KRYSTINA ROBERTSON and GARY MCLEAN, the executors of COLIN EDMUND ROBERTSON, deceased v. LAM WING SANG

HCPI 519/2017

[2021] HKCFI 251

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 519 OF 2017

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D E C I S I O N

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I. INTRODUCTION

1.  On 5 June 2014, Colin Edmund Robertson (“Deceased”) was riding his bicycle along South Perimeter Road, Lantau when the truck driven by the defendant (“D”) hit him, and he thereby sustained personal injuries from which he died on the same day (“Accident”). On 22 May 2017, the Deceased’s widow Krystina Robertson (“Widow”) and Gary McLean (“McLean”) commenced the present action on behalf of the Widow and other dependents of the Deceased (collectively, “P2”). On 14 June 2018, the writ of summons was amended to join the Widow and McLean as persons appointed to represent the estate of the Deceased (“P1”).

2.  D disputed liability, and filed his defence on 7 August 2018. Discovery was completed, and witness statements were exchanged. On 2 October 2019, D filed notice of sanctioned payment into court in the sum of $x (“Sanctioned Payment”). The Sanctioned Payment was inclusive of interest until the last date on which it could be accepted without requiring leave of the court because the notice of sanctioned payment did not indicate to the contrary (see Order 22 rule 26(1) of the Rules of the High Court (“RHC”)).

3.  After a series of negotiations (including a without prejudice meeting on 27 November 2019), D made an offer to P1 and P2 for settlement of their claims in the present action in the sum of $z (which was $y more than the Sanctioned Payment in the sum of $x) inclusive of interest plus costs of the present action at High Court scale and on common fund basis to be taxed if not agreed (“Offer”). Upon receiving and accepting counsel’s advice, P1 and P2 accepted the Offer by their solicitors’ letter dated 24 December 2019 to D’s solicitors (“Acceptance Letter”), and such letter went on to say P would prepare the application for approval of settlement under Order 80 rule 10 of the RHC (“O80r10 Application”). No notice of acceptance of sanctioned payment was filed because the proposed settlement involved minority/infant interest, and court approval under Order 80 rule 10 of the RHC pursuant to an O80 Application (“O80r10 Approval”) was required.

4.  On 28 January 2020, the High Court Registry was closed due to public health considerations. On 14 February 2020, D’s solicitors by letter urged the solicitors for P1 and P2 to inter alia file the O80r10 Application as soon as the court registry would resume operation. On 17 February 2020, the solicitors for P1 and P2 replied they were still awaiting written advice from counsel.

5.  Grant of probate for the estate of the Deceased in the United Kingdom was issued on 18 February 2020 (“UK Grant”).

6.  Starting from the week of 9 March 2020, the Judiciary adopted a staggered approach to re-opening the High Court Registry. On 10 March 2020, D’s solicitors wrote to the solicitors for P1 and P2 to urge them to file the O80r10 Application as soon as the court would resume operation. On 11 March 2020, the solicitors for P1 and P2 replied to say they were still awaiting (a) counsel’s written advice and (b) advice on German tax law which P was seeking. On 12 March 2020, counsel for P1 and P2 issued her formal written advice on the settlement pursuant to the Offer and the Acceptance Letter (subject to O80 r10 Approval). On 16 March 2020, the solicitors for P1 and P2 wrote to inform D’s solicitors that counsel’s advice was received. On 23 March 2020, the solicitors for P1 and P2 wrote further to inform D’s solicitors their clients had sighted counsel’s formal written advice and confirmed their agreement to the settlement terms in the Acceptance Letter.

7.  On 23 March 2020, the parties’ solicitors jointly wrote to inform this court that subject to O80r10 Approval the parties had reached an agreement for full and final settlement of the claims of P1 and P2 in the present action in the sum of $z (“Settlement Sum”) plus costs of the present action at High Court scale and on common fund basis to be taxed if not agreed.

8.  On 2 April 2020, the solicitors for P1 and P2 sent (a) to the Widow a draft memorandum for settlement and a draft of her supporting statement, and (b) to D’s solicitors a draft summons for the O80r10 Application (“Draft Summons”) together with a provisional list of various cost items. Such letter stated P1 and P2 were still awaiting advice on German law in respect of family/tax/trust (“German Legal Advice”). Paragraph 3 of the Draft Summons proposed inter alia the following relief: “[that] any interest accumulated on the sums paid into court by [D], be credited to [P1 & P2]”.

