LAU MO CHOI v. LAU MUK FAT (as the Manager of LAU SHAU WO TSO)

CAMP 205/2025, [2026] HKCA 1600

On Appeal From [2025] HKCFI 2656

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 205 OF 2025

(ON AN INTENDED APPEAL FROM HCA NO. 1263 OF 2012)

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JUDGMENT

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Hon Anthony Chan JA (giving the Judgment of the Court) :

Introduction

1.  This is the renewed application of the Defendant for leave to appeal against the decision of Deputy High Court Judge Gary CC Lam (“Judge”) dated 2 July 2025 ([2025] HKCFI 2656) (“Decision”), whereby the Judge allowed the Plaintiff’s appeal from Master Ebony Ling (“Master”) and ordered specific discovery of a global settlement agreement (“Settlement Agreement”) between the Defendant and Mr Wong Kwok Wah (“WKW”).  Leave to appeal was refused by the Judge pursuant to his decision dated 6 October 2025 ([2025] HKCFI 4748) (“Leave Decision”).

Background

2.  The background to this protracted litigation has been set out in detail in the judgment of Wilson Chan J dated 22 February 2019 ([2019] HKCFI 380) (“Main Judgment”).  For present purposes, a summary will suffice.

3.  The Plaintiff and the Defendant are members of two branches (“Branches”) of the Lau Shau Wo Tso (“Tso”).  The Defendant is also the manager of the Tso, appointed pursuant to s.15 of the New Territories Ordinance, Cap 97. 

4.  In 1994-1995, the Tso entered into a development agreement with WKW, a land developer, for the construction of houses on the Tso’s land.  Six houses (“6 Houses”) were eventually built and assigned to the Tso.

5.  In this action, the Plaintiff sought declarations that there existed oral agreements in 1994 and 2010 for the division of the 6 Houses between the two Branches, and that he was entitled to 25% of the interest in the 6 Houses.  By the Main Judgment, Wilson Chan J rejected the alleged agreements and entered judgment in favour of the Defendant on his counterclaim, ie, the Plaintiff is liable to share the expenses incurred by the Tso in connection with the development of the 6 Houses pursuant to an Agreement for Sharing Liabilities (“Liabilities Agreement”).

6.  Paragraph 2 of the Judgment entered against the Plaintiff sets out 7 heads of expenses (“7 Heads of Expenses”), namely, (1) legal costs incurred in litigations with WKW; (2) government rents paid for the 6 Houses; (3) land premiums for the 6 Houses payable to WKW; (4) stamp duties for the assignment of the 6 Houses; (5) professional charges for inspection and valuation reports in relation to the Houses; (6) expenses incurred for renovation and construction works relating to the Houses; and (7) future expenses for completion of the 6 Houses (respectively, “Item 1” to “Item 7”). 

7.  Pursuant to the Main Judgment, the quantum of these expenses, for which the Plaintiff is responsible, remains to be assessed.  The assessment (“Assessment of Damages”) was originally scheduled to take place before a master in September 2024.  It has been adjourned sine die due to the Plaintiff’s discovery of the Settlement Agreement in August 2024.

8.  In mid-August 2024, the Plaintiff learned from WKW the existence of the Settlement Agreement by which 3 sets of litigations between the Tso and WKW (HCA 1879/2011, HCA 896/2012 and HCA 897/2012 (collectively, “Tso Actions”)) were settled and WKW would compensate the Tso in the approximate sum of HK$21 million.  WKW refused to provide further details because of a non-disclosure clause.

9.  On 16 September 2024, the Plaintiff issued a summons seeking specific discovery of (i) a final (or the latest draft copy) of the Settlement Agreement; and (ii) the details of all previous offers made by the Tso/Defendant to WKW (“Discovery Summons”).  The application for the second category of documents was later abandoned.

10.  In allowing the Plaintiff’s appeal, the Judge made the order that, inter alia, (1) the Defendant do disclose by affirmation to be filed within 14 days from the order the Settlement Agreement in relation to all or any of the Tso Actions; and (2) if the Settlement Agreement is not in the Defendant’s possession, custody or power, the Defendant shall make an affirmation within 14 days from the order stating (a) whether the Settlement Agreement was at any time in his possession, custody or power, and (b) if so, when he parted with it and what has become of it (“Disclosure Order”). 

11.  By the Leave Decision, the Judge refused to grant leave to appeal as he found that none of the Defendant’s 5 grounds of appeal had a reasonable prospect of success.

12.  On 17 October 2025, the Defendant filed the present renewed application for leave to appeal to this Court (“Summons”).  By a decision dated 26 January 2026 ([2026] HKCFI 493), the Judge granted a stay of the Disclosure Order pending the determination of the Summons or further order of the Court.

