POON LOI TAK the Administrator of the late POON NUEN Deceased v. POON LOI CHEUNG DESMOND

HCA 3348/2016

[2019] HKCFI 3003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 3348 OF 2016

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J U D G M E N T

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A. Introduction

1.  This is the hearing of the application by the defendant pursuant to his summons dated 6 March 2019 (the “Summons”) for orders (inter alia) that certain paragraphs of the witness statements of the plaintiff (the “WP Paragraphs”)[1] and certain items of disclosure in the plaintiff’s List of Documents (the “WP Documents”)[2] be excluded/expunged on the ground that they are subject to without prejudice privilege and inadmissible. 

2.  This Action was commenced by the plaintiff by Writ issued on 20 December 2016.  The WP Paragraphs and the WP Documents relate to discussions and meetings between the defendant and his siblings (including the plaintiff) (the “Siblings”) in the few months immediately prior to the commencement of this action (ie in September to December 2016) which the defendant says were conducted with a view to settling the disputes between them without resort to litigation.  Such discussions/meetings include:

(1) Telephone conversations between the defendant and some of the Siblings between September and October 2016;

(2) A meeting held between some of the Siblings on 17 October 2016 (the “17 Oct Meeting”);

(3) A meeting held between some of the Siblings on 31 October 2016 (the “31 Oct Meeting”);

(4) WhatsApp messages between the Siblings in November/December 2016 and references to a draft agreement containing proposed settlement terms;

(5) A meeting held between some of the Siblings on 5 December 2016 (the “5 Dec Meeting”).

3.  The plaintiff seeks to rely on the above matters in support of his claims against the defendant.  In particular, without the knowledge or consent of the defendant, the plaintiff secretly recorded the conversations and discussions during the 17 Oct Meeting and the 31 Oct Meeting and now seek to rely on the recordings and transcripts of such meetings as evidence in this Action. 

4.  The following affirmations have been filed in relation to the Summons:

(1) the defendant’s 2^nd Affirmation dated 6 March 2019 in support of the Summons (“Desmond Poon 2^nd”);

(2) the 3^rd Affirmation of the plaintiff(“Plaintiff 3^rd”); the Affirmation of Poon Loi Tat (“Loi Tat’s Affirmation”); and the Affirmation of Poon Loi Chuen (“Loi Chuen’s Affirmation”), all filed on behalf of the plaintiff in opposition to the Summons; and 

(3) the defendant’s 3^rd Affirmation in reply dated 21 May 2019 (“Desmond Poon 3^rd”).

5.  The defendant submits that the discussions referred to in the WP Paragraphs and the WP Documents are quite plainly bona fide attempts to settle a dispute between the parties and subject to without prejudice privilege, and ought to be excluded/expunged. There is also no basis for the plaintiff to suggest that the defendant has “abused the privileged protection” so as to deprive him of such privilege.

B.     Relevant background

6.  This is a family dispute between siblings in respect of the estate of their deceased father, Poon Nuen (“Father”) who passed away on 20 April 2016.  There are six siblings in the family in order of seniority: Poon Kit Bing (“Kit Bing”), Poon Loy Koon (“Loy Koon”), the defendant, the plaintiff, Poon Loi Tat (“Loi Tat”) and Poon Loi Chuen (“Loi Chuen”).

7.  In this action, the plaintiff (in his capacity as administrator of Father) claims against the defendant in relation to (inter alia) the monies in two bank accounts which were, at the time of the death of Father, held in the joint names of the defendant and Father with the Hong Kong and Shanghai Banking Corporation Limited (“HSBC”), namely the Savings Account No 008-8-068085 (the “Savings Account”) and Premier Account No 650-062631-888 (the “Premier Account”). It is common ground that the assets in the Savings and Premier Account include the proceeds of the sale in the amount of HK$33 million of the shop premises situated at Ground Floor, 91 Belcher’s Street, Hong Kong, which was previously held in Father’s name (the “Sale Proceeds”).

