published in the 2018 Yearbook of Chartered Institute of Housing (Asia Pacific Branch)
By K.Y. Kwok and Alex Tsang of Li, Kwok & Law, Solicitors
Introduction
The Apology Ordinance came into effect since 1 December 2017. The objective of the Ordinance, as stated in its section 2, is to “promote and encourage the making of apologies with a view to preventing the escalation of disputes and facilitating their amicable resolution”. Sometimes, a person who intends to apologize to another may have some concern or worry that the apology would be used against him in future legal proceedings as his admission of fault or liability, or the court may at least draw some adverse inferences against him. This may prevent him from tendering the desired apology, although had he actually done so, the party who receives that apologetic message might have dropped the idea of suing him altogether. The Ordinance was enacted to give some protection to the person apologizing, so that his legal position may not be prejudiced under certain circumstances.
Legal definition of Apology
Section 4 of the Ordinance provides that an apology means “an expression of the person’s regret, sympathy or benevolence in connection with the matter” and includes “an expression that the person is sorry about the matter”. It is not necessary for the person tendering the apology to admit liability expressly, but some people may be under the impression that whenever you apologize, you are impliedly saying that you have done something wrong to the detriment of the person to whom the apology is conveyed. Of course, “an express or implied admission of the person’s fault or liability” may also be an apology within the meaning of the Ordinance.
The expression may be oral or written. The Ordinance extends the meaning to cover apologies by conduct. For instance, the conduct of offering to pay for the medical expenses or sending cards and flowers, etc. can be an apology as they may be expression of the person’s sympathy or benevolence.
Scope of Application
The Ordinance applies to judicial, arbitral, administrative, disciplinary and regulatory proceedings and other proceedings conducted under an enactment (e.g. ordinance or statutory rules and regulations).
However, it does not apply to criminal proceedings or those listed in the Schedule of the Ordinance, including those conducted under the Commissions of Inquiry Ordinance, the Control of Obscene and Indecent Articles Ordinance, etc.
Statements of Apology are inadmissible as evidence
The Ordinance provides that evidence of an apology is generally inadmissible in proceedings for determining fault, liability or any other issue in connection with the matter to the prejudice of the person apologizing (section 8(1)). As said above, the objective is to encourage parties to make burden-free apologies with a view to facilitating settlement of the dispute. Indeed, legal actions are sometimes initiated out of burst of emotion, or due to misunderstanding between the parties. A timely apology may change everything, so that two persons become friends instead of enemies.
For example, when an accident occurs in an estate managed by a property management company, say some tiles falling off from the external wall of a building injuring a pedestrian who is hospitalized, the estate manager, whether out of personal feeling like sympathy or sorrow, or with a view to enhancing the corporate image or reputation of the management company, may want to send some gifts and regard to the victim, or visit him and say a few kind words to him expressing regret and apology. In the past, he might hesitate whether he could do so bearing in mind the possibility that the victim might in future sue the management company for loss sustained in the accident. What he has done might then be construed unfavourably against the property manager. Indeed, his public liability insurer would likely tell him that he should do nothing of that sort, or else he might be considered as having breached the condition contained in the insurance policy that the insured should not make any admission of liability. After the Apology Ordinance has come into effect, such acts and statements would likely be inadmissible as evidence in any future legal proceedings and the property manager and his insurer may be more willing to apologize. We will discuss below in more details how the Ordinance copes with such a scenario.
It should be noted, however, in an exceptional case, the decision maker (e.g. a court, a tribunal, and an arbitrator) may exercise a discretion to admit a statement of fact contained in an apology as evidence in the proceedings if it is just and equitable to do so, having regard to the public interest or the interests of the administration of justice (section 8(2)).
As the Apology Ordinance has only been enacted recently, there has not been any decided case in Hong Kong on when exactly the court may ignore the primary objective of the Ordinance as explained above, and nevertheless take into account words or conduct showing apology in determining liability. Hence, this provision might have created some uncertainties. Only one example has been cited in the Ordinance, which is “where there is no other evidence available for determining the issue”. There is no further illustration as to what constitutes “an exceptional case” but it seems that this power would rarely be invoked. Otherwise, the whole purpose of enacting the Apology Ordinance will be defeated altogether. Moreover, judges are familiar with phrases “just and equitable”, “public interest” and “the interests of the administration of justice”. We would expect the court to come to some sensible judgment when a plaintiff seeks to adduce apology as evidence in reliance upon this exception, although other decision makers like arbitrators might not be legally trained and might not be able to exercise discretion in a consistent and logical manner.