The Decision

13.  The Judge considered, inter alia, paras 6(10) to 6(14) of the Defendant’s Counterclaim in which the Tso Actions were pleaded.  These actions included claims for defects in fixtures and fittings, denial of easement to provide access road(s) and failure to construct a box sewage system, all directly related to the condition and completion of the 6 Houses.  It should be noted that in para 6(5) of the Counterclaim, the Defendant pleaded that, in parallel with the Liabilities Agreement, there was an Agreement for Distribution of Assets (“Assets Agreement”) struck between the two Branches.

14.  The Judge held that the Settlement Agreement was relevant to the Assessment of Damages.  He reasoned that the Tso Actions were “reasonably clearly litigation to ensure that the 6 Houses would be completed for the Tso”.  He held that “the litigation covered Items 5 and 6, and that the expenses of the litigation itself were part of Item 7” (Decision, [8]).  The Judge took the view that a settlement sum received in respect of a particular expense must be taken into account when calculating the liability owed by the Plaintiff for that expense (Decision, [7(1)], [7(3)] and [7(5)]). 

15.  The Judge rejected the Defendant’s contention that the Settlement Agreement was protected by without prejudice privilege, holding that the subject matters were different: the Assessment of Damages concerned the Plaintiff’s liability under the Liabilities Agreement, whereas the Settlement Agreement concerned the rights and liabilities between the Defendant and WKW (Decision, [12]-[14]).

16.  The Judge also considered the issue of the Plaintiff’s delay in making the application for specific discovery – the Discovery Summons was issued shortly before the scheduled trial for Assessment of Damages.  By the time of the hearing before the Judge, the hearing of the assessment had already been adjourned.  The Judge found little prejudice caused by the delay given the absence of any milestone dates (Decision, [16]-[17]).

Applicable principles

17.  Pursuant to s.14AA(4) of the High Court Ordinance, Cap 4, leave to appeal shall not be granted unless the court is satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard.  It is trite that reasonable prospect of success means that the prospect of succeeding must be more than fanciful, without having to be probable: SMSE v KL [2009] 4 HKLRD 125, [17].

18.  Specific discovery decisions are case management decisions made in exercise of the judge’s discretion.  This Court has repeatedly emphasised that such decisions require a very high threshold for appellate intervention.  Case management decisions are only subject to appeal in rare circumstances.  The appellant faces a “very high hurdle” and must show that the judge “has gone clearly wrong and made orders which will clearly involve an injustice or an inability for the trial court to carry out its task”: Wong Kar Gee Mimi v Severn Villa Ltd [2012] 1 HKLRD 887, [31].

19.  Having considered the papers, we think that it is appropriate to determine this application without an oral hearing pursuant to O 59, r 2A(5) of the Rules of the High Court, Cap 4A (“RHC”).

The Grounds of appeal

20.  The Defendant advances 5 proposed grounds of appeal.  They were considered by the Judge who, for the reasons set out in the Leave Decision, took the view that none of them had a reasonable prospect of success.  We agree with the Judge and shall deal with these grounds succinctly.

Ground (1): Irrelevance of the Settlement Agreement

21.  The main argument of the Defendant is that the Assessment of Damages only concerns the amount for which the Plaintiff is liable to pay in respect of the 7 Heads of Expenses.  Any sum of money received under the Settlement Agreement should be regarded as an asset of the Tso, which would come under the Assets Agreement, but cannot constitute a reduction of expenses under the Liabilities Agreement.  Therefore, the Settlement Agreement is irrelevant to the Assessment of Damages.

22.  As we understand it, the Defendant seeks to draw a distinction in principle between money which falls into the Assets Agreement and expenses under the Liabilities Agreement.  This distinction is not supported by any authority.  The question of relevance here turns on whether any part of the settlement sum is attributable to the 7 Heads of Expenses.  In light of the relationship between the Tso Actions and some of the Heads of Expenses, we agree with the Judge that relevance is clearly established. 

23.  We also agree with the hypothetical example given by the Judge at Decision, [7(3)]: if the Tso paid HK$500,000 for a footpath and later received HK$250,000 back from WKW in settlement, it would be wrong to claim the full HK$500,000 from the Plaintiff without accounting for the reimbursement.  To permit the Defendant to recover from both WKW and the Plaintiff in respect of the same expense would result in double recovery by the Defendant.

24.  The rest of the arguments made under this Ground have been adequately dealt with in the Leave Decision.  They are not reasonably arguable and require no treatment here. 

Ground (2): No Prima Facie Case for Discovery / Fishing

25.  The Defendant submits that the Plaintiff failed to establish a prima facie case for discovery because his evidence was speculative, using words such as “may”, “strong possibility”, “cannot confirm” and “zero knowledge”.  The Defendant argues that the Plaintiff’s case is speculative and amounts to a fishing expedition which is no basis for discovery.

