1 How will a case be conducted differently under the CJR? Tutorial Workshop through a case study Eric TM Cheung Assistant Professor, Faculty of Law, HKU 13 November 2008

2 Can and should Fragrant Harbour seek discovery of Cleanezee Ltd’s expert report and/or related documents before commencing proceedings? O 24 r 7A and s 41 HCO on pre-action discovery against likely party Pre-action discovery only confined to “directly relevant” documents S 41 (2) For the purposes of subsection (1), a document is only to be regarded as directly relevant to an issue arising or likely to arise out of a claim in the anticipated proceedings if: (a) the document would be likely to be relied on in evidence by any party in the proceedings; or (b) the document supports or adversely affects any party’s case. Discovery shall not be made “unless the Court is of the opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs.”: O 24 r 8(2). Above conditions likely satisfied vis-a-vis expert report Main obstacle: Likely objection on the ground of privilege

3 How should the sanctioned offer for $2m be drafted? Should it be: “Without Prejudice Save as to Costs Our client offers to accept from your client a sum of HK$2 million in full and final settlement of its claim. This offer is open for acceptance within 28 days from the date of this letter, failing which we reserve our client’s right to draw this letter to the attention of the court when the issue of costs arises.”

4 Is it a sanctioned offer? 5. Form and content of sanctioned offer (O. 22, r. 5) (1) A sanctioned offer must be in writing. (2) A sanctioned offer may relate to the whole claim or to part of it or to any issue arising from it. (3) A sanctioned offer must – (a) state whether it relates to the whole claim or to part of it or to an issue arising from it and if so to which part or issue; (b) state whether it takes into account any counterclaim or set-off; and (c) if it is expressed not to be inclusive of interest, give the details relating to interest set out in rule 26(2)…. (7) A sanctioned offer made not less than 28 days before the commencement of the trial must provide that after the expiry of 28 days from the date the sanctioned offer is made, the offeree may only accept it if – (a) the parties agree on the liability for costs; or (b) the Court grants leave to accept it

5 O 22 r 7 (1) A sanctioned offer made not less than 28 days before the commencement of the trial may not be withdrawn or diminished before the expiry of 28 days from the date the sanctioned offer is made unless the Court grants leave to withdraw or diminish it. O 22 r 12 (1) A sanctioned offer is made when it is served on the offeree. O 22 r 21 (1) Where a plaintiff’s sanctioned offer to settle the whole claim is accepted without requiring the leave of the Court, the plaintiff is entitled to his costs of the proceedings up to the date upon which the defendant serves notice of acceptance, unless the Court otherwise orders. O 22 r 25 (1) A sanctioned offer is treated as “without prejudice save as to costs”.

6 2. Offer to settle with specified consequences (O. 22, r. 2) (1) A party to an action containing a money claim or a non-money claim or both arising from any cause or causes of action may make an offer to settle the whole claim, a part of it or any issue arising from it in accordance with this Order. … (3) An offer made under paragraph (1) has the consequences specified in rules 20, 21, 22, 23 and 24 (as may be applicable). (4) Nothing in this Order prevents a party from making an offer to settle in whatever way he chooses, but if that offer is not made in accordance with this Order, it does not have the consequences specified in this Order, unless the Court so orders.

7 Suggested Draft “This is a sanctioned offer made pursuant to Order 22 of the Rules of the High Court. In full and final settlement of its claim (exclusive of costs) in the above-mentioned action, our client offers to accept from your client a sum of HK$2 million, which sum shall be paid within 7 days of acceptance of this offer. Upon acceptance, your client shall also be liable for our client’s costs in accordance with Order 22 r 21. Please note that this sanctioned offer (1) relates to the whole of our client’s claim and (2) takes into account any counterclaim or set-off. This sanctioned offer is open for acceptance without leave from the court within 28 days from the date the sanctioned offer is made. After the expiry of 28 days from the date this sanctioned offer is made, your client may only accept it if (a) the parties agree on the liability for costs; or (b) the Court grants leave to accept it.”

8 How should you advise the Defendant on the consequences of accepting or not accepting the sanctioned offer? Upon acceptance: P is entitled to his costs of the proceedings up to the date of acceptance, unless the court otherwise orders: O 22 r 20 P’s claim is stayed, but the stay is upon the terms of the sanctioned offer; and either party may apply to enforce those terms or to claim the remedy for a breach of the settlement contract without the need to commence new proceedings: O 22 r 22.

