Keywords: mediation process, Hong Kong, HKMAAL, mediation ordinance
The following provides an update of recent developments in mediation in Hong Kong, including the establishment of the Hong Kong Mediation Accreditation Association Limited (HKMAAL) and some recent cases regarding the confidential nature of communications in a mediation and the scope of the duties owed by solicitors in the mediation process.
Hong Kong's New Mediation Accreditation Body
Following the enactment of the Mediation Ordinance (Cap.620) last year, Hong Kong established HKMAAL on 2 April 2013. HKMAAL is a new accreditation body for mediators. There is currently no statutory provision which regulates the accreditation of mediators in Hong Kong and HKMAAL is therefore not the only accreditation body for mediators. However, the founding members of HKMAAL include the main mediator accreditation bodies in Hong Kong and have encouraged their members to apply for accreditation under HKMAAL.
HKMAAL aims to set standards for accredited mediators, supervisors, assessors, trainers, coaches and other professionals involved in mediation in Hong Kong. It will also approve mediation training courses and promote a culture of best practice and professionalism in mediation in Hong Kong.
Recent Cases on Mediation
Confidentiality and Without Prejudice Communications in Mediation
The general principles of confidentiality and without prejudice communications govern the disclosure of documents produced for the purpose of mediation. In Chu Chung Ming & Anor v. Lam Wai Dan & Ors  5 HKC 418 the High Court confirmed these principles will be upheld unless a party can point to some greater public interest or to the fact that the exceptions to the without prejudice rule apply.
In this case, the petitioners in a winding-up proceeding applied to strike out a letter exhibited to the respondents' affirmation. The letter had been read out during the mediation of another related case. In considering whether to strike out the letter as evidence in the proceedings, the Court had regard to issues of confidentiality and without prejudice principles.
Deputy Judge Au-Yeung noted that confidentiality is fundamental to and applies to all communications during the mediation. The court will only compel disclosure of what was said during the mediation if it is necessary for the fair disposal of the case. The Court held that the disclosure of the letter was not necessary for the fair disposal of the case. With respect to the without prejudice privilege, the Court referred to the qualifications and exceptions which may apply including where the issue is whether (i) the without prejudice communications resulted in a concluded settlement agreement; (ii) an agreement apparently concluded should be set aside on the ground of misrepresentation, fraud or undue influence; or (iii) where exclusion of the without prejudice communications would act as a cloak for perjury, blackmail or other unambiguous impropriety.
The Court concluded that none of the exceptions applied and the letter was covered by both principles of confidentiality principle and the without prejudice privilege. The sections of the letter relied on in the proceedings were not admissions in themselves but were self-serving statements of fact. However, they were part of the without prejudice communications of the mediation and therefore could not be disclosed in the proceedings. Accordingly, the Court struck out the letter as an exhibit and the relevant paragraphs of the first respondent's affirmation referring to it.
Flexibility in the Mediation Process
In David Frost v. Wake Smith & Tofields Solicitors  EWCA Civ 772 the English Court of Appeal held that solicitors should not feel bound to conjure up a binding settlement agreement at the conclusion of a mediation where critical issues have not been resolved between the parties.
In that case, David and Ron Frost were brothers and business partners who had fallen out and were in dispute regarding the division of their shared property and business interests. At the mediation, David Frost's solicitor reduced to writing what had been agreed between the parties during the mediation. The document was signed by both parties. However, the document was not a legally binding agreement because critical terms regarding the properties and the appropriate treatment of the tax consequences had not been finalised. The agreement did not satisfy the criteria of the Law of Property (Miscellaneous Provisions) Act 1989 (UK) and was therefore unenforceable. A second mediation was later held to address the unresolved issues.
Years later, David Frost brought claims against his solicitor for failing to obtain a legally binding agreement during the first mediation. The English Court of First Instance found that the solicitor owed his client no such duty of care. The court held the solicitor was not at fault for failing to conclude a binding agreement because the parties were unable to reach a final agreement at that stage and were not in position to do so because of the complexity of the issues involved. The English Court of Appeal concurred with the lower court's decision and dismissed David Frost's appeal. In reaching its decision the court noted that whilst it is a part of a solicitor's duty to advise his client on the nature of the mediation process and the status of any agreement reached, it would be regrettable if any decision of the court were to cause practitioners to approach the process of mediation with anything other than maximum flexibility.
The recent Hong Kong and UK decisions confirm the courts will, where possible, maintain confidentiality and the without prejudice privilege which attaches to mediations and also not impose onerous obligations on the solicitors where parties are unable to resolve their disputes at the mediation.
Originally published - 2 September 2013
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