8.  The plaintiff’s case is that the funds in the Savings Account and Premier Account, including the Sale Proceeds, were owned by Father solely and absolutely and should be vested in his estate upon his death.  The defendant’s position is that the Sale Proceeds were deposited into the Savings Account and the Premier Account with Father’s consent and Father gifted such monies to him.  It is the dispute and negotiations as between the Siblings in relation to such monies that form the subject matter of the WP Paragraphs and the WP Documents in the present application. 

C.     Relevant legal principles

C1.    Application of the without prejudice rule

9.  The without prejudice rule is a rule governing the admissibility of evidence, which applies to exclude all negotiations genuinely aimed at settlement, whether oral or in writing, from being given in evidence: Rush & Tompkins Ltd v Greater London Council [1989] AC 1280, 1299G- 1300B per Lord Griffiths.  The court has power to expunge/exclude evidence which is inadmissible by reason of without prejudice privilege.

10.  The rationale of the without prejudice rule, which is founded on public policy, is to encourage parties to negotiate and settle their disputes out of court: Muller v Lindsley and Mortimer [1996] 1 PNLR 74, 77 (CA)per Hoffmann LJ (as he then was). 

11.  Given that the encouragement of settlement is enshrined in the overriding objectives of the Rules of the High Court (see Order 1A, rule 1(e)), the rule is of fundamental importance in the administration of justice: see Thanki, The Law of Privilege 3^rd Edition §§7.01, 7.02.

12.  The purpose of the without prejudice rule is to protect a litigant from being embarrassed by any admission made purely in an attempt to achieve a settlement: see Hong Kong Civil Procedure 2020 Vol 1, Practice Note 24/5/41. The public policy underlying the rule was explained by Oliver LJ (as he then was) in Cutts v Head [1984] Ch 290, 306 as follows:

“It is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings. They should, as it was expressed by Clauson J. in Scott Paper Co. v. Drayton Paper Works Ltd. (1927) 44 R.P.C. 151, 156, be encouraged fully and frankly to put their cards on the table. ……The public policy justification, in truth, essentially rests on the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the court of trial as admissions on the question of liability.” (emphasis added)

13.  The principles applicable to the determination as to what constitutes without prejudice privileged negotiations for settlement have been set out in Re Jinro (HK) International Ltd [2002] 4 HKC 90 (per Kwan J as she then was) at §13, as follows:

(1) A party claiming without prejudice privilege on communication would have to show that the communication was made: (i) at a time when there was an existing dispute between the parties; (ii) legal proceedings in relation to the dispute had commenced or were contemplated; (iii) the communication was made in a genuine attempt to further negotiations to settle the dispute; and (iv) the communication was made with the intention that, if negotiations failed, it could not be disclosed without the consent of the parties.

(2) Further, it was not necessary for a “without prejudice” stamp to be expressly applied to the negotiations if it was clear from the surrounding circumstances that the parties were genuinely seeking to compromise the dispute.

14.  As to the requirement set out at paragraph 13(1)(iv) above, Hoffmann LJ (as he then was) had this to say in Forster v Friedland (unreported) 1992 WL 1351421 at page 3:

“A party cannot bring within the rule statement which is not within its public policy merely by his stated or implied intention that it should be protected. Thus, whatever the parties may stipulate, the rule covers only those communications which are genuinely aimed at a settlement to avoid litigation. On the other hand, parties are free to make open offers or negotiate openly to settle their differences. The fact that a communication is aimed at settlement may be an indication - even a strong indication - of an intention that it should be without prejudice but the rule would not apply if the court concludes that the communication was in fact intended to be open.” (emphasis added)

15.  See also Cheddar Valley Engineering Ltd v Chaddlewood Homes Ltd [1992] 1 WLR 820, at 824 GH, referring to negotiations between parties for the settlement of litigation:

“… Even without any express reference to the words ‘without prejudice’ or ‘off the record’ or anything of that kind negotiations of this kind prima facie raise the presumption that the communications involved in those negotiations are conducted without prejudice.” (emphasis added)

16.  Whether a particular communication was indeed an attempt to resolve a dispute, is to be determined objectively (the subjective intention of the party in question being irrelevant) having regard to all the circumstances: Alan Ramsay Sales & Marketing Ltd v Typhoo Tea Ltd [2016] 4 WLR 59 at §23 per Flaux J.

