Skyrun Light Industry (Hong Kong) Co Ltd v. Swift Resources Ltd and Others

HCA 118/2022

[2026] HKCFI 5626

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 118 OF 2022

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D E C I S I O N

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The application

1.The documents for which the Plaintiff seeks leave to disclose and admit in evidence in this action (collectively, “the Mediation Communications”) are:

1.1  an authorisation letter signed by the 4th Defendant on 19th January 2016 (“D4’s Authorisation Letter”);

1.2  an authorisation letter signed by the 3rd Defendant on 19th January 2016 (“D3’s Authorisation Letter”); and

1.3  a letter dated 20th January 2016 from Messrs Christine M Koo & Ip to Messrs Michael Li & Co (“CMKI’s 20.01.2016 Letter”).

2.The grounds in support of such leave are that:

2.1  the Mediation Communications are necessary for the purpose of enforcing a mediated settlement agreement, that is, the Loans Settlement Agreement, against the 4th Defendant;

2.2  it is in the interests of the administration of justice for the Mediation Communications to be disclosed and admitted as evidence, and for the Plaintiff to be able to rely on the same in support of its claim.

The background

3.In the present case, the main pleaded defence of the 4th Defendant is that (1) he did not know about the Loans Settlement Agreement until after the present action was commenced, (2) he never knew that he was party to the Loans Settlement Agreement and he had no knowledge of its contents, (3) he never signed or caused his signature to be appended to the Loans Settlement Agreement.

4.In response, the Plaintiff has pleaded (in its Re-Amended Statement of Claim) that (1) the 2nd Defendant was the party representing all the Defendants in their business dealings with the Plaintiff, (2) in December 2015, all the parties to HCA 1278/2014 entered into an agreement to mediate their disputes, (3) the mediation took place on 20th January 2016 and was attended by the Plaintiff and its lawyers (Messrs Christine M Koo & Ip (“CMKI”) for the Plaintiffs, and the 2nd Defendant and Messrs Michael Li & Co (“MLC”) for all the Defendants), (4) ultimately, the parties agreed on the Loans Settlement Agreement, (5) after the Loans Settlement Agreement was signed, CMKI wrote to MLC on 19th February 2016 setting out its understanding that the parties had reached a settlement agreement to dispose of part of the claims in HCA 1278/2014 and proposing a consent summons to do so, and MLC replied on 24th February 2016 saying that the terms of the consent summons were agreeable to its clients (including the 4th Defendant), (6) in the premises, the 4th Defendant knew and was party to the Loans Settlement Agreement.

5.By D3’s Authorisation Letter and D4’s Authorisation Letter, the 3rd and 4th Defendants respectively conferred on the 2nd Defendant the authority to deal with all matters relating to the mediation on their behalf, including the authority to sign the relevant mediation agreement, attend mediation sessions, and negotiate settlement, and further confirmed that any agreement entered into by the 2nd Defendant would be binding on them.  CMKI’s 20.01.2016 Letter was sent to MLC; it referred to the mediation session, put on record the offer made by the Plaintiff and sought the Defendants’ response; after further negotiations, the Loans Settlement Agreement was ultimately entered into.

The Mediation Ordinance

6.It is well-established that mediation is a confidential process.  In Champion Concord Ltd v Lau Koon Foo (No 1) (2011) 14 HKCFAR 534 at [17], Ribeiro PJ observed that:

“ The fundamental importance of confidentiality in mediation is universally acknowledged and it can only be in highly exceptional circumstances that evidence which invades such confidentiality will be permitted to be adduced.”

7.Subsequently, the Mediation Ordinance, Cap.620 (“the MO”) was enacted, which provides that:

7.1  (under s.8(1)) a person must not disclose a mediation communication except as provided for by s.8(2) or s.8(3);

7.2  (under s.8(3)) a person may disclose a mediation communication with leave of the court for certain purposes.  Relevant to the present case is: “(a) for the purpose of enforcing or challenging a mediated settlement agreement”, and “(c) for any purpose that the court or tribunal considers justifiable in the circumstances of the case”;

7.3  (under s.9) a mediation communication may be admitted in evidence in any proceedings only with leave of the court under s.10;

7.4  (under s.10(2)) when considering whether to grant leave under s.8(3) or s.9, the court must take into account a number of matters, including whether it is in the public interest or the interests of the administration of justice for the mediation communication to be disclosed or admitted into evidence, and any other circumstances or matters that the court considers relevant.

