Law Yiu Wai Ray and Another v. Cheung Ying Man also known as Christina Hadiwibawa

HCA 523/2021

[2022] HKCFI 2127

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 523 OF 2021

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JUDGMENT

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A. Introduction

1.In this application the Defendant seeks to strike out the statement of claim on the three normal bases namely:

(1)  It discloses no reasonable cause of action;

(2)  It is frivolous and vexatious; and/or

(3)  it is otherwise an abuse of the process of the court.

2.The application has generated a vast amount of paperwork.  There are 6 affirmations together with approximately one thousand pages of evidential exhibits.  The skeleton arguments are also lengthy.  It is fair to say that both parties have sought to engage the court with the merits of their respective cases in support of their arguments, which has probably driven the extent of the detail that has been put before the court. 

3.The principles of a strike out application are well known and should not be the subject of controversy.  I do not believe that they are in dispute in this case.  They have been identified at some length in Polyline Development Limited v Ching Lin Chuen & Others [2021] HKCFI 483 at paragraphs [10] to [17], and I do not repeat them here, but adopt those principles.

4.Despite the length and complexity of the factual background that has been set out in the affirmations and the skeleton arguments, the relevant facts can, in my view, be stated fairly succinctly:

(1)  The Plaintiffs were beneficiaries of legal aid in respect of two personal injury actions in which they were plaintiffs.  The Defendant was an assistant legal counsel at the Department of Legal Aid (“DLA”) and was handling the Plaintiffs’ legal aid matters.

(2)  The Plaintiffs’ personal injury cases went, on at least one occasion, to the Court of Appeal on an interlocutory matter and the Plaintiffs were unsuccessful in the appeal such that they became obliged to pay the costs of the appeal, as ordered.

(3)  Several years later, in April 2020, following the discharge of the legal aid certificate, the defendants in the personal injury actions sought to initiate taxation of the costs of, amongst other things, the unsuccessful appeal. Solicitors for the Plaintiffs commenced discussions with the DLA, through the Defendant, as to the manner, and approach, that might be taken to the attempt to commence taxation.

(4)  Thereafter, the Plaintiffs applied for an extension to their legal aid certificate so as to contest the taxation.  That application was refused, and the Plaintiffs appealed.  It is said by the Plaintiffs that a “Costs Arrangement” was discussed with the master hearing the appeal, pursuant to which the Plaintiff’s solicitors had agreed to charge the Plaintiffs, or the DLA, only HK$18,000 for conducting the taxation summons.  The appeal was successful, so from that time onwards, the Plaintiffs benefitted from Legal Aid in respect of the taxation.

(5)  During a subsequent taxation hearing it is said that the Defendant disclosed the Costs Arrangement to solicitors for the defendants in the personal injury actions, despite the fact that the existence of that arrangement is said to have been both privileged and confidential (to the knowledge of the Defendant).  It is also said that there were further inappropriate disclosures of the Costs Arrangement, which the Plaintiffs say expanded the scope of the disclosure, and which, the Plaintiffs say, wrongly described the Costs Arrangement.

5.It is said that the disclosure of the Costs Arrangement was unlawful, and the Defendant is personally liable for its disclosure on the grounds that:

(1)  The Costs Arrangement was privileged as a result of the application of s24(1) and (4) of the Legal Aid Ordinance (Cap.91).

(2)  The disclosure was in breach of the Defendant’s statutory duties under the Legal Aid Ordinance and under Principle 3 of Schedule 1 of the Personal Data (Privacy) Ordinance Cap 486.

6.There is also a further set of allegations made concerning what is said to be a disclosure of a different matter, which is also said to have been wrongful.  It arises in this way:

(1)  The Plaintiffs applied for an extension to their legal aid certificate in order to appeal the decision made in the personal injury actions to allow the taxation to be commenced out of time.  That extension of the legal aid certificate was also denied, and the Plaintiffs appealed that denial, including on one ground that the Plaintiffs had no financial means because the DLA had withheld the damages awarded to the Plaintiffs.  In legally aided cases, as I understand the position, damages are required to be paid to the DLA so that the DLA can recover the costs to which it is entitled. 

(2)  The appeal was subsequently withdrawn, because the DLA agreed to make an interim payment to the Plaintiffs of HK$850,000 from the damages that had been awarded to the Plaintiffs.

(3)  It is said that the fact of payment was also privileged under s24 of the Legal Aid Ordinance, and was protected under the Personal Data (Privacy) Ordinance.

(4)  It is alleged that the Defendant subsequently disclosed the existence of the Interim Payment to the solicitors for the Plaintiffs in the personal injury actions, in breach of her duties to the Plaintiffs.

7.The claims are repeated as being a breach of a common law duty of confidence, although to be fair, the Statement of claim does not expressly identify an independent duty of confidence although Mr Tse, for the Plaintiffs, confirmed that he did in fact rely upon one.

8.It is also said that because of the two disclosures identified, and the circumstances surrounding those disclosures, the Defendant has committed the tort of misfeasance in Public Office, and has breached a duty of care it is said that she owes to the Plaintiffs (although the precise scope of the duty of care is not identified in the Statement of Claim).

9.As a result, it is said that the Plaintiffs have suffered damages, identified as follows:

“(a) The additional costs incurred and the costs awarded against Ps (if any) in the taxation of HW’s Bills caused by P’s failure to respond to IKC’s suggestion to make an offer to HW for settlement from 20 April 2020 to 2 June 2020.

(b) The costs in relation to the Preliminary Issue raised by HW on the information given by D.

(c) Loss and damage arising from the loss of tactical advantage, caused by D’s illegal disclosure of the Costs Arrangement to HW, in using the costs awarded against Dr. Chan in respect of HW’s Summons to achieve a global settlement of all outstanding taxation

(d) The additional cost of the Summons Appeal and further loss or damage (if any) caused by D’s illegal disclosure of the details of the Interim Payment.”

10.The Defendant denies that any loss has been suffered, and this appears to be one of the grounds relied upon in striking out the Statement of Claim.

11.Finally, the Plaintiffs seek an injunction restraining the Defendant from committing further breaches of confidence, and breach of her statutory duties.

B.   Breach of Privilege / confidence pursuant to s24 of the Legal Aid Ordinance

12.The relevant provisions of Section 24 of the Legal Aid Ordinance provide as follows:

“(1) The like privileges and rights as those which arise from the relationship of client, counsel and solicitor acting in their professional employment shall arise from the following relationships, that is to say--

(a) the relationship between an applicant for legal aid and the Director and counsel and solicitor to whom the application is referred, ·

(b) the relationship between an aided person and the Director and counsel and solicitor assigned to act for him in any proceedings to which a legal aid certificate relates.

…

(4) A person shall not disclose information given for the purposes of this Ordinance concerning a person seeking or receiving advice, assistance or representation otherwise than

(a) to enable the proper performance by a person of a function under this Ordinance;

(b) to advise on, institute and pursue criminal proceedings for an offence arising out of the operation of this Ordinance or to report the proceedings;or

(c) with the consent of the person concerned and, if he did not give the information, the consent of the person who did.”

13.After emphasising the tripartite nature of the relationship established between the DLA, the solicitors instructed by the assisted person, and the assisted person, the Defendant has gone on to contend that the Costs Arrangement cannot fall within s24(1) because it defines only the relationship between the solicitors and the DLA, and therefore does not affect the assisted person. 

14.She also goes on to say that the Costs Arrangement cannot fall within what is normally described as privileged material because it does not attract either legal advice privilege or litigation privilege, placing reliance on Michael Wilson and Partners Limited v John Forster Emmott & others [2022] EWHC 730 (Comm) and Sean Eric McLean Hotung v Hillhead Limited HCA 1738/2006, unreported, 31 December 2009 at [150], which she says stand for the proposition that retainer letters do not attract privilege.

15.The Plaintiffs, on the other hand, rely upon MK v Registrar of High Court and another [2021] HKCFI 1821, where Keith Yeung J analysed s24 and concluded that it imposed the blanket of legal professional privileged on the tripartite relationship between each of the DLA, the solicitors acting for the assisted person and the assisted person.  Hence the Plaintiffs contend that s24(1) covers any privileged material which exists within that tripartie relationship, and it is therefore irrelevant as to whether the Costs Arrangement relates to a relationship between the DLA and the Solicitors only.

