鄧有強 v. 鄧才有

HCA 4/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 4 OF 2011

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R E A S O N S   F O R   D E C I S I O N

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A. Introduction

1.  These proceedings arise out of a dispute between the plaintiff and the defendant, who are brothers, regarding the ownership of two properties: (1) Section A of Lot No 2996 in DD 111 and (2) Section H of Lot No 2381 in DD 111.

2.  On the first day of what was to have been an eight‑day trial, before Mr Simon Yip (counsel for the plaintiff) started his opening submissions, I raised a matter with both counsel concerning the status of certain without prejudice and privileged materials in the hearing bundles, which I had already read (I did this out of an abundance of caution given that there was a prior court order directing that the contents of the hearing bundles to be agreed).  This led to the making of an application by Ms Lorinda Lau (counsel for the defendant) to recuse myself from trying the case on the basis that I had read such privileged materials.  Despite Mr Yip’s opposition to the application, I acceded to Ms Lau’s application and reserved my judgment on costs.  These are the reasons for my decision as well as my decision on costs.

B. Circumstances leading to the recusal application

3.  At the pre‑trial review hearing on 18 December 2013, G Lam J ordered, amongst other things, that “the plaintiff shall lodge with the Court and serve hearing bundle, supplemental to the PTR bundle, contents of which shall be agreed between the parties on or before 19 March 2014”.

4.  By a letter dated 11 February 2014, the plaintiff’s solicitors (1) sent to the defendant’s solicitors the draft indices of the trial bundles for comments; and (2) requested a reply within 14 days, failing which the plaintiff’s solicitors would prepare their own trial bundles.  The various items of without prejudice correspondence were not separately listed out in the draft indices but was subsumed within one item in the indices described as “Copies of the correspondences between the Solicitors for the plaintiff and the Solicitors for the defendant”. 

5.  By a letter dated 19 February 2014, the defendant’s solicitors referred to the 11 February 2014 letter and proposed that two court orders be included in the bundles.  Nothing else was said.

6.  On 12 March 2014, the plaintiff’s solicitors sent four hearing bundles to the defendant’s solicitors.  The same four bundles were also sent to the Court on the same day.

7.  Numerous without prejudice correspondence from both parties’ solicitors was included in one of the hearing bundles.  At the start of the trial, I referred to such correspondence in the hearing bundles and indicated to counsel that I had already read them.  I asked counsel whether the inclusion of such privileged materials was a deliberate act and agreed by both parties, and what the parties wanted to do about them for the purpose of the trial.  Counsel asked for time to take instructions.  After the adjournment, counsel told me that (1) the inclusion of the privileged materials in the hearing bundle was a deliberate act on the part of the plaintiff, but not on the part of the defendant; and (2) the plaintiff was content for the materials to be left in the hearing bundles but the defendant wanted them expunged.

8.  Ms Lau then made the recusal application.   She submitted that it would be unfair and embarrassing for the defendant to have the without prejudice materials used at the trial. She asked me to recuse myself from hearing the case and re‑fix the trial to be conducted before a different judge.

9.  Mr Yip opposed the application.  He submitted that there was no excuse for the defendant’s solicitors not to have spotted the inclusion of the privileged documents earlier. 

C. The proper approach

10.  The problem of how a judge should deal with the improper disclosure of without prejudice correspondence was considered by Stanley Burnton J in Berg v IML London Ltd [2002] 1 WLR 3271.  He said:

“20. The procedure of the court would be greatly hampered and the cost of litigation greatly increased if the court were too easily to come to the conclusion that the viewing of prejudicial irrelevant material necessarily disabled the court from continuing to hear the action. Prior to the Medicaments case, it was not the case that the court would necessarily come to that conclusion as I have already indicated. In my judgment the Medicaments case has affected the test to be applied in such circumstances, but the effect is not as substantial as suggested by the defendant in this case. The Court of Appeal in the Medicaments case described the effect of the change in law which it was finding and did not regard that change as a substantial change. It referred to a modest adjustment of the test in R v Gough [1993] AC 646: see [2001] 1 WLR 700, 726 to 727 para 85.

