PT MINERALS ASIA LTD v. THE WITTGENSTEINS CPA LTD

HCMP 2472/2025

[2026] HKCFI 3787

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2472 OF 2025

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BETWEEN

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RULING ON COSTS

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1.  This Ruling relates to the costs of:

(i) the Originating Summons dated 12 December 2025 (the “OS”) taken out by PT Minerals Asia Limited (“P”) against the Wittgensteins CPA Limited (“D”) for the return of P’s documents in D’s custody or possession; and

(ii) the Summons for security of costs taken out by D on 9 March 2026 (the “Summons”).

2.  At the hearing on 1 April 2026 this Court disposed of the OS by making no order thereon, granted leave to D to withdraw its Summons and adjourned the argument on costs of the OS and the Summons which came before this Court on 16 June 2026. This is my Ruling on Costs.

Factual background

3.  P was incorporated in Hong Kong on 20 November 2002 by Mr Chen Qiang (“Chen”) and his former wife Madame Tian Ping (“TP”) as an investment vehicle. They were the first subscribers and directors of P.

4.  TP resigned as a director and secretary of P on 30 June 2006 and transferred her 50% shareholding in P to Chen.

5.  Chen caused the shareholding of P to be transferred to TP on 26 August 2016 since which date she has been the sole shareholder and was reappointed a director. According to TP, she took no part in managing the affairs of P but left it to Chen who remained a director until his removal in 2023.

6.  The marriage between Chen and TP broke down in early 2023 and they divorced in May 2024.

7.  TP became the sole director after she removed Chen as a director on 9 June 2023 following the breakdown of the marriage.

8.  D was engaged as the auditor of P at least from 2014 to July/August 2023. It gave an unqualified opinion for P’s financial statements for the years ended 31 March 2014 to 2020.

9.  On 15 June 2023, TP (as sole shareholder and director of P) under cover of a letter of even date from her solicitors Fred Kan & Co (“FKC”), invited D to tender its resignation as auditor. For the ensuing 2 weeks, telephone exchanges took place between representatives of FKC and representatives of SIU and Company (“SC”), solicitors for D to schedule a meeting relating to the proposed change of auditor.

P’s 2023 requests for documents

10.  On 5 July 2023, FKC sent SC a checklist (headed “Schedule 1”) of documents required and demanded that they be delivered by 6 pm the following day.

11.  On 7 July 2023, FKC sent a chaser alleging that it had been urging the release and return of company documents “for months[1]” and that TP had given D since 15 June 2023 to arrange for the handover of documents[2], demanding that the documents be delivered by 5 pm on 11 July 2023.

12.  D prepared a checklist of the documents to be returned (the “Checklist”) and arranged for their collection on 11 July 2023.

13.  On 18 July 2023, P’s new solicitors, (“Gall”) wrote to SC. On the basis that D, through different entities of its corporate group represented P in the capacities of company secretary, accountant, tax representative and auditor since 2006, Gall demanded “outstanding documents and explanations” set out in §§5-6 of its letter within the next 3 business days. It criticised D’s level of efficiency and responsiveness, and complained about incomplete disclosure made on 11 July 2023 (§§4[3] and 9). Then in §10, the letter stated that P’s concern was exacerbated by the revelation from the documents so far received that “the signatures on some corporate documents may have been forged”. P gave official notice to D, terminating “its offices as company secretary, accountant, and tax representative” with immediate effect.

14.  SC replied the following day clarifying, inter alia, that (i) D only acted for P as auditor; (ii) its other related companies provided company secretarial services and tax representative service but none acted as accountant of P; and (iii) P did not state the documents it wanted until 5 July 2023 and by 11 July 2023, D had already provided the required documents, negating P’s allegations of inefficiency and unresponsiveness.

15.  SC further explained that (1) as auditor, D did not keep P’s accounting documents[4] and addressed the other matters raised by P relating to audit material; (2) company secretarial documents dealt with by D’s related company were limited to annual returns and changes in company particulars; (3) only copies of D’s tax returns and profit tax computation were kept by D’s related company for 7 years and those have already been provided to the new auditor; (4) while D has drafted audited financial statements for 2020/21 and 2021/22, they could not be finalised because TP failed to sign and return them. As a result, D was unable to resign from the post of auditor; (5) D confirmed that all documents to which P is entitled have already been provided; and (6) D would gladly cooperate in the event that fraud is alleged upon receipt of a search warrant or a Norwich Pharmacal order if D’s costs are paid by P on an indemnity basis.

16.  Gall responded on 15 August 2023. As a preliminary matter, it maintained that D did provide accounting services to P, enclosing D’s debit notes issued between October 2013 and January 2023 which referred to and charged P for “[D’s] professional fee for … preparing books of accounts for the year ended …”.

