Secretary for Justice v. Wong Lai Yin and Another

Read the full judgment text of CAMP 161/2021 on BabelCite. This Court of Appeal judgment was delivered on 23 December 2021.

1. The underlying dispute in the action below arises from the plaintiff’s claim for possession of certain unleased government land (“ Government Land ”) occupied by an extended portion of a house which is situated at Section A of Lot No 716 in Demarcation District 453 in Lo Wai, Tsuen Wan (“ Lot ”) and in the 1 st defendant’s possession.  The issue before us is whether a letter from the 1 st defendant’s solicitors to the District Lands Office (Tsuen Wan & Kam Tin) (“ DLO ”) and the reply letter

Cited by 5 cases · Cites 5 cases

Case No.CAMP 161/2021[2021] HKCA 1982[2022] 1 HKLRD 258
Court
Court of Appeal
Date23 Dec 2021
Judge
Case Document
100%Judiciary

CAMP 161/2021

[2021] HKCA 1982

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 161 OF 2021

(ON AN INTENDED APPEAL FROM HCA NO 2169 OF 2017)

____________

BETWEEN    
  SECRETARY FOR JUSTICE Plaintiff

and

  WONG LAI YIN 1st Defendant
  ANY OTHER OCCUPIERS of a piece of 2nd Defendant
  unleased Government land adjoining to  
  Lot No 716 s. A in D.D. 453 in Lo Wai, Tsuen Wan,  
  New Territories as more specifically identified in  
  Plan No TWM4205 annexed to  
  the Statement of Claim of HCA 2169/2017  

____________

Before: Hon G Lam and Chow JJA in Court

Date of Hearing: 21 September 2021

Date of Judgment: 23 December 2021

_________________

J U D G M E N T

_________________

Hon G Lam JA (giving the Judgment of the Court):

Introduction

1.The underlying dispute in the action below arises from the plaintiff’s claim for possession of certain unleased government land (“Government Land”) occupied by an extended portion of a house which is situated at Section A of Lot No 716 in Demarcation District 453 in Lo Wai, Tsuen Wan (“Lot”) and in the 1st defendant’s possession.  The issue before us is whether a letter from the 1st defendant’s solicitors to the District Lands Office (Tsuen Wan & Kam Tin) (“DLO”) and the reply letter from DLO are covered by without prejudice privilege. 

2.The intended appeal is from the decision of Deputy High Court Judge Winnie Tsui (“Judge”) dated 22 January 2021 (“Decision”),[1] whereby the Judge dismissed the 1st defendant’s appeal against Master Gary CC Lam’s decision dismissing the 1st defendant’s application for striking out (i) two paragraphs in the plaintiff’s statement of claim that plead the two letters; and (ii) the corresponding items in the plaintiff’s list of documents.  The Judge held that without prejudice privilege did not apply to the two letters.  In a subsequent decision the Judge refused leave to appeal.[2]  This is our decision following a rolled‑up hearing of the 1st defendant’s application to this court for leave to appeal and of the appeal itself if leave is granted.

3.The subject matter of the litigation may be seen from [6]–[14] of the Decision which we set out below:

“ 6. The present action concerns the right over a strip of unleased government land (‘the Government Land’) measuring about 21 sq m in size, and adjoining and running alongside the eastern boundary of a piece of land located at Section A of Lot No 716 in Demarcation District 453 in Lo Wai, Tsuen Wan, New Territories (‘the Lot’).

7. The plaintiff claims that a structure built on the eastern portion of the Lot straddles its eastern boundary and occupies the Government Land. The occupation is without licence or tenancy and is unlawful. The plaintiff claims against the 1st defendant, who is one of the co-owners of the Lot, and the 2nd defendant who comprise any other occupiers of the Government Land, for unlawful occupation and trespass.

8. The 1st defendant raises a claim of adverse possession in defence. In gist, he says that his family has been using and occupying the Government Land since the late 1940’s to the exclusion of the government. It has been used as an annex or extended portion of the family house on the Lot known as House No 117.

9. The 1st defendant pleads to the following facts and say that they are background facts relevant to the appeal.

10. The 1st defendant is the registered owner of 1/3 share of the Lot. His cousin, Wong Siu Hung, owns another 1/3 share. Three other individuals, referred to in the course of submissions as ‘the Wong Lai Kwong group’, own the remaining 1/3 share. Wong Lai Kwong is also a cousin of the 1st defendant.

11. The Lot is divided into three parts physically. The 1st defendant and his family occupy House No 117, which is built on the eastern portion of the Lot. Wong Siu Hung occupies House No 116A, which is located on the northern portion of the Lot. There used to be a House No 116, which was occupied by the Wong Lai Kwong group. That house was demolished in around 2002 and the land is currently vacant.

