The Civil Justice Reform in Hong Kong:

Litigating in the new era

Foreword
From 2 April 2009, civil litigation practitioners and their clients in Hong Kong are to litigate under a reformed civil justice system. The new legislation puts Hong Kong, in the words of the Chief Justice, in a position to serve the public better in terms of accessibility, cost-effectiveness and efficiency. While taking reference from reforms introduced by Lord Woolf in England and Wales in 1999, Hong Kongs reformed civil justice system is custom-designed to suit the specific needs and circumstances of the jurisdiction. Unlike the Woolf Reforms, there is no introduction of an entirely new procedural code. Instead reforms will be implemented by way of amendment to the current court rules. The underlying objectives outlined in a new Order 1A pervade throughout the new system and this cultural change is potentially the most important reform to the Rules of the High Court. These objectives require the courts actively to manage cases at an earlier stage and the parties are under a duty to help the court to do so. Thus the control of litigation is intended to be more driven by judges rather than by litigants and their advisers. The Civil Justice Reform presents us with a challenge. Both we and our clients must be ready to embrace the changes, develop new tactics and take advantage of opportunities which the new rules present. The purpose of this booklet is to provide you with a summary of the new rules in a digestible form. Each section of the booklet sets out the key points and some thoughts on issues that may arise. We hope you find it useful. If you would like further information, please do not hesitate to contact us.

Gareth Thomas Partner Head of Commercial Litigation, Hong Kong 1 March 2009

Contents
The Civil Justice Reform in Hong Kong: Litigating in the new era
Page 1. 2. 3. 4. 5. 6. 7. 8. 9. Overview Underlying objectives and case management powers Non-compliance Starting a claim Defending a claim Timetabling Questionnaire (preliminary case management) Timetabling and milestone dates Discovery Interim measures 1 3 5 7 10 12 14 18 20 24 27 32 34 38 42 Flow-chart of the new Civil Justice Reform procedure for a Writ action Sanctioned offers and sanctioned payments acceptance 45 46 47

10. Evidence 11. Payments in and offers to settle 12. Trial 13. Costs 14. ADR and settlement 15. Appeals Appendix 1 Appendix 2 Profiles

Published by Herbert Smith 23rd Floor, Gloucester Tower 15 Queens Road Central Hong Kong Tel: +852 2845 6639 Fax: +852 2845 9099 www.herbertsmith.com

No photocopying The information provided in this publication is general and may not apply to any specific situation. Legal advice should always be sought (where appropriate, from local advisers) before taking any action based on the information provided. The publisher and authors bear no responsibility for any acts or omissions contained herein. Information provided is accurate as at 1 March 2009. Herbert Smith LLP 2009

1. Overview
The new rules, Practice Directions and Pre-action Protocols

1 History

The Civil Justice Reform is the result of an all embracing enquiry into the civil justice regime in Hong Kong which commenced nearly a decade ago. In February 2000 the Chief Justice appointed a Working Party to review the court rules and procedures in civil proceedings and to recommend changes with a view to improving access to justice at reasonable cost and speed. The Working Party submitted its findings to the Chief Justice in its Final Report in March 2004, making a total of 150 recommendations. In March 2004, the Chief Justice accepted the Working Partys Final Report and established a Steering Committee to oversee implementation. Further consultations on the legislative proposals have since taken place which culminated in the passage of the amending legislation in 2008. The Civil Justice Reform will have effect from 2 April 2009. The new rules were published in the Gazette in June 2008. These can now be found on the Judiciarys Civil Justice Reform website at www.civiljustice.gov.hk.

2 Sources
(i)

The Civil Justice Reform is found in four sources:

The Rules themselves The reforms to the rules will take effect in two main ways:
Textual amendments to the existing Rules of the High Court: some are logical extensions or minor amendments to tidy up the existing rules; others introduce new provisions.

(ii) The more radical reforms introduce completely new concepts: for example, the introduction of the underlying objectives in Order 1A.

Practice Directions These are intended to flesh out further detail, and often contain the procedural nuts and bolts. The Reform introduces 24 new Practice Directions which will have effect from 2 April 2009 (save for Practice Direction 31 on Mediation which is delayed until 1 January 2010 to allow practitioners more time to familiarise themselves with the process). Pre-action protocols Unlike in England and Wales, pre-action protocols will not be prescribed for cases across the board for fears of excessive front-loading of costs before proceedings are issued. However, it remains open for such protocols to be adopted by courts operating specialist lists, subject to consultation and judicial approval; for example, Practice Direction 18.1 incorporates a pre-action protocol for personal injury cases. Forms These are the court forms which are to be used after 2 April 2009. On occasion, these can also require information not specifically sought by the Rules or Practice Directions.

3 References

Throughout this booklet, a reference to rule 1(1) of Order 25 will read O.25, r.1(1). Practice Directions are referred to by part and paragraph number, so that paragraph 1 of the Practice Direction for case management will read PD 5.2 para. 1. As to legislation, a reference to the High Court Ordinance (Cap. 4) will read HCO and a reference to the Arbitration Ordinance (Cap. 341) will read AO, so a reference to section 4 will read s.4 HCO or s.4 AO as the case may be.

4 Transitional provisions

There is no universal transitional provision for the Rules of the High Court. Instead, individual orders will contain order specific transitional provisions where applicable.

The Civil Justice Reform in Hong Kong: Litigating in the new era

2. Underlying objectives and case management powers

The inclusion of underlying objectives in the rules is revolutionary and of central relevance to the way in which the rules will be implemented and interpreted. The court is required to further the underlying objectives by actively managing cases, and the parties are under a duty to help the court to do so. Rules have been introduced conferring specific case management powers on the court. Whenever the court exercises any power under the rules, or where it interprets any of the rules or practice directions, it must give effect to the underlying objectives. The relevant rules are contained in O.1A (the underlying objectives) and O.1B (the courts case management powers). These rules introduce some of the main concepts underpinning the Civil Justice Reform.

Key points

1 The underlying objectives

(i)

The underlying objectives in O.1A, r.1 aim to: increase the cost-effectiveness of litigation;

(ii) ensure a case is dealt with as expeditiously as is reasonably practicable; (iii) promote a sense of reasonable proportion and procedural economy; (iv) ensure fairness between the parties; (v) facilitate settlement; and (vi) ensure the courts resources are distributed fairly. In giving effect to the underlying objectives, the courts primary aim is to secure the just resolution of disputes in accordance with the substantive rights of the parties (O.1A, r.2(2)). The parties themselves, and their legal representatives, are required to help the court to further the underlying objectives (O.1A, r.3).

2 Active case management

(i)

The court also has a duty to further the underlying objectives by actively managing cases (O.1A, r.4). Active case management powers aim to: encourage parties to co-operate;

(ii) identify the issues at an early stage; decide promptly which issues need full investigation and trial and dispose summarily of the others; and decide the order in which issues are to be resolved; (iii) encourage and facilitate the use of alternative dispute resolution procedures if appropriate and help the parties to settle the whole or part of the case; (iv) fix timetables or otherwise control the progress of the case; (v) consider whether the likely benefit of taking a particular step justifies the cost;

(vi) deal with as many aspects of the case as possible on the same occasion; (vii) deal with case management without the need for the parties to attend court and to make use of technology; and (viii) give directions to ensure that the trial of a case proceeds quickly and efficiently (O.1A, r.4(2)). In order actively to manage cases, the court also has general case management powers outlined in O.1B which allows the court, amongst other things, to: (i) extend or shorten the time for compliance with any rule, order or practice direction;

(ii) adjourn or bring forward a hearing; (iii) stay the whole or part of any proceedings or judgment either generally or until a specified date or event; (iv) consolidate proceedings, try two or more claims on the same occasion, or direct a separate trial of any issue; (v) decide the order in which the issues are to be tried; (vi) exclude an issue from consideration; and (vii) dismiss or give judgment on a claim after a decision on a preliminary issue (O.1B, r.1(2)).

Issues arising Underlying objectives v. overriding objectives

The Working Party chose to describe the objectives as underlying rather than adopting the equivalent terminology of the English counterpart in the Civil Procedure Rules which refers to them as overriding. This is a deliberate distinction. The aim is to prevent over-elaborate and misguided reliance being placed on O.1A. How the courts will apply this difference in emphasis remains to be seen, although we anticipate that judges are likely to take a robust approach to arguments taken up with minute analysis and debate over the application of the objectives, in order to reduce the risk of satellite litigation.

Case management
As might be expected, the rules relating to case management timetabling appear to be geared towards the management of smaller cases involving individuals rather than large scale, complex, commercial litigation. It is unclear what changes will result from the addition of the underlying objectives to case management in such larger cases. The new rules impose a duty on the court actively to manage cases. Consequently, we can expect the court to take a more proactive approach at a relatively early stage to ensure the proceedings are court controlled rather than party driven. This is a major shift in the dynamics of litigation and its ramifications are uncertain. Good case management will result in speedier and more economical resolution of disputes. Poor or arbitrary case management may, somewhat ironically, increase costs. For example, if masters and judges are initially unrealistic in the timetables they set this may lead to increased costs, either because it may be necessary to return to court at a later stage and seek extensions, or because a larger team may be required on the case to ensure compliance with the courts directions. In addition, the underlying objectives and new case management powers increase discretionary decision making by judges. This may result in uncertainty in predicting the outcome of applications as well as inconsistent and unfair decisions being made by the court.

The Civil Justice Reform in Hong Kong: Litigating in the new era

3. Non-Compliance
Introduction
In order to ensure that proceedings are as cost-effective and timely as possible, the court will not necessarily strike out a claim for a procedural irregularity. For example, where an incorrect originating procedure has been used, the court will make directions to try to ensure the case continues in an appropriate manner. However, generally, where a party is under an obligation to comply with rules or orders, the court will take non-compliance seriously. It is expected that the court will be much less tolerant of breaches of its orders than at present.

Key points

1 Taking out a wrong originating procedure

If a party chooses an inappropriate mode of commencement, the court will not set aside the proceedings. Instead, it will try to give suitable directions to enable the case to continue its procedural course (O.2, r.1(3)).

2 Non-compliance with court rules and orders

(i) the amount in dispute; and

If a party has, without good reason, failed to comply with a rule, or court order, the court may order him to pay a sum of money into court. This will be security for any sum payable by that party to any other party in the proceedings (O.2, r.3(1) and (3)). When considering whether to order security, the court will take into account the following factors:

(ii) the costs which the parties have incurred or which they may incur (O.2, r.3(2)). The court may make self-executing orders or unless orders where a party has failed to comply with a rule or court order (O.2, r.4). These are orders which take effect automatically upon non-compliance without the need for a further hearing (and are discussed further in Chapter 9). A party may apply to the court for relief from any sanctions imposed for non-compliance. Any application for relief must be supported by evidence (O.2, r.5(2)). In exercising its discretion, the court will take into consideration various matters such as: (i) the interest of the administration of justice;

(ii) prompt application for relief; (iii) whether the failure was intentional, or whether there is a good explanation; (iv) compliance with other rules and orders; and (v) any effect on the likely trial date (O.2, r.5(1)).

Issues arising Case management

In accordance with the underlying objectives in O.1A, r.1 of ensuring that a case is dealt with as expeditiously as is reasonably practicable, and to promote a sense of reasonable proportion and procedural economy, the court will not set aside proceedings where the wrong originating procedure has been used. Instead, the court will try to give directions to enable the action to continue, rather than a party having to start over again.

Sanctions for non-compliance

The court is likely to take a tough line where a party has been guilty of non-compliance with a rule or order. Parties are expected strictly to comply with the court timetable and no extensions of time will be granted unless sufficient grounds are shown. If any extension is granted, this is likely to be on a unless order basis with self-executing sanctions for non-compliance (PD 5.2 para. 29). (As to variations of milestone and non-milestone dates, refer to Chapter 7). Although unless orders are a vigorous sanction, the new rules allow a party to apply for relief under O.2, r.5. There is a risk that applications for relief may turn into costly satellite litigation with each party filing extensive evidence. In order to avoid this, the court will need to take a firm line to ensure any applications are dealt with in short, strictly managed hearings.

The Civil Justice Reform in Hong Kong: Litigating in the new era

4. Starting a claim
Introduction
The new system introduces amendments intended to facilitate settlement at a much earlier stage in the process: the introduction of costs only proceedings, is one such example. It is also envisaged that requiring pleadings be verified by a so-called statement of truth may encourage parties to define a case with sufficient precision and accuracy at an early stage, which may in turn, encourage earlier settlement. As to pleadings themselves, the basic rules remain unchanged although some new rules are introduced to encourage more careful and precise drafting. For example, the court will be empowered to strike out pleadings of its own motion and will only allow amendments to pleadings when these are really necessary. The reforms also seek to reduce complexity and streamline procedures by, for example, simplifying the commencement procedure for cases in the Court of First Instance.

