Finance of the Peoples’ Republic of China (“PRC”) in connection with the rules and regulations regarding the transfer of audit working papers to Hong Kong.  PwC ZT also issued a letter to that Bureau setting out the background to the litigation, the Hong Kong court’s directions for discovery and the basis of PwC ZT’s application for a letter of request and sought guidance and confirmation from the Bureau on the provisions of relevant Mainland law and regulations.

14.  On 30 November 2023, the Ministry of Finance issued a letter to PwC ZT in Chinese (“the MoF letter”) which reads (in translation):

“We acknowledge receipt of your ‘Request for Instructions Concerning the High Court of Hong Kong’s Request for PricewaterhouseCoopers Zhong Tian to Provide Audit Working Papers within the Territory of Mainland China in a Hong Kong High Court Litigation Case’. After studying the matter, we hereby offer our opinion in reply to your request as follows:

The matters concerning the High Court of Hong Kong’s request for your firm to provide audit working papers to the Hong Kong liquidators of Tenwow International Holdings Ltd fall under the judicial scope. The administrative supervision cooperation agreement between the Mainland and the Hong Kong Special Administrative Region is not applicable. There is no basis for us to approve the production of audit working papers to the High Court of Hong Kong and the Hong Kong liquidators. The High Court of Hong Kong, if necessary during hearing of civil and commercial matters, can request the courts of the Mainland to provide assistance in obtaining the relevant audit working papers through mutual legal assistance between Hong Kong and the Mainland and in accordance with the ‘Arrangement on Mutual Taking of Evidence in Civil and Commercial Matters between the Courts of the Mainland and the Hong Kong Special Administrative Region’.

You should strictly comply with the relevant requirements of the Mainland laws and regulations in maintaining, using and obtaining the relevant audit working papers, and properly handle litigation related matters in Hong Kong.”

A.3    The application for a letter of request and the decisions below

15.  In compliance with the case management directions ([12] above), PwC ZT applied to the Court of First Instance for a letter of request to be issued by the High Court in Hong Kong to the Shanghai High People’s Court for assistance to enable PwC ZT to produce the documents in the litigation in Hong Kong.

16.  The draft letter of request sought by PwC ZT set out the background of the dispute leading to the litigation and summarised the issues to be tried in Hong Kong, explaining that the D2 Documents were considered to be relevant to the issues in the proceedings and thus crucial to the conduct of the proceedings.  It went on to state that:

“PRC laws and regulations (including ‘The Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies’ dated 24 February 2023 (Announcement [2023] No. 44)) require that the [D2] Documents be screened and approved by the relevant authorities in the PRC (such as the Ministry of Finance and the Archives Bureau) before copies of the same can be transferred from the PRC to Hong Kong and/or inspected by the Plaintiffs and/or their representatives.”

17.  The draft letter of request noted that after screening and approval, copies of the D2 Documents as approved should, subject to any redactions as might be required by the relevant authorities, be transferred by delivery to the defendants’ solicitors in Hong Kong for production to the plaintiffs for use solely for these proceedings.

18.  Consistent with their initial stance noted above, the plaintiffs opposed the application for the issuance of the letter of request when it was heard in the Court of First Instance by Mr Justice Anthony Chan.[2] After hearing the parties, his Lordship declined to issue the letter of request on the following grounds:

(1)     First, that letters of request are normally issued to obtain evidence, usually from non-parties, overseas.  Here, the documents are in PwC ZT’s own possession and they ought to produce them, seeking relief from the Hong Kong court if there is any difficulty in complying with that obligation.[3]

(2)     Secondly, seeking help from another court to enable production is not within the scope of the assistance that might be requested under the Mutual Arrangement, in particular Article 6 (set out below), and so the Mutual Arrangement does not apply.[4]

(3)     Thirdly, the Judge was not satisfied there is a blanket restriction under PRC law on the transfer of all of the D2 Documents under Article 9 of Regulation 44,[5] only a prohibition on the transfer of documents containing confidential or sensitive information, including State secrets, or other specifically proscribed information.[6]

(4)     Fourthly, as a matter of discretion, namely delay, which the Judge thought was both lengthy and unexplained so that the order, if granted, would have an adverse impact on preparations for the 30-day trial that is set down to commence in March 2026.[7]

19.  PwC ZT appealed the CFI Judgment to the Court of Appeal,[8] who reversed the Judge, holding that:

(1)     The use of the letter of request procedure to aid in the production of specified documents in a litigant’s own discovery documents in light of a legal impediment in the foreign jurisdiction is not inappropriate in principle and there is nothing wrong in principle, inherent in the nature of a letter of request and in the nature of discovery by a party, for the former to be used in aid of the latter.[9]

(2)     There is in Mainland law a blanket prohibition against the transfer of audit working papers out of the Mainland without approval of the relevant authorities.[10]

(3)     A request for assistance from the Shanghai court is, in the circumstances, the only appropriate way to obtain approval for the transfer of the D2 Documents for production in Hong Kong.[11]

(4)     The assistance to be sought from the Shanghai court under the letter of request applied for is within the scope of the Mutual Arrangement, in particular Article 6 thereof.[12]

(5)     The court should in its discretion issue the letter of request applied for.[13]

A.4    Leave to appeal to this Court

20.  The plaintiffs applied to the Court of Appeal for leave to appeal from the CA Judgment to the Court of Final Appeal, seeking leave to appeal on two questions of law, which the Court of Appeal granted (albeit in relation to a reformulated Question 1).[14]

21.  The Court of Appeal recognised that this was an interlocutory decision and that interlocutory appeals to this Court on procedural issues are rare and exceptional.  However, it noted that the dispute was the first contested case involving the issuance of a letter of request to aid in the discovery and production in Hong Kong of audit working papers located in the Mainland, such that the proposed appeal raised issues of principle concerning the use of the letter of request procedure in this context and might have relevance to future Hong Kong cases involving the need to inspect or produce restricted documents located in the Mainland.[15]

22.  The questions for which leave to appeal was granted (as reformulated in the case of Question 1) were:

Question 1

“Does the Hong Kong Court’s jurisdiction to issue a letter of request extend to securing the production by a party to litigation in Hong Kong of documents which (a) are in the possession of that party, (b) have been enumerated in that party’s list of documents, (c) that party is under an existing obligation to produce as part of general discovery, but (d) are prohibited from such production without the requisite approval under the law of the place where the documents are located, regardless of whether or not such documents are material to an issue at trial and admissible in evidence at trial?”

