Chan Yau Yam v. Dr Ho Sai Cheung

DCPI 2438/2024

[2025] HKDC 2130

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

PERSONAL INJURIES ACTION NO 2438 OF 2024

------------------------------

------------------------------

------------------------------

DECISION

------------------------------

Introduction

1.In this Action, the Plaintiff sues the Defendant, her former dentist, for damages, alleging that the Defendant negligently performed a tooth implant surgery which caused her physical and mental injuries.

2.By a Notice of Appeal filed on 5 September 2025 (“Notice of Appeal”) pursuant to Order 58 rule 1 of the Rules of the District Court (Cap 336H, sub leg.) (“RDC”), the Plaintiff lodges an appeal against the Order of Master Charmaine Lo made at a checklist review hearing on 29 August 2025 (“the Order”) in the following terms:

(1)  All further proceedings in this action be stayed except for the purpose of carrying out sub-paragraphs (2) to (5) hereof into effect, and there be liberty to apply for the said purpose;

(2)  The Defendant shall pay the Plaintiff the sum of HK$1,400,000 (inclusive of interest) (“the Settlement Sum”) and the Plaintiff’s costs of this Action up to the filing and service of the Notice of Acceptance of the Plaintiff’s Re-Amended Sanctioned Offer dated 6 August 2025, to be taxed on the District Court Scale if not agreed, in full and final settlement of all the Plaintiff’s claims against the Defendant in this Action;

(3)  The Settlement Sum shall be satisfied by the Defendant’s Sanctioned Payments into Court in the sum of HK$850,000 and HK$150,000 made on 17 December 2024 and 28 January 2025 respectively, with the remaining sum of HK$400,000 be paid to the Plaintiff through her solicitors, Messrs H Y Leung & Co, within 14 days from the date hereof;

(4)  The Defendant’s Sanctioned Payments into Court made on 17 December 2024 and 28 January 2025 respectively in the total sum of HK$1,000,000 be paid out forthwith to the Plaintiff through her solicitors, Messrs H Y Leung & Co;

(5)  Interest (if any) accrued on the Sanctioned Payments made on 17 December 2024 and 28 January 2025 be released to the Defendant forthwith through his solicitors, Messrs Johnson Stokes & Master; and

(6)  There be no order as to costs after 6 August 2025 and today’s checklist review hearing.

3.The Plaintiff seeks an order that:

(1)  The Order be set aside;

(2)  The Defendant’s notice of acceptance dated 6 August 2025 (“Notice of Acceptance”) be set aside for material irregularity and/or abuse of process; and

(3)  Such further or other relief as the Court may think just.

4.This is my decision on the Plaintiff’s appeal.

5.Moreover, at the hearing of this appeal, while I did not prevent the Plaintiff from pursuing a new Ground 5 in her proposed Amend Notice of Appeal, I dismissed the Plaintiff’s another application by summons filed on 25 November 2025 for leave to adduce two affirmations as evidence at the hearing of the appeal, and ordered costs of the summons including one hour of the hearing be paid by the Plaintiff to the Defendant, with Certificate for Counsel, to be taxed if not agreed. I said that I would give detailed reasons for the dismissal, which I now do below.

Background

6.On 1 August 2024, the Plaintiff issued the Writ of Action herein.

7.As a matter of fact, both before and after the commencement of this action, parties had engaged in rounds of “without prejudice” communications, with offers and counter-offers being sent back and forth, with an attempt to reach settlement. For example, by letter dated 20 November 2024 marked “without prejudice save as to costs” from Messrs Johnson Stokes & Master (“JSM”), the Defendant made an offer to settle, which was rejected by the Plaintiff through the letter dated 27 November 2024 marked “without prejudice save as to costs" from her solicitors Messrs H Y Leung & Co (“HYL”), stating, among other things, that the Plaintiff was unwilling to sign any confidentiality agreement.

8.By a “without prejudice save as to costs” letter dated 28 November 2024 from HYL, the Plaintiff sent a sanctioned offer (“the Sanctioned Offer”) to the Defendant’s solicitors. It was stated that in accordance with Order 22 RDC, the Plaintiff offered to accept a certain sum plus costs up to the date the Defendant served a notice of acceptance, in full and final settlement of the proceedings.

9.The Sanctioned Offer was not accepted. By HYL’s 1^st Letter dated 26 May 2025 marked “without prejudice save as to costs” to JSM, the Plaintiff informed the Defendant that she had amended the Sanctioned Offer by revising the settlement sum (“Amended Sanctioned Offer”).

10.By a “without prejudice save as to costs” letter dated 3 July 2025, JSM informed HYL that they had instructions from the Defendant to accept the Amended Sanctioned Offer. The Defendant realised that the deadline for accepting the Amended Sanctioned Offer without Court’s leave had passed, and so a draft consent summons ‘to effect the settlement’ was prepared for the Plaintiff’s consideration. The Defendant expected the Plaintiff to reply within 2 days whether the draft Consent Summons was agreeable. This draft consent summons provided, inter alia, that all further proceedings in this action be stayed upon the terms of settlement agreed between the Plaintiff and the Defendant set out in the schedule attached except for the purpose of carrying out the order and the said terms into effect. The said schedule provided that:

(1)  On a non-admission of liability basis, the Defendant shall pay the Plaintiff the settlement sum and the Plaintiff’s costs of the action including and up to the costs of this application, to be taxed according to the District Court Scale if not agreed, in full and final settlement of all the Plaintiff’s claims against the Defendant in this Action; (“Non-Admission Term”)

(2)  The settlement sum shall be satisfied by the Defendant’s sanctioned payments into court in the sum of HK$850,000 and HK$150,000 made on 17 December 2024 and 28 January 2025 respectively, with the remaining sum of HK$300,000 be paid to the Plaintiff through her solicitors, HYL, within 35 days from the date of the order;

(3)  Upon payment of the settlement sum and the Plaintiff’s costs as set out in the order, the Defendant shall be fully and absolutely discharged from all liabilities in respect of the Plaintiff’s claim in this action; (“Full Discharge Term”)

(4)  The Plaintiff undertakes to keep the terms of the order and any matter in relation to her claims in this action confidential unless disclosure is required by law or by the Court. (“Confidentiality Term”)

11.The draft consent summons enclosed to the said letter of JSM dated 3 July 2025 was not accepted by the Plaintiff. It is common ground of the parties that the Amended Sanctioned Offer was not accepted by the said JSM’s “without prejudice save as to costs” letter dated 3 July 2025.

