Cmbicdhaw Investments Ltd v. Li Lei and Others

HCMP 1074/2024

[2025] HKCFI 3616

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1074 OF 2024

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D E C I S I O N

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A.  INTRODUCTION

1.By summons of 21st March 2025 (as amended on 2nd April 2025) (“the Defendants’ Summons”), the Defendants seek to expunge certain paragraphs of, and exhibits to, the Affirmation of Henry Qiu Han Rong (“Qiu’s Affirmation”), on the grounds that they are outside the scope of the Amended Contempt Statement filed on 4th June 2024 and/or are irrelevant, scandalous and/or oppressive. This summons was heard on 13th May 2025.

2.After the hearing of the Defendants’ Summons had been fixed, the Plaintiff issued a summons on 25th April 2025 (“the Plaintiff’s Summons”), seeking to expunge certain paragraphs of, and exhibits to, the Affirmation of Li Lei of 4th October 2024 (“Li’s Affirmation”) and the Affirmation of Xiong Fei of 3rd October 2024 (“Xiong’s Affirmation”), on the grounds that they relitigate decided issues, constitute impermissible hearsay, are irrelevant, or are impermissible self‑serving statements. There was debate between the parties as to whether this summons could, or should, be heard at the hearing fixed solely for the Defendants’ Summons. In the event, the Plaintiff’s Summons was heard on 24th June 2025.

B.  THE BACKGROUND

B1.  The Main Action

3.The present proceedings are an application by the Plaintiff to commit the Defendants for contempt of court in breaching orders relating to discovery in HCA 905/2020 (“the Main Action”).

4.I have set out the background to the parties’ dispute in my decision of 31st August 2023 in the Main Action ([2023] HKCFI 2176) (“the 31.08.2023 Decision”) relating to the Plaintiff’s application to enter judgment and the Defendants’ application for relief from sanctions. I recap some of the points here as follows.

5.In the Main Action, the Plaintiff sues the Defendants and a Mr Chen (who is a party in the Main Action but not in the contempt proceedings) for fraudulent misrepresentation. The parties to the Main Action are as follows.

5.1  The Plaintiff is the corporate vehicle of Mr Henry Qiu, a beneficial owner and director.

5.2  The 3rd Defendant (namely, the 4th Defendant in the Main Action) is part of a private equity investment group, of which the 1st Defendant is the managing director, and the 2nd Defendant was formerly an employee, working under the 1st Defendant.

5.3  Mr Chen (the 3rd Defendant in the Main Action) is the shareholder of Heilongjiang Hengyang Cattle Group Co Ltd (“HHCG”), a mainland company carrying on the business of meat processing, sales and distribution in mainland China.

6.My references below to “the Defendants” and to the “1st Defendant”, “2nd Defendant” and “3rd Defendant” are to the three defendants in the current contempt proceedings.

7.The Plaintiff’s case in the Main Action is that:

7.1  the 3rd Defendant acted as the executive manager for a Cayman Islands Ltd partnership fund named CDH Fund V, LP (“CDH Fund V”) and CDH Grand Cattle Holdings Limited (“the JV Company”);

7.2  the Plaintiff and CDH Fund V made a joint investment in a minority stake in HHCG (“the Investment”). Pursuant to an agreement dated 17th March 2014 between the Plaintiff, CDH Fund V and the JV Company, the Plaintiff had a contractual right to participate in the Investment. The Investment was governed by an Investment Agreement, entered into between the JV Company, HHCG and Mr Chen, also dated 17th March 2014 (“the HHCG Investment Agreement”);

7.3  the Defendants conspired to defraud the Plaintiff, and investors in CDH Fund V, by making fraudulent representations regarding the legitimacy and attractiveness of the Investment, including representations about the intended listing of HHCG on the Hong Kong Stock Exchange, and the intended switch to a listing on the Shenzhen Stock Exchange;

7.4  the Plaintiff was defrauded and its funds misappropriated.

B2.  The Plaintiff’s application for discovery in the Main Action

8.In the Main Action, the Plaintiff sought discovery against the Defendants. The following ensued.

8.1  On 7th September 2022, Master Gary Lam made an order (“the Discovery Order”) requiring the Defendants to give discovery of various classes of documents.

8.2  On 18th November 2022, Master Matthew Leung made an unless order requiring the Defendants to give discovery by 16th December 2022 (“the 1st Unless Order”).

8.3  On 17th January 2023, the Plaintiff issued a summons seeking judgment against the Defendants (“the 1st Judgment Summons”).

8.4  On 27 January 2023, Master Matthew Leung dismissed the 1st Judgment Summons, but made an unless order requiring the Defendants to give discovery by 4pm on 10th February 2023 (“the 2nd Unless Order”).

8.5  On 10th February 2023, the Defendants filed and served an affirmation seeking to comply with the 2nd Unless Order. Service of the relevant documents was effected on the Plaintiff’s solicitors shortly after 4pm.

8.6  On 15th March 2023, the Plaintiff issued another summons seeking judgment against the Defendants (“the 2nd Judgment Summons”) on the grounds that the Defendants had failed to comply with the 2nd Unless Order.

8.7  On 14th April 2023, the Defendants issued a summons for extension of time to apply for relief from sanctions, and relief from such sanctions (“the Relief Summons”).

9.I dealt with the 2nd Judgment Summons and the Relief Summons in the 31.08.2023 Decision, granting relief from sanctions and dismissing the 2nd Judgment Summons subject to rectification of certain omissions. One of the breaches of the 2nd Unless Order alleged by the Plaintiff had been that the Defendants had breached the 2nd Unless Order as the discovery in relation to certain classes of documents ordered to be disclosed under the Discovery Order was inadequate. I was of the view that the allegation was not made out: see 31.08.2023 Decision at [67] to [75].

10.There was no appeal from the 31.08.2023 Decision.

B3.  The current contempt proceedings

11.I gave leave to the Plaintiff on 17th June 2024 to file an originating summons, seeking to commit the Defendants for contempt of court for breach of the Discovery Order, the 1st Unless Order and the 2nd Unless Order, and for wilfully misleading the court, in the manner particularised in the Amended Contempt Statement filed pursuant to RHC O.52 r.2(2) on 4th June 2024.

12.In a nutshell, the complaint is that the Defendants deliberately failed to disclose a termination agreement between the JV Company, HHCG and Mr Chen dated 25th May 2015 (“the 25.05.2015 Termination Agreement”). The Plaintiff says that this document should have been disclosed as a document falling within classes 2(n) and 2(o) of the Discovery Order.

13.Classes 2(n) and 2(o) of the Discovery Order provided as follows.

“(n) All documents between 30 May 2014 to December 2016 regarding the communications between [the 1st Defendant], [the 2nd Defendant] and/or the [3rd Defendant] … on one hand; and [Mr Chen] and/or HHCG on the other hand in relation to the JV Company’s decision to waive any of their rights under the [HHCG] Investment Agreement.

(o) All documents between 30 May 2014 to December 2016 regarding the decision by the JV Company to waive any of their rights under the [HHCG] Investment Agreement including such documents relied upon by the [JV Company] leading to the said decision to waive any of their rights under the [HHCG] Investment Agreement.”

14.The Plaintiff says that the 25.05.2015 Termination Agreement should have been disclosed under classes 2(n) and 2(o), as it terminated the HHCG Investment Agreement, and the parties thereto (HHCG, the JV Company and Mr Chen) waived any claims for breach of contract or rights to claim compensation against each other.

15.The Defendants say that:

15.1  the 25.05.2015 Termination Agreement was an insignificant document. The original intention was to list HHCG on the Hong Kong Stock Exchange by means of a restructuring (“the Red-Chip Restructuring”). This involved setting up an offshore company (“China Beef”) to hold the shares of HHCG, getting the existing shareholders of HHCG (including the JV Company) to become shareholders in China Beef instead, transposing the rights and obligations of the JV Company and other onshore shareholders to a fresh Shareholders’ Agreement of China Beef dated 23rd March 2015 (“the China Beef Shareholders’ Agreement”), then procuring the listing of China Beef on the Hong Kong Stock Exchange. The 25.05.2015 Termination Agreement was a mere formality which had to be executed to prepare for the listing; by the time of the document, the principal rights and obligations in the HHCG Investment Agreement had already been transposed to the China Beef Shareholders’ Agreement;

15.2  the focus of the Plaintiff’s complaint in the Main Action is the right under cl.6.1(4) of the HHCG Investment Agreement, which gave the JV Company the right to request Mr Chen to repurchase its shares in HHCG if HHCG failed to be listed on the Hong Kong Stock Exchange or the mainland A-share market within five years following Completion (as defined under the agreement) (“the Repurchase Right”). However, this right had already been transposed to cl.17.1(d) of the China Beef Shareholders’ Agreement, so that the 25.05.2015 Termination Agreement did not relate to any waiver of the Repurchase Right. The Defendants therefore do not accept that the 25.05.2015 Termination Agreement fell within classes 2(n) and 2(o) of the Discovery Order at all;

15.3  the 1st and 2nd Defendant’s failure to disclose the 25.05.2015 Termination Agreement was inadvertent and not deliberate. Neither of them recalled the existence of the document, given (inter alia) the passage of time, and the fact that they did not sign the document, which was an insignificant formality handled by lawyers or junior staff.

16.The Plaintiff’s response is that:

16.1  its pleaded case in the Main Action is not just about the Repurchase Right. Its complaint is that it was induced by the Defendants’ misrepresentations to forbear from enforcing all of the JV Company’s rights under the HHCG Investment Agreement; indeed, even the Repurchase Right highlighted by the Defendants is merely one of scenarios in which the JV Company could demand the repurchase of its shares in HHCG;

16.2  the JV Company’s rights under the HHCG Investment Agreement were not all transposed to the China Beef Shareholders’ Agreement;

16.3  the 25.05.2015 Termination Agreement was therefore not an insignificant mere formality and would not have been forgotten about as claimed.

C.  THE EVIDENCE IN DISPUTE

C1.  The evidence which the Defendants seek to expunge

17.Qiu’s Affirmation was filed in reply to those filed by the Defendants in opposing the application to commit them. The parts of the affirmation which the Defendants seek to expunge (“the Disputed P Evidence”) were grouped by the parties into two categories, as follows.

18.Category 1 consists of paragraphs 54 to 56 and exhibit HQHR-1, which refer to and exhibit various documents. It is said that these documents fell within classes 2(f), 2(i), 2(k), 2(l), 2(m), 2(r), 2(u), 2(v), 2(w), 2(x) of the Discovery Order, but that the Defendants failed to disclose them, in breach of the Discovery Order.

19.The Plaintiff accepts that these alleged breaches did not fall within the scope of the Amended Contempt Statement, but seeks to rely on them as “further examples of the Defendants’ broad and systematic defiance of their … Discovery obligations” and “in rebuttal of the incredible claims in the Defendants’ Affirmations that their breaches … were accidental or inadvertent”.[1]

20.Category 2 consists of paragraphs 37, 90, 91, 93 and 95 to 104 and exhibits HQHR-3 and HQHR-4,[2] which refer to and exhibit a “Supplemental Agreement to the Shareholders’ Agreement relating to China Beef Products Holdings Limited” (“the Supplemental China Beef Shareholders’ Agreement”) and correspondence relating thereto. The Supplemental China Beef Shareholders’ Agreement recorded the oral agreement of the parties thereto that cl.17 of the China Beef Shareholders’ Agreement, except for the right under cl.17.1(d) (the right transposed from cl.6.1(4) of the HCCG Investment), would be deleted from 26th May 2015. It is said that the Supplemental China Beef Shareholders’ Agreement and the correspondence relating thereto (that is, HQHR-3 and HQHR-4) fell within classes 2(n) and 2(o) of the Discovery Order, but that the Defendants failed to disclose them, in breach of the Discovery Order.

21.The Plaintiff relies on the Category 2 evidence for a number of different purposes.

21.1  First, the Plaintiff says that the Supplemental China Beef Shareholders’ Agreement and correspondence relating thereto show the Defendants’ “wide-scale suppression of evidence and concealment”, in the same way as the Category 1 documents.[3] It is said that these documents fell within classes 2(n) and 2(o) of the Discovery Order, but the Defendants failed to disclose them. Again, it is not disputed that these alleged breaches fall outside the scope of the Amended Contempt Statement.

21.2  Second, the Plaintiff says that the Supplemental China Beef Shareholders’ Agreement shows that not all of the JV Company’s rights to require repurchase of its HHCG shares were transposed to the China Beef Shareholders’ Agreement. It is said that this undermines the Defendants’ claim that their omission to disclose the 25.05.2015 Termination Agreement was inadvertent or that the document was a mere formality.[4]

21.3  Third, the Plaintiff says that the email correspondence in HQHR-3 shows that the Defendants were in fact involved in the preparation of the 25.05.2015 Termination Agreement, so that they cannot have forgotten about it. [5]

22.I will consider the Disputed P Evidence in two groups:

22.1  evidence relied on for the submission that the Defendants were in further breach of the Discovery Order in failing to disclose documents which are not the subject of the Amended Contempt Statement: Qiu’s Affirmation paragraphs 54 to 56 and exhibit HQHR-1 (which exhibit consists of the Category 1 documents), and the first sentence of paragraph 104 (which asserts that failure to disclose HQHR-3 and HQHR-4 was a breach of the Discovery Order) (“the Disputed P Evidence of Additional Breaches”);

22.2  evidence relied on for the submission that the JV Company’s repurchase rights were not transposed as alleged, and the correspondence to show that the Defendants were involved in the preparation of the 25.05.2015 Termination Agreement: Qiu’s Affirmation paragraphs 37, 90, 91, 93, 95 to 103, the second sentence of paragraph 104, and exhibits HQHR-4 (the Supplemental China Beef Shareholders’ Agreement) and HQHR-3 (correspondence relating to this agreement) (“the Disputed P Evidence of Ds’ Involvement In Termination”).

23.The Defendants say that the Disputed P Evidence only goes to the credibility of their defence, so that on the proper application of the finality rule, it should be excluded. They further say that insofar as the Plaintiff seeks to rely on the Disputed P Evidence as similar fact evidence, this should not be allowed in the circumstances of the present case.

C2.  The evidence which the Plaintiff seeks to expunge

24.Li’s Affirmation and Xiong’s Affirmation were filed to set out the Defendants’ defence to the charges of contempt against them. The Plaintiff seeks to expunge virtually all of the substantive parts of the affirmations.

25.At the oral hearing of the Plaintiff’s Summons, counsel for the Plaintiff, Mr Barrie Barlow SC (appearing with Ms Terri Ha), directed his submissions to Li’s Affirmation, as the reasoning in respect of both Li’s Affirmation and Xiong’s Affirmation is identical. I will take the same approach in this decision (save in respect of one ground identified below).

26.The Plaintiff seeks to expunge:

26.1  paragraphs 17 to 42, 44 to 45, 48 to 49, 57 to 80 of Li’s Affirmation on the grounds of issue estoppel; alternatively on the grounds of irrelevance (“the Main Disputed Li Paragraphs”);

26.2  a subset of the aforesaid, namely all of the above except for paragraphs 17, 44, and 81, on the additional ground that they constituted impermissible self-serving statements; and

26.3  the second sentence of paragraph 4 and paragraph 84 of Li’s Affirmation on the grounds that they were in breach of RHC O.41 r.5(1).;

26.4  corresponding paragraphs of a similar nature in Xiong’s Affirmation.

(“the Disputed D Evidence”).[6]

D.  THE DISPUTED P EVIDENCE

D1.  The finality rule and the distinction between primary and collateral issues

27.The Defendants say that the Disputed P Evidence should be expunged by reason of the finality rule, namely, that evidence to rebut a witness on a matter of credibility is generally not admissible, citing HKSAR v Ng Fan Ying (2021) 24 HKCFAR 428 at [22].

28.The relevant principles were also explained in HKSAR v Kong Wai Lun (2015) 18 HKCFAR 7 by Lord Phillips NPJ:

“ The relevant law

27. Two basic common law principles as to the admission of evidence are in play on this appeal. The first is that no evidence is admissible unless it is relevant to an issue in the case. The second is that evidence should not be admitted if its probative weight is insufficient to justify the complexity that it will add to the trial. Whether in a criminal or a civil trial the judge should be astute to prevent the primary issues becoming obfuscated as the result of the admission of evidence of insufficient significance to justify the additional burden that it will impose on the hearing. These principles apply as much to a voir dire as they do to the trial itself.