Question 2

“Does a request for a Mainland Court to facilitate regulatory approval for production of documents in Hong Kong proceedings as part of general discovery fall within the scope of Article 6 of the Arrangement on Mutual Taking of Evidence in Civil and Commercial Matters between the Courts of the Mainland and the Hong Kong Special Administrative Region?”

B.     Question 1

B.1    The receipt of evidence for trial and use of letters of request

23.  Evidence is usually received by a Hong Kong court in civil litigation in the form of witness statements and documents tendered and proved by witnesses or agreed by the parties. 

24.  A Hong Kong court may, however, receive evidence in the form of depositions sworn by witnesses.  The procedure is governed by provisions of the Rules of the High Court (“RHC”), specifically RHC Order 39 rule 1. Where the person to be examined is outside the jurisdiction, an order may be made by a Hong Kong court in respect of evidence to be taken before an examiner in another country, if the government of that country allows a person there to be examined before a person appointed by the Hong Kong court: RHC Order 39 rule 2(1)(b).

25.  An alternative procedure, where the foreign government does not permit the examination in their country by an examiner appointed by the Hong Kong court, is the issue by a Hong Kong court of a letter of request, to the judicial authorities of the country in which the person to be examined is, to take or cause to be taken the evidence of that person there: RHC Order 39 rule 2(1)(a).  That rule of the RHC is based on a similar provision in the Rules of the Supreme Court of England and Wales, Order 37 rule 6A, introduced in 1884: see Panayiotou v Sony Music Entertainment (UK) Ltd. (“Panayiotou”) [1994] Ch 142 at 147F-G, citing Daniell’s Chancery Practice, 8^th ed. (1914), vol. 1, p.549.

26.  The procedures whereby a Hong Kong court obtains evidence, whether by seeking a foreign court’s help in compelling the attendance of witnesses or the production of documents as evidence, is peculiarly within the court’s control and is a process whose source is the court’s own inherent powers.  Thus, as a matter of jurisdiction, the power of a Hong Kong court to issue a letter of request to the judicial authorities of another jurisdiction derives from its inherent jurisdiction and not from statute or the RHC: see Panayiotou (supra) at 149-150.[16]  There, Sir Donald Nicholls V-C (as he then was) said:

“… the court’s power to issue a letter of request stems from the jurisdiction inherent in the court. Inherent in the court is power to do those acts which the court needs must have to maintain its character as a court of justice: see Lord Diplock in Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corporation Ltd. [1981] A.C. 909, 977.”

27.  The inherent jurisdiction in respect of an outgoing letter of request is to be contrasted with the jurisdiction under which a Hong Kong court may make an order consequent upon its receipt of a letter of request from a foreign court requesting assistance in the obtaining of evidence for proceedings before the foreign court.  That jurisdiction is exclusively statutory,[17] being conferred by the provisions of Part VIII of the Evidence Ordinance (Cap.8),[18] which was introduced to give effect to the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, concluded at The Hague on 18 March 1970 (“Hague Evidence Convention”).  Part VIII of the Evidence Ordinance is based on the Evidence (Proceedings in Other Jurisdictions) Act 1975 in England and Wales, which in turn had replaced an earlier statutory power to compel evidence for use in foreign proceedings, namely the Foreign Tribunals Evidence Act 1856.  The procedure for the issue of an order in response to an incoming letter of request, in relation to civil proceedings, is governed by RHC Order 70.

28.  Hong Kong has been a signatory to the Hague Evidence Convention since June 1978.  The Mainland also acceded to that convention in December 1997.  However, since the Hague Evidence Convention applies as an inter-state international convention, it does not apply as between the Mainland and the Hong Kong Special Administrative Region (“HKSAR”) because, although separate law districts for the purposes of the conflict of laws,[19] they are parts of the same country.  In order to address this, in December 2016, the Government of the HKSAR concluded the Mutual Arrangement with the Supreme People’s Court of the PRC pursuant to Article 95 of the Basic Law of the HKSAR (“BL95”).[20]

29.  Apart from the difference between the source of jurisdiction in respect of an outgoing letter of request (inherent) and that in respect of an incoming letter of request (statutory), it is also relevant to bear in mind the further difference that the former is merely a request to a foreign court for assistance, whereas the latter may result in a coercive order by the Hong Kong court for the obtaining of evidence: see Panayiotou (supra) at 150A.

B.2    The appellants’ case on Question 1

30.  The plaintiffs, as appellants in this Court, contend that the answer to Question 1 is no.  They say that the issue of the letter of request in this case is wrong in principle as it is outside the court’s inherent jurisdiction, and the scope of the Mutual Arrangement (to be discussed under Question 2), to issue a letter of request for the purposes of general discovery.  It is contended that a letter of request seeking assistance to obtain documents may not be issued unless it is for the purpose of obtaining material and admissible evidence and the court’s jurisdiction to issue a letter of request does not extend beyond this limit.

31.  The appellants seek to support this limitation on the Hong Kong court’s jurisdiction to issue a letter of request to a foreign court on the basis that there is an “equivalence” principle and that the same limit applies to an incoming letter of request as to an outgoing letter of request: Panayiotou (supra) at 152C and Charman v Charman [2006] 1 WLR 1053 at [29].  In the case of an incoming letter of request, the limit is defined by the statutory provisions in the Evidence Ordinance, in particular s.76(3) thereof, which provides:

“An order under this section shall not require any particular steps to be taken unless they are steps which can be required to be taken by way of obtaining evidence for the purposes of civil proceedings in the court making the order …” (emphasis added).

32.  In Rio Tinto Zinc Corporation v Westinghouse Electric Corporation [1978] AC 547 at 619F, Viscount Dilhorne held that the word “evidence” in the equivalent statutory provision in the Evidence Act 1975 was to be interpreted in the same way as the word “testimony” had been interpreted in the Foreign Tribunals Evidence Act 1856, namely as “direct evidence for use at a trial as contrasted with information which may lead to the discovery of evidence”: see Radio Corporation of America v Rauland Corporation [1956] 1 QB 618 at 646.

