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(e)
The court's general discretion as to costs
The requirements for sanctioned offers discussed above are conditions which must be
met for an offer to qualify as such and therefore to carry the prescribed financial
sanctions. It should, however, be noted that offers which do not meet those
requirements are not nullities. If a party is unable to meet a condition (eg, the 28 day
requirement) or chooses to make an offer which does not comply with the
requirements (eg, by expressly reserving the right to withdraw the offer at any time
before acceptance), the offer will still take effect as a contractual offer and
procedurally, would still be taken into account in the court's exercise of its general
discretion as to costs.
This is in line with the CPR approach. As Lord Woolf pointed out in Petrotrade Inc v
Texaco Ltd (Note) [2002] 1 WLR 947, in England and Wales the CPR do not :-
"...... prevent a party making an offer in whatever manner that party chooses, but if that offer
is not in accordance with Part 36, ‘it will only have the consequences specified' in Part 36 ‘if
the court so orders': rule 36.1."
In Hong Kong, s 52A of the HCO provides that, subject to the provisions of rules of
court, the costs of and incidental to all civil proceedings in the High Court are in the
court's discretion. The introduction of sanctioned offers would not affect this residual
discretion which would enable the court to make an adverse costs order reflecting an
unreasonable rejection of an "unsanctioned" offer.
Indeed, if the circumstances justify such a course, a court could even order indemnity
costs to be paid in such cases. As in England and Wales, the main thrust of our case-
law was originally to regard indemnity costs as only appropriate where the paying
party has initiated proceedings that are scandalous, vexatious, or malicious or for an
ulterior motive, or has conducted them in an oppressive, abusive or improper
manner.
Notes
At §56.
See Overseas Trust Bank Ltd v Coopers & Lybrand (a firm) and Others and Peat, Marwick, Mitchell
& Co (a firm) [1991] 1 HKLR 177; Sung Foo Kee Ltd v Pak Lik Co [1996] 3 HKC 570; and Choy
Yee Chun (The representative of the estate of Chan Pui Yiu) v Bond Star Development Limited
[1997] HKLRD 1327.
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