Jersey Unreported Judgments

Companies - decision and costs

[2021]JRC006

Royal Court

(Samedi)

13 January 2021

Before     :

Advocate Matthew John Thompson, Master of the Royal Court

 

Advocate W. A. F. Redgrave for the Plaintiff.

Advocate J. C. Turnball for the Defendant.

CONTENTS

		Paras
1.	Introduction	1
2.	Background	2-21
3.	Pleadings	22-30
4.	Advocate Redgrave's submissions	31-108
	Overarching observations
	The Relevant Legal Principles
	Misleading the Court
	WeChat
	Personal email accounts and devices in China
	State Secrets
	The Ning Ren affidavits
	A risk of prosecution
	Mr Cheung
	Third party privilege
	TMI's activities in China
5.	Advocate Turnbull's submissions	109-146
	Relevant legal principles
	WeChat
	The affidavits of Ning Ren
	Misleading the court
	The defendant's compliance with the disclosure orders
	Mr Cheung
	Other custodians
	Risk of prosecution
	Documents held by third parties
	Privilege
6.	Advocate Redgrave's reply	147
7.	Decision	148-159
8.	WeChat, email and sources	160-173
9.	Documents belonging to third parties and privilege	174-188
10.	State Secrets	189-208
11.	Risk of prosecution	209-224
12.	Conclusions on breaches of orders	225-226
13.	The sanction requested	227-245
14.	Costs	246-247

judgment

the MASTER:

Introduction

1.        This judgment contains my decision on whether the defendant should be debarred from defending the plaintiff's claim and pursuing its counterclaim on the basis of allegations that the defendant has misled the court, has failed to conduct its discovery exercise in accordance with previous court orders, and has withheld substantial quantities of material from inspection without proper justification.

Background

2.        The starting point to consider the issues raised by the plaintiff's application is the various discovery orders I made.  The first relevant date is a hearing on 6^th November 2019 which led to an Act of Court of the same date.  In this judgment I refer to this hearing as the November hearing.  Paragraphs 1 to 5 of this act contained the following orders:-

"1.       the deadline for the Defendant to provide discovery is extended to close of business Friday, 28^th January, 2020 for all documents held outside China, such order to be a final order;

2.        the deadline for the Plaintiff to provide discovery in respect of all documents held in China is also extended to close of business Friday, 28^th January, 2020, such order also to be a final order, subject to the remaining paragraphs of this Act of Court;

3.        the Defendant shall use its best endeavours to obtain approval from the relevant authorities in China to make discovery and provide inspection of any documents held within China;

4.        the Plaintiff's list of documents verified by affidavit shall be filed with the Judicial Greffe by close of business Friday, 15^th November, 2019, such list of documents to be released to the Defendant either when the Parties agree this may occur or when ordered to do so;

5.        a further hearing shall take place at 2:30 p.m. on Wednesday, 15^th January, 2020 for half a day to consider whether any further extensions of time for the provision of documents located in China is required;"

3.        At the hearing fixed for 15^th January, the following orders were made as set out in the Act of Court of that date at paragraphs 1 to 4 as follows:-

"1.       the deadline for the Defendant to provide discovery in respect of all documents held in China is further extended as follows:-

a.        by 5:00 p.m. Friday, 24^th January, 2020 the Defendant shall provide in English to the Plaintiff a list of all of the 1,595 documents that the Defendant considers to be disclosable referred to at paragraph 28 of the second affidavit of Niall Hugh MacDonald sworn on 6^th January, 2020; the form of the list shall comply with Practice Direction RC17/08;

b.        the Defendant shall further procure by the same date that any documents so listed for disclosure shall have been uploaded to the 'Relativity' programme for review and then downloaded and provided to the Plaintiff's legal advisers by Secure File Transfer Protocol ("SFTP") or hard drive;

c.        by 5:00 p.m. Friday, 7^th February, 2020, the Defendant shall provide in English a list of each of the 8,777 documents which are potentially discoverable, but which the Defendant does not wish to disclose as far as they are relevant or make available for inspection, describing as far as possible each document individually and why inspection is being withheld by reference to Article 9 of the Law of the Peoples Republic of China ("PRC") on Guarding State Secrets or Article 219 of the Criminal Law of the PRC or any other statute relied upon with as much specification as can be provided;

d.        thereafter the Defendant shall produce on a fortnightly basis starting with Friday, 21^st February, 2020 further lists of documents setting out any further documents being disclosed which list shall be in the form required for a list provided pursuant to Practice Direction RC17/08 and where inspection shall be provided by downloading the documents from the 'Relativity' programme and transferring them to the Plaintiff's legal advisors by SFTP or hard drive at the same time as a list is provided;

e.        on the same dates, the Defendant shall also provide lists of any further documents which are potentially relevant where inspection is withheld and why inspection is being withheld in the same format as required by paragraph 1.c. of this order;

2.        discovery of all documents held within the PRC shall be completed by 5:00 p.m. Friday, 20^th March, 2020;

3.        by 5:00 p.m. Friday, 3^rd April, 2020 the Defendant shall further provide an affidavit from a suitable qualified lawyer from Ning Ren law firm identified by name and setting out with as much detail as possible all of the legal explanations relied upon as to why any potentially relevant documents have not been disclosed and why they have been withheld for inspection;

4.        any breaches of paragraphs 1 to 3 and 7 of this order will entitle the Plaintiff to apply for the Defendant's answer and counterclaim to be struck out immediately or for such other sanction as the Plaintiff sees fit..."

4.        As a result of the COVID Pandemic, those directions were varied by an Act of Court dated 27^th May, 2020.  The material parts are paragraphs 1 to 4 and 7 which provide as follows:-

"1.       the Defendant is to provide discovery in respect of all documents held by the custodians listed in Schedule 1 of the Act of Court, dated 5^th June, 2019, who are based in China by 5:00pm on Friday, 29^th May, 2020;

2.        by 5.00pm on Friday, 12^th June, 2020 the Defendant shall provide a further affidavit to the Plaintiff in respect of the additional documents disclosed by the Defendant setting out all of the legal explanations relied upon as to why any potentially relevant documents have not been disclosed and why they have been withheld from inspection. This affidavit shall be prepared by a suitable qualified lawyer from Ning Ren law firm ("Ning Ren");

3.        in the affidavit required by paragraph 2 Ning Ren shall explain all their interactions with the relevant Chinese authorities (as described below), and any related interactions between the various Chinese authorities of which they have knowledge, and exhibit all (non-privileged) correspondence, communication and documentation. This material shall include, but not be limited to:-

a)        all correspondence or communication between the Defendant (including any party communicating for or on behalf of the Defendant in connection with the present dispute and the attendant discovery exercise) and the Chinese authorities in respect of the discovery of material from China. The aforementioned Chinese authorities shall include the Department of Industry and Information Technology of Ningxia Hui Autonomous Region (the "DIIT"), the Ministry of Industry and Information Technology of the People's Republic of China  (the "Ministry"), the State Cyberspace Administration of the People's Republic of China (the "SCA") also known as the Office of the Central Cyberspace Affairs Commission (the "OCCAC"), the Cyberspace Administration of Ningxia Hui Autonomous Region (the "NCA"), and/or any other Chinese state authority which has been involved in the Defendant's discovery process; 

b)        the minutes and/or transcript and/or notes of the meeting between Ning Ren and the Chinese authorities which took place on or around 2nd April, 2020 (as described in the Defendant's email of 17th April, 2020) and any other meetings with state authorities attended by any party representing or acting on behalf of the Defendant; and

c)        the letter which was sent by the DIIT to the Ministry following the aforementioned meeting on 2^nd April, 2020 (as described in the Defendant's email of 17th April, 2020), and all correspondence and documents referred to in the affidavit of Mr Lui dated 3rd April, 2020.

4.        insofar as legal professional privilege ("LPP") is claimed over any document or class of document described in paragraph 3 above or production is refused on the basis of Chinese law or the said document being unavailable to the Defendant, that claim must be explained in the body of the affidavit (it being accepted by the Defendant that LPP is not expressly recognised as a matter of Chinese law). If it is claimed that minutes and/or transcript and/or notes of a meeting do not exist, the Defendant shall provide a detailed explanation of the meeting;

...........

7.        the time for any challenge to any discovery provided by the Defendant or to any withholding of documents to be issued shall be extended to 24th July, 2020 ...."

5.        In respect of the directions contained in the Act of Court of 15^th January, 2020, the reasons for the directions issued were set out in my judgment dated 16^th April, 2020 reported at Sheyko v Consolidated Minerals Limited [2020] JRC 061.  Paragraphs 2 to 25 of that judgment set out the general background to this dispute, which I adopt for this judgment.

6.        The pertinent paragraphs for the purposes of this judgment are paragraphs 43 to 49 which state as follows:-

"43.    I further ordered that the defendant by Friday 7th February 2020 was to provide a list in English of the 8,777 documents which were potentially discoverable but which the defendant did not wish to disclose.  The defendant as part of this order was required to describe as far as possible each document individually and why inspection was being withheld by reference to any applicable secrecy laws in PRC.  This was so that the plaintiff could understand why documents were being withheld and take advice on the defendant's approach.  At present, the opinion from Ning Ren was simply a statement of the relevant statutes without an analysis as to why and how those statutes applied to the present case, or applied to categories of documents that would otherwise be disclosable.  The plaintiff was entitled to know why documents were being withheld so that ultimately, if advised to do so, the court could be invited to rule on whether the defendant had made out any grounds relied upon to withhold documents.

44.      In reaching this conclusion, I wish to emphasise that no discourtesy is intended to the PRC or its laws.  However, this is a case before the Royal Court of Jersey where both parties have accepted the Royal Court has jurisdiction.  The Royal Court is therefore entitled to determine, having regard to appropriate opinions from Chinese lawyers about whether or not grounds exist which might override the normal discovery rules, which grounds the Royal Court should recognise.  It is therefore important that what the defendant intends to produce or withhold and the reasons why are made clear.

45.      I further ordered disclosure to take place on a fortnightly basis with further lists of documents being produced of the documents that were being disclosed and of lists of documents being produced which were potentially relevant but which were being withheld.

46.      I further required the defendant by Friday, 3rd April, 2020 to provide a further affidavit from a suitably qualified lawyer within Ning Ren to set out with as much detail as possible all of the legal explanations relied upon as to why any potentially relevant documents have not been disclosed and why they had been withheld for inspection.

47.      I required the opinion to come from a named lawyer because the opinion as a matter of Jersey procedural law is expert evidence which must come from an individual and must be in compliance with Practice Direction RC17/09 on expert evidence in particular the obligations of an expert contained in Schedule A.

48.      I further ruled that discovery should be completed by Friday, 20th March 2020.  This was because of how long the defendant had already taken to comply with discovery obligations.  The defendant itself had stated it was aware of its discovery obligations in October 2018.  Directions for discovery had also first been issued in June 2019.  Nine months to produce relevant documents was therefore more than ample time for the present dispute.  While the dispute is reasonably complicated, ultimately it is about whether the position of the plaintiff as CEO was undermined or not and therefore whether his resignation on the basis of various alleged repudiated breaches of contract was justified.

49.      I further made it clear that, if the orders I issued were not complied with, then the defendant was at risk of having its sanctions imposed including its answer struck out.  While a strike out of an answer with judgment being entered is a serious step, if that is the only means by which the Royal Court can enforce compliance with its orders, then such a sanction may be an appropriate step for the Court to take.  Whether such a sanction is ordered in this case is of course a matter for another day, but I made it clear to the defendant's advocates that they should be under no illusion that any non-compliance with orders I issued would be a very serious matter and could well attract significant sanction."

7.        In ordering the defendant to pay the plaintiff's costs on the indemnity basis I also made the following observations at paragraph 50:-

"50.    I also ordered the defendant to pay the costs of the hearing on the indemnity basis and ordered a payment on account of costs of £15,000 within 14 days.  This was for the following reasons which justified indemnity costs:-

(i)        At the previous hearing, the defendant had agreed to use its best endeavours to make disclosure.  I was not satisfied that this obligation had been met because of the length of time it took to retain Consilio and because of delays in information being provided by the defendant or its parent company to Consilio for review.  At times the defendant or its parent company has not responded with the urgency required by a best endeavours obligation.

(ii)       The opinions provided from Ning Ren to date did not explain in sufficient detail why potentially discoverable documents were being withheld.  Nor was there any explanation of what processes were being followed to determine whether any state secrecy provisions applied to particular documents.  This did not help in formulating a timetable.

(iii)      The defendant had also not explained why any law of the PRC concerning protecting commercial secrets applied to the present case, which was primarily about the internal decision-making processes of the defendant, and whether the position of the plaintiff had been undermined.  The position of third parties who might have commercial secrets which required protection was not clear at present.

(iv)      At the last hearing I had expected discovery documents outside the PCR to take place in tranches, which was the impression created by paragraph 78 of the first affidavit of Advocate MacDonald.  This had not occurred. 

(v)       I was also not satisfied by the explanation that discovery in tranches was permissive in nature only; this was not the impression I was left with after the last hearing at all. 

(vi)      I was also not persuaded by the explanation that no further discovery in tranches was possible because of a review of privilege for over 100,000 documents.  The process of using an experienced e-discovery provider such as Consilio involves identifying which documents are or may be privileged.  While I accept that questions of privilege can and will arise during a review process, this does not mean that every document that is disclosable will have to be re-reviewed.  There is technology available for a party to identify which documents may be privileged without having to hold up the entire disclosure process.

(vii)     The defendant's unsatisfactory approach had led to further delay."

8.        Finally, I made an express order as to confidentiality as is recorded in paragraph 51 of my previous judgment.

9.        The present application was issued by the plaintiff on 24^th July 2020 in accordance with the direction contained at paragraph 7 of the Act of Court of 27^th May 2020.  The relief sought is as follows:-

"1.       The Defendant's Answer and Counterclaim be struck out.

2.        The Defendant be debarred from continuing to defend the Plaintiff's claim and prosecuting its Counterclaim.

3.        Judgment be entered for the Plaintiff in respect of the claim set out in the Order of Justice dated 27 July 2018 and the following orders made:

a)        The Defendant shall pay the Plaintiff US$14,316,625.60.

b)        The Defendant shall pay the Plaintiff's costs of the proceedings on the indemnity basis (in accordance with paragraph 3.4 of the Service Agreement).

c)        The Defendant shall make an interim payment of US$500,000, or such other sum as the Court deems appropriate, on account of the Plaintiff's costs.

d)        The Defendant shall pay interest on all sums due to the Plaintiff from 4 June 2018 to the date of judgment at such rate as the Court deems appropriate.

e)        The Defendant shall pay judgment interest on all sums due from the date of judgment until the date of payment at such rate as the Court deems appropriate.   

f)         The sum of U$10,000,000 held in Court pursuant to the Act of Court dated 3 October 2018 shall be paid to the Plaintiff's Advocates immediately and in any event no later than 2 working days after the date of judgment in partial satisfaction of the sums due to the Plaintiff pursuant to paragraphs 3(a) to (e) above.

g)        Save for the balance of the costs due pursuant to paragraphs (b) and (c) above (to be assessed if not agreed), the balance of the sums due pursuant to paragraphs 3(a)-(e) above shall be paid to the Plaintiff's Advocates as soon as is reasonably practicable and in any event no later than 7 working days after the date of judgment".

10.      An alternative order was also sought at paragraph 4 of the summons requiring the defendant to remedy every deficiency in discovery identified by the court within 7 days of any order to do so.

11.      The application was supported by written submissions running to 84 pages in length and supporting materials comprising two lever arch files.

