ORDER 22 Payment into and out of Court

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Contentspara.

22/0/1

1.Payment into court (O.22, r.1) 22/1

2.Payment in by defendant who has counterclaimed (O.22, r.2) 22/2

3.Acceptance of money paid into court (O.22, r.3) 22/3

4.Order for payment out of money accepted required in certain cases (O.22, r.4) 22/4

5.Money remaining in court (O.22, r.5) 22/5

6.Counterclaim (O.22, r.6) 22/6

7.Non-disclosure of payment into court (O.22, r.7) 22/7

8.Money paid into court under order (O.22, r.8) 22/8

9.Person to whom payment to be made (O.22, r.10) 22/10

10.Payment out: small intestate estates (O.22, r.11) 22/11

11.Payment of hospital expenses (O.22, r.12) 22/12

12.Investment of money in court (O.22, r.13) 22/13

13.Written offers "without prejudice save as to costs" (O.22, r.14) 22/14

Editorial Introduction

22/0/2

The rules in Hong Kong are (except for the important time limit for acceptance of a
payment in, 14 days in Hong Kong as opposed to 21 days in England, and some
jurisdictional issues) identical to the former English rules. The English authorities therefore
remain persuasive. In these notes, references in the English cases to the period of 21 days
for the acceptance of a payment in have been amended to references to 14 days. The rules
directing the court as to the manner in which it should exercise its discretion as to costs
endeavour to encourage the settlement of proceedings. In particular, these rules provide a
means by which a party defending a claim may, in certain circumstances, by making an
offer, minimise his exposure to liability for his opponent's costs under the ordinary costs
rule. Thus, O.62 (Costs), r.5 says the court shall, to such extent, if any, as may be
appropriate in the circumstances, take into account:
(a)any offer of contribution brought to its attention, in pursuance of a reserved right to do so,
in accordance with O.16, r.10,

(b)any payment into court (see O.22, r.1),

(c)any written offer under O.33, r.4(A)(2), and

(d)subject to some qualifications, any written offer made under O.22, r.14.

The second of these, payment into court, is the principal mechanism; the others may be
regarded as derivative of it. The requisite rules of court for dealing with this procedure are
found in this Order. The payment in rules do not apply to third parties or to joint
contributors to any debt or damages. This problem is dealt with by O.16, r.10. (It should be
noted that the expression "payment into court" is used in another quite different context
where a defendant is ordered to pay money into court as a condition for being granted leave
to defend on a plaintiff's application for summary judgment under O.14.) Note also that in
Hong Kong payments into court may be made in respect of arbitration proceedings. The
relevant rules are to be found in O.73, rr.11-18.

The principal provisions in the Order are rr.1, 3, 7 and 14. Rule 1(1) of the Order states that
in any action for a debt or damages any defendant may at any time make a voluntary
payment into court of a sum of money in satisfaction of the plaintiff's claim. (He may, of
course, be ordered to pay money into court, e.g., as a condition for leave to defend; for
certain purposes, such involuntary payment is treated as a voluntary payment in, see r.8.) A
payment in may be subsequently increased but may not be withdrawn, except with the
leave of the court (r.1(3)). A plaintiff against whom a counterclaim is made, and any other
defendant to the counterclaim, may pay money into court in accordance with r.1 (r.6). Rule
7 states that, for obvious reasons, the fact that a party has paid money into court should not
be disclosed to the court before all questions as to liability and the amount of the debt and
damages have been determined by the court.

Rule 3 contains provisions concerning the acceptance of money paid into court. On the
plaintiff accepting money paid in, the proceedings to which the acceptance relates shall be
stayed (r.3(4)), including, where appropriate, proceedings on any counterclaim (r.3(5)).
Further, upon acceptance, the plaintiff shall be entitled to receive payment of that sum
(r.3(6)) but an order for payment out may be required (r.4) (note also, where he is legally
aided, r.10 requiring payment to the Director of Legal Aid). An additional consequence of
acceptance is found in O.62, r.10(2) which says that the plaintiff shall be entitled to his
costs of the action incurred up to the time of giving notice of acceptance (for explanation,
see para. 22/3/6). As indicated above, by the effect of O.62, r.5, the costs consequences of
the plaintiff's not accepting will be to limit the defendant's costs liability from the time of
acceptance (see para. 22/5/5).

In actions other than for "debt or damages" (covered by r.1) the defendant may make an
"open offer" which may have the same effect as to costs as a payment in. Alternatively, if
he does not wish his offer to be revealed to the court during trial, he may make his offer in
a letter written "without prejudice save as to costs". Rule 14 (and a related amendment to
O.62, r.5), codify and extend the procedure as to such offers endorsed by the English Court
of Appeal in Calderbank v. Calderbank [1975] 3 W.L.R. 586, CA. This case was applied in
McDonnell v. McDonnell [1977] 1 W.L.R. 34, CA.

For the purposes of O.59 (Appeals to the Court of Appeal), it may be that an order for or
 relating to payment into or out of court will be treated as interlocutory by reference to the
(different) English rules.

The general effect of the rules as to payment into court may be summarised as follows:

(i)Payment into court may be made or increased at any time after service of the writ on the
defendant on notice to the plaintiff and any co-defendant;

(ii)One lump sum may be paid in in satisfaction of one or more causes of action but such
payment in must include a sum in respect of interest which may be awarded on the debt or
damages recovered up to the date of the payment in;

(iii)The notice of payment in must specify the fact and the amount of payment and in
respect of all or which causes of action it is made; and if an interim payment has been made,
whether voluntary or pursuant to an order of the court, the notice must also state that that
interim payment has been taken into account;

(iv)A counterclaiming defendant must specify whether or not his counterclaim has been
taken into account in the payment in made by him;

(v)A plaintiff embarrassed by one lump sum paid in may apply to compel the defendant to
apportion that sum between two or more causes of action;

(vi)Except under section 4 of the Defamation Ordinance (Cap. 21), or where tender is
pleaded, the fact and the amount of payment in must not be disclosed in the pleadings or
communicated to the trial Judge or to the Court of Appeal until after liability and damages
have been tried;

(vii)Acceptance of the payment in may be made effective without leave (except in certain
specified cases) on notice within 14 days after the last payment in but before the beginning
of the trial;

(viii)Payment into court may be made or increased after the trial or hearing of an action has
begun;

(ix)Acceptance of a payment in made or increased after the trial or hearing of an action has
begun may be made without leave within two days after the receipt of the notice of payment
or further payment but before the judge begins to deliver his judgment or summing up;

(x)Acceptance of the payment in can be made only with the leave of the court in the case of
a person under disability or in the case of a payment in made under the Fatal Accidents
Ordinance (Cap. 22) or where tender is pleaded or where one of several defendants makes
the payment in;

(xi)The plaintiff may pay into court in satisfaction of a counterclaim in the same way as the
defendant does in relation to the claim;

(xii)In every case where there has been a payment in, the costs are in the absolute discretion
of the court.

Related Sources
22/0/3

•RHC, O.16, r.10 (Offer of contribution)

•RHC, O.18, r.16 (Defence of tender)

•RHC, O.29, r.16 (Payment into Court in Satisfaction)

•RHC, O.33, r.4A(2) (Split trial: offer on liability)

•RHC, O.37, r.9 (Offer to submit to an award of provisional damages)

•RHC, O.62, r.3(8) (Costs where payment in by counterclaiming defendant)

•RHC, O.62, r.10(2) (Where a party may sign judgment for costs without an order)

•RHC, O.62 (Costs), r.5 (Special matters to be taken into account in exercising discretion)

•RHC, O.73, rr.11-18 (Payment in in arbitration proceedings)

•RHC, O.80, r.12 (Control of money recovered by person under disability)

•RHC, O.82, r.4 (Provisions as to payment into Court in defamation actions)

The following Practice Direction is relevant to this Order:

•Practice Direction--16.2 (Judgment: Foreign Currency) para. 4 (Payment of foreign currency into
Court in satisfaction)

Forms

22/0/4

The following Prescribed Forms in Appendix A are relevant to O.22:

•No. 23--Notice of payment into Court (rr.1 & 2)

•No. 24--Notice of acceptance of money paid into Court (r.3)

•No. 51--Judgment for costs after acceptance of money paid into court (O.62, r.10(2) & (3))

See also Practice Form No. 10, FM-D10(J) found in Appendix D.

Payment into court (O.22, r.1)

22/1
1.--(1) In any action for a debt or damages any defendant may at any time pay into court a sum or sums
of money in satisfaction of the cause of action in respect of which the plaintiff claims or, where two or
more causes of action are joined in the action, a sum or sums of money in satisfaction of any or all of
those causes of action.

(2) On making any payment into court under this rule, and on increasing any such payment already
made, the defendant must give notice thereof in Form No. 23 in Appendix A to the plaintiff and every
other defendant (if any); and within 3 days after receiving the notice the plaintiff must send the
defendant a written acknowledgment of its receipt.

(3) A defendant may, without leave, give notice of an increase in a payment made under this rule but,
subject to that and without prejudice to paragraph (5), a notice of payment may not be withdrawn or
amended without the leave of the Court which may be granted on such terms as may be just.

(4) Where two or more causes of action are joined in the action and money is paid into court under this
rule in respect of all, or some only of, those causes of action, the notice of payment--

(a)must state that the money is paid in respect of all those causes of action or, as the case may be, must
specify the cause or causes of action in respect of which payment is made, and

(b)where the defendant makes separate payments in respect of each, or any two or more, of those
causes of action, must specify the sum paid in respect of that cause or, as the case may be, those causes
of action.

(5) Where a single sum of money is paid into court under this rule in respect of two or more causes of
action, then, if it appears to the Court that the plaintiff is embarrassed by the payment, the Court may,
subject to paragraph (6), order the defendant to amend the notice of payment so as to specify the sum
paid in respect of each cause of action.

(6) Where a cause of action under the Fatal Accidents Ordinance (Cap. 22) and a cause of action under
sections 20 to 25 of the Law Amendment and Reform (Consolidation) Ordinance (Cap. 23) are joined
in an action, with or without any other cause of action, the causes of action under the said Ordinances
shall, for the purpose of paragraph (5), be treated as one cause of action.

(8) For the purposes of this rule, the plaintiff's cause of action in respect of a debt or damages shall be
construed as a cause of action in respect, also, of such interest as might be included in the judgment,
whether under section 48 of the Ordinance or otherwise, if judgment were given at the date of the
payment into court.

22/1/1

Nature of payment in

"A payment into Court is simply an offer to dispose of the claim on terms" (per Devlin L.J.
in A. Martin French (a Firm) v. Kingswood Hill Ltd [1961] 1 Q.B. 96 at 103; [1960] 2 All
E.R. 251 at 252). When a plaintiff accepts the amount paid in in respect of a cause of action
what happens is that that cause of action is settled, as if by a payment under a compromise;
but the conclusion of an action in this way is something quite different from its conclusion
by a judgment. "The payment in implies no admission about the merits of the cause of
action; there has been no adjudication on it, and therefore no estoppel is created" (ibid.).

There is, however, nothing contractual about payment into court; it is wholly a procedural
matter and has no true analogy to a settlement arranged between the parties out of court (per
Goddard L.J. in Cumper v. Pothecary [1941] 2 K.B. 58 at 67).

22/1/2

Action for debt or damages

 This Order applies only to actions for "debt or damages," and not to actions for an account
(Nichols v. Evens (1883) 22 Ch.D. 611, per Fry J. at 613); but it applies to actions where
debt or damages are sought together with other relief (e.g. injunction) see Moon v.
Dickinson (1890) 63 L.T. 371. In such a case payment in must be only in respect of the
claim for damages, otherwise it is not within this rule (Young v. Black Sluice
Commissioners (1909) 73 J.P. 265). See the Court of Appeal decision in Associated
Engineers Ltd. v. Lo Chee Pui [2003] 2 H.K.L.R.D. 76 where it was held that the payment
into court was not made in accordance with this rule where the defendant claimed that the
payment in was purported to satisfy all causes of action but the plaintiff in the
circumstances only had one cause of action seeking damages and declaration relief. It was
also held that since the payment in only related to the damages claim, and the plaintiff had
not abandoned or discontinued the claim for declaratory relief, the plaintiff was not entitled
to the taxation of its costs without a court order. See also Luk Kwan Hung v. Victory Mark
Investment Ltd [2004] H.K.E.C. 324, where the court held that a payment in was not
appropriate where the plaintiff was seeking a sum of money as part of claim to rescind a
sale and purchase agreement, as it would not deal with the recission point. In this regard, a
Calderbank letter would be more appropriate.