21. Where a question such as that which has arisen in this case arises, in my judgment there are two aspects to the decision of the court whose recusation is sought. The first question is whether subjectively the judge considers that he is disabled from fairly continuing with the case. If he decides that he is so disabled then that normally is the end of the matter. The matter must be transferred to another judge and it can be only in the rarest cases that an appeal court would intervene to order for the hearing to continue before that judge. The decision is often said to be one within the discretion of the court, but essentially the decision is a subjective decision. That, however, is not the end of the matter.

22. As I have already indicated, there is a modified test as laid down in the Medicaments case, which is an objective test to be applied. There are circumstances, in my judgment rare circumstances, in which whatever the subjective feeling of the judge in question, he cannot continue with the case without there being a real possibility or a real danger of there being seen to be, by a fair‑minded and informed observer, an unfair trial.

23. The fair‑minded observer will appreciate that the judge is not partial to either party, will appreciate that when the judge expresses his views as to whether or not he can continue, he is expressing those views honestly and unaffected by any connection with either party.”

11.  In Garratt v Saxby [2004] 1 WLR 2152, Dyson LJ at §19 considered that a judge should adopt the same approach laid down by Stanley Burnton J in Berg in dealing with the improper disclosure of a Part 36 offer or payment.  At §20, Dyson LJ said:

“It is for the judge to decide in each case whether the disclosure of a Pt 36 offer or payment makes a fair trial impossible and whether justice demands that he recuse himself. But judges should not be too ready to reach such a conclusion; the delay and extra cost occasioned by a recusal may be very considerable. Moreover, when exercising their discretion, judges should remind themselves that they ought to have little difficulty in analysing and deciding the issues in the case on their merits without being influenced by their knowledge of the amount of the Pt 36 offer or payment.”

12.  The test for apparent bias in Hong Kong is the same as that stated by Stanley Burnton J in Berg §22: see Deacons v White & Case LLP (2003) 6 HKCFAR 322 at §20 (Ribeiro PJ).

13.  In determining whether a judge should recuse himself where without prejudice materials have been improperly disclosed, I respectfully agree with the approach laid down by Stanley Burnton J in Berg.

D. My reasons

14.  For obvious reasons, I cannot go into the contents of the without prejudice materials.  What I can say is that I have read them and am fully aware of their contents. 

15.  In these circumstances, applying the two‑stage approach set out in Berg, I consider that both the subjective and objective tests are satisfied.  In particular, I consider that (1) I am disabled from fairly continuing with the case; and (2) I cannot continue with the case without there being a real possibility or a real danger of there being seen to be, by a fair‑minded and informed observer, an unfair trial.

16.  For these reasons, I decided to recuse myself from hearing the case and have the case re‑fixed before a different judge.  This is not a decision which I arrived at lightly, particularly knowing that this is an eight‑day case and that the parties would very likely have to wait a fairly long time before the matter can come back before a different judge.  Nonetheless, in the circumstances of this case, I consider that justice demands that the case be tried before a different judge.

E. Costs

17.  On the question of costs, Mr Yip submitted that the defendant should pay for all the wasted costs as a result of the recusal application on an indemnity basis.  Ms Lau submitted that there should be no order as to costs.

18.  I consider that both parties were at fault.  The plaintiff’s solicitors should not have included the without prejudice materials when they were preparing the hearing bundles.  The defendant’s solicitors should have spotted the inclusion of such materials and raised the objection much earlier. In these circumstances, I consider that there should be no order as to costs.

19.  Even though I have ordered that there be no order as to costs as between the parties, there will inevitably be costs occasioned by this application.  Such costs would ordinarily be paid by the plaintiff and the defendant to their respective solicitors.  In the circumstances of this case, I see no reason why the plaintiff and the defendant should bear such costs.  I am contemplating the making of a wasted costs order to disallow the costs occasioned by the recusal application as between the solicitors of both parties and their respective client.  In this regard, I have borne in mind sections 52A(4) and 52A(6) of the High Court Ordinance (Cap 4), RHC Order 62, rules 8, 8A and 8B, and Practice Direction 14.5.  In accordance with RHC Order 62, rule 8B(1)(a), I am satisfied that (1) there are sufficient materials which would be likely to lead to a wasted costs order being made and (2) the wasted costs proceedings are justified notwithstanding the likely costs involved.  In accordance with RHC Order 62, rule 8B(1)(b), I shall give the parties’ solicitors an opportunity to give reasons why a wasted costs order (as outlined earlier) should not be made, and direct them to file written submissions to set out such reasons within 7 days from the date of these Reasons if they so wish.