Urban Renewal Authority v. Agrila Ltd and Another

HCA 1582/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1582 OF 2002

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Before: Deputy High Court Judge L. Chan in Chambers

Date of Hearing: 22 January 2009

Date of Decision: 19 February 2009

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D E C I S I O N

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1.This is an appeal against two orders made by a Master on 11 June 2004.  

2.The 1storder was a dismissal of the plaintiff’s application to strike out parts of a witness statement of one Abraham Razack dated 30 May 2002 and filed on 3 April 2003.  The plaintiff’s ground of the application is that those parts of the witness statement are irrelevant to the issues in the action and are inadmissible.  The plaintiff maintains the same ground on appeal.

3.The 2nd order was made in favour of the defendants’ application to have specific discovery by the plaintiff of certain documents.  The plaintiff opposed the application on the grounds of the discovery being irrelevant to the issues in the action and legal professional privilege.

Background

4.The plaintiff and the defendants entered into a Heads of Agreement on 15 February 1989 to redevelop a site at Queen’s Road, Central and Jubilee Street.  The redevelopment is now completed and is called the Centre.

5.When the parties entered into the Heads of Agreement, the site was owned by diverse owners.  Resumption of land was contemplated.  The agreement provided that resumption payments would be part of the acquisition funds and all acquisition funds would be provided by the 1st defendant.  The acquisition funds formed part of the land costs.  The land costs thus included the resumption payments.  The proceeds less the land costs and other development costs were the net proceeds for equal sharing between the plaintiff and the 1st defendant.

6.It is the plaintiff’s case that the 1st defendant had to bear all resumption payments made or to be made by the plaintiff for this development under an express/implied term of the Heads of Agreement.  After the Heads of Agreement, some supplemental agreements were also made.

7.On 19 July 1997, the parties entered into a restructuring agreement that replaced the Heads of Agreement and the supplemental agreements.  The restructuring agreement provided that the 1st defendant would pay the plaintiff a guaranteed profit defined as follows:

“’Guaranteed Profit’ — the sum of HK$1,947,460,000.00 to be received by the Corporation pursuant to Clause 2.04 hereof (as quantified in a Memorandum of Agreement dated 19^th July 1997).  Provided that if further Land Cost still required to be paid from the date of this Agreement shall exceed HK$121,000,000.00, the Guaranteed Profit shall be adjusted by deducting therefrom an amount equivalent to one half of the difference between the said further Land Cost and the said sum of HK$121,000,000.00 and if the said further Land Cost shall be less than HK$121,000,000.00, the Guaranteed Profit shall be adjusted by adding thereto an amount equivalent to one half of the difference between the said sum of HK$121,000,000.00 and the said further Land Cost …”

8.The guaranteed profit was half of the net profit and was subject to adjustment by the formula built into the definition.  It was calculated on the basis of the total sale proceeds less all costs of development.  The calculation was set forth in a memorandum of the same date which was signed by the parties.  The costs of development included the land costs which meant the same as in the Heads of Agreement.  The land costs included an estimate of HK$121,000,000 which could be payable after the making of the restructuring agreement.  Since it was an estimate and the actual future land costs might be more or less than HK$121,000,000, there was therefore the need to have the adjustment formula built into the definition of guaranteed profit.

9.The plaintiff has pleaded in the Statement of Claim that the proper construction of and/or it was an implied term of the restructuring agreement and the memorandum of calculation that the 1st defendant was to continue to be responsible to pay the plaintiff all resumption payments made or to be made by the plaintiff.  The future resumption payments constitute the future acquisition costs or the future land costs which were estimated at HK$121,000,000.

10.The restructuring agreement also provided for the 1st defendant’s obligation to continue with the construction of the development and the dates for payment of the guaranteed profit to the plaintiff.  They are contained in clauses 2.02, 2.04 and 2.05 as follows:

“2.02    The Developer shall cause the Development to be completed in a manner which is not less than the standards as set out in the Finishing Schedule of the Development and in accordance with the Building Contract.

…

2.04 The Developer shall on the signing hereof pay to the Corporation the sum of HK$778,984,000.00 being part of the Guaranteed Profit and shall on the Final Payment Date Pay to the Corporation the balance of the Guaranteed Profit.

2.05 The Developer shall pay interest at Best Lending Rate on any part of the Guaranteed Profit remaining unpaid after the Final Payment Date.”

