CAMP318/2023

A A CAMP 318/2023, [2024] HKCA 77 On An Intended Appeal From [2023] HKCFI 1892 B B IN THE HIGH COURT OF THE C C HONG KONG SPECIAL ADMINISTRATIVE REGION D COURT OF APPEAL D MISCELLANEOUS PROCEEDINGS NO 318 OF 2023 E E (ON AN INTENDED APPEAL FROM F HCA NOS 3391 OF 2016 AND 1417 OF 2013) F G G HCA 3391/2016 H H BETWEEN I I CHINA MEDICAL TECHNOLOGIES, INC. 1st Plaintiff (IN LIQUIDATION) J J CMED TECHNOLOGIES LTD 2nd Plaintiff K K rd COSIMO BORRELLI AND YUEN LAI 3 Plaintiffs L YEE IN THEIR CAPACITY AS THE JOINT L AND SEVERAL LIQUIDATORS OF CHINA MEDICAL TECHNOLOGIES, INC. M M (IN LIQUIDATION) N N and O WU XIAODONG 1st Defendant O P SAMSON TSANG TAK YUNG 2nd Defendant P Q CHEN ZHONG 3rd Defendant Q ZHU FENG (CHARLES) 4th Defendant R R CHONG WING HIP (IN HIS PERSONAL 5th Defendant S S CAPACITY AND FORMERLY TRADING AS KAM HING TRADING CO) T T th HAO XIAOQING ALLAN 6 Defendant U U V V  - 2 - A A B SUPREME WELL INVESTMENTS 7th Defendant B LIMITED C C th EAST HOPE INTERNATIONAL LIMITED 8 Defendant D D CHEER LINK INTERNATIONAL 9th Defendant LIMITED E E INNOVATIVE TECHNOLOGY 10th Defendant F INVESTMENT LIMITED F G DYNAMIC SENSE LIMITED 11th Defendant G H TIME REGION HOLDINGS LIMITED 12th Defendant H I BI XIAOQIONG (IN HER PERSONAL 13th Defendant I CAPACITY AND AS TRUSTEE OF THE XIAO QIONG BI TRUST AND THE ALISA J J WU IRREVOCABLE TRUST) K WORLDPRO INVESTMENTS LIMITED 14th Defendant K L LONG CHART INVESTMENTS LIMITED 15th Defendant L M CHAVIS INVESTMENTS LIMITED 16th Defendant M N SINOWELL INTERNATIONAL 17th Defendant N INVESTMENT LIMITED O O CHENGXUAN INTERNATIONAL LTD 18th Defendant P WEIXIAO MEDICAL TECHNOLOGY 19th Defendant P LIMITED Q Q th WB INTERNATIONAL HOLDING PTE 20 Defendant R LTD R MAX PROSPER ENTERPRISES LIMITED 21st Defendant S S JUN YUN BI 22nd Defendant T T U U V V  - 3 - A A B GLOBAL FLASH LIMITED 23rd Defendant B C C HCA 1417/2013 D D BETWEEN E E CHINA MEDICAL TECHNOLOGIES, INC. Plaintiff F (IN LIQUIDATION) F and G G WU XIAODONG 1st Defendant H H nd SAMSON TSANG TAK YUNG 2 Defendant I I CHEN ZHONG 3rd Defendant J J th ZHU FENG (CHARLES) 4 Defendant K K SUPREME WELL INVESTMENTS 5th Defendant LIMITED L L M M (Consolidated by Order of Master Chow dated the 23rd day of July 2018) N N Before: Hon Au and Chow JJA in Court O O Dates of Written Statements: 5 and 19 October 2023 P Date of Judgment: 23 January 2024 P Q Q JUDGMENT R R S Hon Chow JA (giving the Judgment of the Court): S T T U U V V  - 4 - A A INTRODUCTION B B 1. This is the 2nd Defendant’s renewed application for leave to C C appeal against the order of Ng J dated 26 July 2023 (“the Order”), D whereby the Judge dismissed the 2 nd Defendant’s summons dated D 24 September 2021 seeking (i) specific discovery of “all documents or E E correspondence between, or notes of meetings or conversations between, F the 3rd Plaintiffs … and any of the respective 6 experts referred to in F paragraph 72.2 of the 3rd Affidavit of Mr Cosimo Borrelli sworn on G G 29th March 2018 in HCA 3391 of 2016 relating to the FISH and/or SPR H Technologies” (“the Subject Materials”), and (ii) inspection of the same H under Order 24, Rules 3, 7 and 11 of the Rules of the High Court, Cap 4A. I I Leave to appeal against the Order was refused by the Judge on J 22 September 2023. J K K 2. The basic facts of this case and the Judge’s reasons for his L decision have been set out in his written judgment dated 26 July 2023 L (“the Judgment”), and will not be repeated here. In summary, the M M Judge refused to order specific discovery (and hence inspection) of the N Subject Materials on the ground that they were protected by litigation N privilege and there had not been any waiver of the privilege by the O O Plaintiffs. P P 3. The tests for granting leave to appeal and for the Q Q circumstances in which the Court of Appeal will interfere with an R exercise of discretion by a judge concerning specific discovery and R inspection of documents are well established, and do not have to be set S S out here. T T U U V V  - 5 - A A 4. Having considered the papers before us, we consider that it B B is appropriate to deal with the present application on paper without an C oral hearing, pursuant to Order 59, Rule 2A(5)(a) of the Rules of the C High Court. D D