CHIANG CHI HANG v. JIANG RONGHUA

DCCJ1301/2021

[2026] HKDC 1722

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1301 OF 2021

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DECISION

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1.  This is the application of the Plaintiff (“P”) by way of the Summons issued on 8 April 2026 (the “Summons”) for variation of the costs order nisi (the “Costs Order”) made under my judgment of this case pronounced on 26 March 2026 (my/the “Judgment”).

2.  The Summons was taken out in light of the statutory costs consequences provided for by Order 22, rule 24(3) of the Rules of District Court, Cap 336H (“RDC”) as a result of by the Defendant’s non-acceptance of the sanctioned offer made by P on 13 January 2026 (the “Sanctioned Offer”).

3.  In support of the Summons, P has filed the 2^nd Affirmation of Lam King Yin on 8 April 2006 (“LKY’s 2^nd Aff”) and the 3^rd Affirmation of Lam King Yin on 10 April 2026 (“LKY’s 3^rd Aff”) (collectively the “Supporting Affirmations”).

4.  LKY’s 3^rd Aff is an affirmation deposing to the service of the Summons and LKY’s 2^nd Aff by insertion of the same through the letter box of the last known address of the Defendant (“D”) on 8 April 2026. I find that P has duly served the Summons and LKY’s 2^nd Aff on D.

5.  Pursuant to my directions given on 10 April 2026, P has lodged his written Skeleton Submissions on 15 May 2026.

6.  But D has not lodged any written Skeleton Submissions in opposition.

7.  Unless otherwise stated in this Decision, I shall adopt my abbreviations used in the Judgment.

THE RELEVANT PROCEDURAL HISTORY

8.  On 25 March 2021, P commenced this action against D for breach of the Refund Agreement. A summary of P’s claims against D can be seen at paras 12-23 of the Judgment.

9.  On 11 February 2025, leave to set down this action for trial in the Fixture List was granted.

10.  On 13 January 2026, the Sanctioned Offer was made by P whereby, in gist, D was either to transfer 65 ETH to P or to pay P a sum of US$201,035.25 within 28 days from the date of the Sanctioned Offer.[1]

11.  On 19 January 2026, the Pre-trial Review of this action was held.

12.  D was legally represented by his solicitors, Wong & Co until 23 January 2026 when D gave his notice to act in person.

13.  On or before 10 February 2026, D had failed to accept the Sanctioned Offer.

14.  On 23 March 2026, the trial of this action commenced against D in absentia on proof of due service of the notice of trial on D.

15.  On 26 March 2026, I pronounced my Judgment in Court. The Judgment was in favour of P in that D was ordered to pay P common law damages assessed at US$252,397.33 with interest at 1% above the HSBC best lending rate on USD from 14 September 2023 to the date of Judgment and thereafter at the judgment rate. By the Judgment, the Counterclaim raised by D was dismissed and the following costs order nisi (ie the Costs Order) was made:

(a) D do pay P’s costs of the action on a party and party basis, such costs to be taxed if not agreed with certificate for counsel; and

(b) D do pay P’s costs of the counterclaim on a party and party basis, such costs to be taxed if not agreed with certificate for counsel.

THE SUMMONS

16.  By the Summons, P applies to vary the Costs Order in 3 ways:

(a) D shall pay P’s costs of the action up to 10 February 2026 (including all costs reserved) on a party-and-party basis, to be taxed if not agreed with certificate for counsel, and to pay interest on such costs at judgment rate from 26 March 2026 until the date of payment;

(b) D shall pay P’s costs of the action in respect of the period from 11 February 2026 until the conclusion of the trial (including all costs reserved) on an indemnity basis, to be taxed if not agreed with certificate for counsel, and to pay interest on such costs at a rate of 10% above judgment rate from 26 March 2026 until the date of payment; and

(c) P’s own costs be taxed in accordance with the Legal Aid Regulations.

17.  In the main, the variation is sought on the Costs Order relating to P’s claim in this action as the Judgment was more advantageous than P’s proposals contained in the Sanctioned Offer.

THE APPLICABLE LEGAL PRINCIPLES

18.  The operation of Order 22, rule 24 of RDC is triggered by the satisfaction of either of the conditions under Order 22, rule 24(1) of RDC. 