The Final Payment Date for payment of the balance of the guaranteed profit was 31 March 1999.

11.The defendants have pleaded in their defence and counterclaim that the 1st defendant was not liable for any land costs save provided in the definition of guaranteed profit and under clause 2.04 of the restructuring agreement.  They also pleaded a further or alternative argument that the 1s defendant’s liability for land costs would cease on the Final Payment Date.

12.On 14 October 1998, the parties entered into a supplemental agreement to redefine the Final Payment Date and rescheduled the payment of the guaranteed profit to instalments.  The terms of the supplemental agreement are:

“1. The definition of ‘Final Payment Date’ on page 3 of the Agreement be deleted and replaced by the following: -

‘Final Payment Date’ — means whichever is the later of 31st March 2000 or the date of the Certificate of Compliance, but if the Certificate of Compliance shall not have been issued by 31st March 2000, the Final Payment Date shall be 30^th September 2000’; and

2.  Clause 2.04 of the Agreement be deleted and replaced by the following: -

‘The Developer shall pay to the Corporation:

(i)  $778,984,000.00 being part of the Guaranteed Profit upon the signing of the Agreement on 19^th July 1997;

(ii)    $58,423,800.00 being part of the Guaranteed Profit on or before 31st March 1999;

(iii)   $58,423,800.00 being part of the Guaranteed Profit on or before 30^th September 1999; and

(iv)  the balance of the Guaranteed Profit on the Final Payment Date.”

13.The new Final Payment Date thus depended on the date of issue of the certificate of compliance by the Director of Lands for the development.  If the certificate should be issued on or before 31 March 2000, then the Final Payment Date would be 31 March 2000.  If the certificate of compliance should be issued at any time after 31 March 2000, the Final Payment Date would be 30 September 2000.  Therefore, if the certificate of compliance should be issued on or before 31 March 2000, the final installment of the guaranteed profit would be due six months earlier and interest would accrue after 31 March 2000 pursuant to clause 2.05 of the restructuring agreement.

14.It is the defendants’ pleaded case that the adjustment to the amount of guarantee profit pursuant to its definition in the restructuring agreement and by reference to the future land costs would be made to the balance of the guaranteed profit payable on the Final Payment Date.

15.The 1st defendant duly paid the instalments of the guaranteed profit as per the schedule in the supplemental agreement up to 30 September 1999.

16.The plaintiff then unilaterally applied to the Director of Lands for issuance of the certificate of compliance for the development and the Director issued the same to the plaintiff on 31 March 2000.  The plaintiff presented the same to the 1st defendant on the same day and demanded payment of HK$1,051,628,400 as the final instalment of the guaranteed profit on the same day.  This sum and the previous instalments totalled HK$1,947,460,000.  It was the same figure as contained in the definition of guaranteed profit in the restructuring agreement without any upward or downward adjustment to the estimated future lands costs of HK$121,000,000.  The defendants pleaded that this demand for HK$1,051,628,400 amounted to a representation by the plaintiff to the 1st defendant that this sum was the balance of the guaranteed profit payable under clause 2.04 of the restructuring agreement.

17.However, the 1st defendant did not pay the HK$1,051,628,400 when the demand was made.  The 1s defendant disputed the plaintiff’s right to make the demand.  It contended that the plaintiff had breached the restructuring agreement by unilaterally applying to the Director of Lands for the certificate of compliance.

18.The parties later entered into an agreement and indemnity (3) dated 31 May 2000 (“Indemnity (3)”) as a further supplement to the restructuring agreement.  The 1st defendant also paid the plaintiff the sum of HK$1,051,628,400 on the same day.

19.The relevant part of Indemnity (3) provided:

“1. In consideration of the Land Development Corporation (‘the Corporation’) agreeing to waive all interest accrued on the outstanding balance of the Guaranteed Profit in the sum of HK$1,051,628,400 and in full and final settlement of the obligations and liabilities of Agrila Limited under (i) Clauses 2.02, 2.04 and 2.05 of the aforesaid Agreement dated 19th July 1997 and (ii) …, we, Agrila Limited (‘the Developer’) hereby undertake as follows:-

(a) The Developer shall, …, diligently complete and/or discharge and caused to be completed and/or discharged the following obligations:-

(i)  to carry out the works as set out in the letter dated 16th March 2000 from the District Lands Office to Belt Collins Hong Kong in respect of Special Condition (27) of the Conditions of Exchange No.12379 (as varied and modified) relating to the Property (hereinafter referred to as ‘the Conditions’) and

(ii) to construct the Footbridge if required under Special Condition (29) of the Conditions in accordance with the terms and conditions of the Conditions and to the satisfaction of the Director of Lands

(such obligations under (a)(i) and (ii) above are hereinafter referred to as ‘the Outstanding Works and Obligations’).