28. In applying these principles it is helpful to distinguish between primary issues and collateral issues. Whether an event upon which the prosecution relies in fact occurred is a primary issue. Evidence that such an event did or did not occur is primary evidence. A collateral issue does not bear directly on whether a primary fact in issue occurred. It bears on the reliability of the primary evidence. The second principle normally applies only in relation to evidence that goes to a collateral issue.

Evidence as to credit

29. The evidence that most often gives rise to the invocation of the two principles set out above is evidence as to credit. Where a witness gives evidence that is challenged, the veracity of that witness may be put in issue. The party challenging that evidence may wish to ask questions in cross-examination about the conduct of the witness on other occasions for the sole purpose of showing that the witness is not the kind of person whose word can be believed. Such evidence of how a witness behaved on another occasion, or an issue as to this, is collateral to the primary issue of whether the evidence of the witness is truthful.

…

34. I can summarise the position as follows. Cross‑examination as to credit should be permitted in relation to any matter that, if proved, will diminish a witness’ credibility. This may be a failure to tell the truth on an earlier occasion, or some quite different type of misconduct, providing only that it bears logically on the weight that should be accorded to the witness’s word. Where a prosecution witness denies, under cross-examination as to credit, that he has been guilty of misconduct of a kind that would damage his credibility, evidence that unequivocally rebuts his denial, such as a finding by a court or tribunal to this effect, should normally be admitted for that purpose. Where, however, the truth of the allegation of misconduct made against the witness cannot be determined without what is, in effect, a separate trial relating to that issue, the finality rule will normally preclude the calling evidence to challenge his denial.”

29.The Plaintiff says that it is important to distinguish between evidence that is relevant to a primary issue between the parties, and evidence that only goes to a collateral issue; evidence relating to the former is admissible.

30.Mr Barlow submitted that the issue of whether the Defendants deliberately withheld the 25.05.2015 Termination Agreement is a primary issue in the contempt proceedings. Since the Disputed P Evidence is relied on to contradict the Defendants’ claim of inadvertence, it is admissible as primary evidence. It does not become inadmissible simply because it can also be described as going to the credibility of the Defendants’ explanation.

31.It is not disputed that the issue of whether the Defendants deliberately withheld the 25.05.2015 Termination Agreement is a primary issue. However, it does not follow that any evidence touching upon this issue must be primary evidence. As explained by Lord Phillips, evidence that an event did or did not occur is primary evidence, whereas evidence that bears on the reliability of the primary evidence is collateral; evidence of how a witness behaved on a different occasion is collateral to the primary issue of whether the witness’ evidence regarding the event under consideration in the proceedings is truthful. Dealing with the Disputed P Evidence of Additional Breaches first: the complaint is that the Defendants failed to disclose documents other than the 25.05.2015 Termination Agreement, in breach of the Discovery Order. The Plaintiff says that since this failure was so extensive, it may be inferred that it was deliberate, and this deliberateness was the case for the non-disclosure of the 25.05.2015 Termination Agreement as well. In my view, this complaint is a collateral issue. It goes to the reliability of the Defendants’ claim that the non‑disclosure of the 25.05.2015 Termination Agreement was inadvertent. It may be contrasted with evidence that directly shows the Defendants’ state of mind as regards the 25.05.2015 Termination Agreement (such as a piece of evidence showing that the Defendants had expressly discussed whether or not they should disclose the 25.05.2015 Termination Agreement).

32.The Plaintiff’s allegation is that the Defendants withheld numerous documents which should have been disclosed under multiple classes of the Discovery Order (and that this shows that the Defendants’ claim of inadvertent non-disclosure of the 25.05.2015 Termination Agreement is not to be believed). This is an allegation which cannot be determined without what would effectively be a separate trial of whether there have been multiple breaches of the Discovery Order other than the breach complained of in the contempt proceedings. The finality rule would normally preclude the adducing of evidence to prove such breaches. Cf. HKSAR v Kong Wai Lun at [34].

D2.  A particular type of collateral evidence: similar fact evidence

33.In HKSAR v Kong Wai Lun, Lord Phillips NPJ explained the difference between evidence going to credit and similar fact evidence:

“ 35. Evidence that goes simply to credit must be distinguished from another type of collateral evidence — similar fact evidence. Where the trial raises a primary issue as to whether a police witness, or indeed anyone else, acted in a particular way, the fact that he acted in the same way on another occasion may render it more probable that he acted as alleged. Where it is the conduct of the defendant himself that is in issue, special rules fall to be applied when deciding whether relevant similar fact evidence should be admitted. These are designed to protect the defendant against unfair prejudice. Where, however, similar fact evidence is alleged against a prosecution witness similar principles apply to those that apply to evidence as to credit, although the application of those principles will not be identical.

36. Before a witness can be cross-examined as to how he behaved on an occasion unrelated to the trial, it must be demonstrated that the cross-examination is relevant. The judge must be satisfied that the matters to be alleged in cross‑examination will, if established, be relevant to the determination of a primary issue. Where similar facts are relied on this will depend, in part, on the nature of the conduct in issue and the degree of similarity between that conduct and the “similar fact” conduct alleged. If this test of relevance is satisfied, the judge should permit the cross-examination.