33.  The appellants further advance the proposition that only documents that are admissible in evidence in the sense of being directly material to an issue in the action may be the subject of a letter of request.  For this proposition, they rely on the two authorities referred to in the preceding paragraph and also on Panayiotou (supra) at 153H and Byers v Samba Financial Group [2020] EWHC 853 (Ch) at [67].

34.  The same approach is said to have been followed in a number of Hong Kong cases.[21]

35.  In the present case, say the appellants, PwC ZT’s attempt to use the letter of request procedure to avoid any Mainland prohibition on the transmission of the D2 Documents from the Mainland to Hong Kong for the purposes of complying with PwC ZT’s discovery obligations in these Hong Kong proceedings is accordingly wrong in principle.  The appellants rely on Byers v Samba Financial Group (supra) as a decision to like effect in what are said to be relevantly similar circumstances.  In that case, at [68], Fancourt J held:

“In my judgment, the court should not issue a letter of request to the Ministry of Foreign Affairs of KSA for the following reasons:

(i) Such an order is wrong in principle: attempting to engage the support of a foreign government to remove an obstacle to a foreign litigant’s compliance with an order for disclosure is not a request for assistance from a foreign court to secure material evidence. This court does not have diplomatic relations with foreign governments.

…”.

36.  The appellants contend that the letter of request in the present case cannot satisfy the requirement that the D2 Documents are admissible in evidence as being relevant to an issue in the action.  This is because the D2 Documents, being PwC ZT’s list of documents disclosed in compliance with the Peruvian Guano discovery test,[22] will almost certainly include documents which will not become evidence.

37.  It is contended that the appropriate solution to PwC ZT’s dilemma, if there really is a legal impediment to the transmission of the D2 Documents out of the Mainland, is to apply to the Hong Kong court for an order, pursuant to the test in Bank Mellat v Her Majesty’s Treasury [2019] EWCA Civ 449, relieving PwC ZT of the obligation to produce the documents.  The appellants say that, by issuing the letter of request, the Hong Kong court is subjugating its powers to regulate its own discovery procedures to the Mainland court and regulators.

B.3    A consideration of the appellant’s contentions

38.  As noted above, the court’s power to issue an outgoing letter of request derives from its inherent jurisdiction: see Panayiotou (supra) at 149-150.

39.  The court’s inherent jurisdiction is necessarily broad and flexible, giving it “power to do those acts which the court needs must have to maintain its character as a court of justice” (ibid.).  As Sir Anthony Mason NPJ stated, in HKSAR v Lam Kwong Wai & Anor (2006) 9 HKCFAR 574 at [69] and [70]:

“In common law systems, courts enjoy wide-ranging inherent and implied powers and there is no reason to think that the courts of the HKSAR stand as an exception to the generality of this statement. The Basic Law recognizes that the courts of the Region (including this Court) are equipped with powers to grant appropriate remedies. In this respect, there is a distinction between inherent jurisdiction and jurisdiction by implication. When a statute sets up a court with a jurisdiction, it acquires by implication from the statute all powers necessary for its exercise (Grassby v The Queen (1989) 168 CLR 1 at pp.16-17, per Dawson J). As the courts are established by the Basic Law, the powers which they possess and the remedies which they may grant should be characterized primarily as implied, though some powers to be implied under the Basic Law may be ultimately traced back to the common law.

The grant of judicial power and, for that matter, the investing of jurisdiction in a court, carry with them all those powers that are necessary to make effective the exercise of judicial power and jurisdiction so granted.  ‘Necessary’, in this context, means ‘reasonably required’ (PCCW-HKT Telephone Ltd v Telecommunications Authority (2005) 8 HKCFAR 337 at p.357G-H, per Bokhary PJ). …”

40.  The question at the heart of this appeal concerns the ambit of the Hong Kong court’s inherent or, (as explained in the passage quoted in the preceding paragraph) more precisely, implied powers to issue a letter of request to a Mainland court for assistance in obtaining necessary administrative approval to enable the production of documents.

41.  As Lord Steyn famously observed, “[i]n law context is everything.”[23] That statement is particularly apposite in the present case.

42.  Central to the context of the present appeal are the factual premises underlying Question 1.  When the Court of Appeal granted leave to appeal to this Court, it did so on the basis of a reformulated question of law.[24] In reformulating the question, the Court of Appeal set out the specific circumstances in which the question of law arises, namely that the letter of request is for the purpose of securing the production by a party to litigation in Hong Kong (i.e. PwC ZT) of documents which “(a) are in the possession of that party, (b) have been enumerated in that party’s list of documents, (c) that party is under an existing obligation to produce as part of general discovery, but (d) are prohibited from such production without the requisite approval under the law of the place where the documents are located.”

43.  Here, PwC ZT has established that there is a relevant prohibition on the production of the D2 Documents in Hong Kong without approval under Mainland law.[25] The letter of request is sought to obtain that approval and thereby facilitate the production of the D2 Documents in Hong Kong, being PwC ZT’s own documents which have been separately enumerated in its list of documents.

44.  The relevant factual context also includes the MoF letter ([14] above) and the findings of the Court of Appeal in relation to it, which were that:

“(1) the protocols agreed between regulatory authorities in the Mainland and Hong Kong are not applicable in relation to the production of audit working papers in the context of judicial proceedings in Hong Kong; (2) the Ministry of Finance could not or would not give approval for the 2^nd defendant’s audit working papers in question to be produced to the court or the liquidators in Hong Kong; and (3) if in the course of civil or commercial proceedings in the Hong Kong court it is necessary to obtain those audit working papers, it is appropriate to seek assistance from the Mainland courts for such purpose via avenues of mutual judicial assistance under the Mutual Arrangement.”[26]

45.  A further matter of context that is important is that in exercising any power under RHC Order 39 to issue an outgoing letter of request, a Hong Kong court is required to give effect to the underlying objectives of the rules and to recognise “that the primary aim in exercising the powers of the Court is to secure the just resolution of disputes in accordance with the substantive rights of the parties”: RHC Order 1A, rule 2(2).  Similarly, the just resolution of disputes is also promoted by the process of discovery in a civil action under RHC Order 24, the purpose of which is to secure full and frank disclosure to the court and co-parties of all relevant documents including those which satisfy the “Peruvian Guano” test (see FN22 above).