E DISCUSSION E F 5. Attached to the Plaintiff’s summons dated 5 October 2023 F seeking leave to appeal is a draft Notice of Appeal containing 2 intended G G grounds of appeal (“Ground 1” and “Ground 2”). H H 6. Under Ground 1, referred to as the “Privilege Issue”, I I Mr Lung on behalf of the 2nd Defendant makes 2 points. J J 7. First, Mr Lung contends that the Judge should have held that K K the Plaintiffs failed to discharge the onerous burden for establishing L litigation privilege, in particular the requirement that the Subject L Materials were created for the sole or dominant purpose in connection M M with litigation (“the 1st Requirement”). N N 8. The question of whether the Subject Materials came into O O existence for the sole or dominant purpose of obtaining or providing legal P advice as to bringing or conducting of legal proceedings was carefully P considered by the Judge at §§16-30 of the Judgment. We agree with the Q Q Judge’s analysis and conclusion. R R 9. We now turn to Mr Lung’s arguments in support of S S Ground 1: T T U U V V  - 6 - A A (1) Mr Lung argues that Mr Borrelli’s statement at §20 of his B B 21st Affidavit filed on 5 December 2022 (namely, that “[a]ll C documents, correspondence, and notes of meetings and C conversations, between the Liquidators (either by themselves, D D their team or their lawyers) and these 6 experts were produced and brought into existence for the sole purpose of E E obtaining or providing legal advice as to bringing or F conducting these proceedings and other actions that had F been commenced by the Plaintiffs or were in contemplation”) G G is a bare assertion. It seems to us, however, that in the H context and circumstances of the present case, Mr Borrelli’s H said statement is entirely credible, and there is no reason to I doubt its veracity. I J (2) Mr Lung next argues that where there are self-evidently dual J or multiple purposes (eg valuation of assets for sale), the K K court should not too readily conclude that the 1st Requirement is satisfied. This argument was considered L L by the Judge at §§27-28 of the Judgment. The Judge was M not impressed by it on the facts of the present case. So are M we. N N (3) Lastly, Mr Lung argues that the difficulty is particularly O acute when one considers the multi-faceted duties inherent in O the nature of the work of a liquidator, and points to the fact P P that 4 of the experts were engaged in 2013-2015 during the Q 1st Plaintiff’s early stage of liquidation. This argument adds Q nothing of substance to the one mentioned in (2) above. R R 10. Second, Mr Lung contends that the Judge incorrectly S S nd reversed the burden of proof by requiring the 2 Defendant to suggest an T T U U V V  - 7 - A A alternative purpose for the creation of the Subject Materials other than B B one in connection with the litigation. This contention is completely C without merits. The Judge alluded to the fact that Mr Lung was unable C to suggest any other purpose of the Liquidators’ investigation and D D communications with the 6 experts if it were not for the purpose of E obtaining or providing legal advice in relation to bringing or conducting E legal proceedings 1 . The Judge was entitled to take this matter into F F account in coming to the “confident” conclusion that the Subject G Materials were protected by litigation privilege 2 . There is no basis G whatsoever to contend that the Judge reversed the burden of proof as H H contended by Mr Lung. I I 11. Under Ground 2, referred to as the “Waiver Issue”, Mr Lung J J makes 3 points. K K 12. First, Mr Lung contends that the Judge erred in holding that L L the 3 passages cited in §§36, 39 and 42 of the Judgment only concerned M the effect of the Subject Materials but not their contents. We have M considered the 3 passages, and agree with the Judge that Mr Borrelli was N N merely stating the Liquidators’ conclusions on the nature and value of the O FISH and SPR Technologies. The fact that Mr Borrelli might have O come to those conclusions with the benefit of, or in reliance upon, the P P opinion or advice given by the experts did not mean that the Liquidators Q “deployed” the contents of the Subject Materials thereby waiving the Q privilege. The applicable approach can be found in the judgment of the R R S 1 S See §29 of the Judgment. 