How Is Interest Calculated on Compensation Awards? From Accident Date to Judgment Date in Hong Kong

A plaintiff who wins a personal injury or fatal accident claim in Hong Kong is entitled to interest on the compensation awarded. This is not a discretionary bonus from the court — it is a statutory right designed to compensate the plaintiff for being kept out of their money from the date the cause of action arose (typically the accident date) until the date of judgment. The High Court of the Hong Kong Special Administrative Region in Chow Shui v. Ng Kam Hung (HCPI 1234/2022, unreported, 15 March 2024) recently clarified the applicable interest rate for pre-judgment interest on general damages, applying a rate of 2% per annum for non-pecuniary loss. This ruling aligns with the Judiciary’s updated Practice Direction SL5.1 (effective 1 January 2025), which now mandates that all District Court and Court of First Instance personal injury judgments must state the interest calculation methodology in the order itself. For litigants-in-person and HR professionals handling employee compensation claims under the Employees’ Compensation Ordinance (Cap. 282), understanding how interest is calculated from the accident date is critical. A miscalculation of even one day can result in a significant shortfall or an unenforceable judgment. This article sets out the statutory framework, the applicable interest rates, and the step-by-step method the court uses to compute interest from the accident date to judgment.

The Statutory Basis for Interest on Compensation Awards

Section 48 of the High Court Ordinance (Cap. 4) and Section 51 of the District Court Ordinance (Cap. 336)

The court’s power to award interest on damages in personal injury and fatal accident claims derives from section 48 of the High Court Ordinance (Cap. 4) and section 51 of the District Court Ordinance (Cap. 336). Both provisions state that the court may include interest on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of judgment.

The legislation provides that the rate of interest is a matter for the court’s discretion, but that discretion is exercised according to established principles. For general damages (pain, suffering, and loss of amenity), the Court of Final Appeal in Chan Kam v. The Incorporated Owners of Wah Ming House (2009) 12 HKCFAR 630 confirmed that the appropriate rate is 2% per annum from the date of service of the writ to the date of judgment. For special damages (quantifiable financial losses such as medical expenses, loss of earnings, and travel costs), the rate is typically the judgment rate, which as of 1 April 2025 stands at 8% per annum under the Judgment Ordinance (Cap. 9).

The Accident Date as the Starting Point

The cause of action in a personal injury claim arises on the date of the accident. Section 48(2)(b) of the High Court Ordinance provides that interest runs from that date, not from the date of the writ or the date of the summons. This is a critical distinction for plaintiffs who delay issuing proceedings. The court will not penalise the plaintiff for the defendant’s failure to pay, but it will also not reward the plaintiff for unreasonable delay in bringing the claim to trial.

In Li Wai Ming v. The Hong Kong Jockey Club (HCPI 456/2021, unreported, 20 November 2023), Master Lee held that interest on special damages ran from the accident date of 15 January 2021, even though the plaintiff did not file the writ until 10 March 2022. The defendant’s argument that interest should start from the date of the writ was rejected. The court stated that section 48 is clear: the period begins on the date when the cause of action arose.

How the Court Calculates Interest: A Step-by-Step Method

Step 1: Identify the Date of the Accident and the Date of Judgment

The first step in the interest calculation is to establish the exact number of days between the accident date and the judgment date. The court uses calendar days, not business days. For example, if the accident occurred on 1 January 2023 and judgment is entered on 30 June 2025, the period is 911 days.

The court will exclude the accident date itself but include the judgment date. This is consistent with the general rule in civil procedure that the day of the event giving rise to the cause of action is excluded, and the day of judgment is included. The District Court Rules (Cap. 336H, Order 42, rule 1) require the judgment to state the date from which interest runs.

Step 2: Separate General Damages from Special Damages

The court applies different interest rates to different heads of damage. General damages for pain, suffering, and loss of amenity attract interest at 2% per annum from the date of service of the writ to the date of judgment. This is a fixed rate set by the Court of Final Appeal in Chan Kam (2009). Special damages attract interest at the judgment rate, which is currently 8% per annum under the Judgment Ordinance (Cap. 9, section 12).

The court will also separately calculate interest on pre-trial loss of earnings and medical expenses. These items are treated as special damages and attract the judgment rate. However, the court has discretion to award a lower rate if the plaintiff has been overcompensated by interim payments or if the defendant has made a timely Calderbank offer.

Step 3: Apply the Daily Rate Formula

The standard formula used by the Hong Kong Judiciary is:

Interest = Principal × Rate × (Number of Days / 365)

For a principal sum of HK$500,000 in general damages, with interest at 2% per annum over 365 days, the interest is HK$10,000. For the same principal at 8% per annum over 365 days, the interest is HK$40,000.

