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Leung Tai Ah v. Chan Tak Wan and Another

Read the full judgment text of CACV 3/1968 on BabelCite. This Court of Appeal judgment was delivered on 7 June 1968.

1. This appeal arises out of an action claiming damages for personal injuries caused by the negligent driving of a bus by the first defendant as servant or agent of the second defendant in Canton Road, Kowloon, at about 7.00 a.m. on the 17th March, 1966.

Case No.CACV 3/1968
Court
Court of Appeal
Date07 Jun 1968
Judge—
Case Document
100%Judiciary

CACV000003/1968

IN THE SUPREME COURT OF HONG KONG

APPELLATE JURISDICTION

CIVIL APPEAL NO.3 OF 1968.

(ON APPEAL FROM O.J. ACTION NO.180 OF 1967)

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BETWEEN:
LEUNG TAI AH Plaintiff
(Respondent)

AND
CHAN TAK WAN 1st Defendant
(1st Appellant)
KOWLOON MOTOR BUS COMPANY (1933) LIMITED 2nd Defendant
(2nd Appellant)

Coram: Full Court (Scholes & Mills-Owens, JJ.)

Date of Judgment: 7 June 1968

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JUDGMENT OF THE PRESIDENT

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1. This appeal arises out of an action claiming damages for personal injuries caused by the negligent driving of a bus by the first defendant as servant or agent of the second defendant in Canton Road, Kowloon, at about 7.00 a.m. on the 17th March, 1966.

2. The facts shortly are that the plaintiff was walking on the pavement of Canton Road at about the time stated when a bus owned by the second defendant and driven by the first defendant mounted the pavement and struck the plaintiff and knocked him down causing him injuries. It was found by the trial judge that the first defendant drove negligently and that there was no contributory negligence on the part of the plaintiff. The plaintiff's injuries were found by the trial judge to be as follows:-

          "The plaintiff suffered contusion of the lower abdomen accompanied by compound fracture of the pelvis with large lacerations and abrasions over the lower abdomen, severe enough to expose part of the pelvic bone. His right foot was injured and after a week developed gangrene, resulting in the necessity for amputation of the toes of the right leg, part of the foot and part of the necrotio tissues in the calf. The plaintiff underwent five operations and whilst the lower part of the abdomen and calf have healed a small active wound remains in the sole of what is left of his foot. According to the evidence of Dr. Tong Pak On the plaintiff can never be independant of crutches or sticks with his present deformed foot and whilst an artificial foot would help him in walking in the sense that he would experience less pain and that there would be less possibility of the wound in the sole breaking out again, an artificial foot cannot be fitted so long as the existing wound remains unhealed. Dr. Tong was of the opinion that later further amputation at a higher level would become necessary because repeatedly there would be more sores on the foot. This witness said that the plaintiff would never be able to work as a coolie again and never be fit for any form of heavy work.
          Dr. Gordon Low who examined the patient in June of last year found extensive scars over the whole of the front of the lower half of the abdomen from skin grafting operations, the area extending to the front of the upper parts of both thighs and the right outer extreme of the pelvic bone; there was considerable diminution of the muscle bulk of the right thigh with the result that the power to move the right knee is less than the power of the left thigh to move the left knee. Dr. Low, in his written report, described the disability arising from the amputation as serious resulting in the plaintiff being unable to walk properly and being capable of taking only small steps and for very short distances."

3. The plaintiff has always worked as a coolie or fisherman, earning his living by the strength of his muscle, and he has been deprived of his ability to continue to do so, and he is illiterate.

4. The learned trial judge found that the plaintiff's earnings were $480 per month, that his future earning capacity was $100 per month, and that his probable average loss of present and future earnings was $380 per month, and he awarded the plaintiff special damages amounting to $7,182, general damages amounting to $68,400 for loss of future expectation of earnings, and general damages for pain and suffering, disfigurement, and loss of amenities, amounting to $20,000, being $95,582 damages in all.

5. The defendants have appealed against one part of the judgment only, namely the assessment of general damages amounting to $68,400 for loss of future expectation of earnings, and the defendants allege that that amount grossly exceeds the amount to be awarded based on the trial judge's own finding of a loss of earning capacity of $380 per month. It is only the amount of $68,400 which is challenged.