17.  It does not matter that litigation has not begun: the relevant question (to be decided objectively) is whether the parties “contemplated or might reasonably have contemplated that litigation would follow if they could not agree”: Barneston v Axa Framlington Group Ltd [2007] 1 WLR 2443 at §§32-34 per Auld LJ.

18.  Further, it is not necessary for the communication to contain a concession or offer of compromise: it is sufficient that it evinces a genuine desire to negotiate a settlement of an actual or potential dispute: Williams v Hull [2009] EWHC 2844 (Ch) §28 per Arnold LJ.  As Recorder Jat Sew Tong, SC stated in Re Estate of Joachim Thomas [2011] 5 HKLRD 538§32:   

“In my judgment, the application of the [without prejudice] 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.” (emphasis added)

19.  Similarly, in Unilever Plc v Proctor & Gamble Co [2002] 1 WLR 2436, Robert Walker LJ made the following observation at 2443H-2444B:

“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.” (emphasis added)

20.  The fact that a party asserts his rights is also not incompatible with it being part of a negotiation with a view to settlement: Williams v Hull supra §37 per Arnold LJ.  For example, in Schering Corporation v Cipla Ltd [2005] FSR 25 a letter which asserted the strength of the party’s position but states that it did not wish to embark on a confrontation if there was an alternative solution was construed as an invitation to negotiate (at §21 per Laddie J).

21.  A useful illustration of the workings of the without prejudice rule and its public policy rationale can also be found in cases on “opening shots”, in which an initial proposal in negotiations before commencement of proceedings may be protected by the privilege.  The courts look to whether the communication can be intended and understood to promote negotiations, even if the offer was by definition only unilateral at that point in time and even where there had not been any response from the opposing party: see Thanki: The Law on Privilege 3^rd Edn §7.15; South Shropshire District Council v Amos [1986] 1 WLR 1271, at 1276A-C, 1276D-E, 1277C. 

22.  The without prejudice rule applies to all communications which form part of the negotiations, whether they are themselves offers: Thanki: The Law on Privilege 3^rd Edn §7.16; South Shropshire supra at pp.1277-1278 per Parker LJ.  It has also been made clear that the protection of the privilege is not limited to admissions.  A party will not be allowed to engage in an exercise of dissecting technical admissions from the overall body of without prejudice negotiations.  Instead, the discussions as a whole will be protected, as a general freedom to negotiate is part of the same package: Thanki: The Law on Privilege 3^rd Edn §§7.17-7.22.  As Robert Walker LJ stated in Unilever Plc v Proctor & Gamble Co supra: –

“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…to speak freely about all issues in the litigation both factual and legal when seeking compromise…Parties cannot speak freely at a without prejudice meeting if they must constantly monitor every sentence, with lawyers…sitting at their shoulders as minders” (emphasis added) (2448H-2449B).

C2.    Exceptions to the without prejudice rule

23.  In exceptional circumstances, evidence that would otherwise be protected by without prejudice privilege would be rendered admissible if the exclusion of the evidence would act as a cloak for perjury or other unambiguous impropriety.  This exception would be applied only to the clearest of cases so as not to impair the value of the without prejudice rule: see Re Jinro supra §18 per Kwan J (as she then was) where it was held:

“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.’’ (emphasis added)

24.  Attempts to rely upon what was allegedly said (or not said) in without prejudice meetings or correspondence to show that what the other party had earlier pleaded or said on oath was perjured should not be permitted; otherwise, the protection offered by the without prejudice rule would be seriously undermined:Re Estate of Joachim Thomas supra per Recorder Jat Sew Tong, SC at §§28-29, 48-49.  See also Savings & Investments Bank Ltd (In Liq) v Fincken[2004] 1 WLR 667 §§59-61.

