B. Sanctioned offers and sanctioned payments

B. Sanctioned offers and sanctioned payments

After commencement of proceedings, both the plaintiff and the defendant can make settlement offers by way of “sanctioned offer” and/or “sanctioned payment”. Offers of settlement can relate to the whole or part of the claims (whether monetary or non-monetary), any claim within the proceedings or a part thereof, and even issues within claims.

Notice of “sanctioned offer” and “sanctioned payment” must be given to the other party in writing (see judiciary.hk).

What is a “sanctioned offer”?

At any time after the commencement of proceedings, any party may offer in writing to settle a claim or part of it on less stringent terms than the pleaded case. A plaintiff may offer to accept a lesser amount in full satisfaction of what he claims in his pleadings. When a plaintiff makes a sanctioned offer to settle a monetary claim, no payment into court is required. A defendant may also make a sanctioned offer to settle non-monetary claims.

What is a “sanctioned payment”?

At any time after the proceedings have begun, a defendant may make a payment into court in settlement or all or part of a plaintiff’s claim.

Consequence of Acceptance of “sanctioned offer” and “sanctioned payment”

Once accepted by the other party, the case is resolved in whole or in part according to the terms of the “sanctioned offer” or “sanctioned payment”. The plaintiff will normally be entitled to his costs up to either:

(1) the date of his acceptance of the defendant’s “sanctioned offer” or “sanctioned payment”;

or (2) the date of the defendant’s acceptance of the plaintiff’s “sanctioned offer” or “sanctioned payment”, as the case may be.

Consequence of Non-acceptance of “sanctioned offer” and “sanctioned payment”

If a plaintiff decides to proceed to trial but he is not able to get a better result than the defendant’s “sanctioned offer” or “sanctioned payment”, the plaintiff may have to bear the defendant’s costs after the latest date when the “sanctioned offer” or “sanctioned payment” could have been accepted. He may have to bear costs on an indemnity basis with interest running on such costs at a penalty rate of up to 10% over the judgment rate.

By the same token, if a defendant fails to improve upon the “sanctioned offer” of the plaintiff, he may have to bear the plaintiff’s costs, with some portion of those costs being charged on an indemnity basis from an appropriate date and with interest running thereon at up to 10% above judgment rate. He may also have to pay the whole or part of any sum awarded to the plaintiff at up to 10% over judgment rate.

The Court has discretion on costs and the penal interest rate chargeable. The Court will consider:

• the terms of the “sanctioned offer”;
• the stage in the proceedings when the “sanctioned offer” was made;
• the information available to the parties at the time when the “sanctioned offer” was made; and
• the conduct o the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated.