CACV offers in compromise

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					由此


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                                                              HCPI 398/2008
B                                                                                B
                     IN THE HIGH COURT OF THE
C            HONG KONG SPECIAL ADMINISTRATIVE REGION                             C
                      COURT OF FIRST INSTANCE
D              PERSONAL INJURIES ACTION NO. 398 OF 2008                          D


E                             -----------------------------                      E

     BETWEEN
F                                                                                F

           RAI RANA MAGAR PABITRA                                1st Plaintiff
G          PERSONAL REPRESENTATIVE OF                                            G
           THE ESTATE OF
H          RANA MAGAR MOHAN JUNG, DECEASED                                       H


I          RAI RANA MAGAR NAMRATA                                2nd Plaintiff   I
           PERSONAL REPRESENTATIVE OF
           THE ESTATE OF
J                                                                                J
           RANA MAGAR MOHAN JUNG, DECEASED
K                                                                                K
                                            and
L                                                                                L


M
           PACIFIC CONSTRUCTION (HK) CO. LTD                   1st Defendant     M

           VSL SWC                                             2nd Defendant
N                                                                                N

           GAMMON-SKANSKA-MBEC JOINT                           3rd Defendant
O          VENTURE                                                               O


P                                 -------------------------                      P


Q    Before : Hon Bharwaney J in Chambers                                        Q
     Date of Hearing : 9 February 2011
R    Date of Reasons for Decision : 24 May 2011                                  R


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                     ------------------------------------------------------
B                      REASONS FOR DECISION                                          B
                     ------------------------------------------------------
C                                                                                    C
     1.           This is a fatal accident claim brought by the dependants of the
D                                                                                    D
     deceased who died in an accident at work. The action was warned for

E
     trial for the week commencing on 31 January 2011. On 2 February 2011,           E
     on the eve of Chinese New Year, the defendants’ solicitors took out a
F                                                                                    F
     summons returnable before me for leave to the defendants to accept the

G
     plaintiffs’ sanctioned offer on liability dated 18 November 2009. By that       G
     summons, the defendants’ solicitors sought an order that interlocutory
H                                                                                    H
     judgment on liability be entered for the plaintiffs for 50% of the amount of
I    damages, and interest thereon, to be assessed, and that costs on the issue of   I

     liability be to the plaintiffs from 16 December 2009 up to and including
J                                                                                    J
     1 February 2011, to be taxed, if not agreed, on an indemnity basis.
K                                                                                    K
     2.           On 8 February 2011, the plaintiffs’ solicitors took out a cross
L                                                                                    L
     summons for leave to the plaintiffs to withdraw their sanctioned offer on
M    liability dated 19 November 2010.                                               M


N                                                                                    N
     3.           I heard both summonses on 9 February 2011 and ordered that

O    the defendants’ application for leave to accept the plaintiffs’ sanctioned      O
     offer on liability dated 18 November 2009 be refused, that the costs of and
P                                                                                    P
     occasioned by the defendants’ summons be paid to the plaintiffs by the
Q    defendants, and that there be no order in respect of the plaintiffs’            Q

     summons.
R                                                                                    R


S    4.           I also directed that the plaintiffs’ own costs be taxed in         S
     accordance with the Legal Aid Regulations, Cap. 91.
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     5.            These are my reasons for that decision.
B                                                                                    B


C    6.            The case concerned a fatal accident that occurred on 12 June      C

     2005 at a construction site called the Hong Kong Shenzhen Western
D                                                                                    D
     Corridor in the New Territories.     A road bridge was under construction at
E    that site, and the deceased was employed by the 1 st defendant as a skilled     E

     labourer and assigned to work for the 2nd defendant at the site.         The
F                                                                                    F
     2nd defendant was the sub-contractor of the main contractor on the site, the
G    3rd defendant.    As part of the construction work, it was necessary to         G

     transport pre-cast concrete sections of the bridge to be constructed. These
H                                                                                    H
     pre-cast sections were very large and were moved by a machine called a
I    “carrier”. This consisted of a flat platform that was 9 metres long and         I

     3 metres wide.         The platform was 1 metre high and supported by
J                                                                                    J
     24 wheels. The carrier would be moved by an operator who would stand
K    nearby and operate the carrier by a control panel which was attached to the     K

     carrier. The accident occurred at about 9 p.m. on 12 June 2005 when the
L                                                                                    L
     carrier was being moved by the operator. The site was lit and the carrier
M    also had lights of its own at each corner. The carrier had not moved very       M


N
     far when the operator saw a safety helmet roll into his view from the front
                                                                                     N
     of the carrier. The operator stopped the machine and found the deceased
O                                                                                    O
     lying on the ground at the front of the carrier. He was seriously injured

P
     and died afterwards from the injuries he sustained that night.                  P


Q    7.            Issue was joined between the parties on liability and             Q


R
     contributory negligence, and the extent thereof.
                                                                                     R


S    8.            Although issue was joined, the parties exchanged sanctioned       S

     offers on liability.    On 6 August 2009, the defendants offered a settlement
T                                                                                    T


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     of liability on the basis of 80% contributory negligence.                     This was
B                                                                                                B
     rejected by the plaintiffs’ solicitors on 15 September 2009 when they
C    wrote to the defendants’ solicitors counter-offering settlement on the basis                C

     of 25% contributory negligence.            The defendants’ solicitors rejected this
D                                                                                                D
     counter-offer on 22 October 2009.
E                                                                                                E

     9.              By a letter dated 18 November 2009, expressed to be “without
F                                                                                                F
     prejudice save as to costs”, the plaintiffs’ solicitors wrote to the
G    defendants’ solicitors enclosing a “Notice of Sanctioned Offer” in respect                  G

     of liability.   That Notice stated as follows :
H                                                                                                H

                     “Plaintiffs’ Sanctioned Offer
I                                                                                                I
                     The Plaintiffs hereby make a sanctioned offer under O22 r5 RHC
                     in respect of liability for the whole claim on the following basis:
J                                                                                                J
                          st   nd   rd
                     The 1 , 2 & 3 Defendants accept 50% liability; and
K                                                                                                K
                     The Plaintiffs accept 50% liability by way of contributory
                     negligence
L                                                                                                L
                     Take notice that if the sanctioned offer is not accepted within 28
                     days, the Defendants may only accept it after this if either the
M                    parties agree on liability for costs or the Court grants leave to           M
                     accept it.”
N                                                                                                N