6. In giving his reasons for arriving at the figure of $68,400, the learned trial judge having come to the conclusion that $380 per month was the probable average loss of future earnings, then considered the question of the multiplier to be applied to that figure, and was of the opinion that the plaintiff, who was a healthy man of thirty-three years of age at the time of the accident, could no doubt have looked forward to many more years of active employment, and, following the case of Richards v. Western Plant Equipment Ltd.(1), he adopted the multiplier of 15 as being the appropriate figure to work upon in the present case. Having decided on the figure of 15 as a multiplier the learned trial judge finally, on this matter, said:-

"On the basis of a loss of earnings of $380 per month it results in an award of $68,400, a sum which is intended to take into account the vicissitudes of life and the fact that it is a lump sum payable now rather than over the period of fifteen years. But for these considerations I would have adopted a higher multiplier."

7. On the hearing of the appeal it was the case for the defendants that the learned trial judge did not assess the $68,400 correctly; but the defendants do not object to the figure of $380 per month assessed as loss of future earnings.

8. Mr. de Basto, who appeared for the defendants at the hearing of the appeal, contended that, although the trial judge had in mind the right principle, he failed to apply it correctly, and that if the sum awarded were invested it would bring in more than the loss; the trial judge had applied the highest multiplier which is used, namely "15", whereas "13" was the more usual, and then, although he had considered discounting the final figure after multiplying by 15, he had not in fact done so. Counsel submitted that a multiplier of 15 in the present case was on the high side, but that, if it were used, it should be discounted; and that it was the practice of the court to take a figure as a multiplier, taking into consideration the vicissitudes of life, and then to discount the resulting figure so that at the end of the relevant period, namely the working life, the capital would be exhausted, but that the trial judge having taken the multiplier of 15 had not discounted it, with the result that, if the sum of $68,400 awarded were invested in good securities, not only would the plaintiff obtain more than the loss of $380 per month, but that at the end of his working life he would still have the capital intact, which was wrong. Mr. de Basto submitted that a figure of from $46,000 to $50,000 would be an accurate figure for loss of future earnings, and that $50,000 invested at $5% would bring in $208 per month. but that the plaintiff would still have the capital, and that yields in Hong Kong on good securities were from 8% to 13%, whereas if the sum of $68,400 were invested at 7½% it would bring in $427.50 per month, whereas the loss per month was $380, and at the end of his working life the plaintiff would still have all the capital intact, and that this was not fair or reasonable; the criterion was that the figure assessed should be fair and reasonable, He argued that $50,000 invested at 9% would produce $375 per month, but that at the end of his working life the plaintiff would still have the capital, whereas the capital should be exhausted; that if the multiplier of "13" had been taken and the resulting figure had been discounted to $48,024, and that amount invested at 7½%, it would produce $300 per month.

9. Regarding the case of Richards v. Western Plant Equipment Ltd.(1), which the trial judge had followed, Mr. de Basto at first pointed out that in that case the plaintiff not only had more severe injuries than in the present case, but that he also had very good prospects of promotion, of becoming a foreman, whereas in the present case that was not so; however Mr. de Basto went on to point out that, although in that case the trial judge took the maximum multiplier of "15" and made no discount, the case went to appeal on the quantum of damages, which appeal was settled before the hearing by the parties themselves agreeing to a reduction of the general damages from £9,000 to £7,250, a reduction of about 20%; (see page 34 (note) and page 264 of Volume 1 of the 2nd edition of Kemp and Kemp on the Quantum of Damages).

10. Mr. Zimmern, who appeared for the plaintiff, submitted that a multiplier was fixed by a judge on the basis of how much the judge had found that an employee had lost, and that in the present case the judge had found the loss to be $380 per month, which figure had not been appealed against, and that in fixing the multiplier a judge must take into consideration the health and age of the plaintiff, who in the present case was healthy and had never been sick and might have another 30 years of working life, and he would thus have lost $380 X 30 X 12, but that judges in England had come to fix the appropriate figure by a multiplier which would give a sum which would completely exhaust the capital and dividend over the period of the working life, which in the present case would be 30 or 35 years, and that in England multipliers of from 1 to 15 were used. Mr. Zimmern further submitted that in the present case the multiplier had been selected taking into consideration the discount, and that the trial judge had taken a higher multiplier than "15" and then reduced it to "15", instead of discounting the resulting figure after using the higher multiplier, and that therefore a discount had been taken into consideration.