25.  In Berry Trade Ltd v Moussavi (No. 2) [2003] EWCA Civ 715 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.  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.” (emphasis added)

D.     Discussion

26.  The discussions and communications referred to in the WP Paragraphs and the WP Documents can be broadly separated into three periods: (i) telephone conversations before the 17 Oct Meeting; (ii) the 17 Oct Meeting and 31 Oct Meeting; (iii) events after the 31 Oct Meeting. 

27.  To understand the proper context of the events and communications between the Siblings in these three periods, the relevant background of events in around August to September 2016 must first be considered. 

D1.    Background – events in around August to September 2016

28.  It is common ground that, at a meeting between the plaintiff and the defendant on 15 August 2016, the plaintiff requested the defendant to return the Sale Proceeds in the Savings Account and the Premier Account to the plaintiff for distribution.  However, both parties knew that the Sale Proceeds in the Accounts were in the joint names of Father and the defendant and were held by the defendant upon Father’s death, which was reiterated by the defendant throughout the meeting as a clear indication of his position that he was entitled to the Sale Proceeds as the sole survivor.  By then, the parties were conscious that the manner of distribution of the Sale Proceeds was disputed, as shown by the plaintiff’s acknowledgment of the defendant’s “[hesitance]” to return the Sale Proceeds[3] and the failure of the parties to reach an agreement upon the end of the meeting.

29.  Thereafter, the plaintiff and the defendant had a meeting on 5 September 2016, the content and discussions in which has not been disputed in the plaintiff’s affirmation in reply.  At the meeting:

(1) The defendant emphasised that the Sale Proceeds had been deposited into the Savings Account and the Premium Account which were in the joint names of Father and himself, which made clear his view that he was entitled to such funds as the sole survivor. 

(2) The plaintiff, who produced an image of the Letter of Administration he obtained and expected the Sale Proceeds to be distributed between the Siblings, took a wholly different view.  No doubt he was well aware of the dispute between the parties. 

(3) The fact that court litigation was contemplated is further reflected in the plaintiff’s remarks about numerous cases of joint accounts ending up in court battle.  

30.  Further, there is clear evidence and admissions that, even prior to September 2016, the Siblings had raised the possibility of litigation if the dispute could not be resolved. 

(1) At the 31 Oct Meeting, Loi Tat noted that, two months prior to the October family meetings, Loi Chuen was “determined” to fight the matter out in court.  The defendant recounted one occasion in which Loi Chuen raised the possibility of court litigation, which Kit Bing confirmed and further added that “it was a long time ago”.  The defendant also recalled that he was advised by lawyers to settle the matter out of court.  

(2) Loy Koon also informed the defendant that he and the rest of the Siblings were concerned about the Sale Proceeds, inviting the defendant to resolve the matter to avoid any court battle amongst the Siblings.

31.  It is against the backdrop of these extant disagreements, as well as parties’ hope for possible negotiation to avoid litigation, that the nature of the following discussions and meetings must objectively considered. 

D2.    Period 1: Telephone conversations prior to the 17 Oct Meeting

32.  The relevant WP Paragraphs relating to the various telephone conversations which the defendant had with Loi Chuen, Kit Bing and Loi Tat prior to the 17 Oct Meeting, in which he put forward proposals for the settlement of the dispute are as follows:

(1) Loi Chuen WS §§36-41;

(2) Kit Bing WS §§36-39;

(3) Loi Tat WS §§36-40.

33.  On the defendant’s case, these telephone conversations took place after his meeting with the plaintiff on 5 September 2016 and before the 17 Oct Meeting.  Kit Bing, Loi Tat and Loi Chuen do not dispute the existence of such telephone conversations and/or meetings, but aver that they occurred at a slightly earlier point in time.  On Kit Bing’s case, these conversations were said to have taken place between August and September 2016; for Loi Tat, between July and August; for Loi Chuen, “a few months” before the October meetings.

34.  However, it should be pointed out that while Kit Bing states that the three conversations she had with the defendant took place between early August to September, her text message to the plaintiff on 10 October 2016 indicates that the conversations in fact took place in early September and early October, which is consistent with the defendant’s version of events. 

