Yeung, Abraham v. Sun King Kai

HCA 413/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 413 OF 2015

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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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1.This hearing concerned amendments to the defence and counterclaim.  They were not opposed subject to an outstanding issue, ie whether or not the pleas and affidavit evidence concerning privileged discussions should be struck out.  After hearing arguments, I declined to strike out.  Here are my reasons.

The facts

2.The deceased acquired 2 properties both on 5/F of No 5 and No 7 Soares Avenue (collectively “the Flats”).

3.The plaintiff by original action (“Pastor Yeung”) is a pastor of a congregation which has been operating at the Flats. The defendant by original action (“Madam Sun”) is the executrix of the deceased.

4.The plaintiff claims to have been in adverse possession of the Flats and seeks declarations that he has dispossessed the deceased’s estate.

5.This is denied by Madam Sun.  Her case is that the deceased had formed a charitable trust for the advancement of Christianity (“the Trust”), designating one or both of the Flats for that purpose.  By will, she has appointed 6 persons including Madam Sun to be joint tenants of the Flats.  They were to continue the Trust.

6.Pastor Yeung joined the congregation since about 1994.  According to Madam Sun, he has been permitted to live, preach and serve at the church at the Flats, at least up to 2014.  On the other hand, Pastor Yeung claims to have engaged a locksmith to gain entry and changed the lock. In 1997, he formed his own preaching circle.  In 2000, he started to operate a farm in Mainland China. Since then he has seldom held any Sunday service at the Flats but has retained exclusive possession of them.

7.At about the end of 2014 or early 2015, a potential developer wanted to purchase the Flats at $10 million each.  On 26 February 2015, Pastor Yeung commenced this action seeking declarations in relation to his possessory title.

8.The subject matter of the strike out concerned 3 meetings on the following dates, attended by Pastor Yeung on the one part, and Samuel Yung, Alfred Lam and Shally Wong of the Christian Philadelphia Church representing Madam Sun on the other.  According to these representatives:

(a) 9 April 2015: Pastor Yeung said that one Madam Liu gave him the keys to the Flats.  After Madam Liu’s death, Pastor Yeung continued to serve the old members of the church at the Flats but also brought in new members.  There were exchanges over the present action.  Samuel Yung told Pastor Yeung that the Flats were dedicated by the deceased for the preaching of the gospel.  Pastor Yeung responded by saying that he would consult the old and new members of the congregation.

(b) 16 April 2015: Pastor Yeung said that he had borrowed money for the litigation and incurred more than $100,000.  He said that the old and new members of his congregation responded quite strongly to the decision of Madam Sun and Ruth Cheung to recover possession of the Flats.

(c) 26 June 2015: Pastor Yeung said that he represented 15-20 of the new members of the congregation and a few of the old members.  He said he could not agree to the withdrawal of the proceedings as he had to take into consideration the interest of his congregation and they did not agree to such withdrawal.

9.The draft amended defence and counterclaim pleaded that  these were admissions of (i) the existence of the Trust; and (ii) Pastor Yeung continuing to serve the old members of the church in accordance with the Trust. These pleas would contradict Pastor Yeung’s self-professed claim to occupy the Flats as a squatter.  

10.Ms Tsau, counsel for Pastor Yeung, submitted that the 3 meetings took place after commencement of the action and contained without prejudice discussions. They ought to be struck out from the pleadings and should not be relied on in various affidavits filed on behalf of Madam Sun.  It would not cause prejudice to Madam Sun because she could still rely on other evidence of admission.  This would include Pastor Yeung’s alleged admissions in 2004 and 2014 to Samuel Yung and Koo Suet Ming, respectively, that he was serving a congregation at the Flats; and the evidence of Koo Suet Ming that Madam Liu handed the keys to Pastor Yeung.

Legal principles on striking out

11.There was no dispute on principles.  It is only in plain and obvious cases that the court should exercise its summary powers to strike out any pleading under Order 18, rule 19.  There should be no trial on affidavits.  Disputed facts are to be taken in favour of the party whose pleadings are sought to be struck out: Hong Kong Civil Procedure 2016, Vol 1, 18/19/4.

Legal principles on without prejudice communication

12.In Re Jinro (HK) International Ltd [2002] 4 HKC 90 (at §§13-18). Kwan J (as she then was) laid down the following principles:

(1) For a claim of “without prejudice” privilege to succeed, the party claiming it must show that the communication was made:

(a) in a bona fide attempt to settle a dispute between the parties; and,

(b) with the intention that, if negotiations failed, the communication could not be disclosed without the consent of the parties making the communication.

(2) In establishing that there was a bona fide attempt to settle a dispute, the party seeking to assert privilege must show that, at the time of his communication:

(a) a dispute existed between the parties in respect of which legal proceedings had commenced or were contemplated; and,

(b) the communication was made in an attempt to further negotiations to settle that dispute.

