Wong Wai Chun v. The China Navigation Co Ltd

IN THE SUPREME COURT OF HONG KONG

APPELLATE JURISDICTION

CIVIL APPEAL NO.3 OF 1969

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(On Appeal from Original Jurisdiction Action No. 792 of 1967)

Coram: Hogan, C.J., Blair-Kerr and Huggins, JJ.

Date of Judgment: 17 September 1969

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JUDGMENT

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Blair-Kerr, J.:

1. I agree that the appeal should be dismissed. As regards the first ground of appeal in paragraph 4 of the statement of claim it was pleaded that timbers and such like articles had been

"piled up ------ on the deck blocking all the passage ways which made it impossible for a passenger to get through except up the pile and getting down or else by going through a narrow gap between the edge of the hatch and the pile of timbers at the risk of falling down the hatch --------------------------------------------------------------."

These allegations of fact were denied by the defendants, who pleaded that the deceased was negligent in climbing on to the hatch-coaming when it was obviously unsafe so to do; and pleaded further in the alternative that the deceased jumped from the hatch-coaming and threw himself into the cargo hold.

2. The extent to which passage to and fro along the starboard deck had been obstructed was a vital question for the trial judge's decision. Therefore, it is surprising that the plaintiff's legal advisers consented to an order that the evidence of the ship's officers should be taken de bene esse before the Registrar. Having regard to the pleadings, it must have been obvious to the parties that the trial judge might be faced with conflicting testimony. In the result the trial judge found no difficulty in resolving the issues of fact on this aspect of the case; but in this he was assisted to a considerable extent by the excellent photographs taken by Mr. Wong immediately after the deceased had fallen into the hold. But for that, the trial judge might have had very considerable difficulty in weighing the uncorroborated evidence of Mr. Wong with a transcript of the evidence of the ship's officers (Mr. Watson-Jones, Mr. Wilson and Mr. Newman).

3. If witnesses who may be able to testify in regard to important issues of fact are about to leave the Colony, it seems to me that it is desirable that their evidence should, if possible, be recorded before the judge who will be trying the case.

4. The sketch plan produced in evidence by the ship's officers was prepared by the Chief Officer (Mr. Wilson) and the second officer (Mr. Newman). It purports to show the state of affairs on the port and starboard sides of the deck adjacent to No. 2 hold at the material time. According to the sketch, hatches and beams obstructed a relatively small proportion of the deck and it purports to indicate that there was ample room for a person to walk along the starboard side of the deck.

5. Mr. Watson-Jones (the fourth officer) said he actually saw the deceased fall and he testified that the sketch prepared by Wilson and Newman was accurate.

6. The state of affairs as shown in the photographs can not possibly be reconciled with the sketch. It is not a case of the sketch being rough and the photographs being more accurate. Clearly the sketch was carefully drawn by Wilson and Newman. If the state of affairs on the starboard side of the hold had been as is shown in the sketch, this would have lent support to the view expressed by Watson-Jones that the deceased climbed up on the coaming and jumped down into the hold because at the spot where the deceased admittedly fell, there was, according to the sketch, about 12 feet of open unobstructed deck; and, in these circumstances, there would have been no need for the deceased to climb up on the coaming unless he had decided to behave in a very foolhardy way or intended to commit suicide.

7. The defendants did not question Wong's allegation that he took the photographs immediately after the accident and the learned judge found no difficulty in accepting the photos as accurate and rejecting the sketch. Clearly, the sketch is a grossly misleading document. It was prepared by Wilson and Newman when they were unaware that Wong had taken photographs of the scene. Newman was confronted with the photographs after he had produced the sketch in evidence; and one wonders if he would have had the temerity to produce the sketch at all if he had known that Wong had taken photographs. Be that as it may, it is difficult to resist the conclusion that the sketch was prepared by these ship's officers with a view to misleading their principals, or the Court, in any subsequent inquiry into the question of negligence on their part.

8. The trial judge found that it was impossible for a person to pass between the piled-up hatches and the ship's rail. He also found that the hatches were greasy and slippery. He rejected the suggestion of suicide; and found that at one stage the deceased must have stood on the coaming while he was manoevering his way along the narrow space between the piled-up hatches and the hold.

9. Before this court, the defendants did not challenge these findings of fact. Indeed these findings were the basis for the defendants' submission that the learned judge should have also found that the deceased voluntarily chose to incur a risk which was out of all proportion to the convenience which he was seeking to satisfy, namely, to return to his cabin; and that consequently the action should have been dismissed because the principle volenti non fit injuria applied.

