Chan Pui Ki v. Leung on and Another
Read the full judgment text of HCA 2006/1992 on BabelCite. This High Court CFI judgment.
1. On 22nd April 1989, the Plaintiff, Chan Pui Ki was seriously injured in a road accident. The parties agreed that the apportionment of liability is that the Defendants are 80% liable and the Plaintiff is 20% liable.
Cited by 6 cases · Cites 6 cases
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HCA002006/1992
----------------- HEADNOTE ----------------- Personal Injury - A ten year old girl was severely injured in a traffic accident. She is now 16.
Index
IN THE SUPREME COURT OF HONG KONG HIGH COURT -----------------
----------------- Coram: Hon Mr Justice Cheung in Court Dates of hearing: 1st, 5th-8th, 13th-16th, 22nd & 23rd June 1995 and 10th-14th, 17th-19th July 1995 Date of delivery of judgment: 30th October 1995 ----------------- JUDGMENT ----------------- I. Liability 1. On 22nd April 1989, the Plaintiff, Chan Pui Ki was seriously injured in a road accident. The parties agreed that the apportionment of liability is that the Defendants are 80% liable and the Plaintiff is 20% liable. Mr Griffiths Q.C., Counsel for the Plaintiff, have addressed me how this apportionment was arrived that. The apportionment was approved by me. II. Heads of damages 2. The Plaintiff is seeking to recover the following heads of damages:-
3. Many items of the special damages are agreed between the parties and I shall deal with them later on. III. Loss of future earnings 1. Multiplier/Multiplicand or lump sum 4. The Plaintiff is seeking loss of future earnings based on the multiplier and multiplicand approach. Mr Benjamin Yu, Q.C., Counsel for the Defendants, argued that a review of the cases in Hong Kong on loss of earnings for infant plaintiff shows that the courts have sometimes used the multiplier/multiplicand approach but more often and in more recent decisions, awarded a lump sum without seeking to justify the figure on the basis of a multiplier and a multiplicand.
5. Mr Yu submitted that in refusing to apply a multiplier/multiplicand approach in some of the cases, the courts recognised that, while there has been proved on the balance of probabilities there will be loss of future earnings, it is much too speculative to find:-
6. In Joyce v. Yeomans [1981]1 WLR 549, the English Court of Appeal held that because of the many imponderables, the assessment was necessarily a matter of guess work and it was inappropriate to apply a multiplier and multiplicand and make an mathematical calculation. It held that the correct approach was to select a global figure which seems to represent fair compensation. 7. Mr Yu further drew my attention to Blamire v. South Cumbria Health Authority (1992), October 8, 1992, in which the trial judge in assessing the loss of future earnings of an injured person did not adopt the conventional multiplier and multiplicand approach. This approach was accepted by the Court of Appeal. Balcombe L.J. held that:-
2. Multiplier/Multiplicand is the proper approach 8. I have considered Mr Yu's arguments but I find that the multiplier/multiplicand approach is the correct approach. 9. The case of Croke v. Wiseman [1982] WLR 71 is instructive. The English Court Appeal held that a gravely injured child of 21 months who was expected to live for many years into adult life was entitled to damages for life for loss of future earnings during his period of likely survival. The damage was not to be treated as being so speculative that it could not be assessed. Griffiths L.J. at page 82 held that in the case of a gravely injured child "there are compelling social reasons why a sum of money should be awarded for his future loss of earnings" Shaw L.J. agreeing with Griffiths L.J. at page 84 refused to accept that there should be any difference of principle between a child plaintiff and an adult plaintiff. The approach of Griffiths L.J. and Shaw L.J. was approved in the Privy Council in Jamil Bin Harun v. Yang Kamsiah and Another [1984]1 AC529 were a plaintiff aged seven years of age was injured in a motor accident. Lord Scarman at page 537F delivering the judgment of the Privy Council held that:
10. The argument of Mr Yu that the Privy Council was only approving the concept of damages for loss earnings, rather than approving the use of the multiplier/multiplicand approach is incorrect because the decision of the Federal Court of Malaysia [1981] MLJ 292, stated at page 295 that,
11. It is clear that the Federal Court was adopting the multiplier/multiplicand approach and this approach was approved of by the Privy Council. The Privy Council decision is binding upon me and accordingly the multiplier and multiplicand approach is the one I will adopt. 12. As Mr Griffiths pointed out, the first nine cases referred to by Mr Yu were all before the decision of the Privy Council and of the subsequent cases, none was dealt with by the High Court or the Court of Appeal. Furthermore, as indicated in Leung Lai Hai and Renny Cho, the court only adopted the lump sum approach because there was insufficient evidence to pursue any other approach. 13. In Lee Woon Sui v. Won Kin Keung [1976] HKLR 296, the Hong Kong Court of Appeal referred to the conventional method of multiplier and multiplicand. 14. The multiplier and multiplicand approach is the appropriate method in assessing future loss particularly when there are evidence available before the court. In assessing future loss, it is worthwhile to bear in mind the words of Lord Diplock in Mallett v. McMonagle [1970] AC166 at p.176:-
15. The fact that the court in Blamire v. South Cumbria Health Authority was not prepared to adopt the multiplier/multiplicand approach does not mean that this approach must be jettisoned whenever there are uncertainties facing the future of an injured person. In order to come to a fair and adequate compensation it is necessary to assess the future loss, difficult though the task may be. 3. Conventional multiplier or increased multiplier 16. The Plaintiff invites the court not to adopt the conventional multiplier but to receive actuarial evidence as to what is the appropriate multiplier. The Plaintiff's argument is that the fundamental principle of law is that compensation should as nearly as possible put the party who had suffered in the same position he would have been if he had not sustained the wrong (per Lord Scarman in Lim Poh Choo v. Camden Health Authority [1980] AC174 at 187E, approving the statement of Lord Blackburn in Livingstone v. Rawyards Coal Company [1880J5 AC25). The conventional multipliers are appropriate to discount rates of 4% to 5% (per Lord Diplock at Cookson v. Knowles [1979] AC556 at 571G). The Plaintiff introduces evidence showing that in present day Hong Kong, the rate of real return on investment over wage increase falls below the rate of 4% to 5%. Thus the conventional multiplier which is based on that range of return is not capable of giving the Plaintiff a fair compensation to cover her loss of earnings measured at the date of the trial and the amount by which future annual earnings will increase above the normal inflationary increase. Hence, only if the multiplier is increased will the Plaintiff receive fair compensation. 17. In Cunningham v. Camberwell Health Authority, [1990]2 Med L.R. 49, Mustill L.J. at .p.53, described the conventional approach as follows:-
4. Objections against departure from the conventional multiplier 18. Mr Yu submitted that where a multiplier/multiplicand approach is adopted, the court would choose a lower multiplier for infants than would have been the case for adults. This was because there are many more imponderables on the earning capacity and its duration for an infant. He submitted the conventional multiplier for an infant of 16 had been in the region of ten and the court has traditionally multiplied the monthly sum by twelve months. 19. Mr Yu argued that the conventional multiplier should not be tempered with. He submitted that the court can only award damages once and this presents insuperable problems. In Lim Poh Choo, Lord Scarman at p.183 stated that:-
20. At p.184, he held that:-
21. Mr Yu further submitted that the assessment of future loss is already difficult enough without adding further uncertainities to it. In Cookson v. Knowles, Lord Diplock at p.568F stated that,
22. Although this was said in the context of a fatal injury case, the same difficulties apply as in most other assessment as well. 23. Furthermore, inflation should not be taking into account in the assessment. As Lord Diplock further said at p.571H:-
24. Mr Yu submitted that the court have always rejected the attempt to temper the conventional multiplier by arguments as to the increase rate of inflation, i.e. the loss of value of money. Lord Scarman in Lim Poh Choo at p.193F gave three reasons:-
25. Mr Yu argued that if the Plaintiffs contention is correct, the court would have to reduce the conventional multiplier when the returns from investments produce a net discount rate of over 4% - 5% per annum. An argument along this line was tried in Peter Zee v. Yau Yat Shing (Civil Appeal No. 59 of 1983), but was rejected by the Hong Kong Court of Appeal:-
26. Mr Yu submitted that if the conventional multiplier is abandoned, then it means in personal injury cases actuarial evidence will have to be introduced every time at the trial. This is not conducive to settlement between the parties and make the calculation of payment into court virtually impossible. 27. Mr Yu submitted that with the uncertainties facing Hong Kong because of the 1997 change of sovereignty, to adopt an approach other than the conventional approach presents even more difficulties. Relying on the words of Lord Scarman in Lim Poh Choo, Mr Yu reminded the court of the inherent limitations of judicial reform. If the level of damages in Hong Kong is indeed lower than other jurisdictions, then the solution Lies not in judicial changes of the law but rather in legislative changes. Lord Scarman at p.183 stated that:-
5. Assessment of damage is subject to change 28. The difficulties in this area so ably summarised by Mr Yu are recognised. However, as Lord Scarman in Jamil Bin Harun at p.537 held:-
29. I agree with Mr Griffiths that the conventional upper limit of the multiplier, namely twenty, is not set in stone. In order to give effect to the principle of compensation as laid down in Lim Poh Choo, one must take into account the actual facts of the surrounding financial situation in any particular country at any particular time. 30. In Todorovic v. Waller [1981]37 ALR 498, Stephen J. in the High Court of Australia held that:-
31. The necessity to adopt to change is recognised in the authorities. In Cookson v. Knowles, Lord Salmon p.574A stated that:-
At 574E Lord Salmon further stated that:-
32. Lord Diplock at p.571 of Cookson v. Knowles accepted that an alternative practical way of providing for inflation could be considered were a better way to be suggested:-
33. Lord Scarman at p.193H in Lim Poh Choo was of the view that:-
6. Rationale for excluding inflation 34. The rationale for excluding inflation is in the speech of Lord Scarman in Lim Poh Choo at p.193F which I have referred to earlier. It should be pointed out that investment policy is only to take care of inflation in the great majority of cases. But where such an approach offends against the fundamental rule in compensation, then a different approach must be adopted. This is, for example, recognised by Lord Fraser in Cookson v. Knowles at p.577H where he held that:-
35. Lord Salmon in Cookson v. Knowles at p.574B pointed out that the former assumption that investment in equities will protect the plaintiff against inflation because that would be balanced by the rising equity which would automatically follow inflation has now been exploded. 36. In the present case, evidence is introduced by the Plaintiff showing that the wage increased annually by more than the rate of inflation in Hong Kong so that the English discount rates of 4%-5% are not capable of giving the Plaintiff a fair compensation. The matter is not simply to predict future wage inflation. The distinction is between the concept of general inflation increasing earnings and eroding savings on the one hand as dealt with by Lord Fraser in Cookson v. Knowles at p.577E:-
And on the other hand the fact that because in Hong Kong earnings each year increased by more than the rate of inflation, so each year the Plaintiff (if uninjured) will have more increased spending power i.e. more real earnings yearly. The Plaintiff is entitled to be compensated for this increase real earnings just in the same way as any plaintiff is entitled to be compensated for increase earnings arising from a finding that the. plaintiff would probably secure in the years ahead a promotion attracting enhanced earnings and hence more spending power. 7. What is a discount rate? 37. The objective of the court when making once and for all lump sum award to reflect loss of future earnings is to award a sum today which together with the investment income obtained from it will be sufficient to compensate in each future year for that year's loss earnings, with the intention that the entirety of the fund be exhausted by the day the plaintiff would have retired. This principle is succinctly stated by Lord Diplock in Cookson v. Knowles at p.567H when he dealt with awards for fatal accidents. The same principle applies equally to awards for future loss in non-fatal injuries.