9.  On 24 April 2020, D’s solicitors returned to the solicitors for P1 and P2 the Draft Summons with their comments, including a proposal to amend paragraph 3 thereof as follows: “[that] any interest accumulated on the sums paid into Court by [D] be credited to [D] through his solicitors ……”

10.  On 4 May 2020, P’s solicitors sent their letter of instructions to a German lawyer to advise on issues regarding receipt of and dealing with the Settlement Sum, especially for the involved infant/minor.

11.  On 7 May 2020, a consent summons was filed for (a) leave to re-amend the capacity of P1 and P2 in the amended writ of summons and subsequent pleadings, and (b) a carry on order under section 5(1) of the Fatal Accidents Ordinance Cap 22. This court granted such order on 13 May 2020, and the re-amended writ of summons was filed on 15 May 2020. In the re-amended writ of summons, P1 and P2 were re-named as the Widow and McLean being the executors of the estate of the Deceased (“P”).

12.  Between 6 March and 19 June 2020, P’s solicitors wrote 6 times to the Scottish law firm that handled the application for the UK Grant to chase for provision of the sealed UK Grant. No reply was received. P’s solicitors suspected such silence might be due to public health considerations and measures in Scotland. In the meantime, P’s solicitors also followed up with the Hong Kong law firm that handled the application for local re-sealing of the UK Grant.

13.  On 11 May 2020, the solicitors for P and D jointly wrote to this court to report on the above developments. On 15 May 2020, P’s solicitors wrote to D’s solicitors to set out their views on the latter’s comments on the Draft Summons, and to inform D’s solicitors that they were still awaiting the sealed UK Grant (for such grant to be re-sealed in Hong Kong and for calculating the costs of obtaining probate) and the German Legal Advice. As for paragraph 3 of the Draft Summons, P’s solicitors commented that “[there] is extra delay due to COVID 19 Why should our client be denied this small sum”.

14.  On 22 May 2022, the High Court Registry returned to normal operation.

15.  On 27 May 2020, D’s solicitors replied to P’s solicitors with further comments, and in relation to paragraph 3 of the Draft Summons, D’s solicitors reiterated their stance that any interest accrued on the Sanctioned Payment should be credited to D through them, which approach, it was said, was the ordinary one taken by the courts. The attention of P’s solicitors was drawn to the court’s remark in Wai Fong Fong v Express Security Ltd that “…… the interest accrued during the period should belong to the party who makes the sanctioned payment. Hence they should be returned to the defendant, whether the sanctioned payment was accepted or not accepted by the plaintiff ……” [1]

16.  On 2 June 2020, P’s solicitors wrote to D’s solicitors with their further observations on the Draft Summons, proposing that interest accrued on the Sanctioned Payment up to the date of the Acceptance Letter (24 December 2019) be credited to D, but interest accrued as from 24 December 2019 be credited to P. On 3 June 2020, D’s solicitors wrote to reject such proposal, and insisted that any/all interest accrued on the Sanctioned Payment be credited to D through them, which D claimed was “…… the ordinary approach taken by the Court all along, which is supported by case authorities”, and D proposed for this issue to be determined by the court at the hearing of the O80r10 Application.

17.  On 4 June 2020, P’s solicitors wrote to D’s solicitors requesting for “authorities on Interest in the context of O80”. But on 5 June 2020, D’s solicitors replied to say that with a view to obviate further costs on argument via correspondence, the unresolved issue(s), including the dispute over entitlement to interest accrued on the Sanctioned Payment, should be left for determination by the court at the hearing of the O80r10 Application.

18.  On 5 June 2020, D’s solicitors asked for a full copy of the UK Grant together with supporting documents as to the legal costs for obtaining the same. On 30 June 2020, P’s solicitors replied that the Scottish law firm that handled the UK Grant advised they had posted the sealed UK Grant, but P’s solicitors had yet to receive the same, nevertheless “[once] we have this, we can finalize the application to Court for “Approval””.