Key points

1 Pre-action protocols

The proponents of the reforms originally proposed the use of pre-action protocols, a concept introduced by Lord Woolf in England and Wales to facilitate early settlement of disputes. These protocols have since been identified as one of the most prolific causes of the front-loading of costs. Consequently, pre-action protocols will not be prescribed for cases across the board in Hong Kong, although the courts operating specialist lists may introduce any pre-action protocols where appropriate (for example, the Personal Injury list has its own pre-action protocol Practice Direction 18.1). The reforms have, however, extended the courts powers to consider pre-action conduct when considering the issue of costs (O.62, r.5(2)(d)). In practice, formal claims are often preceded with letters before action in which the putative plaintiff sets out his case in some detail and demands that the defendant give him his claimed remedy within a specified period of time. The intended defendant then has an opportunity to assess his position and respond, sometimes with an offer of settlement, before commencement of proceedings. Such practices are likely to be greatly encouraged under the new system and it will be interesting to see what pre-action conduct will be taken into consideration by the court going forward when exercising its discretion as to costs.

2 Simplification of mechanism for commencement of proceedings

(i) writs where substantial factual disputes are likely to arise; and

The old system had four different modes of commencement of proceedings (writs, originating summonses, originating motions and petitions), a situation which was often criticised for being unnecessarily complicated, inflexible and cumbersome. In order to simplify the process, save for certain exceptions, there will now only be two modes of commencement for cases before the Court of First Instance:

(ii) originating summonses where questions of law involving no or little factual investigation are to be placed before the court (O.5, r.1). If the parties choose an inappropriate mode of commencement, the court will continue to give suitable directions to enable the court to change its procedural course (see O.2, r.1(3) and Chapter 3 for further discussion).

3 Statement of truth

Pleadings (and amendments thereto), witness statements and experts reports will all need to be verified. The verification must state that the facts in the document are true and additionally, in the case of witness statement and expert reports, that any opinion expressed is honestly held (a statement of truth) (O.41A, r.2(1) and 4(1)). The aim is to deter sloppy and speculative pleadings and to provide a disincentive against advancing a dishonest case. In the case of witness statements or expert reports, the statement of truth is to be signed by the maker. In any other cases (e.g. pleadings or amendments thereto), the document must be signed by: (i) the party putting forward the document;

(ii) the next friend or guardian of the party; or (iii) the legal representative (O.41A, r.3(1)). The new rules allow a legal representative to sign on a partys behalf provided: (i) he is authorised to sign the statement;

(ii) he has explained that by signing the statement he would be confirming the partys belief that the facts stated in the document are true; and (iii) he has informed the party of the possible consequences to the party if it should subsequently appear that the party did not honestly believe in the truth of those facts (O.41A, r.4(3)). Different rules on signing the statement apply depending on the identity of the party, as outlined below: Party Corporation Unincorporated association Public body or authority Partnership Insurer Authorised signatory a person holding a senior position (for example, a director, manager, corporate secretary or other similar officer) (O.41A, r.3(2) and (4)(a)) a person holding a senior position (i.e. any corresponding person appropriate to that association) (O.41A, r.3(2) and (4)(b)) the public officer or a person holding a senior position, (i.e. a person authorised by that public body or authority to sign) (O.41A, r.3(3) and (4)(c)) a partner or a person having the control or management of the partnership business (O.41A, r.3(6)) an insurer may sign provided the insurer has a financial interest in the outcome of the proceedings. If there is more than one insurer conducting proceedings, an officer responsible for the case as the lead insurer may sign (O.41A, r.3(8)-(9)).

Where a document is not verified by a statement of truth, the court may impose sanctions. These may result in a pleading being struck out or a witness statement or expert report rendered inadmissible as evidence (O.41A, r.6 and 7). It is contempt of court to make a false statement in a document verified by a statement of truth without an honest belief in its truth, but contempt proceedings may only be brought with the courts permission. These proceedings may be initiated by the Secretary for Justice or by a party aggrieved by the statement (O.41A, r.9).

The Civil Justice Reform in Hong Kong: Litigating in the new era

Starting a claim

4 Pleadings
(i)

Although the basic rules regarding pleadings remain unchanged, reforms are introduced in relation to the original pleadings and requests for further and better particulars as outlined below (note witness statements and expert reports are dealt with in Chapter 10). Parties should only seek further and better particulars where it is necessary either for disposing fairly of the matter or for saving costs (O.18, r.12(3B)). Consequently this will only be permitted where there is a genuine need to do so and not where the substance of the other sides case is sufficiently clear.

(ii) The court can strike out all or part of the pleadings on its own motion (with or without an application) on the usual grounds (O.18, r.19(1)). (iii) A party will only be able to plead inconsistent alternative facts where he has reasonable grounds for doing so (O.18, r.12A). (iv) To discourage slackness in drafting, it will be more difficult to amend pleadings. Amendments will only be permitted where clarification is necessary either for disposing fairly of the matter or for saving costs (O.20, r.8(1A)).

5 Costs-only proceedings

The rules introduce a new concept of costs-only proceedings (O.62, r.11A and s.52B(1) and (2) HCO). This will allow parties to apply to have costs taxed or summarily assessed at court even though there is no substantive dispute to be resolved between the parties. Costs-only proceedings can be brought where parties have agreed in writing on all issues in the dispute except on the amount of costs and where no proceedings in relation to the dispute have been commenced. At present, parties who have reached pre-action settlement on a substantive dispute and have agreed who should pay the costs, but cannot agree on the amount of the costs, may have to litigate the whole dispute in order merely to resolve the question of costs, thereby increasing time and expense.

Issues arising Pleadings

The reforms in respect of pleadings will encourage parties to produce more carefully drafted documents. The intention is that pleadings should reflect a partys case from the outset with sufficient precision and clarity to ensure the real issues are identified earlier on and suitable case management directions can be given.

Statement of truth
The requirement for a statement of truth codifies what is currently good practice. The statement is likely to concentrate the minds of parties as to the accuracy of the case put forward and will, hopefully, deter false or speculative cases. The statement will also make it more difficult to amend pleadings, as any subsequent attempt to change the facts, will raise issues about the original statement of truth. The sanction for verifying a false statement of truth is contempt. This is of course a serious remedy, but in practice is likely to be little used or ultimately ineffective. Proving contempt is never easy (the criminal standard of proof applies) and obtaining an order for committal to prison or even a fine from a civil judge is rare. A more immediate and potentially more effective remedy may be for the court to exercise its case management powers to impose a costs sanction for failure to comply with a rule; or alternatively, in more serious cases, the court may strike out the case of the defaulting party.

5. Defending a claim
Introduction
After service of the claim, the defendant may proceed to file a substantive defence or, in the case of a money claim, an admission (or both). The new system provides for stricter rules on pleadings to ensure that the parties focus on the relevant issues, and to discourage unmeritorious allegations or defences. For example, a defendant will no longer be able simply to deny an allegation, but will have to state his reasons for denying it, and if he intends to put forward a different version of events than that given by the plaintiff, he will have to state (and of course verify by a statement of truth) his own version.

Key points

1 Admissions

A new procedure allows the defendant to make an admission in a money claim by filling out the appropriate statutory form enclosed with the writ or originating summons (O.13A, r.2 and 13). This is intended to facilitate settlement and save time and costs. The time limit for making an admission in an action begun by a writ is within the time fixed for serving a defence, and in an action begun by an originating summons is within the time fixed for filing affidavits (O.13A r. 3(1)).

O.13A provides detailed rules for a defendant to admit the whole or part of a claim for a specified amount of money, or to admit a claim for an unspecified amount of money, with the possibility of offering a sum in satisfaction of that claim. In each case there is a mechanism for the plaintiff to obtain judgment, or to continue proceedings if he does not accept the amount admitted or offered, or for the court to enter judgment for an amount to be decided. When a defendant makes an admission, he may make a request for time to pay, and the time and rate of payment may be determined by a court officer or a judge (O.13A, r.9 and 10).

2 Defence

A defendant who wishes to defend all or part of a claim must file a defence within 28 days after the time limited for acknowledging service of the writ, or after the statement of claim is served on him (whichever is the later) (O.18, r.2(1)). Where an allegation in a statement of claim or counterclaim is denied, the person denying the allegation will have to state the reasons for denial and, if he intends to put forward a different version of events, he must state his own version (O.18, r.13(5)).

A defendant who fails to deal with an allegation will be taken to admit it (O.18, r.13(1)). However, to avoid excessive detail in substantive pleadings, an exception to this general rule applies. Where a defendant fails to deal with a specific allegation, but has set out the nature of his case in relation to that issue, the defendant is deemed not to admit it and to require the plaintiff to prove the allegation (O.18, r.13(6)). The practice of pleading a general joinder of issue at the end of a defence will no longer amount to a denial and will be treated as a non-admission (O.18, r.14(4)). A defence (and amendments thereto) must include a statement of truth (O.18, r.20A and O.20, r.13). Statements of truth are discussed further in Chapter 4.

The Civil Justice Reform in Hong Kong: Litigating in the new era

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Defending a claim

Issues arising Admissions

In straightforward debt-collection matters, the new admission procedure is likely to facilitate settlement. At present, the default judgment process is limited, applying only where the defendant unconditionally surrenders to the claim. Accordingly, in many money claims, although the defendant accepts he has no defence, he may make attempts to defer default judgment to avoid any immediate liability thereby increasing time and expense for both parties. Allowing a defendant to make a proposal regarding payment terms when admitting a claim should remedy this current problem and allow these types of cases to be resolved more economically.

Time limits
Defendants will be under considerable time pressure under the new system. However, the court does have power under O.1B, r.1(2)(a) to extend time for compliance with any rule, and consequently applications to the court for further extensions of time to file a defence are possible. It remains to be seen how much additional time the court will grant (if any) and what reasons it will consider convincing. Early decisions as to whom to bring in as third parties or defendants to counterclaim will be necessary. The requirements for doing so will involve factual investigation at the same time as the defence is being prepared, which is likely to add to the front loading of costs on the defendant.

Substance of the defence

There will be less opportunity than before for a defendant to stall or hide behind a bare denial of the allegations made against him. In the limited period available, the defendant must produce a detailed defence which must set out why he denies allegations. Similarly if the defendant disagrees with a version of events in the plaintiffs claim, he must set out his own account of the facts. In preparing his defence, a defendant must have in mind that it will be verified by a statement of truth. Any subsequent attempt to amend his defence will raise issues about the original statement of truth. Taken together, these rules should result in the early identification of the issues and allow for their resolution, or for early settlement.

Front-loading?
The new requirements for statements of truth (see Chapter 4) and substantive defences are likely to force parties to focus on the relevant issues at play at an earlier stage of proceedings. This may result in the front-loading of costs, although it may promote early settlement in some cases. In addition, the new rules give the plaintiff what some may see as an unfair advantage because, except in cases where there are limitation problems, the plaintiff can take his time to prepare his case. The defendant will then be faced with a strict timetable laid down by the court. The corollary, of course, is that the well prepared plaintiff will be able to take full advantage of the new rules to seek to obtain an early result. Although the time for service of a defence has been lengthened from 14 days to 28 days to address this problem, it is unlikely to reduce the need for extensions of time in some more complex cases.

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6. Timetabling Questionnaire (preliminary case management)

Introduction
Judicial case management of civil litigation is one of the central planks of the Civil Justice Reform. The aim is to shift the control of litigation from the litigants and their advisers to the court. Under the new rules, the legal profession is intended to perform its traditional adversarial role in a managed environment governed by the courts. As the first part of the new case management procedure, the parties must complete a Timetabling Questionnaire to enable the court to fix a tailored timetable which takes into account the reasonable wishes of the parties and the needs of the particular case. Proper completion of questionnaire will require detailed consideration of how the case may progress, consultation with the other parties and, preferably, agreement with the other parties as to case management directions. If directions are not agreed at this stage, the plaintiff will need to take out a case management summons (which replaces the old summons for directions). This is discussed in Chapter 7.

Key points

1 Timetabling Questionnaire

Within 28 days after the close of pleadings, each party must complete a new Timetabling Questionnaire (attached to Practice Direction 5.2) mapping out the intended progress of their action. The Timetabling Questionnaire must be served on all other parties and filed at court (O.25, r.1(1)). The parties are required to consult each other when completing their Timetabling Questionnaires. However, they should not allow consultation to delay filing (PD 5.2 para. 8). It is intended that the parties should, so far as is possible, try to agree the directions and timetable for the case without requiring reference to the court. The court may take the parties conduct in this regard into consideration when exercising its discretion as to costs. The parties can submit a single Timetabling Questionnaire (after consultations) containing the joint views of the parties together with a consent summons containing the directions which they invite the court to make (PD 5.2 para. 15). Alternatively, in light of the information provided by the defendant(s) and other parties, the plaintiff should consider whether he ought to modify any of his initial proposals or incorporate other parties directions and identify those directions that he disputes. The burden then rests with the plaintiff to liaise with other parties to see if they can achieve agreement as to directions (PD 5.2 para. 11). If neither party files a Timetabling Questionnaire, the court will not force litigation proceedings on the parties and proceedings will come to a standstill (refer to Chapter 7 for further discussion). If the parties agree proposals for management of the case, the plaintiff must file a consent summons at court within 14 days after receiving the Timetabling Questionnaire from all the defendants, or when the time for all defendants to file the Timetabling Questionnaire expires, whichever is the earlier (PD 5.2 para. 13). Where no agreement can be reached, each party should set out their proposed directions on their respective questionnaires and the plaintiff should take out a case management summons. Where the plaintiff fails to do so, the defendant may issue a case management summons instead or apply to dismiss the action (O.25, r.1(1B) and (4)).