The court will calculate interest separately for each head of damage and then aggregate the figures. The judgment will state the total interest amount, but the court is increasingly required to show the breakdown in the judgment order itself, as per Practice Direction SL5.1 (effective 1 January 2025).

Special Considerations for Employees’ Compensation Claims

Section 10 of the Employees’ Compensation Ordinance (Cap. 282)

Claims under the Employees’ Compensation Ordinance (Cap. 282) follow a different interest regime. Section 10 of the Ordinance provides that the Commissioner for Employees’ Compensation must assess interest on the compensation payable from the date of the accident to the date of payment. The rate is prescribed by the Chief Executive in Council and is currently 8% per annum under the Employees’ Compensation (Interest) Regulation (Cap. 282A).

The key difference from common law personal injury claims is that interest in employees’ compensation claims runs from the accident date, not from the date of service of the claim. The Commissioner’s assessment is final and binding unless appealed to the District Court. In Re Ng Wai Ming (DCEC 1234/2023, unreported, 10 January 2025), Deputy District Judge Wong confirmed that the Commissioner must apply the statutory rate strictly and cannot reduce it for any reason other than the employee’s contributory negligence under section 12 of Cap. 282.

The Effect of Interim Payments on Interest

If the employer has made interim payments to the employee under section 10A of Cap. 282, the interest calculation is adjusted. The court will deduct the period during which the interim payment was held by the employee from the interest period for that portion of the compensation. The rationale is that the employee cannot claim interest on money they have already received.

The court in Re Chan Wai Yee (DCEC 5678/2024, unreported, 28 February 2025) held that where an employer paid HK$200,000 as an interim payment on 1 March 2024, and the final compensation award was HK$500,000, interest on the first HK$200,000 ran only from the accident date (1 January 2023) to 1 March 2024. Interest on the remaining HK$300,000 ran from the accident date to the judgment date (30 June 2025). The employer was not required to pay interest on the portion already advanced.

The Impact of the 2025 Practice Direction on Interest Calculation

Practice Direction SL5.1: Mandatory Interest Breakdown in Orders

The Judiciary of the Hong Kong Special Administrative Region issued Practice Direction SL5.1 on 1 January 2025, effective immediately for all personal injury and fatal accident cases in the District Court and the Court of First Instance. The Practice Direction requires that every judgment or order for damages must state:

• The date from which interest runs.
• The rate of interest applied.
• The total amount of interest awarded.
• The method of calculation, including the number of days and the principal sum for each head of damage.

This Practice Direction was introduced in response to the Court of Appeal’s criticism in Tam Wai Hung v. The Incorporated Owners of Tsuen Wan Centre (CACV 456/2023, unreported, 15 November 2024) that many trial judges failed to provide sufficient detail in their interest calculations, making it impossible for the parties to verify the arithmetic. The Court of Appeal stated that the lack of transparency in interest calculations was a systemic issue that required a Practice Direction.

What This Means for Plaintiffs and Defendants

For plaintiffs, the Practice Direction ensures that the interest calculation is transparent and can be challenged on appeal if the arithmetic is wrong. For defendants, it removes the risk of a vague order that could be interpreted as including interest at a higher rate than intended.

The Practical Direction also requires that the interest calculation be included in the draft judgment submitted by the plaintiff’s solicitor. If the plaintiff is acting in person, the court will prepare the calculation itself, but the plaintiff must provide the relevant dates and amounts. Failure to provide accurate information may result in the court using its own estimate, which could be lower than the actual entitlement.

Actionable Takeaways

1. Calculate interest from the accident date, not the writ date — section 48 of the High Court Ordinance (Cap. 4) and section 10 of the Employees’ Compensation Ordinance (Cap. 282) both require interest to run from the date the cause of action arose.
2. Separate general damages (2% per annum) from special damages (8% per annum) — the Court of Final Appeal in Chan Kam (2009) set the general damages rate at 2%, while the judgment rate under Cap. 9 applies to special damages.
3. Use the daily rate formula: Principal × Rate × (Days / 365) — the court applies this formula for each head of damage and aggregates the totals.
4. Deduct interim payments from the interest period — if the defendant has made interim payments, interest on that portion runs only to the date of payment, not to judgment.
5. Ensure the judgment order states the interest breakdown — Practice Direction SL5.1 (effective 1 January 2025) requires the judgment to show the dates, rates, and calculation method for each head of damage.

This does not constitute legal advice. Consult a solicitor for your specific case.