10. There was a notice in the purser's office which read: "Please keep clear of hatches while work is in progress". But the only route to the deceased's cabin was along the starboard side of the deck by No. 2 hold. It would have been foolish for him to have attempted to approach his cabin by walking along the port side where loading operations were actually in progress. The notice in the purser's office gave no indication as to the probable duration of loading operations. It would be pointless to speculate as to what action the ship's officers might have taken if the deceased had protested to them that they had obstructed the starboard deck; and if, as frequently happens, loading was scheduled to continue until the ship sailed, the choices open to the deceased would appear to have been (1) to attempt to negotiate the obstruction or (2) to remain on the after-deck or in some lounge (if such was available to him) for an indefinite period.

11. It must be presumed that the deceased knew of the danger involved. He had successfully negotiated it on his way to the purser's office. But as Lord Somervell said in the Billings⁽¹⁾ case:

"There is ...... a further question as to whether, although knowing of the danger, he acted reasonably, in all the circumstances, in taking the risk which he did take. If so, he was not negligent although there was an accident."

In any view the greet majority of men of the same race and way of life as the deceased would have acted in precisely the same way as the deceased. I do not see how it can be successfully argued that he acted so unreasonably or so negligently as to lead to the conclusion that his death was caused entirely by his own fault; and I entirely agree that the facts of this case do not warrant the application of the doctrine of volenti non fit injuria.

12. As regards the second ground of appeal, I think that some reference might be made to Henderson v. Stevenson⁽²⁾. The pursuer Henderson was a Lieutenant in the 18th Royal Irish Regiment. On 14th July, 1871, he was a passenger on one of the defenders' steamers. While on a voyage from Dublin to Whitehaven the steamer was wrecked off the Isle of Man as a result of the negligence of the defenders' agents; and Henderson instituted proceedings for damages for the loss of his luggage. He had paid his fare at the defenders' Dublin Office and in return he had obtained a ticket on the back of which was printed:

"This ticket is issued on the condition that the company incur no liability whatever in respect of loss, injury or delay to the passenger or to his ...... luggage whether arising from the act, neglect or default of the company or their servants ...... It is also issued subject to all the conditions and arrangements published by the company."

The following notice was also inserted in time bills issued by the defenders and hung up in their booking office:

"The ..... company give notice that they carry passengers, passengers' luggage ..... on the following conditions only namely ...... that the company ...... are not liable for any loss of or damage to passengers, passengers' luggage ... arising from ...... any act neglect or default whatsoever of the company, or their agents or servants ...... it being an express condition that the passengers ...... undertake all risks whatsoever."

13. There was nothing on the face of the ticket directing attention to the condition appearing on the back of it; and the trial judge accepted the pursuer's evidence that he had not read this condition. There was no evidence that he had seen the notice in the time bill in the office, or that he had had his attention directed to it.

14. In the course of his judgment the Lord Chancellor (Lord Cairns) said⁽²⁾:-

"On the face of the ticket which was handed to him there are letters indicating the name of the Steam Packet Company, and the words "Dublin to Whitehaven". If the matter ended there that would clearly be evidence of a contract on the part of the Steam Packet Company to carry the person to whom the ticket was named, in consideration of the money which he had paid to them, from Dublin to Whitehaven, and to use all reasonable care ...... Is the mere fact of handing a ticket of this kind to an intending passenger, at the time that he pays his fare, sufficient to hold him affected by everything which is printed on the back of the ticket that, even without seeing or knowing what is printed on the back, he is to be held to have contracted in the terms indicated upon the back of the ticket?"

The Lord Chancellor's view was that this question should be answered in the negative. At p.75 he said:-

"It seems to me it would be extremely dangerous, not merely with regard to contracts of this description, but with regard to all contracts, if it were to be held that a document complete upon the face of it, can be exhibited as between two contracting parties, and without any knowledge of any thing besides, from the mere circumstances that upon the back of that document there is something else printed which has not actually been brought to and has not come to the notice of one of the contracting parties, that contracting party is to be held to have assented to that which he has not seen, of which he knows nothing and which is not in any way ostensibly connected with that which is printed or written upon the face of the contract presented to him. I am glad to find that there is no authority for such a proposition ................ The question in this case does not .......... depend upon any technicality of law or upon any careful examination of decided authorities. It appears to me to be a question simply of common sense."