11. Mr. Zimmern contended that what the court had to do was to decide, taking everything into consideration, whether or not the trial judge was manifestly wrong, and counsel submitted that he was not.

12. In the case of Banco de Portugal v. Waterlow & Sons, Ltd.(2) Viscount Sankey L.C. citing Lord Blackburn in the case of Livingstone v. Rawyards Coal Co. said:-

"Where any injury is to be compensated by damages, in settling the sum of money to be given for reparation of damages you should as nearly as possible get at that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation."

That was a case in contract and not in tort, but the principle is the same in both cases, and indeed Earl Jowitt in the case of British Transport Commission v. Gourley(3), a case in tort, used similar wording when he said:-

"          The broad general principle which should govern the assessment of damages in cases such as this is that the tribunal should award the injured party such a sum of money as will put him in the same position as he would have been in if he had not sustained the injuries: see per Lord Blackburn in Livingstone v. Rawyards Coal Co."

13. The volume of Kemp and Kemp, already referred to, puts the position thus (page 5):-

"           It is submitted that the correct approach to the assessment of damages in personal injury claims can be summarised thus:
1. In so far as the injury results in actual pecuniary loss, past or prospective, the plaintiff should be awarded full compensation for that loss; but that does not mean that in the case of loss of prospective earnings the plaintiff is to be awarded his annual earnings multiplied by the number of years for which he could be expected to have worked, if he had not been injured. A simple calculation of that sort ignores many contingencies which would or might operate to reduce the plaintiff's future earnings and so would mean that the plaintiff would get more than full compensation for his loss. In the words of Lord Reid in B.T.C. v. Gourley, the court's task is to give 'the present value of prospective loss.'
2. In so far as the injury results in damages which does not admit of assessment by arithmetical calculation, the plaintiff should be awarded fair and reasonable compensation, such compensation to be assessed in the light of previous awards in respect of comparable damage."

14. Dealing with the question of discount the learned authors of Kemp and Kemp (page 30) state:-

"The other matter concerns the discount which must be made because the plaintiff will be receiving a lump sum down instead of successive weekly or other periodic payments, as the case may be."

and they then cite an American author as clearly stating the reason for the discount as follows :-

"          In the attempt to measure future loss of earning capacity in dollars, to be paid now, it is clear that it will not do for the jury simply to estimate all the future wages that would have been earned, deducting the lessened wages, if any, that probably will still be earned by the injured person, and to award the resulting sum. This would be more than compensation, for it would enable the plaintiff to get his future wages long in advance and to reap interest upon the money during the intervening period. Equally erroneous would be the award of a sum the annual interest upon which would equal the wages lost annually. This would give the plaintiff his lost wages during the period of disability, which is full compensation, and at the end of his life he would still have intact the principle sum. What must be done, of course, is to ascertain the 'present worth' of each of the future instalments of lost earnings, and the award should equal the total of these sums."

In the same volume, when dealing with the matter of the loss of future earnings, it is stated (at page 33) :-

"It is, of course, impossible to say with any certainty what multiplier will be applied to the basic net annual loss; it will vary from case to case and from judge to judge; but a rough general pattern will emerge from a consideration of the general run of awards for prospective loss of earnings in similar cases. Thus, for example, it is unlikely that the multiplier will ever exceed fifteen years' purchase, and even that figure is likely only to be applied in the case of a healthy man who is not more than, say, forty years of age. With a man aged fifty, the multiplier is unlikely to exceed eight to ten years. And so on."

15. I think that it is clear from his judgment that what the learned trial judge did was, instead of taking the highest conventional multiplying figure of 15 and then reducing that multiplier from 15 to a lower figure in place of discounting the figure obtained by multiplying by 15, he took a multiplying figure higher than the highest conventional figure of 15, and then, instead of discounting the resulting sum after multiplying with that figure, he reduced the multiplier to the highest conventional figure, and as a result of starting with a multiplier above the highest conventional one, he in fact ended up by using the highest conventional multiplier of 15 without any discount of the resulting sum obtained by using that multiplier, which in my view has resulted in an excessive assessment, for it is clear that if the figure of $68,400 is invested in good securities in Hong Kong it would not only yield more than the estimated loss of $380 per month, but at the end of his working life the plaintiff would still have the capital intact.

