Case Document

CACV000080/1992

IN THE COURT OF APPEAL	1992, No. 80
	(Civil)

BETWEEN
	KINGS LIGHT INDUSTRIAL LTD.	Appellant/
		1st Defendant

	AND

	LO WAI KEUNG	Respondent/ Plaintiff

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Coram: Hon. Fuad, V.P., Mayo & Godfrey, JJ.

Date of Hearing: 8, 9 & 10 December 1992

Date of handing down of judgment: 21 December 1992

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J U D G M E N T

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Mayo, J :

1. The Appellant appeals against Liu J's judgment when he assessed damages in favour of the Respondent. The Respondent was severely injured in an industrial accident. His right dominant hand was caught in some machinery and badly crushed and mangled. There does not appear to be much issue concerning the extent of the injuries sustained. Neither Mr. Lai for the Appellant nor Mr. Swaine for the Respondent disagree with the view taken by the learned Trial Judge that the injury should be classified as a substantial injury adopting the criteria laid down in Lee Ting Lam v. Leung Kam Ming [1980] HKLR 657. They also did not dissent from Liu J's view that so far as damages were concerned for pain, suffering and loss of amenities, they should be pitched at the upper end of this classification. What they disagreed on was the appropriateness of the award made by the judge under this head.

2. There was also substantial disagreement on the extent (if any) to which future earnings should be discounted so as to take account for uncertainty and the vicissitudes of life and some other parts of the award which was made.

3. Liu J. very helpfully set out all the awards he made at the conclusion of his full and comprehensive judgment.

"In conclusion, the damages I find proved and award in this action are as follows

1. Medical expenses as Agreed : $ 1,490

2. Travelling expenses: $ 6,000

3. Nourishing food : $28,060

4. Agreed costs of operation : $35,000

5. value of care and attention at $3,000 for 9 months $27,000

6. Pre-trial loss of earnings:

(a) salary and year end double pay from 15th June 1990 to end of February 1992:

(i) 6 months and 16 days (i.e. from 15th June 1990 to end December 1990) x $12,000 per month $ 78,400

(ii) pro rata year- end double pay in respect of year for (i) $ 12,000

(iii) 14 months (i.e from lst January 1991 to end of February 1992) at $20,000 per month $ 280,000

(iv) Year end double pay in respect of period under $ 20,000

(b) Estimated loss of benefit of petrol from June 1990 to February .1992 at $1,000 per month for 20 1/2 months $ 20,500

(c) Estimated loss of benefit of annual trip $ 50,000

(d) Estimated loss of lunch expenses agreed at $520 per month x 20 1/2 months $10,660

7. Pain, suffering and loss of amenities $ 330,000

8. Loss of future earnings $22,100 x 13 (i.e. 12 months plus one month as year-end bonus) x 16 years purchase: $4,596,800

9. The notional earnings of the plaintiff for 16 years less (7 months) i.e. $3,000 x 185 months are $555,000. Estimated taxation on loss of future earnings is $400,380.20. Therefore, the plaintiff's real loss is [$4,596,800 (future earnings) - $555,000 (notional earnings) - $400,380.20 (tax)] : $3,641,420

10. The plaintiff would have lunch expenses at $520 per month in 1990 but at 10.5% inflation per year would take it to (say) $635. $635 X 12 months x 16 years' of purchase : $ 121,920

11. Petrol allowance at $1,000 x 12 x 16 $ 192,000

12. Annual holiday benefit at $50,000 + 2 years inflation at 10.5%. For 1991, it would be $50,000 x 10.5% : $55,250 For 1992, it would be $55,250 x 10.5% : $61,051 Adopting a multiplier of 16, $61,051 x 16 $ 976,816

13. Loss of earning capacity : $ 36,000

14. Cost of future care and attention at $1,500 per month x 12 months x 2 years $ 36,000

Total: $5, 903, 266

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4. Before dealing with these awards in any detail we think it will be helpful to consider the principles which should be borne in mind when deciding whether or not to interfere with the awards made. We are satisfied that we should not interfere with theJudge's order unless it can be demonstrated that he was in serious error.