38. Lord Diplock at p.569B further stated that:-
39. Lord Fraser at p.576E stated that the relevant factor is the increases in the rate of earning. 40. Based on the speeches of Lord Diplock and Lord Fraser, two of the essential ingredients to calculate the present lump sum requirement are:-
The other ingredients are those indicated by Mr Quant, an actuary, at p.91 of the Trial Bundle, namely:-
41. Mr Quant gave a mathematical formula which can calculate the present lump sum required for this purpose. It is necessary also to take into account other possibilities such as illness or unemployment. The risk of mortality is taken into account in Mr Quant's formula as it is in the Ogden Tables and the traditional tables set out in Kemp & Kemp. The other viciccitudes of life are traditionally taken care of by a small reduction in the multiplier. This mathematical approach can be "telescoped" - to use the words of Mr Griffiths - by adopting a "multiplier" and applying this to the multiplicand. Essential to this formula and to the multiplier approach is the differential between the rate of investment return and the rate of earnings increase for the period of the plaintiffs working life. This is sometimes called the "discount rate". 42. A good summary of the use of the arithmetical discount is set out at para.8-001 of Kemp & Kemp. 8. Objections to actuarial evidence 43. In respect of actuarial evidence relied upon by the Plaintiff in calculating the multiplier, Mr Yu submitted that the use of such evidence is not appropriate and of no assistance in the present case. He said the use of this type of evidence is not a new subject. It was first raised in the 1960's and received judicial disapproval. For example, in Watson v. Powles [1968]1 QB 596, Lord Denning MR at 604 said:- 44. "We do not think it should be the general practice." 45. In Fletcher v. Autocar & Transportors [1968]2 QB 322 at 346, Lord Diplock L.J. said:-
The debate was renewed in the 1980's in Auty v. National Coal Board [1985]1 WLR 784 in which Purchas L.J. said:-
46. Mr Yu accepted that the use of actuarial evidence was recognised by Oliver L.J. in Auty at p.800H where he held:-
47. Mr Yu submitted that at its simplest level, the actuary tables are no more than the result of mathematical calculations. If one wants to ascertain the present day value of a continuous flow of an ascertained amount of income to be received year after year in the future, one may use the mathematical formula. The starting point of such calculation is the assumption of a constant discount rate. With the assumed and constant discount rate, it is possible to work out mathematically the number of years purchase. He, however, argued that if one attempts to build into the mathematical calculation, a further factor, such as the probabilities of mortality, one is not only performing a mathematical calculation but is at the same time assuming certain facts on the basis of statistical probabilities. At this level, the actuarial calculations seek to give the impression of a scientific certainty when the matter is in fact uncertain. Sir Gordon Willmer in Mitchell v. Mulholland (No.2) [1972]1 QB 65 at pp.85-6 stated that:-
48. In the present case, Mr Yu argued that the actuarial evidence is to the life expectancy of a 16 year old and no attempt has been made to consider the particular circumstances of the particular Plaintiff. 49. Mr Yu further submitted that when other uncertainties as in most personal injury cases are present, it becomes impossible to use actuarial tables. The usual uncertainties are voluntary wastage, redundancy, dismissal, supervening ill-health, disablement or death (see Auty at p.798B). 50. Oliver L.J. in Auty at p.800H stated:-
51. In the present case, apart from the usual uncertainties, there was this added question as to whether the Plaintiff would have obtained remunerative employment at all and if so, from when? And whether she would have married and have children which might have affected her earnings. In Hunt v. Severs [1994]2 AC350, Lord Bridge at p.365D held:-
52. Mr Yu submitted that where the actuarial evidence relates only to the general rather than the particular and where there are so many imponderables that cannot be measured even by the science of probabilities and statistics, the actuarial calculations cannot be said to be "precisely in point" or "demonstrably giving a more accurate assessment" than the conventional method. 53. Mr Yu argued that Mr Quant, the actuary, had given some very general comments on uncertainties relating to unemployment and continuing work after marriage and child bearing. However, no statistics were available and no attempt can therefore be made to work out the reduction which would be given for this various contingencies. Mr Yu submitted that the very precise and scientific approach adopted by an actuary completely breaks down at this point. 9. Actuarial evidence admissible 54. Based on Cookson v. Knowles, the assessment of the rate of investment returns and of the rate of earning increases are essential elements in calculating the appropriate multiplier. Where the discount rate is assumed at 4%-5%, one way of ascertaining the multiplier is by reference to decided cases. However, where the assumed discount rate is no longer attainable, the court must make an assessment of the multiplier without the benefit of previous examples. Short of picking a figure from the air, the only possible way of calculating the appropriate multiplier is by the assistance of expert evidence. It should be noted that the use of actuarial evidence has been accepted by the courts in the past. 55. Lord Denning MR in Hodges v. Harland & Woolf Limited [1965]1 WLR 523 at 526D-E held that,
56. In Hunt v. Severs [1994]2 AC at 365E-F, Lord Bridge held that:-
57. Mr Griffiths informed the court that this is certainly his experience in relation to the use of actuarial tables in courts in England. 58. The English Law Commission in its report on damages, particularly in Part II, i.e. "Lump Sum Damages" (p.9 to 25) recommended legislation whereby:-
59. Hong Kong, of course, does not have any index linked government security. The Ogden Tables contained actuarial tables with explanatory notes for use in persona] injury and fatal accident cases. The tables set out multipliers which would enable the user to assess the present capital value of future annual loss (net of tax) or annual expenses. The working party responsible for the second edition of the table includes Sir Michael Ogden Q.C. as the Chairman with representatives of the actuary and legal profession. 60. In Cookson v. Knowles at p.570E, Lord Diplock made use of arithmetical tables produced by the respondent in order to evaluate the rate of return from fixed interest stocks. If this is an appropriate exercise, then evidence on the rates of return given at the trial and subject to cross-examination must not only be admissible but more reliable. As pointed out at para.8-008 of Kemp & Kemp, courts in other commonwealth countries had found it hard to understand the English courts' dislike and distrust of actuarial evidence. This type of evidence is regularly adduced and accepted in the courts of Australia and Canada. 61. Kemp & Kemp at para.8-004 demonstrated that the observation of Sir Gordon Willmer in Mitchell v. Mulholland about actuarial calculation taking mortality into account was in error. The calculations do not employ an annuity certain for the period of the expectation of life to represent the value of a life annuity. Instead the actuary in his calculation allows for the chance that the individual in question will depart one way or the other from the average, i.e. will not live for the average period by which people of his age survived that age. The error of Sir Gordon Willmer was repeated by the Court of Appeal in Auty v. National Coal Board. 62. In regard to Mr Yu's submission of the future uncertainties, for example, the plaintiff might get married and cease work altogether, or she might discontinue work after she reached child-bearing age, it is recognised that the 1991 statistics showed that in respect of the age 30-59 group, the never married women in Hong Kong had average monthly earnings between $6,500 and $8,100 and the ever married women in similar age groups had $6,300-$4,100 monthly earnings, decreasing with age. But considering the very large number of women workers in the Hong Kong labour force, examples which are readily observed are the presence of, particularly in recent years, the large number of women court staff and women lawyers, the traditional reservations about the working prospect of woman should be treated with some caution. 63. Furthermore, O'Connor L.J. in Housecroft v. Burnett [1986]1 All ER 322 at 345 approved of an earlier case in which it was held that in assessing economic loss, so long as no claim was taken of loss of marriage prospects in the award for loss of amenity, there was no need to reduce the multiplier from which would be appropriate had the plaintiff been a men. 64. In the present case, the Plaintiff is not making any claim under pain suffering and loss of amenities for loss of marriage prospect. Even if the actuarial evidence does not take into account such possibilities, it does not mean that the evidence of the actuary is somewhat faulted. 65. The U.K. Law Commission pointed out that increased use of actuarial evidence does not appear to cause delay, for example, in Scotland. As long as the basis of a party's actuarial evidence is disclosed and the other side can counter it; there is no distinction between this situation and the situation where the judge is assisted by a medical witness. 66. The Plaintiff introduced evidence showing that the discount rate of 4%-5% is not achievable in Hong Kong. Face with this evidence, to apply the conventional multiplier would mean that the plaintiff in a personal injury litigation would not receive the fair compensation. Lord Scarman in Lim Poh Choo at p.187E held that,
67. Implicit in this observation must be the need to assess the damage on a rational basis. It is not an answer to the problem by saying that the matter can be taken care of by prudent investment. As demonstrated by the evidence of the economists and actuary, even with prudent investment strategy, it is not possible to achieve a real return of 4%-5% in Hong Kong.