2 See §26 of the Judgment. T T U U V V  - 8 - A A Court of Appeal in Goldlion Properties Limited v Regent National B B Enterprises Limited [2006] 1 HKLRD 794, at §36 (citing with approval C Matthews and Malek on Disclosure §10.17): C D “The key word here is ‘deploying’. A mere reference to a D privileged document in an affidavit does not of itself amount to a waiver of privilege, and this is so even if the document E referred to is being relied on for some purpose, for reliance in E itself is said not to be the test. Instead, the test is whether the F contents of the document are being relied on, rather than its F effect. The problem is acute in cases where the maker of an affidavit or witness statement has to give details of the source G of his information and belief, in order to comply with the rules G of admissibility of such affidavit or witness statement. Provided that the maker does not quote the contents, or H H summarise them, but simply refers to the document’s effect, there is apparently no waiver of privilege.” I I 13. Second, Mr Lung contends that in considering the issue of J J waiver, the Judge held, incorrectly, that it was immaterial that the K Plaintiffs utilized the Subject Materials “for merits purposes”. Mr Lung K says that the Judge failed to grapple with the concept of fairness L L altogether. If, as we consider it to be the position, the Subject Materials M M are, as a matter of law, protected by litigation privilege, and the Plaintiffs N have not waived the privilege attached to the Subject Materials, we do not N nd see how their non-disclosure to the 2 Defendants can be said to give rise O O to any unfairness. Further and in any event, Mr Lung has failed to P demonstrate any unfairness arising out of the non-disclosure of the P Subject Materials. Q Q R 14. Third, Mr Lung contends that the Judge wrongly failed to R consider the unfairness inherent in the Plaintiffs’ fundamental shift in S S their stance on the value of the FISH and SPR Technologies. The T T U U V V  - 9 - A A 2nd Defendant’s complaint about the Liquidators’ change of stance is B B based on what the Liquidators are alleged to have represented to the C Beijing Court in some other proceedings in China 3. The Plaintiffs deny C that there has been any change of stance as alleged. Mr Lung has failed D D to show, and we are not satisfied, that without the Subject Materials, the E 2nd Defendant will be unable to pursue the said complaint at the trial. E F F 15. In all, neither Ground 1 nor Ground 2 is reasonably arguable. G We do not consider that the 2nd Defendant’s intended appeal has any G reasonable prospect of success. Neither do we see that there is any other H H reason in the interests of justice why the appeal should be heard. I I DISPOSITION J J 16. The 2nd Defendant’s summons dated 5 October 2023 is K K dismissed with costs to the Plaintiffs, to be summarily assessed. The L Plaintiffs shall have leave to file and serve a statement of costs (limited to L 2 pages) within 14 days from the date of this judgment, and the M M 2nd Defendant shall have leave to file and serve a statement of objection N (limited 2 pages) within 14 days thereafter. Subject to such further N directions as may be given, the Court will assess the Plaintiffs’ costs O O summarily without further notice to the parties. The above orders as to P costs is an order nisi, and shall become absolute unless an application is P made to vary the same within 14 days from the date of this judgment. Q Q R 17. As the 2nd Defendant’s application is totally without merit, R we make an order that no party may request the present determination to S S 3 See §§9 to 14 of the 1 st Affidavit of Tang Shu Pui Simon dated 24 September 2021. T T U U V V  - 10 - A A be reconsidered at an oral hearing inter partes pursuant to Order 59, B B rule 2A(8) of the Rules of the High Court. C C D D E E (Thomas Au) (Anderson Chow) F Justice of Appeal Justice of Appeal F G G Mr Vincent Lung and Mr Bryan Lee, instructed by P C Woo & Co, for the 2nd Defendant H H Mr Charles Manzoni SC, instructed by Karas So LLP, for the Plaintiffs I I J J K K L L M M N N O O P P Q Q R R S S T T U U V V