12. Since the late 1940’s, the 1st defendant’s family have started occupying the Government Land. Such occupation has changed in form over the years, initially with part of it being used as an annex of House No 117 for cooking, storage, and breeding pigs and poultry. Eventually, as from about 2000, there has stood a two‑storey concrete structure built over the Government Land as an annex or extended portion of House No 117.

13. It is worth noting at this juncture that according to the 1st defendant’s own pleaded case, it has been he and his family who have been occupying the Government Land. He specifically pleads that the other co‑owners of the Lot have never occupied it at any time.

14. Since around 2002, there have been disputes over the use of the Lot among the co‑owners. The disputes relate to, among other things, construction works which the Wong Lai Kwong group carried out (or tried to carry out) on the Lot.  I should note here that these disputes concern the co-owners only and do not affect the plaintiff’s claim over the Government Land.  While the DLO had been informed and given updates of the disputes by the co‑owners from time to time, it remains that these disputes are distinct from the dispute in the present litigation.  The co‑owners’ disputes are however presently relevant as they form part of the factual backdrop which the 1st defendant says one should take into account in order to gain a proper understanding of the meaning of the Letters.”

4.The disputes referred to by the Judge in last paragraph quoted above arose in these circumstances.  According to the 1st defendant, the predecessors‑in‑title of the co‑owners of the Lot had agreed that it should be partitioned into three equal portions should the three houses be redeveloped.  In 2002, after House No 116 was demolished, Wong Lai Kwong and his brother acquired a piece of adjoining land, namely, the Remaining Portion of Lot No 716, intending to erect a building on the site of the original House No 116 (“Vacant Site”) and the adjoining land combined.  There was, however, strong opposition from Wong Siu Hung and her family.  Eventually a building (consisting of two houses, Nos 116B and 116C) was erected only on the Remaining Portion of Lot No 716.

5.Subsequently, in November 2009, the Wong Lai Kwong group began site formation and construction works on the Vacant Site. Following a letter from the DLO stating that the works were unauthorised and illegal, Wong Siu Hung and the 1st defendant’s father (the then owner of the 1/3 share now held by the 1st defendant) caused a solicitors’ letter to be issued to the Wong Lai Kwong group demanding that they stop the illegal works.  Eventually the Buildings Department also issued a warning letter and a demolition order to them requiring the removal of the unauthorised building works.

6.When the Wong Lai Kwong group intended to commence building works on the Vacant Site again in September 2014, Wong Siu Hung and the 1st defendant (who had since succeeded to the 1/3 share in the Lot) caused a solicitors’ letter to be issued to the Wong Lai Kwong group demanding that they stop the works immediately and also wrote to the Buildings Department and the DLO complaining of the works.

7.Perhaps as a step taken in retaliation, on 22 September 2014, Wong Lai Kwong made a complaint to the DLO that the other two co‑owners of the Lot had unlawfully occupied the Government Land.  As a result, the DLO conducted investigation which suggested that the Government Land and another piece of unleased government land located to the north of the Lot were occupied by extensions of buildings erected on the Lot.  (The proceedings here and below are not concerned with the latter piece of land.)

8.Accordingly, on 7 November 2014, the DLO issued a letter to both Wong Siu Hung and the 1st defendant and a similar letter to the Wong Lai Kwong group, stating as follows:

“ This office has received a complaint against illegal occupation of the Government lands adjoining to Lot No. 716 S.A in Demarcation District No. 453, Lo Wai, Tsuen Wan, New Territories.

2. Investigation reveals that the Government lands at the northern and eastern parts of the structures erected on the captioned lot are being occupied by the extended portions of the structures. …

3. In this regard, you are required to rectify the above irregularities by setting back the occupied areas from the concerned Government lands or appropriate land control action will be contemplated according to the LAWS OF HONG KONG, Chapter  28, LAND (MISCELLANEOUS PROVISIONS) ORDINANCE including clearance/demolition action, reimbursement of cost and prosecution action.”

9.Meanwhile, there was ongoing correspondence among the co‑owners in relation to both the construction works on the Lot and the occupation of the Government Land.  Some of the correspondence was copied to the DLO.  In about November 2014, the 1st defendant’s side and the Wong Lai Kwong group agreed to withhold further building works pending mediation.  However, no mediation was held as their relationship deteriorated further when it became known that Wong Lai Kwong had made a complaint to the DLO of unlawful occupation of the Government Land.

