P1 and Another v. D

HCCT 59/2023

[2025] HKCFI 5584

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 59 OF 2023

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BETWEEN

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DECISION

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1.  Introduction

1.1By my judgment handed down on 12 June 2025 (“Judgment”)[1], I dismissed Ps’ application to set aside the PFA.  This is my decision on Ps’ application by their summons dated 26 June 2025 (“Summons”)  for leave to appeal against the Judgment.

2)  The proposed appeal grounds

2.1Ps do not challenge my rejection of the infra petita ground.  The proposed appeal grounds are directed at my treatment of the WPP issue.  At Judgment §§4.1-4.2, I set out what I understood to be Ps’ complaints on the WPP Issue by reference to 4 headings, namely (1)  the Procedural Complaint, (2)  the Bias Complaint, (3)  the Unfair Treatment Complaint and (4)  the Prejudgment Complaint. 

2.2The proposed appeal grounds do not seek to challenge my rejection of the Unfair Treatment Complaint and the Prejudgment Complaint.  In the draft Notice of Appeal (“DNOA”)  annexed to the Summons, the overarching error identified is that I had erred in concluding that Ps failed to show that: (1)  the PFA was in conflict with the public policy of Hong Kong and (2)  the arbitral procedure was not in accordance with the agreement of the parties (DNOA §1).  It is said that the foregoing erroneous conclusion was precipitated by a failure on my part to recognize that the apparent bias that infected the decision-making of the Tribunal at both the time that the Tribunal decided the Third Privilege Application and at the time of the PFA was as a result of: (a)  the procedure that the Tribunal adopted for decision the question of privilege and (b)  the fact that the Tribunal had read and considered in detail a significant amount of evidence that was, in fact, and as held by the Tribunal, to be covered by without prejudice privilege (DNOA §2).

2.3DNOA §§3-7 are directed at my treatment of the Procedural Complaint and DNOA §§8-15 at how I dealt with the Bias Complaint.  Two general propositions emerge from Ps written submissions:

(1)  I had erred in dealing with the Procedural Complaint and the Bias Complaint separately, and in doing so, it is at least reasonably arguable that I had failed to apply the correct test;

(2)  I had misunderstood Ps’ challenge to be based on actual bias when in fact it was based on apparent bias, and had I not committed that error, my focus should be on the question of whether the circumstances considered would give rise to a real possibility of bias instead of whether they justified a finding of actual bias.

2.4As articulated in their written submissions, Ps say that the identified errors meet the requisite merit threshold, and in any event, 3 matters are questions of general public importance warranting appellate guidance.  Those issues are:

(1)  There is presently no authority in Hong Kong which considers the voluminous amount of scientific and academic literature placed before the court to support the proposition that decision-makers cannot, in fact put inadmissible evidence out of their minds (“Q1”);

(2)  Whether an arbitral tribunal can appoint a privilege expert in the absence of consent from the parties (“Q2”);

(3)  Whether there should be any distinction between apparent bias arising in connection with prior relationships and that arising from exposure to WPP (“Q3”).

2.5I have received helpful submissions from the same teams of advocates. In the following sections, I shall deal with the proposed appeal grounds as elaborated in Mr Manzoni’s written submissions.

3.  The applicable principles

3.1Save one aspect, there is no dispute between counsel on the applicable principles.

3.2Pursuant to section 81(4)  of the Arbitration Ordinance Cap 609, leave of the court is required from the court for any appeal from a decision of the court under Article 34 of the UNCITRAL Model Law.  It is common ground that, for leave to be granted, the proposed appeal must have a reasonable prospect of success: American International Group Inc & Anor v Huaxia Life Insurance Co Ltd, HCCT 60 of 2015, 6 December 2016 §§8-9 and Pan Ocean Container Suppliers Co Ltd v Spinnaker Equipment Services Inc [2025] HKCFI 700 §2.1.

3.3The one aspect which has generated some debate between counsel is what is required by the merit threshold.  Mr Manzoni emphasizes that the threshold does not present a high bar and disagrees with Mr Man’s submission that, since Ps’ intended appeal challenges the court’s factual findings, “the threshold for challenging such decision is high”.

3.4I do not understand Mr Man to have adopted the position that, where a proposed appeal is against the court’s factual findings, the reasonable prospect of success threshold is displaced and replaced by a more stringent threshold. As has been stated in LY v HW [2022] HKCFI 3016 §6, the approach of an appellate court adopts a spectrum of appropriate respect to the decision of the lower court, at one end of the spectrum are decisions premised on factual findings and at other end lie questions of law.  I can readily accept Mr Man’s proposition that, in the context of an appeal against pure factual findings, the reasonable prospect of success test is inherently more difficult to meet given that the appellate court would only interfere with the lower court’s factual findings on limited bases.  See, for example, Tamang Shushma v Pizzaexpress (Hong Kong)  Limited [2025] HKCA 803 in which G Lam JA observed as follows:

“[3] Pursuant to section 63A(2)  of the District Court Ordinance (Cap 336), leave to appeal shall not be granted unless the court is satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard.