26.  The Judge observed that the Plaintiff’s affirmation in support of the Discovery Summons contained clear and firm hearsay evidence from WKW about the Settlement Agreement, and that the Defendant did not deny the existence of that Agreement (Leave Decision, [7]-[14]).

27.  There is no merit in this Ground.

Ground (3): The Master’s Decision should be upheld

28.  The Defendant submits that the Judge erred in not having sufficient regard to the Master’s reasoning and decision.  The Defendant argues that ordering specific discovery is a case management decision, and that a judge will not lightly intervene in a master’s case management decision unless there are good reasons to do so.  The Defendant contends that the Master’s analysis was sound and sensible, and that there was no good reason to intervene with the Master’s decision.

29.  The Judge rightly took the view that an appeal from a master was a de novo hearing and he was not bound by the Master’s reasoning (Leave Decision, [15]).

30.  There is no reasonable prospect of success with this Ground.

Ground (4): Delay and Lateness

31.  The Defendant submits that the Discovery Summons was only filed in September 2024, shortly before the scheduled Assessment of Damages hearing, when the Plaintiff knew of the Settlement Agreement as early as April 2024 (disputed by the Plaintiff).  Late interlocutory applications may be dismissed on the basis of delay alone, and the adjournment of the assessment hearing should not relieve the Plaintiff from his wrong of deliberate delay.  The Defendant further submits that the Plaintiff’s late application has caused substantial prejudice, including the need for further evidence, interrogatories, and the enlargement of the scope of the assessment.

32.  We are not satisfied that this Ground has a reasonable prospect of success.

33.  The Judge had considered the issue of delay in the Decision, [16]-[17], but accorded it little weight for the reasons he gave (see also Leave Decision, [17]-[18]).  The Judge noted the Plaintiff’s evidence that he only learned of the Settlement Agreement in mid-August 2024, that the assessment was adjourned sine die as a result, and that no dates had been fixed for the adjourned hearing.  He concluded that: “Little prejudice would arise in the absence of any milestone dates” (Decision, [17]).

34.  The weight to be given to delay is a matter for the Judge.  This Court would not interfere merely because it might have given different weight to it.

35.  Finally, it must be said that given that the Settlement Agreement is relevant to the Assessment of Damages, it should have been disclosed by the Defendant voluntarily in discharge of his discovery obligation.  Thus, any “prejudice” flowing from the discovery or adjournment of the Assessment of Damages hearing cannot be blamed on the Plaintiff. 

Ground (5): Discovery Order too wide

36.  The Defendant submits that the Judge erred in ordering the disclosure of the entire Settlement Agreement “in relation to all or any of [the Tso Actions]” without imposing any restriction.  The Defendant argues that it ought to have been made clear that only relevant contents referring to the 7 Heads of Expenses should be disclosed.  The order goes far beyond what is necessary, causing confidential information to be disclosed.

37.  The Plaintiff contends that Ground (5) is a new point because the Defendant did not raise any argument before the judge on the width of discovery or need for redaction.  The stance taken by the Defendant was one of non-admission of the Settlement Agreement.  Ground (5) was raised for the first time at the leave application before the Judge.

38.  The Judge dealt with the arguments on merits and rejected them (Leave Decision, [19]-[22]).  We agree with the Judge that as a starting point the Settlement Agreement must be read as a whole before one can construe any of its terms (Leave Decision, [20]-[21]).

39.  The Defendant has not identified which part(s) of the Settlement Agreement he considers irrelevant.  He has not proposed any redactions.  He has not properly explained why certain part(s) is/are irrelevant.  In these circumstances, the Defendant’s complaint that the Disclosure Order is too wide is unsustainable. 

40.  Ground (5) has no reasonable prospect of success.

Disposition

41.  For the reasons aforesaid, we are not satisfied that any of the Defendant’s proposed grounds of appeal has a reasonable prospect of success.  Nor are we satisfied that there is any other reason in the interests of justice why the appeal should be heard.

42.  Accordingly, the Summons is dismissed.  The stay granted by the Judge on 26 January 2026 is lifted.  The Defendant shall comply with the Disclosure Order within 14 days of the date of this Judgment.

43.  As this application is wholly without merit, we make an order pursuant to O 59, r 2A(8) of the RHC that no party may request this determination to be reconsidered at an oral hearing inter partes.

44.  Costs should follow the event.  We make an order nisi that the Plaintiff shall have the costs of and occasioned by the Summons to be assessed summarily.  The Plaintiff shall have leave to file and serve a statement of costs within 14 days from the date hereof, and the Defendant shall have leave to file and serve a statement of objections (limited to 2 pages) to the Plaintiff’s statement of costs within 14 days thereafter.  The assessment will be conducted on paper. 

45.  In the absence of any variation application made within 14 days hereof, the costs order nisi shall become absolute.