17.  The letter then identified 3 inconsistencies[5] in D’s letter of 19 July 2023 that required clarification. It also suspended for the time being the request made under §§6(2) and 8 of P’s letter of 18 July 2023, only repeating its request under §6(1)[6] (or alternatively a confirmation that all such records have indeed been provided) and §7[7].

18.  SC replied on 21 August 2023:

(i) §1 confirmed that D’s retainer only covers audit services and that it did not provide accounting services to P.

(ii) §2 confirmed the accuracy of the Checklist and addressed, inter alia, the 3 ‘inconsistencies’ mentioned in §§4-6 of P’s letter of 15 August 2023 as follows:

(a) subparagraph A answered P’s §4;

(b) subparagraph B answered P’s §5;

(c) subparagraphs C-F answered P’s §6.

(iii) §3 confirmed (a) that D had already provided all documents in their possession classified as client property; (b) ownership of Working Papers belongs to D; and (c) documents not on the Checklist and were generated more than 7 years ago had not been kept by D.

19.  Had P not been satisfied with any of those answers, the natural thing to do would be to seek clarification. But there was no follow-up to SC’s reply of 21 August 2023.

P’s 2025 demand for the return of P’s company books and records

20.  More than 2 years after SC’s correspondence with Gall considered above, on 17 September 2025, Ince, a new firm of solicitors representing P and TP, wrote to D ‘demanding’ the return of “documents, books, records, or other property belonging to [P]” because it had come to their clients’ attention (but without giving any explanation) that D may still retain possession or control of the same.

21.  The letter went on to state that “[f]ormer auditors have no right to retain company property or records once their office has ceased”, the duties of auditors are “fiduciary in nature and include obligations to account for and deliver up all company property in their possession”, a breach of which duty could give rise to civil liability, implicitly suggesting that D may find itself in that position.

22.  §6 then demanded D to comply with what followed under subparagraphs 1 and 2 of its letter within the next 7 days. Subparagraph 1 which reads:

“1) Return to our clients all books, records, accounts, statutory registers, papers, documents, and any other property of the Company in your possession, custody, or control, whether held in physical or electronic form, especially those relating to any suspicious and unexplained accounts payable and accounts receivable transactions[8] of the Company from 2014 to August 2023, including but not limited to:- …”

was followed by sub-subparagraphs (a)-(i) which listed the categories of documents it wanted.

23.  Subparagraph 2) sought confirmation that D had no further company documents in its possession.

24.  On 27 October 2025, Ince sent a chaser, inter alia, revising the list of documents required (the “revised list”) at the same time. The revised list was subsequently transmogrified in the OS into “Books of Account”.

25.  SC replied on 28 October 2025, explaining the role of the auditor, that it is not responsible for keeping accounting records of the company and that pursuant to sections 373-374 of the Companies Ordinance[9], the obligation of keeping accounting records and where they are to be kept lies on the director of the company, with consequences for non-compliance.

26.  With regard to the Books of Account, SC pointed out that they are accounting records which Ince’s client TP (as director) is obligated to keep. In response to P’s threats of legal action should D failed to comply, D reserved all its rights[10].

27.  On 12 December 2025, P took out its OS for delivery up of documents per the revised list i.e. the Books of Account.

28.  The OS was supported by TP’s 30-page affirmation dated 12 December 2025 (“TP Aff”). It is TP’s evidence that prior to the breakdown of her marriage in 2023, she had entrusted the management of P and its financial affairs to Chen. She delegated all duties and responsibilities to Chen for the period from 2006 to August 2016. After the breakdown and becoming sole shareholder and director in June 2023, she became wary of P’ s affairs.

29.  Section D of TP Aff describes P/TP’s attempts to obtain documents from D by recapping the correspondence exchanged between P’s former solicitors (FKC and Gall respectively) with SC. Section E is headed “Suspicious Transactions” which (in §36.1) identified an increase of US$8 million in amounts due to related companies, and in §36.2 tabulated 6 “suspicious and unexplained significant debit transfers” out of P’s SCB accounts on divers dates between 6 January 2020 and 5 July 2022.

30.  SC informed Ince on 16 February 2026 that D had to date already incurred costs of approximately $200,000 and explained why it is entitled to ask for security for costs in the sum of $500,000 (which includes estimated costs up to the hearing of the OS).

31.  Ince considered D’s intended security for costs application a procedural manoeuvre to support its time summons scheduled to be heard on 23 February 2026 and indicated P’s opposition to that application. At that hearing, the Master made an unless order for D to file its affirmation in opposition by 16 March 2026.

32.  On 9 March 2026, D issued its security for costs summons supported by 2 affirmations of Siu See Kong respectively dated 2 and 9 March 2026.

33.  D filed the affirmation of Lam Cheung on 16 March 2026 in opposition to the OS.

Whether the OS should have been issued

34.  §§10-19 above contains a chronological account of P’s 2023 requests for documents. Reading that correspondence objectively, the following points emerge:

(i) the allegations made in FKC’s letter of 7 July 2023 concerning ‘inefficiency’ and ‘unresponsiveness’ are demonstrably wrong as they are not borne out by the evidence;

(ii) SC’s explanation of D’s role as auditor and the terms of its retainer should have put paid to any lingering doubts/suspicions that D may have assumed other roles and hence having possession/control of other documents relating to those other roles;

(iii) SC’s letters of 19 July and 21 August 2023 answered the questions/queries raised in Gall’s letters of 18 July and 15 August 2023; and

(iv) the absence of any follow-up letters reinforces the conclusion expressed in (iii) above.

35.  The 2025 demand for the return of P’s company books and records was first made in Ince’s letter of 17 September 2025. That letter is striking in the following respects:

(i) it was a ‘demand’ rather than a ‘request’ which, for a letter coming out of the blue, connotes a degree of aggression thereby unnecessarily raising the temperature;

(ii) the tone of that letter was hardly designed to elicit cooperation from the recipient; instead, it succeeded in riling the recipient into taking out the Summons;

(iii) the reference to documents especially those relating to any “suspicious and unexplained accounts payable and accounts receivable transactions” in the preamble to the subparagraphs of §6 (1) without elaboration, appears to presuppose that such documents exist and possibly casting aspersions on D’s professionalism and implying some complicity in such transactions;

(iv) the 2025 demand reads as if that the 2 rounds of detailed correspondence that P’s 2023 requests had engendered[11] had never taken place, or were simply swept aside and ignored; and

(v) had the 2023 correspondence been properly read and digested, it is inconceivable the 2025 demand could have been written in the way that it was. While it was open to P to seek further clarification on specific aspects of D’s responses or to request D to confirm on affidavit that it does not have possession or control of any of P’s documents, the 2025 demand was framed as if the demand was made for the very first time.

36.  Mr Raphael Leung, counsel for P, submitted that when P asked for the documents, D started ‘pointing fingers’ at TP, accusing TP of breaching director’s duties and threatened to report her to the Companies Registry. That resulted in P concluding that a settlement out of court would not be possible and a court application was therefore necessary.

37.  But P’s September 2025 demand was unnecessarily confrontational for the reasons stated above. It was P who first threatened to take legal action against D. D’s threat in response was no more than a tit-for-tat.

38.  P submitted that it was necessary for TP to file her lengthy affirmation because she needed to explain why she did not have the documents even after she was reappointed to the Board in 2016. She trusted Chen at the time and left everything to him by adopting a hands-off approach. But after the breakdown of the marriage, Chen did not cooperate in providing information concerning P’s financial position and management.

39.  However, the evidence shows that TP was not entirely hands-off. Contemporaneous documents show that prior to 2022, TP had signed several “confirmation of balance from related companies[12]”, several “Statements of Financial Position of P[13]”, accessed P’s SCB accounts and provided bank statements to D.

40.  P acknowledged the delay in making the application but maintained that P was entitled as of right to make the application and to the relief sought which was for the return of the Books of Account. P gave D the option of handing over the documents or to give an explanation on affidavit if D does not have them or why P is not entitled to them.

41.  Mr Leung was at pains to emphasize that there was never any claim for professional negligence. The damages mentioned in the OS relate to damages for the tort of conversion and/or detinue for the continued unlawful detention and possession of the Books of Account.

42.  If the matter was as simple as is now submitted, the affirmation in support should have been very brief and confined to no more than a few pages. What we have here are allegations of forged signatures[14] and a series of suspicious transactions over a period of 2 ½ years that D had overlooked. The underlying theme of all this impinges on the integrity of the auditor. Why else should those transactions be tabulated with detailed references?

43.  In that regard, had the bank statements and “transaction explanations” themselves been properly analysed, they provide the answers to the so-called ‘suspicious’ transactions identified in §36 of TP Aff : see LC Aff at §§ 93-95.

44.  In my view, the fact that no claim for damages for professional negligence was made neither excuses nor justifies the inclusion of those matters in TP’s affirmation filed in support of the OS.

45.  D has on several occasions confirmed the return of all pre-2020 audit materials and the delivery of the 2020-2022 audit materials to the new auditors[15]. If P required such confirmation to be by affidavit, it could have made that simple request.

Disposition

46.  For the reasons set out above, D is entitled to the costs of the OS with certificate for counsel, such costs to be summarily assessed and payable forthwith.

47.  As regards D’s Summons, I make no order as to costs. It is part and parcel of the dispute over the OS and I do not consider that separate costs should be awarded.

48.  I further direct that (i) D do lodge its statement of costs within 7 days of this Ruling on Costs; (ii) P do lodge its list of objections (if any, limited to two pages) within 14 days thereafter; and (iii) D do lodge its reply (if any, limited to one page) within 7 days thereafter for assessment in Chambers.