(b) The Developer shall reimburse the Corporation for all costs and expenses required to complete and/or discharge the Outstanding Works and Obligations should the Developer fail to comply with Clause 1(a) above and shall keep the Corporation fully indemnified (on a full indemnity basis) against all liabilities, losses, actions, proceedings, suits, costs, damages, expenses, claims and demands whatsoever which the Corporation may sustain, suffer or incur as a result of any breach by the Developer of its obligations undertaken hereunder or relating to or in connection with the carrying out of the Outstanding Works and Obligations.”

20.The defendants pleaded that the 1st defendant entered into Indemnity (3) in reliance of the said representation by the plaintiff on 31 March 2000 and for achieving a full and final settlement of the 1st defendant’s payment obligations under the restructuring agreement as amended by the supplemental agreement of 14 October 1998 and that the 1st defendant paid the plaintiff HK$1,051,628,400 in full and final settlement of its payment obligations under the restructuring agreement as amended by the said supplemental agreement and Indemnity (3).

21.They further pleaded that even if the 1st defendant was liable under the restructuring agreement to reimburse the plaintiff resumption payments made or to be made for the development, the liability was fully compromised under Indemnity (3).

22.The plaintiff in its reply disputed that the 1st defendant entered into Indemnity (3) by relying on the said representation on 31 March 2000.  The plaintiff further contended that the payment of HK$1,051,628,400 merely discharged the 1st defendant’s obligations and liabilities under clauses 2.02, 2.04 and 2.05 of the restructuring agreement, but not the liability to reimburse the plaintiff for further resumption payments.

23.The issues between the parties as revealed in the discussion above are the construction of the restructuring agreement, the supplemental agreement and Indemnity (3).  The ultimate argument is whether the 1st defendant is liable to reimburse the plaintiff the further resumption payments after 31 May 2000.  However, it is not my task to determine these issues in these appeals. 

24.The 2nd defendant has guaranteed the performance by the 1st defendant of its obligations in the above agreements.  Hence, it was joined as the 2nd defendant in this action.  There are other issues that do not concern these appeals and I will not refer to them. 

The 1st appeal — the plaintiff’s summons to strike out evidence

25.The defendants have on 3 April 2003 filed a witness statement made by Mr Abraham Razack on 30 May 2002.  Mr Razack was the plaintiff’s Chief Executive at the material time.  He said in paragraphs 5 and 6 of the statement:

“5. I recall about some time before the execution of the Agreement and Indemnity (3) dated 31 May 2000, both Mr. Lau Wah-Sum and myself went to the office of Mr. Victor T.K. Li at Cheung Kong Center and after some serious discussions, Mr. Victor T.K. Li agreed to pay the outstanding balance of the Guaranteed Profit in the sum of HK$1,051,628,400 on the basis that ‘無拖無欠，沒再有其他錢銀往來’ and that Mr. Lau Wah-Sum was found agreeable to Mr. Victor T.K. Li’s statement.  Based on the aforesaid, I have instructed Ms. Marina Lo to prepare the settlement documentation.

6.  In about the afternoon of 31 May 2000, I went to the office of Messrs. Johnson Stokes & Master, solicitors to the Land Development Corporation, together with Ms. Marina Lo, to consult on the settlement documentation to be entered into with Agrila Limited and Cheung Kong (Holdings) Limited.  Pursuant to my understanding from Mr. Lau Wah-Sum’s conversations with Mr. Victor T.K. Li, Land Development Corporation would not ask for any further payment in relation to the Development.  Our proposed terms of settlement were eventually accepted by Agrila Limited and Cheung Kong (Holdings) Limited to the effect that Land Development Corporation would not ask for any further payment in relation to the Development.  Under the instruction of the Chairman I therefore executed the Agreement and Indemnity (3) on behalf of Land Development Corporation prepared by Ms. Marina Lo and Messrs. Johnson Stokes & Master.”  (underlining and italics supplied)

26.The plaintiff issued a summons on 16 April 2004 seeking to strike out the parts underlined above.  During the hearing of this appeal, the plaintiff enlarged the scope of attack by including the several lines shown in italics in paragraph 6.  This extension of attack to the end of paragraph 6 only made the plaintiff’s stance clearer and did not cause any change to the arguments presented by both sides.