22/1/3

Action for provisional damages

In actions where an application is made for an award of provisional damages O.37, r.9
prescribes a procedure whereby a defendant may, whether or not he makes a payment into
court, make a written offer to the plaintiff to tender a sum in satisfaction of the claim for
provisional damages, and to agree to the making of an award of such damages.

22/1/4

Actions for claims other than debt or damages

In actions for claims other than "debt or damages" the defendant can make an "open offer"
which may have the same effect on the question, where such offer amounts in substance to
everything to which the court eventually holds the successful party to be entitled.

Alternatively a defendant in such an action who wishes to obtain protection against an

award of costs analogous to that given by this Order, but who does not wish his offer to be
revealed to the court during the course of the trial, may make his offer in a letter written
"without prejudice save as to costs" or "without prejudice" but subject to an express
reservation of the right to refer to the letter on the issue of costs should the action proceed to
judgment. The use of such a procedure was commended by the English Court of Appeal in
matrimonial proceedings in Calderbank v. Calderbank [1976] Fam.93; [1975] 3 All E.R.
333, CA, and by Sir Robert Megarry V.-C., in injunction and other proceedings in
Computer Machinery Co. Ltd v. Drescher & Others [1983] 1 W.L.R. 1379; [1983] 3 All
E.R. 153. Hence letters of the type described are commonly called Calderbank letters. Such
letters were held to be admissible on determination of the question of costs in all cases
where what is in issue is more than a simple money claim in respect of which a payment
into court under O.22 would be appropriate: see Cutts v. Head & Another [1984] Ch. 290;
[1984] 1 All E.R. 597, CA. The procedure is now codified and extended by O.22, r.14; see
para. 22/14/1 (below), "Effect of rule".

Although the existence of a Calderbank letter may be a very important consideration in the
 exercise of the court's discretion with regard to costs, it should not be equated precisely to a
payment into court. The court retains its discretion and the existence of a Calderbank letter
should influence but not govern the exercise of the discretion (see McDonnell v. McDonnell
[1977] 1 W.L.R. 34; [1977] 1 All E.R. 766, CA). Moreover the discretion of the trial judge
as to costs, and as to what weight should be given to a Calderbank letter, cannot be usurped.
Hence the court will not, in advance of a trial, make an order that an offer contained in a
Calderbank letter should be treated for all purposes as though payment into court of the
sum stated therein had been made pursuant to O.22, r.1 (Corby District Council v. Holst &
Co. Ltd & Others [1985] 1 W.L.R. 427; [1985] 1 All E.R. 321, CA). A Calderbank letter
should contain a certain offer capable of acceptance (Luk Kwan Hung v. Victory Mark
Investment Ltd [2004] H.K.E.C. 324). In considering whether a Calderbank letter can be
reasonably accepted, the courts will take heed of whether the offer takes into account the
reasonable costs and disbursements of the offeree (see Cheung Yu Tin Alvin v. Ho Hon Ka,
unreported, CACV No. 255 of 2005, [2006] H.K.E.C. 524).

See also O.16, r.10 and O.33, r.4A.

22/1/5

Claims for costs

Order 22 does not permit a payment into court in respect of taxation proceedings (Leung
Cheung Hong v. Golden Pond Restaurant Ltd, unreported, No. A5399 of 1989, March 21,
1997 [1998] 377 H.K.C.U. 1).

22/1/6

Admiralty actions

Order 75, r.24(1) applies this Order (except rr.3, 4 and 12) in relation to an Admiralty action
as it applies to an action for debt or damages.

See O.75, r.24 as to payment into and out of court in Admiralty proceedings. On the other
hand, O.22, r.1, is not primarily designed to deal with salvage actions which raise their own
problems (see The Talamba and The Troll [1965] P. 433; [1965] 2 All E.R. 775).

22/1/7

Payment into court of foreign currency

If the plaintiff claims the payment of a debt or liquidated demand or damages in foreign
currency the defendant may make a payment into court in satisfaction in the same foreign
currency. The payment may be made by adapting RHC Appendix A, Form No. 23 (see
Practice Direction16.2 (Judgment: Foreign Currency)).

It has been held in England that where a payment into court is made by a cheque expressed
in foreign currency, the party making such payment in must consider carefully the time
required for clearing such a cheque, and therefore if the payment in is made prior to 14 days
before the commencement of the trial, but the notice of payment in is served on the plaintiff
less than the 14 days, the plaintiff will not be penalised as to costs (Banco Fonsecas E.
Burnay S.A.R.L. v. K. O. Boardman International Ltd [1985] 1 Lloyd's Rep. 386).
22/1/8

Payment into court at any time after service of the writ

Paragraph (1) of this rule has the effect that the defendant is entitled to make a payment into
court as soon as he has been served with the writ, and before or without acknowledging
service. He can therefore protect himself as to costs by this device from the earliest possible
moment, even if he is prepared to allow a judgment in default of acknowledgment of
service to be entered against him for damages to be assessed. If a party intends to make a
payment in, the sooner it is made the better, because costs may be running up. Any interest
that may be awarded on the debt or damages recovered should be calculated up to the date
of payment into court.

Order 22, r.3(1) provides for the acceptance of the money by the plaintiff within 14 days of
receiving notice of the payment in but, in any case, before the trial begins. It does not
follow that in order to be effective on the question of costs a payment in has to be made not
less than 14 days before the trial begins. If the payment in is made at a later time, and is not
accepted, the court may take into account both the fact of the payment in and its amount in
exercising its discretion as to costs (King v. Weston-Howell [1989] 2 All E.R. 375, CA).
Moreover a defendant has a right to make or increase a payment into court after the trial or
hearing begins, in which event the rights of the plaintiff are governed by O.22, r.3(2).

Of course, a payment into court may be made after an interlocutory judgment has been
entered for damages to be assessed, and such payment in should be made not less than 14
days before the trial of the assessment of the damages.

A defendant who makes a payment into court is not estopped from asserting that the writ
had not been duly served (Towers v. Morley [1992] 1 W.L.R. 511. CA).

22/1/9

Payment In after trial has begun

Payment into court may be made or increased after the trial or hearing of an action has
begun, see r.3(2) and (3).

22/1/10

Claim for interest

Paragraph (8) was introduced primarily to counteract a decision in the English case of
Jefford v. Gee [1970] 2 Q.B. 130 at 149-150, CA, per Lord Denning M.R. that a claim for
interest the English equivalent of s.48 of the High Court Ordinance was not in itself "a
cause of action" and formed no part of the debt or damages claimed, so that a defendant
making a payment into court in satisfaction under r.1, did not need to include any additional
sum to cover the interest which may be awarded by the trial judge in respect of the period
prior to the payment into court.

Under para. (8) the defendant has to pay into court a sum in satisfaction to cover not only
the debt or damages claimed but also any interest which might be awarded in respect of the
period down to the date of payment in. The defendant is not bound to pay into court any
sum in respect of interest, but if he fails to do so and if an award of interest is eventually
 made he will be at risk on the question of costs, having paid into court an inadequate sum.
The defendant may expressly state in his notice that the payment in "does not include
interest" (see Vianini Lavori S.P.A. v. Att.-Gen. [1993] 1 H.K.L.R. 187 construing the
analogous provisions of O.73).

The element of "interest" in respect of the plaintiff's cause of action for debt or damage is,
judicially speaking, an addition or supplement to that cause of action and is ancillary to it,
in the sense that the original cause of action for debt or damages must first be established
and then, and only then, will interest on such debt or damages accrue or become payable or
awardable. On this basis, it would seem that the claim for interest has no separate or
independent legal identity and cannot itself be regarded as a separate cause of action. The
defendant will therefore not be required to pay into court a separate sum in respect of
interest, but he will simply add the amount referable to "interest" to the "global sum" which
he will pay into court; and the plaintiff will not be entitled to accept a separate sum as being
referable to the element of interest as though it constituted a payment in in respect of a
separate cause of action. The use of the word "also" in para. (8) does not have the effect of
creating a new cause of action (which cannot be done by rule) but it is intended to
emphasise that the payment in should also include interest on the debt or damages up to the
date of the payment in. Nevertheless, it would seem desirable that the defendant should
indicate, if true, that his payment into court includes a sum in respect of interest. If he does
not do so, and is asked whether or not his payment in includes a sum in respect of interest he
should state clearly whether it does or not.

By virtue of O.18, r.8(4) a party must plead specifically any claim for interest whether
under s.48 of the High Court Ordinance or otherwise.

Paragraph (8) has the effect that the trial judge may have to make a special calculation of
interest at the end of the trial for the purpose of deciding whether the payment into court
was adequate at the time when it was made, in order to determine what order for costs
should be made. Thus if the trial judge awards $x by way of damages and the defendant has
paid into court $y, which exceeds $x then a calculation may have to be made as to what the
amount of interest would have been if judgment were given for $x at the date of the
payment into court. If such figure amounts to $a, and if $x+$a exceeds $y, the result would
be that the amount recovered by the plaintiff will have exceeded the amount paid into court
by the defendant, so that the plaintiff will be entitled to be awarded the whole costs of the
action.

Where a defendant has made a payment in which is expressed to include interest, and the
plaintiff rejects the payment in, the plaintiff is not precluded from claiming interest, even if
the sum awarded at trial is lower than the payment in (Harrington v. Cap Gemini Ernst &
Young Hong Kong Ltd [2004] H.K.E.C. 1077).

22/1/11

Defence of tender

A defence of tender before action is effective only if and when the money is paid into court
under this Order. See O.18, r.16.

22/1/12

In satisfaction of the plaintiff's claim

 In Walker & Another v. Turpin & Others [1994] 1 W.L.R. 196, [1993] 4 All E.R. 865 it was
held that where there are two or more plaintiffs suing severally or in the alternative, the
defendant may make one payment in respect of all claims of the plaintiffs but that in the
circumstances, as one plaintiff was effectively deprived of the opportunity to accept any
part of the payment in and withdraw, the defendant should be required to apportion the
payment in between the separate causes of action. For the position where the claim of two
or more plaintiffs is made jointly only or where claims are made by one or more plaintiffs
for damages under the Fatal Accidents Ordinance (Cap. 22) and ss.20 to 25 of the Law
Amendment and Reform (Consolidation) Ordinance (Cap. 23), see paras (5) and (6).

22/1/13

Lump sum for several causes of action

Rule 1 enables the defendant, without the leave of the court, to pay into court one sum of
money in satisfaction of several causes of action. The principle is that where a plaintiff
makes several claims or raises several causes of action, the primary concern of the parties is
not, what is the separate value of each claim or cause of action, but what is the total value of
all the claims and causes of action. As a matter of reality, the parties treat the litigation as an
entirety, and not as comprising several independent pieces notionally joined together. The
defendant has the choice in the first instance, whether to make separate payments into court
in satisfaction of each cause of action, or several causes of action, or whether to make one
lump sum payment in in satisfaction of all the causes of action, or some of them, but his
notice of payment in must specify precisely what he has done. See "Notice of payment in",
para. 22/1/16. See also Associated Engineers Ltd v. Lo Chee Pui [2003] 2 H.K.L.R.D. 76.

The rule applies to defamation actions (see Pedley v. Cambridge Newspapers Ltd [1964] 2
All E.R. 794, decided under the former English rules). The rule is subject to the power of
the court to order the defendant to amend his notice of payment in where the plaintiff is
embarrassed by a payment in of one lump sum, see para. (5).