37. It is at the second stage that the approach to similar fact evidence may differ from the approach to evidence that goes simply to credit. Evidence that goes simply to credit will almost always have limited significance. The fact that a witness is someone whose word cannot be trusted does not mean that his evidence is necessarily false. This is the justification for the application of the finality rule in respect of evidence that goes simply as to credit. Similar fact evidence may, however, be so cogent as to have substantial probative value. If conduct alleged against a witness on two different occasions has the same particular features, and there is no question of collusion between the witnesses to the two different occasions, this may be a cogent indication of the truth of what is alleged in relation to each occasion. Thus where a witness denies on cross-examination that he behaved in the manner alleged on either occasion, this will not necessarily preclude the admission of the similar fact evidence in rebuttal of his denial. The decision whether or not to permit similar fact evidence to be called will depend upon the facts of the particular case. The judge will have to weigh the impact that the similar fact evidence will have, if believed, against the dislocation that its introduction will cause to the trial process.”

34.The Plaintiff made reference to the rules about similar fact evidence, although this was for the purpose of the submission that the Disputed P Evidence went to a primary issue and not a collateral issue, rather than for the purpose of a submission that the Disputed P Evidence was similar fact evidence properly so-called.[7] Mr Barlow in oral submissions indicated that he was not seeking to rely on the Disputed P Evidence as similar fact evidence. Rather, Mr Barlow’s submission was that the Disputed P Evidence went to the primary issue of the Defendants’ state of mind and not merely to credit.

35.Nevertheless, the Plaintiff’s argument in substance amounts to a submission that the Disputed P Evidence (or at least the Disputed P Evidence of Additional Breaches) is similar fact evidence, the argument being that the Defendants’ breaches of the Discovery Order are so numerous and extensive as to rule out the possibility that their failure to produce the 25.05.2015 Termination Agreement was inadvertent.

36.The reference to similar fact evidence led to the Defendants’ submission that even applying the test for admissibility of similar fact evidence, the Disputed P Evidence should be excluded. Counsel for the Defendants, Ms Sara Tong SC (appearing with Mr Keith Chan), submitted that even if such evidence is prima facie admissible, it should be excluded in the circumstances of the present case as its probative value is not sufficient to outweigh the prejudice caused, citing HKSAR v Zabed Ali (2003) 6 HKCFAR 192 at [19] to [20] (Li CJ).

37.This in turn led to a submission by Mr Barlow that the question of whether the prejudicial effect of a piece of evidence is outweighed by its probative value is not a consideration that applies in civil proceedings.

38.In the end, however, Mr Barlow acknowledged that the court has an undoubted discretion to exclude evidence on the grounds that its probative value is outweighed by its prejudicial effect. Indeed, he cited and relied on O’Brien v Chief Constable of South Wales Police [2005] 2 AC 534, where the House of Lords set out a two-stage process for considering the admission of similar fact evidence in civil proceedings.

38.1  The first question is whether the evidence in question is relevant. For evidence to be admissible, it must be relevant, in that it must logically be probative or disprobative of some matter which requires proof. Evidence of what happened on an earlier occasion may make the occurrence of what happened on the occasion in question more or less probable. (See [3] to [4] (Lord Bingham), [52] to [53] (Lord Phillips).)

38.2  The second question is whether, as a matter of case management, evidence which ex hypothesi is legally admissible should be admitted. The importance of doing justice in the particular case always needs to be borne in mind. On the one hand, the party seeking to rely on the evidence will say that justice requires the evidence to be admitted. On the other hand, there may be various considerations against admission, including (1) distortion of the trial and distraction of the attention of the decision maker by focusing attention on collateral issues; (2) the possibility that the potential prejudicial value of the evidence will outweigh its potential probative value; (3) the burden which admission would cause to the resisting party. The court needs to bear in mind that justice requires not only that the right answer be given, but also that it be achieved by a trial process which is fair to all parties. (See [5] to [6] (Lord Bingham), [54] to [56] (Lord Phillips).)

39.The considerations may be somewhat different in criminal proceedings. Counsel touched briefly upon whether the contempt proceedings are criminal or civil in nature, but both were content to rest their submissions on the basis that the contempt proceedings should be considered to be civil in nature. Indeed, there should be no dispute about this: see Numeric City Ltd v Lau Chi Wing [2016] 4 HKLRD 812 at [23] to [27] (Poon JA, as he then was).

40.I therefore proceed to consider the Disputed P Evidence of Additional Breaches by reference to the O’Brien test.

D3.  The Disputed P Evidence of Additional Breaches

41.Paragraphs 54 to 56 of Qiu’s Affirmation and exhibit HQHR‑1 (that is, the Category 1 documents), and the first sentence of paragraph 104 of Qiu’s Affirmation (asserting that failure to disclose HQHR-3 and HQHR-4 was a breach of the Discovery Order) constitute the evidence sought to be relied on by the Plaintiff for the submission that, apart from the failure to disclose the 25.05.2015 Termination Agreement, the Defendants were in further breach of the Discovery Order in failing to disclose other documents (which are not the subject of the Amended Contempt Statement), and that such extensive breaches are indicative of a deliberate intention to flout the Discovery Order. In my judgment, these parts of Qiu’s Affirmation should not be admitted.

42.Whilst it may be the case that this evidence could potentially be probative of whether the Defendants deliberately failed to disclose the 25.05.2015 Termination Agreement, this is only the starting point. The considerations against admission outweigh any probative value that the evidence may have.

43.As regards the Category 1 evidence, it is not disputed that paragraphs 54 to 56 of Qiu’s Affirmation seek to introduce over 1,200 pages of emails and attachments in HQHR-1 which have not previously been mentioned in the contempt proceedings or in the application for discovery in the Main Action, and that that they do not mention or relate to the 25.05.2015 Termination Agreement. Indeed, it is not even the Plaintiff’s case that the documents have any relevance to the complaints in the Main Action such that there would have been any motive on the Defendants’ part to deliberately withhold disclosure. It is therefore questionable as to whether this evidence can have any probative value to the question of whether the Defendants deliberately withheld disclosure of the 25.05.2015 Termination Agreement.