12.By letter dated 14 July 2025 marked “without prejudice save as to costs” from HYL to JSM, the Plaintiff noted that the Amended Sanctioned Offer was not accepted. Moreover, it was stated in the letter that Order 22 provided a self-contained statutory procedure for settlement, and in particular a sanctioned offer was wholly procedural in nature, not contractual in nature, and not analogous to a settlement made between the parties out of court which did constitute a contract. It was further stated that the Amended Sanctioned Offer contained the entirety of the Plaintiff’s offer, and any stay would be upon the terms of the offer. The Plaintiff complained that the Defendant’s said letter dated 3 July 2025 sought consent to terms such as the Non-Admission Term, the Full Discharge Term and the Confidentiality Term that departed from the Amended Sanctioned Offer. In the premises, the Plaintiff further revised the Amended Sanctioned Offer by raising the settlement sum to HK$1,400,000 plus costs for acceptance (“Re-Amended Sanctioned offer”).

13.By letter dated 6 August 2025:

(1)  JSM informed HYL that they had instruction to accept the “Amended Sanctioned Offer” (which should have been stated as the “Re-Amended Sanctioned Offer”) of HK$1,400,000 (inclusive of interest) plus costs to be taxed if not agreed in full and final settlement of all the Plaintiff’s claims against the Defendant in this action;

(2)  Pursuant to Order 22 rule 16 RDC, JSM enclosed, by way of service, the Notice of Acceptance of the Re-Amended Sanctioned Offer dated 6 August 2025 (ie the Notice of Acceptance), a copy of which was being filed with the Court that day;

(3)  JSM prepared a draft Consent Summons as attached thereto “…to, among others, seek to vacate the Checklist Review hearing fixed for 29 August 2025 for your consideration. Kindly let us know within the next 3 days whether the draft Consent Summons is agreeable…”. [original emphases]

14.Pausing here, I noticed that the Notice of Acceptance could not be found as an enclosure to the said letter dated 6 August 2025 in Tab 25 of the hearing bundle. Indeed, the Notice of Acceptance was not included in the hearing bundle at all. At the hearing, I raised this with Mr Butt, solicitor for the Plaintiff, as the Plaintiff had the duty to prepare the hearing bundle for this appeal. Mr Butt confirmed that the Notice of Acceptance had been included as an enclosure to the said JSM’s letter dated 6 August 2025, and the Defendant’s solicitors supplied a copy of the said letter with the Notice of Acceptance and the draft Consent Summons which replaced the original one in Tab 25.

15.The Notice of Acceptance, which referred to Order 22 rule 16(1) RDC, stated that “[t]ake notice that the Defendant accepts the terms of the Re-Amended Sanctioned Offer made by the Plaintiff in [HYL]’s without prejudice letter dated 14 July 2025 (served on the Defendant’s solicitors on 14 July 2025) in full and final settlement of the whole of the Plaintiff’s claim against the Defendant in this Action”.

16.The draft Consent Summons attached to the said JSM’s letter dated 6 August 2025 contained almost the same terms as that attached to the earlier letter dated 3 July 2025. In particular, it was stated again that all further proceedings in this action be stayed upon the terms of the settlement agreed between the parties set out in the schedule thereto, and the schedule thereto contained the same Non-Admission Term, the Full Discharge Term and the Confidentiality Term, save that the settlement sum was revised and the date of payment of the balance of the settlement sum was also revised accordingly.

17.By letter dated 11 August 2025, HYL complained that JSM, together with the Notice of Acceptance, enclosed the said draft Consent Summons that sought to introduce new terms (namely the Non-Admission Term, the Full Discharge Term and the Confidentiality Term) through an attached schedule which were not terms of the Re-Amended Sanctioned Offer. HYL reiterated that they had already, in the said letter dated 14 July 2025, rejected identical proposals and cautioned against further attempt to introduce new terms. HYL contended that the Notice of Acceptance accompanied by new terms was not an acceptance at law but was a counter-offer. HYL expressly rejected the schedule which contained the new terms and requested that any consent order must mirror the terms of the Re-Amended Sanctioned Offer and the Order 22 regime only. HYL further reminded that the deadline for accepting the Re-Amended Sanctioned Offer was that day (11 August 2025) and requested JSM to confirm by 5:30pm whether the Defendant’s acceptance under Order 22 rule 16(1) RDC was unconditional and strictly on the Re-Amended Sanctioned Offer, and that the schedule with the new terms was withdrawn. HYL concluded by pointing out that they would regard the validity of any acceptance to be in issue absent JSM’s confirmation.

18.By letter also dated 11 August 2025, JSM confirmed that by filing and serving the Notice of Acceptance pursuant to Order 22 rule 16 RDC, the Defendant had, on 6 August 2025, accepted the Re-Amended Sanctioned Offer of HK$1,400,000 (inclusive of interest) plus costs to be taxed if not agreed, in full and final settlement of the Plaintiff’s claim, and such acceptance was strictly on the terms of the Re-Amended Sanctioned Offer and not conditional upon any other terms not specified therein. It was further confirmed that the Defendant would not insist on the terms in the schedule to the draft Consent Summons which were not within the terms of the Re-Amended Sanctioned Offer (including the Non-Admission Term and the Confidentiality Term).

19.By letter dated 14 August 2025, HYL alleged that the confirmation in JSM’s said letter dated 11 August 2025 was inconsistent with the position in JSM’s said letter dated 6 August 2025 and demanded an explanation. HYL further said that they were unsure whether an invalid acceptance under Order 22 rule 16(1) RDC could be cured by the said confirmation. HYL further stated that they were considering whether to notify the court of the Defendant’s repeated attempts to circumvent the self-contained procedure under Order 22 despite prior warning and established case law.

20.By letter dated 20 August 2025, JSM reiterated that the Notice of Acceptance had validly accepted the Re-Amended Sanctioned Offer on 6 August 2025.

21.By letter dated 22 August 2025, HYL complained that JSM had failed to attach the Re-Amended Sanctioned Offer to the Notice of Acceptance or propose to attach the same to the draft Consent Summons. HYL contended that if not because of its intervention, the draft Consent Summons containing the rejected schedule could have been submitted to the Court for approval, and that could amount to conduct misleading the Court or an abuse of process. HYL repeated that the Notice of Acceptance could not be read in isolation of the draft Consent Summons with the schedule. HYL further requested JSM to address five questions. Suffice it to say that the five questions were all related to explanations for JSM’s draft Consent Summons with the schedule (rejected already by HYL’s said letter dated 14 July 2025) which was served together with the Notice of Acceptance on 6 August 2025.

22.By letter dated 26 August 2025, JSM repeated their position stated in the said letters dated 11 and 20 August 2025. The letter also enclosed the Defendant’s questionnaire for the checklist review hearing on 29 August 2025 (“CLR Hearing”), proposing 6 paragraphs which eventually became the Order (save and except the last paragraph on costs).

23.As no Consent Summons was signed, the CLR Hearing on 29 August 2025 could not be vacated. On 28 August 2025, HYL wrote to the Clerk to the learned Master, submitting:

(1)  Draft Grounds for “the Intended Set-Aside Application (O2, r2 and O1A, r2)”; and

(2)  Proposed Directions including fixing a 2-hour hearing before a Judge for the substantive argument of the “Intended Set-Aside Application” with direction for filing and service of summons and affidavit evidence.

24.At the CLR Hearing, the learned Master made the Order.

25.On 15 September 2025, the learned Master ordered, by consent, that the Order be stayed pending the determination of the Plaintiff’s present appeal.

Legal Principles

26.An appeal pursuant to Order 58 RDC is dealt with by way of an actual rehearing of the application which led to the order under appeal, and the judge treats the matter as though it came before him for the first time. The judge will give the weight it deserves to the previous decision of the master, but he is in no way bound by it. A judge hearing an appeal from a master, however, is entitled, if he thinks fit, to adopt the master’s reasoning in his own judgment, without setting out the reasoning himself, and by so doing the judge does not fail to exercise the discretion conferred on him. See Hong Kong Civil Procedure 2026, Volume 1, rubric 58/1/2. The parties agreed with the said established principles.

Grounds of Appeal

27.At the hearing, the Plaintiff sought leave, by a summons filed on 25 November 2025, to amend the Notice of Appeal by adding the new Ground 5. Nonetheless, given that this appeal was by way of a rehearing, and given that fresh points might be raised before the judge which were not raised or taken before the master (see Hong Kong Civil Procedure 2026, Volume 1, rubric 58/1/5), I informed Mr Butt that no leave was necessary for the Plaintiff to advance the new Ground 5. Indeed, there is no requirement in RDC that a notice of appeal in an Order 58 appeal must specify the grounds of appeal. At this rehearing, the Plaintiff was entitled to argue any point including Grounds 1 to 5 in support of her appeal.

28.I will consider the Grounds of Appeal when determining the merits of the appeal. I set out the Grounds of Appeal below.

29.Ground 1 of the Grounds of Appeal reads:

“Ground 1: Breach of Order 22 Finality – Post-Acceptance Proposal for Additional Terms Permitted

(1) The Learned Master erred in law by permitting the Defendant to propose post-acceptance additional terms via a draft consent summons and schedule. This circumvents Order 22 regime:

• Rule 16(1) refers only to “a notice of acceptance” (singular);

• Rule 22(2)(a) permits a stay only “upon the terms of the [sanctioned] offer.”

The expressio unius doctrine applies: what is not included is excluded.

(2) The Learned Master’s reasoning creates an absurdity: while the Plaintiff “may change her mind” to agree to additional terms proposed post-acceptance, then logically, the Defendant could also “change his mind” and agree to pay a higher settlement sum proposed when adding these non-sanctioned terms. This renders Order 22’s notice of acceptance meaningless, permitting perpetual post-acceptance bargaining.

(3) In essence, the Learned Master failed to recognise that the Defendant was attempting to circumvent Order 22, rule 22(2)(a); however, this attempt failed to pass the Plaintiff’s inspection. The Defendant’s subsequent retraction, upon confrontation, did not cure the material irregularity he had caused.”

30.Ground 2 of the Grounds of Appeal reads:

“Ground 2: Descending into the Arena and Improper Burden Shifting

(1) The Learned Master erred by introducing the “further negotiation” characterisation sua sponte – a justification the Defendant never advanced. The Court descended into the arena, undermining judicial impartiality.

(2) The Learned Master then compounded this error by asking why the Plaintiff did not simply correct and return the Defendant’s draft, effectively imposing a novel duty to assist a procedurally non-compliant opponent – despite the Plaintiff’s prior express warnings against any additional terms.”

31.Ground 3 of the Grounds of Appeal reads:

“Ground 3 – The Court Risks Being Misled

(1) The Master declined to inquire into the mischaracterisation in the Defendant’s draft consent summons stating that “this Action be stayed upon the terms of settlement agreed between the Plaintiff and the Defendant set out in the Schedule”, when no such agreement ever existed. Even in draft form, documents prepared for potential filing must accurately reflect the parties’ true positions.

(2) This mischaracterisation, left unchallenged, could have resulted in a consent order being made on a wrong factual basis, particularly as the Defendant did not enclose the Plaintiff’s Re-Amended Sanctioned Offer. There is a duty on officers of the Court to act with candour, even during the drafting stage.”

32.Ground 4 of the Grounds of Appeal reads:

“Ground 4: Equivocal Acceptance – Acceptance or Counter-offer

(1) Although the Defendant’s notice of acceptance was not expressly conditional, it was served simultaneously with a draft consent summons seeking additional, non-sanctioned terms. The Defendant’s “creative bundling” blurred the line between acceptance and counter-offer, rendering the acceptance equivocal in substance.