8.In Crane World Asia Pte Ltd v Hontrade Engineering Ltd [2016] 3 HKLRD 640, Lam VP (as he then was) observed at [20] to [21] that before the enactment of the MO, mediation communications were protected by the without prejudice privilege; in considering whether leave should be granted under s.10(2) MO, the court must have regard to the matters set out in that subsection, one of which is whether it is in the public interest or the interests of the administration of justice for the mediation communication to be disclosed or admitted in evidence; bearing in mind the affinity of mediation communication and without prejudice privilege, the court must have regard to the public policy considerations pertaining to without prejudice privilege; at the same time, the court must also exercise caution and only grant leave in the clearest type of cases so that the primary policy of upholding confidentiality will not be undermined.

9.As regards the relationship between the concepts of confidentiality and without prejudice privilege, in Farm Assist Ltd v Secretary of State for the Environment, Food and Rural Affairs (No.2) [2009] BLR 399, Ramsey J considered a number of authorities regarding both in the context of mediation, and concluded that:

“ 42 The passages from those judgments emphasise the overlap between concepts of confidentiality and privilege, in particular without prejudice privilege which applies to mediation.  In my judgment, they provide strong support for the proposition that the general confidentiality or privilege in mediations derives from the without prejudice nature of the mediation proceedings, and applies that concept by analogy.

43 There is a tendency for the use of the words “confidential”, “privileged” and without prejudice to be used in conjunction so as to emphasise the important general rule that what takes place in a mediation is not to be disclosed to third parties outside the mediation.”

10.In the light of the above authorities, it seems to me that it is relevant in the present application to have regard to the principles regarding without prejudice privilege, which were set out in Unilever plc v The Procter & Gamble Co [2000] 1 WLR 2436, which authority was cited with approval by Lam VP in Crane World Asia Pte Ltd at [16] for (inter alia) the following propositions:

“ (a) WPP is a rule that rests upon public policy: 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 may be used to their prejudice in the course of the proceedings (per Lord Griffiths in Rush Tompkins Ltd v Greater London Council [1989] AC 1280 at p 1299);

(b) Another basis for the rule is the express or implied agreement of the parties that communications in the course of their negotiations should not be admissible in evidence if a contested hearing ensues, Unilever Plc v Procter & Gamble Co, supra p 2442D and 2448H;

(c) The rule is not absolute and there are established exceptions when it is in conflict with other more powerful principles, p.2442E, 2444C to 2445G;

…”

11.One such exception is where the issue is whether without prejudice negotiations have resulted in a concluded compromise agreement: Unilever plc at 2444D.

Analysis

12.In relation to the second ground relied on by the Plaintiff for the application, it seems to me to be relevant to consider the following matters in deciding whether or not to give leave under s.10 MO to the Plaintiff to disclose the Mediation Communications and adduce them in evidence, notwithstanding their confidential nature:

12.1  the relevance of the Mediation Communications in the present proceedings;

12.2  whether the Mediation Communications should be disclosed despite being without prejudice communications;

12.3  whether the Plaintiff’s application constitutes an abuse of process.

13.It will be apparent that the Mediation Communications are relevant to the main issue between the parties of whether the Loans Settlement Agreement is binding on the 4th Defendant and the validity of the 4th Defendant’s defence.  Indeed, the Plaintiff had previously sought to plead these documents when it sought to re-amend its Statement of Claim, but its legal team failed make an application for the necessary leave to do so.

14.The 4th Defendant raises a number of points to argue that the Mediation Communications are not relevant.

14.1  He says that D4’s Authorisation Letter did not extend beyond the mediation session to a subsequent session, since although it referred to “any settlement agreement”, it should be read as referring only to a settlement agreement at the mediation session and not thereafter.  However, it is not appropriate to seek to construe the terms of the letter on affidavit evidence.

14.2  The 4th Defendant then says that proof that he gave authority to the 2nd Defendant to conduct the mediation does not prove that he gave her the authority to make the Loans Settlement Agreement, or to sign it for him.  He also says that D3’s Authorisation Letter fails to establish the scope of the mandate given by the 4th Defendant to the 2nd Defendant.  However, at the very least, the two letters tend to support the Plaintiff’s case as to how the mediation was conducted by the 2nd Defendant on behalf of the other Defendants and how the subsequent Loans Settlement Agreement came to be made.