12.      In view of the length of the written submissions, I requested the plaintiff to produce a concise skeleton argument which was filed on 31^st July 2020.

13.      Paragraph 9 of this skeleton argument summarised the plaintiff's concerns as follows:-

"9.       The Defendant's case should be struck out because, in summary, it:

a)        Misled the Court at the November and January Hearings by failing to disclose that Ning Ren had received confirmation from the Ningxia Cyberspace Authority ("NCA") on 24 October 2019, and 27 December 2019, that Ning Ren could conduct the document review itself and that, therefore, the NCA did not need to review the documents before they left China (see paragraphs 63-81).

b)        Continued to try to involve the Chinese state in its discovery process when there was no need for it to do so.

c)        In order to obtain extensions from the Court:

i.         submitted that penalties in China for disclosing material without formal state approval might be extremely severe. These claims are not supported by the expert evidence subsequently served by the Defendant (see paragraphs 88-93).

ii.        Consistently used the term 'state secrets' to exaggerate its legal basis for seeking to limit its discovery obligations. This description has been proved to be misleading by material subsequently served (see paragraphs 104-109).

d)        Served contradictory evidence from Ning Ren about its approach to submitting documents to the Chinese authorities for approval (see paragraphs 82-87).

e)        Failed to inform the Plaintiff about an important meeting between the relevant Chinese authorities on 2 April 2020. When asked to produce evidence from the meeting the Defendant said there were no minutes. When it was put to the Defendant that it was inconceivable that no record was taken, a note promptly materialised (see paragraphs 94-103). This note evidences that the approach of the Chinese authorities is to assist TMI/CML to prevail in the proceedings, rather than to discharge an independent governmental function (see paragraphs 60-63).

f)         Failed to collect important data and/or devices from key custodians (see paragraphs 112 - 116). This included unilaterally changing the terms of the Court's discovery order without informing either the Court or the Plaintiff (see paragraph 115).

g)        Failing to take steps to preserve documents at the proper time. The impact of this has been compounded by the Defendant's intentional delay in progressing its discovery exercise (see paragraphs 118-122).

h)        Relied on the unexplained and unevidenced decision of a number of key figures not to co-operate with the discovery exercise and failed to demonstrate that it had done all it possibly could to remedy this non-cooperation (see paragraph 123).

i)         Failed to describe the source of data collected or the searches carried out against that data (see paragraphs 124-138).

j)         Failed to provide any descriptive metadata in relation to 7,564 documents in its non-China discovery. As a result, these documents are in no comprehensible order. Advocate Seddon offers no explanation for this in his discovery affidavits (see paragraphs 140-141).

k)        Failed to identify the users of unidentifiable email addresses used by custodians based in China (see paragraph 142).

l)         Relied on third party document ownership and privilege erroneously as a basis for withholding inspection of documents in its control, without explaining its position (see paragraphs 143-167).

m)       Failed to establish that material in its control has been properly withheld as a matter of Chinese law. It follows that the Defendant has not met the Jersey law test for withholding inspection of documents based on a risk of prosecution in a foreign jurisdiction (see paragraphs 168-191).

14.      Paragraph 10 of the same skeleton argument stated as follows:-

"10.     The Plaintiff cannot know precisely what material has been concealed by the Defendant's refusal to conduct a proper search for documents or its decision to withhold documents. However, based on what has been disclosed, it is clear that important material is being withheld from the Plaintiff (see paragraphs 192-209). As a result, the Plaintiff's right to a fair trial has been seriously and unacceptably compromised (see paragraphs 210-219)."

15.      On 29^th July 2020, the defendant issued a summons seeking specific discovery and inspection from the plaintiff.  This led me to issue various directions in relation to the determination of both summonses and the setting of a timetable for the filing of evidence.  These interim directions were appealed leading to Deputy Bailiff MacRae issuing a judgment on 14^th September 2020 reported at Sheyko v Consolidated Minerals Limited [2020] JRC 182 upholding the various case management directions I issued. 

16.      As a result of the directions I had issued, the following affidavits were before me:-

(i)        The first affidavit of Marc Christopher Seddon ("Advocate Seddon") sworn on 28^th January 2020 filed pursuant to paragraph 1a. of the Act of Court of 15^th January 2020;

(ii)       The second affidavit of Advocate Seddon sworn on 17^th June 2020 dealing with steps taken in respect of discovery of documents held within the People's Republic of China;

(iii)      The third affidavit of Advocate Seddon dated 20^th July 2020 providing further information in respect of documents discovered since Advocate Seddon's first affidavit;

(iv)      The defendant also produced the first affidavit of Liu Jianguo of Ningxia Ningren Law Firm sworn on 3^rd April 2020 pursuant to paragraph 3 of the Act of Court of 15^th January 2020;

(v)       The defendant also produced the second affidavit of Liu Jianguo sworn on 12^th June, 2020 pursuant to paragraph 2 of the Act of Court dated 27^th May 2020;

(vi)      The defendant also relied on the fourth affidavit of Advocate Seddon sworn on 21^st August 2020 and an affidavit from Mark Camaj sworn on 10^th September, 2020;

(vii)     The plaintiff produced a further skeleton argument dated 7^th September, 2020;

(viii)    The defendant filed a skeleton argument in opposition to the plaintiff's summons seeking the dismissal of the application.

17.      The plaintiff in filing evidence in reply relied on the affidavit of Mr Taili Wang sworn on 5^th August 2020 and the fifth affidavit of Mr Phillip Brown sworn on 2^nd September 2020.

18.      The plaintiff had also filed a fifth affidavit dated 2^nd September 2020, primarily in response to the defendant's specific discovery application, but I was also referred to certain extracts during the course of oral submissions.

19.      I have considered all these affidavits in relation to the plaintiff's application.

20.      On Friday, 11^th September, 2020 after working hours I was also provided with three further affidavits which the defendant sought to rely on from Mr Huang He ("Mr Huang He"), Mr Jia Tianjiang ("Mr Tianjiang") and Ms Hui Yee Ling ("Ms Ling").  On Saturday, 12^th September I was provided with an affidavit of Mr Xing Xinmin.  Mr Tianjiang is the Chairman of the defendant.  Mr Huang He is the Vice Chairman of the parent company of the defendant and alternate Chairman of the defendant.  Ms Ling was the executive assistant to Mr Ming Cheung ("Mr Cheung").  Mr Xing Xinmin was the translator for Mr Jun Liu, a director of the defendant.

21.      I refused permission for these affidavits to be adduced in evidence because they were outside the timetable I had set and there was no opportunity for the plaintiff to respond to these affidavits.  There was also no explanation provided as to why these affidavits could not have been filed earlier in accordance with the timetable I had set.

Pleadings

22.      In view of the nature of the relief sought by the plaintiff it is appropriate also to set out the allegations said by the plaintiff to amount to repudiatory conduct.  This is because, if I am satisfied that breaches of previous discovery orders have been made, I then have to evaluate whether such breaches prevent a fair trial.  That in turn requires an analysis of the central issues in dispute between the parties.

23.      The allegations of repudiatory conduct are set out at paragraph 19 of the order of justice as follows (leaving out various sub-sub paragraphs):-

"a)       Placing the cash flow of the Defendant under such unnecessary strain as to occasion a serious risk that the Defendant will be insolvent by the end of 2018.

b)        Ignoring the proposals put forward by the Plaintiff and, instead, entering into contracts for the sale of manganese ore to China which ran a significant risk of failing to comply with international standards and a consequent risk of fines, penalties and losing mining licenses. In or around July 2018 the Ghanaian Revenue Authority has announced its intention to conduct a transfer pricing audit on GMC. It was subsequently reported in the media that the Ghanaian Minister of Lands and Natural Resources is considering refusing to renew GMC's mining lease license due to the sale of manganese ore to China at an undervalue which may have caused a loss of millions of dollars due to the Ghanaian government in the form of taxes and royalties.

c)        Resolving, without consultation with the Plaintiff, that all future trading rules for the Defendant will be decided by the TMI board of directors.

d)        Making decisions on sending staff to Ghana with a direct reporting line to the Chairman, Mr Jia, rather than the Plaintiff. Sending other staff abroad without discussion with the Plaintiff on their roles and position within the existing organisational structures. In Ghana, following an inspection visit by the Ghanaian immigration authorities fines were imposed for employees working without the correct immigration permission in Ghana. There were also other Chinese nationals working at the mine who ran away during the inspection, which is presumed to be because they also did not have permission to work.

e)        The conduct of important commercial negotiations by Directors and NEDs based outside Jersey without reference to the Plaintiff or keeping the Plaintiff apprised of developments.

f)         Failing to provide the Plaintiff with important commercial and/or financial information upon request.

g)        Undermining the management and operation of the Defendant.

h)        Undermining the position of the Plaintiff as CEO of the Defendant and the ConsMin Group.

i)         Refusing the request of David Slater that concerns expressed by the Plaintiff during the board meeting of 15 September 2017 that he had not been provided with key documents be entered in the minutes of the meeting.

j)         Requesting (through Ching-Wo Ng of KWM) that the Plaintiff consider a general resolution authorizing the Chairman of the Defendant (at the time Mr Jia) to "sign any agreement on behalf of ConsMin in relation to infrastructure projects (railway, port, roadways, shipping contracts, ) in Ghana, or in relation to natural resources projects (bauxite, iron ore, Manganese, gold, etc.). Such that it would not be necessary for ConsMin to scramble for ratification resolutions".

k)        Making the following assertions to the Plaintiff:

i)         That owing a fiduciary duty to act in the best interests of the Defendant means acting in the best interests of the shareholder (implicitly disregarding the fact that a director's primary duty is to the company and that a director who is merely a mouthpiece of a shareholder is failing in that primary duty). This assertion was made by Roy Zhang in an email of 2 May 2018. Legal advice provided to the board and principal officers of the  Defendant  (including  the  Plaintiff)  from  Messrs  Ogier  in  Jersey contradicted this assertion.

ii)        That the Plaintiff had authority to sign documents on behalf of GMC. This assertion was made by both Mr Kutlaca and Ching-Wo Ng (both of KWM) on 26 April and 4 May 2018 respectively. Legal advice provided to the board and principal officers of the Defendant (including the Plaintiff) from Messrs Ogier in Jersey and Ashong Benjamin and Associates in Ghana contradicted this assertion.

l) Disregarding the Defendant as a distinct corporate entity and running the Consmin Group business as the personal fiefdom of Mr Jia and/or TMI irrespective of the duties, including fiduciary duties, of the Plaintiff and others to the Defendant."

24.      In answer to paragraph 19, the defendant argues as follows:-

(i)        The plaintiff was cynically seeking to manufacture a claim of constructive dismissal in attempt to obtain a financial windfall from his departure;

(ii)       The plaintiff had repudiated the contract by resigning without notice which was accepted so his service agreement terminated on the date of resignation;

(iii)      The plaintiff was in repudiatory breach of the terms of his service agreement entitling the defendant to dismiss him without notice;

(iv)      The plaintiff was keen to be involved in major projects outside his remit.

25.      The matters relied upon in support of the above averments are set out in detail in Section D of the defendant's answer at paragraphs 38 to 52.

26.      The defendant further denied that the plaintiff's complaint amounted to breaches of the service agreement or that the plaintiff had been placed in a position where he was incapable of discharging his duties as CEO.

27.      Paragraph 60 of the answer in addition provides as follows:-

"60.     The Plaintiff's allegations of wrongdoing appear in large part to be predicated upon a legal misapprehension that there is something unlawful in a company: (a) owned by shareholders outside Jersey; (b) being subject to oversight from those shareholders; and/or (c) having Board members based outside Jersey. There is nothing improper in any of those matters; indeed this would be the case for many if not most Jersey companies. The board members were obliged to act in the best interests of the Defendant, and they did so."

28.      The defendant further argues that the plaintiff had significant authority as pleaded at paragraph 61 of the answer as follows:-

"61.     Further, and contrary to the Plaintiff's repeated assertions that he was subject to unwarranted control and interference (and, impliedly, that it was this that caused him to perform so poorly), the reality is that at a board meeting which the Plaintiff attended on 30 January 2018, the Plaintiff was given unprecedented power and authority to run the business of the Defendant group. The Defendant will rely upon the meeting for its full purport and effect at the trial of this matter. In summary:

(1)       The Plaintiff would be able to run the Defendant without an executive committee. He was required to report on a new management structure for board approval (but as set out at paragraph 52 above, he failed to do so);

(2)       The Plaintiff would take day-to-day overall responsibility for the Defendant and its operations;

(3)       The Plaintiff was given full authority (other than to remove or appoint senior executives in Jersey, Ghana or Australia) and responsibility for Australia, Ghana and Jersey;

(4)       The Plaintiff was given authority to approve payments up to US$1billion, but he was required to report payments to the Vice-Chairmen and Chairman; and

(5)       The Plaintiff was entitled to seek consent from the Vice-Chairmen or Chairman or make requests where appropriate for significant transactions, and if consent was not received within 2 days, consent was deemed to have been given."

29.      The defendant argues in respect of the breaches pleaded at paragraph 19 of the order of justice that the defendant was rescued from likely insolvency by the acquisition by its current parent.  Any alleged insolvency concerns therefore had no foundation.

30.      The defendant's detailed response to the plaintiff's allegations summarised above is set out at paragraphs 64 to 103 of the defendant's answer.  For the purpose of this judgment each and every allegation made by the plaintiff is disputed.

Advocate Redgrave's submissions

Overarching observations

31.      Advocate Redgrave argued that his client's application was fundamentally about the defendant's discovery approach to documents held within The People's Republic of China ("China").  Without proper discovery from individuals within China it was his client's position that a fair trial was not possible.  Ultimately he argued that what had happened to date demonstrated a decision not to cooperate by the key individuals based in China.

32.      The ultimate beneficial owner of the defendant was and remains Mr Tianjiang.  Mr Tianjiang owns 99.62% of Ningxia Tianyuan Manganese Industry Co. Limited ("TMI").  It is the plaintiff's case that significant decisions were imposed by Mr Tianjiang and not taken by the plaintiff.  The plaintiff therefore argues that this approach was harmful to the defendant and led the plaintiff to resign because his authority had been undermined. 

33.      In support of this position Advocate Redgrave relied on an exchange of emails between the plaintiff and Mr Tianjiang.  In response to an email dated 1^st March 2018 from the plaintiff, Mr Tianjiang replied by an email dated 2^nd March 2018 which included the following statements:-

"I read last year's Capex plan. I don't think it's up to the standard. Firstly, in order to make decision, you need provide comparison among outsource, lease and purchase. Then we can decide which option best fits our needs. In your plan, there is nothing mentioned at all. Secondly, if we decided for purchase, I also did not see the detailed list, offering by suppliers and comparison among different suppliers. Lastly for such large purchase, payment terms or financial leasing options were not discussed at all. I will never approve such uncompleted plan. This is totally not acceptable.

This time, you provided two so-called options. I have told you about the production target at the very beginning. In addition, I have told you that you don't need to worry about sales and funding. TMI will bear them all. Therefore, I think it's a waste for you develop so-called option two. In your plan, you didn't tell me how much profit or cash flow the existing operation would generate. These cash flow, together with about 40 million cash on hand would support a large part of the capex. Then you mentioned expansion would lead to higher inventory. Have you confirmed with Mr. Liu? Has Mr. Liu confirmed its transportation issue or sales issue? How did you make the conclusion? And if so, how much cash would be locked in the inventory? Lastly, it's the same issue. Your capex plan is very preliminary. I had asked your several times about your comparison between hiring and purchase. So far, he has not got an answer from you. I would like to know how do you conclude hiring is more expensive than purchasing if you don't even have the data.