[15] It will be seen that much of the argument raised seeks to challenge the judge’s assessment of the evidence and findings of fact. Before dealing with these grounds in turn, we remind ourselves of the well-established principles governing an appeal against a trial judge’s findings of fact. The threshold faced by an appellant is high. The appellate court will only intervene when it is satisfied that the trial judge’s findings are “plainly wrong”. The court has to be satisfied that the trial judge had fallen into palpable error in his finding of fact, such as where the finding was one (a)  which there was no evidence to support; (b)  which was based on a misunderstanding of the evidence; or (c)  which no reasonable judge could have reached…” (emphasis added)

3.5I acknowledge that not all the proposed appeal grounds are directed at the factual findings made in the Judgment and some of them are concerned with matters of principles and the correct approach which ought to be adopted by the court.  In coming to my decision, I have borne firmly in mind the different “shades” of the requisite merit threshold, depending on the nature of the proposed appeal grounds. 

4.  Not adopting a wholistic approach

4.1DNOA §§3-4 complain that I failed to apply the approach set out in Deacons v White & Case LLP & Ors (2003)  6 HKCFAR 322 §27, namely in assessing the risk of apparent bias, the proper approach is that all the circumstances which have a breading on the suggestion that the decision maker was biased should be ascertained and considered.  Mr Manzoni complains that I had considered the Bias Complaint “in isolation” of the Procedural Complaint.

4.2In my view, DNOA §§3-4 proceed on an erroneous premise and is based on an incorrect reading of the Judgment.  I say this for the following reasons.

4.3First, it is true that the Judgment dedicated different sections to deal with the Procedural Complaint (§§4.3-4.7)  and the Bias Complaint (§§5.1 to 5.23).  However, as is expressly stated at Judgment §5.2, I was aware of the approach and recited the approach set out at Deacons §27.  At Judgment §5.11, in addressing the Bias Complaint, I had expressly noted Ps’ reliance on the matters forming the subject matters of the Procedural Complaint set out at §4.1(1).  The matters set out at Judgment §4.1(1)  are precisely those set out at DNOA §4(a)  (set out below).

4.4Secondly, in the earlier part of the Judgment at §§4.3-4.7, I had rejected Ps’ complaint levied against how the Tribunal had procedurally dealt with the Privilege Applications.  In particular, I formed the view that the Procedural Complaint did not provide an independent or justified ground to set aside the PFA.

4.5In particular, in addressing the Bias Complaint by reference to the fictitious bystander test, I expressly took into account the Procedural Complaint at Judgment §5.18:

“Drawing the above threads together, even by reason of the procedural steps the Tribunal had put itself in a position to decide on the Third Privilege Application shortly before he evidentiary hearing, the fictitious bystander is taken to have known the following matters…”

4.6It therefore seems to me that the complaint is in reality one on the weight (or lack thereof)  I attached to the Procedural Complaint.  As is tolerably established, the Court of Appeal is not the forum to make a second attempt when the fail in the first instance, in the hope that the Court of Appeal will form different views to be attached to a particular factor: Beijing Renji Real Estate Development Group Co Ltd v Zhu Min [2025] HKCA 748 §71.

4.7Third, it is important to identify the nature of Ps’ complaints to ascertain whether they are ones premised on treating the Bias Complaint “in isolation” of the Procedural Complaint.  The complaints made at DNOA §4 are that: had I considered the Privilege Ruling and the Bias Complaint in the context of the matters raised by the Procedural Complaint, I would and should have found that both the Privilege Ruling and the PFA were infected by unconscious bias:

(1)  DNOA §4(a): The Privilege Ruling was infected by unconscious bias in that, having left the matter so close of trial, having refused the Expert Application and to address the matter by way of a privilege log, and with the significantly expanded contested material before it, the Tribunal would have been forced to recuse itself unless it found that at least some of the material was not privileged.  That invidious position would, and did create an unconscious bias to find that some material was not privileged;

(2)  DNOA §4(b): The PFA was infected by the unconscious bias that the Tribunal had looked at and read all of the material that had been contested, including the significant amount of material that it ultimately found was without prejudice.

4.8It seems to me plain that the above complaints made at DNOA §§4(a)  and (b)  are not ones premised on a failure to deal with the Bias Complaint “in isolation” of the Procedural Complaint but, on Ps’ own formulation, complaints made against the Procedural Complaint and the Bias Complaint individually and not cumulatively. 

4.9For the above reasons, I am not persuaded that DNOA §§3-4, insofar as they allege that I had dealt with the Bias Complaint “in isolation” of the Procedural Complaint, are reasonably arguable. 