44.As regards the first sentence of paragraph 104 of Qiu’s Affirmation (which falls within the Category 2 evidence), the Supplemental China Beef Shareholders’ Agreement dealt with termination of (most of) cl.17 of the China Beef Shareholders’ Agreement and not termination of the HHCG Investment Agreement. It also did not refer to the 25.05.2015 Termination Agreement. Again, even if there was deliberate withholding of the Supplemental China Beef Shareholders’ Agreement (and correspondence relating thereto), it does not necessarily follow that the Defendants deliberately withheld disclosure of the 25.05.2015 Termination Agreement.

45.The Plaintiff’s attempt to seek to establish that the Defendants were in deliberate breach of the Discovery Order in failing to disclose the documents in HQHR-1, HQHR-3 and HQHR-4 would necessitate a substantial and disproportionate increase in the length, scope and cost of the trial. Moreover, it would constitute a diversion into subsidiary issues, away from the real issue at hand.

46.Furthermore, the nature of the current proceedings should be borne in mind. The Plaintiff acknowledges that:

46.1  no application for an order of committal may be made unless leave has been granted under O.52 r.2, and an application for such leave must be supported by a statement setting out (inter alia) the grounds on which the committal is sought and an affidavit verifying the facts relied on;

46.2  a statement filed pursuant to O.52 r.2(2) is to be treated in a similar manner as an indictment in criminal proceedings, having regard to the penal nature of the sanctions for contempt. Hence, the statement should state all the factual elements (but not the evidence relied on) which, if proved, are sufficient to establish the contempt. See Cosimo Borrelli v Allen Tak Yuen Chan [2018] 2 HLLRD 496 at [31] (Kwan JA, as she then was).

47.The Defendants should not have to defend themselves against allegations of additional deliberate breaches when the allegations are not contained in the Amended Contempt Statement. Whilst it may be the case that the Plaintiff is not (at least presently) seeking to commit the Defendants for these alleged deliberate breaches of the Discovery Order (so that it may be argued that the requirements of O.52 r.2 do not apply), the Plaintiff is nevertheless asking for findings of fact that there were such deliberate breaches, and that they amounted to “wide-scale suppression of evidence and concealment” on the part of the Defendants;[8] the Plaintiff seeks to commit the Defendants for failing to disclose the 25.05.2015 Termination Agreement on the basis of such alleged facts. It would not be right for the contempt trial to effectively be expanded in scope to cover these additional alleged deliberate breaches which have not been properly particularised in the Amended Contempt Statement.

D4.  The Disputed P Evidence of Ds’ Involvement in Termination

48.This leaves Qiu’s Affirmation paragraphs 37, 90, 91, 93, 95 to 103, the second sentence of paragraph 104, and exhibits HQHR-4 (the Supplemental China Beef Shareholders’ Agreement) and HQHR-3 (correspondence relating to this agreement). The Plaintiff relies on the Supplemental China Beef Shareholders’ Agreement to show that the JV Company’s repurchase rights were not transposed as alleged, and the correspondence to show that the Defendants were involved in the preparation of the 25.05.2015 Termination Agreement; the nature of the Plaintiff’s reliance on these documents is explained in the aforementioned paragraphs of Qiu’s Affirmation.

49.The Supplemental China Beef Shareholders’ Agreement refers to the cancellation of rights under cl.17 of the China Beef Shareholders’ Agreement (save for the right under cl.17.1(d)). The rights of the JV Company under cl.6 of the HHCG Investment Agreement to require repurchase of its HHCG shares had been transposed to this clause 17. However, even if the Supplemental China Beef Shareholders’ Agreement cancelled some of the rights in the China Beef Shareholders’ Agreement, this does not affect the Defendants’ case that the JV Company’s rights under cl.6 of the HHCG Investment Agreement to require repurchase of its HHCG shares had been transposed to the China Beef Shareholders’ Agreement, so that the termination of the HHCG Investment Agreement by means of the 25.05.2015 Termination Agreement was insignificant. In other words, the Supplemental China Beef Shareholders’ Agreement does not in fact go to show that “repurchase rights in the HHCG Investment Agreement were not transposed into the [China Beef] Shareholders’ Agreement”.[9] Insofar as the Plaintiff seeks to argue that rights in the HHCG Investment Agreement were not transposed into the China Beef Shareholders’ Agreement, it has already set out in paragraph 71 of Qiu’s Affirmation a list of those rights.

50.The Supplemental China Beef Shareholders’ Agreement is therefore irrelevant to the issues in these contempt proceedings. As Ms Tong observed, it varies the China Beef Shareholders’ Agreement, and is not about the HHCG Investment Agreement or the 25.05.2015 Termination Agreement.

51.Ms Tong also submitted that the only repurchase right which was important to the Plaintiff was the Repurchase Right under cl.17.1(d), which was expressly preserved in the Supplemental China Beef Shareholders’ Agreement. However, this is not something that I can determine definitively at this interlocutory stage.

52.Ms Tong went on to submit that in any event, at best, Mr Barlow’s argument goes to the credibility of the Defendants’ defence in these contempt proceedings, so that the Supplemental China Beef Shareholders’ Agreement should be excluded by reason of the finality rule. I agree. The agreement does not relate to the primary issue of whether the Defendants deliberately failed to disclose the 25.05.2015 Termination Agreement. Mr Barlow only seeks to use it to cast doubt on the credibility of the Defendants’ claim that they inadvertently failed to disclose the 25.05.2015 Termination Agreement.