10.On 27 May 2015, the DLO issued a letter to the co‑owners regarding an unauthorised structure on the Lot which was said to have been erected in breach of the lease conditions.  This structure was located to the west of House No 117 and not related to the occupation of the Government Land.  The next letter from the DLO to the 1st defendant was dated 16 October 2015.  Enclosed with it was a notice issued under section 6(1) of the Land (Miscellaneous Provisions) Ordinance (Cap 28) (“LMPO”) demanding that the unlawful occupation of the Government Land cease before 16 January 2016.

11.On 18 November 2015, the 1st defendant’s solicitors sent a letter to the DLO, being the first of the two letters that are the bone of contention here (“First Letter”).  The First Letter was written in Chinese and expressly marked “without prejudice” in Chinese (不損害訴訟權益).  It read as follows:

「 關於:約份第453約地段第716A分段毗的未批租土

本律師行代表Wong Lai Yin黃禮彥,他擁有上述地段1/3業權。

貴署於去年及最近發信予上述地段所有業主,聲言在該地段東邊土地被佔用。本律師行澄清:該東邊土地被黃禮彥的家人佔用多年,與另外2/3業權人無關。據悉,貴署及 / 或政府沒有急切需要收回該地段東邊土地。貴署之關注純粹因上述地段的業權爭議而引發。

相信貴署亦已知悉,黃禮彥正積極尋求方案與上述地段另外2/3業權人解決爭議,希望貴署暫緩執行任何檢控程序。

另外,黃禮彥亦希望貴署考慮將上述東邊土地以象徵式的租金授予短期或長期租約給黃禮彥以減低各方訴訟之困擾。請早日回覆。」

[English translation as follows]

“ Re: Unleased land adjoining Section A of Lot No. 716 in Demarcation District No. 453

This solicitors firm represent Wong Lai Yin. He owns 1/3 share of the title to the said Lot.

Your Department issued letters to all owners of the said Lot last year and recently, alleging that the land to the east of the Lot has been occupied. Our firm clarify that the land to the east of the Lot has been occupied by the family member(s) of Wong Lai Yin for many years, and has nothing to do with the title owners holding the other 2/3 share. It is learnt that your Department and/or the Government has no urgent need to recover the land to the east of the Lot. Your Department’s concern has arisen purely from the title dispute in respect of the said Lot.

We believe your Department is also aware that Wong Lai Yin is proactively seeking solutions for resolving the dispute with the owners holding the other 2/3 share of the title to the said Lot, and hopes that your Department can suspend any prosecution procedure.

Moreover, Wong Lai Yin also hopes that your Department will consider granting a short‑term or long‑term tenancy of the land to the east of the said Lot at a nominal rent to Wong Lai Yin, so as to alleviate the trouble brought to all parties by litigation.  Please reply soon.”

12.On 21 December 2015, the DLO replied to the 1st defendant’s solicitors.  That letter (“Second Letter”), not marked “without prejudice”, read as follows:

「 丈量約份第453約地段第716號A分段

毗連的未批租土地

本年十一月十八日就題述事宜致本處的信件收悉。

本處曾於本年十月十六日在現場張貼根據(第28章)第6(1) 條發出的通知,飭令佔用人在二〇一六年一月十六日之前停止不合法佔用位於上址的未批租土地。特此提醒貴行的委託人留意本處於二〇一五年十月十六日的信件內容。倘該通知的規定未獲遵從,本處會按照現行政策採取土地管制行動。

此外,本處在現階段並不能接納貴行的委託人所提出的短期租約申請。

如有查詢,請致電2402 1043與本信代行人聯絡。」

[English translation as follows]

Unleased land adjoining Section A of Lot No. 716 in Demarcation District No. 453

The letter dated 18 November of this year regarding the captioned subject addressed to our Office has been received.

On 16 October of this year, our Office posted at the site a Notice issued in accordance with section 6(1) of Chapter 28, requiring the occupiers to cease the unlawful occupation of the unleased land at the said location before 16 January 2016. Your client is hereby reminded to take notice of the content of the letter dated 16 October 2015 from our Office. Failure to comply with the requirements in the Notice will result in our Office taking land control action in accordance with the existing policy.

Moreover, our Office cannot accept your client’s application for a short‑term tenancy at this stage.

Should you have any enquiries, please contact the undersigned at 2402 1043.”

13.On 28 January 2016, the DLO wrote to the 1st defendant stating that the Government Land was still being occupied despite the notice issued under the LMPO.  The 1st defendant was invited to attend at the DLO for a statement and other information to be taken.  On 24 February 2016 the 1st defendant did attend the DLO and gave a cautioned statement in which he made an adverse possession claim over the Government Land.

14.On 20 June 2016, the DLO wrote to the 1st defendant again, notifying him that investigation had been completed and that the case had been passed to the land control and lease enforcement section for consideration.