The second concurring judgment was delivered by Lord Chelmsford who. at p.76, is reported as having said:-

"The Lord Chief Justice in the case of Young v. the South Eastern Railway Company (Law Reports, 4 Queen's Bench, 544) which has been referred to, thought himself bound by the authorities to hold that, when a man takes a ticket with conditions printed on it, he must be presumed to know the contents of it, and must be bound by them .................. Assent is a question of evidence, and assent must be given before the completion of the contract. The company undertakes to convey passengers in their vessels for a certain sum. The moment the money for the passage is passed and accepted their obligation to carry and convey arises. It does not require the exchange of a ticket for the passage money, the ticket being only a toucher that the money has been paid. Or, if a ticket is necessary to bind the company, the moment it is delivered the contract is completed, before the passenger has had an opportunity of reading the ticket, much less the endorsement."

The third concurring judgment was delivered by Lord Hatherley who, at p.77, said:-

"I agree with the observation that was made by my noble and learned friend who has just preceded me, that the money having been paid and the ticket having been taken up, a contract was completed upon the ordinary terms of conveyance for himself and his luggage, unless it can be made out that he had entered into any special contract to the contrary. A ticket is in reality in itself nothing more than a receipt for the money which has been paid. Of course, terms may be imposed by the carriers, and parties may agree to such terms in derogation of their rights."

15. In Hood⁽³⁾, Lord Haldane said:-

"In Henderson v. Stevenson⁽²⁾ what this House seems to me to have considered was only the particular question of fact which arose in the circumstances of that appeal."

On many other occasions judges have emphasised that the court was not laying down any new principle of law but merely deciding the case before it on its own facts. For example in Cooke v. T. Wilson, Sons & Co., Ltd.⁽⁴⁾ Pickford L.J. said:-

"...... I wish to guard myself against it being supposed that in entering judgment for the defendants here we are doing anything contrary to, or casting any doubt upon, any of the principles laid down in the cases to which we have been referred".

(One of the cases referred to was Henderson v. Stevenson⁽²⁾). Pickfold L.J. continued:-

"I also wish to guard myself against it being supposed that we are deciding principle, or, indeed, anything that can be of service in any subsequent case. We are deciding a question of fact upon the circumstances of this case, and that is all. That is really all that a great many of the cases to which we have been referred decides. .......... no doubt we generally go through all these cases but we have always come back to that opinion."

In Cooke⁽⁴⁾ Phillimore L.J. when referring to Stephen v. International Sleeping Car Co.⁽⁵⁾ said:-

"It is a case which decides that it does not necessarily matter whether the conditions are on the back or on the face of the ticket. If they are on the back, it may require more to draw the attention of the person who is to be carried to them; or, on the other hand, they may be on the face and yet the person to be carried may not know, and may not have sufficiently told of the conditions.”

This passage has to be read in the light of the facts in Stephen's⁽⁵⁾ case. Stephen had been handed a ticket on the face of which appeared not only the condition relied upon by the carrier but also some 22 advertisements. Although the condition was headed "avis important" the judge found that there was nothing to invite close inspection or to lead the possessor of the voucher to draw the inference that it contained terms of the contract he was making; that the plaintiff "could not be taken intelligently to have agreed to the terms printed"; and that the defendants did not take sufficient means to inform him thereof.

16. On appeal to the King's Bench Divisional Court, Henderson v. Stevenson⁽²⁾ was very much in the mind of counsel for the defendants who submitted that it was "not necessary to prove notice of a condition except when the condition was on the back of the ticket, and that a condition appearing on the face of the ticket was binding". It was in the light of that submission that Lord Alverstone said that it was

"obvious that the suggested distinction between the front and back of the ticket was not conclusive. It was a question of fact in each case as to what the contract was .......... where there was a contest as to whether the conditions were known it was not sufficient to show that it was printed in a mass of other printed matter".

In stating that if the conditions are on the back of the ticket it may require "more" to draw the attention of the person who is to be carried by them, Phillimore L.J. presumably meant that if the carrier did not give the intending traveller any other documents containing conditions of travel and failed to draw his attention to any conditions, or a notice to the effect that the carrier was contracting subject to limiting conditions, the least the carrier could do would be to put some words on the face of the ticket such as "for conditions see back" which the courts might deem a sufficient notice to the intending traveller that the carrier was contracting on certain conditions.

17. In Cooke's⁽⁴⁾ case the words "Passenger contract" appeared on the face of the ticket at the top. Then followed the words:

"......... is entitled, subject to the conditions hereof, to one .......... class berth in .........."

The actual condition relied upon by the carriers appeared on the face of the ticket in small but clear type. It was not mixed up (as in Stephen's⁽⁵⁾ case) with other conditions or advertisements; and the Court found no difficulty in coming to the conclusion that the carriers (defendants) had done what was reasonably sufficient to give the plaintiff notice of the conditions.