a. Real interest rate 68. Mr Philip T Wyatt is an economist with GT Management (Asia Limited). He has gathered data contained in the Consumer Price Indexes (CPI) namely CPI(A), CPI(B) and CPI (Hang Seng). These indexes are relevant for price inflation. He has also taken the interest rate data given by a leading commercial bank which was quoted by the Hong Kong Government. Based on the data, he gave evidence on the real rate of interest in Hong Kong since 1962. 69. Mr Wyatt said that in Hong Kong money in excess of HK$100,000 can be placed on deposit at highly competitive interest rates in the inter-bank market which is widely accessible to both individual and corporate depositors in addition to banks. 70. Between January 1962 to October 1993, Mr Wyatt estimated that the real rate of interest was 0.4%. This is derived from a 7.5% average inter-bank interest rate since 1962 and 7.1% per annum as the average increase in the various Consumer Price Indexes over the period. 71. For the period from January 1962 to March 1995, the real rate is 0.21% which is derived from a 7.39% average inter-bank rate and 7.18% per annum as the average increase in various Consumer Price Indexes. 72. Using a shorter period, namely, from July 1975 to March 1995, the real interest rate is - 1.84% which is based on the difference of average monthly three-month inter-bank interest rate of 6.73% and average increase of CPI at 8.57%. 73. For the period January 1985 to March 1995, the real interest rate is - 1.95% which is based on the difference of average monthly three-month inter-bank interest rate of 6.09% and the average increase of CPI of 8.04%. 74. Mr Wyatt recognised that the economic structure in Hong Kong between 1962-1975 was different from that of 1975-1995 but he was of the view that for statistical reasons, it is advisable to use a longer time frame in the calculation. He was of the view that the period from 1962 to 1995 is probably fairly representatives of the economic conditions that one might expect to see in 20, 30 or 40 years' time. 75. Mr Wyatt said that in Hong Kong, it would not be prudent for an investor to invest his entire financial assets in Hong Kong equities. Even some of the largest pension funds in Hong Kong, typically only invest 30% to 35% of their assets in Hong Kong. The remaining 65% to 70% is typically invested overseas. 76. Moreover, the Hong Kong Government Bonds market is at an early stage in its development. Exchange fund bills have only be issued since March 1990 and their range of maturities have been gradually extended from 91 days to 1 year. Government Bonds have an even shorter history. Two-year bonds were first issued in November 1991, and although plans have been announced to extend the range of maturities to five years, this have yet to be realised. Until the market develops further and has a longer trading history, it cannot provide a equivalent to the U.K. Government Gilt (or long term Government Bond) which acts as an bench mark for estimating real returns. One is therefore left with bank deposits and the real rate of return thereon. The real rate of interest being defined as the nominal interest rate less inflation. 77. As the Hong Kong dollar is pegged to the U.S. dollar, U.S. interest rates will continue to provide a good approximation to the Hong Kong dollar interest rates. 78. Using the long term real interest rate in U.S.A. as a check on the real interest rate for Hong Kong, one can see that the real interest rate is 2.69% per annum by using a ten-year U.S. Government Bond yield and the U.S. Consumer Price Index. While the result of using a short term interest rate (the rate on 91-day Treasury Bills) is 1.34% per annum. The mid-point of this two is 2.02% which is considerably higher than the Hong Kong rate of interest of 0.4% over the period 1962 to 1993 or 0.21% from 1962 to 1995. 79. The current inflation in Hong Kong is close to 10% and is widely forecasted to remain at this level over the coming year. It is not feasible to make any long term (i.e. five year) forecast on inflation, but in Mr Wyatt's view, the Hong Kong Consumer Price Index will continue to increase at a rate substantially in excess of the consumer price inflation in the U.S.A. over the next decade. This is because the Hong Kong economy tends, over time, to grow more rapidly than that of the U.S.A., and as the economy upgrades from manufacturing to services, one should expect the domestic price level to raise more rapidly than consumer price in the U.S.A. 80. The consequence of the Hong Kong dollar being pegged to the U.S. dollar is that the interest rates are not determined by the market force and would not, as is the normal situation, adjusted to levels which would provide lenders (or depositors) with a return which (a) compensate for inflation and (b) provides in addition with a further return of something in the range of 1% to 3% over and above the rate of inflation. b. Wage increases 81. Mr Wyatt also dealt with the wage increases over inflation. He illustrated the increase on a chart at p.64. His evidence showed that the increase of wages higher than consumer price or interest rates occurred in 1976 to 1979. The wage increase was roughly in line with inflation and interest rates in 1980 to 1986. It then rose more rapidly than Consumer Price Index or interest rates from the end of 1986 to the end of 1990. 1991 and 1992 data shows wages growth in line with inflation but he expects the decline to be only temporary. 82. Mr Wyatt was of the view that wage increase will outpace both inflation and interest rates over the years ahead because of the economic environment in Hong Kong which is likely to incorporate the following elements:-
83. Mr Wyatt is further of the view that the high wage level is due to the fact that, first of all, the manufacturing wages have continued to be relative high because there is a strong demand for people in this industry; secondly because of the growth in China and in the Pacific Rim which means that Hong Kong has been operating at full capacity in terms of servicing these economies. Future outlook 84. Mr Wyatt was asked about the impending changes of sovereignty in 1997, with China rapidly developing itself and with the immediate problems facing Hong Kong in terms of unemployment, drop in retail sales, decline in the property market in terms of drop in rentals. He was asked whether these have a significant impact in the years to come. Mr Wyatt was of the view that with the linked exchange rate which will continue to remain and with the implication that the interest rates in Hong Kong will continue to match those in the U.S.A., and China will continue to demand the services provided by Hong Kong in relation to the Chinese international trade, Hong Kong will continue to operate at its capacity constrained to the extent that there will be always more demand than it is able to satisfy. He said that the rate of real GDP in Hong Kong wilt move in cycles as China moves in cycles but in the long term, he would not expect Hong Kong's real GDP to average a substantially lower rate. 85. Mr Wyatt said that the recent news about unemployment rates in Hong Kong going up is not an indication of the substantial downturn in the economy. He said that the unemployment rate which is at a low single digit rate is, probably explained by a certain amount of recorded unemployment when people switched jobs. There has been a fair amount of switching jobs given the reduction in manufacturing and increase in the people working in the service industries. 86. Secondly, as to the drop in the rents of properties, he was of the view that the rate of inflation as measured by the indexes set out in his chart has not increased substantially during the time in which rent was rising and has not fallen off substantially over 1994 during which time rent has been on the decline. 87. Thirdly, there has been a decline over the past year or six months on retail sales both in terms of value and volume of sale. He said that in itself is partly indicative of the reduction in purchasing power by the Hong Kong households as a result of increase of interest payments on their debts. 88. Fourthly, he said the relocation of the service industries from Hong Kong to China will take quite a long period of time, over period of 5 to 10 years. Further the relocation of service industries to China because of cheaper labour wages has to be offset by the costs of training new staff. 89. Mr Wyatt emphasised that the reason people chose Hong Kong for their business activities is mainly due to the relatively low taxation structure and the relatively easy environment, in terms of government controls. 90. I accept Mr Wyatt's evidence. There is no contrary evidence adduced by the Defendants on the matters covered by Mr Wyatt. 11. Suitors Fund 91. The relevance of Mr Wyatt's evidence is, apart from his evidence regarding the past economic trends in Hong Kong and what he considers to be the future movement, in relation to the investment of the funds lodged in court under the Supreme Court Suitors Fund, Damages awarded to litigants under disability are put in the Fund. 92. In his letter dated 25th April 1995, the Registrar of the Supreme Court stated that funds paid into court are grouped together for investment purpose. They are placed in Hong Kong dollar deposits of various periods, ranging from overnight deposits to three-month fixed deposits. Interest is earned every day. From these deposits interest will be credited to the balance of component cases proportionally based on the weighted average interest rate. An indicator of the average rate of returns over the past 12 months is provided by the rate of interest calculated on the following days:-
93. As indicated earlier, based on an average of 7% p.a. inter-bank interest rate, the real interest rate, after taking into account the average increase in Consumer Prices, ranges from - 1.84% to 0.4%. In the present case, the Plaintiff's compensation, unless ordered by the court to be invested in some other way, will be put into the Suitors Fund. If the award is based on the conventional multiplier, the fund will be exhausted long before the end of the period intended to be covered by the lump sum payment. 12. Actuary Evidence : Mr Danny Quant a. Economic data 94. Mr Danny L. Quant is an actuary by profession. He is the President of the Actuary Society in Hong Kong. His firm is Wyatt Co (Hong Kong) Limited. 95. Mr Quant said that it is not appropriate to adopt the real return of approximately 4.5% used by the English Courts in calculating the multiplier because past experience in Hong Kong shows that it is not possible to achieve such a high real rate of return on conservative investments. In Hong Kong, in the past 10-12 years the following trend can be observed:-
96. The CPI (Hang Seng) is a measure of price inflation for families who earn something in excess of $20,000 a month. The CPI(A) and CPI(B) also measures of price inflation for families who earn at various amounts. Basically, CPI(A) is taken as the average household and CPI(B) are the less wealthy of households. 97. The Nominal Wage Index is based on data collected by the Hong Kong Government of employers in respect of their increases in employees' wages and the foundation is based on various groups of employers such as hotels, banks, financial services, and a ratio of the wage of this year and last year was complied and that index is representing the increase in wages over a 12 month period. 98. Mr Quant was of the view that it is quite important to take as long a period as possible to average out fluctuations so that one can fairly take account of the good years and bad years as well in coming up with an average. 99. In respect of RDS Survey, the information was collected from 200 employers in Hong Kong covering 35,000 employees. The employers are a mixture of trading companies, utility companies, manufacturers, hotels, banks, insurance companies and others. The information consisted of compensation and benefits provided to various types and grades of employees. The database is updated continuously. RDS takes the average of the salary increase for each participating company. Each index is based on the average of these averages. 100. Mr Quant showed on a chart at p.99 of the trial bundle that in Hong Kong, among the various types of investments, cash is a very low risk asset with a corresponding low return. Hong Kong equities will bring in the highest return but is the most volatile of all the investments which include equities in Singapore, U.S., Germany, Australia, U.K. and Japan; and also of bonds of U.S.$, Yen, U.K. Pound, Dutch Mark. 101. Mr Quant recognised that more equity-based investment portfolios had produced returns in excess of inflation. A summary of the difference between the rate of inflation (price and salary) and investment returns from various investment strategies over similar time periods can be seen in the following table (p.94 of bundle):-
b. Pension fund returns 102. Mr Quant said that in this case, the assets as represented by the damage will be invested for many years (perhaps for longer than 40 years). Meanwhile, the liability to provide an income is affected by inflation. These are features of a retirement scheme. It is reasonable, therefore, to adopt a strategy for a retirement scheme with a slight modification. In his report, Mr Quant dealt with the other types of investment and the risks associated with them. 103. In excess of 90% of the companies that RDS surveyed have provided a provident fund or retirement plan for its employees. The Registrar of Occupational Retirement Schemes have been collecting information on the number of people covered by retirement schemes and it is generally accepted, although not statistically proven, that about one third of workforce are covered by retirement plans. This is about 800,000 to 900,000 people out of a workforce of 2.9 million. 104. Wyatt Co. (Hong Kong) Limited conducted regular annual surveys from 1983 to 1994 of the results of typical retirement fund portfolios in Hong Kong. The number of pension funds covered in 1983 was 85 but by 1994 the number increased to 258 companies. The result of the 1994 survey on Annual Return is set out in the following table:-
The annualised return of the pension funds survey is set out in the following table:-
105. The median annualised return of the smaller sample of the 85 companies from 1983 to 1994 is 16.3%. The median weighted annualised return of the 258 companies is at 15.9%. c. Calculation of net return 106. On average, the strategy adopted for Hong Kong retirement scheme has been equity 66%, bonds 21%, cash 13%. Because a disable plaintiff requires regular income and hence drawing from the fund, whereas a pensioner does not draw until he retires and most pension funds are receiving more in contribution than they are paying out as pensions, it would be more appropriate in the present case to structure the investment of the fund to be awarded in this case as follows: 50% equity, 40% bonds and 10% cash. Because of the altered composition of such a fund it would result in an investment return of 0.7% lower than that of the average pension fund. 107. The cost of investment management and expenses of trustees in the proper administration of a pool of assets maintained for a beneficiary will effectively reduce the gross rate of investment return. For example, a fund in the order of HK$5 million will incur investment management fees of 1% per annum of the assets. Trustee custody and associated costs could be of the order of 1/2% per annum of the assets. 108. A net real discount rate of 1.4% is achieved by adopting an MIP type strategy against salary inflation as measured by RDS:- 109. 15.9% - 0.7% - 12.3% - 1.5% = 1.4% p.a. 110. It should be pointed out that Mr Quant and his firm have expertise in advising clients in setting up pension funds and as to the mix of investments in a portfolio to achieve their objective, although not upon the individual shares to buy in each category. d. Calculation of multiplier 111. Based on actuarial valuation method, Mr Quant gave evidence as to the various multiplier in relation to the discount rate. The actuarial formula involved an mathematical calculation so as to calculate the proper lump sum payment to represent a future earnings loss. The method used by Mr Quant is set out at pp.91-92 of the bundle. 112. The formula included the "real rate of return" which comprises of the "annual rate of investment return" and the "annual rate of future earnings increases". These two elements are those referred to in Cookson v. Knowles. The Multiplier Tables