16.Without deciding the point, it seems to me that the proposition raised by the Plaintiffs is at the very least arguable, and hence if the Costs Arrangement is privileged as between the DLA and the solicitors for the assisted person, then I agree that is arguable that it would be covered by s24, and thus would be subject to the general duty of non-disclosure set out in section 24(4).

17.The Statement of Claim makes it clear that the Plaintiffs’ contention is that the Costs Arrangement is privileged.  For the purposes of assessing a reasonable cause of action, I have to take the facts as alleged by the Plaintiffs.  Hence I need to assume (for this purpose at least) that the Costs Arrangement is privileged.  It will therefore be covered by s24, and any disclosure would be in breach of s24(4).

18.Notwithstanding that position, for the purposes of the other limbs of a strike out I need to look further than merely the allegations contained in the Statement of Claim. I need to make an assessment of whether the Costs Arrangement is in fact capable of being argued as privileged.  It is clear that there is a dispute as to the terms of the Costs Arrangement, and whether it is in fact privileged or otherwise covered by S24.  In my view it is inappropriate to decide on a strike out application, whether the Costs Arrangement is covered by privilege.  To make that decision would require a detailed analysis of the various competing issues of fact surrounding its existence, and its terms, and then applying a complex legal framework (that of the law of privilege) to the facts as ultimately determined.  I do not consider that it is appropriate to embark on that exercise in a strike out application, and hence, without reaching any conclusion on whether the Costs Arrangement is privileged or not, I accept that the point must go to trial.

19.The Plaintiffs also contend that whether or not the Costs Arrangement is privileged, it is clearly “information given for the purposes of this Ordinance” within the meaning of that phrase in s24(4) of the Ordinance, and therefore subject to a duty of non-disclosure.  The Defendant argues that it cannot fall within s24(4).

20.In the context of a strike out application, I cannot say that the contention of the Plaintiffs is unarguable.  It will involve a detailed look at what the Costs Arrangement actually is, what exactly was disclosed, and no doubt also whether the disclosure falls within one of the exceptions to s24.  None of those issues are capable of resolution in a strike out application.

21.As to the Interim Payment, I note that the Plaintiffs did not address the application of s24 of the Legal Aid Ordinance to the interim payment in their skeleton argument.  In oral submissions Mr Tse sought to say that it was “information given for the purposes of this ordinance” within s24(4), as it was information given to the court during the hearing of the legal aid appeal.

22.The pleading alleges that the Interim Payment was privileged.  For the purposes of deciding if a reasonable cause of action exists, I must assume that it was and, on that basis, a reasonable cause of action is disclosed.

23.However, for the other limbs of a strike out, I must look at the real nature of the payment to make some assessment of whether what the pleading says has any prospect of being correct (in this respect). 

24.I do not think that the fact of an interim payment can be privileged, or otherwise information covered by s24.  It is not a fact that would naturally attract privilege, and in my view it is not arguable that it falls within s24(1).  I have not perceived Mr Tse to argue any different.

25.Instead, the thrust of his argument is that it is “information given” within the meaning of s24(4) and hence s24(4) creates a prohibition on disclosure.  He says that the prohibition on disclosure in s24(4) is wider than simply privileged information.  However, I do not think that even such a wider prohibition would cover the fact of the interim payment. 

26.The interim payment is a fact.  It was negotiated and agreed between the Plaintiffs and the DLA in the light of the circumstances that existed at that time.  It was not information “given”, and the fact that the court was told of the interim payment during the course of the legal aid appeal does not turn it into information “given”.

27.Consequently, in my view the claim for breach of any duty under s24(4) in relation to disclosure of the interim payment is bound to fail, and in my view therefore it amounts to an abuse of process and should be struck out. 

28.For the sake of completeness under this cause of action, Miss Chan on behalf of the Defendant confirmed during her oral submissions that the defendant was not running any argument concerning whether the Defendant is in fact the right defendant for an action of this nature, or that no civil liabilities are created on the defendant for any breach of the obligation arising under s24. Similar points arise in relation to the other causes of action.