(3) The mere fact that a communication concerns a dispute between the parties is not sufficient to confer privilege.

(4) The communication need not be expressed to be “without prejudice”, if it is clear from the surrounding circumstances that the parties were genuinely seeking to compromise their dispute.

(5) But there is an exception to the “without prejudice” privilege.  This exception applies where the exclusion of the evidence would act as a cloak for perjury or other “unambiguous impropriety”.

Application of the legal principles

13.Ms Tsau pointed out that holding 3 meetings was strong evidence of negotiations rather than a one-way demand for the full return of the Flats.  In any event, the meetings would not be disqualified from being without prejudice discussions when one party asked for all.

14.I noted that there was nothing in the 3 meetings pointing to a “compromise”. Each party was recounting some history.  Madam Sun’s representatives asked Pastor Yeung to consider withdrawing the claim.  The discussion was based on biblical principles among people who professed to be religious people.  No proposal or counter-proposal on settlement was put forward by either side. There was no negotiation of terms.  No solicitors were involved though both parties were represented.  Had the contents of the meeting been in writing, they would have been more in the nature of demand letters, put in a biblical tone.

15.Pastor Yeung had not filed any affidavit to even assert the privilege. Only his solicitor did.

16.Mr Suen, counsel for Madam Sun, also submits that even if the contents of the 3 meetings were without prejudice, the court should invoke the exception in Re Jinro.  This is because where the occupier has made statements as to what his intention was and such statements were against his interest, the courts would usually accord to them considerable weight: Wong Tak Yue v Kung Kwok Wai & anor (No 2) (1997-98) 1 HKCFAR 55 (at 69B-C).  Such evidence would, Mr Suen submitted, show that Pastor Yeung had lied in the reply and defence and counterclaim.

17.I am unable to agree.  In true without prejudice discussions, parties are encouraged to be frank and forthcoming.  They may make admissions against their own interests.  It would be opening a dangerous floodgate if the court were to lightly permit without prejudice discussions to be adduced as evidence.  I certainly would not want to decide such an important principle in an interlocutory matter like this. 

18.I rest my decision on paragraphs 14 and 15 alone.  In my view, the contents of the 3 meetings were far from being in the nature of privileged discussions. They should not be struck out.  It may be true that Madam Sun could rely on other pieces of evidence to show admissions made by Pastor Yeung against his interest.  However, that was not a valid reason for striking out what were material facts.

19.If I am wrong, Pastor Yeung fell short of showing a plain and obvious case for striking out.  The discussions were not stated to be on without prejudice basis. The mere fact that a communication concerned the dispute was not sufficient to confer privilege.  The circumstances of the 3 meetings, whether Pastor Yeung had perjured himself or had unambiguous impropriety so as to justify disclosure of what was without prejudice discussions ought to be explored at the trial.

20.I therefore dismiss the application to strike out.

Orders

21.As regards Pastor Yeung’s striking out summons dated 6 April 2016, most of the reliefs sought have become otiose because of the concessions of Madam Sun.  Those concessions together with the voluntary further and better particulars have been reflected in the draft amended defence and counterclaim. I therefore order that:

(1) Under paragraph 4 of the summons, the voluntary further and better particulars be struck out;  

(2) Subject to the foregoing paragraph, the application for striking out is dismissed.

22.As regards the Madam Sun’s summons dated 23 August 2016:

(3) Madam Sun do have leave to withdraw 2 earlier summonses filed on 30 March 2016;

(4) Madam Sun do have leave to amend the defence and counterclaim as per the draft attached to the summons dated 23 August 2016, as amended by document “A” handed up at the hearing, within 7 days.

(5) Madam Sun do have leave to substitute and join parties as per the draft amended defence and counterclaim in paragraph (4) above;

(6) Pastor Yeung do have leave to make consequential amendments to the reply and defence and counterclaim within 14 days from the day of handing down of this decision.

23.On costs, Madam Sun has made many changes to her pleadings, as evidenced by her issuing 3 summonses and withdrawing 2 of them.  The last summons was issued only 2 weeks before the hearing, causing wastage of much costs. Save on the issue of privileged discussions, Pastor Yeung was successful in his summons.  On a nisi basis, I order that:

(7) Costs of and occasioned by the amendments to the defence and counterclaim be to Pastor Yeung, to be taxed if not agreed after trial;

(8) 80% of the costs of all 4 summonses shall be to Pastor Yeung, summarily assessed and allowed at $120,000.

(9) Madam Sun’s own costs be borne out of the estate on trustee basis.

24.I thank counsel for their assistance.

Ms Margaret Tsau, instructed by Hau, Lau, Li & Yeung, for the plaintiff (by original action) and 1^st and 2^nd defendants (by counterclaim)

Mr Jenkin Suen, instructed by Wong, Hui & Co, for the defendant (by original action) and 1^st and 2^nd plaintiff (by counterclaim)