(2) The Learned Master, however, focused only on peripheral compliance with formality and paid no regard to the substantive effect of the Defendant’s conduct on Order 22 acceptance of the sanctioned offer, which must be unequivocal. The acceptance should have been set aside for material irregularity, or treated as an abuse of process.”

33.Ground 5 of the Grounds of Appeal reads:

“Ground 5 – Procedural Irregularity – Breach of Practice Direction 18.1, paragraph 116

The Learned Master erred in law by determining a disputed Order 22 at a Checklist Review (“CLR”) hearing, thereby:

(1) Exceeding the jurisdiction prescribed by Practice Direction 18.1, paragraph 116, which exhaustively defines CLR scope as limited to procedural and case management matters, not substantive disputes;

(2) Disregarding the Plaintiff’s request for adjournment to file affirmations and present full argument on important questions of law and professional conduct, as contemplated by paragraph 116(11);

(3) Improperly converting a case management hearing into a de facto summary adjudication, thereby denying the Plaintiff the fundamental right to be heard on a substantive dispute that required proper adversarial determination and procedural fairness.”

Dismissal of Plaintiff’s Application for Filing Two Affirmations

34.At the hearing, I dismissed the Plaintiff’s application to file two affirmations (“Two Affirmations”) as evidence for this appeal. I now give the reasons.

35.The Two Affirmations sought to be adduced were the 2^nd Affirmation of Butt Tze Leung (ie Mr Butt) affirmed on 9 September 2025 (“Butt 2^nd Aff”) and the 1^st Affirmation of Law Tung Miu Angel affirmed on 8 October 2025 (“Law 1^st Aff”). Mr Butt submitted that Butt 2^nd Aff set out the Plaintiff’s efforts to clarify the Defendant’s draft Consent Summons and exhibit material correspondence that was not before the Court below. As regards Law 1^st Aff, Mr Butt submitted that the affirmation detailed the instructions of Ms Law, the Plaintiff’s daughter, to HYL, namely rejection of the Confidentiality Term in November 2024, rejection of the Defendant’s proposed terms on 14 July 2025 and enquiry about the Defendant’s purported acceptance on 6 August 2025, and explained the actual prejudice suffered by the Plaintiff which was wholly avoidable but for the Defendant’s alleged procedural manoeuvring.

36.Order 58 rule 1(5) RDC provides that no further evidence (other than evidence as to matters which have occurred after the date on which the judgment, order or decision was given or made) may be received on the hearing of an appeal under that rule except on special grounds.

37.Parties did not dispute that by reason of the decision of Fortis Insurance Co v Lam Hau Wah HCA 1840/2009, unreported, 30 March 2010, to satisfy “the special grounds” under Order 58 rule 1(5) RDC, the conditions laid down in Ladd v Marshall [1954] 1 WLR 1489 have to be satisfied. Mr Butt submitted further that according to the pre-CJR decision of Wong Hung Yu v Wu Ming Fat [2002] 1 HLRD 555, the Court is much more ready to admit further evidence on an appeal from a master’s decision than on appeal to the Court of Appeal, though discretion must still be exercised. Mr Butt submitted that Wong Hung Yu remains good law in informing the exercise of discretion in rehearing appeals, particularly where the party seeking leave did not have a fair opportunity to present evidence at the hearing below.

38.The Ladd v Marshall conditions are:

(1)  That the evidence could not have been obtained with reasonable diligence for use at the hearing below (Condition 1);

(2)  The evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive (Condition 2); and

(3)  The evidence must be such as is presumably to be believed (Condition 3).

39.Mr Butt went one step further to submit that the Two Affirmations were not “further evidence” within the meaning of Order 58 rule 1(5) RDC because no affirmations were filed by either party below, as the learned Master summarily determined the validity of the acceptance of the Re-Amended Sanctioned Offer at the CLR Hearing, without affording the Plaintiff an opportunity to file evidence and argue the matter substantively at an adjourned hearing. The Two Affirmations were the first evidence on key issues.

40.According to paragraph 11 of her written submissions (for leave to adduce affirmations on appeal), the Plaintiff sought leave to provide the factual context that had been procedurally excluded below. In other words, the Two Affirmations would have been the evidence adduced by the Plaintiff for arguing the validity of the acceptance of the Re-Amended Sanctioned Offer at the CLR Hearing below.

41.I did not accept Mr Butt’s submission. It is clear from the applicability of the Ladd v Marshall requirements, especially Condition 1, that “further evidence” in Order 58 rule 1(5) RDC means evidence which was not adduced at the hearing below before the master but which is sought to be adduced only at the hearing before the judge hearing the appeal. In my judgment, the Two Affirmations are “further evidence” within the meaning of Order 58 rule 1(5) RDC, and the admissibility of which is determined by the application of the Ladd v Marshall rule.

42.I considered Condition 2 first. In my judgment, it is well-established that Order 22 aims to further encourage the parties to take positive settlement seriously and avoid unproductive and expensive prolongation of the litigation. It provides a self-contained statutory procedure for settlement which is complete in its own right and by itself without the need to recourse to other measures. A sanctioned offer is wholly procedural in nature, not contractual in nature, not analogous to a settlement made between the parties out of Court which does constitute a contract. See Hong Kong Civil Procedure 2026, Volume 1, rubric 22/0/2, 22/1/A and 22/1/B. Order 22 rule 7 is a procedural rule and is not to be displaced by the offer and acceptance rules of the law of contract. See Rai v Pacific Construction (HK) Co Ltd [2011] 3 HKLRD 469, at paragraph 20; Hong Kong Civil Procedure 2026, Volume 1, rubric 22/7/A. These principles were not disputed by parties.

43.Order 22 rule 16(1) RDC provides that subject to rule 7(3), a defendant may accept a sanctioned offer made not less than 28 days before the commencement of the trial without requiring the leave of the Court if he files with the Court and serves on the plaintiff a written notice of acceptance not later than 28 days after the offer was made.

44.Coming back to the facts of this case, whether the Re-Amended Sanctioned Offer was validly accepted by the Notice of Acceptance in accordance with Order 22 rule 16(1) RDC involves interpretation of JSM’s letter dated 6 August 2025, the Notice of Acceptance and the draft Consent Summons enclosed with the said letter.