2 Stay to allow for settlement of the case

The Timetabling Questionnaire requires the parties to indicate whether they have attempted alternative dispute resolution (ADR) and if not, whether any of the parties are willing to engage in ADR. The Timetabling Questionnaire also allows the parties to request a stay while the parties try to settle the case. This may be by ADR, such as mediation, or by other means. A stay which has the effect of postponing the trial date will only be granted in exceptional cases.

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Timetabling Questionnaire (preliminary case management)

If a stay has been granted, the plaintiff must tell the court if a settlement is reached and the parties should take the necessary steps to conclude proceedings formally (PD 31 para. 17). ADR is discussed further in Chapter 14.

3 Information to include in Timetabling Questionnaire

The Timetabling Questionnaire requires parties to indicate whether they intend to apply to add a further party, and whether they intend to amend the pleadings and/or make a request for further and better particulars. Parties are requested to state the name of any witnesses of fact and the number of days required to exchange statements. If a party wishes to use expert evidence on liability and/or quantum, he should state the experts name, field of expertise and outline the issues and subjects the expert will address. It is at this stage that the parties will have to explain why, if that is their wish, they do not want to use a single joint expert or alternatively, why they do not want to arrange a joint examination or inspection by each partys respective expert.

Issues arising Timetabling Questionnaire

Although the Timetabling Questionnaire at first sight appears to be merely a procedural step, in fact the parties will need to have formed a detailed view of the underlying issues and of the appropriate procedures to adopt for the whole case shortly after the defendant has filed his defence. Only then, for example, will a party be able to identify the relevant witnesses and experts that will be required. This will probably lead to greater costs being incurred at an earlier stage in the proceedings but it is hoped this up-front approach will help promote settlement. In the past if a party chose to give limited information to the court, this had few implications. Under the new system, the implications are likely to be greater than in the past. The court may make an adverse costs order where a party has refused to cooperate and an unnecessary hearing has taken place (PD 5.2 para. 47).

Stay for settlement discussions

There is a concern that an unscrupulous defendant might request a stay merely to delay matters. It will be interesting to see how the court attempts to prevent this. Experience in England and Wales indicates the defendants who have sought a stay have genuinely sought to settle the matter. In many instances, however, the defendants do not seek a formal stay from the court but merely attempt to settle by negotiation or mediation alongside ongoing proceedings. It will be interesting to see if this approach is also adopted in Hong Kong.

Experts
Experts are dealt with at Chapter 10. However, it is at the stage of the Timetabling Questionnaire that parties outline the evidence they require to put in and make submissions in relation to the use of a single joint expert. Thus, if the parties wish to take advantage of O.25, r.1(1A) and agree proposals for directions, they will need to agree whether to use a single joint expert or party appointed experts. They will also have to explain their decision to the court, which may not be expected. It is likely that large cases and those of a complex nature will not be appropriate for single joint experts and the parties will generally be given permission each to call an expert in the appropriate field.

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7. Timetabling and milestone dates

Introduction
O.1A, r.4 provides that the court must further the underlying objectives by actively managing cases. Specifically, this will involve (amongst other things) procedural judges identifying the issues in the case, summarily disposing of some issues, deciding the order in which other issues are to be resolved, and fixing timetables for the procedural steps in preparing cases to trial. It is intended that procedural judges should be far more willing to intervene during the early stage of proceedings than they have been in the past, so as to ensure that issues are narrowed, that cases are prepared economically and speedily, and are disposed of fairly without undue delay or expense. Court determined timetables will be set at an early stage of proceedings taking into account the needs of the particular case and the reasonable requests of the parties, with firm milestone dates for the major steps in any proceedings, such as the trial date and other important events, such as the date of the pre-trial review. Only in the most exceptional circumstances will a milestone date be changed. The aim is to reduce delays. The courts are expected to adopt a flexible approach to case management to ensure that each case is dealt with in a way appropriate to its own particular circumstances. Smaller and simpler cases are likely to be given directions without the need for procedural hearings. The parties will be expected to comply with those directions without complicating or delaying matters. At the other end of the scale in more complex cases involving several parties, voluminous documents, multiple witnesses and several experts, the courts are likely to adopt a far more active approach, possibly with several directions hearings.

Key points

1 Directions on filing the Timetabling Questionnaire

On reviewing the Timetabling Questionnaire, the court may: fix a case management conference (O.25, r.1A(1)(b)); or (i) (ii) give directions up to trial without a hearing. The timetable will include a pre-trial review or trial date or period (O.25, r.1A(1)(a) and (3)). The order will be on a nisi basis so that parties who object will have 14 days to apply for a hearing to make their objections and proposals heard (O.25, r.1A(4)-(6)). Alternatively, the court may simply approve the parties agreed proposals for directions without a hearing and give directions in the terms proposed.

2 Case management conferences

It should not be thought that every case will go straight to a case management conference. Instead, it is envisaged that the court will be able to give comprehensive directions without a hearing on the basis of the Timetabling Questionnaire and with input from the parties. The court may fix a case management conference where the case is heavy and procedural complications are likely to arise, for instance where strongly contested interlocutory applications or interlocutory appeals are intended or pending (as disclosed in the Timetabling Questionnaire) making it difficult to fix a realistic trial date or trial period at the case management summons stage. At least 7 days before the case management conference, each party must file and serve the new Listing Questionnaire (attached to Practice Direction 5.2) (PD 5.2 para. 24). Listing Questionnaires are used to check that earlier orders and directions have been complied with, and to provide up-to-date information to assist the court with deciding further directions at the case management conference.

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Timetabling and milestone dates

If a party has a legal representative, a representative familiar with the case and with sufficient authority to deal with any issues that are likely to arise must attend the hearing. His authority should include the fixing of the timetable, the identification of issues and matters of evidence. Notwithstanding this general rule if, however, the hearing is before a judge, it should be attended by trial counsel, unless otherwise directed. If the inadequacy of the person attending or of his instructions leads to the adjournment of a hearing, the court may make a wasted costs order (PD 5.2 paras. 44-48). At the case management conference, the court is likely to: (i) undertake a thorough review of the steps the parties have taken to date in preparing the case for trial;

(ii) consider the extent to which the parties have complied with previous orders and directions; (iii) decide on the directions needed to progress the action in accordance with the underlying objectives; (iv) ensure that all admissions and agreements are made and recorded between the parties about the matters in issue and the future conduct of the action; (v) adjourn the case management conference to another date, fix a date for a pre-trial review, or fix a trial date and period; and (vi) ascertain the parties attempt or intention to undergo ADR (PD 5.2 para. 32). In all cases, the court will set a timetable for the steps it decides are necessary. This may include holding a further case management conference or a pre-trial review.

3 The pre-trial review

A pre-trial review will not be held in every case but only those that merit an additional hearing. Where fixed, it will normally be held about 8-10 weeks before trial or before the beginning of the trial period. A pre-trial review is not an extension of the case management conference. The court will expect a case to be ready for trial at the time of the pre-trial review (PD 5.2 paras. 33-34). If practicable, the pre-trial review will be conducted by the trial judge. The same rules about a fully informed representative being present apply to pre-trial reviews as those which apply to case management conferences (PD 5.2 paras. 33, 44-46 and paragraph 2 above). At a pre-trial review, the judge will fix a start date for the trial (if this has not already been done), and the estimated length of the trial will be confirmed or varied in light of the completed interlocutory steps. In addition, the judge will give any further directions needed (including any extensions of time for interlocutory tasks not yet completed, or any appropriate unless orders or terms as to costs), provided that such directions do not impinge upon the trial date. The court will also utilise the pre-trial review as an opportunity to exercise its trial management powers and may limit, for example, the number of witnesses, including expert witnesses that a party may call on a particular issue. (PD 5.2 para. 36 and O.35, r.3A).

4 Failure to appear

If the plaintiff fails to appear at a case management conference or pre-trial review, the plaintiffs claim will be provisionally struck out. Likewise, in cases where the defendant has filed a counterclaim and the defendant has failed to appear, any counterclaim will be provisionally struck out (O.25, r.1C(1) and (2)).

The plaintiff (or where applicable, the defendant) will then have a grace period of 3 months to restore the claim or counterclaim. The court will not, however, restore the action unless good reason has been shown (O.25, r.1C(3) and (5)).

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5 Variation of milestone dates

The case management conference, pre-trial review and most importantly, the trial date (or trial period if the trial date is not yet fixed) are milestone dates. These dates cannot be varied by agreement and a party who wishes to vary any of the milestone dates must apply to court showing that exceptional circumstances apply (O.25, r.1B(1)-(3)). Late instructions from a client, a change in the team of lawyers, and the absence of prejudice to the other party which cannot be compensated for by costs, will not be treated as exceptional circumstances (PD 5.2 para. 42). It must be anticipated that the court will not be pre-disposed to delaying the trial and very cogent arguments and reasons will be required in order to achieve any variation. In contrast, variations of non-milestone dates (for example, extending by a few days, time for exchange of witness statements) may be varied by consent or by application provided that the agreed variations do not ultimately imperil the trial date or trial period (O.25 r.1B(4)-(7) and PD 5.2 para. 40).

Issues arising Active case management

Effective case management is at the heart of the new reforms. The aim of the Civil Justice Reform is that this should go much further than simply ensuring the case is pushed quickly to trial. The judge should decide what issues need full investigation and dispose quickly of those issues which do not, with a view either to advancing the trial date, or shortening the trial itself.

A more interventionist judiciary?

It is likely that we will see a more interventionist judiciary, although the approach to case management is likely to vary from judge to judge and master to master. Furthermore, effective case management will depend on judges and masters being given sufficient time to read into a case in advance to enable them to be in a position to grip the issues at the directions hearing. The experience from our London colleagues is that English judges and masters are conscious that they are supposed to be pro-active and some are, but the overall impression is that increased case management relating to defining issues, timetabling, monitoring costs or settlement discussions has not happened to the extent envisaged by Lord Woolf. A possible explanation for this may be that there was already a certain amount of case management in some English courts, such as the Commercial Court, and so judges in these courts have not felt the need to intervene further. Also, where the courts are dealing with sophisticated parties, judges generally seem happy to let the parties get on with it and are not particularly interventionist. On the other hand, where there has been intervention, it has not always been welcomed by the parties. Several practitioners have commented that some judges intervene on the hoof based solely on a quick review of the papers immediately before a hearing without any awareness of the utility of the order or direction they are making or the cost ramifications. There is also the feeling that some judges rarely have any appreciation of the size of the tasks in major litigation and simply assume larger firms can and will get them done in short order. It will be interesting to see if these same issues arise in Hong Kong in due course.

Court-determined timetables and milestone dates

This new system of fixing timetables with firm milestone dates at an early stage of the proceedings is also aimed at reducing the scope for delaying tactics, unnecessary applications and to deter parties from pursuing marginal or pointless issues. However, the court will only fix the milestone dates once a questionnaire has been filed by one or both parties after the close of pleadings. This was a deliberate policy decision: the Chief Justices Working Party on Civil Justice Reform concluded that it was wrong to force litigation on parties after the close of pleadings if they decide not to proceed at that stage. As a result there is still a possibility of cases going to sleep at an early stage under the new system.

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Timetabling and milestone dates

Attendance at case management conferences and pre-trial review

The case management conference and pre-trial review must be dealt with by the legal representative responsible for the case, or in any event by a legal representative familiar with the case who is able to provide the court with the information it is likely to need. The legal representative attending the application on behalf of the party must also have sufficient authority to deal with issues likely to arise. Solicitors will therefore have to confer with clients in some detail and take full instructions as to the future handling of the case. In addition, this new requirement may lead to an increase in solicitor advocacy. It is likely to be the handling solicitor with responsibility for the case, rather than a barrister instructed intermittently, who will have the detailed knowledge of the issues and the practical considerations in the case and therefore be in the best position to deal with these hearings.

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8. Discovery
Introduction
Traditionally discovery (the process by which documents relevant to the case are disclosed and produced to the other parties) is a time consuming and, consequently, costly process. One of the main proposals for reform was the scrapping of the very wide automatic discovery obligations currently imposed on all parties to litigation and the introduction of a new less burdensome discovery regime based on the one introduced in England in the Woolf Reforms. However, it is widely acknowledged that the changes that the Woolf Reforms brought to the English discovery regime have not necessarily made the procedure any quicker or cheaper. Also it was generally felt that, in Hong Kong, discovery obligations are poorly complied with under the present system and any change to the discovery regime should be aimed at enforcing compliance with the present rules rather than narrowing the scope of discovery. Therefore this proposal was not adopted and the fundamental rules on discovery have not changed. However several less farreaching recommendations have been adopted. Under the new rules, it is anticipated that the court will apply its case management power to tackle the excesses of discovery, thereby saving costs. The reforms also allow for orders to be given to limit discovery in appropriate cases; and extend pre-action and third party discovery to all civil actions.