27.The plaintiff’s ground of the application is that the evidence in question is of the pre-contract negotiation of the parties and their subjective intention.  On the authorities, such evidence is not admissible. 

28.The defendants however argued that the evidence in question is part of the background matrix leading to the making of Indemnity (3).  They said the evidence could help to identity the purpose of the parties in seeking to enter into Indemnity (3) which was to achieve a clean break with no tails attached.  This evidence bears on that issue and is highly material to the trial of the action.  The fact that the part of the factual matrix for construing Indemnity (3) is in itself an agreement is neither here nor there.  It is only in very clear case that the evidence of negotiation is excluded. 

29.Leading counsel for the defendants also referred to ICS Ltd v West Bromwich B.S. [1998] 1 WLR 896 at 913B where Lord Hoffmann said the boundaries between the admissible background matrix and the inadmissible evidence of previous negotiations and declarations of subjective intent are in some respects unclear.  Furthermore, the defendants submit that the oral exchange referred to in the evidence was known to the parties.  Leading counsel also suggested that the admissibility of this evidence should be left to the trial judge and should not be decided at the interlocutory stage.  The trial judge would have all the evidence before him to assist his resolution of this matter.

30.Leading counsel also argued that although the evidence is relevant for a plea of rectification, which has not been pleaded by the defendants, it does not mean that it is irrelevant for anything else.  Leading counsel also disagreed that this evidence is of the negotiation of the parties and argued that it is only of some serious discussions and the eventual consensus reached by the parties.  Leading counsel further submitted that this evidence is significant in establishing the common object of the parties and the purpose of Indemnity (3).  Even if this evidence is excluded, it does not obviate the meet for calling any of the witnesses.

31.I now consider the nature of the evidence.  Before the meeting referred to by Mr Razack, the parties had a dispute.  The dispute was on whether the certificate of compliance dated 31 March 2000 had been validly obtained by the plaintiff so that the 1st defendant’s obligation to pay the balance of the guaranteed profit had crystallized.  The defendants at that time argued that the obligation had not crystallised because the plaintiff had obtained the certificate of compliance in breach of the restructuring agreement.

32.It was for the purpose of resolving this dispute that Mr Razack went with the chairman of the plaintiff, Mr Lau Wah Sum to see Mr Victor T. K. Li of the defendants.  Mr Razack said in his witness statement that after some serious discussions, Mr Li agreed to pay the outstanding balance of the guaranteed profit in the sum of HK$1,051,628,400 on the basis of “無拖無欠，沒再有其他錢銀來往” (which means “there would be no money owing or outstanding, no more other money dealings”) and that Mr Lau Wah Sum agreed to Mr Victor T. K. Li’s statement.  The rest of the evidence under attack was on what happened pursuant to this alleged conversation.

33.In my view, this alleged conversation is clearly a negotiation for settlement of a dispute.  Mr Razack also alleged that the parties entered into an oral agreement of full and final settlement at the end of the conversation.

34.Regarding the law on the admissibility of evidence of the background matrix and the inadmissibility of pre-contract negotiation and the parties subjective intention, the starting point is Prenn v Simmonds [1971] 1 WLR 1381 at 1384C to 1385H per Lord Wilberforce:

“But the respondent’s counsel contended for even greater extension of the court’s interpretative power.  They argued that later authorities have gone further and allow prior negotiations to be looked at in aid of the construction of a written document.  In my opinion, they did not make good their contention. …