5. The classic exposition of the approach to be adopted was that of Greer L.J. at p.359 in Flint v. Lovell [1935] 1 KB 354.

" I should like to add a few words about the jurisdiction of this Court in appeals where the only contention, or one of the contentions, is that the damages awarded by a judge hearing a case without a jury are excessive. It is not possible to say that the tests which have been laid down in cases like Phillips v. London & South Western Railway Co. (I) apply to an appeal from a judge trying a case without a jury, because an appeal is a rehearing by the Court with regard to all the questions involved in the action, including the question what damages ought to be awarded, but though the established rules with regard to the decisions of juries do not apply to appeals from the decision of judges trying cases without the assistance of a jury, I think it right to say that this Court will be disinclined to reverse the finding of a trial judge as to the amount of damages merely because they think that if they had tried the case in the first instance they would have given a lesser sum. 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."

6. We would agree with this.

7. Mr. Lai submitted that notwithstanding this requirement the award for' pain and suffering was excessive. He argued that the amount which had been awarded under this head would have been more appropriate to injuries in the category of 'gross disabilities' rather than 'substantial injuries'.

8. We do not accept the validity of this submission. It is not helpful to adhere too strictly to guidelines which are laid down in these types of cases. Lord Frazer said at p.458 in Chan Wai Tong v. Li Ping Sum [1985] 1 AC 446, (P.C.):

" Their Lordships consider that reference to guidelines is proper and useful and is to be encouraged. It tends to produce consistency in awards, and it assists practitioners to negotiate settlements of the many claims which are settled either in the early stages of proceedings before going to trial, or which never reach the courts at all. But the use of guidelines cannot do away with the need to compare the facts of the particular case under consideration with the facts of reported cases in which damages have been awarded by the courts. If attention is concentrated entirely on the description of the categories of injuries contained in the guidelines, without regard to the facts of actual decided cases, there is a risk that the description may be treated as if it had been contained in a statute, and may divert attention from proper comparisons."

9. Liu J. explained the reasons why the amount he awarded was slightly more than amounts awarded in the cases which were referred to him for comparison at the trial. The fact that the Respondent's thumb had been rendered useless by the accident greatly increased the amount of inconvenience he was occasioned and this justified a higher award than the amount awarded in Mak Chun To HCA No. A1183 of 1986. In that case the medical opinion assessed the disability at 50% whereas in the present case the disability was assessed at 70%.

10. A further complaint made by Mr. Lai was that in the body of the judgment Liu J. made specific reference to the Respondent's cosmetic disability. This seemed to indicate that an additional award was being made. We do not think that this was so. There was no reference to this being dealt with separately when the learned judge summarised all the awards he was making. It was just one of the matters he took into account in making a global award.

11. Liu J. also took into account the effects of inflation on past awards and this was a factor which increased the award he made.

12. Adopting what we consider to be the correct principles we would not interfere with the award for pain and suffering.

13. When the appeal was before us there was no dispute concerning pre trial loss of earnings. The disagreement between the parties related to future earnings.

14. Liu J. described in his judgment the way in which the Respondent's remuneration increased over time. He had in effect been "head hunted" by the 1st Appellant and his salary had been substantially increased to reflect the fact that he had been able to operate a new machine which had been acquired by the company. We do not think that there can be much scope for criticising the learned judge coming to a conclusion that the Respondent's salary was $22,100.00 for the purpose of assessing loss of future earnings. Indeed Mr. Lai concentrated very much more upon the question of discounting the figures arrived at rather than complaining about the calculation itself.

15. The main difficulty encountered by Mr. Lai in this connection is that during the trial counsel representing the parties agreed that the multiplier which was appropriate in the circumstances was 16. Mr. Lai did not himself represent the Appellant at the trial. It was his submission that a multiplier of 14 would have been the correct one to adopt. We do not think that this is a matter which we can interfere with as it was obviously open to the trial judge to accept an agreement which had been concluded by Counsel representing the parties.