Regarding your concern over higher profitability from Ukrainian sales, I have made it very clear to minimize your sale to Ukraine. I don't think you got my point. It is my decision on who to sell to. Your focus should be on production expansion and cost reduction. I never put profit as your KPI. So far, I hear very little discussion or proposal from you on how to reduce cost or increase production. I think this is where you should keep your focus on.

As you have a complete plan with all supplementary documents, the funding is not your concern at all. Now because of the poor work, you said it has already affected production. This is your fault. You need to think on how to make up for the loss.

Regarding your questions, I think its meaningless. You should study more on how to increase production and reduce cost. For 2018, the production target is 6mt for Ghana, 1.45mt for Australia. For 2019, it's 9mt and 2.1mt, respectively. For other plan, there is no need for discussion."

34.      This exchange of emails illustrated what was at the heart of the plaintiff's case, according to Advocate Redgrave, because notwithstanding the plaintiff being CEO, he was told that profit was not his concern.  The issues for trial included therefore who was making decisions and/or why they were making certain decisions, including why manganese ore was being sold to China Mining at a fixed price and below the price that could have been obtained elsewhere.

35.      Another major area of concern was why Mr Tianjiang required the defendant to guarantee loans made to TMI which loans were twice the value of the defendant.  This led to Advocate Redgrave posing rhetorical questions as to whether the plaintiff was allowed to run the defendant and whether he was allowed to act in the best interests of the defendant.  Was the plaintiff incompetent, as the defendants pleaded, or was he rather being criticised for not doing what he was told?

36.      If the plaintiff could not see contemporaneous documents or communications between Mr Tianjiang and his associates, then the plaintiff could not test the defendant's evidence at trial.  This contrasted with the defendant's ability to test the plaintiff's evidence.  The plaintiff had made available all his devices.  Yet the defendant had not handed over any personal devices and had not given access to personal email accounts of key individuals based in China.  Mr Tianjiang was not therefore cooperating.  Yet he was not a third party but was the ultimate beneficial owner of the defendant, a director and its chair.

37.      The lack of cooperation could be seen because of the total number of documents the defendant had disclosed - of over 115,000 only 956 had come from China; there were also only 30 emails from Mr Tianjiang which had been disclosed but even these were through other sources and had not come from him.

38.      The final observations made by way of introductory remarks concerned how long the defendant had been on notice of its discovery obligations.  The proceedings were served on 27^th July 2018.  On 5^th September 2018 Baker and Partners wrote to Walkers to expressly remind them and put them on notice of their discovery obligations including the following statement:-

"It is imperative that all relevant documents have been and are preserved and are not destroyed, disposed of or altered in any way whatsoever."

39.      The letter also contained the following statement:-

"We therefore ask that the directors (both past and present), members of the Group Executive Committee, non-executive directors of the Defendant and all members of staff whether in the Jersey office or elsewhere and all outside contractors, wherever situated, with whom the Defendant has dealt in relation to the matters in issue in these proceedings will, as soon as reasonably practicable, and in any event by 19 September 2018, submit any computers, laptops, tablets and mobile phones used in their capacity as an employee or contractor of the Defendant to be digitally imaged by an agreed independent third party (or in default of agreement to a third party directed by the Court):"

40.      On 23^rd January, 2019 I also emailed counsel for both parties and stated the following:-

"I write further to the forthcoming directions hearing listed for 6 February 2019 at 11am.  From my review of the pleadings it appears that there may well be significant amounts of electronic discovery in this case.  I therefore remind you of the obligations contained in Practice Direction RC17/08 in particular paragraphs 10 to 13 dealing with both your obligations prior to the first directions hearing.  I therefore expect to be addressed on these matters at the directions hearing.  The work required by the Practice Direction will also assist in any consideration of whether discovery should be limited."

41.      Advocate Redgrave indicated that, despite these communications, it was clear that significant relevant material was not going to be provided and would not be resolved by any specific discovery application. 

The Relevant Legal Principles

42.      Advocate Redgrave relied upon the key principles as set out in Leeds United Football Club Limited v Admatch [2011] JRC 016A at paragraphs 29 to 36.  The key paragraphs are paragraphs 33 to 35 as follows;-

"33.    Further assistance as to the circumstances in which striking out may be appropriate is to be found in the comment of Chadwick LJ in Arrow Nominees Inc v Blackledge [2000] 2 BCLC 167 at para 54:-

"I adopt, as a general principle, the observations of Millett J in Logicrose v Southend United FC Limited (The Times 5 March 1988) that the object of the rules as to discovery is to secure the fair trial of the action in accordance with the due process of the Court; and that , accordingly, a party is not to be deprived of its right to a proper trial as a penalty for disobedience of those rules- even if such disobedience amounts to contempt for or defiance of the Court - if that object is ultimately secured by (for example) the late production of a document which has been withheld.  But where a litigant's conduct puts the fairness of the trial in jeopardy, where it is such that any judgment in favour of the litigant would have to be regarded as unsafe, or where it amounts to such an abuse of the process of the Court as to render further proceedings unsatisfactory and to prevent the Court from doing justice, the Court is entitled - indeed I would hold bound - to refuse to allow that litigant to take further part in the proceedings and (where appropriate) to determine the proceedings against him.  The reason, as it seems to me, is that it is no part of the Court's function to proceed to trial if to do so would give rise to substantial risk of injustice.  The function of the Court is to do justice between the parties, not to allow its process to be used as a means of achieving injustice.  A litigant who has demonstrated that he is determined to pursue proceedings with the object of preventing a fair trial has forfeited his right to take part in a trial. His object is inimical to the process which he purports to invoke." (Emphasis added)

34.      The above passage was quoted with approval by Bean J in Madarassy v Nomura International plc [2006] All ER (D) 75 and he went on to say at para 30(iii):-

"Striking out is a draconian remedy: it must be a proportionate response to the misconduct involved, and there must be a compelling reason for the Court or tribunal to take such a step."

35.      I draw from the above authorities the conclusion that it is a strong thing to strike out a defence and there must be an abuse of process such as to render further proceedings unsatisfactory or prevent the court from doing justice or, to quote Page Commissioner, a party must have flouted or ignored the Court's orders or persistently conducted himself in a way that evinces an unwillingness to engage in the litigation process on an equal footing with the other parties."

43.      Advocate Redgrave then made specific criticisms of the approach of the defendant adopting a number of headings.  It is important to summarize these criticisms, which are as follows, by reference to each area Advocate Redgrave identified.

(i)        Misleading the Court

(ii)       WeChat

(iii)      Personal email accounts and devices in China

(iv)      State Secrets

(v)       The Ning Ren affidavits

(vi)       A risk of prosecution

(vii)     Mr Cheung

(viii)    Third party privilege

(ix)       TMI's activities in China

Misleading the Court

44.      In respect of this part of his submissions Advocate Redgrave accepted that this complaint of itself did not mean a fair trial could not take place.  However, what had occurred was important background evidence to the defendant's approach to the discovery of documents in China.  In particular, it was relevant to the question of whether the evidence from Ning Ren could be relied upon as objective, in the way that ordinarily evidence from a lawyer would be looked at.

45.      By the Act of Court dated 5^th June 2019 the parties had been ordered to provide discovery by 4^th October 2019.  By agreement this deadline was extended to 28^th October 2019.  A hearing took place on 6^th November to consider if this deadline should be extended.

46.      Advocate Redgrave emphasised that a series of obstacles had been put in place both before and since the 28^th October 2019 deadline as follows:-

(i)        Consilio had not in fact been instructed in China by the time of the hearing on 6^th November 2019;

(ii)       The court was not informed at the hearing that Consilio had not been retained to operate in China;

(iii)      Consilio had sent out questionnaires when first instructed in May 2019 outside China, but no answers to these had ever been produced;

(iv)      The questionnaire sent in May 2019 to Mr Cheung, Deputy Chair of the defendant was not answered until mid-November;

(v)       The application in November 2019 was predicated upon various matters including difficulties with Chinese law.  This was an obstacle rather than a problem.

47.      The detailed criticism of the difficulties that were occurring in China was put forward by Advocate Redgrave as follows:-

(i)        Ning Ren had been told on 24^th October 2019 that the Ningxia Cyberspace Authority ("NCA") did not need to carry out a review.  This was clear from the first affidavit of Mr Liu at paragraph 16.  Yet it appeared that Ning Ren did not carry out the review as permitted but instead contacted NCA again on 27^th December 2019.  This led to the additional observation from NCA that "CML must do the self-assessment diligently".

(ii)       In relation to what Ning Ren had been told by NCA not being mentioned at the November hearing, Advocate Redgrave accepted that he could not say that Walkers were to blame.  Rather he blamed Ning Ren.

(iii)      Ning Ren's letter of 1^st November 2019 which was provided to the court for the November hearing did not explain that the NCA were happy for Ning Ren to carry out the self-assessment.  Ning Ren's letter of 1^st November 2019 contained the following statement:-

"As a result, approval for documentation transmission out of the country has become increasingly strict and tight.  Document transmission out of the country must be reviewed and assessed by the competent authorities before exiting."

(iv)      This was not however the position of the NCA.  Ning Ren had not according to Advocate Redgrave told the whole truth.  They had certainly not given the whole picture. Paragraph 45 of Advocate MacDonald's affidavit sworn on 1st November 2019 was not therefore complete. 

48.      In response to the criticisms that Ning Ren misled the court, in the written submissions provided by Ning Ren in response to the Plaintiff's written submissions filed with the present application, Ning Ren stated:-

"It is entirely reasonable that Ning Ren waited until they had written confirmation from the NCA before they were willing to consider to review by the NCA (or any other government body) was not required."

49.      Advocate Redgrave observed that this was submission not evidence and did not explain why the full picture had not been before the Court in November.

WeChat

50.      The starting point for this section of the plaintiff's submissions was that it was clear that WeChat was used not only in China but was widely used at CML, the defendant.  This was summarised at paragraphs 192 to195 of the plaintiffs' written submissions as follows:

"4E      Missing material

WeChat communications

192.    WeChat is a multi-purpose mobile phone app available on Android and iPhone devices. It is an immensely popular communication tool in China, where relatively few people use email, and in Hong Kong. In China the app is ubiquitous and is used for messaging (including audio and video), electronic payments and social media; it is estimated to have more than a billion users worldwide.  It is also, importantly, the default platform for work communications in China.

193.    As set out below, only a very small number of WeChat messages has been disclosed, and from a very limited number of people. This cannot represent the full extent of relevant WeChat material that has existed. It is not obvious why this is the case. It is very significant, as there is very good reason to believe that highly relevant material would be found among WeChat conversations between key individuals.

Use of WeChat within the Consmin Group

194.    Following its acquisition by CTYML and the appointment of a number of Chinese and Hong Kong-based directors to its board, the use of WeChat became prevalent within CML and throughout the wider Consmin Group, including its employees in Ghana and Australia. Its use extended beyond internal group communications; the disclosure shows that communications with third party organisation also took place using WeChat. Some examples of the extent of its use are below:

a.        As early as October 2016, before even the CML share purchase agreement was executed, Ming (Jacky) Cheung was keen to know whether Mr Sheyko had a WeChat account. Mr Sheyko was expressly asked to use WeChat by Mr Cheung and, on a different occasion, by Roy Zhang during meetings in Accra.

b.        On 25 August 2017 Mark Camaj, CML's general marketing manager, emailed Elaine Hui and asked: "Could you share your WeChat contact info I think easier to communicate that way".

c.        In October 2017 Sam Xing, Jun Liu's personal secretary, noted that it would be convenient if employees of the Consmin Group's Australian business downloaded WeChat onto their mobile phones.  He repeated this in November 2017 to Brent Jenkins, describing WeChat as "very convenient, popular in China".

d.        In an email to members of the Consmin HK team dated 9 October 2017, Max Liu, Vice President of China HKBridge Holdings Limited ("HKBridge"), proposed as follows: "Mr Zhensheng Zhang, let's communicate through WeChat".  This would appear to be intended to refer to Roy Zhang, and subsequent emails show Mr Zhang using the platform. These emails relate to a Belt and Road Fund Project connected to CML and in respect of which HKBridge would be a general partner.

e.        On 7 December 2017, in a WeChat exchange between what appears to be Sam Xing and Isabella Dai (Mr Sheyko's executive assistant and translator), Mr Xing queried how Mr Sheyko communicates with the "Chinese boss" if he does not have WeChat. It is assumed that the Chinese boss to which this refers is Mr Jia.

f.         In the same exchange, Mr Xing comments: "I WeChat with Mark [Camaj], Jurgen [Eijgendaal] and Brent [Jenkins] every day".

g.        On 28 February 2018 Elaine Hui, executive assistant to Mr Cheung, asked for Jenny Tsai's WeChat account details for "easy communication"."

'195. WeChat was used by directors and other senior employees of CML and TMI to communicate on key issues and/or to send important documents. For example:

a.        Mr Cheung often communicated by WeChat with Mr Sheyko and others, including - it must be assumed - Mr Jia, with whom he had a close relationship. The substance of these communications varied but includes sending a signed copy of Mr Sheyko's contract with CML and relaying approvals for matters raised by the General Executive Committee of the Consmin Group ("GEC").

b. Zhensheng Zhang, who reported directly to Mr Jia, provided important information or instructions to Mr Sheyko (via Isabella Dai's WeChat account) and others, including to relay Mr Jia's opinion of Mr Sheyko's performance17 and to address issues of resourcing in Ghana and Australia.

c. On 7 June 2018, Helen Zhang (TMI) and Mark Camaj discussed (via WeChat) payment terms on proposed new contracts with QRK Holding Limited, with Ms Zhang instructing Mr Camaj to issue those contracts forthwith.

d. As with Mr Zhang, noted above, Huang He sent important communications to Mr Sheyko via Ms Dai's WeChat account, including to confirm Mr Sheyko's proposal regarding the procedure to close Metal Solutions Limited.

e. The senior management of TMI had a group chat on WeChat, communications from which have been disclosed but withheld from inspection."

51.      No evidence was filed in response to the evidence referred to in these paragraphs.

52.      In the schedule of documents listing what documents had been withheld, attached to the second affidavit of Mr Jianguo of Ning Ren, over 140 items of WeChat were listed which had been recovered from Jenny Tsai who was the head of marketing of the defendant's China representative office.   However, each of these were classified as a potential state secret and so were not disclosed.  The rationale for this non-disclosure was essentially the same for all WeChat items as follows:

"The document is Ningxia Tianyuan Manganese Group Senior Management Group chat record, involving trade secrets of Ningxia Tianyuan Manganese Group and WeChat account data of their senior management."

53.      Criticism of this reliance on state secrets was dealt with later in Advocate Redgrave's submissions.  At this point he simply relied on the fact that a claim to withhold documents as being state secrets was made in respect of WeChat.

54.      Advocate Redgrave also relied on the following to demonstrate that WeChat was in use in China:-

(i)        A newspaper article exhibited to Mr Brown's fifth affidavit dated 2^nd October 2018 entitled "Who Uses WeChat and why is WeChat so Popular in China?";

(ii)       An exchange of WeChat messages from Isabella Dai about whether the plaintiff should be added to a WeChat group; the other party to the exchange was the personal secretary to Mr Jun Liu, another director of the defendant.

(iii)      A statement in Advocate MacDonald's affidavit of 1^st November, 2019 at paragraph 43:-

"Firstly, a number of the custodians used personal email accounts for work purposes and imaging the data on their personal accounts is more difficult to achieve."