19.  On 15 July 2020, D’s solicitors again chased P’s solicitors for a full copy of the UK Grant together with supporting documents as to the legal costs for obtaining the same. On the same day but by separate letter, D’s solicitors urged P’s solicitors to file the O80r10 Application within the next 7 days. On 17 July 2020, P’s solicitors replied they still had not received the sealed UK Grant, but “[pending] that, we have nearly completed the additional work we need to do – prior to make the application to Court and have arranged telephone conference with a German lawyer next week on the issue of Trusts etc”. On 22 July 2020, P’s solicitors had a virtual conference with the German lawyer.

20.  On 2 September 2020, D’s solicitors again asked for a full copy of the UK Grant together with supporting documents as to the legal costs for obtaining the same. On the same day but by separate letter, D’s solicitors again urged P’s solicitors to file the O80r10 Application or alternatively to provide explanation for the delay within the next 7 days. On 2 September 2020, P’s solicitors replied to say they were still awaiting the sealed UK Grant and the German Legal Advice.

21.  On 8 September 2020, D’s solicitors wrote to P’s solicitors to express regret for the delay over the past 9 months in bringing the present action to overall settlement, and to demand (a) explanation for the delay in obtaining the sealed UK Grant and the alleged need for the German Legal Advice, and (b) information as to when the sealed UK Grant and the German Legal Advice would be available and what outstanding steps there were before the O80r10 Application could be made.

22.  On 9 September 2020, P’s solicitors replied inter alia that:

(a)  they still had not received the sealed UK Grant from the Scottish law firm that was probably closed or in lockdown due to public health considerations, but a colour copy sent to them by the Widow was provided to D’s solicitors;

(b)  since P instructed another law firm in Hong Kong to handle the local re-sealing of the UK Grant, P’s solicitors had written to them to enquire as to when the local re-sealed grant would be issued;

(c)  the German Legal Advice would facilitate the court in deciding how to pay out or deal with the infant’s/minor’s share of the Settlement Sum;

(d)  subject to the above (ie the necessary documents would be finalised upon receipt of the German Legal Advice), P’s solicitors were ready to make the O80r10 Application.

23.  On 27 September 3030, P’s solicitors received the initial German Legal Advice. On 14 October 2020, P’s solicitors sent their comments thereon to the German lawyer. Thereafter, various reminders were sent to the German lawyer.

24.  On 2 November 2020, P’s solicitors wrote to D’s solicitors to enclose a copy of the German grant of probate, and to say they hoped the German Legal Advice would be finalised shortly whereupon they would then be able to file the O80r10 Application.

25.  On 6 November 2020, D’s solicitors wrote to P’s solicitors expressing dismay that P still had not filed the O80r10 Application after lapse of almost a year since the agreement between the parties on settlement, and demanding clear time estimates as to when the sealed UK Grant, the Hong Kong re-sealed grant of probate and the German Legal Advice would be obtained. D’s solicitors reminded that the grants of probate would not affect the O80r10 Application as they concerned issues of apportionment and payment out of the Settlement Sum, and urged P’s solicitors to proceed with the O80r10 Application in the absence of such grants. D’s solicitors indicated that if the O80r10 Application was not made within the next 14 days, they would write to this court to seek directions. They also reminded there were several outstanding issues (including the dispute over entitlement as to interest accrued on the Sanctioned Payment) that required determination by the court.

26.  On 17 November 2020, P’s solicitors replied as follows:

“ We advise we have still not received all information and documents we need to properly finalize the application to court for approval of settlement and payment out.

2. We agree, it is not appropriate to delay matters further – and will complete the application this week based on the current information and documents. That will mean – we will need to update the documents and information provided to the court, in the future.”

27.  On 18 November 2020, D’s solicitors asked P’s solicitors for a draft joint letter to the court on/before 20 November 2020. On 23 November 2020, P’s solicitors replied they had sent the final documents for the O80r10 Application to P for approval, and claimed “we still await your response re Interest and Order, as requested under our letter dated 4^th June 2020”.

28.  On 27 November 2020, D’s solicitors replied inter alia as follows:

“We have stated our position very clearly in our previous correspondence. If you are still not ready to take out the Order 80 Summons now, then please let us have your draft Joint Letter to the Court reporting the present status. It has been more than 11 months since the parties have reached an agreement on the settlement sum. Your clients should not be deprived of a peace of mind to know this case is settled. The Court should also be informed of the ongoing process and any reason(s) for delay. It is simply unfair to all parties concerned that this matter is procrastinated for nearly a year and but still not reach a conclusion.