e. Difference of the Hong Kong tables and Ogden Tables 113. Difference between the Hong Kong tables and the tables in the Ogden Tables is accounted for by the different mortality assumption used. In the Ogden Tables, mortality assumptions are taken from the English Life Table No.4 (ELT 14) which are based on the mortality experience of a general population of England and Wales for the period 1980-1982. In the Hong Kong tables, the mortality assumptions are taken from the Hong Kong Life Tables 1991 (HKLT 91) which are based on the mortality experience of the Hong Kong general population during the period 1987-1991. 114. The effect of using Hong Kong mortality experience is to increase the multiplier marginally, for example, at age 16 and a discount rate of 3% by using a "To age 60 multiplier", the difference is:-
The result is a 0.4 increase in the magnitude of the multiplier. 13. Criticism of investment strategy 115. Mr Yu described it as a "myth" perpetrated by the Plaintiff's experts in that a particular investment must be proper for the particular plaintiff. He submitted that if that were right, then the court will in future have to receive evidence in every case of the means of the plaintiff and what will be the rate of return on a prudent investment designed for that particular plaintiff. This will make the conduct of future personal injury cases protracted and the law uncertain for anyone to properly advise or negotiate settlement of claims. Mr Yu argued that this is not the law is apparent from the speech of Lord Diplock at p.571E in Cookson v. Knowles:-
116. Lord Fraser at p.577 stated that:-
117. The views of the Law Lords are of course correct. However, the very reference to assumed annuity and prudent investment policies will necessarily require the court to consider the various types of investment returns. Further, in order to arrive at a fair compensation for the Plaintiff, reference must be made to the various types of investment returns. The Plaintiff is under disability and if the money is simply put into the Suitor Fund, the return is based on interest from bank deposits. The evidence shows that it will only achieve a real return of less than 1%. Hence one must consider an investment scheme which is aimed at achieving a net return over and above salary inflation which will match the income loss for which the plaintiff is being compensated. 118. In the absence of securities such as the U.K. Index-linked Government Stock which makes it possible to match the receipt from the investment of a lump sum almost precisely to the income loss for which the plaintiff is being compensated, and leaving aside volatile investments such as Hong Kong equities and illiquid investments such as real property in Hong Kong, one must regard to a certain mode of investment vehicle in order to ascertain the necessary discount rate and a multiplier appropriate to that discount rate. 119. If, as it is indeed demonstrated to the satisfaction of the court, that it is wrong to assume that the real rate of the return in Hong Kong is 4%-5%, then the court cannot ignore the true position. If evidence on the investment return is required in personal injury cases, then this will be an inevitable result of dealing with the real position. 120. Lord Salmon at p.574A of Cookson v. Knowles pointed out:-
121. A departure from the conventional multiplier approach would only be necessary where over a long period of time, investment rates are shown not to justify the assumptions implicit in the conventional multiplier. This does not occur every time when the inevitable short term fluctuation occurs as in the Peter Zee situation. 14. Hong Kong equities and real property 122. In regard to Mr Yu's argument that a high rate of return could be achieved by purchasing blue-chip Hong Kong equities and purchasing a house in Hong Kong, either of which he say could not be regarded as imprudent, this will ignore (i) the need for investment diversification, (ii) the need for professional advice to achieve a varied but conservative portfolio and (iii) the Plaintiffs need on a periodical basis over the rest of her life to have access to income which involves the need to have higher yielding fix interest/cash investments. 123. In respect of the Hong Kong stock between 1988 to 1994, the average return had been in the region of 23 to 25% but with a volatility of +/-30%. The 25% achieved between 1988 and 1994 includes 1993 when the Hong Kong Stock Market increased by 120%. In 1994, the result was significantly negative. In respect of real property, the problem is that it is illiquid. One just cannot sell part of a property. 124. Furthermore, if the Plaintiff had invested in blue-chip equities some two years ago, she would have resulted in substantial loss in value of such investments, since she had need to realise for cash over the past 12 months. Similarly, the property market suffered a downward movement over the past 12 months or so. 15. Appropriate to use pension fund strategy and the median returns 125. In the absence of index-linked securities, a pension fund type of investment appears to be the most appropriate investment vehicle for the court's consideration both in terms of assessing the real return of investment and also as an investment strategy for a plaintiff under disability. The return from this type of investment is quite high and at the same time it caters for the long term needs of the recipient. The risk considerations appropriate to a pension fund and a disabled plaintiff are analogous in that a "conservative" investment policy is the appropriate one. 126. Mr Quant agreed that individual items like the investment return and the salary inflation have been historically volatile and trying to predict them with accuracy is difficult. However, what is easier, although still difficult, is to predict the difference between the two of them. Predicting the difference between salary inflation and investment returns has been easier than predicting the individual components and this has been fundamental to the funding of retirement plans for many years, not just in Hong Kong but in the U.S., U.K. and elsewhere where they have similar type of retirement plans. The mechanism to fund a retirement scheme on the basis of the gap has withstood the test of time. 127. The return of pension funds both in Hong Kong and in United Kingdom over a long period of time again show that the return was less than the 4%-5% assumption. Based on empirical evidence, the investment returns is around 1%-2% above salary inflation. 128. Mr Yu argued that even based on the evidence of Mr Quant, a return of 16.3% from the MIP type of investment is achieved. Less the nominal wage index of 9.5% and minus the 1.5% for administrative fees, one would arrive at a net return of 5.3%. 129. In my view, 16.3% is obviously not the appropriate figure because it is only the median return achieved by the 85 companies whereas the 15.9% is the weighted average of the median returns of 258 companies. Furthermore, based on the adjusted portfolio with a higher proportion of cash, the return is to be expected to be lowered by 0.7% p.a. Hence the return should be 15.2%. This figure can be taken as the nominal return of a prudent investment in Hong Kong. 16. Rate of earning increase 130. In order to ascertain the real return, it is necessary to ascertain the rate of earning increase. The rate of earning increase over the past 12 to 15 years was testified to by a number of witnesses. Mr Quant said that between 1984 and 1994, the salary inflation is 12.3% p.a. as measured by the RDS. 131. Dr Kelly Busche said the annual average of per capita payroll increases for the period 1980 to 1994 as 13.2%. This is shown in his supplemental report at p.82-6 of the bundle. In arriving at this figure, he relied on the percentage per capita payroll increase of seven economic activities in Hong Kong, namely, mining/quarrying, manufacturing, electricity/gas, wholesale, transport, finance and community. The statistics were obtained from the Hong Kong Census and Statistic Branch which produced series called the Nominal Payroll Per Person and the Real Payroll Per Person which is adjusted for change for inflation in the Consumer Price Index (A). The simple average percentage increase of this seven industries between June 1990 and September 1994 is 500. The annual nominal per capita increase is 13.2%. 132. Dr Huang Guobo, an expert called by the Defendants arrived at a figure of 4.33% as the simple average of the real payroll growth rate of the same seven industries between 1983 and 1993. He agreed under cross-examination that in order to arrive at the nominal payroll growth rate, the simple average of the inflation growth rate of 8.1% under the CPI(A) Index between 1983 and 1993 can be added to the real growth rate. Adding up these two figures, the simple average of the increase in the nominal payroll increase is 12.4%. This is comparable to the 13.2% suggested by Dr Busche. 133. Dr Huang said he preferred to adopt a weighted average. He said the payroll index was unreliable because of the large fluctuation changes in the categorisation in March 1991 and there was no weighting. In cross-examination, Mr Griffiths suggested to Dr Huang that the weighted average for the period 1983 to 1994 is 12.1% p.a. Dr Huang said that the figure might be between 9% and 10%. 134. While the method of calculation of the weighted average was only put during cross-examination and not referred to in the evidence of Dr Busche, I am satisfied that the figure of 9% to 10% as suggested by Dr Huang could not be correct because firstly, the lowest simple average in his Table at p.150-18 was 2.81% which is of the mining/quarrying industry, adding the CPI inflation of 8.04% the figure is already 10.85%. Moreover, mining is a declining industry, hence, a lower weighting should be to it given than others. The next lowest figure is 3.65% for the finance and insurance group. Given the rate of inflation, the average is 11.69%. The remaining five industries all averaged in excess of 12.43%, some going up as high as 13.8%. Consequently, it is impossible for any weighted average to be anywhere near 9% to 10% as suggested. 135. Dr Huang's suggestion that the wage growth rates rather than the payroll growth rates be used is in my view wrong. I shall deal with this in detail later on. 136. Mr Griffiths submitted that the average of the various figures called by the experts is about 12.5% and the court can safely accept that figure as appropriate to wage inflation in Hong Kong over the past 12 to 14 years. No alternative figure was suggested by the Defendants. 137. I am satisfied that for the past 12-14 years the rate of earnings increase exceeds 10% p.a. and I can safely use the average figure of 12.5% as the appropriate wage inflation. The period covered is long enough to take into account cyclical fluctuations. 17. The appropriate discount rate in Hong Kong 138. In assessing the real return rate, earning or salary inflation rather than price inflation is the appropriate measure because salary inflation has been higher than price inflation which is a reflection of an improving standard of living. If one is trying to provide a similar benefit that might have been earned in the normal course of events, then salary inflation is the right measure of protection for the future rather than price inflation. 139. Based on the figures, it is shown that for the past 12 years or so the position in Hong Kong is that:-
140. In the case of a person under disability as is the Plaintiff in the present case and the size of the damage requires management, the above figure is to be deducted by another 1.5% due to the cost of trustee and investment management, leaving a net rate of 1.2%. 141. Although the matter cannot be of an exact mathematical calculation, I am satisfied that 2.7% (or 1.2% where the damage is required to be managed) can be regarded as the appropriate investment return or discount rate in Hong Kong for the purpose of calculating the multiplier. The materials upon which this figure is arrived at has been tested in cross-examination. The 15.9% median return of pension funds has already taken into account the two extremes in returns : the high return in 1993 and the negative return in 1994. The figure of 2.7% is not too far off from the figure suggested by Mr Quant of 1.4% which has already taken into account the administrative charges. 142. Also the figure of 2.7% is consistent with the survey carried out by the UBS Asset Management Limited, a unit of the Union Bank of Switzerland. In its publication entitled "The Pension Fund Indicators" published in August 1995 (Exhibit P3), at p.21, it is stated that,
At p.23, it is stated that,
18. The correct multiplier 143. The present Plaintiff has the normal life expectancy of a girl in Hong Kong aged 16. The question of mortality is reflected in the actuarial tables and this can be applied as calculated by Mr Quant to generate a multiplier appropriate to a girl of that age. The workers in Hong Kong usually retires at age 60, although some have continued to 65. 144. While under the Ogden Tables, a further discount is to be applied in respect of other contingencies such as unemployment and illness, there is no similar studies being carried out in Hong Kong of such contingencies. Mr Griffiths, however, accepted that a discount is to be deducted from the multiplier to reflect the viciccitudes of life. In Kemp & Kemp, para.7-018 note 59, a further discount of 10% from the multiplier is chosen. This is the approach adopted by the Supreme Court of Canada. However, Professor Street, in "Principles of Damages" suggested that the appropriate figure is between 2% and 6% and the English Law Reform Commission in its Working Paper No. 27, 1970, Appendix B, para.27 suggested a discount ranging from 2%-4%. 145. I consider that a discount of 10% in Hong Kong is appropriate. Based on Mr Quant's Age 16 Multiplier for Female, the approximate multiplier of 2.7% is 27 and the 1.2% multiplier is 34. As the 1.2% discount rate is to be adopted in the present case, the 34 multiplier is to be discounted by another 10% for viciccitudes of life and a further small discounting to reflect the earnings which would not start until 18 or 20. The appropriate multiplier in the present case is 30. 19. Cross-check 146. In O'Briens Curator Bonis v. British Steel Plc [1991] SLT 477, Lord President Hope held that:-
