JOEL KAI THOMAS v. TAO HSIAO SHAN, ALICE

HCMP209/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 209 OF 2011

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BETWEEN

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JUDGMENT

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1.  This is an application by the defendant to strike out certain passages in the 2^nd affirmation of the plaintiff filed on 7 June 2011 and an exhibit, “JKT-13”, to that affirmation. It raises a relatively short but important point concerning the scope of “without prejudice” privilege.

Background

2.  For the purpose of this application, the material background facts can be shortly stated.

3.  Mr Joachim Michael Thomas (the “Deceased”), who had lived in Hong Kong for a long time, passed away intestate in Hong Kong on 4 May 2007.  The defendant (“Mdm Tao”) was his wife.  Letters of Administration was granted to her on 12 June 2008.

4.  The Deceased had 2 children from an earlier marriage : a daughter (“Jocelyne”), born on 4 July 1980 and the plaintiff (“Joel”), born on 6 September 1983.  They reside in Germany.

5.  Mdm Tao, Jocelyne and Joel are the only beneficiaries entitled to the Deceased’s estate (the “Estate”).

6.  By an Originating Summons issued on 14 February 2011 (amended on 20 April 2011) pursuant to RHC Ord. 85 r 2, Joel seeks (amongst other relief) disclosure from Mdm Tao, as administratrix, of details of the assets belonging to the Estate, an order that Mdm Tao provide an account, and an inquiry against her “as applicable” (whatever that means) in respect of the assets of the Estate.

7.  Amongst the assets listed in the Originating Summons of which disclosure and account are sought are two sums of US$750,000 and €350,000 respectively.  It would appear that these sums were originally held in the bank account of Deutsche Consult (Asia) Ltd (“DC”), a Hong Kong company.  According to Mdm Tao, DC was the company through which the Deceased provided trustee and corporate secretarial services to clients. 

8.  In her 1^st affirmation filed in these proceedings on 17 May 2011, Mdm Tao deposed that the Deceased had, on 18 April 2007, given instructions on behalf of DC to transfer the two sums into his personal account held with the same bank.  On 24 April 2007, again on the Deceased’s instructions, the sums were remitted to an account held by Best Rate International Ltd (“Best Rate”) with a bank in Switzerland.

9.  Best Rate is also a Hong Kong company, with the Deceased being the sole registered shareholder of all its shares.  Although Mdm Tao was at the material time of the transfers, and I think still is, a director of Best Rate, she deposed that she took no part in giving the transfer instructions to the banks.  Mdm Tao’s evidence is that the two transfers were carried out entirely at the Deceased’s instructions and she did not know the purpose behind the transfers.  She also claimed that she had discovered since the Deceased’s death that he had held 50% of the shares in Best Rate on behalf of another, unnamed, person and that she had been able to find out that Best Rate had no assets.

The Without Prejudice Meetings

10.  In March 2011, i.e. after the commencement of the present proceedings, Mdm Tao asked for a personal meeting with Joel and Jocelyne to discuss matters concerning the Estate.

11.  Eventually, two meetings took place in April 2011 in Nuremburg, Germany, between Mdm Tao, Joel and Jocelyne (separately the “1^st/2^nd Meeting” or collectively the “Meetings”).

12.  There is no dispute that the Meetings were set up in order that the parties could discuss out of court settlement of their dispute over the Estate.  The email exchanges between Mdm Tao and Joel show unequivocally that they had agreed that the Meetings would be held on a “without prejudice basis”.  In Joel’s email to Mdm Tao dated 9 March 2011, he said :

“All discussions between us are without prejudice which means that neither parties are allowed to disclose the contents of our discussions to the court.”

13.  Further, Mdm Tao requested as a condition of meeting Joel and Jocelyne that the parties would not make any recording of the Meetings, to which Joel and Jocelyne did not dissent.

Reliance on “admissions” in Joel’s evidence in the proceedings

14.  Nevertheless, in his 2^nd affirmation filed on 7 July 2011, Joel referred to certain alleged admissions made by Mdm Tao during the Meetings in relation to the two transfers.  These passages, the subject matter of the strike out application, are contained in paragraph 24 (the last sentence) and paragraphs 29 to 32 of that affirmation.