16. Even if we had been able to consider this matter further we would not have been disposed to discount the award for loss of earnings in the manner proposed by Mr. Lai.

17. The reason for this is that the very idea of adopting multipliers as a means of calculating the period during which a Plaintiff can be deemed to have been able to continue his employment has built into the calculation the various imponderables which usually have to be taken into account. This is helpfully referred to in paragraph 6-008 of Part I of Kemp & Kemp.

"Instead of directly attempting an actuarial calculation with the expert assistance of actuaries or of recognised actuarial tables, the courts adopt a rough-and-ready approach to an actuarial problem. They take account both of contingencies and the discount for a lump sum by applying an arbitrary multiplier to the multiplicand, which they have ascertained in the way already described. One can say "arbitrary" because the multiplier is not calculated in a precise or logical manner.

Per MUSTILL L.J.:

"... the process seem to have no clear intellectual basis. ... What happens in practice is that the judge adopts an intuitive process buttressed by reference to previously decided cases. These cases partly operate as reference points whose features are compared with those of the case under consideration and partly from the basis of a general climate of opinion on the proper multiplier in a particular class of case with which a judge of long experience in the field will be entirely familiar. But it must be observed that these previous cases themselves must ultimately be intuitive in origin. Now this may be a rough and ready approach but it operates in an economical way and it enables the court to achieve a consistency of award which is at least the start of a just system for computing damages."

18. Over and above this we were not impressed with the reasons advanced by Mr. Lai for discounting the future loss of earnings. Mr. Lai emphasised the uncertainties the Respondent would have faced in the new life he had contemplated in Canada.

19. This is rather hypothetical. The learned trial judge carefully considered all of the evidence and in our view wisely came to a conclusion that he should disregard what may or may not have happened in Canada.

20. While it is undoubtedly true that the Respondent may have had plans to emigrate to Canada with his then girl friend Miss Mak, these plans were not proceeded with after the decision was made that they should not get married. It was never established in the evidence that this decision was made as a direct consequence of the accident.

21. For all these reasons we would not discount the award for future loss of earnings.

22. A further complaint made by Mr. Lai was that the notional earnings calculated by the trial judge had been arrived at by a miscalculation.

23. There had been a considerable volume of evidence concerning the Respondent's earning capacity with his present physical handicap. Liu J. had eventually accepted that the Respondent would be able to earn $3,000.00 per month. However, when he converted this amount to an annual income he had overlooked the almost universal practice of Hong Kong employers to pay a double salary at Chinese New Year. This had meant that the judge had multiplied the figure by 12 rather than 13.

24. We do not think that we should interfere with this. The calculation of a notional salary is in all conscience an imprecise exercise and the scope for exercising judicial discretion must necessarily be wide. Certainly when considering an award of this magnitude, it would be unrealistic to adjust the award for an amount as small as would be involved in this unless it can be demonstrated that the trial judge was manifestly in error. This cannot be shown in this part of the award.

25. Associated with these matters was the question of the claim for the loss of the Respondent's earning capacity. Mr. Lai contended that it was not appropriate to make such an award as 'the Respondent had already been compensated for this in the award for future loss of earnings.

26. Mr. Swaine submitted that it was right for such an award to be made. He argued that the award had been reduced by what the trial judge had notionally determined the Respondent would be able to earn in his handicapped condition. It was apparent from the evidence that it was likely that when the Respondent went out to work he would have less job security than a normal employee in the type of work contemplated and that if he did lose his job, it would take him longer to find alternative employment.

27. We do not accept the validity of this contention. It is unduly artificial to add an unknown element of this type to the consideration which need to be borne in mind in determining a proper assessment of a Plaintiff's earning capacity in the future.

