SKYRUN LIGHT INDUSTRY (HONG KONG) CO LTD v. SWIFT RESOURCES LTD AND OTHERS

HCA 118/2022

[2026] HKCFI 2901

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 118 OF 2022

____________

____________

_______________

D E C I S I O N

_______________

A.  INTRODUCTION

1.  By Notice of Appeal dated 21st January 2026, the 4th Defendant appeals against the Master’s order of 7th January 2026 granting leave to the Plaintiff to re-amend its Statement of Claim in terms of the draft annexed to its summons of 30th September 2025.

B.  THE BACKGROUND

2.  The Plaintiff’s claim against the Defendants is, inter alia, to enforce a Loans Settlement Agreement. The Plaintiff says that it made a number of loans to the 1st Defendant (“the Loans”) pursuant to various loan agreements (“the Original Loan Agreements”), and that the 2nd, 3rd and 4th Defendants acted as guarantors to one or more of the Loans. The Loans were not repaid in accordance with the agreed terms, so the Plaintiff commenced HCA 1278/2014 against the Defendants.

3.  The parties entered into a mediation agreement in about the end of 2015 or early 2016 (“the Mediation Agreement”) to try to settle the proceedings.

4.  The Plaintiff says that there were also two letters signed by the 3rd Defendant and 4th Defendant respectively, authorising the 2nd Defendant to deal with all matters relating to the mediation, and pursuant to which the 4th Defendant agreed that any settlement agreement entered into by the 2nd Defendant would be legally binding on him (“the Authorisation Letters”).

5.  On 20th January 2016, the Plaintiff and its lawyers Messrs Christine M. Koo & Ip (“CMKI”), and the 2nd Defendant (also acting on behalf of the 1st, the 3rd and the 4th Defendants) and the Defendants’ lawyers Messrs Michael Li & Co (“MLC”) attended a mediation session in relation to HCA 1278/2014. On the same day, CMKI sent a letter to MLC, putting on record that the Plaintiff had made a settlement offer at the substantive mediation session and that the Defendants had verbally agreed to provide a constructive reply to the same by 26th January 2016 (“CMKI’s 20.01.2016 Letter”).

6.  On 15th February 2016, the Plaintiff, 1st Defendant and 2nd Defendant entered into the Loans Settlement Agreement regarding the repayment arrangements for the Loans.

6.1  The Plaintiff says that the 3rd Defendant and the 4th Defendant signed and executed the Loans Settlement Agreement as guarantors.

6.2  The 4th Defendant says that he did not sign the Loans Settlement Agreement and that he did not even know about its existence or its terms until the commencement of the present action in February 2022. He says that his signature must have been forged.

7.  On 19th February 2016, CMKI wrote to MLC, saying that it was given to understand that the parties had reached a settlement agreement to dispose of part of the Plaintiff’s claims in HCA 1278/2014, and proposing that the parties enter into a consent summons to discontinue the claims in HCA 1278/2014 (“CMKI’s 19.02.2016 Letter”). The letter was marked “without prejudice save as to costs”.

8.  On 24th February 2016, MLC replied to CMKI, saying that the terms in the letter were agreeable to their clients and asking for a draft consent summons (“MLC’s 24.02.2016 Letter”). The letter was marked “without prejudice save as to costs”.

9.  The discontinuation of the relevant parts of the Plaintiff’s claims was effected by a consent order dated 26th February 2016.

10.  The Plaintiff claims that due to the 1st Defendant and the 2nd Defendant’s failure to make repayment under the Loans Settlement Agreement, the 3rd Defendant and the 4th Defendant became jointly and severally liable as guarantors. The 3rd Defendant and the 4th Defendant also failed to repay the amount due under the Loans Settlement Agreement.

11.  On 28th January 2022, the Plaintiff commenced the current action HCA 118/2022 against the Defendants to recover the Loans. The Plaintiff’s primary claim is based on a breach of the Loans Settlement Agreement, but its alternative claim is that it reserved its right to recommence legal proceedings in the Loans Settlement Agreement, so that it is entitled to seek repayment of the Loans pursuant to the Original Loan Agreements.