As to the meaning of the phrase "cause of action" in the context of the rule see "Application
by plaintiff to amend lump sum payment in notice", para. 22/1/22.

22/1/14

Amendment adding new causes of action

Where the defendant makes a payment into court in satisfaction of the plaintiff's claim
which then comprises only one cause of action, and thereafter the plaintiff by amendment
adds a further cause or causes of action, the payment in stands as a payment in in respect of
the original cause of action, and not in respect of those added by amendment, because the
amendment does not affect the nature or character of the payment into court nor the notice
given to the plaintiff (Tingay v. Harris & Another [1967] 2 Q.B. 327; [1967] 1 All E.R. 385,
CA, decided under the comparable English County Court rules). The payment in must be
judged by the circumstances in relation to the number and types of causes of action
obtaining at the time of the payment in (ibid., per Russell L.J.).

22/1/15

Lump sum for claim under the Fatal Accidents Ordinance (Cap. 22) and ss.20 to 25
 of the Law Amendment and Reform (Consolidation) Ordinance (Cap. 23)

The provision in para. (6) under which the joinder of a cause of action under the FAO (Cap.
22), and a cause of action under the LARCO (Cap. 23) has the effect of reversing the
English case of Gears v. Braley [1940] 2 K.B. 442. Where one lump sum is paid into court
in satisfaction of claims under these two Ordinances, the plaintiff cannot apply under para.
(1) to compel the defendant to amend his notice of payment in and to apportion the lump
sum in respect of each cause of action.

22/1/16

Notice of payment in

The defendant must give notice of his payment in or any increase of it to the plaintiff and
every co-defendant. He must do so in the prescribed Form, i.e. RHC Appendix A, Form No.
23.

Where there are two or more causes of action, the notice must state whether the lump sum
paid in is in satisfaction of all the causes of action or in satisfaction of only some, and if so,
which causes of action, and if separate payments in are made, the notice must specify the
cause or causes of action in respect of which each such payment has been made. Care and
accuracy are required to complete a notice of payment into court properly, but the court
may give leave to amend the notice, see para. (3).

Where the defendant is counterclaiming, the notice of payment in must specify whether or
not the counterclaim has been taken into account, see r.2.

Where the defendant has made an interim payment pursuant to an order for interim
payment under O.29, r.11, and thereafter he makes a payment into court in satisfaction
under r.1, the notice of payment in must state, if true, that he has taken into account the
amount of the interim payment (see O.29, r.16). However, the court will construe the notice
of payment in and if on that construction the defendant intended that an interim payment
should be taken into account but omitted to state that fact nevertheless the court will
exercise its discretion in favour of the defendant. "That is not to say that defects in a notice
of payment in are always to be ignored. They may be such as to give reasonable grounds for
a plaintiff being misled as to the true scope of the payment in and a defendant who does not
comply with the rules runs the risk of that being held against him so as to deprive him of the
costs which he would normally get on a payment in properly made" (Prudential Mall Ltd v.
P.H. Shek Ltd & Another [1993] 1 H.K.L.R. 195; [1992] 1 H.K.C. 7).

22/1/17

Increase of payment in

Paragraph(3) entitles a defendant to increase his payment into court at any time without
leave. He must, however, serve a fresh notice of payment in on the plaintiff and any
co-defendant, under para. (2).

22/1/18

Interest on money paid in

 Interest will be credited on money paid into court under r.1 (or appropriated under r.8) in
satisfaction of a claim which is not accepted within the time specified under r.3(1) 14 days
after the effective date of lodgment or appropriation (High Court Suitors' Funds Rules,
r.16(3A)).

On the other hand where the money paid into court is accepted within the time specified in
r.3(1) no interest will be payable in respect of the period between lodgment or
appropriation (High Court Suitors' Funds Rules, r.16(3A)).

22/1/19

Withdrawal of payment in

Once money has been paid into court under the rule, it cannot be withdrawn without the
leave of the court, para. (3).

If the defendant can show good reason, e.g. the discovery of further evidence which puts a
wholly different complexion on the case, or a change in legal outlook brought about by a
new judicial decision, the court may grant leave for the payment out to him of the whole or
part of the money paid in (Cumper v. Pothecary [1941] 2 All E.R. 516 at 522, CA). Money
paid into court by mistake or on a mistaken meaning of the statement of claim (S. Kaprow
& Co. v. Maclelland & Co. Ltd [1948] 1 K.B. 618, CA) may be ordered to be withdrawn by
the defendant.

The court has a complete discretion, to be exercised judicially, whether to allow a payment
into court to be paid out back to the defendant, and if so, on what terms. The test to be
applied is "whether there is a sufficient change of circumstances since the money was paid
in to make it just that the defendant should have an opportunity of withdrawing or reducing
his payment" (see Unistress Building Construction Ltd v. Humphrey's Estate (Forrestdale)
Ltd, unreported, MP Nos 3268 and 3311 of 1991, March 16, 1992, [1992] H.K.L.Y. 47
applying the similar provisions of O.73). The court will so order where since the date of the
notice of payment in the character of the litigation has entirely changed (Pearl Furniture
Co. Ltd v. Adrian Share (Interiors) Ltd [1977] 1 W.L.R. 464; [1977] 2 All E.R. 211, CA).
"It is irregular and does not make sense for a payment into Court to be paid back to the
defendant where there has been a settlement in favour of a plaintiff which involves payment
of a sum of money to the plaintiff." A consent order seeking to achieve this result purports
to exclude the court's discretion referred to in this note (Leung Kam Tai v. Wong Chuen
[1998] 4 H.K.C. 214).

The court also has absolute discretion, implied in para. (3), to order payment out to the
defendant of moneys paid in. (Tsang Kam Ming t/a Good Harbour Property Agency Co. v.
Artchamp Investment Ltd, unreported, HCA No. 256 of 1998, January 17, 2002 [2002] 144
H.K.C.U. 1.)

In Toprak Enerji Sanayi A.S. v. Sale Tilney Technology Plc [1994] 1 W.L.R. 840; [1994] 3
All E.R. 483; [1994] 1 Lloyd's Rep. 303 the court held that there was nothing in O.22, r.1 to
suggest that a payment into court was of its nature so personal to the plaintiff that in no
circumstances could the payment be treated as available to an assignee, transferee or
successor of the plaintiff. The structure of the rule is directed to matching payments to
causes of action, not to identifying a payment as an offer made to the plaintiff personally.

Where the defendant has made a payment into court before an order for interim payment is
 made under O.29, r.11, the court may well entertain an application by him for leave to
withdraw a sum equivalent to the whole or part of the amount which he has paid by way of
interim payment.

In Williams v. Boag [1940] 4 All E.R. 246, it was stated that where by an amendment to the
pleadings an insuperable obstacle is raised to any possible success by the plaintiff, there is
inherent power in the court to order payment out of the money in court to the defendant. In
that case the plaintiff had taken £100 out of court, but he was ordered to repay it to the
defendant.

On the other hand where the plaintiff paid money into court to cover a counterclaim set up
in the action by affidavit, and afterwards discontinued the action, the court refused to order
payment out to the plaintiff (Bildt v. Foy & Others (1892) 9 T.L.R. 34, affirmed ibid., at
83).

In any case in which the plaintiff is entitled without leave to accept the money in
satisfaction within 14 days after the payment or last payment in, the court may nevertheless,
upon proper grounds being shown, entertain an application for the withdrawal of the money
or any part thereof before the expiry of this period.

The court may grant leave to withdraw money paid in, even where, at the date of the
application for leave, it is still open to the plaintiff to accept the money; acceptance of the
money by the plaintiff between the date of the application for leave and its hearing will not
necessarily serve to defeat the application, although it may be an important consideration in
deciding whether or not leave to withdraw should be granted (Manku v. Seehra [1985]
C.I.L.L. 224; (1985) New L.J. 236). A revaluation of the plaintiff's claim by a fresh expert
retained by the defendant, acting on the same material as an earlier expert, is not a sufficient
reason or change of circumstances to justify withdrawal of money paid into court (ibid.).

Where the defendant withdraws the money paid into court with the leave of the court, more
than 14 days after payment in, but before the commencement of the trial of the action, he
thereby essentially nullifies his own payment in and the successful plaintiff at the trial is
entitled to the costs of the action, though the court has a discretion to order him to pay the
costs in respect of the period between the expiry of the 14 days after the payment in and the
date when he could no longer have taken the money out of court on the ground of a change
in circumstances (Garner v. Cleggs (a firm) [1983] 1 W.L.R. 862; [1983] 2 All E.R. 398,
CA).

For cases on the exercise of discretion to grant leave to withdraw a payment in where the
defendant becomes bankrupt or goes into liquidation after the payment in, see para.
22/1/24.

22/1/20

Death of defendant or plaintiff

Where the defendant dies after payment in, his personal representative (if an order to carry
on is made under O.15, r.7) may apply for the withdrawal of the money paid in (see Brown
v. Feeney [1906] 1 K.B. 563, CA); and where the plaintiff dies after payment in, and the
action abates on his death, the court may order the money to be repaid to the defendant, or
possibly to the plaintiff's personal representative (see Maxwell v. Viscount Wolseley [1907]
1 K.B. 274, CA).
22/1/21

Amendment of payment in

The court has power to give leave to amend the notice of payment in, and will do so on the
same principles under which leave to amend is given generally, see O.20. Sufficient
evidence will be required to support an application for leave to amend a notice of payment
in where the amendment is more than merely technical (Modern Fashion Ltd v. Hong Kong
Prudential Knitting Factory Ltd [1996] 3 H.K.C. 267).

22/1/22

Application by plaintiff to amend lump sum payment in notice

Where the defendant pays into court a single sum in respect of two or more causes of action,
the plaintiff may apply for an order to compel the defendant to specify a separate sum for
each separate cause of action, para. (5). Such an order will only be made where the plaintiff
is embarrassed by a lump sum payment in respect of two or more causes of action.
"Embarrassment means put into a difficulty" (per Hewson J. in The Talamba and The Troll
[1965] P. 433; [1965] 2 All E.R. 775). A plaintiff must not be too ready to find himself
embarrassed. There is no embarrassment where it is not clear how the lump sum has been
calculated, or where the plaintiff is bound to succeed on some issues or where the causes of
action are separate and unconnected or where the causes of action are pleaded in the
alternative. An embarrassment under this rule may arise only where a single payment in in
respect of two or more causes of action may tend to prejudice the plaintiff otherwise than on
any question of costs. In The Talamba and The Troll [1965] P. 433; [1965] 2 All E.R. 775,
where the defendants made two lump sum payments into court, one in respect of the
services rendered by four tugs to one vessel and the other in respect of the services rendered
by five tugs to another vessel, they were ordered to apportion each lump sum as between
each tug in respect of that tug's services, but not as between the owners, masters and crew of
each tug.

What constitutes embarrassment for the purposes of O.22, r.1(5) is a question of fact in
each case and it may not be enough to show a difficulty for the plaintiff over and above the
difficulty encountered by any plaintiff facing a payment in where there is more than one
defendant (Driscoll v. Nye Saunders, 17 Con.L.R. 73, CA). Where embarrassment is
proved it becomes necessary to consider whether it is just and practical in all the
circumstances for the court to exercise discretion to make an order requiring the defendants
to amend the notice of payment in to specify the amount contributed by any one or more of
them (ibid.).

The phrase "cause of action" in the rule must be read in a broad sense as embracing an
identifiable monetary claim which the plaintiff seeks to advance, even though it may
consist of a number of causes of action in the sense of elements which, individually, may
involve the proof of different facts not applicable to other elements of the same claim
(Bovis Construction (South Eastern) Ltd v. Greater London Council (1987) 9 Con.L.R.1,
CA).

The court has no power under O.22, r.1(5) to order several defendants who have made a
single payment into court to amend the notice of payment in so as to indicate the
contribution of each defendant and to specify the amounts paid in respect of different heads
 of damage claimed, as opposed to the causes of action (Driscoll v. Nye Saunders &
Partners (a Firm) & Others, 17 Con.L.R. 73, CA).