9 If no acceptance: O 22 r 24(1): This rule applies where –(a) a defendant is held liable for more than the proposals contained in a plaintiff’s sanctioned offer; or (b) the judgment against a defendant is more advantageous to the plaintiff than the proposals contained in a plaintiff’s sanctioned offer. The court shall make the following orders unless it considers it unjust to do so: (a) interest be awarded on the whole or part of any sum of money (excluding interest) 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; (b) the plaintiff be entitled to his costs on the indemnity basis after that date; and (c) interest be awarded on those costs at a rate not exceeding 10% above judgment rate.

10 What alternatives does the Defendant have in response to this offer? Counter-offer by sanctioned payment Seek clarification under O 22 r 14: O 22 r 14(1): The offeree may, within 7 days of a sanctioned offer or a sanctioned payment being made, request the offeror to clarify the offer or payment notice. R 14(2): If the offeror does not give the clarification requested within 7 days of service of the request, the offeree may, unless the trial has commenced, apply for an order that he does so. Seeking further information/documents so as to properly assess the value of P’s claim, and asking for an extension of time to accept the offer pending receipt of the information/documents (and agreeing to an interim stay for this purpose)

11 O 22 r 24(5): When considering whether it would be ‘unjust’ to apply the stipulated sanctions, the court must take into account all the circumstances of the case, including: (a) the terms of any sanctioned offer; (b) the stage in the proceedings when the sanctioned offer was made; (c) the information available to the parties at the time the sanctioned offer was made; and (d) the conduct of the parties with regard to giving or refusing to give information to enable the offer to be made or evaluated. Final Report of the Working Party on the Civil Justice Reform paragraph 308: ‘It would accordingly be a mistake for a Hong Kong party to believe that his sanctioned offer carries the relevant consequences if it was made without properly apprising the other side of the nature of his case. He may not be required by the rules to take on the burdens of pre-action protocols in general, but, if he wishes to avail himself of the benefits of sanctioned offers and payments, he must ensure that he has nevertheless fairly acquainted the other side with all material aspects of his case.’

12 What matters need to be considered or done by the Defendant before the filing of the Case Management Timetabling Questionnaire? Mutual discovery without order within 14 days after close of pleadings: O 24 r 1 and 2 O 24 r 15A and Draft PD for Order 25 on Case Management para 6: “The parties should proceed with discovery without the need to wait for an order of the court and try to agree on the directions for modifying discovery obligations (e.g. limiting discovery to specified issues) or on the manner of their implementation (e.g. exchanging copy documents without the need to prepare lists of documents) with a view to achieving economies in respect of discovery.” Within 28 days after close of pleadings, each party must serve and file the Timetabling questionnaire: O 25 r 1(1) See Draft PD on Case Management and on ADR

13 Contents of the Timetabling Questionnaires Governed not by RHC, but by PDs Annex A of draft PD for O 25 shows that the questionnaires will cover confirmation or information on the following: First on ADR (whether the parties have attempted ADR; whether willing to settle by ADR and so request for a stay of ?? Weeks while trying settlement; to confirm that he has filed the ADR certificate; and ADR Notice/Response) In the ADR certificate: (1) the solicitors shall expressly conform that they have explained to their client the availability of ADR and “the respective costs positions for the ADR as compared with the costs of the litigation”; (2) that the client “fully understands” the ADR PD and the availability of ADR; (3) Whether the party intends to explore ADR to settle or mediate, and if so, what is the form of ADR it intends to engage. If not, state why he believes it is premature to do so at this stage or inappropriate at any stage. If the parties have already attempted an ADR procedure w/o success, state the mode of ADR attempted and whether they are willing to attempt another mode of ADR. If a party wishes to invoke any ADR procedure, he should serve an ADR Notice on the other party giving various details (proposed rules, mediator or neutral, estimated costs, timetable and minimum level of participation).

14 Other contents of the Timetabling Questionnaires: Parties (any intention to add another party) Pleadings (any intention to amend or request for F&BPs) Evidence (whether list of docs filed or when it will be filed; number and names of factual witnesses, and when witness statements can be exchanged) Expert Evidence (any intention to adduce expert evidence, and names and fields of expertise, and when expert reports can be exchanged; whether agreeable to appoint a single joint expert or a joint report by the parties’ experts) Interlocutory applications (any outstanding directions to be complied with, any intention to seek interrogatories, security for costs or other interlocutory applications, and if so when the applications will be made) Case management Conference/Pre-trial Review (whether or not one asks for a CMC or for a PTR, and why) Trial (whether it is appropriate to set down for trial and why; whether Running List appropriate and why; whether to be tried before a bilingual judge and why; estimated length of trial; the earliest date that the case be ready for trial) Proposed directions/timetable to be attached.