A Settlement Demand is a critical document in Hong Kong's pre-litigation process, serving as a formal written demand for resolution of a dispute before proceeding to court action. This document is typically used when a party seeks to recover damages, enforce obligations, or resolve disputes while avoiding immediate litigation. The Settlement Demand must comply with Hong Kong's civil procedure requirements and often references relevant ordinances such as the High Court Ordinance (Cap. 4) and Law Amendment and Reform (Consolidation) Ordinance (Cap. 23). It should detail the claim's legal basis, quantum, and proposed settlement terms, while considering limitation periods and the rules regarding without prejudice communications. This document is particularly important as Hong Kong courts often expect parties to attempt settlement before commencing proceedings, and the content of the demand can influence cost orders if the matter proceeds to litigation.

1. Sender and Recipient Details: Full names, addresses, and any reference numbers of both parties

2. Subject Line: Clear identification of the matter and any relevant reference numbers

3. Claim Background: Concise summary of the events or circumstances giving rise to the claim

4. Legal Basis: Clear statement of the legal grounds for the claim

5. Quantum Details: Detailed breakdown of the amount claimed, including calculations where applicable

6. Settlement Terms: Specific demands and proposed settlement terms

7. Payment Instructions: Clear payment details and deadline

8. Consequences of Non-Compliance: Statement of intended legal action if settlement is not reached