O
     10.             Receiving no response from the defendants’ solicitors, the                  O
     plaintiffs’ solicitors wrote on 3 February 2010 asking them to confirm
P                                                                                                P
     specifically, if that was the case, that their clients were not interested in

Q    settling liability on the basis of the plaintiffs’ sanctioned offer.                  The   Q
     defendants’ solicitors only wrote on 10 May 2010, expressly rejecting the
R                                                                                                R
     plaintiffs’ sanctioned offer on liability of 18 November 2009 and offering
S    to settle on the basis of 70% contributory negligence.                                      S


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     11.          The parties attempted to mediate their differences on
B                                                                                     B
     19 November 2010, but this was unsuccessful. The action was warned
C    for trial for the week commencing 31 January 2011 and, on 1 February             C

     2011, the defendants’ solicitors wrote an open letter to the plaintiffs’
D                                                                                     D
     solicitors accepting the plaintiffs’ sanctioned offer on liability made on
E    18 November 2009, and offering to pay costs on the issue of liability, on        E

     an indemnity basis, from 16 December 2009 (i.e. 28 days after
F                                                                                     F
     18 November 2009) until 1 February 2011. This prompted a response by
G    the plaintiffs’ solicitors, by a without prejudice letter dated 2 February       G

     2011, reminding the defendants’ solicitors that they had rejected the
H                                                                                     H
     plaintiffs’ sanctioned offer of a 50/50% settlement by their letter of
I    10 May 2010 and stating further that :                                           I


J                 “Matters have moved on and our further analysis of the evidence     J
                  had led us to believe that our case is stronger on liability than
K
                  represented by the proportion set out in the Sanctioned Offer.      K
                  We have told our clients this and they have accepted our view in
                  the matter.
L                                                                                     L
                  We subsequently informed you, not least at the beginning of the
                  mediation process, that we were not prepared to come to a
M                 settlement on liability at this amount (50/50%).”                   M


N                                                                                     N
     The letter ended with the statement that the plaintiffs were unable to agree

O    with the defendants’ proposal and that any application to court would be         O
     opposed.
P                                                                                     P


Q
     12.          The plaintiffs’ cross summons was supported by the affidavit        Q
     of their solicitor, Mr Simon Cleves, sworn on 7 February 2011, in which
R                                                                                     R
     he deposed to the fact that the defendants’ solicitors were told, on

S    3 separate occasions, on 12 July 2010 at the hearing of the checklist review,    S
     at the mediation session on 19 November 2010, and over a telephone
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由此

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     conversation on 31 January 2011, that the plaintiffs were no longer willing
B                                                                                      B
     to settle on a 50/50% basis. He had specifically informed the defendants’
C    solicitors on 12 July 2010 that the plaintiffs were no longer willing to settle   C

     on that basis “since we had obtained Counsel’s Advice and her evaluation
D                                                                                      D
     of the evidence led her to opine that the plaintiffs should succeed at a far
E    higher level in their favour as regards percentage of liability/contributory      E

     negligence”.
F                                                                                      F


G    13.            For completeness, I should add that the defendants’ solicitors     G

     gave notice of a sanctioned payment into court in the sum of $120,000
H                                                                                      H
     (after taking into account the amount of $935,000 paid as employees’
I    compensation). That notice was dated 13 December 2010.                            I


J                                                                                      J
     14.            One of the major changes effected by the Civil Justice Reform
K    was the amendment to O. 22 of the Rules of the High Court (RHC)                   K

     introducing, for the first time, the procedural mechanism of “Sanctioned
L                                                                                      L
     Offers”. This is an offer to dispose of the case on terms and can be made
M    by a plaintiff as well as by a defendant.        The new provision, which         M

     permits plaintiffs to make sanctioned offers, produces a level playing field
N                                                                                      N
     and enables plaintiffs to enjoy the benefits of O. 22 which, prior to its
O    introduction, could only be enjoyed by defendants making payments into            O

     court.
P                                                                                      P


Q    15.            Our provisions are modelled on the provisions of the old           Q

     Part 36 of the 1998 UK Civil Procedure Rules (“CPR”).                  By an
R                                                                                      R
     amendment to the CPR, enacted in 2006 and coming into effect on 6 April
S    2007, the provisions of the original Part 36 of the CPR were completely           S


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     replaced. The following current provisions of Part 36, pertaining to Part 36
B                                                                                           B
     offers, are relevant:
C                                                                                           C


D                 “36.2 Form and content of a Part 36 offer                                 D

                  (1)   An offer to settle which is made in accordance with this
E                       rule is called a Part 36 offer.                                     E

                  (2)   A Part 36 offer must –
F                                                                                           F
                  (a)   be in writing;
G                                                                                           G
                  (b)   state on its face that it is intended to have the consequences
                        of Section I of Part 36;
H                                                                                           H
                  (c)   specify a period of not less than 21 days within which the
                        defendant will be liable for the claimant’s costs in
I                       accordance with rule 36.10 if the offer is accepted;                I

                  (d)   state whether it relates to the whole of the claim or to part
J                                                                                           J
                        of it or to an issue that arises in it and if so to which part or
                        issue; and
K                                                                                           K
                  (e)   state whether it takes into account any counterclaim.

L                       (Rule 36.7 makes provision for when a Part 36 offer is              L
                        made)
M                                                                                           M
                  Rule 36.2(2)(c) does not apply if the offer is made less than
                  21 days before the start of the trial.
N                                                                                           N
                  (3)   Rule 36.2(2)(c) does not apply if the offer is made less
                        than 21 days before the start of the trial.
O                                                                                           O
                  (4)   In appropriate cases, a Part 36 offer must contain such
                        further information as is required by rule 36.5 (Personal
P                                                                                           P
                        injury claims for future pecuniary loss), rule 36.6 (Offer to
                        settle a claim for provisional damages), and rule 36.15
Q                       (Deduction of benefits).                                            Q

                  (5)   An offeror may make a Part 36 offer solely in relation to
R                       liability.                                                          R

                  36.3 Part 36 offers – general provisions
S                                                                                           S
                  (1)   In this Part -
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           (a) the party who makes an offer is the ‘offeror’;
B                                                                           B
           (b) the party to whom an offer is made is the ‘offeree’;
                     and
C                                                                           C
           (c) ‘the relevant period’ means -
D                                                                           D
               (i) in the case of an offer made not less than 21 days
                   before trial, the period stated under rule 36.2(2)(c)
E                  or such longer period as the parties agree;              E

               (ii) otherwise, the period up to end of the trial or such
F                   other period as the court has determined.               F

     (2)   A Part 36 offer -
G                                                                           G
           (a) may be made at any time, including before the
H                  commencement of proceedings; and                         H

           (b) may be made in appeal proceedings.
I                                                                           I
     (3)   A Part 36 offer which offers to pay or offers to accept a
           sum of money will be treated as inclusive of all interest
J          until -                                                          J


K
           (a) the date on which the period stated under rule               K
               36.2(2)(c) expires; or

L          (b) if rule 36.2(3) applies, a date 21 days after the date the   L
               offer was made.
M    (4)   A Part 36 offer shall have the consequences set out in this      M
           Section only in relation to the costs of the proceedings in
N
           respect of which it is made, and not in relation to the costs    N
           of any appeal from the final decision in those proceedings.

O    (5)   Before expiry of the relevant period, a Part 36 offer may be     O
           withdrawn or its terms changed to be less advantageous to
           the offeree, only if the court gives permission.
P                                                                           P
     (6)   After expiry of the relevant period and provided that the
           offence has not previously served notice of acceptance, the
Q                                                                           Q
           offeror may withdraw the offer or change its terms to be
           less advantageous to the offeree without the permission of
R          the court.                                                       R

     (7)   The offeror does so by serving written notice of the
S          withdrawal or change of terms on the offeree.                    S


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           (Rule 36.14(6) deals with the costs consequences
B          following judgment of an offer that is withdrawn)               B

     36.9 Acceptance of a Part 36 offer
C                                                                          C
     (1)   A Part 36 offer is accepted by serving written notice of the
D
           acceptance on the offeror.                                      D
     (2)   Subject to rule 36.9(3), a Part 36 offer may be accepted at
E          any time (whether or not the offeree has subsequently           E
           made a different offer) unless the offeror serves notice of
           withdrawal on the offeree.
F                                                                          F
           (Rule 21.10 deals with compromise etc. by or on behalf of
G
           a child or protected party.)
                                                                           G
     (3)   The court’s permission is required to accept a Part 36 offer
H          where -                                                         H

           (a) rule 36.12(4) applies;
I                                                                          I
           (b) rule 36.15(3)(b) applies, the relevant period has
                    expired and further deductible amounts have
J                                                                          J
                    been paid to the claimant since the date of the
                    offer;
K                                                                          K
           (c) an apportionment is required under rule 41.3A; or

L          (d) the trial has started.                                      L

           (Rule 36.12 deals with offers by some but not all of
M          multiple defendants)                                            M


N
           (Rule 36.15 defines ‘deductible amounts’)                       N
           (Rule 41.3A requires an apportionment in proceedings
O          under the Fatal Accidents Act 1976 and Law Reform               O
           (Miscellaneous Provisions) Act 1934)
P    (4)   Where the court gives permission under paragraph (3),           P
           unless all the parties have agreed costs, the court will make
           an order dealing with costs, and may order that the costs
Q                                                                          Q
           consequences set out in rule 36.10 will apply.

R    (5)   Unless the parties agree, a Part 36 offer may not be            R
           accepted after the end of the trial but before judgment is
           handed down.
S                                                                          S


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                 36.10 Costs consequences of acceptance of a Part 36 offer
B                                                                                         B
                 (1)   Subject to paragraph (2) and paragraph (4)(a), where a Part
                       36 offer is accepted within the relevant period the claimant
C                      will be entitled to the costs of the proceedings up to the         C
                       date on which notice of acceptance was served on the
D                      offeror.                                                           D

                 (4)   Where -
E                                                                                         E
                       (a) a Part 36 offer that was made less than 21 days before
                           the start of trial is accepted; or
F                                                                                         F
                       (b) a Part 36 offer is accepted after expiry of the relevant
G
                           period, if the parties do not agree the liability for costs,
                                                                                          G
                           the court will make an order as to costs.

H                (5)   Where paragraph (4)(b) applies, unless the court orders            H
                       otherwise -
I                      (a) the claimant will be entitled to the costs of the              I
                           proceedings up to the date on which the relevant
                           period expired; and
J                                                                                         J
                       (b) the offeree will be liable for the offeror’s costs for the
K                          period from the date of expiry of the relevant period to       K
                           the date of acceptance.

L                36.14 Costs consequences following judgment                              L

                 (6)   Paragraphs (2) and (3) of this rule do not apply to a Part 36
M                                                                                         M
                       offer –

N                      (a) that has been withdrawn;                                       N

                       ...”
O                                                                                         O


P    16.         The provisions of the new Part 36, set out above, may be                 P

     compared with the following provisions of our O. 22, which were enacted
Q                                                                                         Q
     by Legal Notice No 152 of 2008 dated 4 June 2008 :
R                                                                                         R
                 “2.   Offer to settle with specified consequences (O.22, r.2)

S                (1)   A party to an action containing a money claim or a                 S
                       non-money claim or both arising from any cause or causes
                       of action may make an offer to settle the whole claim, a
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           part of it or any issue arising from it in accordance with
B          this Order.                                                      B

     (2)   An offer made under paragraph (1) may take into account
C          any counterclaim or set-off in the action.                       C


D
     (3)   An offer made under paragraph (1) has the consequences           D
           specified in rules 20, 21, 22, 23 and 24 (as may be
           applicable).
E                                                                           E
     (4)   Nothing in this Order prevents a party from making an
           offer to settle in whatever way he chooses, but if that offer
F          is not made in accordance with this Order, it does not have      F
           the consequences specified in this Order, unless the Court
G          so orders.                                                       G

     II.   MANNER OF MAKING SANCTIONED OFFER OR
H          SANCTIONED PAYMENT                                               H

     3.    Defendant’s offer to settle (O.22, r.3)
I                                                                           I
     (1)   An offer by a defendant to settle the whole or part of a
           claim or an issue arising from the claim does not have the
J                                                                           J
           consequences specified in this Order unless it is made by
           way of a sanctioned offer or a sanctioned payment or both.
K                                                                           K
     (2)   Where an offer by a defendant involves a payment of
           money to the plaintiff, the offer must be made by way of a
L          sanctioned payment.                                              L

     (3)   A sanctioned payment may only be made after the
M                                                                           M
           proceedings have commenced.