15.  Additionally, Joel produces as an exhibit to that affirmation two “attendance notes” of what Mdm Tao allegedly said during the Meetings.  These notes ran to 7 pages in small fonts.  Mdm Tao believes that Joel or Jocelyne had in fact surreptitiously made recordings during the Meetings in breach of the parties’ pre-meeting agreement, which allegation is not disputed by Joel.

16.  Mdm Tao, in correspondence between the parties’ solicitors, denies that she has admitted misappropriation of the two sums.

Joel’s reasons for referring to things said in the Meetings

17.  In his affirmation filed in opposition to this application, Joel gave two reasons why he had decided to make reference to the alleged contents of the discussions during the Meetings.

18.  First, it is said that Mdm Tao’s admissions demonstrate that what she had said in her affirmation are misleading and untruthful : Joel 2^nd affirmation §§30, 32; Joel 3^rd affirmation §5.

19.  Secondly, it is said that Mdm Tao did not make any settlement proposals or offers of settlement during the Meetings.  Rather, it is said that she essentially made “confessions” as to what she has done or failed to do as administratrix : see Joel 2^nd affirmation §31; Joel 3^rd affirmation §6.

Applicable principles

20.  There is no dispute about the applicable principles.  Counsel for both sides referred me to Unilever v Plc v The Proctor & Gamble Co. [2000] 1 WLR 2436, which has been applied in Hong Kong in a number of cases : Re Jinro (HK) International Ltd, HCCW1352/2001 (unreported, Kwan J, 26 July 2002) at §17; Dynamic Creations Ltd v Mint Gem & Jewellry Manufacturing Co. Ltd, HCA378/2007 (unreported, Chu J, 12 April 2006) at §27; and Ninh Diep v Luigi Ferrini, DCPI1152/2006 (unreported, HH Judge Au, 27 July 2007) at §20.  The Unilever case is recently applied by the House of Lords in Ofulue v Bossert [2009] 1 AC 990.

21.  In Unilever, the English Court of Appeal (Robert Walker LJ, Simon Brown LJ and Wilson J) reviewed the modern authorities on the “without prejudice” rule and identified the twin bases or foundation of the rule : public policy in encouraging litigants to settle their differences rather than litigate to the finish, and express or implied agreement of the parties that communication in the course of negotiations should not be admissible in evidence if they could not settle : see 2441H-2442D. 

22.  As to the circumstances when the court may receive evidence of otherwise privileged communication, Robert Walker LJ (with whom Simon Brown LJ and Wilson J agreed) observed at 2444H :

“Apart from any concluded contract or estoppel, one party may be allowed to give evidence of what the other said or wrote in without prejudice negotiations if the exclusion of the evidence would act as a cloak for perjury, blackmail or other ‘unambiguous impropriety’ (the expression used by Hoffmann L.J. in Forster v. Friedland (unreported), 10 November 1992; Court of Appeal (Civil Division) Transcript No. 1052 of 1992). Examples (helpfully collected in Foskett’s The Law & Practice of Compromise, 4th ed. (1996), para. 9–32) are two first-instance decisions, Finch v. Wilson (unreported), 8 May 1987 and Hawick Jersey International Ltd. v. Caplan, The Times, 11 March 1988. But this court has, in Forster v. Friedland and Fazil-Alizadeh v. Nikbin (unreported), 25 February 1993; Court of Appeal (Civil Division) Transcript No. 205 of 1993, warned that the exception should be applied only in the clearest cases of abuse of a privileged occasion.”