46.  The D2 Documents are relied upon by PwC ZT extensively in defence of the claim of professional negligence against it.[27]  The appellants likewise, as Mr Charles Hollander[28] confirmed in the course of argument in this Court, also wish to rely on the D2 Documents in support of their claims in the action.  As already noted above, it is self-evident that the underlying audit working papers are critical to the determination of whether the audit was performed with the care and skill of a reasonably competent auditor and the trial court will inevitably need to refer to those working papers in trying the allegations of negligence and breach of duty.

47.  This is therefore not a case of a letter of request seeking intrusively to obtain evidence from a non-party or in relation to a specific subject matter not in issue in some foreign proceedings: see, e.g., FWC v FSR [1992] 1 HKC 490 at 492-494, Prediwave Corp v New World TMT Ltd [2007] 4 HKC 207 at [69] and Primarius Capital LLC v Jayhawk Capital Management LLC [2009] 4 HKLRD 58 at [24]-[25].  Nor is the letter of request in the nature of a fishing expedition hoping to turn up potentially relevant documents: see, e.g., Re Q Ltd; In Re a Letter of Request [1997] 4 HKC 439 at 446-447 and Kayne Creditors v Roderick John Sutton (unrep.) HCMP 463/2013 (30.9.2013) at [54].  There is no suggestion of oppression or prejudice to the party whose documents are the subject of the letter of request, nor that there is any lack of particularity in the description of the documents in the letter of request.  Nor is there any suggestion that the costs of complying with the letter of request will be disproportionate to the potential benefits of obtaining production of the D2 Documents under the letter of request: see, e.g., Lee Samuel Tak v The Hong Kong Chinese Christian Churches Union (unrep.) HCAL 27/2008 (25.9.2009) at [16], [21].

48.  As Sir Donald Nicholls V-C explained, in Panayiotou (supra) at 150F, regarding the English court’s preparedness to communicate with a foreign court and seek its assistance in the production of documents:

“The English court would not normally embark on such a course unless there was reason to suppose the foreign court would be receptive to the request.”

49.  In essence, the appellants’ principal jurisdiction argument against the issue of the letter of request in this case proceeds on the basis that, since an incoming letter of request seeking such documents would not satisfy s.76(3) of the Evidence Ordinance (see above), the Hong Kong court would not make an order in response to that request.  That being the case, the Hong Kong court should likewise not issue a letter of request addressed to a foreign court in respect of those documents.

50.  This argument is based on what the appellants term the “equivalence” principle,[29] said to be supported by reference to dicta in Panayiotou (supra) at 152C and Charman v Charman (supra) at [29].  In the former case, Sir Donald Nicholls V-C observed that:

“In my view there is only one standard, applicable alike to subpoenas to produce documents, outgoing letters of request and incoming letters of request.”

And in the latter case, Wilson LJ (as he then was) said:

“In my opinion, however, Sir Donald Nicholls V-C was clearly correct to equate the principles apt to the issue of an outgoing request with those apt to the giving of effect to an incoming request. It would be unconscionable for the English court to make an outgoing request in circumstances in which, had it been incoming, it would not give effect to it; nor could the foreign court reasonably be expected to give effect to the English court's request in such circumstances. ‘Do unto others as you would be done by’, as Lord Denning M.R. reminded us, in this context albeit obiter, in In re Westinghouse Electric Corpn Uranium Contract Litigation MDL Docket No 235 [1978] AC 547, 560H.”

51.  I would reject the suggested “equivalence” principle advanced by the appellants.  There are clearly certain limits on the issue of a letter of request common to both incoming or outgoing requests.  It was in the context of the need for particularity in the identification of the documents requested that Sir Donald Nicholls V-C made the remark quoted in the preceding paragraph.  In that context, the stricture to “do unto others as you would be done by” which Wilson LJ adopted is perfectly understandable. Consistent with this approach, no Hong Kong court would issue an outgoing letter of request, or make an order in response to an incoming letter of request, if it was addressed to a non-party in relation to material not relevant to any issue in the action or where the request was in the nature of a fishing expedition or oppressive or prejudicial to the party to whom it was addressed.  Just as the Hong Kong rules of procedure impose restrictions and limits in respect of incoming letters of request, the Hong Kong court should be astute not to exceed the bounds of judicial comity by issuing outgoing letters of request where there is no “reason to suppose the foreign court would be receptive to the request” (per Sir Donald Nicholls V-C).

52.  However, to elevate the common limits to both incoming and outgoing letters of request to a principle requiring equivalence in all respects seems to me to overstate the position and is not, in any event, consistent with the outcome of the decision in Charman v Charman itself where the English Court of Appeal rejected the existence of a limitation that an outgoing letter of request could not be issued in matrimonial financial relief proceedings because the documents sought could not at that stage be proved to exist.

53.  Furthermore, the “do unto others” approach is clearly not a rule of law and is not one that demands symmetry.  That there is no equivalent documentary approval process in Hong Kong that a Hong Kong court might be asked, by an incoming letter of request, to assist in facilitating cannot mean that an outgoing letter of request is unavailable where it is established by evidence that the foreign court is the appropriate channel by which to seek the necessary approval.  In those circumstances, the necessary degree of receptiveness of the foreign court will have been shown.

54.  Byers v Samba Financial Group (supra) is plainly distinguishable and therefore does not assist the appellants.  The case did not involve a court-to-court request. There, the English court was instead asked to issue a letter of request to the Ministry of Foreign Affairs of the Kingdom of Saudi Arabia to request it to direct the Saudi Arabian Monetary Authority to approve disclosure of certain documents.

55.  Nor does the issue of a letter of request by the Hong Kong court in the present case subjugate its powers to regulate the discovery procedures to the Mainland court and regulators, as the appellants sought to suggest.  The issue of the letter of request in the present case is not in substitution for PwC ZT’s discovery obligations, which remain to be complied with in accordance with the procedural rules applicable to it as a party to this litigation in Hong Kong.

56.  An application by PwC ZT to be relieved of its obligation to produce the D2 Documents under the principles in Bank Mellat v Her Majesty’s Treasury (supra) is not before the Court and no application engaging any such discretion has been considered in this case in either court below.[30] The possibility of such an application, however, would be a matter wholly separate to the question of whether a letter of request should be issued to the Mainland court with a view to securing PwC ZT’s ability to produce the D2 Documents in compliance with its discovery obligations in Hong Kong.  In any event, given the appellants’ professed desire to obtain copies of the D2 Documents in order to support its claims, it is difficult to see why this course would hold any attraction for them.