An application under para. (5) of this rule should be made promptly.

No application can be made by the plaintiff for an order to amend the notice of payment in,
when the single payment in is in respect of causes of action under the Fatal Accidents
Ordinance (Cap. 22) and the Law Amendment and Reform (Consolidation) Ordinance,
para. (6).

22/1/23

Joint wrongdoers and third parties

This Order relates only to payment in as between the plaintiff and defendant; it does not
apply as between co-defendants, nor in relation to third-party proceedings.

See, however, as to an offer of contribution as between co-defendants and in relation to

third parties, O.16, r.10.

22/1/24

Bankruptcy of defendant after payment into court

In such a case it was held that the payment in, notwithstanding a denial of liability, was a
conditional payment to the creditor suing, who became a secured creditor to the extent to
which his claim in the action was admitted by the trustee (Re Gordon, Ex p. Navalchand
[1897] 2 Q.B. 516). After annulment of bankruptcy while the money paid in with denial of
liability remained in court, an issue was directed to determine what sum, if any, was due
from defendant to plaintiff, and to order accordingly (Dessau v. Rowley [1916] W.N. 238,
CA).

Money paid into court does not remain an asset of the defendant which, on his bankruptcy,
forms part of his property available for distribution; a defendant paying into court under
O.22, r.1 parts outright with his money. The plaintiff is therefore a secured creditor to the
extent of the money in court and the defendant's bankruptcy or liquidation does not by itself
constitute a change of circumstances which would justify the court in exercising discretion
to order repayment W.A. Sherrat Ltd v. John Bromley (Church Stretton) Ltd [1985] Q.B.
1038; [1985] 1 All E.R. 216, CA, applying Re Gordon (above), Re Ford, Ex p. The Trustee
[1900] 2 Q.B. 211 and Dessau v. Rowley (above), and not following in this respect Peal
Furniture Co. Ltd v. Adrian Share (Interiors) Ltd [1977] 1 W.L.R. 464; [1977] 2 All E.R.
211, CA).

22/1/25

Bankruptcy: payment in after petition

Where a petition is stayed pending the trial of the validity of the debt claimed by the
petitioning creditor, and the debtor admits the debt and pays the amount thereof and a sum
for costs into court, the petitioning creditor is not bound to accept such payment and take
the money out at the risk of having to pay it back, but may proceed with the bankruptcy
petition, and a receiving order may be made on it (inRe Gentry [1910] 1 K.B. 825, CA).
22/1/26

Declaration of legal right

If the plaintiff claims a declaration of legal rights and damages, and the defendant pays a
nominal sum into court as to the claim for damages, with denial of liability, the plaintiff
could not by accepting that sum in satisfaction set up such payment in as an admission by
the defendant of the legal right claimed. He could terminate the action by his acceptance,
but if the defendant in his defence counterclaimed for a declaration of his legal right, the
acceptance by the plaintiff of the money paid in with denial did not remove the defendant's
right to have his counterclaim adjudicated upon, even though the counterclaim raised the
same point as the plaintiff's claim (Coote v. Ford [1899] 2 Ch. 93). See also Associated
Engineers Ltd v. Lo Chee Pui [2003] 2 H.K.L.R.D. 76.

22/1/27

Payment in and Calderbank letter

In Luen Yin Ching v. Chan Yi Man, unreported, DCCJ No. 982 of 2002, November 19,
2002, [2003] H.K.E.C. 520, the defendant wrote two Calderbank letters to the plaintiff. The
plaintiff rejected the first Calderbank letter. The defendant heard nothing with respect to
the second Calderbank letter and he subsequently made a payment into court of an amount
equivalent to the second Calderbank letter. The payment into court was accepted by the
plaintiff in accordance with r.3. The defendant, however, argued that, due to the
unreasonable attitude and manner of the plaintiff, his costs for the action were wasted and
therefore he sought a cross-order for the costs of his action. It was held that when the
defendant made the payment into court, unless he withdrew it, he must know that if the
payment in was accepted by the plaintiff, the latter would be entitled to his costs as taxed up
to the date of acceptance of payment in. If he considered the action was instituted
improperly, he should not have made the payment in and could have protected his position
by merely making his offer to settle in the form of a Calderbank letter in accordance with
r.14. Since the payment in was made and accepted by the plaintiff, the plaintiff would be
allowed to have his costs up to the date of acceptance of payment in and the defendant's
claim was dismissed.

Payment in by defendant who has counterclaimed (O.22, r.2)

22/2
2. Where a defendant, who makes by counterclaim a claim against the plaintiff for a debt or damages,
pays a sum or sums of money into court under rule 1, the notice of payment must state if it be the case,
that in making the payment the defendant has taken into account and intends to satisfy--

(a)the cause of action in respect of which he claims, or

(b)where two or more causes of action are joined in the counterclaim, all those causes of action or, if
not all, which of them. (See App. A, Form 23)

22/2/1

Effect of rule
 Under this rule the defendant who makes a counterclaim against the plaintiff for a debt or
damages must clearly state in his notice of payment into court whether the sum he pays in
takes his counterclaim into account or not. The choice is his, but he must make plain
whether his payment in comprises his counterclaim or not. This rule provides a great
advantage to litigants by giving the defendant the option of striking a balance between the
plaintiff's claim on the one side and his own set-off and counterclaim on the other, and
paying in to satisfy the balance, thus offering up his cross-claim in satisfaction. For the
costs consequences see O.62, r.3(8).

The reverse position, where the plaintiff makes a payment into court in respect of the
defendant's counterclaim, is dealt with by r.6.

22/2/2

Form

See RHC Appendix A, Form No. 23.

Acceptance of money paid into court (O.22, r.3)

22/3
3.--(1) Where money is paid into court under rule 1, then, subject to paragraph (2), within 14 days after
receipt of the notice of payment or, where more than one payment has been made or the notice has been
amended, within 14 days after receipt of the notice of the last payment or the amended notice but, in
any case, before the trial or hearing of the action begins, the plaintiff may--

(a)where the money was paid in respect of the cause of action or all the causes of action in respect of
which he claims, accept the money in satisfaction of that cause of action or those causes of action, as
the case may be, or

(b)where the money was paid in respect of some only of the causes of action in respect of which he
claims, accept in satisfaction of any such cause or causes of action the sum specified in respect of that
cause or those causes of action in the notice of payment,

by giving notice in Form No. 24 in Appendix A to every defendant to the action.

(2) Where after the trial or hearing of an action has begun--

(a)money is paid into court under rule 1, or

(b)money in court is increased by a further payment into court under that rule,

the plaintiff may accept the money in accordance with paragraph (1) within 2 days after receipt of the
notice of payment or notice of the further payment, as the case may be, but, in any case, before the
judge begins to deliver judgment or, if the trial is with a jury, before the judge begins his summing up.

(3) Rule 1(5) shall not apply in relation to money paid into court in an action after the trial or hearing of
the action has begun.

(4) On the plaintiff accepting any money paid into court all further proceedings in the action or in
respect of the specified cause or causes of action, as the case may be, to which the acceptance relates,
both against the defendant making the payment and against any other defendant sued jointly with or in
the alternative to him, shall be stayed.
(5) Where money is paid into court by a defendant who made a counterclaim and the notice of payment
stated, in relation to any sum so paid, that in making the payment the defendant had taken into account
and satisfied the cause or causes of action, or the specified cause or specified causes of action, in
respect of which he claimed, then, on the plaintiff accepting that sum, all further proceedings on the
counterclaim or in respect of the specified cause or causes of action, as the case may be, against the
plaintiff shall be stayed.

(6) A plaintiff who has accepted any sum paid into court shall, subject to rules 4 and 10 and Order 80,
rule 12, be entitled to receive payment of that sum in satisfaction of the cause or causes of action to
which the acceptance relates.

22/3/1

Effect of rule

The effect of this rule is to create a sharp distinction between a payment into court made or
increased before the trial or hearing of an action begins and after it has begun.

If the payment in is made or increased before the beginning of the trial or hearing the
plaintiff has the right without the leave of the court to accept and receive the money paid in
within 14 days after the receipt of the notice or the last notice of payment and he is entitled
as of right to tax his costs (see O.62, r.10(2) and (3)) but this right is dependent upon two
conditions being fulfilled (1) that notice of acceptance is given within the time allowed and
(2) that notice of acceptance is duly given in proper form to every defendant. It would seem
to follow that, to be effective, a payment into court made or increased before the trial or
hearing of the action begins must be made or increased not less than 14 days before the
beginning of the trial or hearing, otherwise the plaintiff will not have his prescribed period
of 14 days within which to accept such payment in.

On the other hand, paras (2) and (3) of this rule expressly allow a payment into court to be
made or increased after the trial or hearing of an action is begun. In such case, of course, the
defendant must still give notice of his payment in Form 23 of App. A. RHC to the plaintiff
and every other defendant, if any; but in such a case, there will be the following differences
(1) the right of the plaintiff to accept such payment in must be exercised within 2 days after
receipt of the notice or last notice of payment in but such exercise must be before the judge
begins to deliver his judgment or his summing-up to the jury, if any; (2) the plaintiff cannot
apply under r.1(5) to compel the defendant who has made a lump sum payment in to specify
the sum paid in respect of each cause of action; (3) the plaintiff is not entitled as of right to
tax his costs upon acceptance of the money, but the entitlement to costs must be decided by
the trial judge (see O.22, r.4(3) and O.62, r.5(d)); and (4) the defendant cannot apply to
withdraw or amend his payment in.

The rule makes no express provision as to what is the position where a payment into court is
made or increased less than 14 days before the trial or hearing of the action begins. It would
seem that the plaintiff may effectively and without leave accept such sum by giving notice
of his acceptance in proper form to all the defendants provided he does so before the trial or
hearing of the action begins. Once the trial or hearing has begun, however, the plaintiff
cannot accept such payment in; but a payment in made or received less than 14 days before
the trial or hearing of the action begins, which remains unaccepted by the plaintiff, is a valid
payment in and may be taken into account by the court in exercising its discretion as to
costs (King v. Weston-Howell [1989] 2 All E.R. 375, CA).
 Moreover, payment of the money accepted under this rule cannot be obtained without an
order of the court in the cases mentioned in r.4.

Where a plaintiff accepts a payment-in in accordance with the provisions of O.22, r.3(1) his
automatic entitlement to costs under O.62, r.10(2) is to his costs of the action against the
paying-in defendant only: see General Accident Insurance Asia Ltd v. Hampton Winter &
Glynn (a firm) & Others and Hill Taylor Dickinson [1999] 2 H.K.L.R.D. 109; [1998] 4
H.K.C. 398 applying QBE Insurance (UK) Ltd v. Mediterranean Insurance and
Reinsurance Co. Ltd [1992] 1 W.L.R. 573; [1992] 1 All E.R. 12. To the same effect see
Carrs Bury St Edmunds Ltd v. Whitworth Partnership and Barnes Group (1997) 13
Const.L.J. 199, not following Hodgson v. Guardall Ltd & Others [1991] 3 All E.R. 823
(see para. 22/5/5 (below)). The Carrs Bury St Edmunds case also held that the court had no
discretion in relation to costs when the payment-in was accepted in time, not following in
this respect QBE Insurance Ltd v. Mediterranean Insurance and Reinsurance Co. Ltd and
Hodgson v. Guardall Ltd but following Fell v. Gould Grimwade Shirbon Partnership
(1995) 36 Con.L.R. 62. This analysis was rejected and Carrs and Fell were not followed in
the respect in General Accident Insurance Asia Ltd (above) where it was held that a
discretion as to costs will arise when the plaintiff seeks to discontinue his action against the
defendants who have not paid in, and those defendants agree to the discontinuance. See also
Associated Engineers, Ltd v. Lo Chee Pui, unreported, HCA No. 328 of 2000, October 9,
2002, CFI, [2002] 1176 H.K.C.U. 1, where it was held that the plaintiff was not entitled to
rely on O.62, r.10(2) where there was no acceptance of the payment in in accordance with
the rule due to the non-compliance of the payment in with r.1.