23.  And at 2448H-2449C :

“ In those circumstances I consider that this court should, in determining this appeal, give effect to the principles stated in the modern cases, especially Cutts v. Head, Rush & Tompkins Ltd. v. Greater London Council and Muller v. Linsley & Mortimer. Whatever difficulties there are in a complete reconciliation of those cases, they make clear that the without prejudice rule is founded partly in public policy and partly in the agreement of the parties. They show that the protection of admissions against interest is the most important practical effect of the rule. But to dissect out identifiable admissions and withhold protection from the rest of without prejudice communications (except for a special reason) would not only create huge practical difficulties but would be contrary to the underlying objective of giving protection to the parties, in the words of Lord Griffiths in the Rush & Tompkins case [1989] A.C. 1280, 1300 : ‘to speak freely about all issues in the litigation both factual and legal when seeking compromise and, for the purpose of establishing a basis of compromise, admitting certain facts.’ Parties cannot speak freely at a without prejudice meeting if they must constantly monitor every sentence, with lawyers or patent agents sitting at their shoulders as minders.

Lord Griffiths in the Rush & Tompkins case noted, at p. 1300c, and more recent decisions illustrate, that even in situations to which the without prejudice rule undoubtedly applies, the veil imposed by public policy may have to be pulled aside, even so as to disclose admissions, in cases where the protection afforded by the rule has been unequivocally abused.” (Emphasis added)

24.  The English Court of Appeal had another occasion to consider what might constitute “unequivocal abuse” in Savings & Investments Bank Ltd (In Liq) v Fincken [2004] 1 WLR 667.  Rix LJ, with whom Carnworth LJ agreed, held at 684C-685H §§57-61 as follows :

“57 In my judgment that philosophy [ie the jurisprudence underlying the privilege] is antagonistic to treating an admission in without prejudice negotiations as tantamount to an impropriety unless the privilege is itself abused. That, it seems to me, is what Robert Walker LJ meant in the Unilever case [2000] 1 WLR 2436 when he repeatedly spoke in terms of the abuse of a privileged occasion, or of the abuse of the protection of the rule of privilege : see at pp 2444g, 2448a and 2449b. That is why Hoffmann LJ in Forster v Friedland 10 November 1992 emphasised that it was the use of the privileged occasion to make a threat in the nature of blackmail that was, if unequivocally proved, unacceptable under the label of an unambiguous impropriety. And that is why Peter Gibson LJ in Berry Trade Ltd v Moussavi (No 2) [2003] EWCA Civ 715 suggested, without having to decide, that talk of ‘a cloak for perjury’ was itself intended to refer to a blackmailing threat of perjury, as in Greenwood v Fitts 29 DLR (2d) 260, rather than to an admission in itself. It is not the mere inconsistency between an admission and a pleaded case or a stated position, with the mere possibility that such a case or position, if persisted in, may lead to perjury, that loses the admitting party the protection of the privilege : see the first holding in Fazil-Alizadeh v Nikbin 25 February 1993, described in para 47 above. It is the fact that the privilege is itself abused that does so. It is not an abuse of the privilege to tell the truth, even where the truth is contrary to one's case. That, after all, is what the without prejudice rule is all about, to encourage parties to speak frankly to one another in aid of reaching a settlement : and the public interest in that rule is very great and not to be sacrificed save in truly exceptional and needy circumstances.

58 It may be said, as indeed Ms Gloster [counsel for the claimant] has powerfully argued, that even if the mere possibility of future perjury does not suffice to destroy the privilege, the admission which demonstrates that perjury has been committed in the past, by reference to an existing affidavit, is or should be different and that no authority suggests otherwise. In this way she seeks to support the judge's decision, which was premised on the prospect of future perjury, as was the decision in the Merrill Lynch case The Times, 14 June 2000, by the different route of the impropriety of past perjury. There is indeed a substantial case to be made that the courts should not pass by such proof of perjury with indifference. There is a clear public interest in the discouragement of perjury. Nevertheless, on balance I do not think that the courts should adopt such a position. If they did, the very serious and criminal charge of perjury would fall to be debated, without the protection which should be available to the accused party, on an interlocutory outing (as here) or even at trial, with the potential of derailing the trial by the exposure of without prejudice material to the trial judge. Essentially the same problem would arise in connection with statements of truth, which now apply under the CPR to all particulars of claim or defence : although they cannot give rise to the offence of perjury, they can give rise to the only relatively less serious matter of contempt of court.