N    4.    Plaintiff’s offer to settle (O.22, r.4)                          N

           An offer by a plaintiff to settle the whole or part of a claim
O          or an issue arising from the claim does not have the             O
           consequences specified in this Order unless it is made by
           way of a sanctioned offer.
P                                                                           P
     5.    Form and content of sanctioned offer (O.22, r.5)
Q                                                                           Q
     (1)   A sanctioned offer must be in writing.

R    (2)   A sanctioned offer may relate to the whole claim or to part      R
           of it or to any issue arising from it.
S    (3)   A sanctioned offer must –                                        S


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           (a) state whether it relates to the whole claim or to part of
B              it or to an issue arising from it and if so to which part   B
               or issue;
C          (b) state whether it takes into account any counterclaim or     C
               set-off; and
D                                                                          D
           (c) if it is expressed not to be inclusive of interest, give
               the details relating to interest set out in rule 26(2).
E                                                                          E
     (4)   A defendant may make a sanctioned offer limited to
           accepting liability up to a specified proportion.
F                                                                          F
     (5)   A sanctioned offer may be made by reference to an interim
G
           payment.
                                                                           G
     (6)   A sanctioned offer may be made at any time after the
H          commencement of the proceedings but may not be made             H
           before such commencement.
I    (7)   A sanctioned offer made not less than 28 days before the        I
           commencement of the trial must provide that after the
           expiry of 28 days from the date the sanctioned offer is
J                                                                          J
           made, the offeree may only accept it if -

K          (a) the parties agree on the liability for costs; or            K

           (b) the Court grants leave to accept it.
L                                                                          L
     (8)   A sanctioned offer made less than 28 days before the
           commencement of the trial must provide that the offeree
M                                                                          M
           may only accept it if -

N          (a) the parties agree on the liability for costs; or            N

           (b) the Court grants leave to accept it.
O                                                                          O
     7.    Withdrawal or diminution of sanctioned offer (O.22,
           r.7)
P                                                                          P
     (1)   A sanctioned offer made not less than 28 days before the
           commencement of the trial may not be withdrawn or
Q                                                                          Q
           diminished before the expiry of 28 days from the date the
           sanctioned offer is made unless the Court grants leave to
R          withdraw or diminish it.                                        R

     (2)   A sanctioned offer made less than 28 days before the
S          commencement of the trial may be withdrawn or                   S
           diminished if the Court grants leave to withdraw or
T          diminish it.                                                    T


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由此

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A                                                                            A

     (3)   If there is subsisting an application to withdraw or
B          diminish a sanctioned offer, the sanctioned offer may not         B
           be accepted unless the Court grants leave to accept it.
C    (4)   If the Court dismisses an application to withdraw or              C
           diminish a sanctioned offer or grants leave to diminish the
D          sanctioned offer, it may by order specify the period within       D
           which the sanctioned offer or diminished sanctioned offer
           may be accepted.
E                                                                            E
     (5)   If a sanctioned offer is withdrawn, it does not have the
           consequences specified in this Order.
F                                                                            F
     12.   Time when sanctioned offer or sanctioned payment is
G          made and accepted (O.22, r.12)                                    G

     (1)   A sanctioned offer is made when it is served on the offeree.
H                                                                            H
     ...
I    (3)   An amendment to a sanctioned offer is effective when its          I
           details are served on the offeree.
J                                                                            J
     ...

K    (5)   A sanctioned offer or sanctioned payment is accepted when         K
           notice of its acceptance is served on the offeror.

L    16.   Time for acceptance of plaintiff’s sanctioned offer               L
           (O.22, r.16)
M    (1)   Subject to rule 7(3), a defendant may accept a sanctioned         M
           offer made not less than 28 days before the commencement
N          of the trial without requiring the leave of the Court if he       N
           files with the Court and serves on the plaintiff a written
           notice of acceptance not later than 28 days after the offer
O          was made.                                                         O

     (2)   If -
P                                                                            P
           (a) a plaintiff’s sanctioned offer is made less than 28 days
Q              before the commencement of the trial; or                      Q

           (b) the defendant does not accept it within the period
R              specified in paragraph (1),                                   R

     then the defendant may –
S                                                                            S
           (i) if the parties agree on the liability for costs, accept the
               offer without the leave of the Court; and
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A                                                                                      A

                        (ii) if the parties do not agree on the liability for costs,
B                            only accept the offer with the leave of the Court.        B

                   (3) Where the leave of the Court is required under paragraph (2),
C                      the Court shall, if it grants leave, make an order as to        C
                       costs.”
D                                                                                      D


E
     17.           In Scammell v Dicker [2001] 1 WLR 631, the Court of Appeal          E
     in England (Aldous and Mance LJJ) held that the provisions of the old
F                                                                                      F
     Part 36 did not seek to exclude the general law of contract that an

G    unaccepted offer could be withdrawn, but laid down the requirements               G
     needed to attain the consequences of making a Part 36 offer, as opposed to
H                                                                                      H
     any other kind of offer, and that, therefore, an offer to settle an action
I    made under Part 36 could be withdrawn at any time prior to acceptance.            I

     In that case, the defendant made an offer to settle the action under Part 36
J                                                                                      J
     by letter dated 9 March 2000 but withdrew that offer by letter dated
K    13 March 2000. The offer being expressed to be open for 21 days, the              K

     claimants took the view that the defendant was not entitled to withdraw the
L                                                                                      L
     offer within that period, and purported to accept it on 14 March 2000.
M    The judge concluded that the Part 36 offer could not be withdrawn                 M

     unilaterally before the expiry of the period of 21 days, and he held that the
N                                                                                      N
     action had been compromised on the terms of the letter of 9 March 2000.
O    On appeal, the Court of Appeal allowed the appeal, holding that an offer to       O

     settle an action made on the Part 36 could be withdrawn at any time prior
P                                                                                      P
     to acceptance, and that, having been withdrawn on 13 March 2000, it was
Q    no longer open for the claimants to accept it. Aldous LJ gave six reasons         Q

     to support his conclusion that Part 36 did not seek to exclude the general
R                                                                                      R
     law of contract that an unaccepted offer could be withdrawn, at
S    p. 637A-E :                                                                       S


