China Evergrande Group (in Liquidation) v. Pricewaterhousecoopers (A Firm) and Others

On 26 August 2026, Deputy High Court Judge Patrick Fung SC handed down judgment in HCA 548/2024, dismissing PricewaterhouseCoopers International Limited's ("International") strike-out application against China Evergrande Group (In Liquidation)'s tort claim. Mr Adrian Beltrami KC, Mr Charles Manzoni SC and Ms Cherry Xu, instructed by Karas So LLP, acted for the successful Plaintiff.

The Liquidators sue International in tort for about RMB38.096 billion arising from PwC HK and PwC Zhong Tian's allegedly negligent audits of China Evergrande's Group Consolidated Financial Statements for FY2018 to FY2020. International sits at the apex of the PricewaterhouseCoopers global network as an English company limited by guarantee. There was no contract, communication or dealing between China Evergrande and International at any material time, and International was not qualified to audit in Hong Kong and received no fee.

The Plaintiff alleges International bore responsibility because it caused reviews of the audits totalling 200 days (§§57A, 57B), possessed powers of "supervised remediation" over member firms (§52), and admitted in a 2024 press release that PwC Zhong Tian's Hengda audit work "fell unacceptably below the standards [International expects] of member firms of the PwC network" (§82). International applied to strike out under O. 18 r. 19(1)(a), (b) and (d) and the inherent jurisdiction.

Holding

The Court held that: (1) The claim was not unarguable. Applying Yue Xiu Finance Co Ltd v Dermot Agnew [1996] 1 HKLR 137, the court would not strike out a fact-sensitive claim where discovery is required. Pleaded as a commission (reviews International caused to be performed) rather than omission, the case was at least arguable on the threefold test or the assumption of responsibility test (§§87-89). (2) Hong Kong law on the duty of care owed by a network parent over member firm audits remains in development; only three local authorities (Yue Xiu, Luen Hing Fat, Dah Sing) address the area, and the CFA's recent restatement in Wong Chi Hung v Lo Wing Pun [2026] HKCFA 14 confirms UK authority is persuasive but not binding (§§69-72, 91-92). (3) Clause 7 of the Terms of Business (excluding claims against other PwC entities) was not a knock-out. International, as network apex, could not plainly be a "subcontractor", and the reasonableness test under the Control of Exemption Clauses Ordinance (Cap. 71) was fact-sensitive and required trial (§§103-106). (4) The Gilchrist affidavits (solicitor) were inadequate. Based on public documents and unspecified "personal knowledge" rather than instructions, they failed to address International's professional indemnity coverage, monitoring role, or control powers (§§95-100).

The summons was dismissed, with costs of HK$3,336,709 on a summary basis.

For liquidators and claimants pursuing group auditors and their parents, this confirms Hong Kong courts will permit a tort claim to proceed against a network umbrella entity where the pleaded case combines governance powers, admissions, and direct involvement in reviews. For defendants seeking early dismissal, a solicitor's affidavit built from public documents, without instructions, will not discharge the burden on a strike-out application involving disputed factual matters.