Regarding your request for case authority on interest, we have stated repeatedly that the parties shall leave any disagreement over the terms of the Order 80 Summons (including but not limited to the issue on interest accrued from Sanctioned Payment) to be determined by the Court. It is meaningless to debate over correspondence, especially when you (still) have not taken out the Summons nearly a year after the settlement.

Please treat this letter as an ULTIMATUM. If you do not take out the Order 80 Summons or send us a draft Joint Letter to the Court by 4 December 2020, we shall report to the PI Judge unilaterally regarding the present status of this matter and ask for appropriate directions as we see fit.”

29.  On 3 December 2020, P’s solicitors wrote to D’s solicitors to advise that all documents for the O80r10 Application were complete save for the German Legal Advice, and such documents “should be filed in Court early next week when we receive the signed statement from our client”.

30.  On 11 December 2020, D’s solicitors wrote to P’s solicitors to express regret that they still had not been served with the O80r10 Application, and to state that unless they were so served by 12:00 noon on 14 December 2020, they would unilaterally report the situation to this court.

31.  On 14 December 2020, P’s solicitors wrote to D’s solicitors to advise that on 11 December 2020 they received from the Widow her signed statement in support of the O80r10 Application, so they were ready to file the O80r10 Application. On that day (ie almost a year after the Acceptance Letter), P filed a summons pursuant to Order 80 rules 10 and 12 of the RHC for inter alia the following reliefs (“Summons”): [2]

(a)  judgment be entered for P against D for compensation to be assessed in the sum of $z (ie the Settlement Sum) inclusive of interest;

(b)  order that the Settlement Sum be satisfied by (i) the Sanctioned Payment already paid by D into court in the sum of $x, and (ii) D paying the remaining balance of the Settlement Sum in the sum of $y into court within 21 days from the date of the order to be made;

(c)  order that “any interest accumulated on the sums paid into court by [D], be credited to [D] through his solicitors …… for the period up to 24 December 2019, and thereafter be paid to [P]”.

D agreed with the reliefs sought in (a)-(b) above, but disagreed with the relief sought in (c) above, ie D considered interest accrued on the Sanctioned Payment in the sum of $x for the periods both before and after 24 December 2019 should be paid to D instead of P (“Dispute”).

32.  On 6 January 2021, D’s solicitors wrote to P’s solicitors to advise that they had received counsel’s advice and to reiterate that P’s claim for accrued interest on the Sanctioned Payment was misconceived because the Settlement Sum was $z (inclusive of interest) and P had no legal right to claim extra interest merely because the Sanctioned Payment was paid into court. D’s solicitors also disputed certain cost items that P claimed (but those disputes were resolved before/at the hearing of the Summons), and warned D would seek costs against P in relation to inter alia the Dispute.

33.  On 8 January 2021, D’s solicitors wrote to P’s solicitors to ask for substantiation of P’s claim for certain cost items, and to request service of P’s written submissions before the hearing of the Summons so as to save time/costs at such hearing.

34.  On 11-13 January 2021, the parties’ solicitors corresponded in relation to various cost items, and D made certain concessions on payment of some of those cost items.

35.  On 18 January 2021, P’s solicitors wrote to this court with copy to D’s solicitors to enclose the finalised German Legal Advice and the corresponding fee note of the German lawyer.

36.  On 19 January 2021, the Summons came before me for hearing (“Hearing”). At the Hearing, Mr Burke, solicitor for P, and Mr Gidwani, counsel for D, confirmed that notwithstanding the Dispute the parties would abide by their agreement on settlement referred to in paragraph 31(a)-(b) above, and they were agreeable to have the Dispute adjudicated by this court. So upon (a) considering the memorandum for settlement lodged on 14 December 2020, counsel’s advice dated 12 March 2020 and other materials placed before this court, (b) obtaining assurances from Mr Burke that any outcome of the adjudication of the Dispute that might be adverse to P would not prejudice the infant/ minority interest in the settlement pending O80r10 Approval, and (c) securing protection over an appropriate portion of the Settlement Sum for the infant/minority interest pending application for apportionment and payment out under Order 80 rules 12 and 15 of the RHC, this court gave approval for the full and final settlement of the present action on the basis of inter alia the terms in paragraph 31(a)-(b) above.