C.   The Personal Data (Privacy) Ordinance

29.The Defendant contends that it is “doubtful” that Costs Arrangement and the Interim Payment could be regarded as “personal data” of the Plaintiffs.  The Plaintiffs suggest that this is a concession which inevitably makes it inappropriate to strike out the Statement of Claim.  I agree that, on the basis of the pleading (which says that these matters are personal data) and on the basis that any other argument is said (at best for the Defendant) to be no more than doubtful, I should proceed on the basis that the Personal Data (Privacy) Ordinance applies.

30.The argument of the Defendant then turns to whether the exemptions set out in s58 and s60B of the Ordinance apply so as to excuse any disclosure, or alternatively so as to disapply the provisions of the Ordinance.  The essence of the argument is that the disclosure was required by law, or by order of the court, or so as to prevent improper conduct. The Defendant also argues that s60B(b) applies in any event, because disclosure of the Costs Arrangement and the Interim Payment was “required in connection with any legal proceedings”.

31.The Defendant says that in a discussion before the master on the taxation summons (at which the Plaintiffs’ solicitors in the personal injury action were present) it would have been improper for the Defendant not to have mentioned the Costs Arrangement due to the way that the hearing progressed.  Therefore, she says, it was required by law, or by order of the court. 

32.I clearly cannot decide that point on a strike out application, and it must go to trial.

33.As to the prevention of improper conduct, she says that it was mentioned so as to prevent the solicitors for the assisted person claiming more than the indemnity principle of costs would permit.  Again, that is clearly a matter for trial and does not make this a case which can be struck out. 

34.As to s60B(b) I do not think that this is suitable to be determined on a strike out application.  The scope of that subsection is somewhat difficult to ascertain and I do not consider that it can be dealt with on a strike out.  The true nature of the exemption, and whether it applies in this case, needs to be determined once all the facts are known.

35.As a result, I refuse the application to strike out the claim under the Personal Data (Privacy) Ordinance.

D.   Breach of Confidence

36.The Defendant suggests that if I have found that section 24 of the Legal Aid Ordinance or the Personal Data (Privacy) Ordinance do not apply, then there is no need to consider the duty of confidence.  In terms of the common law duty of confidence, she says that it is not pleaded, and so should be ignored for the purposes of this strike out application, as she can only operate on the basis of the pleadings.

37.Having considered paragraph 17 and 18 of the Statement of claim, it is probably right that the common law duty is not pleaded, as the alleged duty is said to arise only on the basis of the Legal Aid Ordinance and the Personal Data (Privacy) Ordinance.  However, a more generous reading of the pleading might allow a suggestion that the common law duty of confidence was pleaded.  In either event, Mr Tse has confirmed that he relies upon such a duty, and I think that I should proceed on the basis that it will be argued, even if by amendment to the statement of claim.

38.On the basis that I have found it to be arguable that s24 of the Legal Aid Ordinance applies to the Costs Arrangement, and the Personal Data (Privacy Ordinance applies to both the Costs Arrangement and the Interim Payment (on the basis it has been argued), strictly I do not need to address whether a duty of confidence arises in relation either.  However, just looking at the matter in the round, I think that the existence of a common law duty of confidence as to both the Costs Arrangement and the Interim Payment is at the very least arguable.

39.The thrust of the argument by the Defendant is that the Plaintiffs have waived both confidentiality and privilege by their conduct.  It seems to me that the question of any waiver, and the extent to which it might be binding is not something that can be determined in a strike out application.  It is inevitably fact based, and can only be addressed following a trial.  I decline to strike out the statement of claim, or any part of it on this basis, although I am of the view that if the Plaintiffs are to run a common law duty of confidence, that ought to be pleaded more fully and clearly.

E.   The Loss Suffered

40.The Defendant has run numerous arguments about why the loss cannot have been suffered.  They include that:

(1)  The costs claimed have already been addressed by the various courts, and have been awarded to the Plaintiffs, such that the prospect of any loss having occurred is unrealistic.

(2)  If the Plaintiffs have to pay further costs in relation to the preliminary issue in the taxation, that would amount to a beach of the provisions of the Legal Aid Ordinance, because the preliminary issue was covered by legal aid, and so no further costs liability can accrue to the Plaintiffs.  In this respect it became clear during the hearing that there is some dispute as to whether that hearing was in fact covered by legal aid or not.