19.  Order 22, rule 24 of RDC provides for costs consequence where the plaintiff does better than he proposed in his sanctioned offer. Order 22, rule 24(2) and (3) of RDC provides the following:

“(2) The Court may order interest on the whole or part of any sum of money (excluding interest) awarded to the plaintiff at a rate not exceeding 10% above judgment rate for some or all of the period after the latest date on which the defendant could have accepted the offer without requiring the leave of the Court.

(3) The Court may also order that the plaintiff is entitled to—

(a) his costs on the indemnity basis after the latest date on which the defendant could have accepted the offer without requiring the leave of the Court; and

(b) interest on those costs at a rate not exceeding 10% above judgment rate.”

20.  In this case, the Court “shall make the orders referred to” unless it considers it unjust to do so. In considering whether it would be unjust to make the orders referred to, the Court shall take into account all the circumstances of the case including:

(a) the terms of any sanctioned offer;

(b) the stage in the proceedings at which any sanctioned offer was made;

(c) the information available to the parties at the time when the sanctioned offer was made; and

(d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated.[2]

21.  The onus is on the defendant to show that it is unjust for the Court to make the orders under Order 22, rule 24 of RDC. It is a question of fact in each case where a defendant is able to persuade the Court that it is unjust to allow the statutory consequences.[3]

22.  That the Director of Legal Aid may be at risk of having to satisfy the costs order from public funds will not lead the Court to conclude that it is unjust to allow the statutory consequences.[4]

23.  The power to order indemnity costs or high rate of interest is a means of achieving a fairer result for the plaintiff. The element of unfairness arises from the general rule[5] that interest is not allowed on costs paid before judgment.[6]

24.  If an order is made to pay costs on an indemnity basis, it is unlikely to be unjust to make the party pay interest on those costs for the period when litigation is being funded when acceptance of the sanctioned offer should have led to it not being funded.[7]

25.  Both the “simplified/modified” approach under Golden Eagle International (Group) Ltd v GR Investment Holdings Ltd [2010] 3 HKLRD 273[8] and the “full rate” approach under Shih Pik Nog v G2000 (Apparel) Limited (supra)[9] as adjusted by Fung Chun Man v Hospital Authority, HCPI 1113/2006 (Unreported), 10 February 2012 for publicly funded cases[10] have been adopted and followed in subsequent cases.[11] However, in Chan Wai Chung v China Travel Services (Hong Kong) Limited & Others (supra), Marlene Ng J took the following views:

(a) Where a successful legally-aided party sought enhanced interest on costs under Order 22, rules 23-24 of the Rules of High Court (“RHC”)[12] and did not place information as to whether and if so when the costs/ disbursements incurred by such legally-aided party after expiry of the deadline for the unsuccessful party to accept his sanctioned payment/offer have been advanced/paid, the “modified” approach under Golden Eagle International (Group) Ltd should be followed, especially when there have been work done over a long period of time.[13]

(b) Regulation 5 of the Legal Aid (Scale of Fees) Regulations Cap 91C (“LA(SOF)R”) required an assigned solicitor’s costs/disbursements to be either taxed or determined by the DLA at his discretion, and regulation 6 thereof permitted partial payment of the assigned solicitor’s profit costs and disbursements (presumably under interim bills) with “claw back” provision under regulation 6(2) thereof. This suggested the DLA was likely to have advanced some costs and disbursements for work done, but it would be a complicated matter to identify which item of cost/disbursement had been paid or not, and if paid, whether it would be clawed back upon taxation. It was therefore plainly suitable to adopt the “modified” approach under Golden Eagle International (Group) Ltd.[14]

26.  The level of enhanced interest awarded must be proportionate to the circumstances of the case, which circumstances include those set out by Sir Geoffrey Vos C in OMV Petrom SA v Glencore International AG (CA) [2017] 1 WLR 3465, and the maximum of 10% above judgment rate must be reserved for the worst kind of cases.[15]

27.  There is jurisdiction for the Court to impose enhanced interest on costs in respect of the period after the date of judgment.[16]

MY VIEWS

28.  I agree with P’s submission that the terms of the Sanctioned Offer are very straightforward, requiring D either to transfer 65 ETH to P or to pay P a sum of US$201,035.25. The sum offered represents a 20% discount on the principal sum claimed without resort to other reliefs sought. It cannot be argued that the terms of the Sanctioned Offer are so unreasonable that the Court would conclude that it is unjust to impose the statutory consequences on D.