14.3  The 4th Defendant says that CMKI’s 20.01.2016 Letter does not shed light on whether the 2nd Defendant had authority from the 4th Defendant to enter into the Loans Settlement Agreement.  However, at the very least, the letter tends to support the Plaintiff’s case that the 4th Defendant was aware of, and agreed to, the Loans Settlement Agreement which was eventually made.

15.I turn to consider whether the without prejudice rule ought to prevent the disclosure and admission into evidence of the Mediation Communications.  The fundamental issue between the parties is whether the Loans Settlement Agreement was made between the Plaintiff and the 4th Defendant.  The 4th Defendant denies making or even knowing of it.  The Mediation Communications are relevant to this issue.  The Plaintiff says that D3’s Authorisation Letter and D4’s Authorisation Letter show that the 3rd and 4th Defendants had authorised the 2nd Defendant (the wife and mother of the 3rd and 4th Defendants) to conduct negotiations and conclude a settlement on their behalf); it was therefore the 2nd Defendant who went to the mediation session.  The Plaintiff further says that CMKI’s 20.01.2016 Letter shows that the Loans Settlement Agreement resulted from the negotiations commenced at the mediation conducted by the 2nd Defendant on behalf of the other Defendants.  The 4th Defendant, on the other hand, says that his authorisation to the 2nd Defendant only extended to the single mediation session of 20th January 2016, and that the Loans Settlement Agreement, subsequently concluded, was not the fruit of the mediation.  The Mediation Communications would be important pieces of evidence to establish which is the case.  They go to the issue of whether without prejudice negotiations have resulted in a concluded compromise agreement, one of the recognised exceptions to the rule that without prejudice communications should not be disclosed.

16.Whilst the fact that the Mediation Communications do not contain any admissions on the part of the 4th Defendant does not mean that the without prejudice privilege is not available to cover them (Crane World Asia Pte Ltd at [16(f)]), it is relevant to take into account that what is sought to be disclosed does not cause the 4th Defendant the prejudice which a disclosure of an admission would constitute.

17.Finally, I turn to the issue of abuse.  The 4th Defendant says that it is an abuse of process for the Plaintiff to only be making its application now, and that it could and should have done so when it applied to re-amend its Statement of Claim and referred to the Mediation Communications in that pleading.  Counsel for the 4th Defendant, Ms Wallis Chung, accepts that the doctrine of res judicata does not apply, but says that the Plaintiff’s failure to recognise the need to apply for leave more promptly is an improper use of court resources.

18.It is indeed highly unsatisfactory that the Plaintiff did not make the current application earlier.  Not only did the Plaintiff fail to make the application at the time when it sought to re-amend its Statement of Claim before the Master in January 2026, it failed to do so even at the time of the 4th Defendant’s appeal in May 2026, and it only did so after my decision of 26th May 2026 in which I rejected the submission of counsel for the Plaintiff, Mr Kevin Hon, that the 4th Defendant could not object to the disclosure of the Mediation Communications on the grounds he had been taken by surprise when it was raised four months earlier at the hearing before the Master.

19.However, it seems to me that the omission to make the application earlier is not because of a deliberate attempt on the Plaintiff’s part to gain some tactical advantage or to reargue a failed application (in fact, there was no earlier application for leave), but because its lawyers had overlooked the need to seek leave and to act expeditiously.  It would not be right to lay this at the door of the Plaintiff.  Insofar as the Plaintiff may make a subsequent application to re-re-amend its Statement of Claim to refer to the Mediation Communications, I had not determined this on its merits on the previous occasion (see paragraph 19 of my earlier decision).  Again, any further application of the Plaintiff will be occasioned by the lawyers’ oversight rather than any deliberate tactical manoeuvre by the Plaintiff.

20.I do however agree with Ms Chung’s fallback submission that the Plaintiff’s delay in making its leave application is relevant to the issue of costs.

21.In the circumstances, I consider that the Plaintiff’s second ground for seeking leave to admit and adduce the Mediation Communications is made out.

22.I therefore do not need to go into the Plaintiff’s first ground for seeking leave to admit and adduce the Mediation Communications, namely, that they are necessary for the purpose of enforcing a mediated settlement agreement.  There is a dispute between the parties as to whether the Loans Settlement Agreement constitutes a mediated settlement agreement within the definition of the MO, which I will not attempt to resolve now on the basis of the affidavit evidence alone.  I would, however, observe that this very dispute (of whether the Loans Settlement Agreement constitutes a mediated settlement agreement) illustrates how the parties are at loggerheads over whether the Loans Settlement Agreement originated from the mediation – if it did, then this supports the Plaintiff’s case that the 4th Defendant is party to it, and vice versa.  This underlines the importance of allowing the Mediation Communications to be disclosed and adduced at trial.