Where a defendant pays money into court in satisfaction of only one of two or more causes
of action, and the plaintiff serves notice of acceptance in accordance with O.22, r.3(1) and
abandons those causes of action for which the defendant denies liability and makes no
payment in, the plaintiff is entitled by virtue of O.62, r.10(2) to all his costs of the entire
action, including the abandoned claims, notwithstanding any apparent injustice caused
thereby to the defendant (Hudson & Another v. Elmbridge Borough Council & Others
[1991] 4 All E.R. 55, CA).

22/3/2

Admiralty

Order 75, r.24(1) provides that O.22 (except rr.3, 4 and 12) shall apply in relation to an
Admiralty action (other than a limitation action) as it applies to an action for debt or
damages.

22/3/3

Time for acceptance

The plaintiff should be prompt to accept money paid into court in order to avoid further
costs. To be effective, acceptance of money paid into court before the trial or hearing of the
action is begun must be made within 14 days of the receipt of the notice of payment or last
payment in, but before the trial or hearing of the action begins. In the case of a payment in
being made or increased after the trial or hearing of an action has begun the acceptance
must be made within two days of the notice of payment in or last payment in. The 14 days
or the two days respectively are calculated from the "receipt," i.e. actual receipt, of the
 notice of payment in; if necessary the court will inquire as to the date of such actual receipt.

The trial or hearing of the action begins when it has effectively started, not, e.g. while an
application for an adjournment is being heard. Once, however, the trial or hearing of the
action begins, the plaintiff loses his right to accept the money in court paid in before the
trial or hearing of the action has begun. He cannot, for example, wait to see how the trial is
progressing, still less wait to hear what amount, if any, is awarded to him.

22/3/4

Mode of acceptance

To be effective, acceptance of money paid into court must be made by the plaintiff giving
notice in the form prescribed to every defendant. The form is RHC Appendix A, Form No.
24. The term "giving" in r.1(3) may be wider than "service" as required by O.65, and it may
be sufficient if the notice of acceptance is handed to the solicitor for the defendant before
the trial or hearing of the action begins; such a notice should in no event be handed to
counsel for the defendant.

Failure to comply with the prescribed form is an irregularity capable of being cured under
O.2, r.1 (see Prudential Mall Ltd v. P.H. Shek Ltd & Another [1993] 1 H.K.L.R. 195; [1992]
1 H.K.C. 7), but the court will not exercise discretion to cure the irregularity where, after
the purported acceptance but before the hearing of the application under O.2, r.1, facts are
discovered by the defendant indicating that the value of the plaintiff's claim is significantly
less than the value previously attributed to it (Metroinvest Anstalt & Others v. Commercial
Union Assurance Co. Plc [1985] 1 W.L.R. 513; [1985] 2 All E.R. 318, CA).

22/3/5

Effect of acceptance on claim

The acceptance of money paid into court, if duly made, has effect in two ways, namely (1)
whether the money paid in is accepted before or after the beginning of the trial or hearing of
the action, the acceptance will operate as a stay of further proceedings (para. (4)); (2) if the
money was paid in and accepted before the beginning of the trial or hearing of the action,
the plaintiff is entitled as of right to receive payment of the money without, or in the cases
mentioned in rr.4 and 10, subject to, an order of the court (para. (6)) and to tax his costs
(O.62, r.10(2) and (3)) but if the money paid in is accepted after the trial or hearing of the
action has begun, the money may not be paid out to the plaintiff without an order of the
court, which order must deal with the costs of the action (O.22, r.4(3)). The payment in and
its amount are matters which the court must take into account when exercising its discretion
as to costs upon making such order (O.62, r.5(b)).

The stay of further proceedings resulting from the acceptance of money paid into court
takes effect immediately the notice of acceptance is given to each defendant, and it operates
(1) in respect of all further proceedings in the action or the particular cause or causes of
action to which the acceptance relates, and (2) as against not only the defendant making the
payment but all other defendants sued jointly or in the alternative with him; but such a stay
does not extend to the question of costs (Rookes v. Barnard & Others (No. 2) [1966] 1 Q.B.
176; [1965] 3 All E.R. 549). But a notice of payment into court under O.22 was not of itself
an offer which if accepted could constitute a contract to compromise an action, see Gorse v.
Tinkler, The Times, February 20, 1997, [1997] T.L.R. 87; [1997] P.I.Q.R. Q120, citing
Cumper v. Pothecary [1941] 2 K.B. 58 to the effect that there is nothing contractual about
payment into court. It is a wholly procedural matter and has no true analogy to a settlement
arranged between parties out of court.

The fact that, in agreeing to accept the amount in court, the plaintiff has acted on a mistake
of law does not entitle him to bring a fresh action in respect of the same cause of action
(Derrick v. Williams [1939] 2 All E.R. 559; (1939) 55 T.L.R. 676, CA).

Where money in court has been accepted by a plaintiff under a mistake, and the plaintiff
subsequently wishes to enlarge his claim, the proper course is for the plaintiff to apply for a
removal of the stay on the action and thereafter for leave to amend the statement of claim,
and not to bring a second action arising out of the same cause of action (Buckland v. Palmer
[1984] 1 W.L.R. 1109; [1984] 3 All E.R. 554, CA).

In Penny v. The Wimbledon District Council and Iles [1898] 2 Q.B. 212; [1899] 2 Q.B. 72,
CA, it was held that one of two joint tortfeasors cannot reap the advantage of his
co-defendant's payment into court, in which he did not join; except that if the claim is
thereby satisfied, judgment against him will only be for costs. But in Beadon v. Capital
Syndicate Ltd (1912) 28 T.L.R. 394, it was held that where several defendants are sued on a
joint cause of action and put in several defences, and one of them pays a sum into court in
satisfaction which the plaintiff takes out in satisfaction, the action is at an end. The plaintiff
is entitled to his costs against the defendant who paid into court, but the other defendants
who were not responsible for the payment in are entitled to their costs against the plaintiff.

In the circumstances of both those cases the court has now full discretion over the costs of
all parties.

In Reardon Smith Line Ltd v. Cayzer, Irvine and Co. Ltd (1929) 46 T.L.R. 146, where relief
was claimed against two defendants in the alternative, and money paid in by one of them,
"in satisfaction" was taken out, the other defendants were entitled to judgment with costs.

Where the plaintiff sues two or more defendants, they are not to be treated as having been
"sued jointly" for the purposes of para. (4) above, simply because they are joined in the
same proceedings, where the claim against one defendant is different from that against the
other or others and there are separate heads of claim against them, and in such case money
paid into court by one defendant and accepted by the plaintiff does not have the effect of
staying the action against the other defendant or defendants (Townsend & Another v. Stone
Toms & Partners (a firm) & Others [1981] 1 W.L.R. 1153; [1981] 2 All E.R. 690, CA).

Where a plaintiff accepts a sum paid into court by a defendant in satisfaction of a cause of
action in circumstances which give rise to a different cause of action against a second
defendant, credit has to be given for the sum recovered and any necessary apportionment
made by the court. The second defendant has to establish that the plaintiff has already been
wholly or partly compensated in respect of the plaintiff's cause of action against him.
Thereafter it is for the plaintiff to prove that a part of the sum recovered bears no relation to
that cause of action (Townsend & Another v. Stone Toms & Partners (a firm) & Others (No.
2) (1984) 128 S.J. 659, CA).

Where the plaintiff claims damages and an injunction, his acceptance of a payment into
court made by a defendant cannot be regarded simply as being in satisfaction of the claim
for damages leaving the claim for the injunction still alive (Hargreaves Construction
(Limeside) v. Williams, The Times, July 3, 1982). (It may be that this last mentioned
 authority is in conflict with the cases cited under 22/1/2.)

22/3/6

Costs

As to the plaintiff's entitlement to costs on his acceptance of money paid into court before
the trial or hearing of the action begins, see O.62, r.10(2) and (3). The right to tax upon
acceptance of money paid into court only arises if (a) the plaintiff accepts the money paid
into court in satisfaction of his whole claim, or (b) he accepts a sum paid in respect of one or
more causes of action and gives notice that he abandons the other cause or causes of action.
Unless he gives notice of abandonment, it is obvious that the action must continue as to
those causes of action. So in a case where a plaintiff had claimed damages based on
breaches of contract and negligence and the defendant had made a payment in respect of the
claim in contract the court had no discretion to make any order for costs when the plaintiff
abandoned his claim in negligence and took the money out other than that the plaintiff
should have his costs of the action. The deletion of the words "unless the court or judge
otherwise orders" from O.62, r.10(2) removed any discretion in the court even in a case
such as this one where the costs incurred on the negligence issue greatly exceeded those in
relation to the claim in contract (Ronald Hudson and Andrea Hudson v. National House
Building Council (1991) 7 Const.L.J. 122).

If the money paid into court is accepted after the trial or hearing of the action has begun, the
plaintiff must apply to the trial judge for an order for payment out of the money, and that
order must deal with the costs of the action (O.22, r.4(3)). The payment in and its amount
are matters which the judge must take into account in exercising his discretion as to the
costs (O.62, r.5(b)).

A party accepting money in court and entitled under rules to costs is entitled to interest on
costs under s.49 of the High Court Ordinance (Cap. 4), see O.62, r.11(5).

Following payment into court contractual provisions as to legal costs in a lease will not
entitle a landlord to costs on an indemnity basis unless this is specifically provided for
(Primeridge v. Jean Muir [1992] 1 E.G.L.R. 273).

In General Accident Insurance Asia Ltd v. Hampton, Winter & Glynn [1999] 2 H.K.L.R.D.
109; [1998] 4 H.K.C. 398, the plaintiff sued three defendants severally. The first two
defendants paid a sum into court. The plaintiff accepted the payment in and discontinued
the action against the third defendant. Yam J. decided that the acceptance of the payment in
did not automatically stay the action against the third defendant. The court also had a
discretion with regards to the costs incurred by the plaintiff in suing the third defendant and
the costs of the third defendant in defending the plaintiff's claim. As it was not
unreasonable for the plaintiff to join the third defendant into the proceedings, the paying in
defendants were held liable to pay (a) the plaintiff's costs of prosecuting the claim against
the third defendant; and (b) the third defendant's costs of defending the plaintiff's claim.

22/3/7

Effect of acceptance on counterclaim

Paragraph (5) is a corollary of r.2. Its effect is to stay the proceedings and the counterclaim
where this has been taken into account in the payment in in satisfaction of the plaintiff's
 claim. The defendant is entitled to the costs of the counterclaim up to the receipt of the
notice of acceptance by the plaintiff: O.62, r.3(8).

22/3/8

Appeal after acceptance of money paid in

The plaintiffs in an action for damages for negligence, having obtained judgment, took the
amount awarded out of money which had been paid into court, and then appealed on the
quantum of damages. It was contended that, having taken money out of court, and thereby
approbated the judgment, they could not reprobate it by appealing. It was held that they
were entitled to appeal, as it could not be said that, by appealing as to quantum of damages,
they were approbating the judgment (Mills v. Duckworth [1938] 1 All E.R. 318, CA).

22/3/9

Receipt of payment of money accepted

Where money paid into court is accepted within the time and in the manner provided by this
rule, the plaintiff is entitled to receive payment of that sum without the leave or order of the
court, except in the cases mentioned in r.4.

As to the person to whom payment of money in court may be made, see r.10.
Order for payment out of money accepted required in certain cases (O.22, r.4)

22/4
4.--(1) Where a plaintiff accepts any sum paid into court and that sum was paid into court--

(a)by some but not all of the defendants sued jointly or in the alternative by him, or

(b)with a defence of tender before action, or

(c)in an action to which Order 80, rule 12, applies, or

(d)in satisfaction either of causes of action arising under the Fatal Accidents Ordinance (Cap. 22) and
sections 20 to 25 of the Law Amendment and Reform (Consolidation) Ordinance (Cap. 23), or of a
cause of action arising under the first mentioned Ordinance where more than one person is entitled to
the money,

the money in court shall not be paid out except under paragraph (2) or in pursuance of an order of the
Court, and the order shall deal with the whole costs of the action or of the cause of action to which the
payment relates, as the case may be.