So I think the respondent gains little support from authority.  On principle, the matter is worth pursuing a little, because the present case illustrates very well the disadvantages and danger of departing from established doctrine and the virtue of the latter.  There were prolonged negotiations between solicitors, with exchanges of draft clauses, ultimately emerging in clause 2 of the agreement.  The reason for not admitting evidence of these exchanges is not a technical one or even mainly one of convenience, (though the attempt to admit it did greatly prolong the case and add to its expense).  It is simply that such evidence is unhelpful.  By the nature of things, where negotiations are difficult, the parties’ positions, with each passing letter, are changing and until the final agreement, though converging, still divergent.  It is only the final document which records a consensus.  If the previous documents use different expressions, how does construction of those expressions, itself a doubtful process, help on the construction of the contractual words?  If the same expressions are used, nothing is gained by looking back; indeed, something may be lost since the relevant surrounding circumstances may be different. …

In my opinion, then, evidence of negotiations, or of the parties’ intentions, and a fortiori of Dr. Simmonds’ intentions, ought not to be received, and evidence should be restricted to evidence of the factual background known to the parties at or before the date of the contract, including evidence of the ‘genesis’ and objectively the ‘aim’ of the transaction.”

35.The principles in the above case were restated by Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912F to 913F:

“My Lords, I will say at once that I prefer the approach of the judge.  But I think I should preface my explanation of my reasons with some general remarks about the principles by which contractual documents are nowadays construed.  I do not think that the fundamental change which has overtaken this branch of the law, particularly as a result of the speeches of Lord Wilberforce in Prenn v. Simmonds [1971] 1 W.L.R. 1381, 1384–1386 and Reardon Smith Line Ltd. v. Yngvar Hansen-Tangen [1976] 1 W.L.R. 989, is always sufficiently appreciated.  The result has been, subject to one important exception, to assimilate the way in which such documents are interpreted by judges to the common sense principles by which any serious utterance would be interpreted in ordinary life.  Almost all the old intellectual baggage of ‘legal’ interpretation has been discarded.  The principles may be summarised as follows.

(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

(2) The background was famously referred to by Lord Wilberforce as the ‘matrix of fact.’  But this phrase is, if anything, an understated description of what the background may include.  Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent.  They are admissible only in an action for rectification.  The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life.  The boundaries of this exception are in some respects unclear.  But this is not the occasion on which to explore them.

(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words.  The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean.  The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax:  see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] A.C. 749.

(5) The ‘rule’ that words should be given their ‘natural and ordinary meaning’ reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents.  On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had.  Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera S.A. v. Salen Rederierna A.B. [1985] A.C. 191, 201:

‘if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.’”

36.Bearing these principles in mind, I think the evidence in question cannot be admitted.  Even though it may be part of the background factual matrix and may identify the purpose of the parties in entering into the Indemnity (3), the fact that it is evidence of previous negotiation and the settlement reached therein rendered it inadmissible. 

37.The fact that this evidence is from the plaintiff’s former Chief Executive is also neither here nor there (see Secured Income Real Estate (Australia) Ltd v St. Martins Investments Pty Ltd (1979) 144 CLR 596 at 606 per Mason J).

38.Though there are cases where the boundaries between what is admissible and what is inadmissible are unclear, there is no such problem here.  The evidence in question is clearly of previous negotiation and the settlement reached therefrom.  The fact that it is evidence allegedly known to both parties is also neither here nor there.  I also do not think this matter should be left to the trial judge.  It is a very clear-cut case and I do not think its resolution would require the consideration of all other evidence in the case.  It is also useful to decide this matter now so that the plaintiff and the defendants can tell what evidence the defendants will proffer at the trial and what preparation will be required.  I also take the view that whether the calling of any witness can be obviated is not a factor for consideration.

39.For these reasons, I allow this appeal and strike out the parts of the evidence of Mr Razack as referred to above.  I also order the defendants to pay the plaintiff the costs of this appeal and below.

The 2nd Appeal — The Defendants’ Summons for Specific Discovery

40.In the course of discovery, the plaintiff produced the minutes of a managing board meeting held on 18 May 2002.  The minutes recorded that two counsel’s opinions had been sought on the plaintiff’s right to unilaterally apply to the Director of Lands for the issuance of the certificate of compliance.  The minutes further recorded the views of counsel on the matter.  As a result of disclosure of the minutes, the defendants applied for specific discovery of:

“1. The written advices of 2 counsel referred to in the Minutes of Meeting of Managing Board held on 18^th May 2002.

2.    All Minutes of Meeting of the Plaintiff and documents relating to their application and/or obtaining the Certificate of Complaints dated 31st March 2002 issued by the Lands Department in respect of Inland Lot No. 8827.”

