Lee Tin Yeung v. Chiu Chow Association Secondary School and Others

HCPI000201B/1999

HCPI 201/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES NO. 201 OF 1999

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Coram: Deputy High Court Judge Longley in Court

Date of Hearing: 6 February 2003

Date of Ruling: 27 March 2003

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R U L I N G

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1.At the restored hearing of this matter on 6 February 2003, Miss Lee on behalf of the Defendants sought the Court's ruling on two issues:

(i) the effect that the Plaintiff's liability for tax would have on the Court's findings in respect of pre and post trial loss of earnings;

(ii) the amount of interest payable on the damages awarded.

I made a ruling on the issue of the effect of the Plaintiff's liability for tax on 6 February 2003.

2.In so far as the interest on general damages is concerned, the parties were in agreement that such interest should commence on the date of service of the writ rather than the date of issue of the writ. This is in accordance with the court's view in Jefford v. Gee [1970] 2 QB 131 at 147H.

3.The issue between the parties in so far as interest is concerned relates to interest on special damages. In giving judgment on 27 August 2002, I said:

"Interest is awarded for items of special damage and pre-trial loss of earnings at half judgment rate from 5 March 1996 until the date of payment of employees compensation. And thereafter from that date until judgment interest is awarded at the same rate but less the amount of employees compensation."

5 March 1996 was the date of the assault on the Plaintiff which gave rise to his claim for damages.

4.The award of interest on special damages and pre-trial loss of earnings at half judgment rate from the date of injury is a conventional order in cases which do not display unusual features in accordance with the principles enunciated in Jefford v. Gee [1970] 2 QB 130 at 147A.

5.Miss Lee sought to raise two matters. Firstly, she took a point which had not been taken at trial and argued that there was an exceptional feature in this case which justified the court in adopting a later date than the date of injury from which the interest should run, namely 4 March 1998. This was because by far the greatest component of the award for special damages and pre-trial loss of earnings was the award for pre-trial loss of earnings. That loss had not commenced until 4 March 1998 (i.e. two years after the injury), as prior to that date the defendants had been paying the Plaintiff's wages in full. The position of Mr Lam, for the Plaintiff, was that the Defendants should not be allowed to relitigate a point not taken at trial after the court had delivered its judgment. I did not hear argument on this point due to the shortage of time. At the conclusion of the hearing on 6 February, I adjourned this part of Miss Lee's application sine die with liberty to restore on the basis that Miss Lee would consider whether such an application was open to her. The court was informed by the Defendants' solicitors (by letter dated 21 February 2003) that the Defendants did not wish to pursue the matter. The Plaintiff is therefore entitled to any costs he may have incurred in respect to this application. I note that no significant time was occupied on 6 February 2003 on this matter.

6.The second matter raised by Miss Lee in relation to interest on special damages and pre-trial loss of earnings was the rate that should be used. She argued that while there was no binding authority to that effect, it was customary practice in Hong Kong for the interest to be calculated at half the judgment rate current at the time judgment was delivered. She referred the court to a number of decisions in which the court had ordered interest to be paid at a rate which was half of the judgment rate at the time judgment was delivered. She argued that the court should adopt this practice in relation to interest in this case. The effect of this would be that interest on special damages and pre-trial loss of earnings would be calculated at 4.0625% (i.e. half judgment rate of 8.125% current on 27 August 2002, the date of delivery of judgment).

7.Having heard Miss Lee's submission on this matter, I am not persuaded that the fact there may have been such a practice in Hong Kong and the fact that it makes for ease of calculation should derogate from the accepted principle that the interest is awarded to a Plaintiff "for being kept out of money which ought to have been paid to him." (per Lord Denning MR in Jefford v. Gee (supra. at 146A).