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                     “The Civil Procedure Rules do not prevent a Part 36 offer being
B                    withdrawn at any time prior to acceptance. That I believe to be        B
                     clear for six reasons. First, there is nothing in Part 36 which
                     states that a Part 36 offer cannot be withdrawn. If withdrawal
C                                                                                           C
                     was precluded, I would have expected the rule to have said so in
                     clear terms. That is to be contrasted with rule 36.6(5), which
D                    prevents withdrawal of a payment without permission. Second,           D
                     rule 36.5(6)(a) only requires the offer to ‘be expressed to remain
                     open for acceptance for 21 days …’ If the intention had been
E                    that the offer had to remain open for 21 days then the word            E
                     ‘expressed’ would not have been used. Third, there is no
F                    mention of a particular period for offers made close to trial: see     F
                     rule 36.5(7). To read into the rules that such offers cannot be
                     withdrawn for a reasonable period from the date of the offer
G                    would provide uncertainty which could not have been                    G
                     contemplated. Fourth, rule 36.5(8) expressly provides that a
                     Part 36 offer can be withdrawn. There is no limitation on when
H                                                                                           H
                     the withdrawal can take place. The effect is set out, namely that
                     the offeror cannot rely upon the consequences of having made a
I                    Part 36 offer. Fifth, a requirement that a Part 36 offer could not     I
                     be withdrawn could impose hardship in certain circumstances.
                     That being so, I would have expected a provision providing for
J                    withdrawal in certain circumstances, at least with permission of       J
                     the court. Sixth, a Part 36 offer is an offer to enter into a
K                    contract with the offeree. To impose a term that the offer could       K
                     not be withdrawn would result in an addition to the contractual
                     terms offered by the offeror. That would be possible, but
L                    should not be done by implication. The purpose of making a             L
                     Part 36 offer, as opposed to another type of offer, is to attain the
M
                     advantages that the rules provide. It is only those offers which       M
                     comply with the rules that are certain to attain those advantages.”

N                                                                                           N

     18.             The decision of the Court of Appeal in Scammell v Dicker
O                                                                                           O
     attracted considerable criticism1. It is difficult to accept that an offer
P    expressed to be made pursuant to Part 36 is not subject to those provisions.           P

     In Flynn v Scougall (Practice Note) [2004] 1 W.L.R. 3069, May LJ
Q                                                                                           Q
     observed that a defendant who makes a Part 36 payment has to make an
R    offer to which the relevant provisions of Part 36 are attached.                        R


S                                                                                           S

     1
           See Zuckerman on Civil Procedure 2nd Edition at §§25.41 -25.46.
T                                                                                           T


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由此

                                         - 16 -
A                                                                                      A

     19.          To permit a claimant to withdraw, at any time, an offer
B                                                                                      B
     expressed to be valid for 21 days creates a lopsided situation when
C    contrasted with the case of a defendant making a payment into court. An           C

     offeree should be provided with a reasonable time to consider the offer.
D                                                                                      D
     To permit a claimant to withdraw, at any time, an offer expressed to be
E    valid for 21 days does not facilitate and is not conducive to settlement.         E

     The new Part 36 now provides in r. 36.3(5) that, before the expiry of the
F                                                                                      F
     relevant period, a Part 36 offer may be withdrawn or its terms changed to
G    be less advantageous to the offeree, only if the court gives permission, and      G

     overturns the decision in Scammell v Dicker to this extent.
H                                                                                      H


I    20.          I am of the view that the provisions under O. 22 are entirely        I

     procedural in nature and that they are not affected by the general law of
J                                                                                      J
     contract. In my judgment, the observations of Goddard LJ in Cumper v
K    Pothecary [1941] 2 KB 58 in relation to payments into court apply equally         K

     to sanctioned offers. He said, at p. 67 :
L                                                                                      L

                  “… there is nothing contractual about payment into court. It is
M                 wholly a procedural matter and has no true analogy to a              M
                  settlement arranged between the parties out of court, which, of
N                 course, does constitute a contract. When once the seven days         N
                  have expired the plaintiff can only get the money if he can obtain
                  an order, and before the court makes an order it must consider
O                 whether it is right so to do.”                                       O


P                                                                                      P
     I find support for this view from the fact that, unlike the situation in the
Q    UK, in Hong Kong, a sanctioned offer can only be made after the                   Q

     commencement of proceedings. Indeed, Moore-Bick LJ in his leading
R                                                                                      R
     judgment in the conjoined cases of Gibbon v. Manchester City Council and
S    LG Blower Specialist Bricklayer Ltd. v. Reeves [2010] 1 WLR 2081                  S

     observed in §6 that :
T                                                                                      T


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由此

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B                   “Certainty is as much to be commended in procedural as in                 B
                    substantive law, especially, perhaps in a procedural code
                    which must be understood and followed by ordinary citizens
C                                                                                             C
                    who wish to conduct their own litigation. In my view, Part 36
                    was drafted with these considerations in mind and is to be
D                   read and understood according to its terms without importing              D
                    other rules derived from the general law, save where that was
                    clearly intended”.
E                                                                                             E


F
     21.            O. 22, r. 7(1) specifically states that a sanctioned offer made           F
     not less than 28 days before the commencement of the trial may not be
G                                                                                             G
     withdrawn or diminished before the expiry of 28 days from the date the

H    sanctioned offer is made, unless the Court grants leave to withdraw or                   H
     diminish it.     Although there is no express provision in Hong Kong,
I                                                                                             I
     similar to r. 36.3(6) of Part 36, that a sanctioned offer, made not less than
J    28 days before the commencement of trial, may be withdrawn or                            J

     diminished after the expiry of 28 days without the leave of court, the
K                                                                                             K
     wording of r. 7(1) necessarily implies that that must be so.                   Indeed,
L    Mr Albert Yau, who appeared for the defendants, very fairly conceded that                L

     the offeror could withdraw the sanctioned offer after the expiry of 28 days
M                                                                                             M
     without the leave of the court, and he referred me to a decision of Deputy
N    Judge Alfred H. H. Chan in Wealthy Century Investment Ltd v DBS Bank                     N

