TENWOW INTERNATIONAL HOLDINGS LIMITED (IN LIQUIDATION) AND ANOTHER v. PRICEWATERHOUSECOOPERS (A FIRM) AND ANOTHER

TENWOW INTERNATIONAL HOLDINGS LIMITED (IN LIQUIDATION) AND ANOTHER v. PRICEWATERHOUSECOOPERS (A FIRM) AND ANOTHER

The application for a Letter of Request was dismissed because (1) a LOR is not an appropriate mechanism to relieve a party of discovery obligations in Hong Kong courts, (2) the requested assistance did not fall within Article 6 of the Mutual Arrangement (which concerns taking evidence) and thus there was no proper basis to believe a LOR would be executed, (3) D2 failed to demonstrate that Mainland law imposes a blanket prohibition on transferring the audit working papers or that Regulated Information is involved, and (4) discretionary considerations (futility and undue delay prejudicial to trial preparedness) further support refusal; accordingly D2 was ordered to comply with the Court’s...

Citation
[2024] HKCFI 1146
Parties
1st Plaintiff: TENWOW INTERNATIONAL HOLDINGS LIMITED (IN LIQUIDATION); 2nd Plaintiff: NAN PU INTERNATIONAL LIMITED (IN CREDITORS’ VOLUNTARY WINDING UP); 1st Defendant: PRICEWATERHOUSECOOPERS (A FIRM); 2nd Defendant: 普华永道中天会计师事务所 (特殊普通合伙) PRICEWATERHOUSECOOPERS ZHONG TIAN LLP
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
2 May 2024
Case Number
HCCL6/2023
Procedural Posture
Commercial Actions (consolidated) Professional Negligence and Insolvency Claims / Interlocutory Application for a Letter of Request and Discovery Compliance Pre Trial
Outcome
Notice of Application dismissed; application for Letter of Request refused
Legal Topics
Letter of Request, Mutual Taking of Evidence Arrangement, Production of Documents, Discovery, Foreign Law Risk, Mainland China Confidentiality Regulations (regulation 44; Regulation 29), Comity, Judicial Discretion, Costs
Source Language
EN
Civil Procedure International Judicial Assistance Evidence Insolvency Professional Negligence Cross Border Regulatory Compliance Letter of Request Mutual Taking of Evidence Arrangement +7 more

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Parties

TENWOW INTERNATIONAL HOLDINGS LIMITED (IN LIQUIDATION)

1st Plaintiff

NAN PU INTERNATIONAL LIMITED (IN CREDITORS’ VOLUNTARY WINDING UP)

2nd Plaintiff

PRICEWATERHOUSECOOPERS (A FIRM)

1st Defendant

普华永道中天会计师事务所 (特殊普通合伙) PRICEWATERHOUSECOOPERS ZHONG TIAN LLP

2nd Defendant

Procedural Posture

Commercial Actions (consolidated) Professional Negligence and Insolvency Claims / Interlocutory Application for a Letter of Request and Discovery Compliance Pre Trial

Legal Issues

  1. 1 Whether a Letter of Request (LOR) may be used to assist a party to comply with its discovery obligations
  2. 2 Whether the Arrangement on Mutual Taking of Evidence between the Mainland and the HKSAR (Mutual Arrangement) applies to the obtaining of approval for transfer of documents and thus authorises a LOR
  3. 3 Whether Mainland laws and regulations (notably Regulation 44 and its predecessors) impose a blanket prohibition on transfer of audit working papers outside the Mainland

Ratio Decidendi

The application for a Letter of Request was dismissed because (1) a LOR is not an appropriate mechanism to relieve a party of discovery obligations in Hong Kong courts, (2) the requested assistance did not fall within Article 6 of the Mutual Arrangement (which concerns taking evidence) and thus there was no proper basis to believe a LOR would be executed, (3) D2 failed to demonstrate that Mainland law imposes a blanket prohibition on transferring the audit working papers or that Regulated Information is involved, and (4) discretionary considerations (futility and undue delay prejudicial to trial preparedness) further support refusal; accordingly D2 was ordered to comply with the Court’s...

Court Disposition

Notice of Application dismissed; application for Letter of Request refused

Orders

  • The Notice of Application dated 1 December 2023 is dismissed
  • D2 must comply with its obligation to produce the D2 Documents pursuant to paragraph 5 of the Court’s directions dated 8 November 2023