57.  In the circumstances, subject to Question 2 which concerns the ambit of the Mutual Arrangement and whether there is a reasonable prospect of the letter of request being acceded to by the Mainland court, it is difficult to see any good reason to limit the inherent jurisdiction of the Hong Kong court to preclude the issue of the letter of request in a case such as the present.  On the contrary, in my judgment, since the court has inherent power to do what it must to maintain its character as a court of justice, the context of the present case calls unquestionably for an affirmative answer to Question 1.

C.     Question 2

C.1    The Mutual Arrangement

58.  As noted in Section B.1 above, as from the resumption of the exercise of sovereignty over Hong Kong by the PRC on 1 July 1997, the Hague Evidence Convention ceased to apply as between the PRC and the HKSAR.  The Mutual Arrangement was concluded in December 2016 to achieve “an arrangement in line with the spirit of the Hague Evidence Convention” and came into effect on 1 March 2017.[31]

59.  The Mutual Arrangement recites[32] that it was made in accordance with BL95, through consultation between the Supreme People’s Court and the HKSAR.  It provides “for the mutual taking of evidence in civil and commercial matters” (Article 1) by the making of “requests for the taking of evidence through [the parties’] respective designated liaison authorities” namely the Higher People’s Courts in the PRC and the Administration Wing of the Chief Secretary for Administration’s Office in the HKSAR (Article 2).

60.  Article 3 provides that, on receipt of a letter of request, “the liaison authority of the requested party shall promptly transfer the letter of request … to the relevant court or other authorities for processing, or carry out the processing itself”.   This acknowledges the fact that another processing authority, other than the respective courts, may be involved in the gathering of the evidence.  Article 3 also provides that, “[i]f the requested party considers that the requested matter does not fall within the scope of assistance as provided in the [Mutual Arrangement], it may return the letter of request and specify the reason(s) therefor.”

61.  Article 6 provides for the scope of assistance that may be requested.  Its terms are worded differently depending on the identity of the requesting court and read:

“The scope of assistance that may be requested by a People’s Court of the Mainland in requesting the taking of evidence by the Courts of the HKSAR under the Arrangement includes:

(1) examination of witnesses;

(2) obtaining of documents;

(3) inspection, photographing, preservation, custody or detention of any property;

(4) taking of samples of any property or carrying out of any experiments on any property;

(5) medical examination of any person.

The scope of assistance that may be requested by a court of the HKSAR in seeking the taking of evidence by the People’s Courts of the Mainland under the Arrangement includes:

(1) obtaining of statements from parties concerned and testimonies from witnesses;

(2) provision of documentary evidence, real evidence, audio-visual information and electronic data;

(3) conduct of site examination and authentication.”[33]

62.  The requested party shall arrange for the taking of evidence in accordance with the provisions of the law of its jurisdiction but may carry out the taking of evidence in a special manner as requested by the requesting party if it considers that is not in breach of the provisions of its law (Article 7).  So far as practicable, the requested party is to complete the request within six months from the date of receipt of the letter of request but, if this cannot be done, the requested party should state the reasons in writing to the requesting party (Article 10).

63.  Any problem arising from the implementation of the Mutual Arrangement is to be resolved through consultation between the Supreme People’s Court and the HKSAR Government (Article 11).

64.  The Mutual Arrangement was made under BL95 (see FN20 above).  BL95 is in Section 4 of Chapter IV of the Basic Law of the HKSAR, dealing with the role of the Judiciary in the Political Structure of the HKSAR.  It is, by its terms, an empowering or permissive provision and allows the HKSAR to maintain juridical relations with the judicial organs of other parts of the PRC and for the mutual rendering of assistance with a mechanism for changes to be made through mutual consultation.

65.  As such, the Mutual Arrangement is in the nature of an administrative scheme or arrangement and does not itself have the force of law.  None of its terms (summarised above) suggests otherwise.  Jurisdiction to make any order in response to an incoming letter of request issued to the Hong Kong court by a Mainland court derives from Part VIII of the Evidence Ordinance and the RHC giving effect to those provisions.  Similarly, the jurisdiction for a Mainland court to make any order consequent upon an outgoing letter of request issued by a Hong Kong court is a matter of PRC law (as reflected in Article 7 of the Mutual Arrangement), while the issue of the outgoing letter of request by a Hong Kong court is a matter of inherent jurisdiction (see Section B.1 above).

C.2    The appellants’ case on Question 2

66.  The appellants contend that Question 2 should also be answered in the negative, contending that a Hong Kong court’s request for a Mainland court to coordinate with the relevant authorities to facilitate screening and approval for documentary production does not fall within the scope of the Mutual Arrangement properly construed.

67.  It is contended that this construction follows from the language of Article 6, which distinguishes between what a Hong Kong court may request (“provision of documentary evidence”) as opposed to documents generally, which a Mainland court may request (“obtaining of documents”). Here, it is argued, the letter of request for the D2 Documents is in the nature of general discovery and therefore outside the scope of Article 6 and the meaning of the word “evidence” should be guided by its meaning in the context of the Hague Evidence Convention.

68.  It is also contended that this conclusion follows from the context and purpose of the Mutual Arrangement.  As to its context, the appellants refer to the fact that the PRC made a declaration pursuant to Article 23 of the Hague Evidence Convention that it would execute letters of request for the discovery of documents only if the documents were clearly enumerated and of direct and close connection with the subject matter of the litigation.[34]

69.  As to the purpose of the Mutual Arrangement, the appellants rely on the information paper for the Panel on Administration of Justice and Legal Services of the Legislative Council concerning the Mutual Arrangement, which stated that the Mutual Arrangement “will not bring any change to our existing law on court-to-court assistance in taking of evidence in civil and commercial matters”.[35]

C.3    A consideration of the appellants’ contentions

70.  The Court of Appeal noted that “[i]n theory a letter of request could be issued by the Hong Kong court to a Mainland court even in the absence of the Mutual Arrangement.” [36]  This is clearly correct and follows from the fact that the Mutual Arrangement does not have the force of law but is instead permissive (see Section C.1 above).  The power of the Hong Kong court to issue an outgoing letter of request is instead a matter of its inherent jurisdiction (see Section B.1 above).