     (HK) Ltd (DCCJ 1519 of 2009, 8 September 2010) who said :
O                                                                                             O

                    “8. Just as the previous provisions on payment into court were
P                   wholly procedural (per Goddard LJ, Cumper v Pothecary                     P
                    [1941] 2 KB 58 at 67), so are the new provisions on sanctioned
                    payments and the parallel provisions on sanctioned offers. A
Q                                                                                             Q
                    sanctioned offer, once made, will have the effect and
                    consequences provided for under Order 22. If made not less
R                   than 28 days before the trial commences, it may be accepted by            R
                    the offeree any time within 28 days, during which time it cannot
                    be withdrawn or diminished by the offeror without the leave of
S                   the court. Even after the 28 days, it remains open for                    S
                    acceptance by the offeree, subject to the court’s leave or the
T
                    parties’ agreement on the liability for costs. A sanctioned offer         T


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由此

                                          - 18 -
A                                                                                       A

                  does not normally ‘lapse’. These provisions represent obvious
B                 departures from the normal rules of offer and acceptance in the       B
                  law of contract.
C                 9.    It is true that after the initial 28-day period, a sanctioned   C
                  offer may be withdrawn or diminished without the leave of the
D                 court. Order 22 does not specify how a sanctioned offer may be        D
                  withdrawn after the 28-day period, although in most cases it
                  should not be difficult to determine if a party intends to withdraw
E                 a sanctioned offer, given the potential costs and interest            E
                  implications.”
F                                                                                       F

     22.          I agree with these observations, but not with the comment that
G                                                                                       G
     “in most cases it should not be difficult to determine if a party intends to
H    withdraw a sanctioned offer, given the potential costs and interest                H


I
     implications”. These observations accord with Recommendation 41 of
                                                                                        I
     the Civil Justice Final Reform of March 2004 (at §316 on p. 156) that :
J                                                                                       J
                  “A sanctioned offer or payment should be required to remain
                  open for acceptance for 28 days after it is made (such 28-day
K                                                                                       K
                  period falling before commencement of the trial), unless leave is
                  granted by the court for its earlier withdrawal. Thereafter, the
L                 offer could be withdrawn and if not, would continue to be             L
                  capable of acceptance.”
M                                                                                       M
     I would add that, after the period of 28 days, the offer could be withdrawn
N    by the offeror without the leave of the court and, if not withdrawn, would         N

     continue to be capable of acceptance pursuant to the provisions of r. 5(7)
O                                                                                       O
     if :
P                                                                                       P
            (a)   the parties agree on the liability for costs; or
Q                                                                                       Q
            (b)   the court grants leave to accept it.
R                                                                                       R

     Indeed, the Notice of Sanctioned offer in this case states expressly repeats
S                                                                                       S
     the words of r.5(7) that after the expiry of 28 days the offeree may only
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由此

                                        - 19 -
A                                                                                       A

     accept it if either the parties agree on liability for costs or the court grants
B                                                                                       B
     leave to accept it.
C                                                                                       C

     23.          It is specifically provided in r. 36.3(7) of the new Part 36 that
D                                                                                       D
     the offeror must serve a written notice of the withdrawal or change of
E    terms on the offeree. Our O.22, r. 12(3) provides that an amendment to a           E

     sanction offer is effective when its details are served on the offeree.
F                                                                                       F
     Clearly an amendment may be by way of increasing a previous sanctioned
G    offer or by diminishing it. A withdrawal of a sanctioned offer can also be         G

     regarded as an “amendment” of that offer. O.22, r. 12(3), together with the
H                                                                                       H
     requirements in r. 5(1) that a sanctioned offer must be in writing, and in
I    r. 5(7) that it must provide that, after the expiry of 28 days from the date of    I

     the sanctioned offer is made, the offeree may only accept it if the parties
J                                                                                       J
     agree on the liability for costs or the court grants leave to accept it, lead me
K    to conclude that the court would only accept that a withdrawal or                  K

     diminution of the sanctioned offer has occurred if a written notice of
L                                                                                       L
     withdrawal or diminution of the sanctioned offer from the offeror
M    addressed to and served on the offeree is produced to the court. Given the         M


N
     serious consequences of a sanctioned offer, there must be clarity and
                                                                                        N
     certainty on the issue of whether or not a sanctioned offer has been
O                                                                                       O
     withdrawn. The written notice of withdrawal must expressly refer to the

P
     date of the sanctioned offer and to its terms and must expressly state that        P
     the sanctioned offer is withdrawn.         This will avoid uncertainty and
Q                                                                                       Q
     argument.

R                                                                                       R
     24.          As the provisions are entirely procedural, the fact that
S                                                                                       S
     counter-offers are made by the offeree will not prevent the offeree, after

T
     the expiry of 28 days from applying to court for leave to accept the               T


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V                                                                                       V
由此

                                        - 20 -
A                                                                                       A

     sanctioned offer. In my judgment, oral communications, such as we have
B                                                                                       B
     seen in the present case, that the plaintiffs are no longer willing to settle on
C    the basis of the terms of the sanctioned offer do not constitute an effective      C

     or valid withdrawal of the sanctioned offer as would prevent a court from
D                                                                                       D
     exercising its discretion under r. 5(7). As Moore-Bick LJ observed in
E    Gibbon v. Manchester City Council and LG Blower Specialist Bricklayer              E

     Ltd. v. Reeves [2010] 1 WLR 2081 at §16 :
F                                                                                       F

                  “To import into Part 36 the common law rule that an offer
G                 lapses on rejection by the offeree would … give rise to               G
                  disputes about whether the offer had been rejected in any
H                 given case so as to render it incapable of acceptance”.               H


I                                                                                       I

     25.          Given the serious consequences of failing to beat a sanctioned
J                                                                                       J
     offer, there must be certainty on the issue of whether or not there is a valid
K    and subsisting sanctioned offer at the time of trial so that the court may         K

     award costs on an indemnity basis and interest at a higher rate as provided
L                                                                                       L
     for under rules 23 and 24.
M                                                                                       M