Application to postpone filing of the Re-Re-Amended Writ of Summons and the Re-Amended Statement of Claim

23.Paragraph 2 of the Plaintiff’s summons of 23rd June 2026 (“the Summons”) is an application for extension of time for the Plaintiff to file and serve its Re-Re-Amended Writ of Summons and Re-Amended Statement of Claim, despite the leave which I gave on 26th May 2026, until fourteen days after determination of its leave application under the MO.

24.The Fifth Affirmation of Ma Wan Hin, made by the Plaintiff’s solicitor, explains that the intention is “to avoid having multiple rounds of amendments which may create unnecessary confusion”; in the event that leave is granted to disclose and adduce the Mediation Communications, the Plaintiff will then apply to further amend the Writ and Statement of Claim, “which amendments shall then include the amendments [already allowed] as well as amendments relating to the Subject Mediation Communications”.  This application for leave would supposedly be made and determined within fourteen days.  With respect, far from avoiding confusion, this is a recipe for confusion.  It is also procedurally improper.

25.It is inexplicable why the Plaintiff did not file its Re‑Re‑Amended Writ of Summons and Re-Amended Statement of Claim within the time allowed when leave was granted for this purpose on 26th May 2026.  Under RHC O.20 r.9, where the court makes an order giving any party leave to amend a pleading, then, if that party does not amend the document in accordance with the order before the expiry of the specified period or fourteen days after the order was made, the order ceases to have effect, albeit without prejudice to the power of the court to extend the period.  Thus the leave which I gave to the Plaintiff on 26th May 2026 to re-re-amend its Writ and to re-amend its Statement of Claim has in fact lapsed, and the Plaintiff needs an order for extension of time to file the Re‑Re‑Amended Writ of Summons and the Re-Amended Statement of Claim.

26.This makes it clear that the Plaintiff’s course of simply allowing the leave granted to lapse, and instead of rectifying this, seeking further deferral of the period in which it is to file the Re-Re-Amended Writ of Summons and Re-Amended Statement of Claim, and in fact to further alter these documents before they are filed, is wholly inappropriate.

27.Furthermore, the Plaintiff’s failure to promptly file the Re‑Amended Statement of Claim has already given rise to confusing situations such as today’s where there is on the one hand an Amended Statement of Claim before the court but which does not include the amendments for which leave has been given, and on the other hand a Re‑Re‑Amended Statement of Claim before the court but which is in draft form and includes proposed amendments for which leave was not in fact given.

28.The Plaintiff’s proposal will only give rise to more confusion if eventually the pleading to be filed is a document containing amendments in one colour but for which leave was given on two separate occasions.

29.The Plaintiff should now file the Re-Re-Amended Writ of Summons and the Re-Amended Statement of Claim (in accordance with the leave earlier given) without further delay.  The timing of this should not depend on whether or not, and when, it decides to make any further application for amendment.

Disposition

30.I grant an order in terms of paragraph 1 of the Summons.

31.I grant an order in terms of paragraph 2 of the Summons, save that the time extension allowed for filing the Re-Re-Amended Writ of Summons and Re-Amended Statement of Claim is reduced to three days.

32.I will now hear the parties as to costs.

Postscript

33.In his skeleton, Mr Hon had asked for an order in terms of the Summons (that is, including the extension of time in paragraph 2); Ms Chung had also addressed the application for an extension of time in her skeleton.  At the hearing, Mr Hon expanded on what was being sought under paragraph 2, explaining that it was his intention to make both sets of amendments (granted on different days) in one colour “in one go”.  It was only after I delivered the decision above, and in the course of the parties’ argument as to costs, that Mr Hon informed me that in fact, there had earlier been an order by consent before the Master in terms of paragraph 2 of the Summons.  I therefore rescinded the order made in relation to paragraph 2, so that the time extension allowed for filing the Re-Re-Amended Writ of Summons and the Re-Amended Statement of Claim remains at fourteen days after determination of paragraph 1 of the Summons in accordance with the consent order.  However, this should not be taken as leave to make two sets of amendments granted on different days “in one go” (nor should the Master’s order be read this way).  I further record that Mr Hon indicated that the filing would be carried out as soon as possible.

Mr Kevin Hon, instructed by Haldanes, for the Plaintiff

Ms Wallis Chung, instructed by CLKW Lawyers LLP, for the 4^th Defendant