(3)  If there were further costs incurred, the Plaintiffs ought to have alerted the DLA, who could then have intervened, and such additional costs may have been averted.

(4)  The Plaintiffs did not seek the correct costs orders in the various hearings.

(5)  The loss is speculative.

41.With respect to the arguments that the Defendant runs, they are all clearly matters which, if correct, may amount to a defence to the claim, and indeed perhaps a good defence.  However, they are not matters which are immediately and obviously destructive of the claims made, and I do not consider any of them justify a striking out.  Some answers to the various points have been made in the Plaintiffs skeleton submissions, and it is clear to me that these matters are not suitable for determination in a strike out application.  Consequently I do not take the view that the Defendants arguments on loss are immediately and obviously destructive to the claim, and they do not justify striking out the claims made.

F.   Misfeasance in Public Office

42.To establish a cause of action in this tort it must be shown that:

(1)  A public officer acted in bad faith and dishonestly abused his powers;

(2)  With subjective knowledge that his actions would probably injure the Plaintiffs.

(3)  The subjective knowledge, which must be directed towards the actual injury, or type of injury suffered, could be of three variants, namely where the officer:

(a)  specifically intended to injure the Plaintiffs,

(b)  knew that in the ordinary course, injury to the Plaintiffs would follow even though it was not his purpose;

(c)  was recklessly indifferent as to whether or not his actions would cause the injury

43.The relevant pleading is at paragraph 36 and 37 of the statement of claim.  The Plaintiffs allege that the Defendant made various false representations concerning the Costs Arrangement without any honest belief that they were true.  It is said that the Defendant consciously, and in bad faith, made those false or misleading representations with the intention of causing damage to the Plaintiffs.  The Plaintiffs also say that she made the representations concerning the Costs Arrangement and the interim payment in the knowledge that it would probably cause injury to the Plaintiffs, or at least in wilful disregard of the risk that it would cause such harm.

44.These allegations are serious allegations to make against the Defendant, and I have no doubt that in order to justify them there needs to be some level of particularity as to the alleged dishonesty or bad faith and the deliberate intention to cause damage.  The statement of claim is silent as to both.

45.I do not accept the Plaintiffs’ suggestion in their skeleton argument that it is sufficient for court to look at all the facts pleaded, and from those facts draw a prima facie inference that the Defendant specifically intended to injure the Plaintiffs, or was recklessly indifferent as to whether her actions would cause injury.  Something more is needed, both in relation to the alleged dishonesty or bad faith and the intention, but nothing more is pleaded.

46.I questioned Mr Tse as to the particular elements of the evidence which he said showed dishonesty, or bad faith in this respect.  He pointed me to four letters, 3 in November 2020 and one in February 2021, in which he said the Plaintiffs solicitors drew the false representations to the attention of the Defendant, but, he says, she continued to make them.  He also complained about the “ever expanding” nature of the representations that are said to have been made, disclosing what he described as more and more information. 

47.I do not accept that the pleading is sufficient to disclose a cause of action in this respect.  When dishonesty and bad faith are alleged it is incumbent on the Plaintiffs to make specific pleas as to all facts and matters from which the inference of dishonesty or bad faith is drawn, and to articulate with particularity all matters relied upon to support the proposition.  In my view the pleading in this case does not do that.  It simply uses the relevant words, but does not begin to articulate precisely how the existence of a false representation (even assuming that they are false) demonstrates the necessary mental element of bad faith or dishonesty.  A false representation is equally consistent with an error as it is with dishonesty, and in order to justify a plea of dishonesty or bad faith, the plea must articulate with clarity exactly what the pleader contends makes the false representation dishonest or in bad faith. The statement of claim does not begin to do that, and in my view it fails to show a reasonable cause of action in this respect.

48.However, even if I were to accept the proposition that the pleading is sufficient to disclose a reasonable cause of action, I am nonetheless not satisfied that there is any basis upon which the pleading, has any realistic prospect of success. 

