Sze Fung Engineering Ltd v. Trevi Construction Co Ltd

HCCT 51/2019

[2026] HKCFI 4995

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 51 OF 2019

___________________

____________________

________________

D E C I S I O N

________________

1.On 27 May 2026, this Court handed down its Judgment on Remitted Issues (“Judgment”). The nomenclature used in the Judgment is adopted below.

2.On 11 June 2026, Trevi applied by summons (“Summons”) for variation of the costs orders and interest orders contained in the Judgment. The application is based on SF’s rejection of a Calderbank offer which had been made by Trevi on 20 June 2022 (“Offer”).

3.According to Trevi, the Offer made on 20 June 2022 was for its payment to SF of a sum of $3,950,000, inclusive of costs, in full and final settlement of all the claims and counterclaims made in the action. This offer was not accepted by SF, but as a result of the Judgment and the further assessment of the remitted claims after appeal, Trevi is to pay to SF a sum of $1,340,408.12, which was less than the Offer, even after giving credit for interest before Judgment up to 20 June 2022.

4.Trevi accordingly claims that it should not be liable for pre‑judgment interest after 21 June 2022, and that post-judgment interest should only commence from 27 May 2026 (when SF obtained final judgment for the claimed amount). Trevi’s costs for the action had already been taxed on party and party basis pursuant to the initial judgment of 17 February 2023, and Trevi no longer pursues its costs after 21 June 2022 on indemnity basis. It only seeks costs up to and including 20 June 2022, and for SF to pay the costs of the action from 21 June 2022.

5.The orders in the Judgment were made after SF and Trevi had made their full submissions on costs at the conclusion of the hearing.

6.However, as reflected at paragraph 36 of the Judgment, it was left open to Trevi to seek variation of the costs order after the final amount of the remitted claims and interest had been fully calculated, if Trevi was entitled to do so by virtue of the Offer made (to which Trevi had referred in its closing submissions). At the time of the Judgment, the Court considered that it was premature to determine the effects of the Offer, as the amounts involved were still unascertained. It was also not necessary to grant Trevi express liberty to apply for variation, if it was entitled to do so under the relevant rules.

7.The Summons for variation was issued within 14 days of the Judgment. The Summons cited Order 62 rules 3(2), 4 and 5(1)(6) RHC, as its bases.

8.However, Counsel for SF pointed out that the Judgment orders had been drawn up, sealed and perfected two days before the Summons was issued. As such, it was contended that the Court has no further jurisdiction or power to vary the orders made, which had been perfected and become final. The findings made in CEP Ltd v Wuxi Jiacheng Solar Energy Technology Co Ltd CACV 97/2014, 29 October 2014 support Mr Nip’s submission in this respect.

9.I agree that the Offer is a matter relevant to costs, but Mr Payne did not address the Court on the power of the Court to vary the costs order when it has been perfected and sealed. There is in fact a pending Notice of Motion to amend the Judgement, to include an express provision granting liberty to Trevi to take the Offer into account to vary the Judgment.

10.In the particular circumstances of this case, I have to bear in mind that Trevi had already, in its Closing submissions filed in September and October 2025, referred to the Offer and had made submissions on the orders to be made by the Court on the basis of the Offer. Likewise, Counsel for SF had made submissions in their Closing filed in September and October 2025. This Court only considered, at the time of the Judgment, that as the calculations of the amounts payable by virtue of the Remitted Issues had not yet been clearly ascertained, it was premature at the time to make a decision on the Offer and its effect.

11.Upon computation of the sums as now made, further submissions have been filed on the Summons (issued within 14 days of the Judgment, for variation), and having regard to the caveat contained in paragraph 36 of the Judgment, I consider that the Court’s power to consider the issue has been retained, and that it is fair to consider the Offer now and its effect on the orders made in the Judgment.