Effect on limitation period
Under the Limitation Ordinance (Cap.347), where the right accrued on or after 1 July 1991, if a squatter has been in adverse possession of some landed property continuously for 12 years or more without the owner’s consent, intentionally excluding other people including the owner during such period, the owner’s title to the land may be extinguished (section 17), and the squatter would acquire title to the land instead through adverse possession. In Hong Kong, adverse possession has occurred not only in the New Territories, but also in urban areas.
For example, in Yeung Mau Cheung v Ka Ming Court, Castle Peak Road (IO) [2013], from about October 1969, the 1st Plaintiff and his mother had exclusive possession of two portions of the common parts on the ground floor of the building to run a refreshments shop. Subsequently in about 1983, the 2nd Plaintiff took over in running the shop. In about 2009, the incorporated owners (IO) of the building sought to evict the Plaintiffs who refused to go and claimed a possessory title. The court held that the IO’s right to recover possession the suit portions had extinguished by section 17 of the Limitation Ordinance. Similarly, in Lee Theatre Realty Ltd v Tong Wah Jor [2013], the Plaintiff, the owner of part of the lane located next to Lee Theatre in Causeway Bay, brought an action to recover the land. The court found in favour of the Defendant, holding that the Defendants were in possession of the relevant area since the mid 1970’s, which is more than the 20 years required to establish adverse possession.
Under section 23 of the Limitation Ordinance, however, if the squatter acknowledges the owner’s title (i.e. admits that the owner is indeed the owner of the land) during the 12-year period, time will run afresh from the date of the acknowledgment. Sometimes, therefore, if a squatter is found to be in occupation of your land, you may seek to enter into some agreement (e.g. licence or tenancy) with him for the use of the land even at nominal consideration. If he agrees to do so, he will likely be acknowledging your title in law. As far as the Apology Ordinance is concerned, section 9 of the Ordinance provides that an apology does not constitute an acknowledgement for the purpose of the Limitation Ordinance. Hence, for example, if the squatter writes a letter to apologize for having trespassed onto the owner’s land, the letter may not constitute an acknowledgment causing the 12 years’ period to run from the beginning again. When deciding whether certain message conveyed by the squatter of land under his management (e.g. managers of the buildings referred to in the said decided cases), property managers should bear this in mind, and should not act on the basis that the squatter’s apology will necessarily prejudice his legal position. It will of course be advisable to seek legal opinion on the effect of any apparent apology or acknowledgment and the step to be taken in response in a case of this kind.
Effect on contract of insurance or indemnity
Section 28 of the Building Management Ordinance (Cap. 344) now makes it compulsory for incorporated owners of a building to take out third party liability insurance. Indeed, prior to the said section 28 coming into force, property managers often insure the building they manage against various risks. As mentioned above, a liability insurance policy would invariably provide that the insured should not admit fault or liability without the insurer’s consent. The rationale is that it is the insurer who is to satisfy the claim or part of it. Any admission of liability made by the insured will be against the insurer’s interest. It should be noted that most insurance policies in Hong Kong contains a “condition precedent” clause to the effect that due observance by the insured shall be a condition precedent for the insurer’s obligation to provide insurance coverage under the policy to arise. If the insured incorporated owners or property manager is in breach of any policy condition, it will not be necessary for the insurance company to prove any actual loss flowing from the breach before it may refuse to indemnify the insured.