15.On 8 July 2016, a summons was issued from a Magistrates’ Court to the 1st defendant charging him with an offence under section 6(4) of the LMPO for failing to cease occupying the Government Land as required by the notice dated 16 October 2015.  The 1st defendant was tried on 17 February 2017 but acquitted on the ground that there was a reasonable doubt whether he and his family had been in adverse possession since 1951.

16.On 18 September 2017, the Secretary for Justice as plaintiff instituted the action below against the 1st defendant and other unnamed occupiers as the 2nd defendant for recovery of the Government Land.  The gist of the 1st defendant’s defence has been summarised by the Judge as quoted in [3] above.

The Judge’s decision

17.The Judge noted that the issue was whether the First and Second Letters constituted without prejudice communications.  It was common ground that the issue could be further narrowed down to whether there was a dispute between the parties over the subject‑matter of the action for the purpose of the without prejudice rule when the letters were sent.[3] 

18.The Judge divided the sequence of events into three periods.  In relation to the first period, ie from the time when the DLO became aware of the 1st defendant’s occupation of the Government Land in about November 2014 pursuant to the complaint from Wong Lai Kwong to the time just before the First Letter, the Judge found that the DLO was asserting the Government’s rights in relation to the Government Land but the 1st defendant’s stance was objectively unknown.[4]  In respect of the second period, namely the time in November and December 2015 when the First and Second Letters were issued, the Judge considered that based on an objective view of the First Letter, the 1st defendant was not disputing the plaintiff’s right to the Government Land.[5] As to the events in the third period, ie the period of time subsequent to the Letters, the Judge considered that they do not shed much light on the issue at hand.[6]

19.Accordingly, the Judge considered that the without prejudice rule did not apply to the Letters.  She found it unnecessary to deal with the plaintiff’s submission that the First Letter constituted an acknowledgment of the plaintiff’s title to the Government Land for the purposes of section 23(1) of the Limitation Ordinance (Cap 347).[7]  She therefore dismissed the 1st defendant’s appeal, with costs to the plaintiff.

20.The critical part of the Decision is that relating to the second period.  The Judge’s reasons are to be found in [60]–[78] of the Decision.  She noted that the First Letter was written by the 1st defendant’s solicitors and expressly marked “without prejudice”.  She found it of note that faced with a formal demand to vacate the Government Land, the 1st defendant made no express denial of the Government’s alleged right or assertion of the 1st defendant’s own right based on adverse possession.  The request for a tenancy was wholly inconsistent with there being any possessory right on the 1st defendant’s part.  A reasonable person having knowledge of the surrounding circumstances would conclude that all that the 1st defendant was asking for was indulgence from the DLO so that he could stay on the land, which was not his, for a little longer without the risk and worries of litigation.  In so far as there was an attempt to negotiate, the negotiation only went to how the 1st defendant could avoid prosecution or enforcement action in a situation when he was not disputing the Government’s right to recover the land.  There was therefore no relevant dispute at the time of the First Letter, applying the approach adopted in Re Jinro (HK) International Ltd [2002] 4 HKC 90, Bradford & Bingley plc v Rashid [2006] 1 WLR 2066 and Avonwick Holdings Ltd v Webinvest Ltd & another [2014] EWCA Civ 1436.  The 1st defendant’s solicitors used the without prejudice mark either unthinkingly or unjustifiably, given that there was no relevant dispute as disclosed by the content of the letter.  In so holding the Judge rejected the construction put upon the First Letter by counsel for the 1st defendant.

The intended appeal to this Court

Ground 1

21.The 1st defendant has advanced five grounds in his draft notice of appeal which we shall deal with in turn below although, as will be seen, there is some overlap among them especially between the first three grounds and the First Letter has to be examined as a whole in its context.  The first ground is that the Judge was wrong in holding that a reasonable observer would conclude that there was no extant dispute between the Government and the 1st defendant at the time.  As Mr C Y Li SC, who appears on behalf of the 1st defendant, makes clear, there is no dispute between the parties on the applicable legal principles.  The 1st defendant’s challenge is focused on the Judge’s application of those principles. 