4.10The conclusionary complaint at DNOA §4(a)  (the italicized part)  was expressly rejected as a matter of factual finding at Judgment §5.21.  The complaint at DNOA §4(b)  was dealt with at Judgment §§5.18-5.20.  The correctness my conclusions are subject to other appeal grounds and are dealt with below.

5.  Misunderstanding Ps’ complaint

5.1In relation to conclusionary complaint made at DNOA §4(a), DNOA §§5 and 6 assert that at Judgment §5.21 (1)  I had erroneously taken the view that Ps had suggested actual bias when in fact Ps only suggested that the Tribunal was unconsciously biased in reaching the Privilege Ruling and (2)  I had erroneously held the fact that the Privilege Ruling was not challenged against Ps, when the Privilege Ruling was not capable of challenge as it was an interlocutory ruling of the Tribunal.

5.2In relation to the 1^st complaint above, as pointed out by Mr Man, my factual rejection of Ps serious allegation that the Tribunal felt compelled to rule against privilege in order to avoid refusal was a conclusion based on the complete lack of evidentiary basis in Ps’ contention.  I do not understand the basis for suggesting that I had proceeded on the basis of actual bias when (1)  the entire Judgment did not describe Ps’ complaints as being premised on actual bias and (2)  the Judgment only referred to unconscious bias.

5.3In the foregoing regard, and also related to the 2^nd complaint above, I had set out, at Judgment Section 3, a relatively detailed narrative of the procedural steps leading to the Privilege Ruling and the substance of the Privilege Ruling itself.  I had observed at Judgment §4.6(4)  that, in the process, the Tribunal did not ignore the risk of unconscious bias and dealt with the issue on multiple occasions.  At Judgment §4.7, I then recorded Mr Manzoni’s clarification that there was no substantive challenge to the correctness of the Tribunal decisions on the Privilege Applications. 

5.4DNOA §6 is a mischaracterization of the exercise embarked upon in the Judgment.  I did not hold the fact of non-challenge of the Privilege Ruling against Ps.   It was, as pointed out by Mr Man, simply an evaluation of whether there was any evidential basis to justify the serious aspersion made against the Tribunal.

5.5In my view, DNOA §§5-6 are not reasonably arguable.

6.  The issue relating to the Tribunal’s power to appoint a privilege expert

6.1DNOA §7 contends that I had erred by taking into account “the doubt expressed by the Tribunal whether it could appoint a privilege expert without the parties’ agreement” at Judgment §5.18(3).  As I understand Ps’ appeal ground, they appear to suggest that I should reach a contrary conclusion, namely that the Tribunal did have the power to appoint an independent privilege expert pursuant to Article 3.8 of the 2020 IBA Rules.

6.2The Expert Application was dealt with at Judgment §§3.25-3.28 as part of the procedural background.  The text of Article 3.8 of the 2020 IBA Rules was set out at footnote 4.  At Judgment §3.37(3)  and (4), I set out how the Expert Application was further dealt with in the Privilege Ruling.

6.3The next reference to the issue is at Judgment §5.18(3)  at which the Tribunal’s doubt was a factor taken into account in the fictitious bystander assessment.

6.4It bears emphasis that (1)  I was not required to, and did not, make any findings on the correctness of the doubt expressed by the Tribunal and (2)  it is a fact that the Tribunal did express such a doubt. 

6.5Where it is Ps’ own case that in this leave application that all relevant circumstances must be taken into account, it is unarguable that the doubt expressed by the Tribunal (irrespective of whether it was correct)  was not a relevant consideration.

6.6With respect, DNOA §7 has no substance.

7.  The Bias Complaint issues

7.1DNOA §8 attacks Judgment §§5.13-5.14 at which I accepted Mr Man’s proposition that the considerations set out in the Super Quo line of cases (Judgment §5.8), which dealt with the situation where the court or tribunal had a relationship with one of the parties, could not be directly transposed to WPP cases.

7.2As a result of the above error, it is said that I was wrong in (1)  taking into account the Tribunal’s own assessment of its ability to disregard the WPP material (DNOA §9), (2)  placing emphasis on the objective manner in which the Tribunal expressed its determination (DNOA §§10-11), (3)  regarding as relevant the incremental effect of the WPP content on the issues in dispute (DNOA §§12-13)  and (4)  failing to appreciate that, by reason of the insidious nature of unconscious bias, the materiality of the WPP material was not relevant, and a fortiori, P’s approach of not adducing the WPP material and not challenging the factual findings of the Tribunal in the procedural rulings, were both correct and appropriate  (DNOA §§14-15).

7.3It seems to me useful to take a step back to assess what is the collectively effect of Ps’ appeal grounds.  Were Ps’ appeal grounds correct, in assessing unconscious bias arising from having been exposed to WPP material (1) the court should not place any or any undue weight on a tribunal’s own assessment of its ability to disregard the WPP material, (2)  the court should not assess the materiality of the WPP material or (3)  the challenging party has no obligation to place the WPP material before the supervisory court.

7.4In other words, were all the appeal grounds established, there is very little the supervisory court can take into consideration and Ps are (effectively)  advancing a proposition that exposure to WPP material would (almost)  automatically disqualify an arbitral tribunal.  As Mr Man observed, the foregoing cannot be right and is irreconcilable (or at least inconsistent with)  with Ps’ acknowledgment (as recorded at Judgment §5.10)  that (1)  the issue of unconscious bias is fact-sensitive and (2)  the determination of WPP by a tribunal is built into the arbitral scheme.   

7.5I now address the proposed appeal grounds.

7.6That there is a distinction between cases involving WPP and prior relationships is plainly recognized in the authorities cited at Judgment §5.13.  In my view, DNOA §8 is not reasonably arguable.

7.7As regards DNOA §9, the proposition that, in WPP cases, it is relevant to take into account the Tribunal’s express statement that it was capable of disregarding, and would disregard, WPP material is well-grounded in authority. Ps’ reliance on Locabail (UK)  Ltd v Bayfield Properties Ltd [2000] QB 451 (Judgment 5.8(1))  for the proposition that the Tribunal’s own statement is irrelevant is a recycling of the argument made and rejected by me (Judgment §§5.13, 5.15 and 5.17).

7.8As regards DNOA §§10-11, that the objective manner in which the Tribunal expresses its determination is a relevant consideration in the court’s assessment is supported by the appellate authority set out at Judgment 5.17(1).

7.9As regards DNOA §§12-13, the pertinent context of the present case was:

(1)  Only Category 3 material was held to be protected by WPP and the Category 3 material came into existence at a time which was chronologically proximate to the Category 1 and 2 materials (Judgment §5.16);

(2)  The chronology was that Ps invited the Tribunal to consider the First and Second Privilege Applications and the paradigm shift occurred in the Third Privilege Application with the “blossoming” in the volume of contested material (Judgement §§4.1(1)  and 4.6);

7.10As submitted by Mr Man, as the WPP material was not produced before the court means that, one of the factors considered by the fictious bystander was that there was no objective basis to assess the incremental effect of Category 3 on the issues in dispute (Judgment §5.18(5)).

7.11As regards DNOA §§14-15, Ps complain that I had cited, but failed to, follow AZ v BY [2003] EWHC 2388 (Judgment §5.7).  As pointed out by Mr Man, AZ does not stand for the proposition that materiality is irrelevant but for the proposition the court still has to assess materiality of the WPP material to ascertain whether they give rise, objectively, to a fear of partiality. 

7.12For all the above reasons, I am of the view that the proposed appeal grounds, whether individually or collectively, do not surmount the requisite merit threshold.

8.  Points of general public importance

8.1As regards Q1, Mr Manzoni says that appellate guidance is desirable, as there is presently no authority in Hong Kong which considers the proposition that decision-makers cannot, in fact, put inadmissible evidence out of their mind.

8.2The scientific literature was considered by the Tribunal to be of academic interest (Judgment §3.37(8)).

8.3The effect of the scientific material was addressed at Judgment §5.9, and after referring to the scientific material, Judgment §5.10 then records Ps concession that the exposure to WPP material would not, as a matter of course, disqualify an arbitral tribunal and that the issue of unconscious bias is fact-sensitive. 

8.4As such, Judgment §5.18(3)  simply states the scientific material was one of the considerations which would be taken into account by the fictitious bystander amongst a basket of factors, but importantly in the context that the scientific material had been considered by the Tribunal and the concerns expressed in the scientific literature had to be balanced against the duties imposed upon the Tribunal to rule on admissibility. 

8.5Where, as here, the relevance or the weight of the scientific material is fact-sensitive, I agree with Mr Man that Q1 is not a question of general public importance.

8.6As regards Q2, I have already dealt with the relevance of the issue of the Tribunal’s power to appoint a privilege expert at §§6.2-6.4 above.  In that context, Q2 does not arise from the Judgment as I never made a decision on the issue.

8.7As regards Q3, I agree with Mr Man that the relevant principles are well-settled, as discussed in the context of DNOA §8 above.

9.  Conclusion

9.1For all the above reasons, I dismiss the Summons. 

9.2I also make a costs order nisi that Ps are to pay to D the costs of the Summons on an indemnity basis, with a certificate for 2 counsel, to be taxed if not agreed.

Mr Charles MANZONI, SC leading Mr Simon CHAPMAN (Solicitor Advocate), instructed by Herbert Smith Freehills, for the 1^st and 2^nd Plaintiff

Mr Bernard MAN, SC leading Ms Esther MAK, instructed by Messrs Gall, for the Defendant