41.The plaintiff opposed this application on the grounds that the documents sought are irrelevant to the issues in the action and they are also protected by legal professional privilege.  Leading counsel for the plaintiff also said that the part of the minutes relied on by the defendants in the application was disclosed inadvertently and he undertook before the Master not to rely on that at the trial.

42.The defendants however argued that the documents sought were relevant and privilege had already been waived.  Regarding relevance, the defendants argued that the documents were relevant to the factual matrix leading to Indemnity (3) and the construction of Indemnity (3).  Regarding waiver, the defendants argued that the minutes had been deployed in court and they contained a summary of the counsel’s opinions and their effect.

43.I have already referred to the relevant issues between the parties which are the construction of the restructuring agreement, the supplemental agreement and Indemnity (3).  Even though the factual matrix may include the plaintiff’s unilateral application to the Director of Lands for the certificate of compliance, it does not mean that the plaintiff’s own understanding of the basis of its right to do so would form part of the factual matrix as the plaintiff never disclosed it to the defendants.  The minutes were an internal document of the plaintiff.  Since the basis of the right as understood by the plaintiff had not been disclosed to the defendants, it did not form part of or relevant to the factual matrix.  It would also not assist the construction of Indemnity (3) as the defendants did not know it when they entered into this agreement.

44.For these reasons, I do not think the documents sought by the defendants are relevant to the issue in this action.  Subject to the plaintiff’s undertaking not to rely on the part of the minutes as used by the defendants in support of this application and the plaintiff’s further undertaking to redact the same when the minutes are being used at the trial, I allow the appeal on this ground.

45.Regarding the ground of privilege, the defendants argued that privilege had been waived as a summary of the counsel’s opinions contained in the minutes had been deployed in court.  The plaintiff disagreed.

46.To understand what amounts to “deploying” as used in this context, I refer to para. 12.19 of Disclosure by Matthews & Malek which has been quoted in AXA China Region Insurance Co. Ltd v Pacific Century Insurance Co. Ltd & Ors (No.2) [2005] 3 HKC 359 at 372:

“The key word here is ‘deploying’.  A mere reference to a privileged document in an affidavit does not of itself amount to a waiver of privilege and this is so even if the document referred to is being relied on for some purpose, for reliance in itself is said not to be the test.  Instead, the rest is whether the contests of the document are being relied on, rather than its effect.  The problem is acute in cases where the maker of an affidavit or witness statement has to give details of the source of his information and belief, in order to comply with the rules of admissibility of such affidavit or witness statement.  Provided that the maker does not quote the contents, or summarise them, but simply refers to the document’s effect, there is apparently no waiver of privilege. …”

47.I also refer to Phipson on Evidence, 16^th edition, para. 26-15:

“(e) What sort of reference constitutes a waiver?

26–15   There is a distinction to be drawn between a reference to the fact of legal advice and to its contents.  Because the fact that legal advice has been taken is not of itself privileged, referring to the fact that legal advice has been taken will not normally give rise to a waiver of privilege.  Because the cherrypicking doctrine only comes into play where a party has sought to rely on a privileged doctrine, mere reference to the existence of a privileged document will not be sufficient:  there must be reference to or reliance on its contents.  Thus to state that before attending interview with the police A had taken legal advice is not a waiver of privilege.  But to say that A did not tell the police where he was on Tuesday because his solicitor advised him not to, does rely on the contents of the legal advice:  here the point of the reliance on the privileged advice is to provide an explanation or justification for the failure to provide an answer to the police.  What is important here is not whether legal advice was taken, but what was the content.”

48.It is clear from the above that if the contents of the privileged document have not been relied on, there is no deploying in court or waiver of privilege.

49.Since the plaintiff has only disclosed the minutes and has not yet relied on its contents to advance its own case and/or to damage the defendants’ case, I hold that the plaintiff has not deployed the minutes in this action.  It has thus not waived the privilege to the counsel’s opinions.  Subject to the undertakings by the plaintiff aforesaid, I would also allow this appeal on this other ground.

50.I therefore allow the 2nd appeal also with costs here and below.

Mr Benjamin Yu, SC, instructed by Messrs JSM, for the Plaintiff

Mr Edward Chan, SC and Mr Norman Nip, instructed by Messrs Wilkinson & Grist, for the 1st and 2nd Defendants