Key points

1 Pre-action discovery

To promote greater transparency between the parties at an earlier stage, the courts powers to order pre-action discovery against non-parties will be extended to all types of civil actions, not just (as at present) personal injury or death claims, although the rule is limited to those who are likely to be parties to subsequent proceedings (O.24, r.7A(1) and (3)(a)). No order will be made unless the discovery is necessary to dispose fairly of the claim or to save costs (O.24, r.8(2)). The applicant must satisfy the court that the documents sought are directly relevant to the issues in the anticipated proceedings, namely documents which would be relied on by the parties themselves, or documents which support or adversely affect a partys case (O.24, r.7A(3A) and s.41 HCO). Consequently, background documents or possible train of inquiry documents, currently permissible under the Peruvian Guano principles in standard discovery, will not be acceptable for an application for pre-action discovery.

2 Non-party discovery

It will be possible to apply for non-party discovery in respect of all legal proceedings (no longer limited to personal injury or death claims) up until the point of trial (O.24, r.7A(2)). As with pre-action discovery, no order for non-party discovery will be made unless it is necessary to dispose fairly of the claim or to save costs (O.24, r.8(2)).

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Discovery

3 Case management of discovery

Judges may seek to exercise their case management powers under O.1A to limit the scope of general discovery, in order to tackle the excesses of discovery thereby saving costs (O.24, r.15A). In addition, Practice Direction 5.2 requires parties to agree, where possible, directions on discovery without waiting for an order of the court. The purpose is to achieve economies in the discovery process (PD 5.2 para. 5). Typical directions may seek to: (i) modify discovery obligations e.g. limit discovery to specified issues; and

(ii) implement discovery obligations e.g. provide for the exchange of copy documents without the need to prepare lists of documents.

Issues arising Discovery before proceedings start

It will now be possible to apply for pre-action discovery in respect of all claims, not as present only in personal injury or death claims. The rule is limited to those who are likely to be parties to subsequent proceedings. Inevitably, there will be the danger of parties using this as a tactical tool to fish for documents that might be of assistance in founding a cause of action. However, the courts are unlikely to entertain this possibility and it is anticipated that the right to pre-action discovery will be limited to specific documents which the applicant knows exists or which must exist and which are of central relevance to the dispute. Following a recent evaluation of the Woolf Reforms by our London office, it appears that pre-action discovery in England and Wales has been a success although it is, interestingly, the availability of informal pre-action via the preaction protocols (rather than formal applications for pre-action discovery themselves) which has been the cause of the success. Informal pre-action discovery has, according to practitioners, led to greater discussions at an earlier stage and facilitated earlier assessment of claims. Formal pre-action discovery applications are not generally popular due to the difficulty of the test and the time-consuming and expensive nature of the application. It will be interesting to see how effective and utilised pre-action discovery is in Hong Kong considering this amendment is introduced without the benefit of pre-action protocols.

Non-party discovery
It will now also be possible to apply for non-party discovery in respect of all proceedings once commenced, not limited to personal injury or death claims. This new power compliments other current powers to order discovery against nonparties (such as the Norwich Pharmacal and Bankers Trust order and disclosure in aid of a Mareva injunction). This is likely to be a particularly useful new procedure where such documentation is needed at an early stage in the proceedings.

Case management
Instead of cases routinely proceeding to full automatic discovery under the wide Peruvian Guano test, it is possible the courts will use these principles as a starting point, and may then narrow discovery by appropriate case management according to the needs of the particular case. For example, the court may direct that discovery should take place in stages or in relation to particular issues first; or that it should be limited to particular classes of documents; or that documents need not be listed individually but by bundle or by file in certain categories, and so forth. It will also be standard practice for the parties to consider between themselves whether agreement can be made on economising modifications to the scope and manner of the partys discovery obligations. The powers to modify full automatic discovery are already largely contained in existing provisions in the Rules of the High Court, although it is likely these rules will be utilised more going forward, either by the parties themselves, or by the court in exercising is case management powers.

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9. Interim measures
Introduction
Interim remedies are relief that the court may grant a party before final judgment in order to protect that partys position or assets pending judgment, for example temporary injunctions, interim payments and security for costs. The Civil Justice Reform introduces no significant changes to the general procedure governing applications for interim remedies. However, it will introduce one specific and very significant change relating to asset-freezing (Mareva) injunctions. Under the new rules, it will now be possible to grant asset-freezing injunctions in aid of proceedings or arbitrations which have been (or will be) commenced outside Hong Kong. As to other interim measures, the rules aim to reduce the number of interlocutory applications of doubtful or little value by introducing a number of changes, for example, making orders self-executing, dealing with interlocutory applications on paper, and penalising unwarranted interlocutory appeals with appropriate costs and other sanctions. In addition, the rules introduce a new summary assessment of costs procedure which aims to dispense with the present elaborate and lengthy taxation procedures, thereby saving time and costs.

Key points

1 Mareva injunctions

The court may grant interim relief in aid of proceedings which have been (or will be) commenced outside of Hong Kong. The applicant will not need to establish a substantive cause of action in Hong Kong, as was the case previously (s.21M HCO). Likewise, the court may grant interim relief in aid of arbitrations which have been (or will be) commenced outside Hong Kong (s.2GC(1) AO). The court must be satisfied that the proceedings and arbitrations are capable of leading to a judgment or arbitral award (whether interim or final) which can be enforced in Hong Kong (s.21M(1)(b) HCO and s.2GC(1A) AO). The court may refuse an application for interm relief where s.21M HCO is the sole source of the courts jurisdiction and consequently the court considers it unjust or inconvenient to grant the application (s.21M(4) HCO). There is no similar restriction under the Arbitration Ordinance. Interim relief in aid of foreign proceedings is entirely at the courts discretion. Consequently, in the exercise of that discretion, the court will bear in mind that its jurisdiction is only ancillary and intended to assist the process of the court or arbitral tribunal which has primary jurisdiction (s.21N(1) HCO and s.2GC(1C) AO).

2 Reduction of interlocutory applications

Greater cooperation between the parties

The proliferation of interlocutory applications has been regarded as one of the most serious causes of additional expense and delay in the litigation process, particularly if taken on appeal, which is currently as of right in the Court of First Instance. In order to reduce the number of interlocutory applications of doubtful or little value, the following changes are proposed:

The rules encourage parties to cooperate with each other and to agree procedural arrangements. For example, the Timetabling Questionnaire filed by both parties after the close of pleadings (discussed in Chapter 6) requires parties, where possible, to agree a timetable up to trial.

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Interim measures

Even where the parties cannot agree, mutual cooperation is demanded in the management of contentious issues, for instance by arranging for all unresolved interlocutory questions to be dealt with at the same hearing to keep costs down and to avoid proliferation of interlocutory hearings. Where costs have unnecessarily been incurred due to one partys unreasonable refusal to cooperate, this may be taken into account by the court in making costs orders. Furthermore, the court may make an adverse costs order summarily assessed where a party makes an unnecessary and disproportionate interlocutory application (PD 5.2 paras. 6(4) and 47). Interim procedural orders

It is also intended that unnecessary interlocutory applications will be reduced by the court making interim procedural orders, or orders nisi, on its own initiative (O.1B, r.3). The scope of these orders will be fairly limited and it is not envisaged that the court will make orders nisi in circumstances where the order would lead to a contentious hearing, such as a security for costs application. Instead the court will most likely make orders nisi in respect of less significant directions which are unlikely to be controversial but which are probably procedurally necessary in order for the matter to proceed. Increased use of unless orders

The court will increase its use of self-executing orders or unless orders. These are orders which take effect automatically upon non-compliance without the need for a further hearing. The sanction will be proportionate to the non-compliance in question. For example, failure to serve witness statements or expert reports may lead to exclusion of that evidence at trial, or there may simply be costs sanctions. Where non-compliance will make fair trial impossible, the action may be struck out. This would be a last resort and other less draconian sanctions are likely to be made (Biguzzi v Rank Leisure Plc [1999] 1 WLR 1926). Increased use of paper hearings

The court has the power to dispose of interlocutory applications on paper without a hearing where appropriate (O.32, r.11A(1)).

Interlocutory applications in general

A new Practice Direction 5.4 sets out a new procedure (in respect of setting of the timetable, filing of evidence, skeleton arguments and costs statements etc.) allowing interlocutory applications to be dealt with promptly either on paper or at a short hearing. In dealing with interlocutory matters, the master may make any directions that are necessary or desirable. These include the setting of a timetable, the filing of evidence and arguments, the filing of a statement of costs (and the filing of grounds of opposition to the statement of costs) (O.32, r.11A(3)). Where an interlocutory application is adjourned, no further evidence may be adduced unless there are exceptional circumstances that make the filing of evidence desirable (O.32, r.11A(4)).

Summary Assessment of Costs

Summary assessment of costs will be governed by the new O.62, r.9A. Under r.9A(1), the court when disposing of an interlocutory application, will be empowered to: (a) make a summary assessment of costs in lieu of taxation; (b) make a provisional summary assessment of costs subject to the right of either party to have the costs taxed; or (c) order a taxation at the end of the action.

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Where the court has made a provisional summary assessment of the costs (paragraph (b) above), either party is entitled to insist on a taxation of the costs with a view to adjusting the quantum of payment made (O.62 r.9A(2)). However, the rules make certain provisions to deter any unnecessary taxation. If the party seeking taxation succeeds in having the sum adjusted in his favour, he should be entitled to have the payment consequential to the summary assessment adjusted accordingly (O.62, r.9A(3)(b)-(c)). However, if he fails to achieve a favourable adjustment, or if the adjustment is not significant so that the costs of the full taxation are disproportionate to the benefits gained, he may be ordered to bear the full taxation costs and any other order appropriate in the circumstances (O.62, r.9A(4)). The costs summarily assessed shall usually be paid within 14 days of the date of the order, unless the court orders otherwise (O.62, r.9B). Summary assessment will not be allowed in certain situations (O.62, r.9C), for example, where: (a) the paying party shows substantial grounds for disputing the sum of costs claimed; (b) the receiving party is an aided person or a person under disability and his legal representative has not waived the right to any further sum of money in respect of the costs of the interlocutory application.

Issues arising Asset freezing injunctions

Previously, the Hong Kong courts could not grant Mareva relief in aid of proceedings brought outside of Hong Kong. This is set to change under the new rules which empower the courts to grant Mareva injunctions in aid of foreign proceedings, including foreign arbitration proceedings. This is an important development for international companies or companies that do business outside of Hong Kong. Hong Kong companies frequently wish to sue companies or individuals who have significant assets in Hong Kong but, for legal jurisdictional reasons, cannot bring the proceedings in Hong Kong. Although the courts of certain countries do give themselves powers to order Mareva injunctions covering the worldwide assets of the defendant, various procedural difficulties in Hong Kong have, until now, made it impossible for the Hong Kong courts to freeze the Hong Kong assets of a defendant being sued in a foreign court. Under the new regime, this will be possible subject to the courts discretion.

Self-executing Orders
Obviously the reforms to the procedure governing interlocutory applications are intended to reduce the amount of interlocutory applications and make those that still proceed quicker and cheaper. We hope that this is successful but we have our doubts about the effectiveness of these reforms unless the court is particularly tough in enforcing them. For example, unless orders are a vigorous sanction for non-compliance but the reforms also allow a party in breach to obtain relief upon giving a reasonable explanation of their failure to comply with it. The courts will have to take a very firm line to ensure that procrastinating parties do not treat unless orders as merely an annoyance rather than a fatal weapon.

Paper Hearings
Paper hearings may not necessarily be significantly cheaper than oral hearings. Although they save the time and costs associating with the hearing itself, the parties will still need to prepare evidence and skeleton arguments and it is possible that, unless the court takes a strict line, the initial order that the court gives on most paper applications will merely be that an oral hearing is still required. The rules also allow any party to apply for an oral hearing if they think it is necessary. So, again, the court is going to have to ensure that it takes a firm line in its use of paper hearings to ensure that it genuinely leads to quicker and cheaper justice.

Summary assessment of costs

This is linked to the new regime governing interlocutory applications. From 2 April 2009 the court will look to summarily assess costs of all but the largest interlocutory applications. Summary assessment of costs is not a radical idea and procedures for the swift taxation of costs were set out in the gross sum assessment procedure under the old O.62, r.9(4)(b). However this was rarely used and the introduction of a more systematic process for summary assessment aims to discourage applications that are merely speculative and tactical and also to dispose with the present elaborate and lengthy taxation procedure, thereby saving time and costs.

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Interim measures

Summary assessment of costs will have two main features. The first of these is immediacy of payment. Where costs are assessed summarily the paying party will generally be ordered to pay promptly, normally within 14 days. Secondly, summary assessment of costs will be broad brush which will avoid the legal fees associated with detailed taxation of costs and to implement the reform, a new Practice Direction 14.3 has been drafted which gives detailed guidance as to how a summary assessment of costs is to proceed. This new regime may more effectively deter unreasonable procedural conduct. The pay as you go principle is likely to result in parties making fewer ill-conceived applications, given that they will have to pay the other partys costs immediately, rather than at some distant point in the future after a long drawn-out detailed assessment procedure. However, this may not be a sufficient disincentive to a well-resourced party who may continue to make tactical and numerous applications to wear down the opposition regardless of cost. In England and Wales, the main problem of the summary assessment regime has been the inconsistency between the orders made by different judges. Following an evaluation of the Woolf Reforms by our London office, the view is that the courts still do not have a real feel for costs and how much time it is necessary to spend preparing for an application. Assessment is still felt to be rough and ready with figures being plucked from the air and costs being marked down in the majority of cases. That said, in England, the summary assessment regime has successfully acted as a major deterrent to making a purely tactical application, or one with little chance of success, by giving immediate costs orders a real bite and has perhaps been the single most effective measure in changing the manner in which litigation is run. It is hoped this will also be the case in Hong Kong.