35.  I agree with the defendant’s submission that looking at the circumstances objectively, it is plain that the aforementioned telephone conversations are protected by without prejudice privilege for the following reasons. 

36.  First, I agree it is clear that there was at the time a dispute as regards the Sale Proceeds, and the parties contemplated or might reasonably have contemplated that litigation would follow if they could not agree: –

(1) In determining whether there is a bona fide dispute which the parties were seeking to settle, the court cannot be confined to the selective descriptions of the conversations in the witness statements of the parties, but must have regard to undisputed facts and circumstances existing at the time (as set out in section D1 above) to objectively ascertain whether the communications were of a privileged nature. 

(2) The assertions in Loi Chuen’s Affirmation §7 and Loi Tat’s Affirmation §12 that there had been no disagreement between the Siblings is not only contradicted by the matters set out in section D1 above, but also inconsistent with their own accounts in their witness statements:

(a) In relation to the conversations between Loi Tat and the defendant:

(i) Loi Tat recalls that the defendant proposed an offer which he did not agree to at the time.

(ii) Loi Tat further recalls that the defendant stated that the matter had best not be resolved through litigation.[4]

(iii) Thus, even on Loi Tat’s own account, considered objectively, there was clearly a dispute between the Siblings on the Sale Proceeds and how they should be distributed. 

(b) As to the conversation between Loi Chuen and the defendant, Loi Chuen was clearly well aware of the dispute between the Siblings, as on his own evidence[5], during the telephone conversations:

(i) The defendant’s position was that he was solely entitled to the Sale Proceeds, while other Siblings took the view that they were entitled to a share under the law;

(ii) The defendant said that the Siblings would derive no benefit in litigating with him “我們與他打官司亦沒用”, whereas Loi Chuen replied by saying “官司沒有一定贏或一定輸的”.

37.  Second, these conversations evidence a bona fide attempt to settle the extant dispute: –

(1) There is no dispute that the defendant had put forward a proposed sum for distribution to each of Loi Chuen, Loi Tat and Kit Bing.  Given the defendant’s position is that he is solely entitled to the Sale Proceeds, his offer of a certain proportion of the Sale Proceeds to the Siblings is clearly a concession and a proposed compromise.  Objectively construed, this cannot be otherwise than to promote negotiations in order to resolve the dispute regarding the Sale Proceeds. 

(2) The fact that the offer was unilateral does not preclude the privilege from attaching: see “opening shot” cases in paragraph 21 above. 

(3) Likewise, even if the defendant had asserted the strength of his position, this is not inconsistent with a proposed settlement (see paragraphs 19 and 20 above).  It must be viewed against his offer to distribute a certain proportion to each of the Siblings, being a step taken in compromise to his position that he is solely entitled to Sale Proceeds.   

(4) In any event, the Siblings shared the defendant’s eagerness to settle the matter and mutual steps were taken to negotiate and reach a compromise:

(a) After the defendant had made the offer to Loi Tat over telephone, Loi Tat stated that he would accept the offer if he was paid in advance, and was further willing to sign a settlement agreement to promise that he would not be involved in any dispute amongst the siblings.

(b) In response to the defendant’s offer, Loi Chuen responded with a counter-proposal to press for more, stating that he had not received any wedding money from Father since he did not hold a banquet when he got married.  In an attempt to encourage Loi Chuen to accept the settlement, the defendant informed him that he would secretly give him a “Lai Shi” (red packet) if the dispute could be resolved.

38.  It is clear that the telephone conversations, viewed objectively in the context of all the circumstances existing at the time, were clearly intended to promote negotiations with a view to resolving the dispute between the parties in relation to the Sale Proceeds. 

D3.    Period 2: 17 Oct Meeting and 31 Oct Meeting

39.  The relevant WP Paragraphs relating to the 17 Oct Meeting and the 31 Oct Meeting during which the Siblings carried out discussions in an attempt to resolve their disputes are at:

(1) Plaintiff WS §§95(6), 117-118, 139, 173-176, 178-181, Annex 1-2;

(2) Kit Bing WS §40;

(3) Loi Tat WS §§50-56;

(4) Loi Chuen WS §§42-45.