59 Further considerations point in my judgment in the same direction. A litigant understands in general that he may make admissions for the purpose of settling litigation under the protection of privilege if the negotiations fail. He may go into such a meeting without legal advisors, indeed very often such meetings have better prospects of success if the principals to the dispute meet alone. If the case against him is one of fraud or dishonesty, or if he has made an incautious affidavit in the past whatever be the nature of the case against him, he moves into a situation of peril at the point at which he is most candid. There may be no one present to warn him that the privilege with which the meeting began is in the process of being lost, or of the danger of self-incrimination. In such circumstances cases of fraud or dishonesty become almost impossible to settle. So here, whatever be the motives which led Mr Fincken to admit his ownership of the shares, which are unknown, it is in theory possible that, in seeking a final compromise, Mr Fincken, or someone in an analogous position to his, would be conscious that he might never be able to achieve finality without exposing his own past faults. Alternatively, the less scrupulous who make no admissions are better served by the very rules which are designed to encourage frank exchanges than are the more candid. Moreover, the well advised litigant will be told that if he makes his admission in a hypothetical form, contingent upon settlement, then, as Ms Gloster herself accepted, the privilege cannot be lost. This is a recipe for legalism and has the danger of turning the without prejudice meeting into a potential trap and one which may moreover be exploited by litigants who do not enter into such discussions altogether in good faith, a point which it is common ground does not arise in this case but which was emphasised by Simon Brown LJ in the passage quoted above from the Fazil-Alizadeh case 25 February 1993.

60 Finally, there is the question whether Ms Gloster is in fact right to submit that her reliance on an admission which is inconsistent with a previous sworn statement has never before been the subject of judicial comment or decision. I do not think that she is. In Berry Trade Ltd v Moussavi (No 2) [2003] EWCA Civ 715 at [53] … Peter Gibson LJ said : ‘If the without prejudice rule can be breached in this case, we do not see why it cannot be breached in any case where an admission, inconsistent with some pleading or sworn assertion, is alleged to have been made.’

61 Subject to the need to prove the admission unambiguously, that comment applies to this case.”

Submissions

25.  Mr Paul Leung, counsel for Mdm Tao, submitted that this is a plain case falling within the without prejudice rule.  He submitted that there was no abuse of the privilege, blackmail or any other “unambiguous impropriety” on Mdm Tao’s part which would operate to take the case outside the protection offered by the privilege : Savings & Investments Bank at 684C-G §57 cited above.

26.  Moreover, he submitted that there is strong evidence from which one can draw the inference that Joel had in fact surreptitiously recorded the Meetings, which made it a much stronger case for excluding the alleged admissions : see Savings & Investments Bank at 679E-680A §47.

27.  Miss Rachel Lam, appearing on behalf of Joel, relied on the two reasons given by Joel in his affirmation (see above).  Additionally, she argued that there was “unambiguous impropriety” on the part of Mdm Tao.  She put her case as follows in her skeleton, by reference to parts of the notes of the 2^nd Meeting :

“(1) The ‘blatant threat’ by [Mdm Tao] during the 2^nd meeting that in order to avoid liability for the transfer of the Sums to her personal accounts, she would claim that the Deceased had gifted the money to her. Clearly, she knew this was not the case and was using cloak of the ‘without prejudice’ meeting as an occasion to demonstrate that she would go to such lengths in order to deprive [Joel] and his sister of any part of the estate;

(2) Indeed, she openly admitted that she was not complying with her duty as Administrator for her ‘own protection’; and

(3) She acknowledged that her actions would mean that P and his sister would inherit nothing.”

Without prejudice rule applies

28.  In my view, there can be no doubt that the Meetings were convened with a view to resolving the disputes between Mdm Tao on the one hand and Joel and Jocelyne on the other concerning the Estate without resorting to legal proceedings.  The emails exchanged between Mdm Tao and Joel made this very clear.  For present purposes, the fact that Jocelyne is not a party to these proceedings is immaterial, because her interest is the same as Joel’s.