12.Although the variation sought by Trevi as to reduction of interest appears to be based on Order 22 and the consequences set out in Order 22 rule 23, Trevi cited and relies on Order 62 rules 3 to 5 in its Summons for its application to vary the costs orders. Order 62 rule 5(1) sets out matters which the Court shall take into account in exercising its discretion as to costs - to the extent appropriate in the circumstances of the case. These matters include (under rule (1)(d)) “any written offer which is expressed to be ‘without prejudice save as to costs’”. The rule goes on to state, expressly, that the Court may not take the 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 sanctioned payment or a sanctioned offer under Order 22.

13.SF’s claim in this action was for damages/unpaid costs, and interest thereon. There was no reason why the Defendant could not have protected its position by a sanctioned offer or a sanctioned payment, in respect of the sum of $3,950,000 proposed in the Offer.

14.Trevi contended that the Offer was on terms that each party was to bear its own costs in relation to both the original claims and counterclaims. Relying on the observations made by the Court of Appeal in Leung Lai Kwan v Lo Kai Wing HCMP 1554/2015, unreported, 20 August 2015, and at paragraph 12 of its judgment in this case, that offers made on the basis of no order as to costs cannot be accommodated in the sanctioned payment or a sanctioned offer regime in view of Order 22 rule 20 (1), it was submitted that the exclusionary rule under Order 62 rule 5(1)(d) does not apply to Trevi’s Offer, with its costs provision.

15.In Leung Lai Kwan, it was highlighted that the court retains a discretion to consider settlement offers, by virtue of the provisions of Order 22 rule 2(4), which states expressly that nothing in the Order prevents a party from making an offer to settle in whatever way he chooses. The rule only states that if the offer is not made in accordance with Order 22, it does not have the consequences specified in the Order unless the Court so orders.

16.Trevi’s case is that the Offer should be taken into account to its advantage in respect of costs, because the sum awarded in the Judgment came up to $1,340,408.12, and pre-judgment interest up to 20 June 2022 comes to $216,240.51, making a total of $2,393,351.37 in surplus over $3,950,000, which was the amount of the Offer.

17.On SF’s part, it was contended that since the practical effect of the Offer was inclusive of costs, it cannot be clearly seen that SF has failed to beat the Offer. It was pointed out that (as indicated at the time of SF’s Closing in 2025) SF’s costs for the action including the remitted hearing exceeded $5,829,800, and that even as at 20 June 2022, its costs had been estimated at $3,691,800. There are of course no particulars of these costs, which have not been taxed. On the other hand, Trevi’s costs of the action up to the date of the Offer have been taxed at $1,719,590, and its total costs of the action taxed at $3,666,502.17. On behalf of SF, it was submitted that Trevi’s taxed costs for the action should serve as a ready guidance of SF’s costs. Taking that into account, it was contended that it is by no means clear that SF failed to beat the Offer. SF’s taxed costs would very likely exceed the rounded up surplus of $2.4 million to which Trevi has referred.

18.Having considered the computations made by Mr Payne and Mr Nip, it would appear that the Offer was marginally less than the judgment sum, interest and costs. Trevi had highlighted in its 2025 submissions that the SJE’s assessment of SF’s “best scenario” case was $12.9 million. With that in mind, and the fact that by the time the Offer was made in June 2022, it was just 1.5 months before the commencement of trial, when substantial costs had already been incurred, it cannot be said that in all the circumstances of this case, it was unreasonable for SF to have rejected the Offer.

19.As stated at paragraph 34 of the Judgment, I did not consider that SF had been unreasonable in raising the claims which it did in the proceedings, despite the fact that it did not succeed in the claims.

20.For all the above reasons, I have to decline variation of the costs and interest orders made in the Judgment. The Summons is dismissed, with costs to SF, to be summarily assessed. Parties are to agree on a timetable for statements of costs and objections to be filed.

Mr Norman Nip SC, instructed by Wong & Lawyers, for the plaintiff

Mr Sonny Payne (Solicitor Advocate), of GPS Legal LLP, for the defendant