53.As for the chain of email correspondence in HQHR-3, Mr Barlow says that this shows “the deep involvement”[10] of the Defendants in preparing the 25.05.2015 Termination Agreement, contrary to their claim that it was a mere formality dealt with by lawyers or junior staff.

54.Ms Tong points out that at most, only two of the emails show any involvement on the part of the Defendants.

54.1  There is an email of 19th May 2015, between different teams of lawyers involved in the restructuring exercise; the sender observed that her team had not yet received “the termination agreements of other investment agreements” and asked for an explanation of the situation and circulation of the signed termination agreements. The email was copied to the 1st and 2nd Defendants. (The draft of the 25.05.2015 Termination Agreement was subsequently circulated amongst the lawyers without copying in the Defendants, in an email of 29th May 2015.)

54.2  The other email is one of 31st May 2015, again passing between lawyers, and this time copied to the 1st Defendant, asking the recipient lawyer for feedback “on the termination agreement of the investment agreement”, which was presumably the 25.05.2015 Termination Agreement. (It also referred to a request to include a particular provision in that agreement and the 1st Defendant’s discussion of the same, although a subsequent email clarified that the 1st Defendant had in fact been referring to the Supplemental China Beef Shareholders’ Agreement.)

54.3  The other emails relate to the Supplemental China Beef Shareholders’ Agreement.

55.I agree with Ms Tong that the two emails copied to the Defendants would at most go to the credibility of the Defendants’ claims that their failure to disclose the 25.05.2015 Termination Agreement was inadvertent. They do not constitute primary evidence of whether, when dealing with disclosure in 2023, the Defendants deliberately chose not to disclose the 25.05.2015 Termination Agreement. Applying the finality rule, they should not be admitted.

56.Qiu’s Affirmation paragraphs 37, 90, 91, 93, 95 to 103, the second sentence of paragraph 104, and exhibits HQHR-4 and HQHR-3 should therefore not be admitted for the hearing of the contempt proceedings.

E.  THE DISPUTED D EVIDENCE

E1.  Whether issue estoppel

57.The Plaintiff says that the Main Disputed Li Paragraphs are an abuse of process, as they seek to relitigate (1) whether documents falling within classes 2(n) and 2(o) of the Discovery Order are relevant to the trial of the Main Action, (2) whether it is necessary for the Defendants to comply with the terms of the Discovery Order, and (3) whether the Defendants have previously breached the Discovery Order and the 1st and 2nd Unless Orders.

58.I agree with Ms Tong that the Defendants are not seeking to reopen these issues.

58.1  On the first point, the Defendants’ primary defence to the charge of contempt is that the 25.05.2015 Termination Agreement does not fall within the scope of classes 2(n) and 2(o) of the Discovery Order at all, and not that documents falling within the classes are not relevant to the issues at the trial of the Main Action. As the Plaintiff acknowledges,[11] one of the issues to be determined in these contempt proceedings will be the meaning and operation of the orders said to have been breached. It must be open to the Defendants to argue that on the proper construction of the Discovery Order, the 25.05.2015 Termination Agreement does not fall within it.

58.2  On the second point, the Defendants’ defence is not that they do not need to comply with the Discovery Order. What they are saying is that they did not need to disclose the 25.05.2015 Termination Agreement in order to be in compliance; or that if they did, their non-compliance was inadvertent.

58.3  On the third point, the Plaintiff says that the court has repeatedly determined that the Defendants were in breach of the Discovery Order, given that the two unless orders were made and that the Defendants needed to apply for relief from the sanctions. However, there has of course not been any determination that the Defendants were in breach of the Discovery Order in failing to disclose the 25.05.2015 Termination Agreement, as this document was not the subject of specific consideration at the time that the two unless orders were made, and when relief from sanctions was given in the 31.08.2023 Decision.

E2.  Whether irrelevant

59.The Plaintiff then says that the Main Disputed Li Paragraphs are irrelevant to the present contempt proceedings; they are relevant only to the trial of the Main Action. They deal with the background to the joint investment, the Red-Chip Restructuring, how the 25.05.2015 Termination Agreement came into being, the dismantling of the Red-Chip Restructuring, and the Defendants’ waiver of the Repurchase Right. They set out a version of events hotly disputed by the Plaintiff.

60.I accept Ms Tong’s submission that these matters are in fact relevant to the Defendants’ defence in the contempt proceedings. As analysed in the table in her skeleton argument, the contents of the Main Disputed Li Paragraphs form the basis for the Defendants’ arguments that:

60.1  on a proper construction of the Discovery Order, the 25.05.2015 Termination Agreement does not fall within classes 2(n) and (o) of the Discovery Order, as the agreement did not waive the Repurchase Right, which had already been transposed to the China Beef Shareholders’ Agreement, and

60.2  if the construction argument is wrong, the circumstances in which the 25.05.2015 Termination Agreement came about explains why the Defendants’ non-disclosure could be said to be inadvertent - the events in question took place a long time ago, the document was a mere formality and was handled by lawyers and junior staff, the 2nd Defendant had left the employment of the CDH group in 2020, and so on.

61.I further note that the Plaintiff has responded to the Main Disputed Li Paragraphs in its reply evidence, so that it will not be the case that the court is presented with only a one-sided version of events. Furthermore, it is not being suggested that the court will be unable to exclude from consideration any irrelevant material.

E3.  Whether self-serving statements

62.The Plaintiff says that evidence of previous self-serving statements is inadmissible, citing Fox v General Medical Council [1960] 3 All ER 225 at 230C and E-G (Lord Radcliffe). Most of the Main Disputed Li Paragraphs are said to be inadmissible on this basis.