18. In this appeal our attention was not directed to any case in which the courts have held that a carrier who did nothing more than hand an intending traveller a ticket with conditions on the back of the ticket and nothing on the face of the ticket to indicate that there were conditions on the back, had discharged the onus of proof placed upon carriers who choose to contract in this way. Indeed in Sugar v. London Midland and Scottish Railway Co.⁽⁶⁾ the words "for conditions see back" had been originally printed on the front of the ticket; but the date had been stamped on these words in such a way as to obliterate them. In an action for damages for personal injuries sustained by the plaintiff by reason of the defendants' negligence, Lord Caldecote, C.J, held that by reason of the obliteration of the words "for conditions see back" the defendants had not done what was reasonably sufficient to give the plaintiff notice of the conditions governing the carriage of passengers. In his judgment Lord Caldecote said:-

".......... all these cases proceeded upon the view which is now quite clearly established .......... that a contract of a rather artificial nature between a railway company and a passenger can be made in this rather artificial manner by giving notice on the ticket and calling the passenger's attention in a reasonable way to the conditions on the ticket and in the time-tables of the company. Henderson v. Stevenson⁽²⁾ was decided many years ago and ........ it was a case decided on its special facts. Let me say here that each case must depend upon its facts."

19. The approach of Swift J. in Nunan v. Southern Railway Co.⁽⁷⁾ was somewhat different to the approach of Lord Chelmsford and Lord Hatherley in Henderson v. Stevenson⁽²⁾. He applied the principle that where a document in common form is tendered by one party and accepted by the other, it constitutes the terms of an offer made by the party tendering it. In Thompson v. L.M.S. Railway Co.⁽⁸⁾ the Master of the Rolls (Lord Hanworth) adopted the same approach. I confess that I find great difficulty in seeing how this principle can be applied universally to all "ticket" cases. What is "the document in common form" in such cases? Sometimes, negotiations take place between intending travellers and the carrier in the course of which the traveller is handed documents which, in one way or another, give him ample notice, before he pays his fare, of the fact that the carrier is only prepared to accept him as a passenger on their own terms. Indeed, it is arguable that in some cases there is a concluded contract before the ticket is delivered. In other cases the intending traveller (as in the case of Henderson⁽²⁾) simply calls at the carrier's office and says in effect: "May I have a ticket to .......... please." The booking-clerk says: "That will be ..........". The money is paid and the ticket is immediately delivered to him. The ticket may have the condition relied upon by the carrier printed on the front, or on the back; if on the back, there may or may not be any reference on the front to what is written on the back; the wording on the back may not give the actual terms of the condition; all that may appear is some general reference to the fact that the intending passenger is being conveyed subject to certain conditions; and there may or may not be a reference to the means open to the traveller to acquaint himself with the terms of those conditions.

20. But even if we accept that in all cases the ticket constitutes the "offer", as Professor Hughes says⁽⁹⁾:-

"An offer results in a contract by acceptance. An acceptance embraces conditions which are known, or as to which knowledge can be imputed to the acceptor. Knowledge is imputed to the acceptor where he has failed to avail himself of reasonable means of acquiring that knowledge, the reasonableness of the means having reference, not to the circumstances of the offeror, but to the purpose of bringing home to the mind of the acceptor the conditions of the contract. To hold an acceptor otherwise bound is to impose conditions upon him as the effect of a unilateral notice, not a bilateral contract."

Having said that:

"The history of this class of case is transient contact with reality followed by judicial refuge in fictitious inferences from fact,"

the learned author goes on to say:

"...... it has never been explicitly recognised that those contracts are a class by themselves ...... It is idle to scorn suggestions as to what companies might do: a working basis would soon have been found had the courts not taken refuge in fictitious inferences from fact but applied genuine objective standards in testing means of knowledge ...... far too much attention has been paid to the ticket, e.g. the words 'see back' have acquired a mystic significance. The true question is: Have adequate means been taken of affording knowledge beforehand ........ "

21. In regard to the learned author's reference to the mystic significance which the words "for conditions see back" have acquired in ticket cases, it is hardly surprising that the courts have considered the presence or absence of such words on the front of the ticket to be a matter of some importance in deciding whether the carrier has done what is reasonably sufficient to give the passenger notice of the conditions, more especially in cases where the carrier has done nothing to draw the attention of the intending passenger to those conditions except to hand him a ticket with a notice of some kind printed on the back of it.

22. What then are the facts in this case? All we really know is that this was the deceased's first sea voyage and that he purchased his ticket from the defendants' Sydney office. There was no evidence that the deceased had any communication with the defendants' agents prior to the purchase of the ticket. There was no evidence that he was handed any document other than his ticket or that his attention was drawn to any conditions of travel or whether such conditions were even available for inspection in the Sydney office; and we have no reason to think that the payment of the passage money and the handing over of the ticket were not more or less contemporaneous events.