When taken with the evidence that did refer to use of WeChat, this statement also supported the contention that WeChat conversations had not been produced because the devices with records of such conversations had not been produced.

(iv)      In relation to a schedule attached to Ning Ren's second affidavit setting out why documents were not disclosed, in respect of document 236, this document was described as a potential state secret and was accompanied by the following explanation: -

"The document involves group chat record and large amount of individual WeChat accounts which are personal data.  It is protected by Articles 41, 42 and 44 of the Cyber Security Law of the People's Republic of China."

(v)       A similar explanation was given in respect of document 242 of the same list. Mr Mark Camaj, general marketing manager of the defendant, in his affidavit deposed at paragraph 6 that he was not part of any WeChat group with the senior management of TMI but did accept in paragraph 7 that he was involved in a WeChat group with sales representatives in China. 

55.      This evidence made it clear therefore that WeChat was being used by TMI, the parent company of the defendant.

56.      In addition, Consilio in a report produced in August 2020 also explained that a total of 37,525 WeChat threads were available for review.  These were all WeChat threads which came from sources outside China, which was inconsistent with the lack of any discovery of WeChat conversations within China.

57.      Further evidence that personal email accounts or phones had not been looked at for WeChat or anything else was clear from paragraph 37 of Advocate Seddon's second affidavit which described that:-

"...Mr Tianjiang's data included the collection of the email accounts of Mr Tianjiang's two personal assistants as it has been confirmed that they did on occasion send emails on his behalf."

In other words, Mr Tianjiang's personal email accounts or personal mobile phone devices had not been searched.

58.      Ning Ren had not looked at any private email or mobile accounts or any WeChat.  Rather Ning Ren only reviewed what had been collected by Consilio.

Personal email accounts and devices in China

59.      Advocate Redgrave was also critical of the failure to disclose personal email accounts in China for the following reasons.

60.      Firstly, Jenny Tsai would not provide her personal email account because of privacy issues, even though she was head of marketing of the China representative office of the defendant.

61.      Secondly, in its report prepared by Consilio attached to Advocate Seddon's fourth affidavit, in relation to data collection in China, Consilio stated: -

"Mobile phones were collected from custodians based on the responses received in the custodian questionnaires.  If mobile phones were not collected from any custodian it was on the basis of a response indicating that they did not have mobile phones which were available, and which contained data relating to this matter." 

62.      Advocate Redgrave summarised this statement as effectively stating that, if individuals refused to hand over mobile phones, then those phones were not searched.  This meant that no personal emails relevant to the issues or any WeChat information have been disclosed from anyone within China.

63.      The only data extracted from a phone in China was from Jenny Tsai but that data was withheld as being a state secret.

State Secrets

64.      Advocate Redgrave then analysed the approach of the defendant to withholding documents by reference to the law of China.

65.      The starting point for his analysis was the hearing in January 2020.  For this hearing, Ning Ren provided a note which was exhibited to Advocate MacDonald's second affidavit sworn on 6^th January 2020.  The note included the following statement: -

"Our Firm has conducted an initial legal review of these email messages, and has analysed under Chinese law, tagged and removed emails that fall within the categories of state secrets, trade secrets, and personal data involving person that are not related to the proceeding."

66.      At the time of this hearing there were 8,777 documents withheld as being state secrets, trade secrets or personal data involving parties not related to the proceedings.

67.      In relation to these documents Advocate MacDonald on 7^th February 2020 wrote to Advocate Sorensen and explained the following: -

""1.      6,104 of the 8,777 documents listed either predate or postdate the date range applied by the Act of Court of 5 June 2019 at paragraph 1c ("1st February 2018 to 27^th July, 2018") and are therefore not discoverable.

2.        In respect of the remaining 2,673 documents, 1,427 cannot be transmitted from the PRC due to various PRC statutes as described in the attached list.

3.        The balance of 1,246 potentially discoverable documents may be transmitted out of the PRC in due course pending authorisation to do so by the Cyberspace Authority and it is not yet known when the Cyberspace Authority will complete their review.

a.        If/when the Cyberspace Authority approves the release of such further potentially discoverable documentation from the PRC, then my colleagues and I shall promptly assess whether it falls be disclosed and naturally we shall remain mindful of the deadline in the Act of Court of 15 January 2020 at paragraph 2:

"discovery of all documents held within the PRC shall be completed by 5.00 p.m. Friday, 20th March ,2020."

b.        If such approval from the Cyberspace Authority is denied or not received before that deadline then you will be updated and naturally we remain mindful of the deadline in the same Act of Court at paragraph 3:

"by 5.00 p.m. Friday, 3rd April 2020 the Defendant shall further provide an affidavit from a suitable qualified lawyer from Ning Ren law firm identified by name and setting out with as much detail as possible all of the explanations relied upon as to why any potentially relevant documents have not been disclosed why they have been withheld for inspection.""

68.      Ultimately the plaintiff received 831 documents.  On 14^th February 2020, Consilio received a further 5,767 documents from individuals within China which were then made available to Ning Ren for inspection.  In respect of these documents 49 documents were ultimately released.

69.      Advocate Redgrave observed that it was Ning Ren who decided which of the documents produced by Consilio on 14^th February 2020 were to be released.  He argued that the fact of Ning Ren assessing documents did not support any suggestion that there was a risk of prosecution, because it was Ning Ren themselves who were approving the release of documents recovered by Consilio in February 2020. 

70.      This analysis also led to the submission that the evidence of Ning Ren, in terms of the risk of prosecution and why documents were being withheld, was not reliable. 

71.      The third tranche of documents made available by Ning Ren was on or around 14^th April 2020 and comprised 1,998 documents.  Of these 1,105 were withheld, 467 were eligible for transmission out of China, 430 were illegible and 13 required review by the government.  These latter documents were ultimately released.

72.      The documents that were withheld were 'set out' in a schedule attached to the second affidavit of Mr Jianguo of Ning Ren.  This schedule ran to some 76 pages in length and identified 785 documents.  13 documents were identified as pending government department review.  All the others were withheld as potential state secrets.  The majority were identified by a document number only and were not described.

73.      The schedule also contained comments on each document; Advocate Redgrave was critical of these comments because they did not explain why documents withheld were potentially state secrets.  Nor was any explanation to be found anywhere else why a document was a potential state secret despite all the affidavits filed by the defendant.

74.      In respect of document 119 of the schedule the explanation was "the document is WeChat record of work communications involving other individuals' WeChat accounts.  It is protected by Article 41, 42 and 44 of the Cybersecurity Law of the People's Republic of China".  However, Advocate Redgrave noted that Mr Jianguo in both his affidavits listed a number of relevant laws and distinguished between a law on guarding state secrets and a law on cybersecurity.  Advocate Redgrave observed that the level of detail required by my January Judgment was not there.  In particular, it was not explained why a potential breach of the Cybersecurity Law was a state secret.

75.      The same criticism was made of document 236 which was described as a potential state secret, and also described as a Group WeChat record withheld by reference to the Cybersecurity Law.

76.      Advocate Redgrave also drew my attention to the meeting note produced by Ning Ren dated 31^st March 2020.  Within that note it was recorded that the Ningxia Department of State Security did not regard manganese technology as a state secret.  The note contained the following statement: -

"On the face of it and in terms of technology leak it should not pose a direct threat to national security."

77.      The note did continue to pose a number of questions:-

"But will the leakage of trade secrets affect the state manganese industry or cause other losses?  Is the loss of losing the case greater than the loss caused by the trade secrets leak?  Will it affect diplomatic relations or human rights on an international level? Would non-disclosure cause an impact on credibility?  These are all issues that require careful consideration."

78.      These questions, Advocate Redgrave contended, did not lead to a risk of criminal charges.  They did not even lead to a risk of prosecution.

79.      The Ningxia DIIT in the same note is recorded as making the following statement: -

"While Ningxia DIIT needs to help the company win the case, it must be done in accordance with the law."

DIIT is an abbreviation for the department of industry and information technology.

80.      What the note revealed, according to Advocate Redgrave, was that if more time was given to the defendant the authorities in China would do whatever was needed to help the defendant win the case.  Yet the burden was on the defendant to persuade the court that discovery and inspection should be refused because of the risk of prosecution.  This led Advocate Redgrave to describe the comments of the Ningxia DIIT as recorded in the note as being a troubling indication.

81.      The wider context of the lack of documentation from China was that there was a pre-existing relationship between the defendant and China through TMI and Mr Tianjiang; the state authorities were therefore engaged by the defendant, through Ning Ren, to make discovery as long, as complex and as expensive as possible.

The Ning Ren affidavits

82.      Advocate Redgrave started this part of his submission by reminding me that paragraph 3 of the Act of Court of 6^th November 2019 required the defendant to use its best endeavours to obtain the approval of the relevant authorities in China to make discovery.

83.      In relation to the first affidavit at paragraphs 46 and 47 of my judgment dated 16^th April 2020 I stated: -

"46.    I further required the defendant by Friday, 3rd April, 2020 to provide a further affidavit from a suitably qualified lawyer within Ning Ren to set out with as much detail as possible all of the legal explanations relied upon as to why any potentially relevant documents have not been disclosed and why they had been withheld for inspection.

47.      I required the opinion to come from a named lawyer because the opinion as a matter of Jersey procedural law is expert evidence which must come from an individual and must be in compliance with Practice Direction RC17/09 on expert evidence in particular the obligations of an expert contained in Schedule A."

84.      The above observations followed on from paragraph 3 of the Act of Court of 15^th January 2020.

85.      Advocate Redgrave contended that the requirement of the 15^th January Act and the 16^th April judgment had not been met for the following reasons: -

(i)        The disclosure list attached to Ning Ren's first affidavit did not identify the nature of the documents and it was impossible to tell why a document had been withheld.

(ii)       The explanations given for withholding the document were often vague and repetitious.

(iii)      Ning Ren had failed, other than to list the applicable statutes, to explore the individual provisions of each statute in depth or at all.  There was no discussion of the types of document or even category of document Ning Ren had encountered, why Ning Ren understood such document or category of document to be relevant or why it considered a specific statutory provision to be invoked. 

(iv)      There was no coherent explanation why certain documents were immediately considered to be capable of transfer out of China, while others were sent to the authorities. 

(v)       There was no explanation why Ning Ren came to change its mind with regard to a significant volume of documents identified. 

86.      Mr Taili Wang acting as an expert in his affidavit sworn on 5^th August 2020 on behalf of the plaintiff at paragraph 10 stated in relation to Ning Ren's affidavits: -

"As set out in response to the next section, I have been able to assess parts of the reasoning presented by Ning Ren.  However, to a significant degree, I remain unable to do so because the documents are not described clearly enough, and the legal reasoning is not specific enough."

87.      At paragraph 11 of his affidavit Mr Wang deposed in relation to the second Ning Ren affidavit: -

"The affidavit evidence of Mr Liu Jianguo remains generic and does not add any detail to the lists of documents in terms of why specific documents, or classes of documents, are being withheld.  In particular, he refers to a number of PRC laws but does not expand upon what documents they apply to, or why."

88.      Paragraph 14 of the same affidavit stated as follows: -

"As a PRC legal expert, since those specified documents are not provided to me and are, on the whole, not described in enough detail for me to understand their content, I am not sure of the basis upon which they are being withheld i.e. whether they are state secrets, trade secrets or personal information.  Therefore, I cannot make a judgment on whether Ning Ren's decision on refusing to disclose the specified material is correct or not."

89.      Paragraph 15 and 16 then stated as follows: -

"15.     According to Ning Ren's reasoning, the withheld documents cannot leave the PRC because they are protected as state secrets, trade secrets or personal information by the Law of the PRC on Guarding State Secrets (hereinafter "Guarding State Secrets Law"), Anti-Unfair Competition Law of the PRC (hereinafter "Anti-Unfair Competition Law") and Cybersecurity Law. In fact, the relevant in force PRC laws and regulations have clear definitions of state secrets, trade secrets, personal information. Before applying certain laws and regulations, it is necessary to clarify the definition and scope of relevant terms. Only then is it possible to reach a conclusion as to whether or not, and if so, how, the law applies. Ning Ren has not done this.

16.      According to the list of documents provided by Ning Ren, of the total 18,137 documents, Ning Ren advised that 2572 of them should not be transferred outside the PRC.  In view of the fact that we have not been able to see the specific content of those documents, and therefore do not know their legal nature, it is impossible to comment upon whether they are state secrets, trade secrets, or personal information, the transfer of which is prohibited under the PRC law. As Ning Ren claims that this material cannot leave the PRC, it has the burden to prove it. In my view this burden has not been discharged. I also note that the Master specifically directed Ning Ren to explain the implications of its reliance on commercial secrets, which it has not done."

90.      Finally, Advocate Redgrave observed that the Ning Ren affidavits sworn by Mr Jianguo were not independent expert evidence and they did not contain the required declarations that Mr Jianguo was aware of the duties of an expert and was providing his opinion accordingly.  The requirements of my April judgment had not therefore been met.

A risk of prosecution

91.      Insofar as the defendant was suggesting individuals or organisations in China faced a risk of prosecution for making discovery, Advocate Redgrave made the following submissions.

92.      He started by submitting that the relevant legal test for this was considered by Mr Justice Birss in Property Alliance Group Limited v The Royal Bank of Scotland Plc [2015] EWHC 321.  Paragraph 16 of that decision states as follows: -

"16.    The applicable legal principles are common ground and can be found in Health Secretary v Servier Laboratories [2013] EWCA 1234 (Civ) (Court of Appeal). Orders for discovery of a document in this court (or for inspection of a document already disclosed) are procedural in nature and the law governing them is the lex fori, i.e. the law of England and Wales. The fact that a party objects to disclosure or inspection on the ground that to comply with such an order would put the party at risk of prosecution under a foreign law provides no defence to the making of the order. The English court retains jurisdiction under its local law to make such an order although it has a discretion whether to do so in the particular circumstances. The English court is entitled to take into account the risk of prosecution. In the two cases under consideration the judges who made the orders requiring disclosure had done so having found that a prosecution was highly unlikely. The Court of Appeal upheld those decisions."

93.      Advocate Redgrave also referred to case of Byers v Samba Financial Group [2020] EWHC 853.  In relation to the factors explored at paragraph 107 of that decision, applying those factors to the present case he made the following observations: -

(i)        The documents in China were of the highest importance to the issues in dispute in the present case.

(ii)       The defendant had not dealt with this issue quickly.

(iii)      There was an unfairness in the disclosure process, as effectively there had only been disclosure from the plaintiff.

(iv)      The only sanction identified was a possible fine.  Otherwise there was no evidence as to the risk of prosecution and what approach the authorities in China might take.

(v)       The affidavits of Ning Ren only stated that individuals might be exposed to criminal liabilities and penalties or civil liabilities.  The only concrete example given was in paragraphs 22(a) and (b) of Ning Ren's second affidavit dated 12th June 2020 where Mr Jianguo referred to administrative penalties or punishments only.

(vi)      The type of action that might be taken in China was therefore not clear, nor was the type of penalty that might be imposed.

(vii)     The risk of prosecution was also unlikely because the NCA initially informed Ning Ren there was no need to circulate any documents for review. 

(viii)    The current guidelines were drafts only and this was the first occasion upon which the NCA had been involved in data transmission of this nature.

94.      Yet the material withheld was significant in respect of key issues in the case including: -

(i)        The decision to fix the price of manganese sold to China Mining at a price below the market rate;

(ii)       Pressure to agree favourable terms of supply to China Mining;

(iii)      Pressure to approve a bank guarantee for the benefit of TMI; and

(iv)      Pressure to increase production irrespective of the impact on price.