22.Counsel submits that the Judge erred in thinking that there could only be a dispute if the 1st defendant had by word or conduct positively asserted his right over the Government Land or denied the Government’s right over it.  The proper test is whether there was “a reasonably cohate and definable issue or series of issues” between them: BE v DE [2014] EWHC 2318 (Fam) at [23]; Phipson on Evidence (19th ed), [24-15].  The concept of dispute is given a wide scope so that an opening shot in negotiations may fall within the rule.  It is submitted that, objectively, the 1st defendant’s stance had already been made known to the DLO that he would not vacate the land as demanded.  He had never admitted the allegation of illegal occupation and his letter stated that he and his family had been in occupation of the land for many years.  His non-action meant he would not comply with the demand.  His request for a short-term or long-term tenancy was at nominal rent and, as such, not a conventional request for tenancy but a proposed compromise to resolve the dispute and an attempt to negotiate a settlement.  Nor was it an attempt to avert potential prosecution.  The cases of Bradford & Bingley plc v Rashid [2006] 1 WLR 2066 and Avonwick Holdings Ltd v Webinvest Ltd & another [2014] EWCA Civ 1436 referred to by the Judge dealt with situations without any dispute on liability and were therefore distinguishable.

23.We do not think that the Judge has erred in the ways suggested.  Like her, we are not satisfied that, viewed objectively, there was an extant dispute at the time concerning the entitlement to the Government Land or that the First Letter was a genuine attempt to settle that dispute.  A useful statement of the relevant principles for present purposes may be found in the judgment of Kwan J in Re Jinro (HK) International Ltd [2002] 4 HKC 90 at [13]:

“ … For a claim of privilege to succeed, the party claiming it must establish that the communication in question was made ‘(1) in a bona fide attempt to settle a dispute between the parties, and (2) with the intention that, if negotiations failed, it could not be disclosed without the consent of the parties’. In establishing that there is a bona fide attempt to settle a dispute, the party seeking to assert privilege must show that ‘at the time the communication was made, a dispute existed between the parties in respect of which legal proceedings had commenced or were contemplated and the communication was made in a genuine attempt to further negotiations to settle that dispute. The fact that a communication concerns a dispute between the parties is not sufficient to confer privilege – it must be made in furtherance of the settlement of the dispute.’ …”

24.As the authorities show, whether or not there was an extant dispute at the time is to be determined on an objective basis. The subjective thinking of the 1st defendant or his solicitors is irrelevant.  The case of BE v DE cited by the 1st defendant made the same point by saying that it is necessary “that both parties realised or must or should have realised” that they were seeking to compromise a dispute.[8] The exercise is one that takes into account all the relevant circumstances.  We do not agree that the judge adopted the wrong test as to whether there was a dispute.  She noted there was no express denial of the Government’s right or assertion of his own right by the 1st defendant, but there is nothing to suggest that she considered this conclusive in itself.

25.As the decision in Jinro itself makes clear, not all discussions undertaken with a view to reaching an accommodation are necessarily privileged.  There, persons claiming to be holders of floating rate notes issued by the company alleged that the company had failed to pay interest after December 1997 or the principal upon maturity in 2001.  In the winding up petition subsequently presented, they adduced as evidence certain negotiations between the parties, and the company applied to have such evidence struck out.  The court held that in the period up to the service of the statutory demand in November 2001, there was no extant dispute, since the discussions that had taken place were on the timing and terms on which the company and its group would repay the indebtedness under the notes by repurchasing them at a discount, and centred around the restructuring plans for the company’s debts among other issues.  The validity of the noteholders’ claims had not been investigated by the company and was not discussed in the meetings.  Kwan J concluded at [15]:

“ I am not satisfied on the above evidence that there was an extant dispute at the time the discussions took place and that the discussions were made in a genuine attempt to settle that dispute. There were merely requests for accommodation when there was no challenge to the petitioners’ rights. The without prejudice privilege cannot be invoked in these circumstances.”

26.In Bradford & Bingley, the House of Lords similarly drew a distinction between attempts to resolve a dispute over the existence or extent of a liability and discussions as to how an admitted liability is to be paid.  The former is privileged; the latter is not, because is no dispute.  It was said to be an unwarranted enlargement of the scope of the privilege if it was “to apply not merely to attempts to resolve a dispute over the existence or extent of a liability but also to discussions as to how an admitted liability is to be paid”.[9] The existence of a dispute and of an attempt to compromise it are “at the heart” of the privilege.  An offer to “compromise” a debt in the sense of satisfaction by payment of a lesser sum is not in itself a genuine attempt to “compromise” an extant dispute.[10]  Thus in that case a letter written on behalf of the debtor (not marked “without prejudice”) stating that he was “willing to pay approximately £500 towards the outstanding amount as a final settlement” was held not to be privileged.

27.Avonwick went further in that it shows that earlier communications, even if marked “without prejudice”, may fall outside the privilege on the ground that there was objectively no extant dispute at the time, even though a dispute subsequently emerged.  The letters so marked were exchanged alongside open correspondence.  However, because they proceeded on the basis that there was an existing liability, having been written for the purpose of arriving at an agreed restructuring of that liability, there was nothing to suggest that the creditor-recipient believed or had reason to believe that there was any dispute about the liability.  There being objectively no dispute at the time, the judge[11] and the English Court of Appeal[12] both held that the letters, even though marked “without prejudice”, were not privileged.