8.The loss to a Plaintiff from being kept out of money which ought to have been paid to him is likely to vary according to the prevailing interest rates current during the time of the Plaintiff is deprived of it. The judgment rate reflects such rates being, as I understand it, currently based on a formula of adding 3% to an average of the three most recent months' best lending rate, presumably on the basis that that reflects the cost of borrowing funds without security.

9.It may well be that if interest rates have remained relatively stable during the period in which special damages and pre-trial loss of earnings have accrued then the rate of interest current at the date of judgment will provide a rough approximation of the loss sustained by the Plaintiff as a result of being kept out of the money which should have been paid to him. The same would be the case if the judgment rate current at the date of judgment reflected the average interest rate over the period.

10.Where however the judgment rate current at the date of judgment does not reflect the rates current during the period in which special damages and pre-trial loss of earnings have accrued, then in my view it would not be just in normal circumstances for interest to be calculated on the basis of the rate applicable on the date judgment was delivered. I note that, since the Plaintiff sustained his injury in this case on 5 March 1996, the judgement rate has fluctuated widely rising to 13.08% in 1998, but had fallen to the rate current (8.125%) on the date judgment was delivered on 27 August 2002.

11.The submission of Miss Lee that interest should as a matter of practice be based upon half the judgment rate current at the time of judgment would leave the compensation to be received by a Plaintiff dependent on the chance of when the trial took place and even upon the chance of when judgment was delivered. In this case for instance, the judgement rate was reduced 7 days after the hearing concluded and before judgment was delivered. Even small changes in the judgment rate can result in a significant difference to a Plaintiff when there have been substantial special damage and pre-trial loss of earnings accrued over several years. Predictability is in the interest of both Plaintiffs and Defendants in actions for personal injuries. They and their legal advisers often have to make fine judgments in the course of litigation based upon their estimation of the loss sustained by the Plaintiff.

12.I am reinforced in my view by the fact that in the English cases of Jefford v. Gee (supra. at 149A) interest was based on half the average or mean rate over the relevant period and in Cookson v. Knowles (1979 AC 556 at 573C), it was based on half the interest rates current during the period the pre-trial loss accrued. There seems to me no reason to distinguish the position in England from that in Hong Kong simply on the basis that in England the rate utilised is the rate obtainable on a short term investment account rather than on the judgment rate.

13.It follows that it is in my view appropriate in normal cases for the rate of interest on special damages and pre-trial loss of earnings to reflect one-half of the rates applicable from time to time during the time the damages accrued rather than one-half of the interest rate current at the time of judgment, except when that latter rate reflects the former.

14.Had it not been the fact that the pre-trial loss of earnings formed the predominant part of the damages with which the court is concerned in this case and the fact that those loss of earnings did not commence until 4 March 1998, two years after the incident, I would have regarded it as appropriate to order that interest on special damages and pre-trial loss of earnings be at half the rate prevailing from time to time during the relevant period.

15.However, Lord Denning MR in Jefford v. Gee (supra. 151 at F) recognised that exceptional circumstances might justify the court departing from usual principles and such circumstances could be reflected in either the rate of interest or the period for which it was allowed. While the fact that the Plaintiff's pre-trial loss of earnings did not commence until two years after he sustained injury is a factor that might more usually be reflected in the date from which the court would order interest to run, the court is not precluded from reflecting that circumstance in the rate of interest. In this case it would in my view be just to do so.

16.In the exceptional circumstances of this case I order the interest on special damages and pre-trial loss of earnings run at half the rate current at the date of judgment.

17.I make no order as to costs of the argument on this matter. The reason for declining to make an order is that although the order I make is that sought by the Defendants, I did not accept the arguments put forward in support of their application at the hearing. I only reached the conclusion I did after inviting considering written submissions from the parties thereafter.

18.The Plaintiff's costs to be taxed under the Legal Aid Regulations.

Representation:

Mr Simon Lam, instructed by Messrs Hui & Lam, for the Plaintiff

Ms Christina Lee, instructed by Messrs Cheng, Yeung & Co., for the Defendants