Mr Cheung

95.      Mr Cheung was the Deputy Chair of the defendant and a Director who was based in Hong Kong.  Advocate Redgrave criticised his approach to discovery by reference to Consilio's letter of 20^th August 2020.  That letter summarised that it took 6 months for Mr Cheung to respond to a questionnaire.  The letter then described what happened over the next 9 months.  Ultimately, after a series of attempts to avoid providing his phone, it was finally provided.  Yet the data collected on the phone had still not been disclosed. 

96.      What the description in Consilio's letter revealed was an uncooperative attitude.  Consilio only got access to the phone two years after the proceedings started.  Advocate Redgrave contrasted the sequence of events with paragraphs 69 to 71 of the first affidavit of Advocate Seddon which gave the impression that Mr Cheung was cooperating in order for Consilio to gain access to data on his phone.

97.      In his third affidavit Advocate Seddon described that there had been a number of impediments to the phone being provided.  Advocate Redgrave observed this was something of an understatement.  The full picture only emerged in Advocate Seddon's fourth affidavit.

98.      This part of the history was illustrative of the lack of cooperation shown and further supported why there would be no cooperation from within China.

Third party privilege

99.      This criticism related to an unidentified number of documents collected by Consilio from various sources including custodians in China which had not been disclosed on the basis that they were privileged in favour of TMI and/or CTYML.  CTYML is the immediate parent company of the defendant and is 100% owned by TMI.

100.   In his first affidavit dated 28^th January 2020 at paragraph 96 Advocate Seddon deposed that some documents collected were privileged in favour of a third-party company and then at paragraph 97 stated that such documents: -

"are not disclosable in these proceedings and will not be disclosed."

101.   Advocate Redgrave was critical of this approach because the affidavit of Advocate Seddon did not say anything about the nature of the documents affected by his refusal.  His client could not tell how relevant these documents might be or how many there were.  Given the central role in this case of TMI as the ultimate parent of the defendant and the actions and decisions of TMI figures such as Mr Tianjiang, he argued that there was a serious concern about documents being withheld which could deprive the plaintiff of important and relevant material regarding the conduct of Mr Tianjiang and other key TMI figures.

102.   Insofar as documents were not being disclosed because they belonged to third parties, paragraph 98a of Advocate Seddon's first affidavit, Advocate Redgrave cautioned, "should ring alarm bells".  Advocate Seddon's assertion was troubling, firstly because it prevented documents originating from Mr Tianjiang from being disclosed.  Secondly, these were documents that had been gathered in the course of a discovery process by the defendant.  They were therefore in the defendant's possession. 

103.   The defendant was now asserting a strict demarcation of corporate lines.  This had not been the case when the plaintiff was working for the defendant.

104.   Advocate Redgrave therefore distinguished the present claim from the case of Saltri III Ltd v MD Mezzanine SA SICAR (t/a Mezzanine Facility Agent) [2012] EWHC 3025 relied on by the defendant.  That case concerned discovery of documents held by seconded employees generated while on secondment.  In the present case the defendant had purported to withhold documents in its own possession.

TMI's activities in China

105.   Mr Sheyko in his fifth affidavit at paragraph 58 also raised concerns about Mr Tianjiang's connections to a corruption scandal in China and stated as follows: -

"58. During my time as CEO of CML I became extremely concerned about Mr Jia's connections to a corruption scandal in China, about which I was not being given accurate information. As part of CML's discovery from outside China it has disclosed an investment brochure dated September 2017 which I exhibit as [OS/5 pp. 69-166]. It is clear from the brochure that HKBridge Financial Holdings (in which TMI held a stake) and China Huarong, a state-owned distressed asset manager, were jointly promoting an investment fund seeking to raise billions of dollars supposedly to be invested in CML on the basis of very rosy forecasts as to CML's future profitability [OS/5 p. 125]. TMI was described as a "strategic partner" to the fund [OS/5 p. 118]. In my view the draft brochure paints an inaccurate projection of the future mining performance of CML's assets in Australia and Ghana. It also in my view paints a false picture of CML's financial strength because it does not refer to the CITIC guarantee. The investment opportunity was advertised as one which accorded with the objectives of the Chinese Government's "Belt and Road" economic initiative."

106.   While this issue was not a reason why the plaintiff had resigned, the plaintiff's view was that Mr Tianjiang was connected with the individuals involved.  The plaintiff's view was that it was surprising that Mr Tianjiang would not be involved and so he criticized the lack of discovery on this issue.

Conclusion

107.   In conclusion, Advocate Redgrave relied on the words in Arrow Nominees Inc & Anor Respondents v Blackledge and Others Appellants [2000] 2BC LC167 at paragraph 54 which included the following statement: -

""I adopt, as a general principle, the observations of Millett J in Logicrose v Southend United FC Limited (The Times 5 March 1988) that the object of the rules as to discovery is to secure the fair trial of the action in accordance with the due process of the Court; and that , accordingly, a party is not to be deprived of its right to a proper trial as a penalty for disobedience of those rules - even if such disobedience amounts to contempt for or defiance of the Court - if that object is ultimately secured by (for example) the late production of a document which has been withheld. But where a litigant's conduct puts the fairness of the trial in jeopardy, where it is such that any judgment in favour of the litigant would have to be regarded as unsafe, or where it amounts to such an abuse of the process of the Court as to render further proceedings unsatisfactory and to prevent the Court from doing justice, the Court is entitled - indeed I would hold bound - to refuse to allow that litigant to take further part in the proceedings and (where appropriate) to determine the proceedings against him. The reason, as it seems to me, is that it is no part of the Court's function to proceed to trial if to do so would give rise to substantial risk of injustice. The function of the Court is to do justice between the parties, not to allow its process to be used as a means of achieving injustice. A litigant who has demonstrated that he is determined to pursue proceedings with the object of preventing a fair trial has forfeited his right to take part in a trial. His object is inimical to the process which he purports to invoke. " (Emphasis added)."

108.   Advocate Redgrave therefore concluded by arguing that the cumulative effect of the defendant's approach to discovery of misleading the court, delaying the process, refusing to hand over devices and the proliferation of affidavits without addressing the central criticisms meant a fair trial could not take place.  The relevant individuals in China had made it clear that they would not hand over devices even though they had the means to be compelled to do so.  Even if devices were handed over at this stage given the length that time had elapsed there would be no guarantee that all relevant documents would be produced at this stage. If discovery was going to have happened it would have happened it would have happened by now.  It was clear to the plaintiff it was not going to happen.  Ning Ren's affidavits only made matters worse.  There was therefore clearly a basis to strike out the claim.    the

Advocate Turnbull's submissions

Relevant legal principles

109.   Advocate Turnbull observed that the orders sought by the plaintiff were pursuant to Rule 6/13(1) of the Royal Court Rules 2004, as amended.  The plaintiff had made it clear that he relied on sub-paragraph (c) and (d) of Rule 6/13(1) namely that the conduct complained of, albeit disputed, would prejudice, embassies or delay a fair trial or was otherwise an abuse of process of the court.

110.   Advocate Turnbull however criticised the plaintiff's skeleton for failing to identify which paragraphs of the Act of Court of 15^th January 2020 had been breached.  The matter was put this way in the defendant's skeleton argument at paragraph 2 as follows: -

"The appropriate course was (and still is) to engage in constructive and appropriate dialogue in furtherance of the overriding objective. The present Summons, regrettably, is a disproportionate and unreasonable use of the parties' and court's resources. There is no conceivable prejudice and nor is it a proportionate use of the Court's process to apply to strike out as a result of the matters alleged."

111.   The defendant therefore argued that a strike out was draconian and was for exceptional cases as noted in Leeds.

112.   If there were breaches, there were other sanctions that could be imposed which would be more proportionate.  In that regard no trial dates had been fixed. 

113.   Advocate Turnbull also observed that a claim to be able to withhold documents should not lead to a case being struck out, even if that claim is rejected.

114.   The burden to be overcome was also a high one.  It would require the court to be satisfied that a party was flagrantly ignoring court orders or persistently conducting itself in a way that evidenced an unwillingness to engage in the litigation process on an equal footing with other parties.

115.   This led Advocate Turnbull to emphasise paragraph 35 of Leeds which stated as follows: -

"35.    I draw from the above authorities the conclusion that it is a strong thing to strike out a defence and there must be an abuse of process such as to render further proceedings unsatisfactory or prevent the court from doing justice or, to quote Page Commissioner, a party must have flouted or ignored the Court's orders or persistently conducted himself in a way that evinces an unwillingness to engage in the litigation process on an equal footing with the other parties."

116.   In the present case there was no unless order in play and the plaintiff had not sought such an order.

117.   Advocate Turnbull also noted that in Leeds the case was not struck out because if the defendant complied and provided documents then a trial could take place.

118.   Advocate Turnbull further relied on paragraph 55 of Alhamrani & Ors v Alhamrani & Ors [2009] JLR 301 as follows: -

"55-ƒIt is a common feature of hotly-contested litigation that there is late or inadequate disclosure, sometimes as a result of a deliberate desire to suppress unhelpful evidence. It is equally not unusual that witnesses can be exposed as having given evidence inconsistent with the contemporary record. Such features, when identified, are grist to the mill of the opposing advocate, provide fertile ground for cross-examination and submission, and entitle a court to draw adverse inferences against the party in default (S v. F (9)). But the existence of such features can only rarely result in a court being unable fairly to conduct a trial: rather, it can actually assist the court in reaching the right conclusion. In my view, a court should not lightly be persuaded that it is unable to perform its primary adjudicative role."

WeChat

119.   In respect of this issue Advocate Turnbull made the following submissions: -

(i)        Firstly, the plaintiff's assertions were not supported by evidence. 

(ii)       While Advocate Seddon accepted that WeChat was used, its use was not universal.  He identified individuals who had used WeChat all of whom had since left the TMI Group and referred to Mr Brent Jenkins, Mr Roy Zhang and Mr Zhensheng Zhang. 

(iii)      The first two of these were not located in China and Mr Zhensheng Zhang was located in China and Ghana. 

(iv)      In respect of WeChat, 10,033 WeChat threads were produced for review leading to 140 WeChat threads being disclosed.

(v)       In relation to paragraph 62 of the plaintiff's fifth affidavit Advocate Turnbull attempted to criticise the plaintiff because he had not referred to whether he alleged that he had WeChat communications with other individuals relevant to the dispute.  This however was an attempt to refer to the three affidavits filed on the morning of the hearing which I excluded and so I disregarded this submission.

120.   Advocate Turnbull also argued in relation to WeChat that answers to questionnaires provided by individual employees were subject to litigation privilege.

121.   He also argued that individual employees were not required to hand over devices.

The affidavits of Ning Ren

122.   Advocate Turnbull argued that in respect of documents withheld as being potential state secrets (as described in the list of documents disclosed by the first defendant on 1^st May 2020 attached to Ning Ren's second affidavit), Advocate Turnbull argued that the key column was the final column which contained the comments of the reviewer.  The term "potential state secret" was therefore simply a generic description for all documents withheld with the grounds being defined in the final column.

Misleading the court

123.   The defendant's position was firstly that Ning Ren had approached the authorities before the deadline to make discovery at the end of October 2019 had expired.  While they had received an oral confirmation, they did not want to rely on that confirmation. The defendant's position that it wanted a written confirmation was not unreasonable.

124.   There was also a distinction between review of documents and approval for transmission.  The latter required approval of the Chinese authorities as had been explained in Ning Ren's opinion of 1^st November 2019 which had been provided to the court for the hearing on 6^th November 2019.

125.   In response to the criticism that the level of detail known to Ning Ren was not before the court in November 2019 and January 2020, Advocate Turnbull argued that the position was ultimately accurate, namely approval from the NCA was awaited.  In other words, while the court did not have the full story it had not been misled. 

126.   The issue of Chinese law was serious as could be seen from the questions posed by the Ningxia Department of State Security set out at paragraph 77 above.

127.   The case was a benchmark case in China and therefore the defendant wanted to ensure that it had complied with the rules and regulations applicable to individuals in that country.  The reference to helping the defendant "win the case" was no more than the Chinese authorities recognising that they should not hinder the defendant providing documents provided Chinese law was complied with.

128.   The detailed description of the laws was contained in, or exhibited to, the first affidavit of Mr Jianguo of Ning Ren.  Disclosing documents belonging to a third party was therefore a criminal offence.

129.   The defendant's position was that Ning Ren had given sufficient detail in the first and second affidavits of Mr Jianguo as to why documents had been withheld.

130.   In relation to Ning Ren acting as an expert, Ning Ren had been retained by the defendant and were acting for the entities linked to the defendant.  Mr Jianguo was, therefore, a suitably qualified lawyer but could not act as an expert.

The defendant's compliance with the disclosure orders

131.   The defendant contended it had complied with disclosure orders made previously as follows:-

(i)        The requirement to provide discovery of all documents held outside China contained in paragraph 1 of the Act of Court of 6^th November 2019 was met by the provision of the first affidavit of Advocate Seddon.

(ii)       In relation to the Act of Court of 15^th January 2020 in respect of documents held within China, the defendant had provided a list of 1595 documents that it considered to be potentially relevant.  These documents were uploaded to the Relativity platform and 665 relevant documents were disclosed.

(iii)      In respect of paragraph 1c of the Act of Court of 15^th January 2020 a list of the 8777 documents was also disclosed describing as far as possible each document individually and why inspection was being withheld.

(iv)      Thereafter lists were provided on a fortnightly basis as required by paragraphs 1d and 1e.

(v)       The deadline for completion of discovery was extended to 29^th May 2020 which deadline was complied with.

(vi)      The deadline of 3^rd April 2020 was also extended to 12^th June 2020 and accordingly an affidavit was provided by Ning Ren as required by paragraph 3.

(vii)     The defendant also relied on a third affidavit of discovery being provided dated 20^th July 2020. This related to additional documents outside China discovered after discovery was initially provided pursuant to Advocate Seddon's first affidavit.

132.   The defendant therefore argued that the plaintiff could not go behind the three affidavits filed because there was a presumption that disclosure had been completed satisfactorily, (see Beghin Shoes Limited & Anor v Avancement Limited unreported judgment 1995/726 dated 24^th April 1995).  This meant that the defendant could not be required to produce specific discovery because there was no affidavit filed in support of the application.

133.   The defendant's position was that it had taken steps to conduct a reasonable search which had been described in detail in the affidavits of Advocate Seddon filed on behalf of the defendant.  The relevant email accounts required to be searched had been collected and searched.  The defendant should not be criticised for not searching accounts of individuals who were not custodians.

Mr Cheung

134.   A detailed report had been provided from Consilio about the collection of his data dated 20^th August 2020.  Ultimately, the data had now been collected and was being reviewed in Hong Kong by Walkers.  The outcome of the exercise had led to a large amount of data having to be reviewed.

Other custodians

135.   Advocate Turnbull explained in respect of other custodians the following:-

(i)        Mr Zhensheng Zhang, who had previously worked in Ghana, had left the TMI group and refused to cooperate.

(ii)       Mr Roy Zhang who was based in Hong Kong also refused to cooperate although his data in as far as it was backed up in Hong Kong had been collected.

(iii)      Brent Jenkins was based in Australia and would not cooperate but in as far as data was stored on ConsMin Australia's records this was collected.

136.   In relation to custodians within China, Consilio reviewed email accounts based on the responses received from individuals.  Advocate Turnbull accepted that Consilio had not data collected from mobile phones based on a response indicating that an individual did not have a mobile phone which contained relevant data.

