SCHUTZ, GILLES YVES RENE v. HONGXIAO TRADING CO., LTD AND OTHERS

HCA 2014/2020

[2026] HKCFI 3992

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2014 OF 2020

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DECISION

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A.   IINTRODUCTION

1.  By Judgment dated 3 June 2026 (“Judgment”), this Court entered judgment in favour of the Plaintiff (“P”)  against the 4^th Defendant (“D4”)  as follows:

(1)  An order that D4 do pay, by way of equitable compensation, the sum of HK$5,406,516.65 to P forthwith;

(2)  An order nisi that D4 do pay interest to P on the sum of HK$5,406,516.65 (“Judgment Sum”)  at the rate of 1% above the HSBC prime rate from the date of the writ herein (i.e. 1 December 2020)  until the date of judgment, and thereafter at judgment rate until full payment (“Interest Order Nisi”); and

(3)  An order nisi that D4 do pay P’s costs of this action (including all costs reserved), to be taxed if not agreed (“Costs Order Nisi”).

2.  By Summons dated 12 June 2026 (“P’s Summons”), P applies to vary both the Interest Order Nisi and the Costs Order Nisi, and further seeks an order to be released from undertakings and orders for provision of security for costs as set out in the Order of Mr. Registrar Ho dated 24 December 2024 (“24/12/24 Order”).

3.  On 18 June 2026, this Court has given directions for P’s Summons to be determined on paper, and the filing of written submissions by the parties. P relies on his written submissions dated 12 June 2026 in support of P’s Summons (“P’s Written Submissions”). D4 did not file any written submissions in opposition, notwithstanding this Court’s directions. 

4.  Unless otherwise stated, the abbreviations and nomenclatures used in the Judgment shall be adopted below.

B.   APPLICABLE RULES

5.  Order 22 rules 24(2)-(3)  of the Rules of the High Court (Cap. 4A)  (“RHC”)  provide that where a defendant is held liable for more than the proposals contained in a plaintiff’s sanctioned offer:

“(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.”

6.  Order 22 rule 24(4)  RHC further provides that where Order 24 rule 24 applies, “the Court shall make the orders referred to in paragraphs (2)  and (3)  unless it considers it unjust to do so”.

C.   SANCTIONED OFFERS IN THE PRESENT CASE

7.  In the present case, P made the following three sanctioned offers (“SOs”)  to D4:

Ref	SO Date	SO Amount	Last Date SO was capable of being accepted without leave under O.22 r.16 RHC	Whether SO exceeded Judgment Sum
SO#1	16 January 2026	HK$5,650,000	13 February 2026	No
SO#2	20 February 2026	HK$5,400,000	20 March 2026	Yes
SO#3	5 March 2026	HK$3,000,000	2 April 2026	Yes

8.  The Judgment Sum exceeded both SO#2 and SO#3, and the last date which SO#2 was capable of being accepted was 20 March 2026.

9.  Based on the above, and applying Order 22 rules 24(2)-(3)  RHC:

(1)  enhanced interest should accrue after 20 March 2026; and

(2)  costs incurred after 20 March 2026 should be taxed on an indemnity basis, with interests on those costs.

10.  In P’s Written Submissions, P has not proposed any specific enhanced rate of interest to which he contends to be appropriate, and simply left it to this Court’s discretion.

11.  By way of comparison, P cited the case of Lau Chung v. Hui Keng Yee[2025] HKCFI 2229 where it was held that an award of 3% above judgment rate was considered appropriate (see §§52, 92 and 93).

12.  In the absence of any proposal by P (and also any opposition from D4), and taking into account all the circumstances of this case, I fix the enhanced rate of interest at 5% above judgment rate.  In particular, this takes into account the fact that (i)  SO#2 and SO#3 were made at an advanced stage of the proceedings (and after the pre-trial review which took place on 10 February 2026); (ii)  SO#3 was a substantial discount to the amount claimed by P herein; and (iii)  D4 had failed to respond to the sanctioned offers at all.   

D.   RELEASE FROM SECURITY FOR COSTS

13.  Pursuant to the 24/12/24 Order:

(1)  P paid a sum of HK$816,000 (“Security”)  to P’s solicitors, Messrs. S.T. Cheng & Co. (“STC”), as security for D4’s costs;

(2)  STC undertook not to release or diminish the Security without prior approval of D4 or by an Order of the Court; and

(3)  In the event that P fails to pay D4’s costs, STC agreed to release the Security to D4.

14.  The purpose of the 24/12/24 Order was to protect D4’s costs position in the event that D4 succeeds in its defence but P fails to pay D4’s costs (“Contingency”).

15.  As this Court has ruled in favour of P in the Judgment, the Contingency has not arisen and would not arise.

16.  There is thus no reason why P and STC should not be released from the orders and undertakings provided pursuant to the 24/12/24 Order.

E.   DISPOSITION

17.  For the reasons aforesaid, the following orders are made.

18.  The Interest Order Nisi and Costs Order Nisi shall be varied to the following extent:

(1)  D4 do pay interest to P on the sum of HK$5,406,516.65 (i)  at the rate of 1% above the HSBC prime rate from the date of the writ herein (i.e. 1 December 2020)  until 20 March 2026; and (ii)  thereafter at a rate of 5% above judgment rate until full payment; and

(2)  D4 do pay P’s costs of this action (including all costs reserved), to be taxed (i)  on a party and party basis until 20 March 2026; and (ii)  on an indemnity basis thereafter, with interest on costs incurred after 20 March 2026 at 5% above judgment rate until full payment.

19.  P and STC be released from the undertakings and orders for provision of security for costs as set out in the Order of Mr. Registrar Ho dated 24 December 2024.

20.  Costs of and occasioned by P’s Summons be paid by D4 to P, to be taxed if not agreed.