37.  Thus, the remaining disputed issue before this court was the Dispute, ie whether it was P or D who should be entitled to the interest that accrued on the Sanctioned Payment from 24 December 2019 (ie the date of the Acceptance Letter).

II.  P’s STANCE

38.  Mr Burke submitted the usual rule was for interest accrued on any sanctioned payment paid by a defendant into court up to the date of service of the notice of acceptance by the plaintiff [3] to be credited to the defendant, but interest accrued thereafter would be credited to the plaintiff. Since the present action involved infant/minority interest, P was unable to serve notice of acceptance of sanctioned payment.[4] Mr Burke submitted that in such circumstances, interest accrued on the Sanctioned Payment after 24 December 2019 (ie the date of the Acceptance Letter) should be credited and paid out to P.

III.  D’s STANCE

39.  Mr Gidwani submitted that interest accrued on the Sanctioned Payment both before and after 24 December 2019 should be credited and paid out to D via his solicitors on that basis that such accrued interest belonged to or was owned by D, and P never had any entitlement thereto.

IV.  DISCUSSION

40.  The starting point was to consider the nature of the Sanctioned Payment. As explained in paragraph 2 above, the Sanctioned Payment was inclusive of interest until the last date on which it could be accepted without requiring leave of the court since the notice of sanctioned payment did not indicate to the contrary,[5] ie a date not later than 28 days after the payment was made.[6] Thus, had it been possible to accept the Sanctioned Payment by filing/serving notice of acceptance of sanctioned payment, and had the Sanctioned Payment been accepted “in settlement of the whole of [P1’s and P2’s] claims”[7] within 28 days after the date such payment was made (ie on/before 2 October 2019), the Sanctioned Payment would have been inclusive of interest up to 30 October 2019.

41.  This explained why rule 16(3B) of the High Court Suitors’ Funds Rules[8] provides as follows:

“(3B) Notwithstanding paragraphs (3A) and (3AB), if money paid in court for any purpose referred to in paragraph (3)(a) is a sanctioned payment within the meaning of Order 22 of the [RHC], interest shall be credited to the ledger account for the relevant cause or matter, beginning on the 28^th day after the day on which the money was paid in.” (my emphasis)

This meant that if the Sanctioned Payment were capable of being accepted by filing/serving notice of acceptance of sanctioned payment but was not accepted within 28 days after such payment was made (such that the Sanctioned Payment remained as monies belonging to D), interest would start to accrue on such payment made to court. Since such Sanctioned Payment still belonged to D, interest accrued thereon (in contra-distinction to post-judgment interest that would statutorily accrue on an award of damages) belonged to D and not P, who therefore had no entitlement to such interest that accrued on the Sanctioned Payment.

42.  In Wong Wai Fong, HHJ Andrew Li at page 540 stated as follows:

“17. In the sanctioned payment mechanism introduced under the Civil Justice Reform, which replaced the old payment into court mechanism, it has not changed the substance of how interest should be calculated. Order 22, r 26 (as its predecessor pre-CJR) was primarily introduced to counteract a decision in the English case of Jefford v Gee [1970] 2 QB 130 at 149-150, CA. Under rule 26, the defendant has to pay into court a sum in satisfaction to cover not only the debt or damages claimed but also any interest which might be awarded in respect of the period until the last date it could be accepted without leave of the court: see O 22, r 26 of RDC.

18. Thus, up to the acceptance of the sanctioned payment, a plaintiff who chooses to accept the sum offered by the defendant would have received an amount which would have included interest for the damages up to the last date of which such sum is capable to be accepted. Up to the moment a plaintiff accepts the sanctioned payment, the money belongs to the defendant. If the sanctioned payment is rejected or the case cannot be settled, it will be returned to the defendant together with any interest accrued in the interim. Hence, it logically follows that the interest accrued during the period should belong to the party who makes the sanctioned payment. Hence, they should be returned to the defendant, whether the sanctioned payment was accepted or not accepted by the plaintiff. This is in accordance with my understanding how this rule operates and the practice of the court throughout the years.

19. Based on the above, I rule that the accrued interest for the sanctioned payment should be paid out to the respondent.”