29.  Plainly, in this case, the alleged statements made by Mdm Tao during the Meetings are deployed as admissions against her.  They are sought to be admitted as evidence of the truth of what was allegedly said, to prove Joel’s case that Mdm Tao had not discharged her duties as administratrix, or at least as ammunition to discredit her affidavit evidence at the substantive hearing.  Such usage is prima facie not permissible : it falls squarely within the protection offered by the “normal rule [of privilege] based on public policy” : see Unilever at 2449H.  Additionally, such use is contrary to the express agreement between the parties that nothing said could be used in court.

30.  I reject Miss Lam’s submission that because no proposal or offer had been made and that all that Mdm Tao did was to make “confessions”, the without prejudice rule does not apply.  That submission seems to have been based on a misreading of Bradford & Bingley plc v Rashid [2006] 1 WLR 2066 at §73 and §83 cited by Miss Lam.  The facts of that case are very different from those in the instant case.  What was in issue in that case was whether certain statements made by the defendant mortgagor in open correspondence between him and the claimant mortgagee constituted an acknowledgment of debt for the purposes of s.29(5) of the Limitation Act 1980 (cf s. 23(3) of the Limitation Ordinance, Cap. 347).  The claimant did not dispute the debt or its amount, but in open correspondence proposed to pay a smaller amount than was owed “as final settlement”.  The correspondence was not stated to be “without prejudice”.

31.  The House of Lords unanimously held that the claimant can rely on the statements as acknowledgment of the debt, but disagreed on the basis of their decision.  The majority of the House (Lord Walker, Lord Brown and Lord Mance) held that the without prejudice rule did not apply to such correspondence which was designed only to discuss the repayment of an admitted liability rather than to negotiate and compromise a disputed liability : see Lord Brown at 2089C §§72-73 and Lord Mance at 2091A-H §§81-83. (Lord Hoffmann and Lord Hope gave different reasons for their decisions.) The case therefore affords no support for Miss Lam’s submission.

32.  In my judgment, the application of the rule cannot depend on whether an offer or proposal has or has not been made in the discussions.  There may be many reasons why a concrete offer was not put forward at a particular meeting or meetings.  Statements may be made in an initial meeting, or series of meetings, which may form the basis of further discussions.  The parties may not have reached, or been able to reach, the stage when a concrete proposal or offer could be made.  But the fact that the discussions do not lead to any concrete offer or proposal could not alter, retrospectively, the purpose of holding the meeting in the first place.

33.  In Unilever, Robert Walker LJ made this observation at 2443H-2444B which is particularly relevant to this point :

“ Without in any way underestimating the need for proper analysis of the rule, I have no doubt that busy practitioners are acting prudently in making the general working assumption that the rule, if not ‘sacred’ (Hoghton v. Hoghton (1852) 15 Beav. 278, 321), has a wide and compelling effect. That is particularly true where the ‘without prejudice’ communications in question consist not of letters or other written documents but of wide-ranging unscripted discussions during a meeting which may have lasted several hours.

At a meeting of that sort the discussions between the parties’ representatives may contain a mixture of admissions and half-admissions against a party's interest, more or less confident assertions of a party's case, offers, counter-offers, and statements (which might be characterised as threats or as thinking aloud) about future plans and possibilities.”

34.  

35.  This passage was applied in Berry Trade Ltd v Moussavi (No. 2) [2003] EWCA Civ 715.  In that case the claimants sought to rely on certain admissions alleged to have been made by one of the defendants, Mr Ghadimi, in the course of three without prejudice meetings and a telephone conversation.  Mr Ghadimi attended two of those meetings by himself, and one meeting with his solicitor.  It is said that in the course of these communications what Mr Ghadimi had said (or rather, had not said) was inconsistent with his pleaded case, so as to show that his pleaded case was dishonest.  The claimant therefore asserted that the case fell within the recognized “cloak for dishonesty” exception to the without prejudice rule.