71.  The Court of Appeal went on in the same paragraph to record that “[i]t is common ground however that if the assistance sought does not fall within the scope of the Mutual Arrangement, then a letter of request should not be issued for there would be no basis to believe it would be executed.”

72.  The acceptance of this common ground is correct, in my judgment, if it is understood to mean that the Hong Kong court must be satisfied that, as it construes the Mutual Arrangement, the assistance sought falls within its terms.  It cannot mean that the Hong Kong court must be satisfied that the Mainland court will accept the letter of request falls within the scope of the Mutual Arrangement as a matter of Mainland law.  If that were the case, Article 3 would not provide for the possible return of a letter of request by the requested party.

73.  However, where, for instance, a letter of request is sought to be issued by a Hong Kong court for a matter that, on the evidence of PRC law tendered, cannot be demonstrated to fall within any of the heads of assistance that may be asked of a Mainland court, the Hong Kong court should decline to issue a letter of request.  In those circumstances, there could be no reason to suppose the Mainland court would be receptive to the request.  Bold Shine Investment Ltd v Zheng Deli [2023] 2 HKC 417 (see below) is an example of such a case.  There may also be other grounds on which a request would fall to be refused.

74.  As to the question of whether the present letter of request falls within Article 6 of the Mutual Arrangement, the Court of Appeal held that the application for the letter of request came within the scope of the Mutual Arrangement.[37] In my view, the Court of Appeal was right to reach this conclusion.

75.  Since the Mutual Arrangement is not a statute and does not have the force of law, its construction should not be approached in an unduly strict or formalistic manner.  Its text is broad and permissive, and its purpose is to promote judicial cooperation between the Mainland courts and those of the HKSAR.  As such, closely analysing the words of Article 6 is not particularly fruitful (in either language but all the more so in English, since that version is an informal courtesy translation).  The two parts of Article 6 are expressed in non-exclusive terms, as reinforced by the words “includes” in both parts.  The specific matters within the scope for assistance in both parts are differently worded but that is only to be expected given the significantly different legal systems in operation in the Mainland (a civil law jurisdiction) and the HKSAR (a common law jurisdiction).  There is therefore no compelling reason to give the words “provision of documentary evidence” a restrictive meaning and, given the different context of PRC law from which they derive, to treat those words as equivalent to the word “evidence” in s.76(3) of the Evidence Ordinance.

76.  The PRC’s declaration in accordance with Article 23 of the Hague Evidence Convention does not affect this conclusion.  That declaration[38] is in terms concerned with discovery and the wide obligation imposed on a party in common law systems to review its documentary materials – in Hong Kong on the basis of the Peruvian Guano test of relevance – and disclose by list and produce for inspection the relevant documents.  In contrast, the present case concerns the wholly different situation of a party’s own documents which have been clearly enumerated and identified in its list of documents but which are subject to a prohibition against production without approval under the law of the place where they are located.

77.  Nor does the LegCo Paper assist the appellants’ argument.  There is nothing in that paper to suggest that the interpretation of the Mutual Arrangement must be identical to that of the Hague Evidence Convention.  Instead, it states that the Mutual Arrangement is one “in line with the spirit of the Hague Evidence Convention”.  In my view, the LegCo Paper supports the conclusion that a Hong Kong court will continue to have available the same inherent jurisdiction to issue an outgoing letter of request under the Mutual Arrangement.  As the Court of Appeal rightly noted, the Mutual Arrangement is a facilitating arrangement intended “to help litigants of the two jurisdictions obtain evidence in civil and commercial matters with enhanced efficiency and greater certainty”.[39]

78.  In the present case, the question of whether the letter of request in question falls within Article 6 of the Mutual Arrangement must be considered in the light of the Court of Appeal’s findings in relation to Mainland law (discussed in Section H of the CA Judgment).  The  Court of Appeal concluded, based on the legal developments,[40] subsequent to previous cases holding there was no blanket prohibition on the removal of audit working papers unless they involved state secrets, national security or significant public interest, [41] that, on the contrary, PwC ZT had shown:

“… a real risk that PwC ZT would be penalised in the Mainland if it simply handed over copies of the D2 Documents to the plaintiffs without prior approval of the Mainland authorities.”[42]

79.  Also important is the MoF letter which states clearly that matters concerning the request to provide the D2 Documents to the plaintiffs “fall under the judicial scope” and that the Hong Kong court “can request the courts of the Mainland to provide assistance in obtaining the relevant audit working papers through mutual legal assistance between Hong Kong and the Mainland and in accordance with the [Mutual Arrangement]”.[43]

80.  The position in the present case is therefore very different to that in Bold Shine Investment Ltd v Zheng Deli (supra). In that case, the Court of Appeal took the view that a request for an outgoing letter of request to cross-examine a witness for a plaintiff then detained in prison in the Mainland and therefore unable to travel to Hong Kong to testify was not within Article 6 of the Mutual Arrangement.  This conclusion was based on the view that the omission of the phrase “examination of witnesses” in the PRC part of Article 6 was deliberate and significant.  On the basis of the Court of Appeal’s view as to PRC procedural law (being a matter on which it is not necessary to express any view in this judgment), there was therefore no reason to think that the PRC court would be receptive to a letter of request seeking the cross-examination of the witness in question (that, the Court of Appeal thought, not being a process under PRC law).

81.  For the above reasons, I would answer Question 2 in the affirmative in relation to the facts of the present case.  Once there is “reason to suppose the [Mainland] court would be receptive to the request” (to paraphrase the words of Sir Donald Nicholls V-C), as in the present case, the Hong Kong court will then consider whether there are any other factors, going to its discretion, that support the issue or refusal of the letter of request.

82.  Whilst I have been addressing Question 2, it follows from the observation that the Mutual Arrangement does not itself have the force of law, that there may be cases not falling within the Mutual Arrangement where the Hong Kong court may nevertheless have reason to conclude that a Mainland court would be receptive to a letter of request justifying its issue.