(2) Where an order of the Court is required under paragraph (1) by reason only of paragraph (1)(a) then
if, either before or after accepting the money paid into court by some only of the defendants sued
jointly or in the alternative by him, the plaintiff discontinues the action against all the other defendants
and those defendants consent in writing to the payment out of that sum, it may be paid out without an
order of the Court.

(3) Where after the trial or hearing of an action has begun a plaintiff accepts any money paid into court
and all further proceedings in the action or in respect of the specified cause or causes of action, as the
case may be, to which the acceptance relates are stayed by virtue of rule 3(4), then, notwithstanding
anything in paragraph (2), the money shall not be paid out except in pursuance of an order of the Court,
and the order shall deal with the whole costs of the action.

22/4/1

Effect of rule

Paragraph (3) relates to a payment in made or increased after the trial or hearing has begun
under r.3(2). The court has an unfettered discretion as to the order to be made (see Unistress
Building Construction Ltd v. Humphrey's Estate (Forrestdale) Ltd, unreported, MP Nos
3268 and 3311 of 1991, March 16, 1992, [1992] H.K.L.Y. 47, construing the analogous
provisions of O.73). It should be read with r.5, which requires an order of the court for the
payment out of money not accepted in accordance with r.3, and with r.10, which provides
for the person to whom payment out is to be made. The rule does not apply to Admiralty
actions (see O.75, r.24).

22/4/2

Several defendants

This rule does not apply where money is paid into court on behalf of all the defendants sued.
The term "sued jointly" means sued in respect of a joint liability and not merely joined
together with another or others as one of a number of defendants in the same proceedings
(Townsend & Another v. Stone Toms & Partners (a firm) & Others [1981] 1 W.L.R. 1153;
[1981] 2 All E.R. 690, CA). The case contains examples of joint liability and of alternative
liability.

Where only some but not all the defendants sued make a payment into court which the
plaintiff accepts, he must obtain an order of the court for payment out of the money (for an
example see Li Kwong Wong & Others v. Ever Property Management Ltd & Others,
unreported, Civ. App. No. 62 of 1995, December 13, 1995, CA, [1995] H.K.L.D. (Ybk)
970). The application is made by summons before the master, if made before trial;
otherwise it is made to the trial judge. In either case, the costs of the action or the cause of
action to which the payment relates must be dealt with: see "Effect of acceptance on claim,"
para. 22/3/5. If, however, the plaintiff discontinues his action against the other defendants,
who consent in writing to the payment out of the sum accepted, the money will be paid out
to the plaintiff without an order.

Where claims are made jointly or in the alternative against a number of defendants and
allegations of several liability are also included, O.22, rr.3(4) and 4 apply so far as the joint
or alternative claims are concerned on acceptance by the plaintiff of money paid into court
by one of the defendants (Scania (Great Britain) Ltd v. Andrews & Others [1992] 1 W.L.R.
578).

22/4/3

Defence of tender

Where the defence raises a plea of tender, and the plaintiff accepts the money paid in with
that plea, he cannot take out the money paid in without an order; he must apply either by a
summons to a master or to the judge at the trial for payment out of such money to him, and,
in either case, the defendant's costs can then be provided for.
22/4/4

Plaintiff under disability

Where money is paid into court in an action by or on behalf of a minor or a patient, the
acceptance of such sum is valid only if and when approved by the court (see O.80, r.11) and
the money can only be dealt with in accordance with the directions of the court under O.80,
rr.12 and 13.

22/4/5

Claims under F.A.O. (Cap. 22) and L.A.R.(C.)O. (Cap. 23)

In addition to the power of the court under O.80, rr.12 and 13, to control moneys recovered
by or on behalf of an infant or patient or the widow claiming with infant dependants under
the F.A.O. (Cap. 22), an order of the court is necessary in all causes in which a claim is
made under the F.A.O. (Cap. 22) and L.A.R.(C.)O. (Cap. 23), or a claim is made under the
F.A.O. (Cap. 22) by or on behalf of more than one person. The reason is that in such cases,
the Court must apportion the money accepted as between the claims under the F.A.O. (Cap.
22) and L.A.R.(C.)O. (Cap. 23) and/or as between the claims of the persons entitled to
recover under the F.A.O. (Cap. 22). The application is made by summons to the master or
to the judge at the trial, and in either case the apportionment will be then dealt with and the
costs provided for.

Money remaining in court (O.22, r.5)

22/5
5.--(1) If any money paid into court in an action is not accepted in accordance with rule 3, the money
remaining in court shall not be paid out except in pursuance of an order of the Court which may be
made at any time before, at or after the trial or hearing of the action; and where such an order is made
before the trial or hearing the money shall not be paid out except in satisfaction of the cause or causes
of action in respect of which it was paid in.

22/5/1

Effect of rule

The broad effect of the rule is that unless money paid into court under r.1 is accepted in
satisfaction of the whole cause or causes of action within the time and in the manner
prescribed by r.3, it must remain in court pending an order for its payment out. It would
seem that this rule applies if any money is allowed to remain in court. Money paid in in
respect of two causes of action might be taken out in respect of one such cause of action,
and allowed to remain in court in respect of the other. In these circumstances it is conceived
that the money so remaining in court may not be taken out except in satisfaction and in
pursuance of an order.

This rule does not apply to Admiralty actions (O.75, r.24).

22/5/2

Application for payment out

The application for payment out of money remaining in court is made by summons to the
master or to the judge at the trial. Such an application may be made before, at or after, the
trial or hearing of the action, but, it may be that it will be refused if made after the final
speeches and before judgment (see Millar v. Building Contractors (Luton) Ltd [1953] 2 All
E.R. 339). On such application the court will deal with the issue of costs.

A plaintiff who had issued a writ for damages for personal injuries died from a cause not
due to the accident. The right of action surviving under the English legislation analogous to
the L.A.R.(C.)O. (Cap. 23), her executor, substituted as plaintiff, applied for payment out to
him of money paid in by the defendant with a denial of liability. The defendant was held
entitled to an adjudication of the questions whether there was liability and, if so, what were
the damages, the amount of which might be affected by the death of the original plaintiff,
and no order was made except that the money should remain in court to await the trial
(Dawson v. Spaul (1935) 51 T.L.R. 247).

Where money, paid in with a denial under the old English rules on payment in, was left in
court until the hearing, and then (by leave) taken out by the plaintiff in satisfaction, the trial
judge made no order as to costs after payment in. It was held, on appeal, that leave to take
the money out of court should only have been granted on condition that the plaintiff pay the
defendant's costs incurred after payment in (Griggs v. Petts [1939] 4 All E.R. 39, CA).

Where application for payment out is made before the trial, the court would ordinarily order
such payment out if the chances of success or failure or of greater or less damages were
substantially the same as at the date of payment in but usually only on the terms that the
plaintiff should pay the costs since the date of payment in, but if the chances had
substantially altered as against the plaintiff, the court would ordinarily refuse to order
payment out of the money in court and it is for the defendant to indicate the circumstances
which have altered the position, though without disclosing how he would conduct the case
at the trial (see per Lord Denning M.R. in Gaskins v. British Aluminium Co. Ltd [1976] Q.B.
524; [1976] 1 All E.R. 208). A sum is paid into court in the light of a defendant's perception
of the case at the time of payment in; accordingly the court should not extend the time laid
down by the rules for acceptance of the payment in if, in the meantime, the risks of the case
have changed adversely to the plaintiff (Proetta v. Times Newspapers Ltd [1991] 1 W.L.R.
337, CA; [1991] 4 All E.R. 46).

An order of the court enabling the money remaining in court to be paid out to the plaintiff
who applies for such order because he has not given notice of acceptance within 14 days in
accordance with r.3, is not a "judgment" within the meaning of s.48 of the High Court
Ordinance (Cap. 4) so that the court has no power to award interest on the sum paid into
court (Newall v. Tunstall [1971] 1 W.L.R. 105; [1970] 3 All E.R. 465; Waite v. Redpath
Dorman Long Ltd [1971] 1 Q.B. 294; [1971] 1 All E.R. 513). See now O.22, r.1(8).

The costs incurred since the date of payment in should be the defendant's (Newall v.
Tunstall (above)).

As under the English RSC, O.22, r.1 the payment into court had to be in respect of an action
for debt or damages, RSC, O.22, r.5 could not be invoked once an action for debt or
damages had been extinguished by an election to take an account of profits, as RSC, O.22,
r.5 only authorised money to be withdrawn in respect of the cause of action for which it was
paid in. See Braben v. Emap Images Ltd [1997] 2 All E.R. 544; (1997) 147 (Jan-Jun) New
L.J. 14.
22/5/3

Payment out by mistake

Money in court which is paid out of court by mistake, whether of law or of fact, must be
repaid into court by the person to whom it has been paid (Gainsborough Mixed Concrete
Ltd v. Duplex Petrol Installations Ltd & Barclays Bank, Ltd (garnishee) [1968] 1 W.L.R.
1463; [1968] 3 All E.R. 267, CA).

22/5/4

Costs incidental to payment in

In Wolseley v. Associated Newspapers Ltd (1934) 150 L.T. 347, Scrutton L.J., at 348 said:
"If after the time for payment into Court the plaintiff incurs certain expenses in taking the
money out, is it to be supposed he cannot get those costs from the defendant? I am told the
taxing Masters take the view that though the taking of the money out of Court is after the
payment into Court, the person taking the money out should be allowed those costs as being,
I suppose, incidental to the payment into Court."

22/5/5

Discretion as to costs

Subject to the provisions of the High Court Ordinance (Cap. 4), s.52A, and to O.62, r.2(4),
the court has a complete discretion as to costs. Rule 5(b) of O.62 provides that in exercising
its discretion as to costs the court shall, to such extent, if any, as may be appropriate in the
circumstances, take into account any payment of money into court and the amount of such
payment. The discretion, however, must be exercised judicially, so that a defendant who
pays money into court which exceeds the sum awarded to the plaintiff is the successful
party, and as such is entitled to be paid his costs as from the date of the payment in (Findlay
v. Railway Executive [1950] 2 All E.R. 969, CA, Miah, Mohammed Tara v. Hyundain
CCECC Joint Venture [2006] H.K.D.C. 112). He can only be deprived of such costs by the
proper exercise of judicial discretion upon proper materials arising out of the instant
litigation or the conduct of it; he cannot be deprived of his costs for no reason (Findlay v.
Railway Executive) or upon no or insufficient materials, e.g. because the judge had
considered giving a larger sum than he had eventually awarded (Wagman v. Vare Motors
Ltd [1959] 1 W.L.R. 853; [1959] 3 All E.R. 326, CA). In the event that the plaintiff is
awarded a sum greater than the payment in, the plaintiff will usually recover the costs of the
whole proceedings unless there are special circumstances (see Miah, Mohammed Tara v.
Hyundai-CCECC Joint Venture, unreported, DCEC No. 1068 of 2005, [2006] H.K.E.C.
887).

Nevertheless, if the plaintiff is awarded the exact amount paid into court, and the
substantial issue between the parties has been whether he should be awarded interest on that
sum, and he in fact recovers an increased sum by way of interest in addition to the amount
paid in, it seems that the court will award him the costs of the action since he succeeded on
the issue on which the parties came to court (Vehicle & General Insurance Co. (in
liquidation) v. H. & W. Christie Ltd [1976] 1 All E.R. 747). See, now O.22, r.1(8).

The defendant can and now should make his payment into court to include a sum in respect
 of interest claimed or not, under the High Court Ordinance (Cap. 4), s.48 and the discretion
of the court on the question of costs will be exercised having regard to any award of such
interest. And see r.1(8) and "Claim for interest", para. 22/1/10.