16. I think that it appears from the cases that there may be at least two alternative methods of fixing the loss of future earnings, namely one by using a higher multiplier and making a discount on the resulting figure, and two by taking a lower multiplier thereby allowing for discount in selecting the lower multiplier in which case of course a discount is not actually made because it is taken into account when selecting the lower multiplier, but whichever method is used, if it is used accurately having regard to the circumstances, no doubt the resulting figure should be about the same in both cases.

17. In my view a fair and reasonable sum for general damages for loss of future earnings would be $51,092 calculated by using a multiplier of 14, and discounting by 20% or 1/5th as was done in the case of Ferguson v. Durastic Ltd. and Another(4). That amount invested at 7% would give a return of $3,576 per year, (the annual estimated loss being $4,560), and $298 per month, calculating to the nearest dollar.

18. I would therefore allow this appeal and substitute the figure of $51,092 for that of $68,400.

(A. D. Scholes)
President.

7th June, 1968.

Representation:

Gerald de Basto (Johnson, Stokes & Master) for appellants.

A.Zimmern (Ho & Wong) assigned for Respondent.

(1) Unreported but cited in 2nd Ed. Kemp & Kemp on the Quantum of Damages Vol. 1 pages 34 and 263.

(2) 1932 A.C. 452 at 475

(3) 1956 A.C. 185 at 197.

(4) 1951, 1 Lloyd's Rep. 324.

APPELLATE JURISDICTION

CIVIL APPEAL NO. 3 OF 1968

(On appeal from O.J.Action No.180 of 1967)

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BETWEEN
LEUNG TAI AH Plaintiff
(Respondent)

AND
CHAN TAK WAH 1st Defendant
(1st Appellant)
KOWLOON MOTOR BUS CO (1933) LTD 2nd Defendant
(2nd Appellant)

Coram: Scholes & Mills-Owens JJ. in Full Court.

Date of Judgment: 7 June 1968

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JUDGMENT

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19. It is common ground that the plaintiff, respondent in the appeal, will never be able to work as a coolie again or be fit for any form of heavy work. The learned trial judge assessed "his probable average loss of earnings over the present and future at $380 per month". This also is accepted by both parties. The award made in respect of loss of earnings was the sum of $68,400 and in arriving at that figure the judge said -

" Cases involving victims of comparable age who have suffered broadly comparable loss of earning power are not easy to find but the case of Richards v. Western Plant Equipment Ltd. (unreported but cited in Kemp and Kemp on the Quantum of Damages, 2nd Edition Vol.l. pp.34 and 263 where a considerable excerpt from the judgment of Paull J. is reproduced), affords a realistic comparison with the present case. In that case the injured man was thirty-two whereas Mr. Leung was thirty-three at the date of the accident. Richards' annual loss of earnings was £400, while Mr. Leung's annual earnings were the equivalent of £396 before the recent devaluations and approximately 80% of this earning power has vanished. In assessing loss of earnings in the U.K. case Paull J. adopted a multiplier of 15 which appears to me to be the appropriate figure to work upon in the present case.
          It may serve as a cross-check to test that figure against figures adopted in Hong Kong in some quite recent consolidated actions under the Fatal Accidents Ordinance, (1383, 1384, 1385 and 1386 of 1964, unreported); in these cases Scholes, J. adopted a multiplier of eleven years in the case of a man aged fifty-three, thirteen in the case of a woman of forty-four and fourteen in the case of a man aged thirty-nine. Since, under the Fatal Accidents Ordinance damages are a hard matter of dollars and cents the measure of damage being the pecuniary loss suffered by the dependants, it is, I think, legitimate to measure the multiplier to be used in order to estimate loss of future earnings with that used in cases under the Fatal Accidents Ordinance. An extention of the process whereby Scholes, J. adopted a multiplier of thirteen years in the case of a woman aged forty-four and fourteen years in the case of a man aged thirty-nine, would arrive with reasonable certainty at a multiplier of fifteen years or more for a man aged thirty-three. Thus that figure can be seen to derive support both from the U.K. and from Hong Kong. On the basis of a loss of earnings of $380 per month it results in an award of $68,400, a sum which is intended to take into account the vicissitudes of life and the fact that it is a lump sum payable now rather than over the period of fifteen years. But for these considerations I would have adopted a higher multiplier."