36.  At §53 of the judgment, Peter Gibson LJ (giving the judgment of the court), said this :

“In our judgment this is simply not the sort of case where the court should be prepared to admit the evidence of without prejudice statements as falling within the exception from the without prejudice rule for unambiguous impropriety. The situation here is precisely what Robert Walker L.J. referred to in Unilever (at p. 2444A) when he talked of without prejudice communications which ‘consist not of letters or other written documents but of wide-ranging unscripted discussions during a meeting which may have lasted several hours.’ It seems to us quite wrong to select from many hours of without prejudice discussions what are said to be an admission here and an admission there in order to mount a claim that by his subsequent statements on oath the alleged maker of the admissions committed perjury. These were not even discussions at which, through tape-recording or the keeping of a detailed note, what was said and the context in which it was said could not be doubted. If the without prejudice rule can be breached in this case, we do not see why it cannot be breached in any case where an admission, inconsistent with some pleading or sworn assertion, is alleged to have been made. No litigant could be advised to enter into without prejudice discussions without a lawyer at his elbow or a prepared script approved by his lawyer. To allow such admissions in evidence flies in the face of the public policy justification for the without prejudice rule.”

37.  The above observations apply a fortiori in this case when the parties met in person, and when they had a clear understanding and agreement that things said during their meeting would not be recorded and would not be used in court.

“Unambiguous impropriety”

38.  The next question is whether this case falls within one of the recognised exceptions to the rule.

39.  Miss Lam relies on the “cloak for perjury” exception.  But as Mr Leung correctly points out, that argument cannot stand in the light of Savings & Investment Bank at 684C-G §57 cited above.  For my part, I would add that Miss Lam’s argument is contrary to Berry Trade at §53, as approved and applied in Savings & Investment Bank at §60.

40.  As to the “blatant threat” relied on by Miss Lam in her skeleton, I am not persuaded that the relevant part of the notes relied upon shows any unambiguous abuse.  The part that Miss Lam relies on as constituting an unambiguous threat to perjury reads as follows :

“We pointed out that she was committing a criminal offense by transferring our father’s money to her personal account without declaring it in the schedule of assets and liabilities. She bluntly responded that she has no such concerns as she could always claim that our father had gifted the money to her.”

41.  In my view, that is at the most a statement from Mdm Tao as to how she might run her case.  From the available materials it cannot be said that the contention was not reasonably open to her. In my judgment it does not demonstrate any “blackmailing threat of perjury” or anything of the kind.

42.  As to the argument that Mdm Tao admitted that she was not complying with her duty as administratrix, Miss Lam relies on this sentence in the notes :

“When reminded that it was her duty as the Administrator of the estate to reveal the requested information to us, she agreed but said—for her ‘own protection’ she—would not comply with the same.”

43.  That statement is ambiguous.  It is all the more so when read together with the paragraph immediately above it, when Mdm Tao was said to have mentioned that her lawyers had advised her that she did not have to satisfy all of the children’s requests for information.  In my view, to come within such an exception the evidence must be very clear and the statement falls far short of that requirement.

44.  As to the last point that Mdm Tao acknowledged that her action would mean that Joel and Jocelyne would inherit nothing, Mss Lam relied on the following passage :

“I informed her that an out-of-court settlement would prove to be very difficult, not knowing the true value of the estate due to her continued refusal to provide us with information and documentation. She re-iterated that she had not come to Germany because she was ‘losing’ but merely to tell us ‘the story’ and out the ball in our court saying it was ‘our call’ now. We responded by saying that if we were to go by the letter of administration we would inherit nothing, to which she agreed. We further stressed that we agreed to meet her in the hope for an out-of-court settlement but that it was proving to be impossible if she does not cooperate.”

45.  Two points arise from this passage.  First, it reconfirms that the purpose of the Meetings was to discuss settlement of the action. Secondly, the penultimate sentence quoted above (beginning with “We responded by saying …”) on which Miss Lam placed much emphasis, appears to be nothing more than a statement by Mdm Tao, from her perspective, of the legal position as things stood.  That could not, in my view, be interpreted as some sort of threat or blackmail.