28. The law on this type of award is helpfully referred to at p.139 of the judgment of Browne L.J. in Moeliker v. Revrolle [1977] 1 WLR 132, (CA):

" This court made it clear in Roberts v. Heavy Transport (E.C.C.) Ltd., May 14, 1975, Bar Library Transcript No. 213 and Herod v. Bird's Eve Foods Ltd., November 27, 1975, Bar Library Transcript No. 506 that Smith v. Manchester Corporation. 17 K.I.R. 1 laid down no new principle of law, and I entirely agree. Smith's case is merely an example of an award of damages under a head which has long been recognised - a plaintiff's loss of earning capacity where as a result of his injury his chances in the future of getting in the labour market work (or work as well paid as before the accident) have been diminished by his injury. This court made an award under this head in Ashcroft v. Curtin [1971] 1 W.L.R., 1731 three years before Smith's case. This head of damage generally only arises where a plaintiff is at the time of the trial in employment, but there is a risk that he may lose this employment at some time in the future, and may then, as a result of his injury, be at a disadvantage in getting another job or an equally well paid job. It is a different head of damages from an actual loss of future earnings which can already be proved at the time of the trial. Lord Denning M.R. said in Fairley v. John Thompson (Design and Contracting Division) Ltd. [1973] 2 Lloyd's Rep. 40, 42

"It is important to realise that there is a difference between an award for loss of earnings as distinct from compensation for loss of earning capacity. Compensation for loss of future earnings is awarded for real assessable loss proved by evidence. Compensation for diminution in earning capacity is awarded as part of general damages."

29. We accept that this formulation is correct and supports Mr. Lai's submission. We would therefore delete this item in its entirely and reduce the overall award by $36,000.00.

30. The next matter for consideration is the claim based on the annual holiday the Respondent was entitled to. This is perhaps the most controversial part of this appeal.

31. Mr. Lai submitted that it was wrong in principle to include this among the awards which would be subject to the multiplier of 16. On any consideration of the matter it was highly improbable that the Respondent would have received such a generous benefit over a protracted period of time. One reason for this was that it was by no means customary for employees such as the Respondent to receive holiday benefits of this order. It was apparent from the evidence as a whole that there had been special circumstances surrounding the Respondent's employment and that in effect he had been "head hunted." It would have been highly improbable that the Respondent would receive comparable benefits if he were to change his employment. In this connection it should be noted that the cost of the holiday package amounted to nearly 20% of the Respondent's total remuneration package and this was certainly a very unusual situation.

32. As against this Mr. Swaine argued that the fairest way of considering this aspect of the matter would be to treat the holiday package as an integral part of the Respondent's employment. If this was done it was possible to put a figure on the cost of the holidays and increase the salary to reflect this. It was then_.logical to include the amount in the multiplier.

33. What has to be said immediately on this argument is that this was not the way in which Liu J. regarded the matter. He considered, we think correctly, that the arrangements for the holidays were a separate matter.

34. It is clear from the evidence that the holiday arrangements were made on a very personal basis and that when the Respondent and Miss Mak went on holiday they were accompanied by Mr. Kuen, Managing Director of the 1st defendant. All expenses such as meals were paid for with the Company's credit card.

35. We consider that it would be wrong in principle to regard the holiday payments as part of the Respondent's overall employment as the reality of the situation was that this was a separate matter.

36. This being the case we do not think that it was right for Liu J. to include this item as a benefit which should be subject to the multiplier. The correct approach is to endeavour to consider how long this benefit would in all the circumstances have been likely to last. Doing the best we can consider a fair period for this assessment would be 3 years. We would accordingly disallow the figure awarded by Liu J. of $976,816.00 and substitute in its place $61,051.00 x 3 which amounts to $183,153.00.

37. We would not interfere with the awards made in respect of the petrol allowance notwithstanding Mr. Lai's submissions that we should. It is clear from the judgment that this was a matter which received careful and detailed consideration by Liu J. He did in fact substantially reduce the amounts originally claimed and nothing which was submitted to us by Mr. Lai persuaded us that Liu J. had gone beyond the confines of the discretion reposed in him.