23. A specimen ticket was produced in evidence in the lower court. It is in four parts and it was clearly torn out of a book of such tickets. On each of the four parts there are printed the following words:-

The four parts are headed respectively "Office Counterfoil", "Ship's Counterfoil", "Wharf Counterfoil" and "Passenger's Counterfoil". On the passenger's counterfoil there are written in red ink the words: "This portion must be retained".

24. If the four parts are folded and carbon papers are inserted between each, the particulars (name, fare etc.) if written on the passenger's counterfoil, would be copied on to the other three parts. This appears to have been the manner in which the particulars were written on the deceased's ticket in the Sydney office.

25. Presumably the office counterfoil was retained by the defendants' agents in Sydney and the other three portions were handed to the deceased - at least it was assumed, on the hearing of the appeal, that the deceased would have been required to surrender the wharf counterfoil to someone on the wharf at Sydney and to surrender the ship's counterfoil on the gangway of the ship.

26. On the reverse side of the passenger's counterfoil and ship's counterfoil there were printed in English and Chinese the words:

"This ticket is issued subject to the company’s terms and conditions of carriage, which may be read in the office of principal agents in each port”.

Those words did not appear on the wharf counterfoil, and there was nothing on the front of the passenger's counterfoil and ship's counterfoil to draw attention to what was written on the reverse sides.

27. If, after the carbons had been removed by the booking clerk, the three parts of the ticket, still folded, were torn from the office counterfoil and handed to the deceased, the-front of the passenger's counterfoil and the back of the ship's counterfoil would have been visible.

28. On receiving a ticket, a passenger's first reaction is: "Have I been given a ticket which will enable me to travel to where I want to go?" The deceased would, naturally, have read what was on the front of the passenger's counterfoil in order to check that he had been given a ticket enabling him to travel to Hong Kong. There was nothing on the front of the ticket to draw his attention to what was written on the back; and his interest in the ticket probably ceased from that moment.

29. The situation, in my view, is very similar to that which obtained in Henderson v. Stevenson⁽²⁾ and Sugar v. London Midland & Scottish Railway Co.⁽⁶⁾. There was nothing on the front of the passenger's counterfoil to draw the deceased's attention to the fact that there were conditions of travel; and having regard to the fact that the defendants, so far as the evidence goes, took no other steps of any kind with a view to drawing the deceased's attention to the fact that there were conditions of travel, I do not think that, in the circumstances of this case, they discharged the onus which admittedly rested upon them.

30. When the trial judge stated: "Here the defendants discharged the onus ...........", in my view he was referring to Cockerton's⁽¹⁰⁾ case. There are, however, two other passages in his judgment which call for scrutiny. The two passages read as follows:-

(1)	"Is it enough therefore merely to tell an intending passenger that there are conditions and to leave it to him to find out what they are.
(2)	All that is known therefore is that this warning on the back of the ticket was given to the deceased. I do not think that that is enough .......... In the absence of some evidence that the conditions were readily available or conspicuously displayed at the place where the contract was made I do not think that the defendant (s) (have) discharged the onus of proof placed upon (them)."

It is arguable that in these passages the judge is saying in effect: "I find as a fact that the deceased was aware of the terms of the warning notice on the ticket; but that is not enough to justify a court of law holding that the defendants have discharged the onus placed upon them".

31. In fatal accidents cases it is seldom that the court is given evidence which would justify the court asking itself the question: was the deceased actually aware of the limiting conditions? Or was the deceased actually aware that there were conditions of some kind. There might be evidence to justify this. For example, if a carrier called a booking clerk to testify that he drew the passenger's attention to the warning notice on the back of he ticket and saw him read it and said that he discussed with the passenger the implications of the notice and thereafter the passenger paid his fare and accepted the ticket, if the court accepted such evidence it would be fully justified in finding that the passenger actually knew of the warning notice on the back of the ticket. But, ordinarily, in fatal accident cases the only material question is: Did the carrier do what was reasonably sufficient to give the passenger notice of the conditions and of the fact that the carrier was contracting on the terms of those conditions, so that the passenger (if he had not died and had been in a position to give evidence) would have been estopped from saying that he was not aware of the conditions and was not aware of the fact that the carrier was contracting on those conditions. In other words, that the passenger shut his eyes to the obvious.