The full transcripts and recordings of the two meetings were disclosed as items 15 to 18 of the plaintiff’s List of Documents.

40.  The context of such meetings can be seen from the contemporaneous records of communication between the Siblings at the time: see text message between Kit Bing and the plaintiff on 10 October 2016 which states as follows:

“我今個月二十七日回港，已同[潘來全]講由他約你們一起商量解決遺產的事……最好坐埋一起去解決，到時[潘來祥]不出席的話，我地五個都可以商量，希望你會出席，放下成見，我想[潘來冠]都可參與”.

41.  It is clear from Kit Bing’s aforesaid message that the meetings were arranged so that the Siblings could sit down together to attempt to resolve the dispute over Father’s estate and the distribution of the Sale Proceeds.  It was hoped that the Siblings could put aside their differences and extant prejudices for a negotiation to be carried out to resolve the disputes.  The Siblings’ agreement to the meetings being arranged and their attendance at the meeting evidences this common intention. 

42.  Against the above background, I agree that without prejudice privilege clearly attaches to the discussions carried out as between the Siblings during the two meetings. 

43.  First, it is common ground that there were “references to litigation” throughout the meetings: Plaintiff 3^rd §§23, 30; Loi Tat’s Affirmation §18.  Irrespective of whether litigation had begun, parties clearly contemplated litigation could follow if the dispute was not resolved, which suffices for privilege to attach (see paragraph 17 above). Further, the amount at stake and the manner in which the negotiations were conducted are such that all parties were clearly aware of the potential for litigation if they could not resolve the dispute as to how the funds in the Premier and Savings Account are to be distributed.

44.  Second, the defendant responded with a proposed compromise by offering HK$18 million from the Premier and Savings Accounts for distribution between the Siblings in an attempt to settle the dispute.

45.  At the 17 Oct Meeting, parties clearly intended to reach a compromise, against the backcloth of potential litigation if they could not resolve the dispute between them:

(1) The parties expressly stated their aim to reach a compromise and characterised their meeting as one for negotiation.  In particular, the defendant observed that while there may be differences between the Siblings, they ought to negotiate openly then and there.  In response, Loi Tat suggested that it was in everyone’s interest for the matter to be resolved, and the plaintiff expressly agreed.

(2) In discussing the acceptability of the defendant’s proposal, the siblings noted that it would need further consideration, but again reiterated that it was highly undesirable for the family to go into litigation.

(3) Even though parties were not able to immediately agree, they were eager to proceed with the settlement and stated that they would take some time to consider the proposals.

46.  The 31 Oct Meeting was arranged as a continuation of the 17 Oct Meeting to discuss disputes over Father’s estate: see WhatsApp message from the plaintiff to the siblings.  At the 31 Oct Meeting: –

(1) Parties undertook discussions with a view to settling the matters between them. While there remained disagreements between the siblings, they raised and discussed possible concessions that could be made by each party with a view to reaching a compromise.

(2) Everyone (except the plaintiff) agreed in principle with the defendant’s offers.  Accordingly, the siblings proposed a deadline for all of them to consider the matter, with a view to executing a settlement agreement at a solicitors’ firm.  The plaintiff concurred and suggested finding a date and time for all the Siblings to attend the offices of a solicitors’ firm.

(3) The 31 Oct Meeting concluded by the Siblings agreeing to take time to think over the matters discussed, with Loi Tat who remarked that they are all family and should each take a step back for the betterment of the whole.