147. The same observation will apply to Hong Kong. It may be useful to cross-check the multiplier arrived at this case before the deduction of 10% with the Multiplier Table 6 of the Ogden Tables, Table 6 deals with multipliers for loss of earnings to pension age 60 (females) at the rate of interest of 1.5%. At the age of 16, the multiplier is 31.7%. Compare this with the multiplier of 34 at a discount rate of 1.2%, the figure of 34 is not too far off the mark. 20. Multiplicand 148. As indicated in the later part of this judgment, I am satisfied Pui Ki will be totally unemployable in the future. 149. In Jamil Bin Harun, the Privy Council stated that:
150. In assessing the loss of earnings, the court is entitled to assume the average earnings in the absence of positive evidence. In the present case, given the background in which Pui Ki was brought up, her schooling and the presence of her supporting parents, it is not out of her reach to attain at least average earning. In fact, it is highly probably that she would have earned above average earnings if not for the accident. With the opening up of the tertiary education in Hong Kong, it is not too difficult for students to enter into tertiary education. 151. Mr Wyatt in his report stated that the all employees nominal wage level as of March 1993 was $90,660 per annum. Given inflation, this would be about $113,000 in May 1995. The average monthly earning of the clerical and secretarial workers as of September 1994, as indicated in the half-yearly report of wage statistic is about $8,540. Given inflation since that period, the current figure is about $9,300 per month. 21. Award for loss of future earnings 152. I am satisfied that the sum of $9,300 can be taken as the monthly earning that the Plaintiff would be able to earn. I am further satisfied that in Hong Kong, other than civil servants, most of the employers are prepared to pay and in fact paid 13 months wages to employees. The majority of companies in Hong Kong provide a Chinese New Year bonus. According to the RDS survey of 205 companies, 92% provided either 13 months, 14 months or 15 months wages. The majority of them, i.e. of the 92% provided 13 months wages to the workers. The multiplicand is $9,300 x 13 = $120,900 per annum. The award for loss of earnings will be $120,900 x 30 multiplier = $3,627,000. 153. No deduction should be given for child bearing because pay maternity leave is mandatory in Hong Kong and there is no further deduction for the prospect of Pui Ki getting married and ceasing work because loss of prospect of marriage is not sought by her under the award for pain suffering and loss of amenities. IV. Pain suffering and loss of the amenities 1. Reasons for increase 154. The Plaintiff seeks an increase of the award under this head from the existing guidelines. The argument is based on two grounds. Firstly, an increase should be made by reference to the UK awards because the economic and social conditions of Hong Kong and U.K. are now about the same and there is no reason why there should be a disparity in the amount of awards to be given to a victim in an accident. Secondly, the Court of Appeal in Lau Chi Ping revised the awards on the basis of wage increase, whereas the revision in Chun Yat Nam was simply on price inflation. At the very least, the awards in Lau Chi Ping should be increased by reference to wage inflation. 2. Economic and social changes in Hong Kong i) Dr Kelly Busche 155. Dr Kelly Busche, a lecturer in the School of Economic and Finance at the University of Hong Kong, has made a study of the economic and social conditions of UK and Hong Kong. Based on the comparison, he is of the view that the economic and social conditions in Hong Kong are now at least as good as those in the U.K. The economic conditions are certainly better in Hong Kong than in the U.K. A. Economic Conditions 156. Dr Busche compares the economic conditions of Hong Kong and U.K. by reference to the Gross Domestic Product (GDP) per capita, Gross Domestic Product, Purchasing Power Parity (GDP, PPP) per capita and lowest quartile earnings. The source material is based on available government statistics. a. Gross Domestic Product per capita 157. Dr Busche compares the GDP per capita for UK and Hong Kong in respect of the period 1980 to 1994. The GDP is all the income produced by a country within its geographical boundary. The per capita GDP shows the average income of the population. Table: Per capita GDP, HK and UK, 1980 - 1994
The table shows that the per capita GDP in Hong Kong has been growing from figures which are less than the UK per capita GDP to more than the UK per capita GDP in a fairly systematic rate. In 1980 the average income in Hong Kong was about half of that in U.K. In 1992, the Hong Kong per capita GDP overtakes that of U.K. In 1994, the income per capita in Hong Kong is 1.4 times that of U.K. The comparison is based on nominal currency exchange rates i.e. market exchange rates. b. Gross Domestic Product Purchasing Power Parity (GDP. PPP), per capita 158. Dr Busche said that the problem of comparing the economic activities of different countries is with the existence of different currencies. To deal with these problems, the United Nations started the International Comparison Program (ICP). The economists, instead of measuring the economic performance of different countries on a pure exchange rate basis, built a program by measuring the Purchasing Power Parity of different countries. The comparison is to look at the real amount of consumption that is available for the nominal number of dollars or pounds or whatever currency. To put it simply, the programme is to see how a nominal unit of money can buy the same type of goods and services in different countries. The figures are available from the Harvard University. The data that are available are between 1980 and 1992. No data is available from the ICP program for 1993. For 1994 - 1995, Dr Busche obtained the information from the Asia Magazine which was based on data provided by another publication called Euromoney. Euromoney is published each year and contains a compendium of IMF World Bank figures. 159. Two economist, Robert Summers and Alan Heston, were engaged in the compilation of the files of ICP. Dr Busche referred to an article by them entitled "The Penn World Table (Mark 5): and Expanded set of International Comparison 1950-1988" which gives a summary of the comparison programme. The article stated, inter alia, that, "The Penn World Table displayed a set of national accounts, economic time series, covering a large number of countries. Its unique feature is that its expenditure entries are denominated in a common set of prices in a common currency so that real international quantity comparisons can be made both between countries and over time. In addition, it presents data on relative prices, within and between countries and demographic data and capital stock estimates as well." 160. The comparison of the real consumption power of various countries are set out in the following table. Table: Per capita GDP, PPP, as percentage of US, 1980-95
161. From this table, the trend shows that from 1980 to 1995, the real amount of consumption available to the people Hong Kong has increased from a figure in 1988 which is 10% less than the real consumption power available in the U.K. to a figure in 1995 which is 22% higher than that of the U.K. The parity was reached in 1985. c. Lowest quartile income 162. Dr Busche compares the lowest quartile income of the population in U.K. and Hong Kong. For the U.K. he used survey data that are derived from approximately 40,000 persons, 25,000 of whom reported income above the single person's allowance level. The Hong Kong data on employment income is from a survey of approximately 41,000 persons and reported without any income restriction. Because the numbers of persons with income below the yearly cutoff are not available from U.K. statistical tables, lowest quartile earnings cannot be read directly from those tables. Dr Busche estimated a lognormal income distribution for the two countries and calculated the lowest quartile earnings after income tax. The comparison is set out below. It shows a higher income in Hong Kong. Table: Earnings, lowest quartile workers.
163. On a scale of earning of 1-100, the lowest quartile earnings is the one at No.25 from the bottom of the scale. It does not represent the average income from No.1 - No.25. The figure arrived at by Dr Busche in respect of the lowest quartile income of these two countries are based on estimates. It is based on the economic theory called "lognormal distribution". The theory assumes that the distribution of income is not equal among the population: there is a large population which has relatively low incomes and there is a small group of people with higher incomes. This distribution is relied by works on labour economics, econometrics and statistics which describes the distribution of income and wages of a population. 164. In the U.K., only incomes above £3,445 are counted in the published data. Dr Busche estimated a lognormal income distribution for the U.K. and calculated the lowest quartile earnings after income tax to be £5,274 for the fiscal year 1992/1993. After adjustment the lowest quartile is £5,480 for 93/94. As the U.K. data only shows income above a certain level, it means the U.K. lowest quartile income is overstated. 165. The Hong Kong income for the purpose of the comparison is understated because no account is taken of any benefits taken in kind such as medical insurance or pension or superannuation. Also earnings from the employment data do not include interest or dividend income which is not taxable in Hong Kong. d. Wage increase in Hong Kong 166. Dr Busche's study is that the average nominal annual percentage increase of payroll per person in Hong Kong for the years 1980 to 1994 is 13.2%. The figure for 1988 to 1994 is 14.1%. The average nominal total increase for the period from 1980 - 1994 is 500%. 1988 to 1994 is 133%. Between 1994 and 1995 another increase of 14.2% should be taken into account, hence the wage increase over the period from 1988 to 1995 should be about 150%. The real increase (i.e. after deduction of inflation) of payroll person between 1980 and 1994 is 4.3%. During the same period, the real wage growth rate in U.K. is less than 2%. The study can be illustrated in the following table which is based on seven economic activities in Hong Kong. Table: Increases of payroll per person, selected industries
B. Social Conditions 167. Based on available statistics, Mr Busche also makes a comparison of the social conditions of Hong Kong and U.K. a. Health 168. Relative to the UK, Hong Kong people live longer, they have more doctors per capita, lower infant mortality and lower maternal mortality. As of 1992, men and women had life expectancies of 74.8 and 80.5 years respectively in Hong Kong, and 73.6 and 19 years in the UK. Infant mortality in Hong Kong is 4.7 infant death per 1,000 births. The U.K. position is 6.33 per 1,000. Maternal mortality is also higher in the U.K. at 0.07 and 0.4 per 1,000 live births respectively. 169. Hong Kong and UK statistics for "doctors on the list" are 1.07 and 0.53 per 1,000 population. 170. Dentist per 1 ,000 population is similar in the UK and Hong Kong at 0.33 and 0.27 respectively and hospital beds are only slightly lower at 4.68 per 1,000 in UK and 5.02 per 1,000 in the UK. 171. Government expenditure on health per capita in Hong Kong is less than half the UK expenditure. This is understandable because of the younger Hong Kong population. Furthermore, the Hong Kong data includes elements of underestimation in that many costs are not included in the final figure such as employment benefit of care workers and costs of maintenance, heating, air-conditioning of the hospitals. b. Education 172. At all categories, Hong Kong school children have higher attendance rates than the UK children: the 12 - 16 year group in Hong Kong has an average attendance rate of 93.6% and the UK group has an average of 87.9% with 16 years old in the UK attending at only 43.8%. By aged 17, it is 58.3% for Hong Kong and 28% for the UK. At 18 years, the percentage are 58.3% for Hong Kong and 4.4% for the U.K. 173. In 1980, about 2.5% of the relevant age group had access to first year, first degree, higher education places in Hong Kong. By 1994, that had increased to more than 18%. The number of full time students in higher education in Hong Kong is 9.3 per 1,000 population while in the UK that number is only slight higher at 11.6. The Hong Kong Census and Statistics Department estimated that 8% of the population aged 18 and over with higher education received that education outside Hong Kong. c. Crime 174. Robberies reported by Hong Kong police in 1993 are 137 per 100,000 population and the figure for the U.K. 1993 is 22% lower at 112. Other crime rates in Hong Kong are lower than in the UK. Violent crimes of murder, manslaughter, attempted murder and wounding are reported in Hong Kong at the rate of 21 per 100,000 population. Comparable number of police reports of these crimes in UK are not available but the rate of convictions was 83 per 100,000 for murder, manslaughter, and wounding. Reported rapes and indecent assaults in Hong Kong are 19 per 100,000 population and the figures for U.K. (1993) is 62 per 100,000 population. Burglary is lower in Hong Kong at 225 per 100,000 as compared to 2,643 per 100,000 in U.K. (1993). 175. The comparison made by Dr Busche can be illustrated in the table below:- Table: Social conditions
Of the social indicators referred to by Dr Busche, 13 of them favoured Hong Kong and only 6 for U.K. d. Pollution 176. Ruscon and Walls in their publication called Vehicular Emissions and Control Policies in Hong Kong, Contemporary Economic Policy (January 1995), stated that in terms of air quality, Hong Kong compares favourably to many cities in other industrialised countries and is far better than most polluted cities. e. Householder with consumer durables 177. The percentage of households with washing machines in Hong Kong is the same as the UK. In the case of colour TVs , telephones and refrigerators, Hong Kong households are more likely to own them. Data is taken from the 1981 and 1993 statistics in U.K. The Hong Kong data is that of 1982 and 1989. Table: Percentage of households with consumer durables
ii) Dr Huang Guobo 178. Dr Huang Guobo is an Assistant Professor in the Department of Economics and Finance of the City University of Hong Kong. He gave evidence on behalf of the Defendants. 179. Dr Huang in his report stated that the real exchange rate of the Hong Kong dollar against the US dollar derived by using the CPI has depreciated significantly and steadily over time. The Hong Kong dollar was undervalued before 1980s and has been overvalued significantly since then. Assuming that the US dollar and the British pound exchange rate was in line with the purchasing power rate, then if converted into the British pound by using the nominal exchange rate, the Hong Kong income level would be underestimated before the late 1980s and would be over estimated since then. He suggested Dr Busche has far overstated the rate that the Hong Kong income catches up and exceeds the UK income which is based on nominal exchange rate. 180. Dr Huang said that there is no doubt that Hong Kong's economic and social conditions improved significantly over the early 1980s. However, the development speed of the HK economy in the 80s and 90s is very different; in fact, the Hong Kong economy has reached a stable stage and has slowed down in recent years. In light of this, comparison should be made between the before and after late 80s periods to find out the improvement of economic and social conditions since the late 80s. Dr Huang referred to the following table to illustrate his point. Table: The annual growth rate of GDP and inflation in Hong Kong