29.  The Sanctioned Offer was made on 13 January 2026, about 2 months before trial. There is no evidence or suggestion that P has ever refused to give D any information for the purpose of enabling the Sanctioned Offer to be evaluated. Neither is there any evidence nor suggestion that the timing of the Sanctioned Offer would have any impact on the Court’s assessment of whether it would be unjust to impose the statutory consequences under Order 22, rule 24(3) of RDC. At the time when the Sanctioned Offer was made, D was fully apprised of the strength or weakness of his case and that of P. D was legally represented and had the benefit of legal advice for the first 10 days of the 28-day acceptance period. By choosing not to reply to the Sanctioned Offer and to proceed to trial, D has assumed the risk of the statutory consequences under Order 22, rule 24(3) of RDC.

30.  In my view, it is not unjust for an Order to be made under Order 22, rule 24(3) of RDC.

31.  As to the rate of enhanced interest, this case does not involve D’s engaging in the most egregious type of conduct eg defending proceedings with dishonest ulterior motive or dishonest behaviour, and P’s case against D is only about breach of the Refund Agreement. As the maximum of 10% above judgment rate must be reserved for the worst kind of cases, it is not appropriate in this case to impose enhanced interest at 10% above judgment rate. In my view, an enhanced interest rate of 5% above judgment rate is more appropriate in this case.

32.  Notwithstanding the observations of Marlene Ng J in Chan Wai Chung v China Travel Services (Hong Kong) Limited & Others (supra)[17], P in his written Skeleton Submissions annexed documents showing that Director of Legal Aid has actually paid counsel fees on or about 4 February 2026 and 16 April 2026, and sought the following:

(a) “Full rate” approach under Shih Pik Nog v G2000 (Apparel) Limited (supra) to be adopted; and

(b) Leave to file and serve further affirmation to prove incurrence/actual payment of costs and actual payment of disbursements after 10 February 2026.

33.  I have pondered over the question whether I should adopt the “full rate” approach in this case. No doubt, “full rate” approach is the fairer approach since it takes note of the actual incurrence/payment of costs and/or disbursements. Also, having regard to the short procedural history of this case, I don’t think there would be multiple payments by P or the Director of Legal Aid spanning a long period of time

ORDER

34.  Accordingly, I make the following Orders:

(a) Leave be granted to P to file and serve further affirmation to depose to the incurrence of costs and/or actual payment of disbursements (any payment of disbursements must be accompanied by the confirmation of the Director of Legal Aid that he will not claw back the payment under Reg. 6(2) of LA(SOF)R) after 10 February 2026 within 28 days from the date of this Order;

(b) D shall be at liberty to file and serve his affidavit/affirmation in reply, if any, within 28 days thereafter;

(c) P shall lodge with the Court and serve on D an updated written Skeleton Submissions (not exceeding 10 pages and legibly printed in not less than 14 font size and 1.5 line spacing on A4 paper (single side only)) within 14 days after service of the documents pursuant to paragraph 34(a) or (b) or the expiration of the period of time allowing for the filing of the same as the case may be; and

(d) D shall be at liberty to file and serve on P his written Skeleton Submissions in reply, if any, within 14 days thereafter.

(e) Costs of the Summons be reserved.

35.  In the Summons, P asked for enhanced interest on costs from 26 March 2026 until the date of payment. Whereas, P in para 19 of his written Skeleton Submissions applied for enhanced interest on each payment of costs incurred after 10 February 2026 up to the date of judgment. P should clarify his position in his updated written Skeleton Submission and take whatever steps he may think appropriate to address the difference in the period of time sought for enhanced interest to anchor on.

36.  Lastly, I shall leave the final terms of my Order to be couched after perusing the further affirmation to be filed by the parties.

Chris Yiu & Co., assigned by the Director of Legal Aid, for the Plaintiff

The Defendant was not represented and did not appear