47.  Third, the plaintiff has no answer to the clear and shared purpose of the meetings to resolve the disputes as set out above: –

(1) The attempts by the plaintiff, Loi Chuen and Loi Tat to cherry pick certain extracts and suggest that the discussions were otherwise than for negotiations is futile.  It is clear from the authorities referred to at paragraphs 19, 20 and 22 above that a without prejudice meeting is bound to contain a mixture of statements of different natures, including confident assertions of a party’s case or statements which might in itself be characterised as threats.  The underlying rationale of the privilege is to give protection to the parties to speak freely, and it would be both impractical and unprincipled to dissect without prejudice communications.  The mere fact that more hostile language was used at some point in the meeting does not mean that the meeting ceases to be protected by without prejudice privilege.  The discussions as a whole will be protected, as a general freedom to negotiate is part of the same package: see Unilever Plc v Proctor & Gamble Co supra at p.2448H-2449B.

(2) Further, the nature of the meetings cannot be judged on the selective references and descriptions referred to by the plaintiff in the WP Paragraphs.  As the plaintiff himself acknowledges, he has “omitted lots of the other matters discussed during these meetings” which he deemed to be “not directly related to the issues”.  Rather, the purpose and nature of the two meetings must be assessed objectively, in light of the parties’ ongoing discussions relating to the dispute over the Sale Proceeds. 

(3) The fact that the defendant has not expressly stated that the meetings were without prejudice is immaterial in this case.  The court should look at the substance of the communications, which content clearly indicate a bona fide attempt to settle a dispute and ought to fall within scope of without prejudice privilege. 

48.  Further, the plaintiff’s repeated suggestions that he personally did not think there was room for negotiation or that he “definitely would not agree to” alternative arrangements does not go anywhere to suggest that the privilege cannot attach to the communications.

(1) The question, which is an objective one for the court to determine in view of all the relevant factual circumstances, is whether there was a bona fide attempt to negotiate.  The plaintiff’s assertion that he did not think there was room to negotiate is contradicted by both his agreement to attend the meeting and the statements he has made. 

(2) In any event, the plaintiff’s insistence on the alleged lack of an “express or implied agreement”, is fixated only on the implied agreement rationale of the privilege and wholly ignores the public policy rationale of encouraging parties to negotiate: see Muller v Lindsley and Mortimer supra at p.77B per Hoffmann LJ.  It would be contrary to public policy if parties could avoid the operation of the without prejudice rule simply by asserting the strength of their stance or otherwise suggesting that they were not amenable to persuasion or discussion, notwithstanding their participation at discussions clearly aimed at settlement. 

D4.    Events subsequent to the October meetings

49.  The events subsequent to the October meetings concern: (i) the Siblings’ discussions over WhatsApp following the October meetings; (ii) the draft agreement which the defendant sent to the Siblings containing proposals for the distribution of the Sale Proceeds (the “Draft Settlement Agreement”); (iii) the 5 Dec Meeting attended by all the Siblings (except the plaintiff) to discuss/execute the Draft Settlement Agreement.

50.  The relevant WP Paragraphs relating to the above events include:

(1) Plaintiff WS §§182-187, 189-192, Annexes 3-4;

(2) Kit Bing WS §41;

(3) Loi Tat WS §§57-59;

(4) Loi Chuen WS §§46-51.

51.  I agree the above matters are clearly protected by without prejudice privilege: –

(1) The plaintiff, on his own initiative, requested by WhatsApp message dated 30 November 2016 (the “30 Nov WhatsApp”) that the defendant provide a draft agreement for the Siblings to consider.  The plaintiff’s message referenced a document “that was to be signed” (“要簽的文件”) for the purpose of facilitating a smooth execution “that day” (“方便當天的交收手辦”).  He was clearly referring to a state of affairs which all siblings understood, namely the fruits of the negotiation of the October meetings and the Siblings’ plan (as set out in paragraph 46(2) above) to execute an agreement to resolve the dispute over the distribution of funds in the Premier and Savings Account.  The 30 Nov WhatsApp is a clear continuation of parties’ without prejudice discussions and is covered by the privilege. 

(2) In any event, in asking for the draft agreement to be circulated, the plaintiff objectively demonstrated his intention and understanding that the Siblings were aiming to reach a settlement on the distribution of funds. 