181. Dr Huang stated that while the per capita income for the population is an important indicator of the economic condition, one must also consider the question of working hours, working pressure and safety. In Hong Kong, labour work longer time and work under greater pressure than labour in UK. In 1992, the average working hours per week for all persons was 37.1 in the U.K. In Hong Kong, the median hours of work in selected economic sectors was 46 per week. Working overtime in Hong Kong is a common phenomenon and often the labour do not get compensation from the extra work. Labour in UK generally enjoyed a more relaxing working environment. Safety of work is lower in Hong Kong. In occupational injuries in 1993, there were 287 fatal injuries and 67,375 non-fatal injuries in Hong Kong for an employed labour force of over 2.8 million. In contrast there were only 339 fatal injuries and 18,053 major injuries in the UK for a work force in employment of over 25 million. 182. An added indicator is the home ownership and housing cost which are essential for living home. Ownership in Hong Kong is lower than that in the UK. In 1992 owner-occupiers ratio in Hong Kong was 43.5% whereas 2/3 of all dwellings in the UK were owner occupier. About half of the population in Hong Kong lives in Government owned or subsidies housing. In evidence, Dr Huang said that 40% of them are living on rented government housing. A considerable proportion of such housing, particularly that constructed a decade ago, is very small, dwelled by too many people, lack basic amenities and would be regarded as unfit for human habitation in the UK. 183. Dr Huang said that the increase in per capita GDP based on the Purchasing Power Parity between 1988 to 1995 from 1.13% to 1.22% was because of the fast growth rate of real estate sector in Hong Kong between 1988 to 1993. a. Real payroll growth rate 184. In order to measure the real payroll growth rate in Hong Kong, Dr Huang used the nominal payroll data and reduced it by the Consumer Price Index, CPI(A). He relied on the real indices of payroll per person engaged on seven major business activities, (the same seven used by Dr Busche) and obtained 4.33% as the simple average of the growth rates from 1983 to 1993. b. Wage growth 185. Dr Huang referred to the following table in his reports showing the wage growth rate, overall and by industry, for ail selected occupations in Hong Kong. Table: Wage Growth Rates overall and by Industry for All Selected Occupations in HK (%)
186. Dr Huang also referred to the salary growth rate overall and by industry for managerial and professional employees in Hong Kong in his report. Table: Salary Growth Rates Overall and by Industry for Managerial and Professional Employees in HK (%)
187. He also referred to the real earning growth rates in the U.K. in the following table: Table: The real earnings growth rates in the UK (%)
188. Dr Huang said that between 1983 and 1993, the average of Hong Kong's overall real wage growth rate is only 1.5%, and the average of Hong Kong's overall real salary growth rate for managerial and professional employees is 2.4%. In contrast, during the same period, the average of U.K.'s real earnings growth rate is 2.47 and the average of U.K. real hourly earnings growth rate is 2.98. 189. He said fluctuation in the growth rates of the wages is much smaller and the average rates are much lower than the rates obtained from the payroll indices. Regarding the differences in the payroll and wage rate, he suggested that the difference in the growth rate over time is explained by the working hours. He said the wage index reflect better the true hourly earnings of the employees. 190. Dr Huang said that the payroll index adopted by Dr Busche is unreliable because large fluctuation had changed in the categorisation in March 1991 and no weighting was done. 191. Payroll refers to wages, salaries, bonuses, gratuities, commission, allowance and cash payments in other forms paid directly to all employees. Profits are excluded. Payroll per person engaged is derived by dividing the total monthly payroll by the total number of persons engaged. 192. Wage rates are defined to include basic wages and salaries, cost of living allowance, meal allowance and meal benefit, commission, tips, good attendance bonus, shift allowance, guaranteed year-end bonus and other guaranteed and regular bonus and allowance. Wage rates are usually expressed as time rates which refer to the amount of money paid for a nominal time of work and relate to a time unit, such as an hour, a day, a week or a month. 193. The wage indices provide a measure in change in the price of work and the indices of payroll per person engaged is a measure in changes in average earnings of workers. 194. Dr Huang's evidence is that whilst one can always start with an assumption of lognormal distribution, unless one can find empirical evidence to support the assumption, the assumption cannot be used in applied economics to draw any conclusion. c. Social conditions 195. Dr Huang said that in respect of life expectancy, while the economic and social development is an important determinant of life expectancy, other factors also contribute to such ratios. An example is the population of China which has long life expectancies. Secondly, Dr Huang said the high school attendance rates in Hong Kong may due to cultural, traditional and family structure. And, thirdly, legal and social structure may have implications for various crime rates. 196. He said that people in UK typically enjoy better social welfare. In 1993 the UK Government spent 34.2% of the General Government Expenditure on social security benefits. In contrast only 6.4% of public expenditure was spent on social welfare in Hong Kong. 197. Another factor is the leisure people enjoy. People in UK enjoy more leisure time indoor and outdoor, domestic and overseas leisure activities. 198. The UK has better quality of the environment including air and water quality, land cover, noise and pollution, crowdedness and living spaces. 199. Dr Huang concluded that there is very little evidence suggesting that Hong Kong social condition is at least as good as that in the UK. 3. Economic and social conditions of Hong Kong are as good as U.K. 200. While there is no standard test to measure the social and economic conditions of two places, the overall impression one gets, which is supported by evidence in this case, is that the economic and social conditions of Hong Kong are at least as good as, if not in some respects better than that of the UK. The development of Hong Kong from what is basically a manufacturing based economy to a service industry is well documented. Hong Kong is now a centre of international trade. The development of its financial institutions, information technology, the port facilities and infra structures places Hong Kong amongst the developed countries of the world. In terms of provision of health care, education and social amenities for its population, Hong Kong is at par with any other developed countries in the world including the U.K. The earning of the population has overtaken that of U.K. 4. Assessment of the evidence of Dr Busche and Dr Huang 201. In arriving at the above conclusion, I accept the evidence of Dr Busche. I will now comment on his and Dr Huang's evidence. a. Economic indicators 202. The use by Dr Busche of the lognormal distribution of income is a well recognised economic theory and there is no indication that the income distribution of either Hong Kong or U.K. is not in accordance with this theory. In fact, when comparing the lowest quartile earnings of the population of these two countries, the U.K. data only shows income above a certain level. The effect is that the U.K. average and lower quartile figures are overstated compared with the Hong Kong counterparts because of the different statistical basis of analysis. 203. Even taken into account the fluctuation of the market exchange rates, the evidence on the lower quartile earnings or per capita GDP still shows the increase of earning of Hong Kong over U.K. Furthermore, the use of the Purchasing Power Parity method in comparing the GDP per capita of these two places clearly shows the advance of Hong Kong at this front. b. Hong Kong Dollar over-estimated? 204. Dr Huang's opinion is that the real exchange rate of the Hong Kong dollar against the US$ by using the Consumer Price Index has shown a depreciation over time and that the Hong Kong Dollar has been over-estimated since the 1980's. This is not supported by evidence. In the article in Asian Monetary Monitor Vol. 16 No.4, which is referred to by Dr Huang, it is stated that the valuation of the US$ PPP against other currencies including Hong Kong was calculated by using three different price indices, namely Consumer Price Index (CPI), Wholesales Price Index (WPI) and Export Price Index (EPI). The CPI is the widest basket but as such it tends to contain the prices of more services and other non-tradeables. This makes direct comparison more difficult. Using the WPI tends to strip out the price of services, but WPI tends to be more volatile. But this volatility is diminished over a longer period of time and underlying WPI increases becomes more evident. The EPI reflects the prices of tradeables only and tends to be less volatile than the WPI as exporters adjust their price infrequently to minimise customer uncertainty. The EPI suffers the most in a developing economy from structural shifts in the composition of exports : countries such as Malaysia, Thailand, Indonesia which have shifted over the 1980s from a commodity to a manufacturing base. In a developed economy, this EPI is probably the superior measure. Conversely a developed country's PPP will probably be most distorted by the use of CPI which has a higher share of service and non-tradeable prices. 205. Referring to Hong Kong, the article at p.4 stated that from 1973 to 1986, the CPI and EPI base indices (no WPI is published for the territory) moved generally in line with each other. However, since 1987, the CPI has consistently out stripped the EPI as the productivity gains from the structural shift in the economy into high value-added services, have accommodated a sharp rise in service sector incomes. In the absence of a WPI, and given the HK$/US$ peg which reinforces the convergence of tradeable goods prices, the EPI appears to be the superior measure. 206. Hence, the use of CPI by Dr Huang to show the depreciation of the real exchange rate of the Hong Kong dollar against the US dollar over time is based on a wrong basis. Furthermore, as Table 1 on p.10 of the article shows, the PPP valuation of the Hong Kong dollar against the US dollar and four other Asian currencies have been constantly undervalued. This calls in doubt his conclusion that the Hong Kong dollar has been overvalued since the late 1980s. c. Wage Index 207. One fundamental flaw of using the wage index suggested by Dr Huang is that the wage index does not include irregular bonus and other irregular payment. Only guaranteed bonuses are included. Thus the wage index is not comprehensive. Further the wage index shows the wage rate per hour only. As one is concerned with the money one actually receives the payroll index must be the correct index to be used. 208. Dr Busche suggested that the real cause of the difference between the growth rate of the payroll and wage is that the increase in payroll is a reflection that workers in Hong Kong for the relevant period have had access to better capital. For that reason, they can produce more and they will get more pay. Also the workers themselves are bringing more capital to the workplace in the form of what economist termed as human capital, i.e. they are more highly trained, better educated and with a combination of these factors the workers produce more and the company that hire them have to compete for the workers who can bring the best combination. 209. Dr Huang's argument that the difference in the payroll and wage rate can be explained by the longer working hours in Hong Kong cannot be correct because if that were true, everyone in Hong Kong would work longer hours than they, say, ten years ago which is in fact not the case. The matter can be tested in this way: between 1983 to 1993, the simple average wage growth rate is 1 .5% whereas the simple average of the real payroll growth rate is 4.3%. The difference is 2.8% per year. If the difference is accounted by the hours of work, that means there was an increase in the working hours of the workers by between 20% to 30%. There is simply no evidence to support such an increase. d. GDP and real estate 210. In respect of Dr Huang's comment that the increase in GDP in Hong Kong may due to rise in the real estate sector, if the GDP is based on all incomes deriving from the jurisdiction, the mere fact that there was an increase in income in the real estate sector does not mean that the GDP is somehow distorted. e. Calculation of weighted index 211. In the cross-examination of Dr Huang, Mr Griffiths suggested to him a method of calculating the overall index for nominal payroll per person engaged weighted across all industries. The method of calculation together with the supporting data are referred to Exhibits P6,7,8 & 9. Exhibit P10 is a bar chart showing the annual average growth for nominal payroll indices per person engaged weighted across the seven major industry groups. 212. Mr Yu criticised this exercise as being unscientific and that this was not even done by the Plaintiffs expert. It was calculated on a wrong basis by using the indices which were measured in each industry on survey results as if they were the total payroll. It is said that the exercise is incomplete because the figures in the payroll index was surveyed from selected industries. They are not comprehensive. Some economic activities were not covered such as the civil service. 213. While the exercise was not done by the expert of the Plaintiff, Dr Huang has not challenged the method of calculation of the weighted index. The value of the exercise is really to show even if the average is weighted, the average annual nominal payroll increase is over 12%. f. Others 214. The various factors referred to by Dr Huang such as working pressure of Hong Kong and UK and the lack of compensation for extra work in Hong Kong are not supported by data. Reference to the shorter working hours in U.K. has not take into account trade union demands in respect of working hours. Also he cannot provide data in respect of the quality of the environment. His observation on the quality of life in U.K. appears to be anecdotal. 5. Hong Kong awards for pain suffering and loss of amenities 215. In Lee Ting Lam v. Leung Kam Ming [1980] HKLR 657, the Court of Appeal set out the 4 categories of injuries and the range of damages for each level. Serious injuries 216. Injuries which give a disability which mars general activities and enjoyment of life but allows reasonable mobility to the victim, e.g. a loss of a limb replaced by a satisfactory artificial device or bad fractures leading recurrent pain. 217. Damages: $60,000 - $80,000. Substantial injuries 218. Injuries which require treatment in hospital for many months and leave the victim with a much reduced degree of mobility, e.g. a leg amputated from the thigh so that an artificial leg cannot be used satisfactory; or multiple injuries which leaves a condition requiring regular treatment for the rest of the victim's life. 219. Damages: $80,000 - $100,000. Gross disability 220. Injuries which leave the victim with very restricted mobility or cause serious mental disability or behavioural changes. This includes paraplegic who, particularly if young, can expect to be placed at the upper end of the bracket. 221. Damages: $100,000 - $150,000. Disaster 222. Victim requires constant care and attention and is incapable of ever leading or approaching an independent adult life. 223. Damages: $150,000 upwards. 224. The level of damages was revised in 1988 by the Court of Appeal in Lau Chi Ping v. Hui Kong Ironwares Godown Co Ltd [1988]2 HKLR 650 and further revised in 1994 in Chun Yat Nam v. A.G., Civil Appeal No.92 of 1994. (Judgment 23rd December 1994) 225. The revised level of damages since Lee Ting Lam is set out in the following table:-
