1. The respondent was injured at work and brought proceedings against his employer for common law damages of over $4.7 million. The appellant (“the Board”) administers the Employees Compensation Assistance Fund, a last resort fund for injured employees who establish liability for work-related injuries but who are unable to recover from their employers or any insurer. Since the respondent’s employer had no insurance cover, the respondent’s claim was potentially payable out of the Fund, and so the Board joined in the proceedings to participate in the assessment of damages. 2. At the start of the trial, the respondent and the Board settled his potential claim against the Fund for $1,420,000. The employer was not party to this settlement and the trial went ahead, damages payable by him to the respondent eventually being assessed at HK$1,428,547, with the employer being ordered to pay the respondent’s costs. The trial judge held that the court has power to order the Board to pay costs, but declined to do so, ordering the respondent and the Board each to bear their own costs. The Court of Appeal dismissed the respondent’s appeal against the refusal of costs against the Board and did not accept the Board’s argument that there was no jurisdiction to order costs against it in such proceedings. 3. The Board raised two questions before this Court. The first was whether the courts have power to make costs orders against the Board in proceedings for common law damages to which it has been joined as a party. The second was whether the Board has the power to enter into binding settlements regarding potential claims for payments out of the Fund, and the legal effect of such settlements. First question: the courts’ power to order the Board to pay costs 4. The Court rejected the Board’s argument that section 20B(3) of the Employees Compensation Assistance Ordinance (Cap 365) (“the Ordinance”) deprived the court of power to order the Board to pay costs in common law actions. It held that section 20B(3) only means the Board cannot be liable for costs awarded against the employer, but does not otherwise address or limit the court’s power to order costs against the Board. 5. Instead, the Court held that such a power exists by virtue of the general power to order costs conferred upon the courts by the High Court Ordinance. Moreover, section 29 of the Ordinance also recognises such a power, as it envisions the Board making settlement offers that may entail costs consequences. 6. The Court further held that where the Board has been joined as a party and properly carries out its functions, the appropriate starting-point for costs orders should be for each party to pay its own costs instead of the “loser pays the costs” principle, but that the court retains a wide discretion to order otherwise. Second question: the Board’s power to settle 7. The Court held that section 29 of the Ordinance empowers the Board to settle claims. Settlement is an alternative route to obtaining relief and disposing of the employee’s claim against the Fund. The Board has power to decide whether to settle and to determine what amount is reasonable, arriving at its decision in good faith after making due inquiries. 8. Once the potential claim against the Board is settled, the employee should not need to pursue the action against the employer further. The settlement agreement is a binding contract between the Board and the employee and is not affected by the outcome of any subsequent judgment which the employee might obtain against the employer. DISPOSITION: 9. Accordingly, the Court unanimously dismissed the Board’s appeal.