45.It is a well-established principle that interpretation of a document is an objective exercise in ascertaining the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to both parties in the situation in which they were at the time of the execution, and the subjective intention and previous negotiations of the parties are irrelevant. As neither the Plaintiff nor the Defendant cited authorities relating to interpretation of documents, at the hearing, this Court drew parties’ attention to the Court of Appeal’s decision of The Dairy Farm Company, Limited v Secretary for Justice for and on behalf of the Director of Lands [2022] HKCA 1902, a case on easements, in which G Lam JA, giving the judgment of the Court, encapsulated the following general principles of construction of legal documents, at paragraph 33:

“33. The general principles of construction of legal documents, including those by which easements are created, are also not in dispute and may conveniently be taken from Gale on Easements (21^st edn), § 9-20, as follows:

“(1) interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to both parties in the situation in which they were at the time of the execution of the document;

(3) the court will focus on the meaning of the relevant words in their documentary, factual and commercial context;

(4) the meaning of the words is to be addressed in light of –

(a) the natural and ordinary meaning of the provision;

(b) any other relevant provisions in the document;

(c) the overall purpose of the relevant provisions;

(d) the facts and circumstances known or assumed by the parties at the time that the document was executed;

(e) commercial common sense;

(4) the process is an objective one in which one disregards subjective evidence as to the intentions of the parties;

(5) the general rule is that all relevant facts and circumstances can be taken into account as an aid to interpretation of the words used in the document;

(6) as an exception to the general rule referred to in (5) above, the court will not take into account the contents of pre-contractual negotiations save in so far as those negotiations reveal the existence of a background fact which is otherwise relevant.”

46.Mr Butt submitted that The Dairy Farm was applicable on the face of it, but since a copy of the same had only been given to him by my Clerk shortly before the hearing, he did not have the time to verify if the decision represented the current law or had been overruled, and so he was uncertain if the decision was truly applicable. At the hearing, I rejected such criticisms of Mr Butt. The Dairy Farm did no more than summarise the well-established principles on construction of documents. As stated below, the Two Affirmations contained, among other things, evidence of the subjective intention and belief of Mr Butt himself and the Plaintiff’s daughter, and the burden was on the Plaintiff to lodge authorities to make good her point that evidence of subjective intention was relevant to the interpretation of JSM’s letter dated 6 August 2025, the Notice of Acceptance and the draft Consent Summons. Mr Butt frankly admitted that he did not have any authority in support of the point. While the hearing was scheduled at 10:30 am, my Clerk gave Mr Butt and Mr Man, Counsel for the Defendant, a copy each of The Dairy Farm, and the commencement of the hearing was pushed back to 10:45 am for parties to consider the decision. In fact, Mr Man informed my Clerk that he required more time to study the decision, and I was about to grant more time to parties before Mr Man’s withdrawal of the request. Mr Butt could have requested more time to study the decision and conduct whatever legal research he deemed necessary, but he did not. In any event, at 10:55 am, the appeal was stood down for half an hour for parties to sort out the missing Notice of Acceptance in the copy JSM’s letter dated 6 August 2025 at Tab 25 of the agreed hearing bundle. Mr Butt could and should have made use of the time to consider the decision and conduct legal research.

47.Meanwhile, Mr Man, Counsel for the Defendant, submitted that to determine the validity of the acceptance of the Re-Amended Sanctioned Offer, the starting point was the wording of Order 22 rule 16 RDC itself, though he also agreed that the said extract from The Dairy Farm was applicable.

48.In my judgment, the extract of The Dairy Farm on construction of documents is applicable to the interpretation of JSM’s letter dated 6 August 2025, the Notice of Acceptance and the draft Consent Summons, with the modification of “pre-contractual negotiations” to “previous negotiations” in paragraph (6) thereof, bearing in mind that Order 22 is wholly procedural in nature and the general law of contract does not apply. Hence, it is apparent that the Two Affirmations do not satisfy Condition 2. Insofar as Butt 2^nd Aff is concerned, paragraphs 4, 5, 7, 8, 13 and 14 related to Mr Butt’s own belief as solicitor or his submissions on the alleged invalidity of acceptance of the Re-Amended Sanctioned Offer. According to the said general principles of interpretation of documents, the subjective evidence of the belief of Mr Butt as solicitor for the Defendant is inadmissible. Turning to Lam’s 1^st Aff, paragraphs 4, 6-8, 11-13, 29 and 31 were related to the Plaintiff’s explanations and subjective intention for making the Sanctioned Offer, Amended Sanctioned Offer and the Re-Amended Sanctioned Offer and for rejecting the Defendant’s acceptance of the Re-Amended Sanctioned Offer, including the legal advice she received. Applying the general principles of interpretation of documents, such subjective evidence of the Plaintiff’s intention is inadmissible. Moreover, paragraphs 14, 15, 18, 19-25, 26-28 and 30 were submissions which should not be advanced in an affirmation.

49.Further, paragraphs 3, 9-12 and 15 of Butt’s 2^nd Aff and paragraphs 3, 5, 9-10 and 16-17 of Lam’s 1^st Aff related to correspondence prior to JSM’s letter dated 6 August 2025. Even if Mr Butt was correct to say (which I disagreed as set out below) that the conduct prior to JSM’s letter dated 6 August 2025 are relevant to the determination of the validity of the acceptance of the Re-Amended Sanctioned Offer, all the correspondence pinpointed in the Two Affirmations have been included in the agreed hearing bundle for this hearing, so I can consider the same without admitting the Two Affirmations.

50.Lastly, the alleged actual prejudice suffered by the Plaintiff is plainly irrelevant to the determination of the validity of the acceptance of the Re-Amended Sanctioned Offer.

51.Therefore, I held that the Two Affirmations would not have any influence on the result of the appeal, and Condition 2 was not satisfied.