20. The appeal was argued on the ground that the learned judge adopted an excessively high multiplier, or failed adequately to make an appropriate discount, resulting in the respondent being overcompensated for the present value of his prospective loss and thus being put in a better position than he was before the accident. It is urged that the award provides him with a lump sum which, at the rates of interest prevailing in Hong Kong, will enable him to procure an income exceeding, or at the least corresponding to, his loss of earning capacity, without resort to the capital: that he is secured in the provision of at least $380 per month and will at the same time be left endowed with the undiminished capital sum. Counsel for the appellants has pointed out that in the case of Richards relied upon by the trial judge there were certain prospects of promotion, and that subsequently the parties in that case agreed upon a reduction of some 20 per cent in the damages awarded. Counsel for the respondent argued that promotion prospects are a matter to be taken into account in arriving at the figure of future loss of earnings, not in determining the multiplier. I am persuaded that counsel for the respondent is perfectly correct in that contention in a case such as this where the assessment proceeds upon the basis of a calculation of loss of earning capacity (see Munkman (3rd Edition) pp.45-6); likewise, I am persuaded, in a case such as this (where the aforesaid basis is adopted) that there should be no discount on account of the plaintiff receiving a lump sum for his prospective loss, the multiplier being intended to 'purchase' an annuity equal to the prospective loss for the period of working life.

21. The question remains whether the multiplier of 15 is excessively high. That must depend not only on the age and stage of health of the respondent and the possibility of periods of illness and unemployment, but on local conditions; in particular, prevailing rates of interest and the matter of the length of working life in Hong Kong. But before considering these matters I would refer to the position in England.

22. It appears to be clear, and indeed it is not disputed, that in England a multiplier of 15 is commonly the maximum. A perusal of cases noted in Current Law in the years 1960 and 1967 indicates an average figure of about 12 in the case of a plaintiff of the respondent's age at his date of trial (34-35 years). (In Fatal Accident cases, more often, the average figure is nearer 15, and in one or two cases exceeds 15).

23. The matter of the rates of interest prevailing in Hong Kong is obviously most important. Thus, for example, investment of the $68,400 at a rate of 7 per cent would produce an annual income of $4,788 which is a little more than the annual loss sustained by the respondent, namely $4,560; without, of course, resort to the capital. It is common knowledge that mortgage rates are much higher, and have been so for many years. Judgments carry interest at 8%, under a practice direction given by the Court in 1909 (as compared with 4% in England) - see 6 H.K.L.R.10. Under the Law Reform (Miscellaneous Provisions) Ordinance (Cap.23) a rate of 8% is laid down as a rate which the court may adopt in certain cases. Another consideration is that, in Hong Kong, a man having at his disposal a substantial capital sum could probably do very well for himself in many ways.

24. I turn to the matter of the probable length of working life. In England the tendency in Fatal Accident and personal injuries cases is to take working life as continuing to the age of 65, although in some instances the age of 70 has been adopted. The age of 65 as an age of retirement is reflected in English social legislation and in pension and superannuation enactments. I doubt that the working life of manual workers in Hong Kong ordinarily continues to the age of 65 years.

25. The present-day tendency for wages to rise is a matter which, in my view, is to be taken into account in fixing the annual loss of earning capacity, not in determining the multiplier; and against that is to be put the possibility of physical adaptation to the injury. But here, as I have said, the annual loss of $4,560 is agreed.

26. The foregoing considerations, which no doubt would have been better considered by a full Bench, lead me to the view that the award made in the present case was much too high. The sum proposed by the learned President is $51,092. I am prepared to agree that the appeal be allowed by substituting that figure.

7th June 1968.

(R.H. Mills-Owens)
Puisne Judge.

Representation:

Gerald de Basto Q.C. instructed by Johnson, Stokes & Master for appellants.

A. Zimmern instructed by Ho & Wong for respondent.