     26.          Once the sanctioned offer has been withdrawn in writing,
N                                                                                       N
     r. 5(7) can no longer be invoked by the offeree who wishes to accept it
O    after the expiry of 28 days from the date the sanctioned offer was made.           O

     R. 5(7) can only be invoked in respect of sanctioned offers which are
P                                                                                       P
     subsisting in the sense that they have not been withdrawn in writing.      The
Q    fact that a second or third increased sanctioned offer is made in the course       Q

     of the proceedings does not constitute a withdrawal of the earlier
R                                                                                       R
     unaccepted offers which remain subsisting. The subsisting sanctioned offer
S    which is not beaten by the offeree after trial can be relied upon by the           S

     offeror to invoke the court’s jurisdiction to award costs on an indemnity
T                                                                                       T


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由此

                                        - 21 -
A                                                                                     A

     basis and interest at enhanced rates. So, for example, if the plaintiff offers
B                                                                                     B
     to settle for $1 million in January and for $800,000 in April and for
C    $500,000 in July and the defendant fails to accept any of these offers and,      C

     at trial, the plaintiff obtains judgment in December in excess of $1 million,
D                                                                                     D
     the plaintiff may be able to enjoy indemnity costs and enhanced interest
E    from the date of the first sanctioned offer made in January.                     E


F                                                                                     F
     27.            R. 7(5) provides that if a sanctioned offer has been withdrawn,
G    it does not have the consequences specified in the order. Obviously, if          G

     the sanctioned offer has been withdrawn in writing, it is no longer
H                                                                                     H
     subsisting and cannot be relied upon at the conclusion of trial to invoke the
I    enhancement provisions as to costs and interests contained in rules 23 and       I

     24 of O. 22.
J                                                                                     J


K    28.            By the same token, where a sanctioned offer is subsisting in      K

     the sense that it has not been withdrawn, albeit that 28 days have lapsed
L                                                                                     L
     from the date that the sanctioned offer was made, and the offeror
M    successfully resists an application by the offeree for leave of court to         M

     accept the sanctioned offer pursuant to r. 5(7), then the sanctioned offer is
N                                                                                     N
     no longer subsisting and can no longer be relied upon to invoke the
O    enhancement provisions as to costs and interests contained in rules 23           O

     and 24. For this reason, it is not necessary to grant leave withdraw the
P                                                                                     P
     sanctioned offer to the offeror who has successfully resisted an application
Q    for leave under r.5(7), and I did not make any order on the plaintiff’s cross    Q


R
     summons for such leave.
                                                                                      R


S    29.            I refrain from expressing any view on whether and to what         S

     extent a sanctioned offer, which is no longer subsisting in that it has been
T                                                                                     T


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由此

                                         - 22 -
A                                                                                      A

     withdrawn in writing or in that the offeree has successfully resisted an
B                                                                                      B
     application under r. 5(7) by the offeror for leave to accept it after the
C    expiry of 28 days, can be relied upon by the court in the exercise of its         C

     general discretion as to costs, and the statutory discretion under s. 48 of the
D                                                                                      D
     High Court Ordinance, Cap. 4 to award interest. The court dealing with
E    this issue would be mindful of the authorities on point, including Garner v.      E

     Cleggs [1983] 2 All E.R. 398, Capital Bank Plc v. Strictland [2005] 1
F                                                                                      F
     WLR 3914 and Trustees of Stoke Pension Fund v Western Power
G    Distribution (South West) Plc [2005] 1 WLR 3595.                                  G


H                                                                                      H
     30.          As I have concluded that the sanctioned offer in the present
I    case is subsisting and that the defendants’ application for leave of court to     I

     accept it after the expiry of 28 days from the date of the sanctioned offer
J                                                                                      J
     under r. 5(7) is properly made, I turn to consider whether or not I ought to
K    grant leave in this case.                                                         K


L                                                                                      L
     31.          The court’s discretion to grant or to refuse leave to accept the
M    sanctioned offer after the expiry of 28 days from the date that it was made       M

     is unfettered.    Goddard LJ’s observations in Cumper v Pothecary in
N                                                                                      N
     connection with the defendants’ application for leave to take up monies
O    paid into court apply with equal force to sanctioned offers. He said, at          O

     p. 67-68 :
P                                                                                      P

                  “When once the seven days have expired the plaintiff can only
Q                 get the money if he can obtain an order, and before the court        Q
                  makes an order it must consider whether it is right so to do.
R                 [Counsel for the plaintiff] admitted that, if the defendant could    R
                  show that he had grounds for alleging fraud or mistake which
                  was unknown to him when he paid the money in, the court would
S                 refuse to allow the money to be paid out, but he contended that      S
                  these were the only grounds on which an order could be refused.
T                                                                                      T


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由此

                                          - 23 -
A                                                                                         A

                  We can see no ground for putting such a limit on the powers of
B                 the court. If the court can in any circumstances refuse an order,       B
                  it is plain that in making or refusing an order the court must be
                  acting judicially and not ministerially. If the plaintiff can
C                                                                                         C
                  accept as of right up to the eve of trial, why might he not do so
                  during the trial? The note in the Annual Practice to which
D                 [counsel for the plaintiff] referred clearly has reference to the       D
                  concluding words of r.3, which says that an order may be made
                  at any time before, at, or after the trial. In other words, the
E                 plaintiff may ask for an order at any time, but it does not mean        E
                  that he is necessarily entitled to it. In substance the same
F                 argument was advanced by the plaintiff in Frazer & Haws, Ld. v          F
                  Burns (I), and was briefly answered by the Master of the Rolls,
                  who inquired : ‘What is the good of the seven days?’ It is, in
G                 our opinion, clear that, if the plaintiff does not accept the money     G
                  within the prescribed time, the court has thereafter complete
                  discretion either to make or refuse an order. In the majority of
H                                                                                         H
                  cases, no doubt, it would only be a question of costs, whether the
                  plaintiff should pay those incurred between the expiration of the
I                 seven days and the date of the application, but there may be            I
                  many other considerations.”
J                                                                                         J

