Praetorius v Head Architecture and Design Ltd
Court of First Instance
High Court Action No. 1057 of 2013
Deputy Judge Le Pichon in Chambers
Civil Procedure
13 May 2016

Sanctioned offer or payment – disclosure of sanctioned payment in application for security for costs – general rule was that permissible only where admission of liability of amount greater than security which otherwise would have been ordered

Ps claimed damages of over HK$12 million against D in respect of unauthorised building works due to negligent professional services and advice provided by a third party for whom D was allegedly either directly or vicariously liable. D denied liability and sought security for costs against P3–4. The Master made a joint and several order that P3–4 provide security of HK$700,000. P3 appealed. At issue, inter alia, was whether a sanctioned payment of HK$1 million into court by D (the “Payment”) should have been disclosed. P3 argued that the Payment was a relevant consideration which must be taken into account in determining whether security should be ordered.

Held, dismissing the appeal, that:

  • Where, as here, there had been a payment in, the court could take it into account, but it was not mandatory. It would depend on all the circumstances of the particular case.
  • Further, it was permissible to disclose a sanctioned payment if it would not cause embarrassment to the court or be unfairly prejudicial. As a general rule, it should not be disclosed save where there was an admission of liability of an amount greater than the security which otherwise would have been ordered, but it was for the disclosing party to justify such disclosure. Even then, it was for the court to decide whether it was a relevant consideration.
  • Here, D had not admitted any part of P3’s claim and it would be wrong to equate the sum paid in with the worth of the claim. D should not have disclosed the Payment. Even if disclosure were permissible, the Court was not bound to take it into account. On the facts, the Payment had no practical relevance or impact on the outcome.
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