43.  Although I need not go into why P and D agreed to credit interest accrued on the Sanctioned Payment up to 24 December 2019 to D, the above analysis probably explained why they reached such understanding. I now turn to the period after 24 December 2019.

44.  Here, P did not accept the Sanctioned Payment by filing notice of acceptance of sanctioned payment for 2 reasons: (a) P could not do so as infant/minority interest was involved and instead had to comply with Order 80 rule 10 of the RHC to seek O80r10 Approval of the settlement, and (b) more importantly, P did not settle their claims in the present action for $x being the amount of the Sanctioned Payment and instead they reached agreement with D for full and final settlement in the sum of $z (subject to O80r10 Approval). The reason in (b) above meant that even if there had not been any infant/minority interest, P could not have settled the present action by filing/serving notice of acceptance to accept the Sanctioned Payment.

45.  In short, the settlement agreement between the parties (albeit subject to O80r10 Approval) was a result of negotiations between the parties by way of solicitors’ correspondence that culminated in a settlement agreement: (a) D’s Offer to settle the claims of then P1 and P2 (now P) in the present action in the sum of $z inclusive of interest plus costs of the present action at High Court scale and on common fund basis to be taxed if not agreed, (b) acceptance of the Offer by then P1 and P2 (now P) by way of the Acceptance Letter (see paragraph 3 above). Thus, the compromise (subject to O80r10 Approval) in the sum of $z (ie the Settlement Sum) on the above terms and in excess of the amount of the Sanctioned Payment was not the result of mere acceptance of the Sanctioned Payment (whether with or without leave of the court) in the sum of $x.

46.  Since the parties’ agreement (subject to O80r10 Approval) for full and final settlement of P’s claims in the sum of $z payable by D to P was inclusive of interest, P’s claim for pre-judgment interest was necessarily compromised and included as part of and in the Settlement Sum in the sum of $z. Such agreement between the parties was eventually approved by this court, and on 19 January 2021 judgment was entered for P against D with compensation assessed in the sum of $z inclusive of interest.

47.  Since it was agreed between the parties that P’s claim for pre-judgment interest on damages/compensation assessed and payable by D to P was included in and became part of the Settlement Sum, if interest accrued on the Sanctioned Payment from 24 December 2019 to 19 January 2021 were to be paid to P, it would be tantamount to allow P to have double recovery of interest over such period. I see no reason why D should pay P interest for the period from 24 December 2019 to 19 January 2021 twice over.

48.  Mr Gidwani explained (a) the essence of the agreement reached between P and D (subject to O80r10 Approval) by way of the Offer and the Acceptance Letter referred to in paragraph 45 above was simply for D to pay P the Settlement Sum in the sum of $z inclusive of interest plus costs of the action, and (b) it was mere practical convenience for D to satisfy the Settlement Sum in the sum of $z by (i) utilising the Sanctioned Payment in the sum of $x which D had already paid into court, and (ii) paying a further sum of $y into court. Mr Gidwani submitted (and I agree) that the settlement as agreed between the parties and as eventually approved by the court would have been the same even if D had adopted a different method of payment of the Settlement Sum (eg D paying the Settlement Sum in the full sum of $z into court upon the court granting O80r10 Approval and then withdrawing the Sanctioned Payment with interest accrued thereon), and under this alternative method P could not have asked for any extra interest accrued on the Sanctioned Payment (since P’s claims for pre-judgment interest had been compromised and included in the Settlement Sum).

49.  Mr Gidwani drew support for his proposition from Siu Chi Fai v Gammon Construction Limited.[9] Similar to the present case (but without any involvement of infant/minority interest), the applicant and the respondent in that case compromised the former’s claim against the latter by way of solicitors’ correspondence whereby:

(a)  on 24 September 2015, the applicant by a sanctioned offer offered to accept $108,900 (inclusive of interest and on top of advance payment received in the sum of $105,473.62) in settlement;

(b)  on 2 October 2015, the respondent accepted the offer to settle in the sum of $214,373.62[10] (inclusive of interest and advanced payment) plus costs to be taxed if not agreed.