12.  On 30th September 2025, the Plaintiff applied for leave to re‑amend its Statement of Claim in terms of the draft Re-Amended Statement of Claim annexed to the summons (“the RASOC”).[1]  Leave was granted by the Master on 7th January 2026.

C.  THE 4TH DEFENDANT’S OBJECTIONS

13.  The 4th Defendant objects to the following paragraphs of the draft RASOC:

13.1  paragraph 13(2)(iv), which pleads the Mediation Agreement, signed by all parties to HCA 1278/2014 (including the 4th Defendant) and their respective lawyers CMKI and MLK;

13.2  paragraph 13(2)(v), which pleads the Authorisation Letters signed by the 3rd and 4th Defendant;

13.3  paragraph 13(2)(vii), which refers to CMKI’s 20.01.2016 Letter;

13.4  paragraphs 13(2)(xiv) to (xvii), which refer to CMKI’s 19.02.2016 Letter, and MLC’s 24.02.2016 Letter in reply.

14.  The first three objections were on the ground that they amounted to an unauthorised disclosure of mediation communications, contrary to s.8 of the Mediation Ordinance (Cap.620) (“the MO”). The fourth objection was on the ground that they amounted to disclosure of without prejudice communications.

C1.  Paragraph 13(2)(iv)

15.  At the hearing, counsel for the 4th Defendant, Ms Wallis Chung, fairly accepted that the Mediation Agreement did not constitute mediation communications under s.2 MO. The objection to this paragraph was not pursued.

C2.  Paragraphs 13(2)(v) and 13(2)(vii)

16.  Counsel for the Plaintiff, Mr Kevin Hon, took the position that it was not open to the 4th Defendant to raise an objection that mediation communications could not be disclosed, as this took him by surprise, the matter not having been raised in the 4th Defendant’s affidavit evidence before the Master, so that the Plaintiff had not had the opportunity of making an application under s.10 MO for leave to disclose the mediation communications.

17.  I do not understand this objection. The matter was raised by Ms Chung at the hearing before the Master, which took place in January 2026. Mr Hon says that he raised the objection of lateness at the hearing before the Master and the Master therefore did not take into account the absence of leave under s.10 MO on that occasion. Even if that was the case, that was some four months ago. The Plaintiff has not made any application since that time, although, as Mr Hon accepts, the onus was on the Plaintiff to do so. In any event, as Ms Chung points out, the Plaintiff should have sought leave before seeking to make the re-amendments; it was not the case that the 4th Defendant had to raise the point before the Plaintiff’s obligation to seek leave was triggered.

18.  Mr Hon then submitted that he could make the application for leave under s.10 MO at any time before trial, and since he was likely to succeed, the amendments in the RASOC should be allowed now. However, Mr Hon was not able to explain how he could disclose the materials in paragraphs 13(2)(v) and 13(2)(vii), if indeed they were mediation communications, at this stage, in the absence of leave.

19.  As a fallback, Mr Hon said that he would make an application for leave at the hearing. As I indicated at the hearing, it was not appropriate to entertain such an application which had not been properly taken out, and to which the 4th Defendant had not had a chance to properly respond, whether with evidence or otherwise. Furthermore, the relevant materials were not before the court. For example, I had earlier raised the question of whether the Authorisation Letters formed part of the Mediation Agreement and therefore would not amount to mediation communications, so that no leave would be necessary in any event. Ms Chung submitted that they were not; Mr Hon submitted that they were. However, the Authorisation Letters were not before me, it could not be determined whether or not leave was needed, and if it was, whether it should be given.

20.  Since no leave has been made obtained under s.10 MO (and no determination that leave is not needed has been made) it is not appropriate to grant leave to include the matters in paragraphs 13(2)(v) and 13(2)(vii) at this stage.

C3.  Paragraphs 13(2)(xiv) to (xvii)

21.  The 4th Defendant says that CMKI’s 19.02.2016 Letter and MLC’s 24.02.2016 Letter, which were “without prejudice” communications, are privileged. This is particularly so since the Plaintiff has pleaded an alternative claim in RASOC paragraph 24 relying on the Original Loan Agreements, so that the issues in HCA 1278/2014 remain live.