28.There is no answer from the 1st defendant to the point that by requesting for a tenancy from the Government, the 1st defendant would appear not to be disputing the Government’s title.  As provided in section 17 of the Limitation Ordinance (Cap 347), the effect of adverse possession is the extinction of the paper owner’s title.  And a tenant is, in the absence of disturbance by title paramount, estopped from denying his landlord’s title.[13]  That is why the Judge considered the request, made by solicitors on the 1st defendant’s behalf, to be “wholly inconsistent” with any right on the part of the 1st defendant arising from adverse possession. 

29.Counsel submits that there was clearly an issue at the time, which was whether the 1st defendant would cease his occupation of the Government Land as demanded by the DLO.  But his request for “a short-term or long-term tenancy” at a nominal rent is simply a request for accommodation, analogous to a request for time to pay an undisputed liability or for a reduction of the amount to be paid, which, as the cases show, is not covered by the privilege if there is no dispute of the right.

30.Admittedly the 1st defendant had not vacated the Government Land pursuant to the Government’s demand or expressly accepted in the First Letter that he was in unlawful occupation of it.  But we agree with the Judge that this does not objectively evince any dispute of the Government’s right.  There was no suggestion in the letter that the Government was not entitled to recover the land, but merely that the Government “has no urgent need” to recover it, and a request was made to “temporarily” stay the prosecution process.  There could be myriad reasons why an unauthorised occupier has as at a certain point in time failed to comply with a demand to vacate the land.  As the Judge noted, the land was being occupied by an extended portion of the 1st defendant’s house, which was not readily movable.[14] The potential legal consequence of non-compliance with the notice issued under the LMPO would not arise until the specified deadline of 16 January 2016.  The fact that the 1st defendant had not yet by the time of the First Letter (approximately a month after the notice) dismantled the structure does not show that he was disputing the obligation to do so. 

31.Reliance is placed on the reference in the First Letter to the occupation of the Government Land by the 1st defendant’s family for many years.  But the point made by the relevant sentence in the letter seems to be to clarify that the land had been occupied by the 1st defendant’s family rather than the other co-owners of the Lot.[15]  This was presumably prompted by the fact that the DLO’s letters of demand dated 7 November 2014 and apparently a letter similar to the cover letter of 16 October 2015 issued to the 1st defendant were sent to all three co-owners, as recorded at the beginning of the second paragraph of the First Letter.  Like the Judge,[16] we are unable objectively to read this as an allusion to a claim for adverse possession, especially since it takes 60 years’ occupation for adverse possession to be established against the Government.[17]

32.The 1st defendant submits that his suggestion of a tenancy at a nominal rent was not a conventional request for tenancy and the suggestion was instead a proposed compromise to resolve the dispute between the parties.  A tenancy at nominal rent is of course not a transaction on ordinary commercial terms.  It is a request for an indulgence or concession.  But we are unable to infer from this in all the circumstances that the 1st defendant was disputing the Government’s right to recover the Government Land.  The mere fact that a person is seeking a concession does not give rise to the privilege: Bradford & Bingley, at [73] & [83].

33.Counsel for the 1st defendant submit that the Judge was wrong to think that the 1st defendant’s request for tenancy was an attempt to avert potential prosecution.  They contend that there is no connection between the two and that there could be prosecution even if a tenancy was granted.  We do not accept this argument.  Section 6(4) of the LMPO creates an offence for occupying unleased land and is expressly premised on the absence of reasonable excuse.  It is difficult to see how, if a tenancy was granted within time, and the Government Land thereby became leased to the 1st defendant, he as the lessee could still be prosecuted for not ceasing to occupy the land.

Ground 2

34.The second ground complains that the Judge erred in holding that the 1st defendant was merely seeking indulgence from the DLO in the First Letter.  It is submitted that the 1st defendant had not indicated in the First Letter how much longer he was seeking to occupy the Government Land, that there was no rule requiring a person to set out his potential claim fully in order to come within the without prejudice privilege, that the Judge had failed to consider the words in the First Letter “以減低各方訴訟之困擾” (“so as to alleviate the trouble brought to all parties by litigation”), and that read objectively, the 1st defendant was asking the Government to recognise his entitlement to occupy the Government Land by granting a tenancy at nominal consideration so as to avert litigation between them.