The court is not required to distinguish between the issues of liability and damages or to
make any special order on the issue of liability on which the plaintiff succeeds. The court
looks at the position of the parties to see whether the amount paid in is more or less than the
total of the plaintiff's claim or claims. Thus, where in an action for unliquidated damages
the amount awarded to the plaintiff is less than the amount paid into court in satisfaction by
the defendant, the practice is to order that the plaintiff should have his costs up to the time
of payment in and that the defendant should have his costs thereafter, without making any
special order with regard to the costs on the issue of liability after the date of payment in
(Hultquist v. Universal Pattern and Precision Engineering Co. Ltd [1960] 2 Q.B. 467;
[1960] 2 All E.R. 266, CA). The earlier English cases are not authorities which require the
judge to grant such costs or which require the Court of Appeal to intervene if he fails to do
so, for the whole question is in the discretion of the judge (ibid.). The Court of Appeal will
interfere only if some matter has been wrongly taken into account in exercising the
discretion (Smiths Ltd & Another v. Middleton [1986] 1 W.L.R. 598; CA).

The practice referred to above would apply equally where the defendant pays in a single
sum in satisfaction of two or more causes of action: if the total recovered by the plaintiff
exceeds this sum, he will be entitled to the whole of the costs of the action, even though the
defendant may have succeeded on one or other of the causes of action, and equally, if the
total recovered is less than the sum paid in, the defendant will be entitled to the costs, even
though the plaintiff may have succeeded on one or other of the causes of action. This is, of
course, always subject to any particular order as to costs which the court may make in the
exercise of its judicial discretion.

Where an amendment is allowed at the trial to enable the plaintiff to add fresh allegations
of damage, the discretion as to costs must be exercised by reference to the case as originally
pleaded and not as so amended, and therefore if the damages awarded are less than the
amount of the payment in on the basis of the original case as pleaded even though they
exceed such amount on the basis of the new case as amended, the defendant will be entitled
to costs after the payment in (Cheeseman v. Bowaters United Kingdom Paper Mills Ltd
[1971] 1 W.L.R. 1773; [1971] 3 All E.R. 513, CA).

The court's discretion to order a paying-in defendant to pay the plaintiff's costs of the action
is wide enough to include the plaintiff's costs of proceeding against that defendant's
co-defendants if the circumstances justify such an order (General Accident Insurance Asia
Ltd v. Hampton Winter & Glynn (a firm) & Others and Hill Taylor Dickinson [1999] 2
H.K.L.R.D. 109; [1998] 4 H.K.C. 398; Hodgson v. Guardall Ltd & Others [1991] 3 All E.R.
823); not followed in Carrs Bury St Edmunds Ltd v. Whitworth Partnership and Barnes
Group (1997) 13 Const.L.J. 199, see para. 22/3/1 (above).

22/5/6

Award for less than sum paid in

Where the award is for an amount less than the sum paid into court, the judge has a
discretion as to the disposal of the balance. The defendant has in such a case succeeded on
the issue as to the sufficiency of the sum paid into court, and the money recovered by the
plaintiff may be ordered to remain in court as security for the defendant's costs (Dunn v.
 Devon and Exeter Constitutional Newspaper Company [1895] 1 Q.B. 211n.; Best v.
Osborne Garrett & Co. (1896) 12 T.L.R. 419). In Gray v. Bartholomew [1895] 1 Q.B. 209,
CA, an action of slander, the defendant paid in £5 under r.1 of the English equivalent of this
Order, and the jury found for the plaintiff with one farthing damages. The judge ordered the
£5 less one farthing to be paid out to the defendant. In Powell v. Vickers & Maxim Ltd
[1907] 1 K.B. 71, CA, the Court of Appeal laid it down as a general rule that where in an
action for unliquidated damages the plaintiff recovered a sum less than the amount paid into
court, but still an amount which entitled him to costs, he was entitled to have the amount
recovered paid out to him. "The onus is on the defendants to give some good reason why
the money should remain in Court."

Where, however, the amount paid into court exceeds the damages awarded to a legally
aided plaintiff, the defendant is, nevertheless, entitled to his costs after the date of payment
in, such costs to be set-off against the damages and the plaintiff's costs before payment in
(Cook v. Swinfen [1967] 1 W.L.R. 457; [1967] 1 All E.R. 299, CA). See also para. 22/10/1.

22/5/7

More than one plaintiff

For a form of order made as to costs where two actions were consolidated, and one plaintiff
recovered more and the other less than the amounts paid in in respect of each claim, see
Wolverhampton Wanderers (Owners, Master and Crew) v. Bosworth (Owners), Faraday
(Owners, Master and Crew) v. Bosworth (Owners) The Bosworth (No. 2) [1961] 1 W.L.R.
319; distinguishing English v. Bloom and the London Passenger Transport Board and
Siegenberg v. Bloom and the London Passenger Transport Board (consolidated) [1936] 2
K.B. 550.

Counterclaim (O.22, r.6)

22/6
6. A plaintiff against whom a counterclaim is made and any other defendant to the counterclaim may
pay money into court in accordance with rule 1, and that rule and rules 3 (except paragraph (5)), 4 and
5 shall apply accordingly with the necessary modifications.

Non-disclosure of payment into court (O.22, r.7)

22/7
7.--(1) Except in an action to which a defence of tender before action is pleaded, and except in an
action all further proceedings in which are stayed by virtue of rule 3(4) after the trial or hearing has
begun and subject to paragraph (2), the fact that money has been paid into court under the foregoing
provisions of this Order shall not be pleaded and no communication of that fact shall be made to the
Court at the trial or hearing of the action or counter-claim or of any question or issue as to the debt or
damages until all questions of liability and of the amount of the debt or damages have been decided.

(2) Where the question of the costs of the issue of liability falls to be decided, that issue having been
tried and an issue or question concerning the amount of the debt or damages remaining to be tried
separately, any party may bring to the attention of the Court the fact that a payment into court has or
has not been made and the date (but not the amount) of such payment or of the first payment if more
than one.

22/7/1
Effect of rule

A payment into court was "always a secret plea so far as the jury were concerned. It is now
a secret plea so far as the Judge is concerned" (per Lord Greene M.R. in Monk v. Redwing
Aircraft Co. Ltd [1942] 1 K.B. 182 at 188). It is also a secret plea so far as the Court of
Appeal is concerned, see O.59, r.12A.

The rule does not apply to money paid into court otherwise than in satisfaction under this
Order, e.g. an Order giving conditional leave to defend under O.14, or setting aside a
judgment on condition of payment into court.

The rule applies only to money claims, and not to cases in which some other remedy or
relief is sought, e.g. an injunction or an order relating to finance or property in matrimonial
proceedings. In such cases letters written "without prejudice save as to costs" making offers
relating to any issue in the proceedings, e.g. offering to submit to an injunction or to give an
undertaking or afford other remedy or relief, must be taken into account when determining
the question of costs (see O.22, r.14 and O.62, r.5(d)). An analogous rule governs
disclosure of such letters; an offer made under O.22, r.14, must not be communicated to the
court until the question of costs falls to be decided (O.22, r.14(2)).

Except in the case of a plea of tender (see O.18, r.16) and in the case of a plea under the
Defamation Ordinance (Cap. 21) (see O.82, r.4(2)) a payment into court in satisfaction
must not be alleged or stated as a fact in any pleading, and the fact that it has been made
must not be communicated to the trial judge or court until after the determination of all
questions of liability and quantum, but of course before the question of costs is dealt with. It
applies whether the trial or hearing of the action or counterclaim takes place before the
judge or a master, and it covers the cases where damages are assessed by the master or
where any question or issue as to debt or damages is tried by him.

It is the duty of both judge and counsel to observe this rule, but if, by inadvertence or
otherwise, it is broken, it is a matter for the trial judge to determine what shall be done. If he
thinks it proper, or necessary, for the due administration of justice, he may refuse to hear
the action further, and direct it to be heard by another tribunal. But if he is satisfied that no
injustice will be done he may allow the cause to proceed; this course, if taken, in itself
affords no ground for an appeal (Millensted v. Grosvenor House (Park Lane) Ltd [1937] 1
K.B. 717, CA). See too Re an Action for Negligence (1992 C No. 3063), The Times, March
5, 1993; [1993] T.L.R. 117 where during the course of a trial a journal revealed not only the
fact of payment in but also the amount thereof. The court held it was open to the judge to
continue the hearing if he could put such knowledge to one side for the purpose of making
his decision at end of the trial.

In England the rule was that ordinarily an application for payment out of money in court
should not be made to the trial Judge after the trial or hearing has begun without the consent
of the defendant. However, in Unistress Building Construction Ltd v. Humphrey's Estate
(Forrestdale) Ltd, unreported, MP Nos 3268 and 3311 of 1991, March 16, 1992, [1992]
H.K.L.Y. 47, Kaplan J. declined to follow Gaskins (below) and held that under the
provisions of O.73, r.14(3) which mirror O.22, r.4(3) the court's discretion to order
payment out was unfettered notwithstanding that the defendant opposed the application. As
a rule where an application is entertained and refused, or if the disclosure of the payment in
is made inadvertently or happens accidentally, the judge should invariably continue the
trial himself, though he has a discretion to order a new trial (Gaskins v. The British
 Aluminium Co. Ltd [1976] Q.B. 524; [1976] 1 All E.R. 208, CA; and see Millar v. Building
Contractors (Luton) Ltd [1953] 2 All E.R. 339). On an application for security for costs,
under O.23, r.1, the court is entitled to take into account the fact that the Defendant had
made a payment into Court in respect of the claim, when exercising discretion as to the
amount of security to be given (KJM Industries v. JPM Resources (HK) Ltd [2005]
H.K.E.C. 1662).

On an application for an interim payment under O.29, r.10, the plaintiff is not prohibited by
the rule from disclosing to the court the fact and the amount of any payment made by the
defendant (Fryer v. London Transport Executive, The Times, December 4, 1982, CA).

22/7/2

"No communication at the trial"

The rule has no application to interlocutory proceedings in the course of which it is often
both necessary and desirable that the court should know of a payment into court (Williams v.
Boag (1941) 57 T.L.R. 70, per Goddard L.J. at 71). The rule has been applied equally to the
Court of Appeal (see O.59, r.12A) and on an appeal as to the quantum of damage the Court
of Appeal must not be told the amount paid into court.

22/7/3

"Until all questions of liability"

The rule contemplates communications of the fact of payment into court and the amount
thereof before the judgment is perfected by entry, for it assumes that the trial judge will be
told about such payment in, for the purposes of the order as to costs (Millensted v.
Grosvenor House (Park Lane) Ltd [1937] 1 K.B. 717, per Scott L.J.).

22/7/4

Non-disclosure to the Court of Appeal

The fact that a payment into court has been made in the proceedings in the court below
before judgment or the amount of any such payment must not be stated in the notice of
appeal or the respondent's notice or in any supplementary notice and must not be
communicated to the Court of Appeal until all questions relating to liability for the debt,
damages or salvage claimed or the amount therein have been decided (O.59, r.12A. And see
Chan Kam Hoi v. Dragages et Travaux Public (No. 1) [1997] 2 H.K.C. 567, following Shek
Kam Tin v. Chan Fuk Sang & Another [1979] H.K.L.R. 532; [1977-79] H.K.C. 178).

The rule does not apply in the case of an appeal as to costs only or an appeal in an action to
which a defence of tender before action was pleaded.

The rule is couched in strict terms and it behoves the solicitor for the appellant to observe
the rule strictly and for this purpose the appellant must ensure that the copies of the
documents lodged by him on the appeal omit any part which states that money was paid
into court in the proceedings before judgment (O.59, r.12A(2)).

Money paid into court under order (O.22, r.8)

22/8
8.--(1) On making any payment into Court under an order of the Court or a certificate of a master, a
party must give notice thereof to every other party to the proceedings. (L.N. 363 of 1990)

(2) Subject to paragraph (3), money paid into court under an order of the Court or a certificate of a
master shall not be paid out except in pursuance of an order of the Court. (L.N. 404 of 1991)

(3) Unless the Court otherwise orders, a party who has paid money into court in pursuance of an order
made under Order 14--

(a)may by notice to the other party appropriate the whole or any part of the money and any additional
payment, if necessary, to any particular claim made in the writ or counterclaim, as the case may be, and
specified in the notice, or

(b)if he pleads a tender, may by his pleading appropriate the whole or any part of the money as
payment into court of the money alleged to have been tendered;

and money appropriated in accordance with this rule shall be deemed to be money paid into court in
accordance with rule 1 or money paid into court with a plea of tender, as the case may be, and this
Order shall apply accordingly.