D.     Additional arguments and application to adduce new evidence

83.  The appellants additionally sought to contend that, even if the letter of request sought in this case is within the court’s jurisdiction and within the scope of the Mutual Arrangement, the letter of request is unjustified in any event.  It was sought to contend that the Court of Appeal was wrong to conclude that (1) there was a blanket restriction on the transfer of the D2 Documents from the Mainland to Hong Kong, (2) there was a real risk that PwC ZT would be penalised in the Mainland if it produced the D2 Documents in Hong Kong without prior approval of the Mainland authorities, and (3) recourse to the letter of request procedure pursuant to the Mutual Arrangement was justified in reliance on the MoF letter.[44]

84.  These additional contentions are simply not open to the appellants since they fall outside the ambit of the leave to appeal granted to them.  By rejecting the original Question 1 (see FN24 above) and reformulating it as they did ([22] above), the Court of Appeal clearly refused leave to appeal on matters that were fact specific to this case and which went to the Court of Appeal’s exercise of discretion in an interlocutory decision on a procedural matter.

85.  Similarly, the appellants’ application by summons dated 21 July 2025 and further application by summons dated 1 September 2025 to adduce further evidence on the appeal can be dealt with briefly. 

86.  By these summonses, the appellants sought to adduce four items of further material namely (1) “Answers to Frequently Asked Questions Regarding International Judicial Assistance in Civil and Commercial Matters” published by the Ministry of Justice of the Peoples’ Republic of China on 21 March 2025 (“MOJ FAQs”), (2) correspondence between the appellants’ solicitors and the Office of the Chief Secretary for Administration between 24 June 2025 and 9 July 2025, (3) a “Guide to the Application for Security Assessment of Outbound Data Transfer (Third Edition)” issued by the Cyberspace Administration of China in June 2025, and (4) an article entitled “Data Privacy and Network Security – Law and Practice of Regulating Outbound Transfer of Litigation Evidence in China” published by Jingtian & Gongcheng, a Beijing law firm, on 27 June 2025.

87.  These items were sought to be relied upon by the appellants to contend that the Court of Appeal was wrong in concluding that there was a prohibition on the transfer of the D2 Documents out of the Mainland and a real risk that PwC ZT would be penalised if it did so without obtaining prior approval of the Mainland authorities, and that the Court of Appeal had misconstrued the MoF letter.  The correspondence with the Chief Secretary’s Office was also relied upon to show that previous letters of request issued by the Hong Kong courts, and in particular that issued in another auditor’s negligence action,[45] had not been responded to.  It was suggested this supported the appellants’ argument that the letter of request in this case should not have been issued as a matter of discretion on the ground of futility.

88.  Those matters being outside the ambit of the appeal, the further evidence is irrelevant to the issues before this Court and falls to be excluded on that ground alone without considering in detail the respondent’s further objections as to form, delay and prejudice.  It is right, however, to record that these objections were not without some merit.

89.  Nevertheless, if and insofar as the further evidence sought to be adduced supports the existence of some other method of obtaining approval for the transfer of the D2 Documents from the Mainland to Hong Kong, for example by application to the Cyberspace Administration of China,[46] there could be no objection to the parties jointly seeking to approach that body in order to secure the necessary approval.  Doing so would be consistent with the positive obligation imposed on parties and their legal representatives to assist the court to further the underlying objectives of the RHC: see RHC Order 1A rules 3 and 4.  This is particularly relevant here since the trial date has been fixed to commence on 2 March 2026.  Indeed, given the appellants’ stance, reiterated in the course of oral submissions in this appeal, that they wish to be provided with copies of the D2 Documents to make good their claims in the action, supporting the taking of alternative steps to obtain those documents would seem to be a natural and obvious course.  When Mr Hollander was asked during the hearing whether that course should be taken, his response was that he had no instructions on behalf of the appellants as to that.

90.  So far as the correspondence with the Chief Secretary’s Office is concerned, the bare statistics disclosed in that correspondence are insufficient to support any conclusion that it would be futile to issue a letter of request seeking approval for the production of auditor’s working papers.  If a Mainland court thought the request was outside the ambit of the Mutual Arrangement, it would be expected to respond accordingly under Article 3 and there is no indication that has happened.  In any event, there are many other reasons why a positive response has not been forthcoming in the other cases in which letters of request have been issued.

E.     Matters arising after the hearing

91.  Subsequent to the hearing of the appeal, the appellants’ solicitors provided the Court with a copy of a letter dated 11 September 2025 from the Shanghai High People’s Court to the Chief Secretary for Administration’s Office of the Government of the HKSAR (“the SHPC Letter”).  The SHPC Letter had been forwarded by the Chief Secretary for Administration’s Office to the solicitors for the respondent on 2 October 2025 and the appellants’ solicitors wrote to the Court to enclose a copy in the original Chinese text together with an agreed English translation.

92.  The SHPC Letter informs the Court of First Instance of its response to the letter of request issued in this case, namely to decline to order the provision of the D2 Documents and to return the letter of request to the Hong Kong court.  The appellants, naturally, say that this supports their case on this appeal, in particular demonstrating, in relation to Question 2, that the request here is beyond the scope of the Mutual Arrangement.  For its part, the respondent maintains that the SHPC Letter is irrelevant to either question in this appeal, since Question 1 concerns the nature and ambit of the Hong Kong court’s own jurisdiction and Question 2 is to be judged on the basis of the materials before the Hong Kong court when the order for the issue of the letter of request was made and not ex post facto by reference to subsequent events.

93.  There is some substance to the respondent’s stance on the SHPC Letter, since it is not strictly relevant to the two questions in the appeal.  As to Question 1, the Hong Kong court’s power to issue a letter of request is not determined by the view of the courts of another jurisdiction.  As to Question 2, whether the Mutual Arrangement is applicable is determined upon the evidence before the issuing court when asked to issue the letter of request and not dictated by the subsequent response of the court to which it is issued.

94.  Nevertheless, the SHPC Letter does mean that PwC ZT remains under the restriction that the D2 Documents cannot be transferred out of the Mainland to Hong Kong without the requisite approval and so the dilemma remains that those documents are not presently available for the trial of the underlying action.  In the circumstances, and given the possibility, or even likelihood, of future Hong Kong litigation in which auditors’ working papers located in the Mainland may be relevant to issues in such an action, it is appropriate to consider more generally the effect of the letter and some practical implications arising.

95.  As already mentioned, the Shanghai High People’s Court declined to order provision of the D2 Documents and, pursuant to Article 3 (see [60] above), it has returned the letter of request.  Contrary to the appellants’ contention, however, this does not mean that the subject matter of the letter of request falls outside Article 6 of the Mutual Arrangement so that Question 2 must necessarily be answered in the negative and the appeal consequently allowed.