38. Likewise, we would not interfere with the award made for care and attention. This related to the loss which arose out of Miss Mak giving up her job to take care of the Respondent. There is authority for the proposition that awards of this type will be allowed and it is not necessary for the payment of the moneys to be formally vouched for. An award of this type was made in Bhaktabahadur Limbu v. Lai Chee Por Unreported being HCA No. A4730 of 1988.

39. We are not, however, able to allow the award in respect of future care and attention. This item was not claimed as special damages, There is also the problem that there was no detailed evidence that payments were in fact made to the person who assisted the Respondent. We would disallow this item in its entirety. This means that the overall award will be reduced by $36,000.00.

40. One of the awards which has occasioned us particular concern is the award for nourishing or tonic food.

41. It is obvious that the trial judge gave anxious and careful consideration to this part of the claim. He had this to say

" The plaintiff spent a substantial . amount on nourishing food: ginseng, bird's nests and isinglass. The plaintiff himself was adamant that he felt better. The plaintiff was then engaged to Miss Mak. Her father caused to be acquired these nourishing food for his consumption. Miss Mak had left her job and attended on the plaintiff full time. Mr. Raymond Ho comes from a family dealing in Chinese herbs. He has a B.Sc. in pharmacy. He is also a pharmacist registered in Hong Kong and elsewhere. He was firm that these substances would serve the plaintiff well as nourishing food. He prescribed these substances for the plaintiff on the information supplied to him by Miss Mak's father, although he himself had visited the plaintiff in hospital only once. The plaintiff's injury and conditions have never been said to be of an unusual nature. Mr. Ho recommended the substances fit for the plaintiff, which would not give rise to contra-indications when taken together with western medicine. He himself is married to Miss Mak's sister. The expense of $28,060 is no trivial sum, but it is difficult to visualize that a father-in-law to be and a brother-in-law to be, even assuming Mr. Ho not be an expert, would have put the plaintiff to great expense, had these substances been of no or dubious value. I accept Mr. Ho as an expert and I find that the substances were proper nourishing food to be prescribed for the plaintiff's consumption.

Throughout the years, claims for nourishing food, especially the snake-head fish soup for open-wound injuries, have constantly been made. It is patent to those involved with cases of this nature that a large proportion of the Chinese community in Hong Kong are totally. committed to the therapeutic or otherwise fortification value of traditional nourishing food. In many if not all of these cases, a western qualified doctor would be called to testify to the ingestion of such traditional nourishing food as being an exercise in futility. One has yet to hear these doctors, well qualified in western medicine, lay claim to an understanding of Chinese herbs and traditional nourishing food. Their evidence in this respect is broadly focused on the effects of oriental herbs and traditional nourishing food as judged by the fundamentals of western medicine. It is highly debatable that a western doctor would have any expertise on those effects if Chinese herbs and traditional nourishing food are to be acknowledged as having formed no integral part of the training in their formative years. In many decisions, it seemed to have been assumed that western medicine is the sole source of medical science. This unfortunate misconception is compounded by Chinese herbalists' aversion to trial attendance. It may well be time for the courts to review their approach to traditional nourishing food. In this case, the evidence was one way, and I find the claim of the plaintiff to $28,060 proved."

42. It would be difficult to disagree with the sentiments expressed so far as matters of principle are concerned.

43. The way in which the Courts have dealt with this problem is to allow a modest amount to cover such expenditure without going into the question of the efficacy in any great detail.

44. Roberts C.J. commented on this at p.421 in Yu Ki v. Chin Kit Lam [1981] HKLR 419.

"Nourishing food:

The amount claimed under this head was $2,000, though the plaintiff's son gave evidence that he had spent in the region of $3,000 on nourishing food.

While she was in hospital, he gave her fish soup which (according to his understanding) speeds the healing of wounds and is good for recovery from injuries. He also took her specially prepared congee.

After she returned home from hospital, he prepared medicated food, containing a Chinese herb called "tin chat', which he had learned from other people was good for bone recovery.

In Mui Ling-kwan v. Wona Yin-wah [1973] H.K.L.R. 465, the Full Court discussed the principles upon which an allowance for nourishing food should be made.