6. Recognition of the need for change 226. The courts in Hong Kong and the Privy Council recognise the need from time to time for change and updating due to changing social and economic conditions. 227. In Lee Ting Lam, Cons J.A. at p.659 held that:-
228. Lord Fraser in Chan Wai Tong v. Li Ping Sum [1985] HKLR 176 at 180 held that:-
229. In Lau Chi Ping, Cons J.A. at p.654F, held that:-
7. Updating of Lau Chi Ping 230. Chun Yat Nam updated the awards in Lau Chi Ping by reference to the Consumer Price Index. In Lau Chi Ping itself, the updating was by reference to the increase in the level of wages over and above the rate of inflation. Cons J.A. in Lau Chi Ping at p.654H stated that:-
231. In Chun Yat Nam, Penlington J.A. at p.26 referred to the decision of Lakhan v. Wu Wing Tak, (High Court Action No.3641 of 1993) in which Nazareth J. (as he then was) indicated that he associated himself with the observation of Hunter J. in Chim Kwan Tai v. Li Fung Electronic Factory [1987] HKLR1, that the general level of awards for pain suffering and loss of amenities should be reviewed. Penlington L.J. further held that:-
Nazareth V.P. at p.39 held that:-
On that basis, the Court of Appeal raised the Lee Ting Lam figures by 125%. 8. Updating of Lau Chi Ping for wage increase 232. Mr Griffiths submitted that based on Dr Busche's evidence, the wage increase from 1988 to 1995 is about 150%, the awards in Lau Chi Ping should at least be updated as follows:
9. Updating Chun Yat Nam for price inflation 233. Chun Yat Nam was decided in December 1994. Nearly another year has passed since the decision. Merely on price inflation, the level of awards in Chun Yat Nam should be raised by about 7.5% to the following figure:-
For ease of reference, I have compared the awards in Lau Chi Ping and Chun Yat Nam in the following table:-
10. Comparison with the English awards 234. In recent year in Hong Kong, personal injury cases tend to be settled without proceeding to trial and there are very few Hong Kong cases on personal injury awards. Thus a comparison of recent English and Hong Kong awards are somewhat restricted. Furthermore, the different categorisation of guidelines in Hong Kong and England makes the task more difficult. However, it can readily be seen that in the awards for the more serious injuries, there is a substantial disparity in the awards of the two jurisdictions. a. Guidelines of the Judicial Studies Board 235. The Judicial Studies Board of England has published guidelines for the assessment of general damages in personal injury cases. In respect of head injuries, the suggested awards are shown below. I have included the equivalent Hong Kong dollar against the higher awards.
b. "Disaster" and "Very Severe Brain Damage" 236. If one compares the current award of $675,000 upwards for "disaster" in Hong Kong which must be the most serious type of personal injury with the "very severe brain damage" in U.K., one can see that the U.K. award of £105,000 (or HK$l,310,000 at an exchange rate of HK$12.5 to £1) is almost twice as much as the Hong Kong award. 237. In the "disaster" category, the victim requires constant care and attention and is incapable of ever leading or approaching an independent adult life. Compare that with the "very severe brain damage", the victim will be in a vegetative state, no evidence of meaningful response to environment, and need 24-hour nursing care. The descriptions are similar. c. "Gross Disability" and "Moderately Severe Brain Damage" 238. The "gross disability" category in Hong Kong includes injuries which leaves the victim with very restricted mobility or cause serious mental disability or behavioural changes (an example is paraplegic). The "moderately severe brain damage" in U.K. is described as severe disability, conscious but total dependency and requiring constant care, disability may be physical, (for example, limb paralysis) or cognitive with mark impairment of intellect and personality. The type of injuries covered by the two categories is again similar but the difference in award is substantial. The current Hong Kong award is $445,000 - $675,000 whereas the English award starts at about HK$968,750 and ends at $1,187,500. 239. Even taking into account the fluctuation in exchange rates between the two places, Mr Griffiths's submission that the Hong Kong award should be increased by about 40% over and above the current level is indeed a modest increase as compared to the U.K. award. Dr Busche's table on per capita GDP contains an indication of the nominal exchange rates of Hong Kong and U.K. between 1980 and 1994. They ranged from $9.11 to $14.95. 11 Deferring the increase? 240. Mr Yu argued that the Court of Appeal in Hong Kong has laid down guidelines as recently as 1994 on the level of damages to be awarded. The Court of Appeal judges are most experienced in judging whether the level of awards are appropriate. The laying down of guidelines by the Hong Kong Court of Appeal is of vital importance in preserving some degree of certainty in this area. This is particularly important because many personal injury cases are settled rather than proceed to trial. The court must be slow to depart from the precedent. He argued that much more is required to be proved before the court can depart from those guidelines and follow awards in a different jurisdiction. At the very least, there should be a comparison of levels of earnings in different jobs and much more detail evidence given in the comparison of social conditions. Further, the court may consider it inappropriate for evidence to be adduced and considered on a case by case basis. A more detail study is called for to pave the way for a uniform approach. 241. The guidelines set by the Court of Appeal must, of course, be observed. However, the updating of the awards by the Court of Appeal in Chun Yat Nam was in respect of inflation only and it expressly reserved the question of revising the awards to reflect generally the increased expectation of life in Hong Kong. Despite Mr Yu's submission to the contrary, there are evidence adduced on the economic and social conditions of Hong Kong upon which a trial judge can make an appropriate assessment of the awards in the light of the evidence. By the very nature of our system of litigation, the court of first instance must necessarily make a finding before the appellate court can assess the appropriateness of the decision. 12. Awards should be increased 242. The economic and social conditions in Hong Kong have been shown by evidence to be comparable to that of U.K. There is no reason why the disparity of awards of damages in the two jurisdictions should be so substantial. Afterall, one is concerned with the same pain suffering and loss of amenities of an injured person whether the case is tried in Hong Kong, London or Newcastle. If in the past, the only reason for not bringing the Hong Kong damages to the same level as the U.K. awards is by reason of the disparity in the economic and social conditions of these places - and there is no other reason being suggested -it cannot be right that having found these conditions are now comparable, the court should defer from revising the Hong Kong awards. 243. I shall deal specifically with the award to be made in this case at the later part of this judgment. With deference, I would suggest that the current level of awards should be increased by 50% and the following should be the awards for the various categories of injuries:-
The awards are a little higher than Lau Chi Ping after adjustment for wage increase, but not substantially higher. 13. Pui Ki's injuries 244. Chan Pui Ki ("Pui Ki") was knocked down by a double deck bus. She sustained serious head injuries with skull fracture. She was admitted to the Prince of Wales Hospital for treatment. Her brain injury was complicated by a subdural haematoma left which required urgent operative decompression on the same evening of the accident. This was further complicated by brain swelling. She required intensive care management for 12 days and control of intracranial pressure was extremely difficult. 245. According to the father, she was unconscious for 25 days. She gradually improved with intensive nursing and rehabilitation. She spent 14 weeks in hospital and was discharged on 28th July 1989. She received physiotherapy and occupational therapy everyday while in hospital. 14. Subsequent treatment 246. Pui Ki attended out patient treatment at the Prince of Wales Hospital three times a week from August 1989 to March 1990. She received psychotherapy on 22nd May 1993 with Mr Peter Whyte, a Consultant Psychologist. She also received six sessions of psychotherapy and two sessions of family psychotherapy with Miss Esther Lau between January and April 1995. 15. Physical and neurological impairment a. Examination by Dr Fali J. Shroff 247. Pui Ki was examined by a number of doctors. Dr Shroff, a neurosurgeon, followed her progress from May 1991 to January 1995. When Pui Ki was examined by Dr Shroff in May 1991, she complained of:-
248. This is a summary of Dr Shroff's examination:-
249. Dr Shroff saw Pui Ki again on 27th December 1991. In his report of 20th January 1992, he stated that there has been no improvement in her physical conditions. It was nearly three years since the accident and he did not expect any improvement in the weakness of her left limbs and left side of the face. The weakness and the associated spasticity would remain with her for the rest of her life. It did not appear that there had been any improvement in her cognitive ability. In view of the left sided hemiparesis, Pui Ki, whose preferred hand was the left hand before the accident, had been trying hard to use her right limbs to perform daily activities. This was proved to be difficult for her. 250. Pui Ki was examined by Dr Shroff on 20th January 1995. At that examination, Dr Shroff observed that her gait has improved. There was weakness of the left limbs amounting to Grade 4. There was marked spasticity of the muscle of the left upper and lower limbs. The spasticity (increase in the tone of the muscles) resulted in considerable incoordination of movements effected by the left upper limb and left lower limb. The finger-nose test on the left revealed considerable wavering of her left hand. No coordinated movements of any kind was possible with her left hand. The left hand was in the form of a claw and Dr Shroff could not straighten them. The spasticity of the muscle caused her to tire easily. Her gait was slightly limping, but appreciably clumsy and awkward. Her left leg measured 1/2cm shorter than the right upper limb. 251. The speech was clearer but her voice was mixed with a lot of air. There was still facial paralysis although improved slightly. b. Assessment by Dr Shroff 252. Dr Shroff was of the view that the best guide to the severity of a head injury is the duration of post-traumatic amnesia (PTA). 253. Professor Jennett classified a head injury into five categories: mild, moderate, severe, very severe, and extremely severe depending on the length of the PTA. When the duration of the PTA is from one to four weeks then the head injury would fall under the category of very severe. As Pui Ki was unconscious for a considerable period of time, she sustained very severe head injury. 254. Dr Shroff said that since she sustained her head injury when she was only 11 years old, he would not expect her to improve over the course of next few years: there would be improvement for four to five years after the accident then the improvement would stop. 255. Dr Shroff stated that where an intracranial hematoma had occurred, the incidence of epilepsy likely to occur is 34%. One in five of this epilepsy was manifested for the first time some four years after the injury was sustained. When epilepsy began after four years the attack was more likely to be frequent and remission was less likely (see Professor Jennett "Epilepsy after nonmissile head injury"). Dr Shroff was of the view that up to April 1993 (i.e. 4 years after the accident) Pui Ki had a 34% chance of manifesting an attack. After that period of time, the chance of an attack is about 7%. 256. Dr Shroff reviewed the magnetic resonance imaging of the brain performed on the 20th January 1995. It showed cerebro - spinal fluid (CSF) isointense lesion in the left temporal and frontal area. There was loss of brain substance. The features were compatible with post-traumatic changes. There were defects in the skull in the left superior parietal area; this was keeping with surgical procedure. There was CSF isointense lesion in the right thalamus and mid-brain. The position of the lesion was not typical for trauma but in view of the history and clinical findings it may well be due to trauma. 257. Dr Shroff said that the MRI Scan of the brain revealed appreciable visual evidence of brain damage. As Pui Ki was deeply unconscious for an appreciable period of times, this suggested diffuse damage to the brain with shearing of the white matter. This will result in considerable cognitive and intellectual impairment. 258. In respect of the headaches which Pui Ki complained to be at the right side of her head and were associated with dizzy spells lasting for as long as 2 days at a time and frequency was 2-3 times a week, Dr Shroff was of the view that it is migraine in nature and precipitated by the concussion. 259. Dr Shroff would not expect any reduction in life expectancy of Pui Ki. He would not expect any further improvement in her condition. 260. Dr Shroff assessed her permanent disability at 90%. He reached that figure by taking her person as a whole in view of her ungainly appearance, unsteady gait, cosmetic deformity, difficulty in expression, episodes of depression, headache, a 6-7% possibility of post-traumatic epilepsy, the weakness and spasticity of her left limbs. 261. He was of the view that she could only obtain employment in a sheltered workshop. He doubted very much whether she could hold on to a simple manual job : her left limbs are virtually useless and will remain so for the rest of her life and her right hand is clumsy and not all capable of performing simple tasks. She would not be able to undertake secretarial work, she would not be able to type. 262. Dr Shroff disagreed with Dr Yuk Ling Yu's assessment that she only suffered 19% permanent impairment of the whole person. He said that after he received Dr Yu's report he referred to The Guides to the Evaluation of Permanent Impairment, and noticed that Dr Yu has chosen mostly the lowest range of impairment set out in the book. c. Examination by Dr Yuk Ling Yu 263. Dr Yuk Ling Yu is a Reader of the Department of Medicine, University of Hong Kong. He is also a Consultant Neurologist. Dr Yu examined Pui Ki in May 1995.