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10. Evidence
Introduction
The basic principles relating to factual and expert evidence will remain unchanged. However, the rules will introduce a number of ways in which the court can control evidence, the objective being to reduce costs and delays. Given the court will be under a duty to further the underlying objectives by actively managing cases, greater judicial management of evidence should be expected.

Witnesses key points

1 The courts power to control evidence

(i)

In exercising its powers of case management, the court may order at any time before or during a trial, directions which (amongst other things) limit: the time to be taken in examining, cross-examining or re-examining a witness; and

(ii) the number of witnesses that a party may call on a particular issue (O.35, r.3A, para.(1)(a)-(b)). In deciding whether to make such directions, the court will have regard to the factors listed in O.35, r.3A (2)(a)-(i). This power is discussed further in Chapter 12.

2 Amplification of witness statements

(i) amplify the witness statement; and

In order to discourage the over-working of witness statements, the court will be able to allow statements to be supplemented to:

(ii) give evidence on new matters which have arisen since the witness statement was served on the other party (O.38, r.2A(7)(b)). Leave to amplify a statement will only be granted if there is good reason to allow a witness to expand beyond the contents of his statement (O.38, r.2A(7A)). A witness statement must be verified by a statement of truth. As with all other statements of truth, it is contempt of court to make a false statement without an honest belief in its truth (See Chapter 4 for further information).

Experts key points

Single joint experts

The court has the power to order the parties to appoint a single joint expert (O.38, r.4A(1)). In considering whether to appoint a single joint expert, the court will take into account the following guidelines (O.38, r.4A(5)): (i) whether the issues requiring expert evidence can be identified in advance;

(ii) the nature of the issues and the degree of controversy attaching to the expert evidence;

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Evidence

(iii) the value of the claim and the importance of the issue as compared with the cost of employing separate expert witnesses to give evidence; (iv) whether the party has already incurred expenses in instructing an expert who may be asked to give evidence as an expert witness in the case; and (v) whether any difficulties are likely to arise in relation to choosing the joint expert, drawing up his instructions and providing him with the required information and necessary facilities. The rules outline the procedure for appointment of a joint expert where the parties cannot agree on a name. In addition, the court has the power to give directions on the terms and conditions of experts employment (including payment of fees and expenses) (O.38, r.4A (2) and (3)). Where a party disagrees with the appointment of a single joint expert, the court will not make an order unless that party has been given a reasonable opportunity to appear before the court and make representations (O.38, r.4A(6)).

2 Experts duties

An expert has a duty to help the court on the matters within his expertise. This overrides any obligation to those who have given the instructions or paid for his services (O.38, r.35A). The expert will need to acknowledge that overriding duty in his report. Instructions to experts will have to include a new Code of Conduct (Rules of the High Court Appendix D). The expert will need to confirm in his report that he has read the code, understands his duty to the court, has complied and will continue to comply with that duty. The report, and indeed any oral evidence, is not admissible without such a declaration (O.38, r.37C).

3 Restrictions on calling expert evidence

In the usual way, the courts permission will be required to call expert evidence (O.38, r.36(1)). The court will not give permission unless that party has identified the experts field of expertise and identified the specific issue which the expert will address (PD 5.2 para. 20(1)).

Issues arising Witness statements

The new rules maintain the basic position that a witness is generally to be confined to the contents of his witness statement. However, under the new system, the court now has a general wider discretion to allow him to go beyond such contents if the court gives permission, and that permission will only be granted if there is good reason to do so. For instance, where the amplifying or supplementary evidence would take the other side by surprise, the court could be expected to disallow it unless there was good reason to do otherwise, in which case it would be likely to let in the evidence on terms designed to avoid prejudice to the other side. Allowing witness statements to be supplemented orally will allow witnesses greater flexibility and may limit overelaborate statements and resulting excessive costs. However, similar provisions introduced by Lord Woolf in England and Wales have not generally reduced the considerable time and expense that continues to be spent on the preparation of witness statements. This will probably also be the case in Hong Kong.

Statements of truth
All witness statements and expert reports will have to carry a statement of truth, given by the maker of the document, subject also to the same potential penalty as for the verification of pleadings (i.e. contempt). Refer to Chapter 4 for further details on statements of truth.

Single joint experts

The Rules of the High Court previously provided for the appointment of single joint experts, although this was little used. Single joint experts are not compulsory under the new rules but are likely to be increasingly ordered by the court in certain cases.

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It is anticipated that the court is only likely to make such an order in low value, low complexity cases where the issues fall within a substantially established area of knowledge and where it is not necessary for the court to sample a range of opinion. Suitable areas may include, for example, quantum in straightforward personal injury cases, uncontroversial questions of foreign law or straightforward property or share valuations. The appointment of single joint experts in relation to highly contentious issues is likely to be inappropriate. In contentious cases, parties may feel driven to appoint their own shadow experts to advise in drawing up instructions or in questioning the single expert at trial. This may result in three experts being involved in the case, thereby in effect increasing rather than reducing costs, even if these costs are not ultimately recoverable from the opposing party. In some contentious matters, genuine room may exist for serious expert debate among skilled and impartial experts. Consequently, justice may be best served in such cases by allowing parties to call their own experts. Whilst the power to order the appointment of a single joint expert may be exercised at any time or before the trial of an action, it is likely that such order will be made at the determination of a case management summons. The main difficulty with this is that one or more parties may have needed, or chosen, to obtain advice from an expert before proceedings were issued. This may pose a dilemma for the case management judge when giving directions on expert evidence. While the court may perceive there to be significant advantages for evidence to be obtained from one single joint expert, the impact on the timetable of the action, and particularly on the costs incurred, may be disproportionate if the court orders the instruction of a new expert at a stage when one or more party has already instructed their own expert. In some cases it may be appropriate to allow the parties to retain their own expert, and for the court to seek to narrow the issues in dispute on the expert opinion evidence by ordering an experts discussion pursuant to O.38, r. 38.

Independence of experts
In the Working Partys Interim Report, the perceived lack of partisanship and independence of experts, and the ensuing devaluation of their role in the judicial process, was identified as a major deficiency with the civil justice process. The Final Report acknowledged that whilst the principles which underlie experts duties are well-known and established in case law, it would be beneficial for such principles to be given more prominence, so as to address these concerns. Accordingly, the new rules have reinforced the experts duty to the court, and introduced a new code of conduct for experts.

Focused experts reports

Parties are required to identify the specific issues and subjects for the experts when completing the Timetabling Questionnaire. By answering precise issues and subjects, it is hoped that experts will consequently produce more focused reports.

Limitations on evidence at trial

At trial there may be limitations on expert evidence to be adduced and time limits imposed on openings and crossexaminations etc. Refer to Chapter 12 for further details.

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11. Payments in and offers to settle

Introduction
The new rules include a formalised system of offers to settle. The system allows the defendant and, for the first time, the plaintiff, to make an offer to settle any type of dispute (not just money ones), and imposes specific cost consequences against a party who rejects an offer which he is unable to better at trial. It is a procedure which aims to encourage the parties to take possible settlement seriously and to avoid unproductive prolongation of the litigation. A specific regime is laid down in a new O.22 for written offers to settle (sanctioned offers) and payments into court (sanctioned payments). The new regime is adopted and modified from the Part 36 offers and payments of the Civil Procedure Rules introduced as part of the Woolf Reforms which have achieved considerable success in England and Wales. Offers can be made in ways not provided for under the Rules of the High Court, but if a party makes an offer other than under O.22, he will be outside the specific costs scheme provided for (O.22, r.2(4)).

Key points

1 Operation of the new system

The new O.22 allows the parties to offer to settle a dispute, whether the claim is monetary or non-monetary. (Previously, O.22 only dealt with monetary claims with settlement proposals for non-monetary claims being dealt with by a Calderbank letter under the old O.22, r.14).

A sanctioned payment is a payment into court in settlement of all or part of the plaintiffs claim. A sanctioned offer is a written offer to settle a claim or part of it (otherwise than by way of a payment into court) (O.22, r.1). Both can only be made after proceedings have begun (unless a pre-action protocol adopted by a specialist list provides otherwise). Under the new rules, settlement offers by the parties can relate to: (i) the whole claim;

(ii) a part of a claim(s); and (iii) an issue arising from a claim(s) (O.22, r.2(1)). As distinct from the existing O.22, which only provides for payments into court by the defendant, the new O.22 allows also the plaintiff to make settlement offers. However, a plaintiff can only make a settlement offer by way of a sanctioned offer (not by way of sanctioned payment) (O.22, r.4). In contrast, a defendant can, depending on the circumstances, make a settlement offer using either method. However, where a defendant wishes to settle a monetary claim, he must make a sanctioned payment (O.22, r.3(2)). Where the offer does not consist purely of a payment of money, it will have to be made by way of sanctioned offer. Statutory Forms are required for sanctioned payments, whilst sanctioned offers have no prescribed forms.

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2 Making a sanctioned offer

(i)

There is no prescribed form but the offer must be in writing and served on the other party (O.22, r.5). It must also state: whether it relates to the whole or part of the claim or to an issue arising in it;

(ii) whether it takes into account any counterclaim or set-off; and (iii) that interest is not included if that is the case, as it will be taken to include interest unless otherwise stated. If so excluded, the offer must also state whether interest is offered, and at what rate and for what period (O.22, r.5(3) and O.22, r.26). A sanctioned offer made not less than 28 days before the start of trial must be expressed to remain open for acceptance for 28 days and state that after 28 days the offeree may only accept if the parties agree the liability for costs or the court gives permission (O.22, r.5(7)). A sanctioned offer made less than 28 days before the start of trial must state that the offeree may only accept it if the parties agree the liability for costs or the court gives permission (O.22, r.5(8)). A sanctioned offer is made when it is served on the offeree (O.22, r.12(1)). Where the sanctioned offer is made not less than 28 days before the start of trial, a sanctioned offer 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 do so (O.22, r.7(1)).

3 Making a sanctioned payment

A defendant making a sanctioned payment must serve a Notice of Payment (Form 23) on the plaintiff and file a Certificate of Service at court (O.22, r.9). Form 23 must state, amongst other things, the amount of payment and whether the payment relates to the whole claim or to part of it or to any issues arising from it and if so, to which part or issue (O.22, r.8(2)). A sanctioned payment is made when the Form 23 is served on the offeree (O.22, r.12(2)). A sanctioned payment may not be withdrawn or diminished before the expiry of 28 days from the date the sanctioned payment is made unless the court grants leave to do so (O.22, r.10(1)).

4 An offeree may request clarification of an offer or payment notice

The request must be made within 7 days of the sanctioned offer or payment being made (O.22, r.14(1)). The offeror has 7 days in which to give the clarification requested. If he fails to do so, and the trial has not started, the offeree may apply to the court for an order requiring clarification (O.22, r.14(2)).

5 Acceptance of an offer or payment

A flow chart outlining the acceptance procedure is attached at Appendix 2. The rules governing acceptance of sanctioned offers and payments are similar except there is a prescribed form (Form 24) to be used for acceptance of a sanctioned payment (O22, r.15(4)). No prescribed form is required for acceptance of a sanctioned offer. A sanctioned offer or payment made more than 28 days before the start of trial may be accepted within 28 days without the courts permission provided a written notice of acceptance is filed and served within 28 days after the offer or payment is made (O.22, r.15(1) and r.16(1)). A sanctioned offer or payment made less than 28 days before the start of trial cannot be accepted without the permission of the court unless the parties agree the liability for costs (O.22, r.15(2) and r.16(2)).

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Payments in and offers to settle

Where a sanctioned payment is accepted, it is effected by serving the offeror, and filing at court, a Notice of Acceptance (Form 24) (O.22, r.15(4)). A Notice of Acceptance must set out the title of the proceedings, identify the payment to which it relates and be signed by the plaintiffs legal representative. Where a sanctioned payment is accepted, the plaintiff may obtain payment out of the sum in court by making a Request for Payment (Form 25), which is signed by both parties (O.22, r.17). If there is subsisting an application to withdraw or diminish a sanctioned offer or payment, it may not be accepted without leave (O.22, r.7(3) and r.10(2)). A sanctioned offer or payment is accepted when notice of its acceptance is served on the offeror (O.22, r.12(5)). Where one or more, but not all, the defendants make a sanctioned payment or offer, there are specific provisions set out in the rules which govern acceptance (O.22, r.18).