Risk of prosecution

137.   In respect of this issue, Advocate Turnbull firstly contended that relevant laws of the Peoples Republic of China had been set out in Mr Jianguo's first affidavit. In his second affidavit at paragraph 22 (a)  Mr Jianguo deposed that the Chinese government had paid more attention to the management of network information security and had been increasingly strict about it.  He gave examples of administrative penalties for illegal transmission of data outside China.

138.   Mr Jianguo's second affidavit also stated that the present case was also something of a test case as assisting the defendant to comply with the orders of the Jersey Court. Mr Jianguo could not go any further than paragraph 22 (d) of his second affidavit.

139.   Advocate Turnbull also observed that Mr Wang in his affidavit at paragraph 20 could not set out the risk of prosecution beyond observing that the consequence of disclosure if a document fell within state secrecy legislation could be potentially be serious.

140.   What was required as a matter of law was set out in Bank Mellat v Her Majesty's Treasury [2019] EWCA Civ 449 at paragraph 63: -

"63.    Pulling the threads together for present purposes:

i)         In respect of litigation in this jurisdiction, this Court (i.e., the English Court) has jurisdiction to order production and inspection of documents, regardless of the fact that compliance with the order would or might entail a breach of foreign criminal law in the "home" country of the party the subject of the order.

ii) Orders for production and inspection are matters of procedural law, governed by the lex fori, here English law. Local rules apply; foreign law cannot be permitted to override this Court's ability to conduct proceedings here in accordance with English procedures and law.

iii) Whether or not to make such an order is a matter for the discretion of this Court. An order will not lightly be made where compliance would entail a party to English litigation breaching its own (i.e., foreign) criminal law, not least with considerations of comity in mind (discussed in Dicey, Morris and Collins, op cit, at paras. 1-008 and following). This Court is not, however, in any sense precluded from doing so.

iv) When exercising its discretion, this Court will take account of the real - in the sense of the actual - risk of prosecution in the foreign state. A balancing exercise must be conducted, on the one hand weighing the actual risk of prosecution in the foreign state and, on the other hand, the importance of the documents of which inspection is ordered to the fair disposal of the English proceedings. The existence of an actual risk of prosecution in the foreign state is not determinative of the balancing exercise but is a factor of which this Court would be very mindful.

v) Should inspection be ordered, this Court can fashion the order to reduce or minimise the concerns under the foreign law, for example, by imposing confidentiality restrictions in respect of the documents inspected.

vi) Where an order for inspection is made by this Court in such circumstances, considerations of comity may not unreasonably be expected to influence the foreign state in deciding whether or not to prosecute the foreign national for compliance with the order of this Court. Comity cuts both ways."

141.   Advocate Turnbull also relied on Byers v Samba Financial Group [2020] EWHC 853 (Ch).  Advocate Turnbull contrasted Byers with the present case because in Byers the defendant's team had seen all the relevant documents, whereas in the present case the defendant's team had not seen material because, if it existed, it was still in China.  In contrast to Byers the preparations for trial had not started and were not therefore at risk.

142.   Advocate Turnbull also emphasised that the number of documents withheld were relatively small compared to the overall number of documents disclosed.

Documents held by third parties

143.   In respect of this part of his submissions Advocate Turnbull firstly relied on the case of Saltri III Ltd v MD mezzanine SA [2012] EWHC 1270 (Comm).  He relied on the quotation at paragraph 40 as follows: -

"40. EL point out that it is important to bear in mind that the question is whether EL have the relevant control, not whether a particular employee could in some capacity have had access to the documents. They provide the example of a person, A, who is an officer of two companies, X and Y (it matters not for this example whether X and Y are related companies). They submit that the fact that A may as director of X have access to its documents cannot mean that if Y is sued Y has control of X's documents."

144.   Documents had been withheld in the possession of data controllers where those data controllers had a number of functions (i.e. wore different hats) and owed duties to different companies.  The defendant therefore had no right to see those documents.  The capacity in which an individual received a document was key as to whether or not the defendant was entitled to disclose it.

Privilege

145.   In relation to the defendant's claim to withhold documents on the grounds of privilege, Advocate Turnbull relied on the following extract from Hollander on Documentary Evidence (13^th Ed.).  The extract relied upon is as follows: -

"However, it is difficult to go behind an affidavit (or witness statement) of documents at an interlocutory stage. The affidavit is conclusive unless it is reasonably certain from: (a) the statements of the party making it that he has erroneously represented or has misconceived the character of the documents in respect of which privilege is claimed; (b) the evidence of the person who or entity which directed the creation of the communications or documents over which privilege is claimed that the affidavit is incorrect; or (c) the other evidence before the court that the affidavit is incorrect or incomplete on the material points. Where the affidavit was not treated as conclusive, there were four options open to the court. First, it may hold that the party claiming privilege has not discharged their burden of satisfying the court and order disclosure. Secondly, to order a further affidavit, on the basis that if the court was not then satisfied it would order disclosure. Thirdly, the court might inspect the documents. The fourth possibility was to order cross-examination, an issue further considered by the judge and discussed below. In the event, the judge ordered a further affidavit, with disclosure to be made in default. In Axa Seguros SA De CV v Allianz Insurance Ple Christopher Clarke J summarised the position as follows: "An affidavit which sets out a claim for privilege by stating the alleged purpose of the communication is not conclusive where it is appears from other evidence that the characterisation of the documentation is misconceived. The court must consider the issue in the light of all the evidence including, but not limited to any statement of purpose.""

146.   The defendant's position was that in its disclosure lists and affidavits it had identified its claims for privilege in the conventional way following a review by Advocate Seddon.  The position was therefore that the claims for privilege were properly made and the bases were clear.  If the court was not satisfied with the claim for privilege, there was a range of options available to the court to correct any failings i.e. the filing of a further affidavit.

Advocate Redgrave's reply

147.   In reply Advocate Redgrave made the following points: -

(i)        In relation to the November hearing and allegations of misleading the court, the question was whether the court was given the full position at the hearing.  By the time of that hearing Ning Ren had approached the NCA four days before the expiry of the deadline for discovery. 

(ii)       By the time of the hearing in January 2020 the court was not told that Ning Ren had not accepted the initial answers received from the NCA until the NCA changed their view.  All the court was told was that the NCA would need to conduct a review. 

(iii)      Despite the NCA ultimately saying they would conduct a review, Ning Ren were able to reach their own view that some documents could be released, some were to be withheld and some were sent to the NCA for review.  This approach was therefore inconsistent with the view finally expressed by the NCA. 

(iv)      Advocate Redgrave therefore submitted that the overall position was that the defendant had been dilatory in respect of the steps taken in China. It had not been straight with the Court and was trying to find different reasons to justify a further extension of time and why the defendant had taken such a long time.

(v)       In relation to the collection of devices, Advocate Redgrave criticised the defendant for not making Mr Tianjiang's assistants custodians for search purposes if it knew that they had transmitted emails for Mr Tianjiang.

(vi)      Advocate Redgrave emphasised that private devices had not been collected from the key players in China.  This had not been explained in an affidavit, but rather was left to Consilio to justify in their report.  Yet the questionnaires setting out why devices were not provided were withheld from disclosure because privilege was claimed in respect of these questionnaires.  This position was said to be entirely unsatisfactory.  It was impossible for the Court to know who had decided that there was nothing relevant on any devices.  Consilio were also not in any position to interrogate the responses received.  Yet there was a basis for doubting what was being said.  In an email from Isabella Dai dated 19^th June 2018, Miss Dai wrote to the plaintiff "below is the response from Mr Huang via WeChat".  Mr Huang was the vice chairman of TMI and the alternate chairman of the defendant, and is based in China.  This email showed that the claim that WeChat was not used in China on personal devices was simply not true.

(vii)     The approach that should have been taken by the defendant was that adopted by the plaintiff which was to disclose everything he had with a full explanation (see paragraphs 19 to 25 of the plaintiff's fifth affidavit dated 2^nd September 2020).

(viii)    From the email accounts searched it appeared that Mr Tianjiang (using the address tymy8888@163.com) had sent an email from an iPhone, to another email account which had not been searched by Consilio numbered 1031782671@qq.com.  Further there was in the correspondence disclosed by the defendant an email indicating that there was an email address used for business purposes by Mr Jun Liu which had not been searched, namely 22764829@qq.com.

(ix)      In respect of when email accounts were handed over this step did not occur until December 2019 which was over a year after Baker & Partners' letter of September 2018.  The question was posed by Advocate Redgrave as to who knew what had happened in the meantime. 

(x)       There were only thirty three emails listed from Mr Tianjiang's tymy8888 account, with three being withheld on the grounds of secrecy.

(xi)      The email sent to account 1031782671 was sent from an iPhone and yet Mr Tianjiang's iPhone had not been searched.  Sending the document clearly shows the phone was used for work purposes.

(xii)     The fundamental issue was that a large number of documents had been withheld in China; there was a lack of searching of relevant devices and a lack of clarity of secrecy grounds.

(xiii)    In respect of Ning Ren's affidavits, they could have given chapter and verse about why documents had been withheld and the risk of prosecution.  Based on the material provided it was difficult to see why disclosure would be a breach, but even if it would it was not clear why it would lead to a serious penalty.  The evidence filed was insufficient to satisfy the court that there was a risk of prosecution.  Ning Ren were also not acting as experts. The defendant had to persuade the court that there was a real risk of prosecution.  It was not enough to state the maximum penalty.

(xiv)    In respect of claims for privilege it was not clear from Advocate Seddon's first affidavit at paragraph 96 what documents had been withheld.  The same statement was made in Advocate Seddon's second affidavit at paragraph 54.  It appeared that these were documents collected from custodians which were said to belong to TMI, CTYML and/or other third parties.

(xv)     It was clear that any further orders would not be complied with given the approach taken to date.  The defendant knew what it had to do but had failed to comply.  The defendant had therefore forfeited its right to a trial.

Decision

148.   In paragraph 22 of this judgment I observed that I had to consider whether breaches of discovery orders I have made had occurred.  If I was satisfied that such breaches had occurred, I then had to consider whether such breaches prevented a fair trial, or whether other orders or sanctions were appropriate to address any breaches I had found had occurred.  That summarises the approach I intend to adopt in relation to reaching a decision on the plaintiff's application.

149.   Also as noted, the thrust of the plaintiff's application at its heart related to documents located within the People's Republic of China.  My decision therefore focuses on the criticisms advanced by the plaintiff.  Before I do so however, it is appropriate to deal with criticisms made by the plaintiff in respect of documents held outside China.  The issues that were raised by Advocate Redgrave, unless they are relevant to the approach taken to documents held within China, can otherwise be dealt with relatively briefly.

150.   The most significant criticism concerned that the lists of documents provided did not accord with Practice Direction RC17/07 because they had not been listed chronologically.  Paragraph 14 of Practice Direction RC17/07 provides as follows:-

"1.      The list must identify the documents in a convenient order.  Normally documents should be

a.        listed individually,

b.        in date order,

c.        numbered consecutively and

d.        described concisely."

151.   For electronic documents, this information is contained in Practice Direction RC17/08.  These two Practice Directions are to be read together as noted at paragraph 1 of Practice Direction RC17/07.

152.   I have referred to this because while Practice Direction RC17/08 at paragraph 23 sets out how electronic documents should be set out in a spreadsheet; this spreadsheet should still follow the guidance contained in paragraph 14 of Practice Direction RC17/07 set out above.  In other words, a list of electronic documents should generally be chronological.

153.   I have referred to this question because the defendant's list of documents did not list all items chronologically; some 7500 documents had no metadata and could not be arranged by date.  In response to the criticism that this approach did not meet the requirements of the relevant Practice Directions on discovery, the defendant suggested it was straightforward for the plaintiff to use electronic discovery platforms to reorder the documents provided.  This response however is not a satisfactory answer.  It is for the defendant to provide a list in compliance with the relevant Practice Directions.  Where a significant number of documents have been disclosed (in this case over 115,000), listing documents chronologically is likely to assist both parties in analysing whether documents they have obtained represent the relevant documents, or whether there are particular documents or categories of documents that are missing.  A chronological list assists the party making discovery and its advocates to satisfy themselves that all relevant documents have been produced; it also assists the receiving party to analyse any underlying factual issues in dispute.

154.   However, this issue is capable of resolution and does not meet the tests to which I was referred.  It does not justify a strike out application and is capable of being rectified by appropriate orders against the defendant.  In previous cases where a list of documents has not followed the correct form, the party in breach is normally required to provide a corrected list at its own expense and may be required to meet the wasted costs of the other party in having to deal with a list of documents that does not comply in a material way with the relevant Practice Directions.

155.   The other criticism advanced by the plaintiff in respect of the list of documents was that it did not identify where documents had originated from and, in particular, it was not always clear from which data source documents had been provided.  However, this is not an obligation that is contained in the Practice Directions.  Ordinarily, the description required of a document should be sufficient for a party to identify where the document came from.

156.   In addition, paragraph 4(i) of Practice Direction RC17/08 requires the party making electronic discovery to make available any metadata which is part of the original format of the document.  Such metadata can be important if there are issues in dispute about the authenticity of documents and when they were created.

157.   It is not therefore necessary to describe for each document the source of that document.  Rather affidavits of discovery should explain the processes followed by a party in providing electronic discovery given the information a party is required to disclose by schedule 1 to that Practice Direction.  In complex cases, the affidavit should provide detailed information about what sources have been searched.  The extent of searches may have in part already been encapsulated in a previous Act of Court or in information exchanged between the parties or in a report provided by a specialist discovery provider.  Ultimately, the affidavit should enable the other party to understand how and what searches have been carried out.  This information is required so that the receiving party, and a court if necessary, can evaluate whether the searches carried out are reasonable and proportionate or whether further searches may be required.

158.   The other criticisms raised in respect of documents outside China are capable of resolution, or are as far as the defendant can go, and are as follows: -

(i)        a failure to provide metadata is capable of being resolved by an order to do so.

(ii)       the lack of cooperation from Mr Eijgendaal has been addressed albeit after the deadline contained in the 15^th January 2020 Act of Court.

(iii)      In respect of Mr Ng, discovery has been provided by King & Wood Mallesons where he was a partner.  Given that discovery has been provided from the defendant's records in Hong Kong and by King & Wood Mallesons, the extent of any missing material is not clear; nor is what further enquiries or orders could be made against the defendant or sanctions.  At this stage however I am not satisfied that a fair trial could not take place without this evidence. Rather it could lead to an application for specific discovery.

(iv)      For the other custodians in Ghana, their involvement appears to be less significant than the complaints at the heart of the plaintiff's dispute and so, while their responses can be criticised, they do not in my judgment prejudice or prevent a fair trial.  Rather, such issues fall within the description of problems with discovery set out at paragraph 55 of Alhamrani cited at paragraph 118 above.

(v)       The exception to the above is the position of Mr Cheung because I regard his approach as relevant to the exercise of discretion given that he was deputy Chair of the defendant as well as being one of its directors. While he ultimately provided his device, the manner in which he did so and the length of time he took to provide his device for analysis (which I observe has still not led to any documents being disclosed as far as I am aware) is  pertinent issue in relation to the issues I have to decide.

159.   I therefore propose to focus for the remainder of this judgment on discovery of documents held by individuals within China to evaluate whether or not the defendant has provided discovery of such documents as required by the Act of Court of 15^th January 2020.  The starting point is what sources have been reviewed to enable data to be collected.  This requires an analysis of the defendant's arguments in respect of WeChat as well as collection of data from personal email accounts and personal mobile phones.  I now turn to deal with these categories.