Dispute arose over the acceptance letter in (b) above that claimed the amount of advance payment was in fact $153,265.92, which together with the sanctioned payment of $74,000 would result in a grand total of $227,265.92 that exceeded the settlement sum of $214,373.62. DDJ J Chow found that (i) at the time when the applicant made the sanctioned offer he must have received advance payment in excess of $105,473.62 (and yet he still maintained such amount as the advance payment in his sanctioned offer), and (ii) the respondent’s reply in (b) above was not a counter-offer but a true acceptance of the applicant’s offer for settlement with the settlement sum crystallised at $214,373.62 and payable by the respondent who was entitled to set-off such settlement sum against actual advance payment made to the applicant. Pending formal conclusion of the claim and legal proceedings, the respondent continued to pay monthly advance payment to the applicant, who therefore received a total sum of $180,945.48 as advance payment by 26 October 2015, but the respondent was content to adopt a sum of $164,562.98 as advance payment for the purpose of set-off against the settlement sum, which was to the advantage to the applicant.

50.  Consequently, the learned judge ordered that the applicant’s claim be fully and finally settled at $214,373.62 plus costs to be taxed if not agreed to be satisfied in the following manner:

(a)  credit be given for payment already received by the applicant in the sum of $164,562.98;

(b)  the respondent was to pay the balance of the settlement sum in the sum of $49,810.64 to the applicant;

(c)  the sanctioned payment made by the respondent in the sum of $74,000 be paid out to the respondent.

51.  In my view, this case illustrates that once there was full and final settlement between the parties (whether with or without leave of the court), what remained was the method for payment of the settlement sum (that was agreed to be inclusive of interest), which could be satisfied or could be partially satisfied by sanctioned payment or by other mode of payment. In short, the fact a paying party made a sanctioned payment into court would not enlarge the receiving party’s entitlement under their settlement agreement. It is also interesting to note in Siu Chi Fai (where the settlement sum was agreed to be inclusive of interest) that the court ordered interest accrued (if any) on the sanctioned payment of $74,000 be paid out to the respondent (see paragraph 22(v)).

52.  That said, P would be entitled to interest on the Sanctioned Payment after 19 January 2021. On that day, this court entered judgment for P against D for compensation to be assessed in the sum of $z inclusive of interest, which assessed compensation (being the Settlement Sum in the sum of $z) was to be satisfied by (a) the Sanctioned Payment in the sum of $x and (b) D’s further payment of the sum of $y into court within 21 days. Thus, after 19 January 2021, the Sanctioned Payment was no longer D’s and instead belonged to P who would then be entitled to interest accrued on such Sanctioned Payment. As for the further sum of $y to be paid by D into court within 21 days, such payment into court would be in satisfaction of the judgment in favour of P, so any interest accrued thereon after such payment into court would belong to and should be credited to P.

53.  Whilst the entitlements as explained in the above paragraph reflected strict rights, it is a common feature of settlement in personal injury litigation where the settlement sum was agreed to be inclusive of interest that (a) the sanctioned payment be paid out to the plaintiff in full or partial satisfaction of the settlement sum, and (b) interest accrued thereon be paid out to the defendant without drawing distinction between the pre- and post-judgment interest. This is a matter of practical convenience because usually the sanctioned payment is usually paid out of court immediately or shortly after the settlement agreement is made the subject of a court order for concluding the litigation, and a few days of accrued interest at the current rate would be immaterial unless the sanctioned payment is a significantly huge amount. The court does not discourage such sensible approach to obviate the need for fine but usually immaterial interest calculations.

54.  In my view, in the context of the present action where the parties agreed (and this court on 19 January 2021 ordered) that the Settlement Sum be satisfied in the manner set out in paragraph 52(a)-(b) above, there was also no concern over post-judgment interest on the Settlement Sum. First, since D had already paid the Sanctioned Payment into court, P would not have any claim for post-judgment interest under section 49 of the High Court Ordinance Cap 4 (“HCO”) over $x of the Settlement Sum. Secondly, if D paid $y into court within the prescribed time, such payment is in satisfaction of the judgment in favour of P who would then be entitled to interest accrued thereon. Thirdly, if D were to default by failing to pay $y or any part thereof into court within the prescribed time, P would be statutorily entitled under section 49 of the HCO to enforce and recover post-judgment interest on any such outstanding sum against D, which interest would be different from (and which would not alter D’s entitlement to) interest that would accrue on the Sanctioned Payment after 19 January 2021.