Consequences of acceptance of an offer or payment

Costs If a defendants sanctioned offer or payment to settle the whole claim is accepted without requiring leave, the plaintiff is entitled to his costs of the proceedings up to the date of serving the Notice of Acceptance (O.22, r.20(1)) If a plaintiffs sanctioned offer to settle the whole claim is accepted without requiring leave, the plaintiff is entitled to costs of the proceedings up to the date on which the defendant served his Notice of Acceptance (O.22, r.21(1)). If a sanctioned offer or payment of a defendant relating only to part of the claim or an issue arising from the clam is accepted, the plaintiff is entitled to his costs of the proceedings up to the date of the acceptance if at the time of serving the Notice of Acceptance he abandons the other parts of the claim or other issues arising from the claim (O.22, r.20(2)). Stay If the sanctioned offer or payment relates to the whole claim and is accepted, the claim will be stayed. For a sanctioned offer, the stay will be on the terms of the offer and either party may apply to enforce those terms without the need for a new claim (O.22, r.22(1) and (2)). If the sanctioned offer or payment which relates to part only of the claim is accepted, the claim will be stayed as to that part and, unless the parties have agreed costs, the liability for costs will be decided by the court. Either party may apply to enforce those terms without the need for a new claim (O.22, r.22(3)). If approval of the court is required for the acceptance of the sanctioned offer or payment, the stay arises on approval rather than on acceptance (O.22, r.22(4)).

7 Costs consequences where a plaintiff fails to do better than a sanctioned offer or payment
Where a plaintiff does not do better than a defendants sanctioned offer or payment at trial, the court may order that the plaintiff: (i) has the interest on whole or part of the plaintiffs monetary award disallowed (O.22, r.23(2)); (ii) pay the defendants costs on an indemnity (or otherwise) basis after the latest date on which the payment or offer could have been accepted without the leave of court (O.22, r.23(3) and (4)(a)); (iii) has to pay interest on those costs at an enhanced rate of up to 10% above judgment rate (O.22, r.23(4)(b)).

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8 Costs consequences where a plaintiff does better than he proposed in his sanctioned offer
Where a defendant has not accepted a plaintiffs sanctioned offer and the plaintiff does better at trial than the proposal in his offer, the court may order that the defendant pays: (i) enhanced interest (up to 10% above judgment rate) on any sum awarded (excluding interest) from the latest date on which the offer could have been accepted without requiring the leave of court (O.22, r.24(2));

(ii) the plaintiffs costs on an indemnity basis from the latest date when the defendant could have accepted the offer without the leave of the court (O.22, r.24(3)(a)); and (iii) enhanced interest on those costs at a rate of up to 10% above judgment rate (O.22, r.24(3)(b)).

9 Courts discretion to make costs orders

(i) the terms of any sanctioned offer or payment;

The court has the discretion not to make the costs orders in paragraphs 7 and 8 above if it considers it unjust to do so (O.22, r.23(5) and r.24(4)). In considering whether it is unjust to make the order the court will take into account all the circumstances of the case including:

(ii) the stage in the proceedings when any sanctioned offer or payment was made; (iii) the information available to the parties at the time when the sanctioned offer or payment was made; and (iv) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer or payment to be made or evaluated (O.22, r.23(6) and O.22, r.24(5)).

10 Disclosure of sanctioned offers and payments

(i)

There are restrictions on disclosure of sanctioned offers and payments: A sanctioned offer is automatically treated as without prejudice save as to costs (O.22, r.25(1)).

(ii) The fact a payment has been made may generally not be communicated to the trial judge until all questions of liability and quantum have been decided (O.22, r.25(2)).

Issues arising Plaintiffs offer

The most striking new provision in the rules is the plaintiffs offer. If the plaintiff makes an offer which is not accepted but which he betters at trial, he is likely to receive not only a rate of interest on the amount awarded of up to 10% above judgment rate for the period after the defendant failed to accept the offer, but may also get his costs on the indemnity basis, with an equally high rate of interest, for the same period. A defendant must therefore consider very seriously a plaintiffs offer, because in refusing it, he is potentially exposing himself to a significant extra liability. In view of the short timetables the court is likely to impose once proceedings have commenced, plaintiffs should prepare thoroughly before issuing proceedings. This means a plaintiff is likely to be in a position to make a sensible sanctioned offer shortly after commencement of proceedings. The defendant will then be under pressure to accept at a time when he may be much less well prepared to assess the plaintiffs claim accurately.

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Payments in and offers to settle

Costs sanctions
The costs sanctions should be an effective way of ensuring parties take possible settlement seriously and to avoid unproductive prolongation of the litigation. However, the effectiveness or otherwise of these measures will largely depend on the extent to which the courts utilise their new costs sanctioning powers. It should be noted in this regard that there has been reluctance among judges in England to hand out indemnity costs orders, so it will be interesting to see how the Hong Kong judges apply their new powers. If, in fact, the Hong Kong judiciary do make wide use of their new powers to impose costs sanctions under O.22, the definition of what is unjust may become a contentious issue and result in further satellite litigation.

Non-sanctioned offers
It is still possible to make offers which do not comply with the requirements in O.22 in, for example, the old Calderbank offer format, although these will not attract the cost and other consequences set out above. In exercising its discretion as to costs, although the court will take into account any without prejudice offers, it will not consider these offers if, at the time they were made, the party making it could have protected its position by means of a sanctioned payment or offer under O.22 (O.62, r.5(1)(d)). Consequently, it is clear that compliance with O.22 provides greater certainty that specific costs consequences will ensue.

Clarification
The request for clarification is likely to be a useful tool. If a request, or a subsequent order, for clarification, is not complied with, the court will no doubt take this into account in the exercise of its discretion in relation to the cost consequences of not accepting the offer or payment. The request for clarification does not allow the offeree additional time in which to accept the offer or payment, and once clarification has been received, the offeree may have very little time in which to decide whether to accept. Presumably, the need to clarify an offer will be taken into account by the court where the offeree has to seek permission of the court to accept an offer or payment after the time for acceptance has expired. If an application to court is required to force the offeror to give clarification and the court makes an order it must specify the date on which the sanctioned offer or payment is to be treated as having been made.

Part 36 under Woolf

Part 36 (a similar regime to the sanctioned payment/sanctioned offer system) has been one of the most successful changes introduced in England and Wales by the Civil Procedure Rules. In a recent evaluation of the Woolf Reforms conducted by our London office over 90% of practitioners consulted considered that Part 36 offers and their costs consequences encourage settlement. There is debate about whether it is the costs provisions of Part 36 themselves which have encouraged settlement or whether the practice of making offers has encouraged settlement by opening the door to negotiations, without the initiating party seeming weak. In practice it seems to have become almost standard for a claimant or defendant to make a Part 36 offer. This is also likely to be the case in Hong Kong.

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12. Trial
Introduction
The provisions regarding trial are broadly similar to those under the old rules save for one major amendment. A new O.35, r.3A (based on a Western Australian model) gives the court an express power more effectively to manage the trial procedure.

Key points
At any time before or during trial, the court has the power to limit: (i) the time taken in examining, cross-examining and re-examining a witness;

(ii) the number of witnesses (including expert witnesses) a party can call; (iii) the time taken in making any oral submission; (iv) the time taken by a party in presenting its case; and (v) the trial time (O.35, r.3A(1)). In exercising its discretion to make an order under O.35, r.3A(1), the court will consider the following matters: (i) the trial time limit must be reasonable;

(ii) each party is entitled to a fair trial; (iii) each party must be given a reasonable opportunity to lead evidence and cross-examination; (iv) the complexity or simplicity of a case; (v) the number of witnesses to be called and the volume and character of evidence; (vi) the state of the court lists; (vii) the time expected to be taken for trial; and (viii) the importance of the issues and the case as a whole (O.35, r.3A(2)).

Issues arising
The new rules give the court increased powers to control proceedings by, for example, restricting opening submissions, and controlling the time limits for the parties submissions. The powers are primarily to be exercised at the pre-trial review when the court ought to be in a good position to make an assessment of the needs of the trial, although the court has flexibility to give such directions at any time before or during trial. The new rules aim to reduce prolixity and help determine the real issues in dispute.

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Trial

These changes should serve to reduce the length of trial. For example, under the old system, much time was often wasted on excessive, lengthy and irrelevant examinations and cross-examinations. The English courts have for some time had the express power to limit cross-examinations during trial (Civil Procedure Rule 32.1(3)). At present, Hong Kong judges appear to be less willing to intervene, although trial judges have on occasion expressed displeasure at the length of examinations (for example, in Nina Kung v Wang Din Shin [2006] HKEC 1967, the Court of Final Appeal reduced the successful partys trial costs by one-third on the basis that a great deal of time [was] wasted at the trial by an inordinately long, and often oppressive, cross-examination on matters which were peripheral or irrelevant). It will be interesting to see if the Hong Kong courts adopt a more robust approach going forward and whether such costs sanctions become more commonplace. Also significant in this context, is likely to be the conduct of the case leading up to trial. If the court has carried out its duty actively to manage the case, it will have eliminated issues at an early stage by, for example, possibly restricting the parties to the use of a single joint expert rather than allowing them to adduce their own expert. The effect of which should be a shorter and more focused trial.

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13. Costs
Introduction
One of the key aims of the new rules is to provide a system which is more affordable, and with it to make the costs of litigation more predictable to the users of the court system. This chapter briefly sets out the new regime for the quantification of costs and the underlying principles. The new measures aim to reduce satellite litigation on costs and limit the need for taxation.

Key points

1 Entitlement to costs

The costs to follow the event principle will continue to apply to the costs of the action as a whole. However, in relation to interlocutory applications, this principle will simply be an option rather than the prescribed usual order (O.62, r.3(2A)). Instead, the summary assessment of costs procedure (outlined in Chapter 9), which imposes an immediate costs sanction, will be used more frequently for interlocutory applications to discourage unreasonable procedural conduct. In exercising its discretion as to costs, the court will have regard to the following matters: (i) the underlying objectives in O.1A, r.1;

(ii) offers to settle or payments into court; (iii) the conduct of the parties; and (iv) whether a party has succeeded in part of his case (O.62, r.5(1)).

2 Offers and payments

(i)

A new procedure of sanctioned offers and sanctioned payments for taxation proceedings (the procedure by which the court quantifies the amount of costs to be awarded to the successful, or receiving, party), similar to the new O.22 discussed in Chapter 11, is introduced under O.62A. If a receiving party fails to beat a sanctioned payment, the court may: disallow all or part of any interest on costs for the period after the latest date on which the payment could have been accepted without requiring leave of the court;

(ii) order the receiving party to pay the costs of the taxation on an indemnity basis after the date on which the payment was made; and (iii) award interest on those costs up to 10% above judgment rate (O.62A, r.19). If a receiving party does better than his own sanctioned offer, the taxing master may award the receiving party: (i) interest on the taxed costs up to 10% of the judgment rate for the period after the date on which the offer was served;

(ii) the costs of the taxation on an indemnity basis after the date on which the offer was served; and (iii) interest on those costs up to 10% above judgment rate (O.62A, r.20).

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Costs

The taxing master will not make the costs orders above if it considers it unjust to do so. In considering whether it is unjust, the master will take into account all the circumstances of the case including: (i) the terms of the offer or payment;

(ii) the stage in the proceedings at which the offer or payment was made; (iii) the information available to the parties at the time the offer was made; and (iv) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated (O.62A, r.19(5) and 20(5)).

3 Taxation by Judicial Clerks Provisional taxations on paper 4

The threshold of taxations by a Chief Judicial clerk will be raised from $100,000 to $200,000 (O.62, r.13(1A)).

Under the new system, unless taxation is set down for a hearing, the taxing master can tax the bill of costs without a hearing. Orders will be made on a nisi basis to allow a party who objects 14 days to apply for an oral taxation hearing (O.62, r.21B(1)-(3)). A party who calls an oral hearing may be subject to costs sanctions (i.e. ordered to pay the costs of the hearing) if he fails to do materially better at the hearing (O.62, r.21B(5)). The court will consider: (i) the amount by which the costs taxed at the hearing exceed the amount allowed in the provisional taxation; and

(ii) whether the exceeded amount is proportionate to the costs of the hearing (O.62, r.21B(6)).

5 Counsels fees

No costs will be allowed for counsel appearing before a master in chambers, or of more counsel than one appearing before a master in open court or a judge or the Court of Appeal, unless the master or judge or the Court of Appeal has certified the attendance as being proper in the circumstances of the case (O.62, First Schedule, Part II, para. 2(3)). The special rules governing taxation of counsels fees (which allowed fees in full unless the amount was excessive and unreasonable) is abolished. The new rules provide that counsels fees on full taxation will only be allowed at the discretion of the taxing master and not as of right (O.62, First Schedule, Part II, para. 2(5)).

6 Procedure and documents for Taxation

(i) the form and content of a bill;

In order to expedite the taxation procedure and to save costs, a new O.62, r.13A is added to empower a taxing master to give directions as to:

(ii) the filing of papers and vouchers (i.e. the taxation bundle); (iii) the manner in which any objection to the bill may be raised (and a reply to those directions may be made); and (iv) the steps to be taken at any stage in the taxation proceedings (O.62, r.13A(2)). The complex rules for commencing taxation proceedings set out in O.62, r.21 are replaced with a new rule 21 which completely overhauls the old procedure. Under the new system, a receiving party files a notice of commencement of taxation together with his bill of costs, and then serves it within 7 days. A prescribing taxing fee is paid when the bill is filed.