35.We do not think that the Judge adopted a rule requiring the 1st defendant to set out his claim fully before the privilege could arise.  It is a question of looking at the communication in question in all the relevant circumstances.  Even on the basis that the quoted words about the trouble of litigation refer to litigation to be brought by the Government for recovery of the Government Land, they do not suggest that there was any reasonably choate and definable issue or series of issues between the parties, and are entirely consistent with the 1st defendant making a request for accommodation.  It does not seem to us that a person reading the First Letter, such as the DLO to whom it was addressed, would have gathered from it that the 1st defendant was disputing the Government’s title to the land or his liability as its unauthorised occupier.

Ground 3

36.The third ground contends that the Judge was wrong in holding that the 1st defendant was not giving up any right of his own in the request for tenancy and was thus only asking for a concession.  It is submitted that the Judge’s reasoning is contrary to authorities that state that a without prejudice communication need not contain a concession or offer of compromise and that it is sufficient that such communication evinces a genuine desire to negotiate a settlement of an actual or potential dispute: Re Estate of Joachim Thomas [2011] 5 HKLRD 538 at [32] and Poon Loi Tak v Poon Loi Cheung Desmond [2020] 1 HKLRD 511 at [18]–[19].

37.We do not think there is any substance in this ground.  In saying that the 1st defendant was not giving up any right of his own and that he was just asking for a concession, not giving one,[18] the Judge was dealing with the 1st defendant’s submission that his request for tenancy was an “offer”.  She stated that even if the request for tenancy could loosely be described as an attempt to negotiate, the court must still scrutinise it to see what exactly was being negotiated.  Her conclusion is essentially that rather than raising a genuine dispute of the Government’s right and making a genuine attempt to settle that dispute, the 1st defendant was seeking a concession.  In so doing the Judge was not laying down a rule contrary to the authorities mentioned above but instead evidently construing the First Letter in the light of the reasoning in Bradford & Bingley, where it was said:

per Lord Brown at [73]: “… Nor does the underlying public policy justification for the rule appear to have any application in circumstances such as these.  That justification, as Oliver LJ observed in Cutts v Head (see para 62 above) ‘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’.  No ‘statements or offers’ were made here with a view to settling a dispute.  Since the debt was admitted, there was no dispute.  As Mr Fenwick QC aptly put it in argument, Mr Rashid was simply asking for a concession; he was not giving one” (emphasis added)

and

per Lord Mance at [83]: “Here, the respondent, Mr Rashid, was not offering any concession.  On the contrary, he was seeking one in respect of an undisputed debt. … [E]ven if Mr Rashid had been offering a lesser sum on a basis which could, if accepted, have precluded the appellant bank from pursuing the admitted larger debt …, there would have still have been no relevant dispute about his indebtedness, and the ‘without prejudice’ rule would still have had no application.”  (original emphasis)

Ground 4

38.By the fourth ground, the 1st defendant contends that the Judge failed to take account of the subsequent events and conduct of the parties.  The 1st defendant submits that the DLO did not indicate in reply in the Second Letter that there was no dispute between the parties, and that subsequent events unequivocally supported the 1st defendant’s case that he had all along disputed the Government’s claim for possession.  The 1st defendant raised the claim of adverse possession in a statement taken by the DLO on 24 February 2016.  The DLO did not rely on the First Letter against the 1st defendant in his criminal trial for the offence under section 6 of the LMPO.

39.While it has been said that evidence of subsequent events, particularly the response of the recipient of the communication, is admissible for the purpose of determining the question whether a particular communication is privileged,[19] the fact that a dispute had emerged subsequently does not necessarily show that there was objectively an extant dispute at the time of the communication.  One does not apply hindsight in this regard, as shown by Re Jinro and Avonwick.  We do not think that the Judge has erred in concluding that the subsequent events did not point the way as to whether the 1st defendant was previously disputing the Government’s right.  If anything, the Second Letter rather shows that the DLO did not consider there was any dispute or any negotiation for the purpose of settling that dispute.  The DLO simply stated it could not accept the 1st defendant’s application for a short-term tenancy at that stage.

Ground 5

40.The fifth ground alleges that the Judge erred in disregarding the importance of the “without prejudice” label on the First Letter.  It is submitted that unless a party makes plain his intention that an offer made in correspondence marked “without prejudice” should be treated as an open offer, it ought to be covered by the privilege.  The Judge’s conclusion can only stand if one can come to a firm and certain view that a reasonable recipient of the First Letter would not have understood it to be a negotiating document or that it bore no relationship to any negotiating stance or offer or compromise.  Reliance is placed on Lord Hope’s remarks in Ofulue & another v Bossert [2009] 1 AC 990 at [2]:

“ … where the letters are not headed ‘without prejudice’ unnecessarily or meaninglessly, … the court should be very slow to lift the umbrella unless the case for doing so is absolutely plain”

and

“ Where a letter is written ‘without prejudice’ during negotiations with a view to a compromise, the protection that these words claim will be given to it unless the other party can show that there is a good reason for not doing so”.

41.In our view, this ground also fails.  The Judge analysed the effect of the use of the words “without prejudice” with reference to the authorities.  She recognised that the label was said in Avonwick to be a “highly material factor” and a “strong indication” that there was a genuine dispute and a genuine attempt to settle it,[20] and noted Lord Brown and Lord Mance took somewhat differing approaches in Bradford & Bingley to the effect of the label.  She clearly regarded the label as a material factor in the exercise and rejected the plaintiff’s submission that the express use of the words “without prejudice” is only relevant in case of doubt.  She considered that ultimately the weight and significance the label should carry depended on the facts of the case.[21]  She took the mark into account as part of the overall factual enquiry and was prepared to assume as the starting point that the mark would at first sight prompt a reasonable observer to consider it possible that the First Letter was about negotiation and that the 1st defendant might have intended it should not be disclosed in litigation.[22]  In the end, the Judge considered that the mark had been used unthinkingly or unjustifiably in this case given that, viewed objectively, there was no relevant dispute.[23]

42.As this court[24] stated in Poben Consultants Ltd v Clearwater Bay Golf & Country Club [2019] 1 HKLRD 1110 at [35], it is well established that the mark “without prejudice” is not conclusive and its use does not mean that a communication will necessarily be protected by the privilege.  In that case the court concluded that notwithstanding the letter in question was marked “without prejudice” and was issued following a without prejudice meeting between the parties, it was in truth an assertion of the rights of the defendant rather than a negotiating document.  The court’s observation that the letter bore “no relationship to any negotiating stance, or offer, or compromise”[25] should be understood in the context of the decision which was not based on the absence of a genuine extant dispute but on the ground that the letter did not represent a genuine attempt to resolve that dispute.  As Avonwick shows, even though the mark may be a strong indication that there is a genuine dispute and a genuine attempt to settle it, the contents of the communication may nonetheless show that there is no extant dispute.[26]  In that case the English Court of Appeal held that the phrase had been used not for the settlement of any extant or contemplated disputes, but in the sense that the writer did not mean to give up any right that he might have.[27]

43.Reading the First Letter as a whole including the label, we too are unable to discern from it any reasonably choate and definable issue or series of issues raised in respect of the Government’s right to recover the Government Land from the 1st defendant.

Conclusion

44.We consider that the appeal is reasonably arguable and therefore give leave to appeal, but, for the reasons set out above, the appeal is dismissed.  The 1st defendant has to pay the plaintiff’s costs of the appeal.

(Godfrey Lam)
Justice of Appeal
(Anderson Chow)
Justice of Appeal

Mr Simon K C Lam, instructed by the Department of Justice, for the Plaintiff

Mr C Y Li SC and Mr Matthew Cheung, instructed by Christine FL Ip & Young, for the 1st Defendant

[1] [2021] HKCFI 162.

[2] [2021] HKCFI 1195.

[3] Decision, [2]-[3].

[4] Decision, [53]-[58].

[5] Decision, [67]-[78].

[6] Decision, [79]-[81].

[7] Decision, [85].

[8] BE v DE, [24].

[9] See [72] per Lord Brown, with whom Lord Walker agreed; [83] per Lord Mance.

[10] [81] per Lord Mance.

[11] David Richards J, [2014] EWHC 3322 (Ch).

[12] Lewison, Sharp and Burnett LJJ.

[13] See, for example, Industrial Properties (Barton Hill) Ltd & others v Associated Electrical Industries Ltd [1977] QB 580.

[14] Decision, [58].

[15] “本律師行澄清:該東邊土地被黃禮彥的家人佔用多年,與另外2/3業權人無關。” (“This firm clarify that: the land to the east of the Lot has been occupied by the family member(s) of Wong Lai Yin for many years, and it has nothing to do with the title owner(s) of the other 2/3 share.”)

[16] Decision, [76] – [77].

[17] Section 7(1) of the Limitation Ordinance.

[18] Decision, [78].

[19] Poben Consultants Ltd v Clearwater Bay Golf & Country Club [2019] 1 HKLRD 1110, [31], citing Williams v Hull [2009] EWHC 2844 (Ch), [20].

[20] [2014] EWHC 3322 (Ch), [22], [26].

[21] Decision, [42]-[43].

[22] Decision, [61].

[23] Decision, [70].

[24] Kwan and Poon JJA.

[25] at [36].

[26] [2014] EWHC 3322 (Ch), [26], [28]-[35].

[27] [2014] EWCA Civ 1436, [19].