WeChat, email and sources

160.   In relation to the use of WeChat in general, Advocate Turnbull accepted that it was used; but his position was that its use was not universal. However, this submission does not sit with the newspaper article referred to in Mr Brown's fifth affidavit and the exchange of the WeChat message from Isabella Dai about whether the plaintiff should be added to a WeChat group.  In a WeChat message disclosed from Isabella Dai, secretary to the plaintiff based in Jersey, sent around 7^th December 2017 Miss Dai states:-

"I have not added him on WeChat. I suppose he does not use it."

161.   This exchange was with the personal assistant of Mr Jun Liu, one of the directors of the defendant.  In addition, in an email from Isabella Dai dated 19^th June 2018, Miss Dai wrote to the plaintiff "below is the response from Mr Huang via WeChat".  Mr Huang was the vice Chairman of TMI and the alternate Chair for the defendant.

162.   In a schedule attached to Ning Ren's second affidavit setting out why documents were not disclosed, in respect of document 236 the schedule contained an explanation stating that "the document involves group chat record and large amount of individual WeChat accounts which are personal data."

163.   Mr Mark Camaj in his affidavit stated that he was not part of any WeChat group with the senior management of TMI but did accept in paragraph 7 that he was involved in a WeChat group with sales representatives in China.  That does not mean, however, that a WeChat group did not exist amongst the senior management of TMI.

164.   In addition, Consilio the e-discovery provider retained by the defendant in their report produced in 2020 explained that a total of 37,525 WeChat threads had been made available.  These were all WeChat threads which came from sources outside China.  I accept the plaintiff's submission that the evidence referred to above and this number of threads, given that the most senior people, in particular the chairman and the vice chairman of the defendant, Mr Tianjiang and Mr Huang He, were based within China allows me to conclude that there were WeChat threads being used in China.

165.   As I observed during the hearing, given the way the business world operates and the extensive use of technology and the power of mobile phones and other portable devices, I would also be astonished if such devices were not being used to communicate amongst the upper echelons of the defendant and its parent company in China and that WeChat was not one of the methods of communication used.

166.   This conclusion therefore requires consideration of what devices were searched for.

167.   At paragraph 61 above I have quoted from the report prepared by Consilio in relation to data collection in China.  That quotation bears repetition and states as follows:-

"Mobile phones were collected from custodians based on the responses received in the custodian questionnaires.  If mobile phones were not collected from any custodian it was on the basis of a response indicating that they did not have mobile phones which were available, and which contained data relating to this matter." 

168.   I therefore again agree with the plaintiff that it was left to individuals within China to decide whether to hand over mobile phones or not.  This means that no personal devices held by individuals within China relevant to the issues have been searched apart from that of Jenny Tsai.  Yet communications between other board members about the plaintiff, or the plaintiff's conduct of the defendant's business, are obviously pertinent to the plaintiff's claims.  The data from Jenny Tsai's phone was however withheld as a state secret.  The question of state secrets is dealt with later in this judgment.

169.   In relation to the argument that individuals should not provide their own mobile phones, in addition to not knowing what devices were used, no evidence was put forward as to whether such devices were owned personally or whether they were paid for by the defendant or some other entity within the TMI Group.  In respect of electronic devices which are either paid for or supplied by a business, or a contribution is made to the cost of such devices for work purposes, such devices should be made available for searching and in general terms it would be a reasonable instruction from an employer to require an employee to provide access to such a device.

170.   This conclusion does not mean that safeguards should not be built into such a request so that an employer may only obtain data on a device relating to work issues.  The employer should not be entitled to obtain copies of any personal communications where a device has been used for a mixture of work related and personal matters.  The defendant in this case however has come nowhere near that threshold because the defendant just accepted the refusal of directors and employees to hand over what were said to be personal devices without any challenge.  Nor was any evidence filed about ownership of such devices or who met the costs of using such devices.

171.   The accounts searched, subject to the issue of third-party ownership of such communications to which I refer to later, were therefore work email accounts only.  In other words, in addition to personal devices not being handed over to recover relevant WeChat threads, no personal email accounts were searched on grounds of privacy.  In my judgment the same analysis applies to personal email accounts as for WeChat on personal devices.  In addition, if communications using a personal email account were stored on the systems of the defendant notwithstanding that they were sent from or using a personal email accounts, such emails are in the possession, custody or power of the defendant and so are discoverable.

172.   The most pertinent documents produced in respect of this issue were those referred to by Advocate Redgrave in reply when I was referred to an email sent by Mr Tianjiang using his email address tymy888@163.com which email address has been searched.  However, the letter was sent to another email account with the address 103178267@qq.com which has not been searched.  Even more interestingly this forwarding of a letter by email was sent by iPhone.  Yet, Mr Tianjiang's iPhone was not produced to Consilio.  I was also shown an email dated 13^th September from David Slater about board meetings to inter alia Mr Jun Liu, one of the directors of the defendant. Mr Liu used the email address 22764829@qq.com.  Yet this email address has also not been searched.

173.   For the reasons set out in this part of my judgment, I am not therefore satisfied that discovery of emails or WeChat communications on personal phones or held in personal email accounts of individuals within China has occurred.  The devices of key individuals have not been handed over for any review.  The obligation to provide discovery has therefore been breached.

Documents belonging to third parties and privilege

174.   At paragraph 102 of his first affidavit Advocate Seddon deposed that CTYML and TMI had not given permission for CML to access, disclose or inspect relevant documents said to belong to them.

175.   The justification for this was that a strict demarcation line was being operated between the defendant, its immediate parent company CTYML and its ultimate parent TMI.  This led the defendant's approach to discovery to depend on which hat a particular individual was wearing when an email was sent, even if that email was in the possession of the defendant.  If that individual was discharging a function for an entity other than the defendant or wore multiple hats, whether a document was produced depended on the defendant's conclusion as to which function the particular individual was considered to be performing.

176.   This approach causes concern in a number of respects.  The first problem with this approach is that documents in the possession of the defendant should ordinarily be disclosed whatever the hat being worn. 

177.   Secondly the approach taken is not equivalent to the case of documents found on an employer's systems received by employees while on secondment to a stranger.  The defendant's approach is about documents in its own possession.

178.   Thirdly, the defendant's approach is inconsistent with Mr Tianjiang's position as ultimate owner of the defendant as well as being its chair and director as set out in his email of 2^nd March 2018 to the defendant quoted at length at paragraph 33 above.  That quotation included the following statement:-

"I do not think you got my point.  It is my decision on who to sell to.  Your focus should be on production expansion and cost reduction.  I never put profit as your KPI." 

And:-

"The funding is not your concern at all."

And:-

"For other plan there is no need for discussion."

179.   In other words, the strict approach that has now been applied to refuse disclosure of emails did not apply while the parties' relationship was subsisting.  Mr Tianjiang was then deciding what was within his domain leaving the plaintiff to focus on certain issues only.  No strict separation of corporate personalities was being applied.

180.   The defendant's approach does not also sit comfortably with paragraph 60 of its own answer cited at paragraph 27 above.  Part of the defendant's case is that the plaintiff could be subject to oversight from shareholders.  The email of 2^nd March 2018 indicates the extent of that oversight.  Having taken that position, the defendant's current approach now appears to want to have it both ways. 

181.   The defendant also argues that board members outside Jersey were "obliged to act in the best interest of the defendant and did so."  Yet, those same board members in China will not provide access to emails they have sent about the defendant and/or the plaintiff and they object to emails held by the defendant being produced because they allege that a board member was wearing a different hat or performing a different role.  In addition, if they were acting in the best interest of the defendant as they assert, then there should be no difficulty with making discovery of any relevant communication.

182.   The claim to withhold documents on the basis that they belong to TMI or to CTYML is not therefore made out and so paragraphs 1d. and 2 of the Act of Court of 15^th January 2020 have been breached.

183.   Documents belonging to third parties have also been withheld on the basis of a claim to privilege.  The claim for privilege in schedule 3 includes documentation passing between the defendant and/or their legal adviser or third parties in anticipation and/or since the commencement of litigation in relation to this matter for the purposes of obtaining or the giving of advice in relation to this litigation or for the purpose of obtaining or collecting evidence.

184.   What is not clear from this claim for privilege is whether it covers communications between the defendant, its parent and/or TMI.

185.   In its bundle of authorities, the plaintiff referred to Astex Therapeutics Limited v Astrazeneca AB [2016] EWHC 2759 (Ch).  I applied that case in Smith v SWM [2017] JRC 026 at paragraphs 43 to 46.  For the purposes of the present application it is paragraph 15 of Chief Master Marsh's judgment which is pertinent which states as follows:-

"15. During the course of the hearing of Astex's application, the form in which the claim for privilege was made by AZ was described as "conventional". I accept that the claim for legal advice privilege is described adequately. However, although it may have been conventional at one time to state that other documents are "by their nature privileged", such a statement has no place in modern litigation, let alone litigation of very real complexity. It is clearly unhelpful, without describing the documents said to be privileged, to say that "their nature' explains why they are privileged because the recipient of the list of documents has no way of knowing which documents, or classes of documents, are being referred to."

186.   The defendant's description does not permit me to identify what documents exist between the defendant and its parent or ultimate parent which may be the subject of a claim for privilege.

187.   While a claim for privilege in an affidavit of discovery can be conclusive, the affidavit firstly has to state the claim to privilege properly.  If it does not do so, and it is not clear what the categories of documents for which privilege is claimed are, then the presumption of conclusivity does not arise.

188.   In the present case I am not satisfied that insofar as documents held by the defendant relate to communications with its parent companies that such documents are necessarily privileged, for example communications between board members of the defendant about the plaintiff and the plaintiff's performance prior to the plaintiff resigning and alleging constructive dismissal.  For such categories of documents to be regarded as privileged would require a much clearer explanation than is contained in the affidavit.  Again this is a breach of paragraph 2 of the act of 15^th January.

State Secrets

189.   The next issue to consider in relation to documents that have been produced in China for review is whether discovery would breach a law of China.  The key question is whether the affidavits filed by Ning Ren comply with paragraph 3 of the Act of Court of 15^th January 2020.  That order required the affidavit to set out as follows:-

"with as much detail as possible all of the legal explanations relied upon as to why the potentially relevant documents have not been disclosed and why they have been withheld from inspection".

190.   This order followed on from the note produced by Ning Ren for the hearing on 15^th January 2020 which stated "that Ning Ren had conducted an initial legal review of these email messages and has analysed under Chinese law, tagged and removed emails that fall within the categories of state secrets, trade secrets and personal data involving persons that are not related to the proceedings."

191.   At the time of that note the particular reason why a document was being withheld was not clear, in particular whether it was a state secret, a trade secret or personal data.  This led to the observations I made at paragraph 43 of my judgment of 16^th April 2020.  The intention of the order was so that the plaintiff could understand precisely why documents were being withheld and so that the Court, if necessary, could be invited to rule on whether the defendant had established any grounds that could be relied upon to withhold individual documents.

192.   To be fair to the defendant, this judgment was only produced after Ning Ren had produced its first affidavit dated 3^rd April 2020.  However, the position was clearly known to the defendant and to Ning Ren by the time they produced their second affidavit.

193.   Attached to the second affidavit was a schedule running to some 76 pages in length which identified 785 documents.  This schedule withheld 771 documents as being "potential state secrets".  Although Advocate Turnbull argued that I should ignore this description and focus on the more detailed reasoning contained in the schedule, I cannot take such an approach.  Ning Ren were required to set out and explain why documents were being withheld.  They have described 771 of those documents as potential state secrets.  I have to take the use of that wording at face value and assess whether their reasoning meets what I required.

194.   The ultimate difficulty both I and the plaintiff faced is that there is no explanation given as to what was a state secret beyond quoting the statute that allowed documents to be characterised as state secrets and then applying the label potential state secrets.  Even that label is problematic.  Either a document is a state secret or it is not.  What does a "potential state secret" mean?  Does it mean the document might be a state secret?  The term is certainly not explained in either affidavit.  Yet the opinion required was to make it clear as far as possible whether a document was a state secret or not and the reasons why.

195.   Furthermore the use of this label does not sit with the reasoning in the next column of the schedule.  As noted at paragraph 74 above this is illustrated, by way of example, by document 119 but there are many others.  Document 119 was withheld on the basis of the cybersecurity law.  However, Mr Jianguo's listing of relevant statutes distinguishes between a law on guarding state secrets and a law on cybersecurity.  Yet, both descriptions were applied to the same document.  This is not providing as much detail as possible.

196.   Even if I were to accept Advocate Turnbull's position that I should ignore the potential state secret column, it is not clear why the WeChat communications breach the law on cybersecurity.  In respect of the Cybersecurity Law, Article 41 requires operators collecting and using personal information to abide by principles of legality propriety and necessity and disclosing their rules for its collection and use, explicitly stating the purposes, means and scope for collecting or using information and obtaining the consent of the person whose data is gathered.  Article 42 requires network operators not to disclose, distort or damage personal information they collect without the agreement of the person whose information is collected and personal information may not be provided to others and Article 44 requires an individual or organisation not to use illegal methods to acquire personal information and must not sell or unlawfully provide others with citizens' personal information.  It is also not possible to understand why any breaches of any of these articles is a state secret.  The position is simply not explained.

197.   In addition the email listed appears to belong to or to be in the possession of the defendant.  Despite this there is no explanation as to the general policies for data protection operated by the defendant or its parent, what consents may have been obtained or might be contained in practices and procedures operated by the defendant or within the TMI Group. 

198.   Neither affidavit explains why WeChat messages between members of the TMI Group about the defendant represent personal information.  Nor is it explained why it might be said that illegal methods have been used.  There is simply no analysis in the Ning Ren affidavits drilling down into the detail of the relevant provisions or the practices of the defendant.  Yet, the order required as much detail as possible.  Beyond quoting the statute, I have not been provided with any more detail.  The affidavits barely advance matters at all in terms of the provision of any reasoning since the note provided in January.  The same observations by way of example can be made in respect of document 236.

199.   Nor does the schedule attached to Ning Ren's affidavit identify the documents with as much detail as possible.  The affidavit does not explain why the normal process for describing a document cannot be followed, even if that document is being withheld.  What would appear to be relevant to whether a document can be withheld is the content of the document not its description. Again this is in breach of what was required by the Act of Court of 15^th January.

200.   In a note produced by Ning Ren for the hearing on 15^th January 2020, Ning Ren noted that the five executives in China were executives of both the defendant and the TMI Group.  In relation to that categorisation the note stated:-

"the first category involves personal ID information, passport information and physical information of some employees which are personal and sensitive information."

201.   It is difficult to see why WeChat information contains this sort of personal data.  The note also implies that data is being withheld by individuals depending on which hat they were wearing; in other words, the third-party approach referred to above has also been applied by Ning Ren. I am again not persuaded that this approach is justified.

202.   I also observe that WeChat communications are said to be state secrets.  The only example given in this note of what is a state secret is documents relating to visits and receptions of heads of state.  Again, it is not clear why any WeChat communications relate to such a state secret.  A visit may in any event be public even if detailed discussions involving heads of state are not. Ultimately this analysis is wholly inadequate.

203.   The final category identified involves ordinary personal phone numbers, email addresses and communication information which is general personal information.  However, some of that information is already known to the defendant e.g. email addresses.  In some cases, emails or WeChat threads were on the defendant's own system.  In any event it is the content of the documents that is relevant not anything that is truly personal.  Such details can be redacted but it is not clear why they might justify withholding the content of a document or a communication.

204.   The affidavits filed do not address or explain the impact of conversations Ning Ren have had with various Chinese government departments.  In a note dated 31^st March 2020 the Ningxia Department of State Security did not regard manganese technology as a state secret (see paragraph 76 above).  The same note deposed a series of questions set out at paragraph 77.  Ning Ren have not attempted to analyse or provide any opinion on these questions or expressed any view as to whether the discussion about any trade secrets might amount to state secrets.  There is simply no conclusion to the "careful consideration" that the questions posed would require.