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Upon compliance with the directions given by a taxing master under O.62 r.13A, the party seeking taxation may apply for an appointment to tax. This must be served on every party entitled to be heard on taxation within 7 days after making the application. The taxing master may refuse to proceed if he is of the opinion that any of the directions have not been complied with (O.62, r.21A). Parties need to file taxation documents in the prescribed form with the bill of costs supported by cross reference to taxation bundles, and objections to items in the bills taken on clearly stated grounds (Practice Direction 14.3). The aim is to increase the efficiency of the taxation procedure.

7 Taxation costs
(i)

A party entitled to payment of any costs taxed is also entitled to his costs of the taxation (unless any rule, direction or order provides otherwise) (O.62, r.32A(1)). Whether the court should make some other order is guided by the underlying objectives in O.1A, r.1 and O.62, r.32A(2) which considers: the conduct of the parties;

(ii) the amount by which the bill of costs has been reduced; and (iii) whether it was reasonable for a party to claim or dispute a particular item. The court may disallow all or part of the costs, or order the party at fault or his legal representative to pay costs that he has caused another to incur: (i) if the party or his legal representative fails to comply with a rule, practice direction or order of the court; or

(ii) if it appears to the court that the conduct of a party or his legal representative was unreasonable or improper (O.62, r.32C).

Measures to facilitate settlement and reduce delays in taxation proceedings

The time period for commencement of taxation proceedings after a costs order has been made is extended from 1 month to 3 months (O.62, r.22(1)-(3)). Where there is undue delay in commencing or proceeding with taxation, the taxing master may: (i) order the delaying party to pay costs of the taxation; and

(ii) disallow any part of the costs or interest, or reduce the rate or period of relating to the taxed costs (O.62, r.22(5)). A limitation period of 2 years for the commencement of taxation is introduced (O.62, r.22(7)). Under the old rules, there was no limitation period, and taxation of a costs order could, in theory, be left outstanding indefinitely.

9 Wasted costs orders

The courts power to make wasted costs orders against solicitors will be extended to cover barristers (s.52A(4)-(7) HCO). Wasted costs are costs incurred as a result of any improper, unreasonable act or omission or undue delay or other misconduct or default on the part of the legal representative (s.52A(6) HCO). The procedure for making a wasted costs order application is outlined in a new Practice Direction 14.5.

10 Costs against non-parties

The court will be permitted to make a costs order against a non-party if it is in the interests of justice to do so (s.52A(2) HCO). In order to make a third party costs order, the non-party must be joined as a party to the proceedings for the purposes of costs only and given a reasonable opportunity to attend a hearing (O.62, r.6A(1)).

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Costs

Issues arising Costs sanctions

Judges and masters are given a wider discretion to award and apportion costs taking into account the underlying objectives, partial successes and conduct of the parties before as well as during the proceedings (including the reasonableness of cases and issues, the manner in which the parties have acted and exaggerations). More costs sanctions are likely to be imposed in order to punish and discourage inefficiencies and unreasonable behavior, for example, inappropriately verified pleadings, over-elaborate witness statements and expert reports, unnecessary interlocutory applications or appeals. It is also interesting to note that the costs of taxation proceedings themselves will likewise be subject to the underlying objectives, the conduct of the parties etc. For example, if a receiving party has unjustifiably inflated his bill or has filed a poorly prepared bill which makes a provisional taxation impossible or which prolongs the oral hearing, the court may deprive him of some or all of this costs or order him to pay some or all of the paying partys costs or disallow some of the costs awarded on the taxation. As to co-operation between the parties, Practice Direction 14.3 specifically mentions the duty on the parties to discuss the items of costs to which there is objection and to try to reach an amicable settlement, narrow down the items in dispute and consider making a sanctioned offer under O.62A. Failure to observe these could result in personal liability for costs by the party and/or practitioner (PD 14.3 paras. 4-5).

Wasted costs orders

The new rules extend the courts power to make wasted costs orders against barristers (the court has long had such jurisdiction over solicitors). This change is aimed at discouraging unmeritorious or unnecessary applications and encouraging parties to act reasonably and co-operatively throughout the proceedings.

Offers and payments

The introduction of a mechanism which enables either party to make a sanctioned payment or offer is likely to force parties to give serious thought to settling a dispute as to costs, and should lead to a reduction in expensive taxation hearings.

Third party orders

The courts will have an express power to make costs orders against non-parties, which puts Hong Kong more in line with the English position, where costs orders against non-parties, notably insurers, have been commonplace for some time. This is likely to target litigation funders who were largely protected by the old legislation.

Greater powers for the taxing masters

As for procedural matters, taxing masters who assess a successful partys costs are given fairly similar case management powers to judges, when directing the taxation. The approach to, and success of, taxation management is likely to vary from master to master. This may result in uncertainty in predicting the outcome of applications as well as the possibility of inconsistent and unfair results.

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14. ADR and settlement

Introduction
Under the Civil Justice Reform, the encouragement and facilitation of alternative dispute resolution (ADR) by the court will be an aspect of the courts new case management powers, and the parties and their lawyers will have a duty to help the court in furthering that objective by seriously considering the possibility of ADR to resolve their disputes. Encouragement by the court is likely to mean a stick as well as a carrot as parties unreasonably refusing to mediate may be penalised in costs. ADR is a procedure by which the parties agree to appoint a neutral third party to assist them to settle or resolve their dispute. However, for the purposes of the Hong Kong Civil Justice Reform, ADR is considered to mean mediation. The Judiciary has published a new Practice Direction 31 on Mediation which outlines the new duties on parties and the new mediation procedures. The Practice Direction will not come into effect on 2 April 2009 (like other practice directions) but its implementation has been postponed until 1 January 2010, to allow practitioners more time to become familiar with the mediation process.

Key points

1 Duty to explore ADR

(i)

An underlying objective of the new rules is to facilitate the settlement of disputes (O.1A, r.1(e)). The court has the duty as part of active case management to further that objective by: encouraging parties to use ADR where appropriate and facilitating its use (O.1A, r.4(2)(e)); and

(ii) helping parties to settle their case (O.1A, r.4(2)(f)). The parties and their legal representatives have the duty of assisting the court to further these objectives (O.1A, r.3).

2 Costs consequences of refusing to mediate

No adverse costs order will be made where: (i) there has been a minimum level of participation; or

The court may make an adverse costs order where there has been an unreasonable refusal to mediate. In making any such order, the court will take into account all the relevant circumstances (PD 31 para. 4).

(ii) a party has a reasonable explanation for not engaging in mediation, such as progressive without prejudice settlement negotiations (PD 31 para. 5). Lawyers should advise their clients of the risk on costs where mediation is not considered (PD 31 para. 4).

3 What is mediation?

Mediation involves the appointment of a trained and impartial third party (a mediator) whose main function is to facilitate channels of communication between the parties, seeking common ground, and encouraging the parties to find agreement where possible. A mediator does not make rulings on matters in dispute between the parties. If the parties cannot agree, they are free to walk away from mediation and continue to litigate their dispute. Any information exchanged during the mediation is prima facie without prejudice and therefore protected by the rules of privilege.

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ADR and settlement

Mediation is a private process which may be attractive where parties wish to maintain a continuing relationship. Further information on the process is provided in the Judiciarys pamphlet What is Mediation which can be accessed on the judiciary website at www.judiciary.gov.hk.

Preliminary case management

Parties will need to consider mediation early in proceedings. For example, the Timetabling Questionnaire (discussed in Chapter 6) requires the parties to indicate whether they have attempted ADR and if not, whether any of the parties are willing to engage in ADR. Regardless of whether parties wish to engage in mediation, they will need to follow at least part of the procedure outlined below.

5 The new mediation procedure

The Mediation Certificate Each party must file a Mediation Certificate (attached to Practice Direction 31) at the same time as the Timetabling Questionnaire (i.e. 28 days after the close of pleadings). The Mediation Certificate must be signed respectively by the solicitors and the party they represent (PD 31 para.9). The Mediation Certificate will state whether a party is willing to attempt mediation and if not, why not (PD 31 Part I of Appendix B). The Mediation Certificate will also confirm that the solicitors have explained to the client: (i) the availability of mediation to settle the dispute (or part(s) of the dispute) and the respective costs positions of mediation as compared with the costs of the litigation; and

(ii) the content of the Mediation Practice Direction (PD 31 Part II of Appendix B). The Mediation Notice If a party wants to attempt mediation (the Applicant), he must serve a Mediation Notice on the other party or parties in the dispute as soon as possible after filing the Mediation Certificate (PD 31 para. 10). In the Mediation Notice, the Applicant will state that he wishes to attempt mediation and will make proposals for the conduct of mediation (proposing, amongst other things, a mediator, venue, and what mediation rules should apply) (PD 31 Appendix C). The Mediation Response The Respondent must serve and file at court a Mediation Response within 14 days (or other time agreed by the parties or ordered by the court) (PD 31 para. 11). The Response should state whether the Respondent agrees to mediate the dispute and if not, why not. If the Respondent is willing to mediate, he should confirm whether he agrees with the Applicants proposals and if not, he should suggest alternatives. The Mediation Minute Where the parties put forward differing proposals in the Mediation Notice and Response, they should attempt to reach agreement and put this in the form of a Mediation Minute signed by the Applicant and the Respondent or their solicitors. The Mediation Minute should be filed in court within 3 days after it has been signed (PD 31 paras. 12 and 15). Where the parties are unable to reach agreement on certain proposals they may: (i) make a joint application to the court for directions resolving the points of difference between them (where they are willing to have their differences resolved by direction of the court); or alternatively

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(ii) any party may apply to the court for directions and the court may give directions appropriate to resolve the differences between the parties (although the court will only make directions on certain matters) (PD 31 para. 13). The court will only try to resolve differences concerning the details or mechanics of the mediation process where the parties have agreed to attempt mediation. The court should not, for example, be asked to direct a party to engage in mediation or appoint a particular mediator over the opposition of the other party, unless both parties are willing to have their differences resolved by the court. Non-legally represented cases Where one or more of the parties is not legally represented, the procedure will differ. In such cases, on the application of a party or of its own motion, the court may consider at a suitable stage whether mediation is appropriate. If the court considers that mediation is appropriate, it will give directions that the party follow the above procedure with any necessary modifications (PD 31 paras. 18-20).

Stay of legal proceedings

The court may, either on application by one of the parties or of its own motion, stay legal proceedings for a short time to allow parties to mediate, provided the stay does not imperil any milestone dates. A stay which has the effect of postponing the trial date will only granted in exceptional cases (PD 31 para. 16). If the parties agree settlement, they must inform the court and take steps formally to conclude the proceedings (PD 31 para. 17). If no agreement is reached through mediation, the legal proceedings will continue after the stay period has expired.

Issues arising Costs consequences

The courts power to make adverse costs orders where a party unreasonably refuses to mediate should ensure that parties pay more attention to ADR than was commonly the case. However, it is not clear what will constitute unreasonable conduct. It is likely the courts will look to case law developments in England and Wales where, in the absence of written rules, the courts have been handing down decisions which illustrate when rejection of mediation may be regarded as unreasonable in relation to cases where there has been an outright refusal to participate. English case law has not always taken a consistent approach but is likely to be of use to local courts when considering this question. For example, in the recent decision of I River HK Ltd v Thakral Corporation (HK) Ltd [2008] 4 HKLRD 1000, the Hong Kong Court of Appeal court cited with approval two leading English decisions on the cost consequences of an unreasonable refusal to mediate (Dunnett v Railtrack Plc [2002] 2 All ER 850 and Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3002).

Without prejudice communication

The Practice Direction states that communications during the mediation are subject to the without prejudice protection of privilege (PD 31 para. 6). However, case law developments in England demonstrate this is an area not without debate and exceptions apply. For example, in England the courts have allowed parties to adduce evidence of what happened in the later stages of a mediation in order to decide whether or not a valid mediation agreement had been concluded (Brown v Rice and Patel and ADR Group [2007] EWHC 625 (Ch)).

Growth in mediation
The use of mediation is expected to increase as public confidence in the process grows and Hong Kongs pool of trained and experienced mediators increases. This in turn should lead to more cases being settled at an earlier stage. To advance this trend, the Judiciary has established a Working Party on Mediation to consider how consensual mediation of civil disputes in the Court of First Instance, the District Court and the Lands Tribunal may be facilitated. That said, the success of mediation will depend on whether judges themselves become more pro-active in encouraging the process.

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ADR and settlement

Following an evaluation of the Woolf Reforms by our London office, the views on the increased use of ADR in England are mixed. Some judges seemed to be evangelical about ADR in the early days of the Civil Procedure Rules. However, there is a view that this has tailed off somewhat. Some practitioners report that judges now see it as just a box to be ticked on the case management questionnaire and are content to let parties deal with ADR issues themselves. The costs sanctions which can be imposed for failure to mediate are, in some cases, a factor in persuading parties to use ADR but are not, in our experience, the deciding factor. What is apparent though is that ADR in England, in all its forms, is now much more on the clients and the courts radar and is something which is considered in almost all cases. This is also likely to be the case in Hong Kong once the reforms have had some time to bed in.