49.I have read all of the evidence and the skeleton arguments, and in particular have considered in some detail the four letters that the Plaintiffs particularly rely upon to draw the inference of bad faith and dishonesty.  I do not consider that they support the proposition at all.  They generally complain about the fact of disclosure of the Costs Arrangement, although it is correct that they do also identify what the Plaintiffs considers to be errors in the descriptions of the Costs Arrangement that were made by the Defendant when she made the first disclosure. 

50.But I do not think that these four letters come anywhere close to creating an inference that the subsequent representations said to have been made, even if one accepts that they were in fact false, were made dishonestly or in bad faith.

51.Based upon the evidence that I have seen, all I can see is that the Defendant was simply doing her job.  It is possible that she overstepped the boundaries and disclosed information that she ought not to have disclosed, and I also accept that it is possible that whilst doing so she described the Costs Arrangement in a way that was inconsistent with the way in which the Plaintiffs saw it.  If that did occur then the Plaintiffs are entitled to seek whatever remedies they are able to obtain pursuant to the other causes of action which have been pleaded in the statement of claim.  However, I can find absolutely no basis for the plea of misfeasance in public office.

52.In my view the claim is made in abuse of the process, and I strike it out for this reason too. 

53.I am conscious that the Plaintiffs has suggested that no application for further and better particulars has been made by the Defendant, and that any deficiencies in the pleading could be cured by the provision of such particulars.  I note that no amendment to the pleading has been offered, and I cannot see any particulars that would solve the problems that I have identified.  Therefore, I do not think that the Plaintiffs proposition overcomes the difficulties that I see with their case in this respect.

G.   Negligence

54.Neither party has focused any attention to the question of negligence.  The Plaintiffs simply say that no new allegation is made, and the Defendant simply says that the ground is a catch all ground which is subsumed by the others.

55.I have not been addressed on questions such as the existence or scope of any duty alleged and Miss Chan for the Defendant confirmed that she did not seek to strike out the claim on the basis of any arguments as to existence or scope of duty. 

56.As a result of the way in which it has been argued therefore, the parties seem to accept, at least for this purpose, that the question of negligence will stand or fall with the other grounds to the strike out application.  As a result, I do not address this further, and I simply follow my decisions made on the other causes of action.

H.   Conclusion

57.In the light of the above:

(1)  I strike out the claim made for breach of s24 of the Legal Aid Ordinance insofar as it relates to the Interim Payment;

(2)  I strike out the claim for Misfeasance in Public Office;

(3)  I dismiss the remainder of the strike out Summons.

58.The Plaintiffs are to amend the statement of claim to reflect the above, and remove those claims struck out.  They must also expressly plead the common law duty of confidence, to the extent that they seek to rely upon such a duty (and breach of it).

I.    Future Directions

59.A time summons has been issued in which the Defendant seeks further time for the service of her defence.

60.In my view the correct approach is for the Plaintiffs to amend the Statement of Claim in the manner which reflects this Judgment.  That should be done within 28 days of handing down this Judgement.

61.Thereafter, within 28 days the Defendant should serve her defence.  The Plaintiffs have asked for an UNLESS order.  I do not consider that to be appropriate at this stage, but I do indicate that I do not expect the Defendant to seek any further extensions of time for service of the defence other than in exceptional circumstances, and if any further extension is sought, I would anticipate that the court would impose an UNLESS condition to such further extension.

J.   Costs

62.Each party has been partially successful in this matter.  Each party will have incurred significant costs in bringing the application, and addressing both the parts on which they were successful and the parts on which they were not.  One way to address that would be to make an order that each party is to bear 50% of the other side’s costs of the application.  However, in my view that is likely to increase the burden on court resources through the taxation process, and to increase the burden on the public purse of legal aid, and is, in any event, likely to result in a minimal net gain to any side on the costs subsequently taxed.  Consequently, in my view the most appropriate order is to make an order NISI that each side is to bear its own costs of the application, and the Plaintiffs are to bear their own costs of the necessary amendments to reflect this Judgment.

63.If either party wishes to ask the court to change that order, they are to make written submissions to that effect within 7 days of handing down this Judgment, limited to five pages.  The other side will then have a right of response within 3 days, limited to three pages.  No further submissions without leave of the court.

Mr Dixon Tse instructed by Ip, Kwan & Co., for the Plaintiffs

Ms Tessa Chan instructed by Department of Justice, for the Defendant