96.  After acknowledging receipt of the letter of request, the letter states (in translation) as follows:

“Regarding the request in the LOR relating to the obtaining of relevant documentary evidence, including audit documentation, held by PricewaterhouseCoopers Zhong Tian LLP (Special General Partnership) which is within the jurisdiction of the Shanghai High People’s Court, the relevant departments consider that, based on the [Mutual Arrangement], the People’s Court of the Mainland and the Courts of the HKSAR may mutually request the taking of evidence in civil and commercial matters. However, implementation of the Mutual Arrangement shall also comply with the regulatory requirements of administrative and regulatory departments concerning the export of such documents out of the Mainland.

Article 19 of the Interim Measures for Data Security Management by Accounting Firms issued by the Ministry of Finance and the Cyberspace Administration of China provides that ‘an accounting firm shall establish a level-by-level review mechanism for matters relating to the export of audit working papers to overseas parties and take necessary measures to strictly implement its responsibility for the data security management and control. Audit working papers that need to be exported shall be subject to the approval formalities in accordance with the relevant provisions of the State.’

Accordingly, the relevant documentary evidence and electronic data, including audit working papers, that can be obtained through judicial assistance channels, should be materials provided by the relevant accounting firm in accordance with national administrative and regulatory requirements that comply with relevant laws, following completion of approval formalities for export out of the Mainland. Without having completed the relevant approval formalities and fulfilled the conditions for export out of the Mainland, the People’s Court is unable to provide assistance in the taking of evidence pursuant to the Mutual Arrangement.

We hereby return your LOR and the HKCFI’s materials attached thereto.”

97.  The first paragraph of the SHPC Letter quoted above confirms that the request for obtaining relevant documentary evidence, including the D2 Documents, falls within the jurisdiction of the Shanghai High People’s Court and that the Mainland and HKSAR courts may mutually request the taking of such evidence based on the Mutual Arrangement.  The SHPC Letter then goes on to qualify this assertion by stating that implementation of the Mutual Arrangement also requires compliance with the applicable administrative and regulatory requirements for the export of such documents out of the Mainland.

98.  The second paragraph quoted from the SHPC Letter identifies those requirements as being contained in Article 19 of the Interim Measures for Data Security Management by Accounting Firms issued by the Ministry of Finance and the Cyberspace Administration of China (see FN40 above).  The selected extract from that article indicates the requirement of a review process by the accounting firm and compliance with approval formalities for export of the relevant audit working papers.

99.  The third paragraph quoted from the SHPC Letter reiterates that relevant documentary evidence and electronic data, including audit working papers, “can be obtained through judicial assistance channels” but must be provided “in accordance with national administrative and regulatory requirements that comply with relevant laws, following completion of approval formalities for export out of the Mainland.”  The letter then goes on to state that in the absence of the completion of the relevant approval formalities and completion of the conditions for export, the Shanghai High People’s Court is unable to provide assistance in the taking of evidence pursuant to the Mutual Arrangement.

100.  This, in my view, does not suggest that the Shanghai High People’s Court was indicating that the audit working papers inevitably fell outside the ambit of the Mutual Arrangement.  On the contrary, the court was saying that, before it could provide the requested assistance under the letter of request, such audit working papers had to be reviewed and approved for export by the relevant regulatory authorities, i.e. the Ministry of Finance and the Cyberspace Administration of China.

101.  It seems the court’s response to the present letter of request was that it could not determine whether to order provision of the audit working papers as evidence until their clearance for export was obtained from the relevant regulatory authorities.  But were such approval forthcoming, the implication from the SHPC Letter is that the court would implement the Mutual Arrangement in response to a fresh letter of request in respect of those documents.

102.  There may appear to be some tension between the contents of the SHPC Letter and the MoF Letter (see [14] above).  Each of the Ministry of Finance and the Shanghai High People’s Court appears to be suggesting that the other is responsible for the necessary approval for the export of the D2 Documents from the Mainland to Hong Kong.  Resolution of this specific conundrum, if posed, would be a matter of PRC law and expert evidence. However, it seems from a fair reading of both letters that the provision of audit working papers is a matter that falls under judicial supervision and the ambit of the Mutual Arrangement, albeit that the Mainland court may need to be satisfied that appropriate approval has been obtained from the relevant regulatory authorities before it will then act under the Mutual Arrangement.

103.  In any event, for the reasons set out above, even if the SHPC Letter were thought to be relevant to Question 2, the answer to that question would remain as set out in Section C.3 above.

104.  Recognising that case management decisions are a matter for the trial judge and not the Court of Final Appeal, it remains to make a few observations concerning the implications of the Mainland court’s return of the letter of request without the D2 Documents.  Given the views set out above as to the effect of the SHPC Letter and the self-evident importance of the D2 Documents to the resolution of the issues in this action, the trial judge may form the view that it is appropriate to give the parties a realistic opportunity to seek the necessary Mainland approvals with a view to securing the transfer of the audit working papers to Hong Kong, either with or without a fresh letter of request.  This may therefore entail consideration of a possible adjournment of the trial and, if so, the trial judge will no doubt take into account the parties’ submissions and decide on the appropriate course in the light of all the circumstances and the interests of justice.

F.     Conclusion and disposition

105.  I would therefore answer the questions posed in this appeal as set out in Sections B.3 and C.3 above respectively and dismiss the appeal with (by order nisi) costs to the respondent.

106.  I would further dismiss the appellants’ summonses to adduce further evidence dated 21 July 2025 and 1 September 2025 with costs (by order nisi) to the respondent.

Mr Justice Lam PJ:

107.  I agree with the judgment of Mr Justice Fok PJ.

Sir William Young NPJ:

108.  I agree with the judgment of Mr Justice Fok PJ.

Chief Justice Cheung:

109.  Accordingly, the Court unanimously dismisses the appeal and makes a costs order nisi that the appellants pay the costs of the appeal to the respondent.  If any party wishes to vary this order, written submissions should be filed within 14 days of this judgment and reply submissions 7 days thereafter.

110.  The Court further dismisses the appellants’ summonses dated 21 July 2025 and 1 September 2025 and makes costs orders nisi that the costs of those summonses be paid by the appellants to the respondent.  Again, if any party wishes to vary this order, written submissions should be filed within 14 days of this judgment and reply submissions 7 days thereafter.