52.My conclusion on Condition 2 was sufficient to dispose of the application. In any event, I did not accept that Condition 1 was satisfied. I did not accept Mr Butt’s submission that paragraph 116 of Practice Direction 18.1 did not confer the learned Master such power to make the Order. In fact, paragraph 116 provided that at the checklist review hearing, the Master may consider applications for any of the following orders or make such orders on his own motion where it is appropriate under the relevant rules of Court, and in particular paragraph (9) thereof provided that the Master could make any other order as may be deemed appropriate for the just expeditious and economic resolution of the action including orders relating to service or exchange of witness statements and expert reports not yet disclosed, to the obtaining of any joint medical or other expert reports and to the restriction upon and exclusion of any expert reports.

53.Mr Butt submitted that by applying the ejusdem generis principle, the power to make orders for just expeditious and economic resolution of the action in paragraph 116(9) must be confined to matters belonging to the same class as exchange of witness statements and obtaining of expert reports, citing Re German Swiss International School Association Ltd [2020] 3 HKLRD 518, at paragraph 46 thereof. In that case, Harris J had to consider the definition of ‘club’ in Race Discrimination Ordinance (Cap 602), which was defined in section 2 as “means an association, incorporate or unincorporate, of not less than 30 persons associated together for social, literary, cultural, political, sporting, athletic or other lawful purposes and which provides and maintains its facilities, in whole or in part, from the funds of the association”. It was when the phrase “or other lawful purposes” came under scrutiny that Harris J stated, at paragraph 42, that ‘it is common for definitions to be made by identifying examples, which the drafter intends to come within it and then to add general wording such as “or other lawful purposes” where the identified matters are not intended to be exclusive”, and “the eiusdem generis principle of construction states that general words are to be construed as only covering matters similar to those that have been particularised”. Mr Butt did not cite any authority supporting the application of ejusdem generis principle to the construction of the Practice Direction. Assuming (but without deciding) that it does, the drafting of paragraph 116(9) of Practice Direction 18.1 is obviously different from, for example, the definition of ‘club’ in section 2 of the Race Discrimination Ordinance. Here, by the use of the word ‘including’, paragraph 116(9) clearly does not set out exhaustively the types of orders for just expeditious and economic resolution. Neither does the paragraph restrict orders to those involving exchange of witness statements or obtaining of expert evidence as there are no words to such effect. Moreover, the Plaintiff’s interpretation would mean that even if a course could be taken for the just expeditious and economic resolution of the action (for example an order for discontinuance under Order 21, a stay upon acceptance of sanctioned offer or sanctioned payment under Order 22, an order for a notice to admit under Order 27, etc), the same could not be ordered at the checklist review hearing but must be adjourned to another occasion, and this is inconsistent with the underlying objectives stipulated in Order 1A rule 1 RDC, especially (a) to increase the cost-effectiveness of any practice and procedure to be followed in relation to the proceedings before the Court, (b) to ensure that a case is dealt with as expeditiously as is reasonably practicable, and (e) to facilitate the settlement of disputes. Further, the Plaintiff’s construction does not sit well with paragraph 116(10), which provides that an order can be made for staying the action to facilitate an attempt on ADR. If a stay can be ordered to facilitate negotiation for settlement, there is no reason why a stay of the action upon an apparently accepted sanctioned offer cannot be made pursuant to paragraph 116(9). In the premises, I do not agree with the ejusdem generis point raised by the Plaintiff.

54.It should be noted that paragraph 116 does not say that the Master can only make one of those orders (such as addition or substitution of parties, amendments, discovery, orders for just expeditious and economic resolution of the action, etc.) in uncontested situations. At the hearing below, the learned Master heard the arguments of Mr Butt and solicitor for the Defendant, and rejected Mr Butt’s submission that the Notice of Acceptance did not constitute acceptance of the Re-Amended Sanctioned Offer. The learned Master went on to make the Order which provided, inter alia, that all further proceedings be stayed, which she was entitled to do so pursuant to Order 22 rule 22(1) RDC, subject to the payment of various instalments of the Settlement Sum and the release of accrued interest in accordance with Order 22 rule 22(2) RDC. With respect, upon the acceptance of the Re-Amended Sanctioned Offer by the Notice of Acceptance, the Order was appropriate for the just, expeditious and economic resolution of the action.

55.I also rejected Mr Butt’s argument that the Plaintiff had sought an adjournment for substantive argument of the validity of the acceptance of the Re-Amended Sanctioned Offer, and did not expect that the learned Master would make the Order at the CLR Hearing. Mr Butt failed to cite any legal provisions, rules, caselaw or practice direction stating that the Master did not have power to hear and dispose of the substantive argument of the procedural matters listed in paragraph 116 of Practice Direction 18.1 including the validity of the acceptance of the Re-Amended Sanctioned Offer (being a procedural matter) at a checklist review hearing.

56.I also disagreed with the Plaintiff’s submission that she did not have notice or expectation that the validity question would be determined at the CLR Hearing and that she did not have a fair opportunity to adduce evidence. I took the view that latest by the receipt of JSM’s letter dated 11 August 2025 confirming acceptance of the Re-Amended Sanctioned Offer and non-insistence on the additional terms in the draft Consent Summons, the Plaintiff could have filed the necessary papers including evidence she deemed fit for challenging the validity of the acceptance of the Re-Amended Sanctioned Offer. I rejected the Plaintiff’s argument that she had to wait for JSM’s or the Defendant’s explanations for serving both the Notice of Acceptance and the draft Consent Summons by JSM’s letter dated 6 August 2025, because such explanations, even if given, would only show the subjective intention of the Defendant or JSM which was irrelevant to the interpretation of such documents. The Plaintiff’s failure to adduce evidence at the hearing below and any prejudice allegedly suffered were due to her own misunderstanding that the Order could not be made at the CLR Hearing, and that any explanations for sending both the Notice of Acceptance and the draft Consent Summons would be relevant. With respect, the learned Master cannot be faulted. In any event, as I said above, the Two Affirmations would not have had any influence on the outcome of this appeal. The learned Master could not be faulted for making the Order.

57.Hence, I did not accept that the Two Affirmations could not have been filed with reasonable diligence for use at the hearing below. Condition 1 was not satisfied.

58.Finally, since the subjective intention of the Plaintiff was irrelevant to the determination of the validity question, it was not necessary to consider Condition 3.