205.   The lack of any analysis in the affidavits is also troubling because of the statement that the Ningxia Department of Industry and Information Technology "needs to help the company win the case and this be done in accordance with the law".  This statement is not explained in the affidavit and is troubling in light of the other lack of analysis to which I have referred.

206.   Advocate Redgrave also criticised Ning Ren's approach because on the one hand Ning Ren were advising that the Chinese authorities needed to agree before documents could be released and yet it had chosen to release documents itself.  This inconsistency is also not addressed in either affidavit.

207.   For all these reasons, the affidavits do not comply with what was required by paragraph 3 of the Act of Court of 15^th January 2020.  In reaching this conclusion, no disrespect is intended to the Peoples' Republic of China.  Rather the criticism is directed at Ning Ren who were required to explain the position as a matter of law with appropriate analysis but in my judgment they have failed to do so as I had required.

208.   It may be that this lack of an opinion addressing the central issues has occurred because Ning Ren were retained by the defendant and/or the TMI group and could not give an independent opinion.  However the requirement for an opinion was clear and the failure to do so was a breach of paragraph 3 of the act of 15^th January 2020.

Risk of prosecution

209.   The starting point for considering this aspect of the argument between the parties is also paragraph 3 of the Act of Court of 15^th January 2020 which required Ning Ren to set out with as much detail as possible "all the legal explanations relied upon" as why the relevant documents had not been disclosed.

210.   Paragraph 43 of my judgment of 16^th April stated in the final sentence that the plaintiff was entitled to know why documents were being withheld so that ultimately, if advised to do so, he could invite the court to rule on whether the defendant had made out any of the grounds relied upon to withhold documents.

211.   Paragraph 37a of the first affidavit of Mr Jianguo explains that data transmission of the documents out of China without approval would be subject to "administrative penalties and criminal liability".

212.   In his second affidavit Mr Jianguo stated that the Chinese government had become increasingly strict about the management of network information security and transmitting data out of China.  He also stated there had been "administrative penalties" for illegal transmission of data.

213.   In paragraph 22b of his second affidavit Mr Jianguo deposed that "transmitting such data could lead administrative punishments by the Chinese government and could even be a criminal offence in serious cases".  He then referred back to paragraph 37 of his first affidavit.

214.   While the plaintiff through its expert Mr Taili Wang accepts that there is a risk of prosecution, he states at paragraph 20:-

"I am unable to express certain view on the likelihood of prosecution because, as set out above, Ning Ren has not been clear as to the legal basis for withholding documents."

215.   At paragraph 21 of his affidavit Mr Wang deposed that the maximum sentence for breach of obligations in relation to personal information is a term of imprisonment of 7 years, but again repeated at paragraph 22 that he was unable to make any accurate prediction of a potential sentence because of the lack of evidence provided by Ning Ren.

216.   In relation to the legal principles where a party objects to discovery or inspection on the grounds that to comply with such an order would put the party at risk of prosecution, both parties accepted that, following the approach in England, the court retains a jurisdiction as the court dealing with procedural matters, which includes discovery, whether to make such an order requiring disclosure in the particular circumstances (see Property Alliance Group v Royal Bank of Scotland Plc at paragraph 16 set out at paragraph 92 above).

217.   As noted in Bank Mellat v Her Majesty's Treasury there is a balancing exercise to be carried out. Paragraphs 2 and 3 state as follows:-

"2. For all litigants, the procedure in this Court is governed by the lex fori - English law. That is the norm internationally, as a matter of the conflict of laws. Disclosure and the inspection of documents form a part of the law of procedure governed by the lex fori . On occasions, a tension can arise between the English law requirement for the inspection of documents and the provisions of foreign law in the home country of the litigant.

3. Where such a tension arises, it is for the Court to balance the conflicting considerations: the constraints of foreign law on the one hand, and the need for the documents in question to ensure a fair disposal of the action in this jurisdiction, on the other. That balance is struck by a Judge sitting at first instance, making discretionary, case management decisions. As is well-established, this Court will only interfere if the Judge has erred in law or principle or has (in effect) reached a wholly untenable factual conclusion."

218.   The court's conclusions in Bank Mellat are set out at paragraph 63 which I have quoted at paragraph 140 above.

219.   In relation to this issue, the evidence of Ning Ren does not address the actual risk of prosecution.  It simply sets out the maximum penalties while recognising that sanctions may be administrative, civil or criminal in nature.  Just as there was no analysis of why particular documents were being withheld, there was also no analysis of why the withholding of documents or categories of documents would give rise to an actual risk of prosecution.

220.   Yet as the plaintiff contends documents in China are likely to be extremely significant in relation to this dispute which has at its heart the relationship between the CEO, the Board of the defendant and above all the relationship between the plaintiff and Mr Tianjiang, the chairman of the defendant and its ultimate beneficial owner.

221.   I also agree with the plaintiff that this issue, as with others, has not been dealt with quickly; general observations about delay are made later in this judgment.

222.   I also agree that if documents were not provided on the basis of a risk of prosecution, there would be an unfairness in the discovery process because there had only been discovery by the plaintiff and there had not been discovery of relevant documents from key individuals based in China.  The defendant's argument that because Walkers had not seen such documents there was no unfairness does not address the complaint in this case and misses the point.  This is not a case where one set of lawyers have seen documents but others have not; rather the complaint is about what has not been produced at all.

223.   Whether the authorities in China would in fact prosecute is more difficult to determine.  The use of manganese technology does not appear to be a state secret (see paragraph 76 above).  What the ultimate policy might be however is an unknown factor.  To the extent that the concerns of the authorities in China are issues of confidentiality, I have already made express orders to address such concerns.  Where disclosure is sought of material that would enable a review of what key individuals were saying to each other, again safeguards could have been built in to protect purely personal information such as ID numbers, personal phone numbers or addresses and therefore a risk of prosecution.  However, no such safeguards had been considered by Ning Ren or proposed by the defendant.  Finally, as noted at paragraph 63(vi) of the Bank Mellat decision, comity cuts both ways.  As it was put in that case "considerations of comity may not unreasonably be expected to influence the foreign state in deciding whether or not to prosecute the foreign national for compliance with the order of this court".  Again, there is no such analysis by Ning Ren in their affidavits addressing this issue.

224.   In respect of this part of the issues the lack of reasoning again leads me to conclude that the defendant has not persuaded me that a risk of prosecution is a basis for withholding inspection of documents or, in this case, discovery of them.

Conclusion on breaches of orders

225.   For the reasons set out above, I consider the defendant is in breach of the Act of Court of 15^th January 2020 in the following respects:-

(i)        The defendant has not searched all possible data sources in China.  It has not therefore given discovery as required by paragraph 2.

(ii)       Searches for WeChat and/or other communications held by individuals within China have either not been carried out or the material has been withheld without justification.  Again, this leads to a breach of paragraph 2.

(iii)      The claim to withhold documents as belonging to third parties when those third parties are the immediate and ultimate parent of the defendant is not made out.

(iv)      The claim to withhold documents on the basis of privilege in relation to any communications between the defendant, its parent and/or its ultimate parent is also insufficient.  This again is a breach of paragraph 2.

(v)       The schedule attached to the affidavit of Ning Ren fails to comply with the requirements of paragraph 1c.

(vi)      The affidavit provided by Ning Ren does not comply with paragraph 3 in relation to why relevant documents had not been disclosed, why they had been withheld from inspection, and why a risk of prosecution arises.

226.   Insofar as the plaintiff referred to other activities of TMI in China, I have not taken this submission into account in reaching my decision.  Rather my focus has been on the issues summarised in the preceding paragraph.

The sanction requested

227.   My conclusion on non-compliance therefore requires me to consider what sanction should follow for the breaches of these orders.  This in turn requires me to evaluate how serious the defects are and whether the defects could be addressed by some other appropriate order.  I formulated these questions in this way because ultimately I have to decide whether the conduct of the defendant in breaching the discovery orders I have made as set out above "puts the fairness of the trial in jeopardy" applying Leeds United Football Club Limited v Admatch.  

228.   Firstly I am satisfied, by reference to the issues in dispute between the parties, that documents held by senior individuals within China are very relevant to the allegations at sub-paragraphs a,b,c,d,e,f,g,h,j,k and l of paragraph 19 of the order of justice.  They are also pertinent to the defendant's arguments that the plaintiff was in repudiatory breach and whether or not he was justified in wanting to be involved in major projects said to be outside his remit and authority.

229.   Discovery from key individuals in China is therefore central to the complaints of the plaintiff and aspects of the defences raised by the defendant which in my judgment are at the heart of the issues on liability between the parties.  I do not consider that a fair trial on liability can take place without these documents.  The breaches are therefore as serious as they can be.

230.   I am also not satisfied that position will change, for a number of reasons.

231.   The lack of detail in the Ning Ren affidavits follows a pattern.  I was not told prior to the November 2019 hearing that Consilio had not been retained in China.  I was also not told either at the November 2019 hearing or the January 2020 the full story in relation to Ning Ren's communications with the relevant authorities in China.  Rather I was only provided the final picture.

232.   The current affidavits of Ning Ren continue that pattern of a lack of detail.  Despite the express orders made, the documents withheld are not described with anything like as much detail as possible; nor is the reasoning why documents have been withheld at all clear; nor is the risk of prosecution explained.

233.   It is also relevant to whether or not discovery will be provided in the manner required to take into account how long this process has taken.  The defendant was put on notice of its discovery obligations in September 2018.  Yet there was no process of safeguarding devices entered into at that time.  In respect of documents in China the process of looking for relevant data sources did not start until over 14 months later. Another year has since passed.  Who knows what has happened to the devices or data previously stored on devices in the meantime?

234.   This is also not purely a hypothetical concern.  The letter of 20^th August 2020 and the history of Mr Cheung who was the Deputy Chairman of the defendant is an extremely sorry saga and demonstrates an attitude that was as uncooperative as Mr Cheung could be, short of destroying the relevant device.  Yet there is no explanation from the defendant as to why Mr Cheung chose to take that approach. 

235.   The attempt to involve the Chinese state in the discovery process is also of concern.  Although I understand why a party might want written confirmation of the position of the authorities, the impression of the Chinese authorities looking to assist the defendant and its parent is troubling and, when taken with the approach of the defendant and the TMI group, on balance suggests a wish to support the defendant's approach.

236.   Ning Ren have also had a further 6 months since the January hearing to make matters clear and have not done so.  When set against the context of how long has already passed since the defendant was put on notice of its discovery obligations, the court not being given the full picture and only being given information just before relevant hearings, I do not consider that any further time allowed or further orders will lead to a change of approach.

237.   Even if it did, who knows what has happened to devices, materials held on such devices or to emails held on personal accounts in the meantime.

238.   It also does not help the defendant that the plaintiff had to battle to obtain notes of the latter's conversations with the authorities in China.  These are clearly relevant and should have been produced and explained in affidavit evidence as set out above.

239.   It is the combination of these factors taken together that leads to the conclusion that this court's expectations have not been met and in my judgment will not be met.  Previous extensions of time have been granted with the result that the discovery process has now taken over 18 months.  This is simply not acceptable, even allowing for COVID.  As paragraph 12 of the plaintiff's skeleton argument dated 31^st July 2020 observes, the plaintiff already has five costs orders in his favour which have not been a deterrent to the defendant.

240.   I have also noted that in the Bailiff's costs judgment Sheyko v Consolidated Minerals and Anor [2019] JRC 008, when making a costs order in the plaintiff's favour the Bailiff stated:-

"In these circumstances, however, I consider it to be more appropriate to reflect the fact that the Defendant's application and the evidence it deployed and the evidence that it failed to deploy, was wasteful of time and costs in a manner that should be reflected by an order for costs in favour of the Plaintiff."

241.   Insofar as the Bailiff was criticising a tactical approach, that tactical approach has continued for the reasons set out above.  Further orders requiring compliance will not in my judgment make any difference to that approach.

242.   I am therefore satisfied that a fair trial cannot take place on issues of liability.  This also applies in respect of the defendant's counterclaim. 

243.   However, I have not reached the same conclusion in respect of the claim for damages.  The order I am therefore proposing to make, as a result of being satisfied that a trial on the issue of liability cannot take place fairly, is judgment for the plaintiff on liability with damages to be assessed.  This is because I do not consider that the lack of documents from China prevents an assessment of what is due under the plaintiff's contract of employment.  The quantification of the plaintiff's damages is therefore in dispute and can be determined by the Royal Court without the discovery that has not been provided.

244.   I also note that the defendant has denied that the sums claimed are due, albeit without specifying why.  This will need to be rectified as part of directions required to progress this case to a trial on quantum which I will hear argument on when this judgment is handed down.

245.   For all these reasons the plaintiff's application is granted to the extent that judgment is entered on liability for the plaintiff in respect of his claim; the defendant's counterclaim also cannot proceed to a fair trial and so is also struck out leaving over the issue of damages to be assessed.

Costs

246.   Following the handing down of this judgment the plaintiff applied for indemnity costs.  There was no dispute between the parties about the applicable legal principles and when indemnity costs may be ordered and both parties agreed that something was required to take the case out of the ordinary.

247.   In paragraph 7 above, in ordering indemnity costs in relation to the January 20201 hearing I set out certain observations from my judgment of 16^th April 2020 at paragraph 50.  The observations at sub-paragraphs (ii) and (iii) of paragraph 50 are pertinent to the present application because the issues raised then still apply for the reasons set out at paragraphs 227 to 241 of this judgment.  Sadly, in respect of the defendant's approach to discovery the position has got worse not better.  The combination of circumstances leading to my conclusion that the Court expectations in relation to discovery have not been met and in my judgment is not met are therefore sufficient to take this case out of the ordinary to justify indemnity costs and I order accordingly.  As a consequence, again applying the usual principles which were also not in dispute I also ordered a payment on account of 50% of the costs claimed on the indemnity basis after an allowance that some costs might not be recoverable after taxation.

Authorities

Sheyko v Consolidated Minerals Limited [2020] JRC 061. 

Sheyko v Consolidated Minerals Limited [2020] JRC 182. 

Leeds United Football Club Limited v Admatch [2011] JRC 016A. 

Property Alliance Group Limited v The Royal Bank of Scotland Plc [2015] EWHC 321. 

Byers v Samba Financial Group [2020] EWHC 853. 

Saltri III Ltd v MD Mezzanine SA SICAR (t/a Mezzanine Facility Agent) [2012] EWHC 3025. 

Arrow Nominees Inc & Anor Respondents v Blackledge and Others Appellants [2000] 2BC LC167. 

Royal Court Rules 2004, as amended. 

Alhamrani & Ors v Alhamrani & Ors [2009] JLR 301. 

Beghin Shoes Limited & Anor v Avancement Limited unreported judgment 1995/726 dated 24^th April 1995. 

Bank Mellat v Her Majesty's Treasury [2019] EWCA Civ 449. 

Byers v Samba Financial Group [2020] EWHC 853 (Ch). 

Saltri III Ltd v MD mezzanine SA [2012] EWHC 1270 (Comm). 

Hollander on Documentary Evidence (13^th Ed.). 

Practice Direction RC17/07. 

Practice Direction RC17/08. 

Astex Therapeutics Limited v Astrazeneca AB [2016] EWHC 2759 (Ch). 

Smith v SWM [2017] JRC 026. 

Sheyko v Consolidated Minerals and Anor [2019] JRC 008.