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15. Appeals
Introduction
The most significant change to the appeals regime under the Civil Justice Reform is the introduction of a new requirement for the courts permission to appeal from the decision of a Court of First Instance judge with respect to an interlocutory application. This is designed to reduce satellite litigation on interlocutory issues (which are often of only marginal significance to the outcome of the litigation). Other changes aim to speed up the process generally by imposing a shorter time frame to appeal, streamlining the leave application process so that all applications are dealt with in the same way, and empowering the court to deal with certain applications on paper without a hearing. In common with much of the Civil Justice Reform, work is significantly front loaded with summonses, appeal bundles, affidavits and skeleton arguments being filed within a shorter time period than previously required.

Key points

1 Appeals from masters

An appeal from a master to a judge (whether from the masters decision on the papers or after a contested hearing) remain as of right. However, no fresh evidence (other than evidence on matters which have occurred since the decision was given) may be admitted unless special grounds apply (O.58, r.1(1) and (5)). In considering what is special the court is likely to apply the general rule stated in the English case of Ladd v Marshall [1954] 1 WLR 1489, which sets out three conditions to be satisfied before such evidence is considered: (i) Was the evidence not reasonably available at the time of the original hearing?

(ii) Is the evidence of sufficient importance to the decision? (iii) Is the evidence apparently credible (even if not necessarily incontrovertible)?

2 Permission to appeal
(i)

An interlocutory appeal from the Court of First Instance to the Court of Appeal can only be brought with the permission of the Court of First Instance or the Court of Appeal (s.14AA(1) HCO). Exceptions apply to: appeals from masters to judges, which remain as of right (see O.58, r.1 and paragraph 1 above);

(ii) interlocutory decisions which are decisive of substantive rights (for example, where summary judgment has been granted, where there is an order to strike out an action or pleading, or an order refusing to set aside judgment) (O.59, r.21(1)(a) and (2)); and (iii) certain other defined categories of decisions (including those concerning committal for contempt, habeas corpus and judicial review) (O.59, r.21(1)(b)-(l)). Where leave to appeal is required, the court will have power to limit the grant of such leave to particular issues and to grant leave subject to conditions designed to ensure the fair and efficient disposal of the appeal (s.14AA(3) HCO). Permission to appeal will only be given where the court considers the appeal has a reasonable prospect of success, or there is some other compelling reason why the appeal should be heard (s.14AA(4) HCO). Refusal of leave by the Court of Appeal is final (s.14AB HCO).

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Appeals

3 The leave application procedure

(i)

The rules introduce a revised standardised procedure for leave applications to the Court of Appeal. The new rules outline the following procedure: An application is made by summons accompanied by draft grounds of appeal, affidavit evidence where appropriate and written submissions as to why leave should be granted. If an extension of time is requested, this application should be made at the same time (O.59, r.2A(1) and (3) and PD 4.1 para. 7).

(ii) Leave applications should be made inter parties (and not, as present, ex parte) (O.59, r.2A(2) and 2B(5)). (iii) A party who wishes to resist a leave application must file and serve within 14 days a statement setting out the reasons why the application should not be granted. The court may then decide the matter on paper or will direct that the application be heard at an oral hearing (O.59, r.2A(4) and (5)). (iv) Where a determination is made by the Court of Appeal on paper, the aggrieved party may apply for an oral hearing within 7 days but this will be refused if the application is totally without merit (O.59, r.2A(7)-(8)). (v) Where an oral hearing takes place, it may be heard by the Justices of Appeal who determined the paper application (O.59, r.2A(9)). (vi) Where an application for leave to appeal against interlocutory decisions or other orders of the Court of First Instance is made, the application for leave must initially be made within 14 days from the date of the judgment or order to the judge or master whose decision is being challenged. Where the application is refused, the party has 14 days to make a further application to the Court of Appeal for leave to appeal (O.59, r.2B). (vii) Where a determination is made by a single judge of the Court of Appeal, the aggrieved party may make a fresh application to two Justices of Appeal within 7 days (O.59, r.2C). (viii) In granting leave, the court may give any directions or impose any conditions it sees fit (O.59, r.2A(6)).

4 Time limits for appealing

Where leave is required and granted, a notice of appeal has to be served within 7 days (O.59, r.4(1)(a)). Where leave is not required, the time for appealing has been standardised so that a notice of appeal should be filed within 28 days from the date of the judgment, order or decision (O.59, r.4(1)(b) and (c)).

5 Interlocutory applications on paper

Applications which are interlocutory to pending appeals to the Court of Appeal can be dealt with on paper (without a hearing) (O.59, r.14A(1)). Alternatively, where it considers it necessary or expedient, the court may direct that the interlocutory application be heard before a Court of Appeal consisting of 2 or 3 Justices of Appeal (O.59, r.14A(2)).

Issues arising Clamp down on evidence on appeals from masters

The restriction on the evidence allowed on appeal to a judge from a decision by a master is designed to prevent parties from filing further fresh evidence on appeal. This is in line with other proposals introduced by the Civil Justice Reform which aim to prevent parties raising new arguments at a later stage in the process and to encourage parties to be up front about the substance of their case early on.

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Better distribution of judicial resources

Currently, where there is satellite litigation on interlocutory issues (which are often of only marginal significance to the outcome of the litigation), major delay and expense is likely to be incurred. The introduction of a leave requirement is not a radical proposal and many jurisdictions, including England and Wales prior to the adoption of the Woolf Reforms, have for many years made interlocutory appeals subject to the grant of leave. The aim is to help screen out unmeritorious applications, to discourage undue delays and misconduct and thus facilitate better use of judicial time and resource for genuine disputes. As to the threshold of the leave test, the reference to some other reason in s.14AA(4) HCO is generally take to allow some additional leeway on appeals to the Court of Appeal which raise a point of public interest or relate to an area of law which requires clarifying.

Time periods
The new rules require an application for leave to appeal to be lodged with the draft grounds of appeal and all accompanying affidavits, skeleton arguments etc. within 14 days from the judgment date (O.59, r.2B(1) and PD 4.1 para.7). Previously, time ran from the date on which the order was perfected (i.e. sealed) which often delayed matters by one or two weeks. The new rules have shortened time periods and consequently represent a significant amount of front-loading.

More paper applications

In order to streamline some existing procedures, the court is empowered to deal with certain applications on paper without a hearing. For example, the Court of Appeal, comprising two Justices of Appeal, will now have jurisdiction to hear or determine interlocutory applications in relation to pending appeals by a paper hearing. This aims to expedite the process and to reduce costs.

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Appendix 1 Flow-chart of the new Civil Justice Reform procedure for a Writ action
Writ Filed and served by the Plaintiff

Acknowledgement of Service of Writ & Notice of Intention to Defend Filed by the Defendant

Statement of Claim (unless indorsed on the Writ) Filed and served by the Plaintiff

Defence Filed and served by the Defendant

Reply Filed and served by the Plaintiff

Upon receipt of the Timetabling Questionnaire, Court either gives directions up to trial without further hearing (fixing a Pre-Trial Review and/or the Trial Date or Trial Period) or fixes a Case Management Conference

Timetabling Questionnaire filed and served by parties 28 days after close of pleadings (where possible attaching a consent summons containing agreed directions)

Case Management Summons issued by the Plaintiff if there is no agreement on directions (or the defendant does not file a Timetabling Questionnaire)

Case Management Conference

Court gives directions up to trial (and fixes a Pre-Trial Review and/or the Trial Date or Trial Period)

Experts Reports*

Discovery*

Witness Statements*

Possibly another Case Management Conference and/or Pre-Trial Review

Trial

These stages could be completed, or dispensed with, before the Case Management Conference if the parties agree or the Court orders as such following the issue of a Case Management Summons.

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= acceptance by P = acceptance by D

The Civil Justice Reform in Hong Kong: Litigating in the new era

Is the sanctioned offer / payment made not less than 28 days before commencement of trial?

NO O.22 r.15(2)(a) O.22, r.16(2)(a)

YES O.22, r.15(1) O.22, r.16(1) NO O.22 r.15(2)(a)(ii) + (b)(ii) O.22 r.16(2)(a)(ii) + (b)(ii)

Have the parties agreed on the liability for costs?

Leave of the Court IS required

Is the sanctioned offer / payment accepted not later than 28 days after the offer / payment was made? YES O.22 r.15(2)(a)(i) + (b)(i) O.22 r.16(2)(a)(i) + (b)(i)

NO O.22 r.15(2)(b) O.22, r.16(2)(b)

Appendix 2 Sanctioned offers and sanctioned payments acceptance

Leave of the Court is NOT required

YES O.22, r.15(1) O.22, r.16(1)

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Profiles
Mark Johnson is the head of Herbert Smiths dispute resolution practice in Asia. He has been based in Hong Kong since 1987 and has extensive experience of litigation and regulatory matters both in Hong Kong and throughout Asia, with a particular focus on the financial services sector. He advises a broad range of clients including international banks and other major financial institutions, market regulators and government bodies such as the Listing Committee of the Hong Kong Stock Exchange, the Independent Commission against Corruption and Insider Dealing Tribunal, listed and private companies and their directors on contentious regulatory issues.

Mark Johnson
Partner, Head of dispute resolution, Asia Tel: +852 2101 4003 Fax: +852 2845 9099 Email: mark.johnson@herbertsmith.com

Gavin spent over two years as a Managing Director at UBS AG in Hong Kong, responsible for litigation and regulatory matters in over 13 countries across Asia Pacific. Gavin specialises in litigation and regulatory work, with a particular focus on the financial services sector. He advises clients involved in investigations by the Securities and Futures Commission, Stock Exchange, Commercial Crime Bureau and Independent Commission Against Corruption in Hong Kong, in addition to inquiries by other market regulators in Asia. He also advises clients on internal investigations and in relation to anti-corruption matters. In his general litigation practice he has experience in complex creditor litigation and handles injunctions, Judicial Review, auditors liability and directors and shareholders disputes. He joined Herbert Smith in London in 1996 and has been based in Hong Kong since 1998.

Gavin Lewis
Partner, Dispute resolution, Hong Kong Tel: +852 2101 4002 Fax: +852 2845 9099 Email: gavin.lewis@herbertsmith.com

Tim focuses on contentious and non-contentious regulatory matters in the financial services industry, with an emphasis on regulatory investigations and proceedings. He also advises on related civil and criminal disputes, and where regulatory issues arise in corporate transactions. Tim has appeared as advocate before the civil and criminal courts in Hong Kong, as well as in specialist tribunals like the Insider Dealing Tribunal and the Administrative Appeals Board. After training and qualifying with Herbert Smith, he spent two years as an in-house lawyer with the Hong Kong Securities and Futures Commission, before returning to Herbert Smith in 2002. His clients include investment banks, commercial banks, private banks, fund managers, listed companies and their directors, financial services regulators and other market participants.

Tim Mak
Partner, Dispute resolution, Hong Kong Tel: +852 2101 4141 Fax: +852 2845 9099 Email: tim.mak@herbertsmith.com

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Gareth leads the Hong Kong commercial litigation team where he works closely with the Financial Services practice in particular advising on contentious regulatory matters. His clients in this sector include a broad range of financial institutions and market regulators. These proceedings often require urgent applications for interim injunctions.

Gareth Thomas
Partner, Dispute resolution, insurance and reinsurance, Hong Kong Tel: +852 2101 4025 Fax: +852 2845 9099 Email: gareth.thomas@herbertsmith.com

Gareth also heads the Asian insurance practice, which deals with all manner of insurance and reinsurance matters, both contentious and non-contentious.

Stephen has particular experience in competition law, monopoly infrastructure access regulation, media and telecommunications, and large scale/complex commercial litigation. Stephen is also a certified mediator and has extensive experience in alternative dispute resolution. Prior to joining Herbert Smith, Stephen worked for a major Australian law firm where he was involved in significant media and telecommunications competition litigation. He also advised in New Zealand on complex, high value commercial/competition litigation and international arbitrations for multi-national corporations and high net worth individuals.

Stephen Crosswell
Senior consultant, Dispute resolution, Hong Kong Tel: +852 2101 4176 Fax: +852 2845 9099 Email: stephen.crosswell@herbertsmith.com

Michael Withington
Senior consultant, Dispute resolution, Hong Kong Tel: +852 2101 4150 Fax: +852 2845 9099 Email: michael.withington@herbertsmith.com

Michael has practised in Hong Kong since 1994, having previously worked in Sydney, New South Wales, following his admission there as a solicitor in 1987. He has acquired a broad range of commercial litigation experience in Hong Kong, in areas such as insurance, employment, defamation and consumer law. He has conducted several appeals to the Court of Appeal and a successful appeal to the Court of Final Appeal. Since 1989, Michael has been a panel solicitor for the Hong Kong Solicitors Indemnity Scheme, advising both solicitors and their insurers on professional indemnity claims. He has also advised extensively on policy issues and acted in arbitrations over coverage disputes. Michael also handles a substantial employment practice, advising employers on a wide range of issues including terminations, discrimination claims and issues arising out of employee misconduct.

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