59.In any event, no special grounds existed under Order 58 rule 1(5) RDC. For reasons given above, I rejected the Plaintiff’s submission that the Order involved a procedural irregularity and that the Plaintiff had no fair opportunity to adduce evidence below.

Discussion on Appeal

60.The starting point is the Notice of Acceptance, as Order 22 rule 16(1) RDC provides that subject to rule 7(3), a defendant may accept a sanctioned offer made not less than 28 days before the commencement of the trial without requiring the leave of the Court if he files with the Court and serves on the plaintiff a written notice of acceptance not later than 28 days after the offer was made. Further, according to Order 22 rule 12(5) RDC, a sanctioned offer is accepted when notice of its acceptance is served on the offeror.

61.In my judgment, first of all, the Notice of Acceptance, at least on the face of it, was a valid acceptance of the Re-Amended Sanctioned Offer:

(1)  the Notice of Acceptance cited Order 22 rule 16(1) RDC;

(2)  it referred to the Re-Amended Sanctioned Offer; and

(3)  it expressly stated that the Defendant accepts the terms of the Re-Amended Sanctioned Offer in full and final settlement of the whole of the Plaintiff’s claim against the Defendant in this Action.

62.Secondly, the Notice of Acceptance was served on HYL acting for the Plaintiff by JSM’s letter dated 6 August 2025 in accordance with Order 22 rule 16(1) RDC. Of course, this Court did not lose sight of the fact that the draft Consent Summons was served together with the Notice of Acceptance. The Plaintiff submitted that the Notice of Acceptance served together with the draft Consent Summons with additional terms proposed by the Defendant was an invitation for the Plaintiff to approve a materially different agreement, and therefore the Re-Amended Sanctioned Offer was not validly accepted. I disagree. As stated above, the Notice of Acceptance was, on the face of it, a valid acceptance of the Re-Amended Sanctioned Offer, and nothing indicated that the acceptance was conditional upon the acceptance of the additional terms in the draft Consent Summons. Moreover, regarding JSM’s letter dated 6 August 2025, applying the principles of interpretation of documents in The Dairy Farm (supra):

(1)  The first paragraph stated that JSM had instruction from the Defendant to accept the “Amended Sanctioned Offer” (which should have been stated as the “Re-Amended Sanctioned Offer”) of HK$1,400,000 (inclusive of interest) plus costs to be taxed if not agreed in full and final settlement of all the Plaintiff’s claims against the Defendant in this action. This paragraph was in the same terms as the Re-Amended Sanctioned Offer, and the addition of the words “inclusive of interest” did not differ from the offer since the Re-Amended Sanctioned Offer did not say that interest was excluded from the Settlement Sum (Order 22 rule 5(3)(c) RDC);

(2)  The second paragraph expressed that the Notice of Acceptance, filed earlier that day, was being served on the Plaintiff in acceptance of the Re-Amended Sanctioned Offer pursuant to Order 22 rule 16 RDC;

(3)  In the third paragraph, the Defendant proposed additional terms by way of the draft Consent Summons for the Plaintiff’s consideration. The fact that those terms were unilaterally proposed by the Defendant which had not been agreed by the Plaintiff is supported by the words “for your consideration” and “let us know within the next 3 days whether the draft Consent Summons is agreeable”;

(4)  Again, nowhere in the letter was it stated that the acceptance of the Re-Amended Sanctioned Offer was conditional upon the acceptance of the proposed additional terms in the draft Consent Summons;

(5)  The literal and ordinary meaning is that the Notice of Acceptance was served for acceptance of the terms of the Re-Amended Sanctioned Offer in full and final settlement of the Plaintiff’s claims, and further additional terms were proposed by the Defendant for the Plaintiff’s consideration, seeking the latter’s acceptance;

(6)  This interpretation is further supported by the general principle that a sanctioned offer is wholly procedural in nature, not contractual in nature, and not analogous to a settlement made between the parties out of Court which does constitute a contract, and the rules of offer and acceptance in the law of contract are not applicable. I reject the Plaintiff’s contention that JSM’s letter dated 6 August 2025, serving both the Notice of Acceptance and the draft Consent Summons, constituted an invitation for a materially different agreement. The Plaintiff was essentially arguing that JSM’s letter dated 6 August 2025 was a counter-offer, but contract law had no place in Order 22 regime. In truth and in fact, the Defendant accepted the Re-Amended Sanctioned Offer procedurally by serving the Notice of Acceptance pursuant to Order 22 rule 16 RDC, and further proposed additional terms independent of the Re-Amended Sanctioned Offer, seeking the Plaintiff’s acceptance;

(7)  I accept Mr Man’s submission that upon the service of the Notice of Acceptance on 6 August 2025, the Plaintiff’s whole claim was automatically stayed pursuant to Order 22 rule 22(1) RDC. This submission is supported by Order 22 rule 22(4) RDC, which provides that if the approval of the Court is required before a settlement can be binding, any stay which would otherwise arise on the acceptance of a sanctioned offer or a sanctioned payment takes effect only when that approval has been given. I also accept Mr Man’s submission that upon the stay of the action by reason of the acceptance of the Re-Amended Sanctioned Offer, parties could still negotiate terms because Order 22 rule 22(5) RDC provides that any stay does not affect the power of the Court to enforce the terms of a sanctioned offer, to deal with any question of costs (including interest on costs) relating to the proceedings, or to order payment out of court of any sum paid into court. Pausing here, I must stress that I need not, and do not, rule on the propriety of the additional terms in the draft Consent Summons proposed by the Defendant. The Plaintiff was free to reject the additional terms in the draft Consent Summons, as she did;

(8)  For the sake of completeness, I observe that none of the proposed additional terms in the Schedule to the draft Consent Summons was repugnant to or inconsistent with the Re-Amended Sanctioned Offer. The Plaintiff complained about paragraph 2 of the draft Consent Summons (which stated that “all further proceedings in this Action be stayed upon the terms of settlement agreed between the Plaintiff and the Defendant set out in the Schedule…” [Plaintiff’s emphasis]) because there was no such settlement agreed between the parties as set out in the Schedule. In my judgment, the Plaintiff could simply reject the draft Consent Summons, and such rejection did not affect the validity of the acceptance of the Re-Amended Sanctioned Offer.