55.  On the above analysis based on principle and on the terms of the parties’ compromise as approved by the court, P was not entitled to interest accrued on the Sanctioned Payment up to 19 January 2021, and the same must be credited to D.

56.  Given the agreed terms of the parties’ compromise (as approved by the court) that the Settlement Sum was inclusive of interest, I do not agree with Mr Burke that this court could exercise its discretion to award interest accrued on the Sanctioned Payment after 24 December 2019 to P. This meant I need not deal with D’s complaint about P’s delay in taking out the O80r10 Application, which was said to justify refusal of P’s claim for such accrued interest even if this court had discretion in the matter (which D disagreed).

57.  But this court would take this opportunity to make some observations on a number of matters. First, where disability interest (whether that of an infant/minor or a mentally incapacitated person) is involved, once a compromise has been reached between the parties, the plaintiff should promptly take out appropriate O80r10 Application. If the settlement is beneficial to the person under disability, early compromise allows the settlement sum to be deployed sooner for his/her benefit. If the court does not approve the settlement, then the legal action should progress as soon as practicable towards trial.

58.  Secondly, once counsel’s advice on settlement requiring O80r10 Approval has been obtained, the plaintiff should promptly take out the O80r10 Application. In a fatal accident claim, there is no need to wait for any grant of probate or letters of administration because the court must have already appointed person(s) to represent the estate of the deceased to carry on the proceedings against the defendant. Such appointed person(s) can act for the estate of the deceased to conduct or (subject to O80r10 Approval) compromise the action. If the settlement is sanctioned by the court, given the involvement of disability interest, the entire settlement sum (or the balance of the settlement sum on top of any sanctioned payment already paid in court and any interim payment or advance payment already received) is invariably paid into court as protection for the disability interest. Such protected funds in court will only be paid out under court order (see Order 18 rule 12 of the RHC), and part of the settlement sum apportioned by the court in favour of the estate of the deceased (see Order 18 rule 15 of the RHC) will only be paid out to the executor(s) or administrator(s) of the estate of the deceased as the person(s) who can give valid discharge.[11] Thus, the grant of probate or letters of administration is relevant to the matter of apportionment and payment out under Order 80 rules 12 and 15 of the RHC and not to the matter of approval for settlement under Order 80 rule 10 of the RHC.

59.  Thirdly, whilst it is generally time- and cost-saving to have the matters of (a) O80r10 Approval for overall settlement under Order 80 rule 10 of the RHC and (b) apportionment and/or payment out of the settlement sum under Order 80 rule 12 and/or rule 15 of the RHC to be dealt with together in 1 hearing (and in a simple and straightforward case this should be the case, and the court may not necessarily countenance the costs for 2 hearings), in cases involving, say,

(a)  substantial settlement sums (which usually require more effort and information to frame the proposal for apportionment and/or payment out), international elements (as in the present case which is further compounded by global public health restraints) and/or matters of complexity (as in cases where there are disagreements amongst dependents and/or family members), or

(b)  in cases where the defendant urges for early O80r10 Application (as in the present case), which obviously means such defendant is prepared to bear the costs for 2 separate hearings for the O80r10 Approval and for apportionment and/or payment out of the settlement sum,

the plaintiff should promptly take out the O80r10 Application. Prompt resolution of the O80r10 Application not only serves the laudable objectives referred to in paragraph 57 above to the plaintiff’s benefit, it is also of benefit to the defendant to conclude the relevant litigation and to get on with his/its own personal and/or commercial affairs (and often the insurer will be interested to close its reserves for the relevant claim for commercial and accounting reasons). Further, as a matter of practical reality, ongoing litigation invariably have a way of generating costs (eg solicitors’ correspondence referred to in Part I above) as a rolling stone gathers moss. Where there is a viable settlement, efforts should be taken to minimise incurring further costs.

V.  CONCLUSION

60.  I hereby order that interest accrued on the Sanctioned Payment paid into court by D up to 19 January 2021 be credited and paid out to D through his solicitors Messrs Deacons.

61.  At the Hearing, the parties agreed that costs should follow event. I therefore order that costs of and occasioned by the Dispute be paid by P to D to be taxed if not agreed. For the avoidance of doubt, such cost order is an absolute order.