     32.          I agree with the submissions of Mr Yau that the discretion of
K                                                                                         K
     the court in this type of application is very wide and that it should be
L    exercised as widely as possible so as to advance the overriding objective to         L

     do justice to the parties concerned. It is inappropriate to attempt to give
M                                                                                         M
     an exhaustive list of all relevant factors to be taken into account. The
N    relevant factors must vary from case to case.        In considering these factors,   N

     the court must not lose sight of the fact that the object of O.22 is to
O                                                                                         O
     promote settlements, save costs, and avoid the uncertainties of litigation. In
P    a Judiciary Press Release dated 3 March 2004, Ribeiro PJ, Deputy                     P

     Chairman of the Working Party on CJR stated that “the major
Q                                                                                         Q
     recommendations of the Working Party include... encouraging earlier, fair
R
     settlements...” and that “the rules should be interpreted and applied with a         R


S
     view to increasing cost-effectiveness of the procedures in question...               S


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由此

                                                   - 24 -
A                                                                                                  A

     facilitating settlement and achieving a fair distribution of the court’s
B                                                                                                  B
     limited resources among its users.”
C                                                                                                  C

     33.                The main criterion must be whether there has been such a
D                                                                                                  D
     change of circumstances as would render it unjust to allow the offeree to
E    benefit from the offer. A change of the evaluation of the merits of the                       E

     case may or may not be a good reason to advance to resist the leave
F                                                                                                  F
     application. New evidence coming to light which materially affects the
G    relative strengths and weaknesses of the parties’ respective cases can be a                   G

     relevant circumstance2.              However, an offeror who chooses to make a
H                                                                                                  H
     sanctioned offer before obtaining expert evidence may find himself in
I    difficulty trying to resist leave on the ground that he is now in possession                  I

     of favourable expert evidence. May LJ refused leave to reduce a payment
J                                                                                                  J
     into court in Flynn v Scougall (Practice Note) [2004] 1 WLR 3069 for the
K    reason that the defendant in that case had chosen to make a Part 36                           K

     payment before her expert’s report arrived and thereby secured the
L                                                                                                  L
     advantage of an earlier payment into court.                    The favourable expert report
M    was not the product of new evidence or a change of law but was a review                       M


N
     of available information by the expert which could have been obtained
                                                                                                   N
                                                          3
     prior to making the payment into court .
O                                                                                                  O

     34.                On the other hand, the court may be less inclined to grant
P                                                                                                  P
     leave to accept the sanctioned offer where an application is made on the
Q    eve of trial or, as in the present case, when an action was warned for trial,                 Q


R
     particularly when the parties resisting the application advances a cogent
                                                                                                   R
     reason why the court ought not to grant leave.
S                                                                                                  S

     2
         Capital Bank Plc v. Strictland [2005] 1 WLR 3914 at §19.
     3
T        [2004] 1 WLR 3069 at §42                                                                  T


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V                                                                                                  V
由此

                                       - 25 -
A                                                                                      A

     35.          In my judgment, the plaintiffs have established cogent reasons
B                                                                                      B
     why I ought not to grant leave to the defendants to accept the sanctioned
C    offer. Although the sanctioned offer was not withdrawn in writing, the            C

     defendants’ solicitors were notified on 3 separate occasions, on 12 July
D                                                                                      D
     2010, 19 November 2010 and 31 January 2011 that the offer was no longer
E    on the table. This fact alone may not weigh as heavily in future cases            E

     where parties, having the benefit of this judgment, fail to withdraw their
F                                                                                      F
     sanctioned offers in writing.
G                                                                                      G

     36.          Further, I am satisfied that the plaintiffs in this case were no
H                                                                                      H
     longer willing to settle on the basis set out in the sanctioned offer because
I    they had obtained counsel’s advice and her evaluation of the evidence             I

     which led counsel to opine that the court was likely to assess the
J                                                                                      J
     contributory negligence of the deceased at less than 50%. The plaintiffs,
K    who are legally aided, did not have the benefit of counsel’s advice when          K

     their solicitors made the sanctioned offer.      They could only have the
L                                                                                      L
     benefit of counsel’s advice when counsel was assigned to them.        This is a
M    material change in circumstance since the sanctioned offer was first made         M


N
     that I took into account in the exercise of my discretion.        A privately
                                                                                       N
     funded plaintiff, who has the means to engage counsel prior to making the
O                                                                                      O
     sanctioned offer but choses not to do so until much later, may not be able

P
     to rely on this ground to resist the application for leave in the absence of      P
     cogent reasons to explain the late engagement of counsel.      Nor would this
Q                                                                                      Q
     ground avail a legally aided plaintiff if his assigned solicitors fail to avail

R    themselves of the opportunity to obtain advice from counsel already               R
     assigned on the case and only do so after having made a sanctioned offer
S                                                                                      S
     without the benefit of assigned counsel’s advice.
T                                                                                      T


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V                                                                                      V
由此

                                      - 26 -
A                                                                                    A

     37.          Although Mr Yau made an eloquent submission to me that the
B                                                                                    B
     outcome of this litigation was uncertain, I do not think that it is right for
C    the court hearing an interlocutory application of this nature to conduct a      C

     mini trial of the issues on paper and come to a view as to whether or not
D                                                                                    D
     the sanctioned offer was reasonable in all the circumstances of the case so
E    that leave ought to be granted under r. 5(7) in the interest of saving costs,   E

     promoting settlements and avoiding the uncertainties of litigation.
F                                                                                    F


G    38.          Taking into account all the relevant factors set out above and     G

     guided by the overriding consideration that the court should strive to do
H                                                                                    H
     justice between the parties, I came to the conclusion that I ought to accept
I    to the submission of Ms Josephine Pinto, who appeared for the plaintiffs to     I

     oppose the application, and refuse to grant leave to the defendants to
J                                                                                    J
     accept the sanctioned offer out of time.
K                                                                                    K


L                                                                                    L


M                                                                                    M
                                               (Mohan Bharwaney)
N                                       Judge of the Court of First Instance         N
                                                    High Court
O                                                                                    O

     Ms Josephine Pinto, instructed by Messrs Krishnan & Tsang,
P                                                                                    P
        for the 1st and 2nd Plaintiffs
Q    Mr Albert Yau, instructed by Messrs Deacons,                                    Q

        for the 1st, 2nd and 3rd Defendants
R                                                                                    R


S                                                                                    S


T                                                                                    T


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