What happens in mediation stays in mediation – or at least, that is the expectation. For parties engaged in settlement negotiations, the ability to speak candidly without fear of their words being later used against them is not merely a procedural nicety.
It is the very foundation upon which effective mediation rests. But what happens when one party, having failed to reach a settlement, seeks to prise open the door to the mediation room in subsequent court proceedings? The District Court decision in Lam Shun Yuen v Wong Suet Kiu [2024] HKDC 2056 provides a firm answer: that door remains closed.
Hong Kong's approach to mediation confidentiality reflects a robust commitment to protecting privileged communications. Lam Shun Yuen is a useful illustration of how stringently Hong Kong courts guard mediation communications, and the high threshold parties must meet to obtain disclosure.
The case
Lam Shun Yuen arose from a civil dispute in which the defendants applied for leave to disclose communications from a mediation session, arguing that disclosure was necessary to support a costs application. Master Raymond Chu, in his decision of 9 December 2024, dismissed the defendants’ application in its entirety, ruling that no exceptional circumstances had been demonstrated to justify disclosure of mediation communications.
The statutory framework
The Mediation Ordinance (Cap. 620) provides the statutory foundation for mediation confidentiality in Hong Kong. Section 3 of the Ordinance sets out its dual objectives: to promote, encourage, and facilitate the resolution of disputes by mediation, and to protect the confidential nature of mediation communications. “Mediation communication” is broadly defined under Section 2 to include anything said or done, any document prepared, or any information provided for the purpose of or in the course of mediation, but excludes an agreement to mediate or a mediated settlement agreement.
Section 8 strictly prohibits the disclosure of mediation communications except in limited circumstances. These exceptions include situations where all parties and mediators consent to disclosure, where the information is already in the public domain (other than through unlawful disclosure), where there are reasonable grounds to believe disclosure is necessary to prevent injury or serious harm to a child, where disclosure is made for research or educational purposes without revealing identities, where disclosure is made for the purpose of seeking legal advice, or where disclosure is made in accordance with a requirement imposed by law.
Under Section 10, a person may also disclose mediation communications with leave of the court for specific purposes, including enforcing or challenging a mediated settlement agreement, establishing or disputing an allegation of professional misconduct against a mediator, or for any other purpose that the court considers justifiable. In deciding whether to grant leave, the court must consider whether the mediation communication may be disclosed under Section 8(2), whether disclosure is in the public interest or the interests of the administration of justice, and any other relevant circumstances.
Highly exceptional circumstances required
The Court of Final Appeal has made clear that confidentiality in mediation is of fundamental importance and will only be departed from in highly exceptional circumstances. In Champion Concord Ltd v Lau Koon Foo (2011) 14 HKCFAR 534, the Court 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”.
In Lam Shun Yuen, the defendants sought disclosure of mediation communications to support their argument that the court should depart from the usual costs order. Master Chu firmly rejected this application, finding that the defendants had failed to demonstrate the highly exceptional circumstances required to lift the statutory protection. The court was not prepared to "strip away the protection of the Mediation Ordinance designed for the parties to exchange and explore ideas freely and without fear in their attempts to reach settlement".
No calderbank equivalence
An important point reinforced by this decision is that offers made during mediation are not equivalent to Calderbank offers. As explained in CHN v CCY [2024] 3 HKC 460, offers made during mediation enjoy the full protection of confidentiality under the Mediation Ordinance, as well as without prejudice privilege at common law.
Calderbank offers, by contrast, are made on a "without prejudice save as to costs" basis and may be disclosed to the court when determining costs. The court in Lam Shun Yuen affirmed this distinction, holding that mediation communications cannot be characterised as Calderbank offers for the purposes of costs arguments.
Conclusion
Lam Shun Yuen v Wong Suet Kiu stands as an important authority reaffirming the robust confidentiality protections afforded to mediation communications under Hong Kong law. The decision underscores that the threshold for disclosure is deliberately high, reflecting the policy imperative that parties must be free to engage in candid settlement discussions without fear that their communications will later be used against them. For practitioners, the case serves as a timely reminder: mediation communications are not Calderbank offers, and absent truly exceptional circumstances, they will remain confidential.