22.  CMKI’s 19.02.2016 Letter was in fact pleaded by the 4th Defendant himself in paragraph 12 of his Defence. Ms Chung submitted that this did not amount to a waiver of privilege as the letter was only referred to, and its contents were not pleaded, citing Hong Kong Civil Procedure 2026, note 24/5/35. She submitted that in contrast, the Plaintiff quoted the letter extensively in the RASOC.[2]

23.  I do not agree. Paragraph 12 of the 4th Defendant’s Defence reads:

“ …It is averred that on or about 19 February 2016, by a letter from the solicitors for the Plaintiff under HCA 1278/2014, Messrs Christine Koo & Co, to the Defendants’ solicitors under the same action, Messrs Michael Li & Co, the 4th Defendant was informed that a settlement agreement was reached to dispose of, among others, the Plaintiff’s claim against him under HCA 1278/2014”.

24.  This goes beyond a mere reference to the letter. Indeed, it is similar to paragraph 13(2)(xiv) of the RASOC, which Ms Chung criticised for having quoted “extensively” from the letter. Paragraph 13(2)(xiv) of the RASOC reads:

“ By way of letter from CMKI to MLC dated 19 February 2016 (‘the Feb 19 Letter’), CMKI informed MLC that they were given to understand that ‘the Parties have reached a settlement agreement to dispose part of the Plaintiff’s claims in this action [HCA 1278/2014]’ and proposed ‘the Parties’ to enter into a consent summons to dispose of part of the claims of HCA 1278/2014;”.

25.  The waiver would extend to MLC’s 24.02.2016 Letter, which was part of the same transaction, being a reply to the proposal. Cf. General Accident Fire and Life Assurance Corporation Ltd and others v Tanter and others [1984] 1 WLR 100 at 113E-H.[3]

26.  In any event, even if there had been no waiver, I accept that both CMKI’s 19.02.2016 Letter and MLC’s 24.02.2016 Letter may properly be disclosed for the purpose of showing that the 4th Defendant did enter into the Loans Settlement Agreement, contrary to his assertion. Where the issue is whether without prejudice communications have resulted in a concluded compromise agreement, the communications are admissible into evidence: Unilever plc v The Procter & Gamble Co [2000] 1 WLR 2436 at 2444D (Robert Walker LJ).

27.  Ms Chung says that the two letters only showed discussions regarding the discontinuance of the proceedings in HCA 1278/2014, rather than the Loans Settlement Agreement, since the Loans Settlement Agreement was negotiated between another firm of solicitors acting for the Plaintiff and the 2nd Defendant directly, and the discontinuance of the proceedings in HCA 1278/2014 was effected by a separate consent order of 26th February 2016. However, the chronology shows that the proposed discontinuance followed on from the Loans Settlement Agreement of 15th February 2016. The Loans Settlement Agreement had provided for the withdrawal of the claims in HCA 1278/2014, with no order as to costs, as part of the settlement. The Plaintiff’s case is that MLC acted for all of the Defendants in agreeing to the consent order and that the 4th Defendant must have known of, and agreed to, the Loans Settlement Agreement. It seems to me that CMKI’s 19.02.2016 Letter and MLC’s 24.02.2016 Letter do not merely go to the credibility of the 4th Defendant’s assertion that he knew nothing about the Loans Settlement Agreement, but also evidence the parties’ overall settlement.

D.  DISPOSITION

28.  I therefore grant leave for the Plaintiff to amend the RASOC in terms of the draft annexed to its summons of 30th September 2025, save in respect of paragraphs 13(2)(v) and 13(2)(vii). I also grant leave to the Plaintiff to re-re-amend its Writ same manner.

29.  As the 4th Defendant has been partially successful in his appeal, I order (on a nisi basis) that he is to have half of the costs of and occasioned by the Notice of Appeal. I will not disturb the costs order made before the Master given that the Plaintiff was largely successful in obtaining leave to the amendments sought before the Master.