46.  Finally on the question of abuse, I would observe that I have proceeded on the basis that the notes are accurate.  Mdm Tao has not had any proper opportunity to adduce evidence to address the “impropriety” point because it was not mentioned in Joel’s evidence filed in opposition to the application or correspondence, but only surfaced in Miss Lam’s skeleton.  That is most unsatisfactory and potentially unfair to Mdm Tao because she may wish to adduce evidence to answer the accusation if the point has been unambiguously made.  In the event I do not think there is anything in the point.  But I must stress that in an appropriate case, the court may consider it unfair to allow such an argument to be raised at all if the other side is deprived of a fair opportunity to file evidence in answer.

Conclusion

47.  In my view, the current case is indistinguishable from Berry Trade and Saving & Investment Bank. It would appear to be indistinguishable from Re Jinro (HK) International Ltd (in respect of the “second period of negotiation”) : see judgment §§16-19, although one cannot be certain as the content of the letter in question is not set out in the judgment.  In all these cases, what was allegedly said (or not said) in without prejudice meetings or correspondence was sought to be relied upon to show that what the other party had earlier pleaded or said on oath was perjured.

48.  Such attempts should not be permitted, otherwise the protection offered by the without prejudice rule would be seriously undermined.  In this regard, I echo what Kwan J (as she then was) said in Re Jinro at §18 :

“The exception of ‘unambiguous impropriety’ to pierce the veil of without prejudice privilege should only be applied in the ‘clearest cases of abuse of a privileged occasion’, otherwise ‘the value of the without prejudice rule would be seriously impaired if its protection could be removed by anything less than unambiguous impropriety’ (Unilever, supra. at 2444; Forster v. Friedland, supra.). As Simon Brown LJ stated in Fazil-Alizadeh v. Nikbin, unreported, English Court of Appeal, 25 February 1993, ‘There are powerful policy reasons for admitting in evidence as exceptions to the without prejudice rule only the very clearest of cases. Unless this highly beneficial rule is most scrupulously and jealously protected, it will all too readily become eroded.’”

49.  I would also respectfully adopt what Rix LJ said in Savings & Investment Bank at §§59-61, cited above.

50.  For the reasons given above, I would order that the offending parts of Joel’s affirmation and exhibit “JKT-13” be struck out and expunged from the record.

Costs

51.  Counsel agreed that costs should follow the event.  Accordingly, the defendant shall have her costs of an occasioned by the application.

52.  Mr Leung asked for costs to be assessed on the indemnity basis.  He submitted that the purported use of things said in without prejudice negotiations is an abuse of process.  The abuse here is particularly serious since the parties have expressly agreed that nothing discussed during the Meetings should be used in court, and because Joel and Jocelyne must have recorded the conversations in breach of their agreement.

53.  Miss Lam submitted that there is nothing undeserving on her client’s part to warrant departure from the usual party and party basis.  She submitted that there is no positive evidence that the Meetings had been recorded, or any abuse on his part.  She emphasised that her client had been advised that it was legitimate to refer to the communication.

54.  I agree with Mr Leung.  In my view, the inference is irresistible that Joel did surreptitiously record the Meetings, in plain deliberate breach of the agreed arrangement, with a view to obtaining materials for use in the action.  A clear message must be sent out that such conduct would not be condoned.  In my judgment, this is an appropriate case to award costs on an indemnity basis.

55.  I propose to assess costs summarily.  The parties have filed their respective statements of costs and written objections. 

56.  Mdm Tao’s statement of costs come to $99,096. The plaintiff’s own statement of costs totalled $73,500.

57.  The plaintiff raised objections to items C1, C2, C3 (attendance on client, other side and counsel), as well as D2 and D5 (perusal of documents and research), on the ground that these items are excessive. 

58.  Having considered the plaintiff’s objections, I would agree that items C1, C2, C3, and D2 appear to be on the high side.  But rather than suggesting what would be appropriate times to spend on individual items of work, I propose to adopt a more broad brush approach.  Taking into account all circumstances, I would allow a lump sum of $90,000.

59.  Finally, I thank counsel for their assistance.