(3) Thereafter, the defendant provided the Draft Settlement Agreement containing the terms of the proposed settlement, reflecting the proposed distribution to each of the Siblings of the funds in the Premier and Savings Account.  A written settlement proposal (even if unaccepted) is by its very definition put forward to settle disputes and must be protected by without prejudice privilege. 

(4) Thereafter, the 5 Dec Meeting (attended by all the Siblings except the plaintiff) was held to discuss whether the terms of the Draft Settlement Agreement were acceptable. Discussions at this meeting were clearly a continuation of the negotiations for resolving the dispute and is clearly privileged.  The assertion by Loi Tat that he only attended the meeting on 5 December 2016 to “see what [the defendant] would do” and that he considered there to be “no room for negotiation” cannot change the privileged nature of the communications viewed objectively.   

E.     Unambiguous impropriety? – No abuse of privilege by the defendant

52.  Exclusion of without prejudice privilege, whether on the basis that it is being used as a cloak for perjury or other unambiguous impropriety, can only be applied in the clearest of cases (Re Jinro supra §18 per Kwan J (as she then was) – see paragraph 23 above).  Applying the well-settled legal principles set out in Section C2 above, I accept there is no basis whatsoever for the exclusion of privilege in the present case.

53.  The only ground upon which the plaintiff alleges that the defendant has abused his privilege is that the statements he made in the meetings and communications are in “stark contrast” with his contentions in the proceedings, such that the privilege is being used as a cloak for perjury, inconsistent statements, and/or other unambiguous impropriety.

54.  This is not a case where the plaintiff is even suggesting that there is any perjury on the part of the defendant.  Rather, the plaintiff’s complaint appears to be no more than that the defendant has taken inconsistent positions during the without prejudice discussions and in these proceedings, which is said to cast doubt on his credibility and the trial judge should be allowed to evaluate such inconsistency in adjudicating upon the claims in this Action.  I agree with the defendant’s submission that this comes nowhere close to showing that there was “unambiguous impropriety” to constitute an abuse of privilege.

55.  Arguments based on “inconsistent” positions taken by a party in without prejudice communications and in legal proceedings as a purported ground for exclusion of the rule were raised and rejected in Re Estate of Joachim Thomas supra as being contrary to Savings & Investment Bank v Finken supra at p.684C-G (§57) per Rix LJ, where it was held that it is not the mere inconsistency between an admission and a pleaded case or a stated position that loses the party the protection of privilege; it is the abuse of privilege that does so; and that “it is not an abuse to tell the truth, even where the truth is contrary to one’s case”.  Similarly, in Berry Trade Ltd v Moussavi supra at §53, Peter Gibson LJ held that this is not the sort of case where the court would be prepared to admit the evidence of without prejudice statements as falling within the exception from the without prejudice rule, and to admit such evidence flies in the face of the public justification for the rule itself. 

56.  Examples where the court has found an abuse of privilege so as to warrant exclusion of the without prejudice rule include cases where a defendant told a claimant that he would give perjured evidence or bribe other witnesses to do the same unless the claimants withdrew their claims: see Hollander: Documentary Evidence(13^th edn) §20-28.   

57.  The plaintiff has not demonstrated that the defendant has engaged in any such conduct that may possibly be regarded as being an abuse of privilege, let alone a “clear” case of such abuse. 

F.     Conclusion and Disposition

58.  For the reasons stated above, I grant an order in terms of paragraphs 1 and 2 of the Summons.

59.  As to paragraph 3 of the Summons, I give the following directions: “Paragraph 3 of the Summons be adjourned to be heard before a Master on a date to be fixed in consultation with Counsel’s diaries not earlier than 28 days after the determination of paragraphs 1 and 2 of the Summons”.

60.  I further order that the costs of the Summons be paid by the plaintiff to the defendant, such costs are to be taxed if not agreed with a certificate for one counsel only.  I am of the preliminary view that the nature of the application do not necessitate the retaining of two counsel to conduct the same.

61.  The above order as to costs is nisi and shall become absolute in the absence of any application within 14 days to vary the same.

62.  Lastly, I express my gratitude to counsel on both sides for their helpful assistance in this matter.