Samuel Hung January 25 2022 Court of Appeal comprehensively reviews without prejudice privilege RPC | Litigation - Hong Kong Samuel Hung Litigation IntroductionBackgroundAppealCommentIntroduction Secretary for Justice v Wong raises some important issues arising out of the legal principles that underpin the protection afforded to without prejudice communications that are deserving of appellate court review.(1) In a rolled-up hearing, the Court of Appeal considered an application for permission to appeal by the defendant and the appeal itself.(2) In allowing permission to appeal, while at the same time dismissing the appeal, the Court upheld the judge's decision that a letter from the defendant's lawyers (the letter) to the District Lands Office had not been made on a without prejudice basis and was, therefore, admissible in evidence. The letter appears to have been important in the context of the government's claim against the defendant for alleged unlawful occupation of government land and the defendant's claim of adverse possession. The Court's judgment is a comprehensive analysis of the common law principles that underpin without prejudice privilege. For a communication to be made on a without prejudice basis, there must be a relevant dispute between the parties and the communication in question must be a genuine attempt to compromise that dispute.BackgroundIn Secretary for Justice v Wong, the principal issue in dispute was whether the letter constituted a without prejudice communication. This largely depended on whether there had been a dispute between the government and the defendant over the subject matter of the action when the letter was sent by the defendant's lawyers to the District Lands Office. The background to the case is set out in "Without prejudice according to a reasonable person".The first-instance judge held that the letter, while marked without prejudice by the defendant's lawyers, had not in substance been made in contemplation of a relevant dispute and, as such, was admissible.On applying for permission to appeal, the defendant raised several grounds of appeal – however, the essential issue was whether there had been a dispute between the government and the defendant over the subject matter of the action when the letter was sent. Specifically, the defendant argued that the judge had been wrong to conclude that:a reasonable person would conclude that there had been no extant dispute between the government and the defendant at the relevant time;the defendant was merely seeking an indulgence from the District Lands Office;the defendant was not giving up any rights and was only asking for a concession from the government;subsequent events, after the letter was sent, did not (based on the evidence) support the argument that the defendant had disputed the government's right to the land; andthe "without prejudice" label had been used "unthinkingly or unjustifiably".(3)Appeal The Court acknowledged that there was some overlap between the issues (particularly as between the first three issues) – the crucial issue being the first.(4)In allowing the defendant's application for permission to appeal, but dismissing the appeal, the Court held as follows:The judge had not erred in concluding that there had been no extant dispute at the relevant time concerning the government's entitlement to the land. Whether such a dispute had existed was to be determined on an objective basis. The subjective thinking of the defendant or his lawyers was not determinative. In reaching these conclusions, the Court applied applicable legal principles that originate from English case law.(5) The crux of without prejudice privilege is the existence of a dispute and an attempt to compromise. The Court stated that the defendant's request of the government was: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.(6)Taking account of all the relevant circumstances, the letter was consistent with the defendant seeking an indulgence from the government.(7)While there was some authority for the proposition that evidence of subsequent events could be admissible for the purpose of determining whether a communication is privileged, the fact that a dispute emerged subsequently was not conclusive as to whether there had been a dispute at the time of the communication.(8)The judge had not failed to give sufficient importance to the label "without prejudice" on the letter. The judge had taken the label into account, as part of the overall factual enquiry, and had been prepared to assume (as a starting point) that the label at first sight would have prompted a reasonable observer to consider that it was possible the letter was an attempt to negotiate – albeit, on the evidence, it was not.(9) Applying Re Poben Consultants Ltd,(10) the Court stated: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.(11)The Court dismissed the defendant's appeal.CommentThe Court's judgment is an interesting analysis of the legal principles that underpin the protection afforded to without prejudice communications. Leaving aside the outcome, it is notable that the Court gave the defendant permission to appeal when the judge did not. The issues raised in the appeal are important, hence the level of detail in the Court's judgment.It will be interesting to see whether the defendant seeks permission to appeal to the Court of Final Appeal on a point of great general or public importance. While the issues raised are not complex, they are of significant practical importance – the protection afforded to without prejudice communications is an important rule of evidence that, in practice, is generally put to good use by legal practitioners and their clients. Therefore, clarity is important.In the meantime, one main lesson from the case is that legal practitioners and clients should give careful thought to the labels they use on correspondence. For example, some legal practitioners and clients appear to label correspondence "without prejudice" without much thought to the context or contents. There is also the important point that negotiation, of itself, does not guarantee without prejudice protection.For further information on this topic please contact Jacky Darsono or Samuel Hung at RPC by telephone (+852 2216 7000) or email ([email protected] or [email protected]). The RPC website can be accessed at www.rpc.co.uk.Endnotes (1)  HKCFI 162.(2)  HKCA 1982, 23 December 2021.(3) Supra note 2, at para 41.(4) Supra note 2, at para 17.(5) Supra note 2, paras 23–27.(6) Supra note 2, at para 29.(7) Supra note 2, at para 32. There was overlap between the second and third grounds of appeal.(8) Supra note 2, at para 39.(9) Supra note 2, at para 41.(10)  1 HKLRD 1110.(11) Supra note 2, at para 42.