The effect of a “condition precedent” clause has already been recognized by Hong Kong courts. In Chan Yiu Sun v Yip Kim Cheung & Others & Euro-America Insurance Ltd (Third Party) [1990], the Plaintiff was a passenger in a car owned by the 1st Defendant and driven by the 2nd Defendant. The Plaintiff suffered serious injuries as a result of traffic accident between the car and a taxi driven by the 3rd Defendant. Although the 3rd Defendant was made aware of the allegation that he was responsible for the accident, he did not inform the third party insurer until he received a letter from the Plaintiff’s solicitors making the claim. The insurer repudiated liability on the ground that the 3rd Defendant failed to comply with the condition precedent to give notice to the insurer when the accident occurred. The court held that the 3rd Defendant was obliged to give early notice to the insurer under the policy and a breach of condition precedent by the 3rd Defendant entitled the insurer to repudiate liability even if the insurer did not prove any loss caused by the delay in giving notice.
In the past, therefore, there should always be strict compliance with the policy conditions including the provision prohibiting admission of liability. Whenever a breach occurs, the insurance company may be entitled to decline indemnity even if they suffer no actual loss as a result. It would therefore be unwise for property managers to tender any apology or do anything along such line. At least he should not do so without his insurer’s consent which consent may never be forthcoming. As a result, the Property Manager/Management Committee were reluctant to make any apology or express any regret or sorrow towards the victims however much they would love to, for fear that the apologies would adversely affect the insurance cover or right to compensation. This may arouse some dissatisfaction or misunderstanding on the part of the victims who might be determined to take legal action.
Section 10 of the Apology Ordinance now provides that an apology does not avoid or otherwise affect any insurance cover, compensation or other form of benefit for any person in connection with the matter under a contract of insurance or indemnity. This may, in appropriate cases, allow the property manager to convey an apologetic message to the victim without affecting its insurance coverage. Moreover, under section 8 of the Apology Ordinance, the apology may well be inadmissible in any future legal proceedings when the victim seeks compensation from the owners or the property managers of the relevant building or estate. Nevertheless, the property manager should seek proper advice from its insurance brokers and lawyers as to whether he could make the intended apology in a particular case despite the above statutory provisions. After all, each insurance policy may contain different conditions, and the Apology Ordinance is a relatively new piece of legislation and the precise legal effect of the above provisions has not been discussed in any local decided case.
Effect on defamation and mediation proceedings
Section 11(b) of the Apology Ordinance makes it clear that the Ordinance does not affect the operation of sections 3, 4 or 25 of the Defamation Ordinance (Cap.21). It means that apologies made to the plaintiff may continue to be admissible in the mitigation of damages (section 3 of the Defamation Ordinance). Also, the defendant may still plead a defence that he had published an apology in newspaper and such libel was made without malice or gross negligence (section 4 of the Defamation Ordinance). In addition, where a person published words alleged to be defamatory of another person, if he claims that the words were published by him innocently, he can still make an offer of amends in accordance with the procedures in section 25 of the Defamation Ordinance. All those apologies and offers to amend will be taken into account by the court notwithstanding the Apology Ordinance.
Section 11(c) provides that the Ordinance does not affect the operation of the Mediation Ordinance (Cap.620). A person must not disclose a mediation communication, whether or not apology related, save in exceptional circumstances (section 8 of the Mediation Ordinance). Therefore, such mediation communication will continue be protected from disclosure by the Mediation Ordinance without being affected by the Apology Ordinance. Therefore where there is a dispute between the incorporated owners and an individual owner and the parties attempt to settle the matter through mediation, if either party makes an apology during the mediation session, such communication cannot be disclosed and cannot be used as evidence against that party.
Conclusion
Compared to other jurisdictions which have introduced apology legislation earlier, the apology law in Hong Kong is still very new and it is the first piece of such legislation in force in Asian jurisdictions. Its application and operation will need to be further clarified by case laws as time goes by. The new law does not exclude all apologies from evidence. Care must be taken when drafting apologies to ensure that any such apologies would enjoy the protection of the new Ordinance. We are optimistic that the Apology Ordinance will enable a well timed and well drafted apology to assist in preventing dispute escalation and encourage amicable settlements. We would encourage building managers to seek professional legal advice in appropriate circumstances on how to take advantage of the new law, such as when issuing pre-action letters or revising internal protocol on handling complaints. Apologetic and empathetic messages always sound good to the ears, and may create a more harmonious environment in the housing estate.
“This article is for general reference only and should not be acted upon in any actual case. Further, the information contained in the article may not be updated. The readers should consult their solicitors for legal opinion.”