32. In this case, the judge did ask himself that question. He answered it in the negative; and I can see no reason why this court should reverse his finding. I do not think that, in the two short passages which I have quoted, the judge was making a finding that the deceased actually knew what was on the back of the ticket. I agree, of course, that if he did find that the deceased knew of the warning notice on the back of the ticket, there was no point in him then asking himself the further question whether the defendants had done what was reasonably sufficient to give the deceased notice that they were contracting with him on their own terms. As the decisions stand, there is authority for the view that notice of the fact that there are conditions should ordinarily be sufficient to put an intending traveller upon his guard so that he should either find out for himself what the conditions are or be deemed to have bought "a pig in a poke". But in this case if it is felt that the judge has found that when the contract was made the deceased was aware of the warning notice on the back of the ticket, then it is open to this court to reverse that finding; and in my view we should do so. This court is in as good a position as the trial judge was in a matter of this kind. The state of the deceased's mind at the moment when he entered into the contract with the defendants is an inference of fact. This does not depend upon anything said by a witness during the trial of the action. All the trial judge had before him was the ticket purchased by the deceased; and that is really all this court has to go on.

33. I agree with what the learned President has said in regard to the third ground of appeal; and I have nothing to add. I also agree that there is insufficient ground to justify this court interfering with the trial judge's estimate of loss of future earnings, namely, $115,200. But in my view the dependancy should have been fixed at a figure considerably higher than $600 per month.

34. As regards the tables of awards on pages 35/43 of Kemp & Kemp, the multipliers given were, for the most part, obtained by the learned authors by simply dividing the award by the annual value of the dependancy. At page 19, the authors say:-

"Judges rarely reveal their mental calculations so that one does not know how many years purchase they took originally and by what sum they discounted the resulting lump sum. But, by dividing their final assessment of damages by the annual value of the dependancy, one can reach a multiplier."

35. In his textbook on damages, Munkman deals with the two approaches which the courts have adopted in estimating loss of future earnings; and at p.46 he says:-

"................ there are two methods of calculation. If the calculation is to be in terms of 'earning capacity', the estimated figure of annual earnings lost must be capitalised by multiplying it by a convenient multiple, say 7 to 15 years' purchase. This multiple is not the actual number of years for which the plaintiff would have worked: although described as so many 'years;' purchase', it is just an arithmetical factor selected by good judgment, usually with the help of annuity tables, as being about right. Contingencies are best taken into account in fixing the multiple. Thus if a plaintiff is elderly and could not have expected to work for much longer, the multiple will be low. If, on the other hand, the calculation is to be in terms of 'actual future earnings', then the estimated annual earnings are multiplied by the number of years for which the plaintiff might have gone on working: a deduction is then made to bring the total to its present value, at the same time allowing for contingencies ................ if annuity tables are used to convert actual future earnings into their present value, the result will be the same as in the capitalisation method."

36. The learned author deals further with the second method of calculation at page 54, thus:-

"First, if incapacity is for life, the Registrar-General's tables of expectation of life ................. show the expectation of. life of a man or woman at a given age ......... The expectation of life is that of the average man, and must yield to medical evidence that the plaintiff's expectation is shorter. Thus, within the life expectation, the court must decide on the expectation of working life, usually shorter ......... Secondly, there are annuity tables. These are very simple in principle, founded ultimately on the compound interest or present value formula

P_n = P_o (1+x/100) ⁿ

where p_o is the initial capital invested at x% and p _n is the capital at compound interest at the end of n years. Thus we can tell what sum is required now, at a given rate of interest, to produce a specified annual sum at the end of 1, 2, 3 ................. n years, and either by summation or more complex formulae, construct tables which show the price now of an annuity of (say) £100 for 10 years at 5% interest. The price is expressed as a multiple (so many year's purchase) of the annual sum. That is how 'year's purchase' comes to be used.

Two cautions are necessary. First the tables are on the basis of a definite rate of interest. At the present time (1965) about 5% seems to be appropriate (A high rate of interest means, of course, that the annuity costs less and you take a smaller number of years' purchase ................................................"

37. In this case, the deceased was aged 36 at the time of his death. According to the Registrar General's tables of expectation of life (Vide Kemp and Kemp Vo1.2 p.310) the deceased's expectation of life was 34.67 years, i.e. barring accidents, he would normally have expected to live until the middle of his 71st year.

38. His wife was 34; and, according to the tables (Kemp and Kemp p.312) her expectation of life was 40.91 years, i.e. barring accidents, she would normally have expected to live until nearly 75 years of age.

