High Court rejects a plaintiff's very late application for leave to accept a sanctioned payment

Under Order 22, Rule 15 of the Rules of the High Court, where a plaintiff fails to accept a sanctioned payment within 28 days of the payment being made by a defendant, payment may only be accepted with leave of the court. In Polyever Holdings Limited v Savills (Hong Kong) Limited, the High Court usefully summarized the principles it should consider in deciding whether or not to grant an application to accept a sanctioned payment after the expiry of the 28 day period, as follows:

1. The discretion of the court is unfettered and is to be exercised judicially.
2. The main criterion to be considered is whether there has been a change of circumstances as would render it unjust to allow the offeree to benefit from the sanctioned offer/payment.
3. The court will not, in the interlocutory application, conduct a mini-trial of the issues raised.
4. Other relevant considerations include:
5. The delay in making the application;
6. The substantiality of the offer to accept; and
7. The conduct of the applicant.
8. After taking into account all the relevant factors, the court will be guided by the overriding consideration to do justice between the parties.

The court held that the reason(s) for the late application to accept a sanctioned offer/payment is also a relevant consideration. The applicant must explain why an application has to be made to invoke the court's discretion and that explanation must be scrutinised and evaluated by the court. If the application is frivolous, the court cannot be expected to entertain it. In the event of a more serious delay, the court will look for a more cogent reason. The court stated that delay is an important factor because it can defeat the very object of Order 22: "a very late application means that the court's wishes to encourage settlement and to have its scarce resources fairly distributed are defeated."

In this case, the Plaintiff's reason for the late application was a change in the evaluation of the merits of its own case (as a result of the Plaintiff having changed its counsel). The court considered that such a reason would rarely be a good reason for allowing leave because, first, it is not a matter which is appropriate for the court to scrutinise and, second, lawyers often take different views on the merits of a case and therefore the achievement of the object of Order 22 cannot depend on who the parties have chosen as their legal advisors.

The most important message of this decision is that a parties should 'act early' when considering whether to accept a sanctioned offer or payment; the courts are not sympathetic to unjustified delays. Where leave is sought to accept a sanctioned offer or payment after the prescribed time limits, good reasons will be needed.

If you wish to discuss, please contact Gareth Thomas or Dominic Geiser of our Hong Kong Dispute Resolution team.