63.The Plaintiff submitted that conduct prior to JSM’s letter dated 6 August 2025, including her previous rejection of the Defendant’s purported acceptance of the Amended Sanctioned Offer with draft Consent Summons containing identical terms as those in the said JSM’s letter dated 6 August 2025, should also be considered. I disagree. The correspondence preceding the said letter at best showed the negotiations of the parties leading to the acceptance of the Re-Amended Sanctioned Offer, nonetheless it is a trite principle as recited in The Dairy Farm (supra) that contents of previous negotiations are inadmissible. Here, as agreed by parties, Order 22 is not contractual but only procedural. As long as the Re-Amended Sanctioned Offer was procedurally accepted by the Notice of Acceptance, it matters not how the acceptance came about. Notwithstanding that the Defendant proposed the same additional terms which had been rejected before, equally the Plaintiff could reject the same again. Hence, there was nothing amounting to a background fact which warranted such prior correspondence to be considered.

64.In my judgment, by JSM’s letter dated 6 August 2025, the Defendant accepted the Re-Amended Sanctioned Offer upon its terms by the service of the Notice of Acceptance, and at the same time proposed additional terms by way of the draft Consent Summons for the Plaintiff’s consideration. The validity of the acceptance of the Re-Amended Sanctioned Offer was not affected by the proposed additional terms in the draft Consent Summons, which were subsequently rejected by the Plaintiff and eventually abandoned by the Defendant. As such, the learned Master was entitled to make the Order including the stay of these proceedings.

65.Finally, I turn to the Grounds of Appeal.

66.In respect of Ground 1, I note that the Plaintiff characterised the additional terms in the draft Consent Summons and schedule as “post-acceptance” proposal. In other words, the Plaintiff herself accepted that there was valid acceptance of the Re-Amended Sanctioned Offer, which must have been by the Notice of Acceptance, and that the terms in the draft Consent Summons and schedule were proposals only. There was no material irregularity with the acceptance of the Re-Amended Sanctioned Offer. I disagree that the learned Master’s reasoning created any absurdity. On one hand, the Defendant only proposed terms in addition to and independent of the Notice of Acceptance for the Plaintiff’s consideration. On the other hand, the terms of the Re-Amended Sanctioned Offer including the Settlement Sum, once accepted, could not be changed. Ground 1 has no merit.

67.In relation to Ground 2, the learned Master’s characterisation of the draft Consent Summons and schedule as “further negotiation” was obviously born out from the wording “for your consideration” and “let us know within the next 3 days whether the draft Consent Summons is agreeable” in paragraph 3 of JSM’s letter dated 6 August 2025. The learned Master did not descend into the arena. Moreover, the learned Master was absolutely right to say that the Plaintiff was entitled to consider the draft Consent Summons and reject the same as she did, and this did not, as the Plaintiff submitted, impose a novel duty to assist the Defendant. Further, the “prior warnings” did not bar the Defendant from renewing the proposal for the same additional terms, and ultimately the Defendant could reject the same again. Ground 2 is totally devoid of merit.

68.Turning to Ground 3, as I held above, the reasons behind the Defendant’s proposal of the additional terms in the draft Consent Summons were matters of subjective intention of the Defendant or her solicitors which is irrelevant to the interpretation of JSM’s letter dated 6 August 2025, the Notice of Acceptance and the draft Consent Summons. The learned Master was correct in not making inquiry of such reasons. Further, neither the Plaintiff nor the Defendant signed the draft Consent Summons, and so the contention that the draft Consent Summons could mislead the Court that there had been agreement over the terms therein has no substance at all. In this connection, as submitted by Mr Man, the Court of Appeal in Miss Leung So Hung Siem v Mr Carson Wen [2019] HKCA 1428 made clear that the Court does not entertain serious but baseless allegations of fraud, dishonesty and perjury without proper foundation. Ground 3 is rejected.

69.Ground 4 mixes up Order 22, which is wholly procedural in nature, with a general or conventional settlement, which is contractual in nature and rules of offer and acceptance in the law of contract are applicable. The Notice of Acceptance was a clear and unequivocal acceptance of the Re-Amended Sanctioned Offer. There was no material irregularity or abuse of the process of this Court. Ground 4 has no merit.

70.Finally, for Ground 5, paragraph 116(9) of Practice Direction 18.1 permits the learned Master to make the Order, being a procedural one, which was conducive to just expeditious and economic resolution of this action upon the valid acceptance of the Re-Amended Sanctioned Offer. By no later than 11 August 2025 when the Defendant indicated that the Notice of Acceptance was valid and the proposed additional terms in the draft Consent Summons were no longer pursued, the Plaintiff could have taken out the summons and filed affidavit evidence to set aside the Notice of Acceptance well before the CLR Hearing. In any event, the learned Master afforded parties the opportunity to argue the matter. It was the Plaintiff’s own misunderstanding that the learned Master could not hear substantive argument on the validity of the Notice of Acceptance and make the Order including the stay of this action at the CLR Hearing. Further, as I held above, the affirmation evidence that the Plaintiff would have adduced at the court below, ie the Two Affirmations, would not have had any influence on the outcome of this appeal. Therefore, the learned Master was entitled to hear substantive argument at the CLR Hearing without adjourning the same. Ground 5 has no merit.

Disposition

71.In the premises, the Plaintiff’s appeal is dismissed. I make an order to uplift the stay ordered by the learned Master on 15 September 2025. I also order that the Defendant shall make payment to the Plaintiff pursuant to paragraph 3 of the Order within 14 days.

72.Costs should normally follow the event. I make a costs order nisi that the Plaintiff do pay the Defendant his costs of this appeal (including costs of the Plaintiff’s summons for stay taken out on 1 September 2025), with Certificate for Counsel, to be taxed if not agreed.

Mr Anthony Butt of H. Y. Leung & Co. LLP, for the plaintiff

Mr Richard Man Ka Lok, instructed by Johnson Stokes & Master, for the defendant