39. The judge adopted the so-called 'capitalisation' method. I would, myself, prefer that some attempt be made to estimate the deceased's actual future earnings, i.e. Munkman's second method. In doing so, as Munkman says (p.54), there is no reason why, in cases not tried by a jury, the court should not take judicial notice of any actuarial aids available; Unfortunately, annuity tables are not available; but by use of the formula given by Munkman it is possible to construct a table showing the value in 1966 of an annuity for any number of years.

40. There was no evidence that the deceased was other than a normal healthy man; and I see no reason why we should not assume that, barring accidents, he should not have continued working till he was 65, i.e. from 1966 to 1995. What we have to ascertain is the value in 1966 of an annuity of $7,200 for 29 years. This involves using Munkman's formula to discount each annual payment. For example, using the formula to calculate what sum invested in 1966 at 5% compound interest would produce $7,200 in 1966, we have the following:-

$7200 = P_o (1+5/100)²⁹

P_o is the sum invested in 1966 at 5% compound interest for 29 years which eventually produces $7,200 in 1995. A similar calculation is necessary in respect of each sum of $7,200 payable in each of the years 1967/1994. No calculation is necessary in respect of 1966.

41. I have done three lots of 29 calculations. The first lot of calculations are based on the assumption that the plaintiff would have received $7,200 each year during the period 1966/1995; and to get the 'present value', or rather the 1966 value, of each of those payments I have discounted each of the payments of $7,200 at 5% compound interest. In the second lot of calculations, the annual payments remain the same; but in 'discounting' them to their 1966 value, I have made the calculations on the basis of 8% compound interest. In the third lot of calculations, the annual dependancy is increased to $1,000 per month or $12,000 per year; and in 'discounting' these annual payments I have again used the figure of 8% compound interest.

42. The results of the calculations are as follows:-

The total of column 1 is the price in 1966 of an annuity of $7,200 for 29 years discounted at 5% compound interest. If we divide $116,174 by $7,200 we get 16, i.e. the 1966 price of the annuity expressed as a multiple of $7,200 (the annual payment) is "16 years' purchase".

43. The trial judge also used 16 as his multiplier; and reached almost exactly the same figure as I did by the method of discounting 'actual future earnings' to their present value. But it is important to note that the multiplier (i.e. 16 years' purchase) assumes that interest rates are 5%. If interest rates go up to say 8%, lower multipliers (i.e. smaller numbers of years purchase) are required to achieve the same result. This is illustrated by the figures in the second column. There the total of the various sums invested at 8% compound interest is $87,577, i.e. the price in 1966 of an annuity of $7,200 for 29 years discounted at 8% is only "12 years' purchase". ($87,577 divided by $7,200 gives the figure 12.) It is apparent from the above calculations that the so-called multipliers in the tables on pp.35/43 of Kemp and Kemp presuppose that interest rates shall remain in the region of 5%, and that they are of very little guidance in a territory such as Hong Kong when interest rates are considerably higher.

44. The purchasing power of the dollar will almost certainly decrease during the next ten years or so; and, in all probability, prices and incomes will increase very considerably; and it seems to me that $600 per month is much too low a figure to fix as the dependency in this case. I have not calculated what the 'present value' of an annuity of $9,600 per year ($800 per month) for 29 years would be; but if a "multiplier" of 12 is used, the figure $115,200 is again obtained. If, on the other hand, it is felt that $1,000 per month ($12,000 per year) would have been a more realistic figure to fix as the dependency, the results of my calculations (using MunKman's second method) are shown in column 3 of the above calculations. This shows that the present value of an annuity of $12,000 for 29 years discounted at 8% is $146,021, i.e. 12 years' purchase.

45. The above calculations make no allowance for what the text-book writers call the chances and uncertainties of life, that is to say the possibility of the widow remarrying, the chances that she or the deceased might, in 5 years' time, have fallen in front of a bus, or that he may have died of an appendicitis or become blind and so on. It does not appear that the trial judge discounted his original figures in any way.

46. I do not think that in this case too much weight should be given to such contingencies. The deceased's profession could not be described as a hazardous one; and, so far as the evidence goes, he was a normal healthy man. As regards the possibility of the plaintiff remarrying, there is no evidence that she has in fact done so; and as Kemp and Kemp say (p.20):-

"...... too much weight must not be given to the chances of remarriage."

In Nunn v. Cocksedge Ltd. (a case which does not appear to be reported but which is cited in Kemp and Kemp at.p.21.) Denning L.J. is reported to have said:-

"...... it seems to me that the judge must have reduced his figure far too much on that account. After all, she has not remarried. She is not even engaged to be married. Two years have passed since the accident; and it is entirely an element of chance whether she will remarry or not. How sad it would be if, as the years passed by, she did not remarry, and yet her compensation had been cut down by the court so drastically on the footing that she would."