Briggs, C.J. at p.472 observed that the courts allow a reasonable sum for such a claim, but that if the figure claimed is challenged, it must be proved that the expenditure was on nourishment suitable to assist the recovery of the injured person.

At p.479, McMullin, J. expressed the view that there should be some evidence put before the court to support the advisability of special food.

In this instance, there was no evidence that any doctor, or herbalist, or person with any medical knowledge, had suggested that the nourishing food which was supplied was advisable or suitable; only the son himself. Nor was there any itemization of the costs of the extra food.

Following this Full Court case, I have to find that the plaintiff has not satisfied the tests there laid down.

However, it seems to me to be proper, even in the absence of the necessary evidence required as to the advisability or suitability of the food, to allow a nominal sum, where relatives have spent this on food which the injured person or the relative reasonably believes to be helpful to the plaintiff's recovery.

As the plaintiff was in hospital for about five weeks, I will allow $10 a day for additional food during that period, a total of $350. I do not allow anything for the period after her return home."

45. As can be seen from the remarks made by Liu J. this is an entirely different situation. A fairly substantial claim is being made on the basis of treatment by traditional Chinese medicine.

46. The problem which arises is whether Mr. Raymond Ho who apparently "prescribed" the food was indeed qualified to do so.

47. Mr. Ho obtained a Bachelor of Science Degree in Pharmacy from Portsmonth Polytechnic. He said in evidence that the course he undertook included studying herbs. What is not apparent though is whether the studies undertaken by Mr. Ho included the discipline of Chinese herbal' medicine. It seems unlikely that the course at the Polytechnic included a consideration of the effects of such herbs on the human body and would confer upon him the necessary expertise to express opinions on what constituted suitable treatment for a person who had suffered injuries such as those sustained by the Respondent. It is perhaps also significant to add that Mr. Ho never physically examined the Respondent before first "prescribing" the nourishing food. It is difficult to imagine how Mr. Ho could reach the conclusions he did without first examining the Respondent.

48. We are doubtful whether Mr. Ho's experience assisting his parents with their Herbal Medicine Shop takes matters much further. There was no evidence that Mr. Ho's parents were competent or experienced Herbalists or that the shop selling the herbs was anything more than a retail outlet.

49. It may also be noted that Dr. Yeung who is a Chinese Doctor qualified in Western Medicine expressed the opinion that he himself would only have recommended that the Respondent should have a normal diet. He had, of course, examined the Respondent and was in a position to express a view on the subject.

50. We have come to the conclusion that there was insufficient evidence before the trial judge to enable him to find that it had been proved that the expenditure incurred on the nourishing food had been for the purpose of medical treatment of the Respondent.

51. The consequence of this is that we do not consider that any award should be made over and above the type of award referred to by Roberts C.J. Taking everything into consideration we consider that the maximum award possible would be $5,000.00. The award under this head is reduced to this figure.

52. The final matter for consideration is the amount of the deduction which was made to take cognisance of salaries tax which would have been payable on the Respondent's future earnings. It is common ground that such a deduction should be made.

53. What is in dispute is the amount of the deduction. Liu J. deducted $400,380.00 from future earnings. In calculating this amount it appears that he placed reliance upon the tax rate paid by the Respondent on his pre-accident earnings.

54. This approach would appear to be erroneous. It can be calculated with certainty that tax on salary of $287,300.00 comes to $43,095.00. This amount needs then to be multiplied by 16 which comes to $689,530.00. The total award therefore needs to be reduced by $289,150.00.

We would summarise our conclusions as follows :

1. We deduct $36,500.00 being the award for loss of earning capacity.

2. The deduction in respect of holidays is $976,816.00 - 183,153.00 = $793,663.00.

3. We deduct $36,000.00 being the award for future care and attention.

4. Nourishing food is reduced from $28,060.00 to $5,000.00 which means that $23,060.00 is subtracted.

5. Adjustment to tax position - subtract $289,150.

55. This gives a total for all the deductions of $1,177,873.00. We make an order nisi that the Appellant will have its costs.