(L.N. 363 of 1990)

22/8/1

Effect of rule

In Tsang Yuk Kiu v. Lobley Co. Ltd & Another [1997] 3 H.K.C. 717 the Court of Appeal
considered the application of r.8(2) to money paid into court as security for costs and
reached differing views as to whether such money could be paid out without an order of the
court. The majority view was that no order was required because r.8(2) is to be read as
applying only to a payment into court in any action for debt or damages in satisfaction of
the cause of action under an order of the court and not to payments into court under an order
of the court but not in satisfaction of a cause of action. Under para. (3) where money has
been paid into court under an order made in O.14 proceedings, e.g. as a term of conditional
leave to defend or otherwise, the defendant can (unless otherwise ordered) appropriate that
money in satisfaction of the plaintiff's claim or appropriate it to a plea of tender. In the first
case he must do so by an appropriate notice of payment into court, so as to enable the
plaintiff to take it out in satisfaction; in the second case he may properly raise the defence of
tender in his pleading, see O.18, r.16.

Forms

For the prescribed form to be used when making payments into court under order, see
Appendix 11 to Law Society Circular 04-500 (PA), October 11, 2004.

22/8/2

Appropriation of money and payment out

Where the defendant is given conditional leave to defend under O.14, r.4(3) on payment of
a sum of money into court, and that sum on being paid into court is placed on deposit
 account earning interest and thereafter the defendant appropriates that sum in satisfaction
of the claim of the plaintiff who does not accept that sum but is not successful in his claim
against the defendant in whole or in part, the defendant is entitled to the accrued interest on
the sum which he has appropriated in satisfaction of the claim (Schroeder v. Accountant
General [1980] 1 W.L.R. 1314; [1980] 2 All E.R. 648).

[The next paragraph is 22/10]

Person to whom payment to be made (O.22, r.10)

22/10
10.--(1) Where the party entitled to money in court is a person in respect of whom a certificate is or has
been in force entitling him to legal aid under the Legal Aid Ordinance (Cap. 91), payment shall be
made only to the Director of Legal Aid without the need for any authority from the party.

(2) Subject to paragraph (1), payment shall be made to the party entitled or to his solicitor.

(3) This rule applies whether the money in court has been paid into court under rule 1 or under an order
of the Court or a certificate of the Registrar.

22/10/1

Effect of rule

This rule applies to all cases of money paid into court, whether in satisfaction under r.1, or
otherwise.

22/10/2

Payment out in legal aid cases

Paragraph (1) ensures that the legally aided person's obligations to the Director of Legal
Aid are met. No authority from the party himself is required.

22/10/3

Payment out to plaintiff or his solicitor

Paragraph (2) removes the necessity for a solicitor to have his client's express authority to
receive payment of money out of court or to require an order of the court for payment out of
court without such authority, and thus avoids unnecessary time, trouble and expense to
obtain such authority or to obtain an order to dispense with such authority.

Payment out: small intestate estates (O.22, r.11)

22/11
11. Where a person entitled to a fund in court, or a share of such fund, dies intestate and the Court is
satisfied that no grant of administration of his estate has been made and that the assets of his estate,
including the fund or share, do not exceed $20,000 in value, it may order that the fund or share shall be
paid, transferred or delivered to the person who, being a widower, widow, child, father, mother,
brother or sister of the deceased, would have the prior right to a grant of administration of the estate of
the deceased.
22/11/1

Note

The making of an interim payment by a defendant should not have attached to it a condition
that the court should not be informed of such payment. In the case of a person under a
disability the court must be informed in order for the court to consider whether such
payment should be paid into court in the first instance.

Whatever the circumstances of the plaintiff, no paying party, i.e. the defendant, should seek
to exclude such payment from the court's knowledge save in the circumstances set out
under O.29, r.15.

Payment of hospital expenses (O.22, r.12)

22/12
12.--(1) This rule applies in relation to an action or counterclaim for bodily injury arising out of the use
of a motor vehicle on a road or in a place to which the public have a right of access in which the claim
for damages includes a sum for hospital expenses.

(2) Where the party against whom the claim is made, or an authorized insurer within the meaning of
section 2 of the Motor Vehicles Insurance (Third Party Risks) Ordinance (Cap. 272) pays the amount
for which that party or insurer, as the case may be, is or may be liable under section 8 of that Ordinance
in respect of whom the claim is made, the party against whom the claim is made must, within 7 days
after the payment is made, give notice of the payment to all the other parties to the action.

Investment of money in court (O.22, r.13)

22/13
13.--Cash under the control of or subject to the order of the Court may be invested in any manner
specified in the High Court Suitors' Funds Rules (Cap. 4 sub. leg.) and the Trustee Ordinance (Cap.
29).

(25 of 1998 s.2)

22/13/1

Interest on money invested

Rule 16(3)(a) of the High Court Suitors' Funds Rules (Cap. 4 Sub. Leg.) provides that no
interest shall be credited to money paid into court under, among other matters, O.22, unless
the court otherwise orders. However, r.16(3A) of the Rules provides that in the case of
money so paid in interest shall be credited on the ledger credit for the relevant cause or
matter, beginning 14 days after the money is paid in. Rules 16(3)(a) and 16(3A) appear to
be in conflict. The court's practice has been to credit interest beginning 14 days after the
money is paid in as provided by r.16(3A). These provisions rectify an omission identified in
Lee Ying v. T.C. Hamlett [1977] H.K.L.R. 274. Money paid into court is not treated as
belonging to the person claiming damages. As a result, when the award to the person
claiming damages equals but does not exceed the amount of the payment in, the accrued
interest will be ordered to be paid out to the party who made the payment in (Polish Steam
Ship Co. v. Atlantic Maritime Co. & Others; The Garden City [1985] Q.B. 41) [1984] 3 All
E.R. 59, CA).
Written offers "without prejudice save as to costs" (O.22, r.14)

22/14
14.--(1) A party to proceedings may at any time make a written offer to any other party to those
proceedings which is expressed to be "without prejudice save as to costs" and which relates to any
issue in the proceedings.

(2) Where an offer is made under paragraph (1), the fact that such an offer has been made shall not be
communicated to the Court until the question of costs falls to be decided: (L.N. 404 of 1991)

Provided that the Court shall not take such offer into account if, at the time it is made, the party making
it could have protected his position as to costs by means of a payment into court under O.22.

22/14/1

Effect of rule

The rule codifies and extends the procedure first approved by the English Court of Appeal
in Calderbank v. Calderbank [1976] Fam. 93; [1975] 3 All E.R. 333, CA, and hence often
referred to as the writing of a Calderbank letter (see para. 22/1/4 (above) "Action for claims
other than debt or damages"). The proviso to para. (2) is identical to that to be found in O.62,
r.5(d). While the rule provides that a party to proceedings may "at any time" make a written
offer, the Lands Tribunal has held that the written offer will be ignored for the purposes of
determining the parties' respective liabilities to costs if the recipient has insufficient time to
consider the offer (Wong Yik Po & Others v. Director of Lands [1995] H.K.D.C.L.R. 93;
[1996] 1 H.K.C. 586). The rule applies only where proceedings have been commenced. The
terms of the offer must be sufficiently certain as to be capable of a valid acceptance by the
plaintiff without further query or negotiation on the matter. In this case, the defendant
proposed that it or "one of its subsidiaries" would purchase a property, the assignment of
which was in dispute. The reference to unnamed subsidiaries was held to make the offer too
uncertain (Luk Kwan Hung Nelson v. Victory Mark Investment Ltd [2004] 158 H.K.C.U. 1).
Sakhrani J. also emphasised that "a Calderbank offer should influence but not govern the
exercise of the discretion on costs" as discussed by Mummery L.J. in Butcher v. Wolfe and
Wolfe [1999] 1 F.L.R. 334 at 340. A written offer in Calderbank form made before
proceedings are commenced may, however, be taken account of by the judge in the exercise
of his discretion (Oriental Press Group Ltd & Another v. Apple Daily Ltd (No. 2) [1998] 1
H.K.L.R.D. 231; [1997] 3 H.K.C. 615, CA). A written offer made under the rule may relate
to a claim which is more than a simple money claim for debt or damages (e.g. a claim for an
injunction or declaratory relief), or to any issue in proceedings in which such a claim is
made. But the proviso to para. (2) embodies and gives effect to the words of caution used by
the English Court of Appeal in Cutts v. Head [1984] Ch. 290; [1984] 1 All E.R. 597, CA,
that a Calderbank letter ought not to be used as a substitute for a payment into court, where
a payment into court under O.22, r.1 is appropriate. "The machinery provided by O.22, r.14
is simply not available where the party making a without prejudice offer can protect his
position by means of a payment into court" per Godfrey J.A. in The Hong Kong &
Shanghai Hotels Ltd v. Choy Bing Wing (t/a Bing Choy & Associates) [1999] 1 H.K.L.R.D.
473; [1998] 4 H.K.C. 555, CA. See too Singh v. Parkfield Group Plc, The Times, May 27,
1994, [1994] T.L.R. 307; (1994) The Independent, June 27 (affirmed by CA, The Times,
March 20, 1996; [1996] P.I.Q.R. Q110; (1996) 93(10) L.S.G. 32), where the court held in
an action for damages for personal injury and following the words of caution in Cutts v.
Head that as a matter of principle an offer must in the ordinary way be backed by a payment
in to achieve any protection against costs. See also Luen Yin Ching v. Chan Yi Man,
unreported, DCCJ No. 982 of 2002, November 19, 2002, [2003] H.K.E.C. 520 for the
consequences of making a payment in after a Calderbank letter. In Padmanor Investments
Ltd v. Soundcraft Electronics Ltd (Derrick Wade & Waters (Southern) Ltd & another, third
parties) [1995] 4 All E.R. 683, it was held that an offer as to costs made by a third party and
defendant to a counterclaim should be taken into account as to costs as the offeror could not
have effectively protected his position by making a payment into court. A claim for
compensation made to the Lands Tribunal is not "any action for a debt or damages" as
provided by O.22, r.1. Accordingly the proviso to r.14 does not apply to such a claim and a
Calderbank offer could be taken into account by the Court of Appeal (Director of Buildings
and Lands v. Shun Fung Ironworks Ltd [1995] 2 H.K.L.R. 501; [1995] 1 H.K.C. 417).
However, in Cheung Yu Tin Alvin v. Ho Hon Ka (unreported, CACV No. 255 of 2005,
[2006] H.K.E.C. 524), the Court of Appeal held that the defendant could have made a
payment into court despite the Defendant's contention that the action was commenced in
the wrong court. In these circumstances, the Calderbank letter was not considered by the
Court in making an order for costs. See also Luk Kwan Hung Nelson v. Victory Mark
Investment Ltd [2004] 158 H.K.C.U. 1, where Sakhrani J. held that a claim for recission of
a contract for the sale of property, where damages were claimed in the alternative did not
constitute a claim where the defendant could have protected its position by making a
payment in.

In National Commercial Bank Ltd v. Kanishi (Far East) Ltd & Another & Po Ding Co. Ltd
(Claimant), unreported, HCMP No. 5045 of 2000, January 30, 2002, [2002] H.K.E.C. 253,
Ma J. refused to allow a defendant to refer to an earlier without prejudice offer on the
question of costs. The offer, made in the course of an application for a charging order, was
marked simply "without prejudice". Ma J. made it clear "that the protection afforded by
without prejudice correspondence is not just to the author of the relevant document but also
extends to the recipient". Unless, as a matter of construction, the offer was intended to be a
Calderbank letter, it was inadmissible. It is therefore important that written offers made
under this rule are clearly stated to be "without prejudice save as to costs".