47. On reconsideration, it may be that the year 1966 should be excluded from the above calculations. The deceased did not have a job to return to in Hong Kong; and it is somewhat unrealistic to suggest that he would have been in a position to contribute $7,200 or any higher sum towards the maintenance of his family in 1966. If therefore no account is taken of the year 1966, the totals of the above three columns are reduced from $116,174, $87,577 and $146,021 to $108,974, $80,377 and $138,821 respectively.

48. If I had been trying this case, I would probably have fixed $1,000 as the dependency and discounted 29 annual future payments of $12,000 on the basis of 8%. The 'present value' of the annuity would have been somewhere in the region of $138,000 (or approximately 12 years purchase). Then I would probably have discounted this figure to allow for possible contingencies. In LEUNG Tai Ah v. Chan Tak-wan and Another⁽¹¹⁾ the Full Court considered that the figure obtained by multiplying the estimated annual loss of earnings by 14 should be discounted by 20%. It is not clear to me what contingencies this was intended to cover. If $138,821 is discounted by 20%, the result is $110,400, which is remarkably close to the trial judge's estimate. But even if I had discounted the $138,821 to some higher figure such as $120,000 or even $125,000 that would not justify my recommending that the judge's estimate of $115,200 be interfered with. As Greer L.J. said in Flint v. Lovell⁽¹²⁾:-

"In order to justify reversing the trial judge on the question of the amount of damages, it will generally be necessary that this court should be convinced either that the judge acted upon some wrong principle of law, or that the amount awarded was so extremely high or so very small as to make it, in the judgment of this court, an entirely erroneous estimate of the damage to which the plaintiff is entitled."

49. In LEUNG Tai-Ah⁽¹¹⁾ the plaintiff was 33 years of age; and his connsel submitted that the court should assume that his working life would have continued for another 30 or 35 years. But the Full Court did not express any view as to the probable length of the plaintiff's working life. Counsel were agreed that the probable loss of future earnings was $380 per month, i.e. $4,560 per year. Scholes J. said (p.232):-

"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⁽¹³⁾. 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."

50. Since drafting this judgment I have managed to obtain the use of certain mathematical tables. Assuming that the plaintiff in LEUNG Tai Ah⁽¹¹⁾ would have continued working till he was 65 (i.e. 32 years) according to these tables the "present value" of an annuity of $4,560 for 32 years discounted at 7% is $57,668, i.e. 12.6465 years' purchase. If this sum is discounted by 20% (as was considered appropriate by the Full Court in LEUNG Tai Ah⁽¹¹⁾) the result is $46,135.

51. On the other hand, if we assume an interest rate of 8%, the present value of the annuity is $52,143 (or 11.4349 years' purchase); and if this sum is further discounted by 20%, the result is $41,715.

52. Having re-read the judgments in LEUNG Tai-ah⁽¹¹⁾, I am more convinced than ever how unsatisfactory it is in Hong Kong to use the multipliers shown on pp.36/43 of Kemp and Kemp. Everything depends on what is considered a proper rate of interest. If 5% is considered suitable, then the multipliers in Kemp and Kemp may be some guide; but not if the rate of interest is 7% or higher. In any event it seems to me that Munkman's second method is a much more satisfactory method of calculation, i.e. to make a genuine attempt to estimate loss of future earnings over the whole period of the deceased's working life and then discount that amount actuarily to its 'present value', thus arriving at the correct number of years' purchase. The present value may then be further discounted to take account of the vicissitudes of life and any unusual features disclosed by the evidence.

53. I agree, of course, that if the annual interest on the award, invested at current rates, is more than the annual dependency, there is something wrong with the calculations. Capital and interest should be exhausted over a period which bears some relation to the deceased's working life.

17 SEP 1969

(1) (1958) A.C. p.240 at p.265.

(2) (1875) Session Reports (H.L.) 4th Series, Vol.II, pp.71.

(2) (1875) Session Reports (H.L.) 4th Series, Vol.II, pp.73 and 74.

(3) (1918) A.C., p.837 at p.844.

(4) (1916) 85 L.J. K.B. at p.896.

(5) (1903) 19 T.L.R. p.621.

(6) (1941) 1 AER p.172

(7) (1923) 2 K.B. 703

(8) (1930) 1 K.B. 41

(9) (1931) 47 L.Q.R. p.460.

(10) (1960) 2 Lloyds Reports p.450.

(11) (1968) H.K.L.R. p.224

(12) (1935) 1 KB 354 at p.360

(13) (1951) 1 Lloyds Reports 324.