63.However, what Fox was concerned with was an out-of-court statement by the accused to his friend prior to the hearing before the disciplinary committee. It was held that such a statement was not admissible as evidence of the truth of the statement. The statement merely showed that the account given by the accused at the hearing was consistent with an account he earlier gave to a third party.

64.The Main Disputed Li Paragraphs clearly do not consist of such out-of-court statements. On the contrary, they are statements which the Defendants make to the court as part of their defence.

E4.  Whether breach of RHC O.41 r.5(1)

65.The Plaintiff says that the second sentence of paragraph 4 of Li’s Affirmation (“Where they are not within my own knowledge, they are true to the best of my knowledge, information and belief.”), and paragraph 84 (which begins “I am advised and verily believe that Cheng J did not place any particular reliance on the existence or absence of the 25.5.2015 Termination Agreement…”) are inadmissible hearsay evidence.

66.There was some debate as to whether the proceedings are interlocutory or final in nature, Mr Barlow arguing that they were final and therefore O.41 r.5(1) applied so as to prohibit hearsay evidence in the affirmations, and Ms Tong arguing that they were interlocutory so that O.41 r.5(2) applies and hearsay evidence is allowed. It seems to me that it is not necessary to resolve this issue. The Court of Appeal has held that affidavit evidence is used in committal proceedings, pursuant to O.38 r.2(3), and that such affidavits may contain hearsay evidence. See Numeric City Ltd at [23] to [27] (Poon JA, as he then was).

67.Whilst affidavits should be kept free of the opinions of the parties’ legal advisers on matters of law, in the present case, I would observe that the opinion expressed in paragraph 84 of Li’s Affirmation as to the 31.08.2023 Decision was referred to so that evidence of factual matters to support the opinion (namely, the way in which the parties’ arguments had been put in arguing the Relief Summons) could be adduced in the affirmation.

68.In the circumstances, there is no basis to strike out parts of Li’s Affirmation on the grounds that they contain inadmissible hearsay evidence.

69.As Ms Tong pointed out, it is surprising that the Plaintiff advanced this ground at all, given that Qiu’s Affirmation also contains a statement to the effect that where matters deposed to are not within Mr Qiu’s own knowledge they are based on information from the sources identified, and believed to be true; and then a number of paragraphs prefaced with the statement “I am advised by the Plaintiff’s legal advisers and I believe that…” (or a statement to similar effect).

70.I said earlier that I would consider the Plaintiff’s arguments by reference to Li’s Affirmation, following Mr Barlow’s approach. However, for this ground, I will also briefly mention Xiong’s Affirmation, as it goes beyond Li’s Affirmation. Xiong’s Affirmation contains a few paragraphs in which the 2nd Defendant (Mr Xiong) stated his understanding of various events (last sentence in paragraph 25, paragraph 27, paragraph 32, paragraph 34).

70.1  Insofar as these paragraphs are relied upon as evidence of Mr Li’s understanding of the events, they are not hearsay evidence at all.

70.2  Insofar as they are relief upon as evidence of the events themselves, they are hearsay, but not inadmissible as earlier observed. It is therefore not a case for striking out. If necessary, it can be pointed out again at trial that paragraphs in question contain matters of which the 2nd Defendant has no personal knowledge, and the weight of the evidence should be considered accordingly. Cf. China Shanshui Cement Group Ltd v Zhang Caikui, unreported, HCMP 1574/2016, 6th January 2017 at [6] (Au-Yeung J).

F.  DISPOSITION

F1.  The Defendants’ Summons

71.I therefore order that:

71.1  Qiu’s Affirmation paragraphs 37, 54 to 56, 90, 91, 93, 95 to 104, and exhibits HQHR-1, HQHR-3 and HQHR-4, and Qiu’s 2nd Affirmation and exhibit HQHR-5, be struck out; and

71.2  the Plaintiff have leave to refile within 7 days amended versions of Qiu’s Affirmation and Qiu’s 2nd Affirmation, bearing notation to indicate amendment in accordance with this decision, and with the relevant paragraphs redacted and with the relevant exhibits removed.

72.I further make a costs order nisi that the Plaintiff is to pay the costs of and occasioned by the Defendants’ Summons, with certificate for two counsel, to be summarily assessed.

73.The Defendants have already lodged their statement of costs. The Plaintiff is to lodge and serve a list of objections, in bullet point form, limited to two pages, within five days. The Defendants have leave to lodge and serve a reply, in bullet point form, limited to two pages within three days thereafter.

F2.  The Plaintiff’s Summons

74.I dismiss the Plaintiff’s Summons.

75.I further make a costs order nisi that the Plaintiff is to pay the costs of and occasioned by the Plaintiff’s Summons, with certificate for two counsel, to be summarily assessed. Ms Tong sought an order for indemnity costs on the basis that the Plaintiff sought to unfairly prevent the Defendants from relying on evidence in opposition to the serious charges of contempt being brought against them, on unmeritorious grounds. Whilst I agree that the grounds were unmeritorious, I would not say that there is some special or unusual feature which justifies an award of indemnity costs (Town Planning Board v Society for Protection of the Harbour Ltd (2004) HKCFAR 114 at [15], Li CJ).

76.The Defendants have already lodged their statement of costs. The Plaintiff is to lodge and serve a list of objections, in bullet point form, limited to two pages, within five days. The Defendants have leave to lodge and serve a reply, in bullet point form, limited to two pages within three days thereafter.

Mr Barrie Barlow SC leading Ms Terri Ha, instructed by Chiu, Szeto & Cheng, for the Plaintiff

Ms Sara Tong SC leading Mr Keith Chan, instructed by Deacons for the 1^st to 3^rd Defendants