d. Assessment by Dr Yu 264. Dr Yu was of the view that Pui Ki's neurological deficit is mild left hemiparesis, and is the result of the accident. The left hemiparesis is permanent. Percentage impairment by reference to the facial weakness is 1%, left upper limb is 9%, and left leg is 9%. Total impairment is 19%. Her headaches, impaired memory and poor concentration are psychological problems. The likelihood of epilepsy is very small. The left hemiparesis precludes her from taking up jobs which require an able body but she can take up sedentary jobs such as receptionist and cashier. 16. Cognitive impairment 265. When she was tested by Mr Peter Whyte in July 1991, her I.Q. was assessed at 92. Dr Patrick Leung, a clinical psychologist tested her I.Q. to be 86. Based on her pre-accident academic performance in which there was no failure in her subjects, she was assumed to be an average or better than average student. An average I.Q. of 100 was assumed. There has been serious deterioration in her school performance as compared to the two years before her accident. In 1987, she scored an average of 74%, her place in class was 17 out of 40. In 1988, her average score was 70%, her place in class was 19 out of 39. In 1989, her average score in the first term was 62%, her place in class was 35 out of 39, In the second term, her average was 58%, her place in class was 37 out of 39. In the 1st term of 1990, her place in class was 35 out of 36. In the second term, she was placed 33 out of 36. In the second term of 1991, she was placed 35 out of 36. 266. The secondary school results showed the same kind of performance. Dr Yu in his report of May 1995 revealed that Pui Ki was placed 18 in her class of 31, but her class was in the lowest stream of the form. Within the form, her position was 163 out of 190 pupils. 267. Dr C.K. Wong was also of the view that the accident has compromised her intellectual abilities and her I.Q. is in the lower average of normal intelligence. He said people with the I.Q. level of Pui Ki would find it difficult to complete secondary school. They may even encountered problems in primary education. In terms of occupational, it is likely that they may end up doing simple unskilled work such as working in a factory, doing sundry work or working in an office doing simple repetitive tasks like being a messenger. 17. Psychological problems 268. Pui Ki also suffers from severe psychological problems. These are well documented in the reports of Mr Peter Whyte, Dr Patrick Leung and Dr C.K. Wong and Miss Esther Lau. Other than Mr Whyte, they all gave evidence. She became emotionally unstable in that she readily become sullen, angry, sad and often remains in such emotional state for hours. She is isolated in school, mocked by her peers and she has only one classmate whom she can describe as a friend, she can not take part in physical exercise lessons and she is reluctant to take part in extra curricular activities. She is embarrassed by strangers and uncomfortable with classmates looking at her in a strange way. She dislikes intensely of her feeling of being an inconvenience to others (including her parents). She is home-bound during weekends and holidays. She hesitates to go out. Her relationship with her mother has become stormy. Her mother frequently scolds her for not using her right hand and for generally not trying hard enough. Her relationship with her father has remained good. She had threatened suicide on more than one occasion. This, however, was not due to personality disorder, but rather in the nature of cries for help. 269. The loneliness of Pui Ki at school is confirmed by Miss Chan, her Form 1 class mistress. According to Miss Chan, she is an unhappy child. Her relationship with her classmates is bad. Her only relationship is with senior students who are designated by the school as prefects or peer councillors. She was seen alone walking to and fro in the corridors of the school. After she was teased by her schoolmates, she would pull a long face. Very often, Miss Chan would see salvia coming out from her mouth and secretion running from her nose. This scares her friends. She would only approach the teachers. When asked whether Pui Ki could relay more to persons who are more mature, Miss Chan's answer was that it was not because of that but because the senior students or the adults would not tease or insult her and they would try to cope with her. Even among the senior students, some of them had told the teachers that they could not accept Pui Ki and she had threatened of committing suicide. Report of her court case was greeted with further taunting by the students. They told her to take the money and leave them. 270. There are real problems between Pui Ki and her mother. When she was asked in evidence whether she loved her mother as much as her father, she hesitated before answering and the answer was "Not that much". 18. Dr C.K. Wong 271. Dr Wong is the Reader and Chairman of the Department of Psychiatry, Faculty of Medicine, Chinese University of Hong Kong. He was also the Honorary Consultant Psychiatrist of the United Christian Hospital since 1986 and the Consultant Child and Adolescent Psychiatrist of the Prince of Wales Hospital since 1988. He engages in specialised study of the psychiatry of children and adolescent. 272. Dr Wong's psychiatric diagnose for Pui Ki is dysthymia. Dr Wong said that there are two dimensions in the psychological development of adolescents. First of all, they normally have a positive self-esteem of themselves. They accept and understand themselves. A person with normal self-esteem will aspire to a higher goal in life and will accept and face challenges. A person with low self-esteem typically will aspire to low goals. In that regard, Pui Ki has been suffering extremely low self-esteem. 273. The second aspect of adolescent psychology is emotion. In general, the prevailing emotion is positive. They are at ease, happy and contended with themselves. Secondly, they have no problem in expressing their emotions in a positive way and thirdly, there is no problem in resolving their negative emotions. When faced with an emotional conflict, they will not resolve to defence mechanism in dealing with the problem. 274. In that light, Pui Ki has been psychologically fixated in a very early stage. First of all, the prevailing emotion is one of lack of emotion. She feels anxious, unhappy and rejection of herself. She also feels shame, guilt because she has not been living up to her parents' expectation. Secondly, she has difficulties in expressing her emotions, particularly her negative emotions. Thirdly, she has problems resolving these emotions as she denies the problem and uses defence mechanism. 275. A person with emotions would find it difficult to get along with people. They will misinterpret and exaggerate in terms of inter-personal relationship. Pui Ki is a loner. As she moves into adulthood, this position will get worse. 276. The position is also made worse because she has been retarded in her psychological growth since aged 10 because of the accident and the persistence of the problems without psychological treatment means the gap will continue to widen unless treatment is made. She has limited insight to herself in respect of her handicap. She is unhappy because she has not been able to accept her physical handicap. 19. Impact of the accident on Pui Ki 277. Pui Ki was born on 27th May 1979. She was nearly 10 years old at the time of the accident. She is the only child of the family. Her father and mother is now 48 and 47 years of age respectively. Both the parents are working, the father is a driver/salesman with an ice-cream company; the mother works as a clerical worker. They live in a housing estate in Shatin. Her school is in the same district. From the evidence I have heard she was a normal happy child, enjoying the company of her parents and relatives and engaging in social activities like any girl of her age. She used to have a lot of friends, she was slim, pretty and was on good terms with her parents. Her left hand was her preferred hand, her school performance was good and was likely to be above average. Her position in examinations was in the middle of her class. She has a supportive home environment and her parents wanted her to attend tertiary education. If not for the accident, the chances are that she will lead a normal life with a reasonably well educated background, sociable, marry and bear children when the time comes. 278. She suffered severe injuries as a result of the accident. The cumulative injuries include both physical and mental. The physical injuries will improve no further, the mental problems may improve but there is a serious chance they will not. a. Restricted walking mobility 279. After the discharge from the hospital, she has to walk with the assistance of a tripod. She weaned herself of the tripod with her father's help. She now can walk but with a hemiplegic gait. She dragged her left leg when walking. I have observed her walking when she left the court room and she obviously walked in an awkward manner. She is afraid of falling and there were previous incidences of her falling down at the school and in the streets. They were referred to Mr Whyte's earlier reports. Most recently in July 1995, she fell in the toilet. Dr Yu said that Pui Ki is fully ambulatory. Obviously she could walk but it is an awkward walk with great difficulties in coordination of the body movements. Dr Bernard Lau, a psychiatrist retained by the Defendants, examined Pui Ki for two hours and claimed that she walks with a slight limp only. Plainly he had not paid sufficient attention to her movements. b. Restricted mobility of her hands 280. She has very restricted manual dexterity in her preferred left hand. She could no longer use her left hand and has to switch to the right hand. Dr Wong was the opinion that her handwriting is still at Primary 5 level (she was at Form 3 at the time of the trial). Sample of her handwriting in Chinese with her left and right hands were produced, the handwriting of her right hand is better than that of her left but the handwriting still bears the characteristics of a primary student. She wrote very slowly. She told Dr Wong that by the time the second last student (she was the last) in her class finished the written work she could at most finished 80% of her writing. In fact Dr Wong regarded her writing speed at most 30 to 40% of the speed of a normal person of her age. 281. She has problems using rice bowls and chopsticks in eating. She has difficulty in manipulating her chopsticks. She used her right hand to hold the chopsticks and used them to pick up food and put it into the bowl. She then has to change hands, using her left hand to hold the chopsticks and her right hand to hold the bowl of rice and eat. The movement of the chopsticks is awkward. Because she has lost her grip she could not hold the edge of the rice bowl as a normal person and she has to use her palm to grip the surface of the bowl and the heat of the bowl would be very painful for her. She has difficulty in carrying the bowl of rice in her hand to her mouth because of her limited range of movement. 282. Dr Lau produced paper objects folded by her. These are small, delicate objects. She made them for Dr Wong as well, but according to Dr Wong, she has to spend something like seven or eight minutes to fold the paper and throughout the exercise she has to stop many times and stretched her fingers. She told Dr Wong that she felt her fingers were caught into a spasm. c. Face and the body 283. There was involuntary dripping from her mouth although this did not happen during the trial. However, Mr Whyte in his report of 18th May 1993 referred to the dribbling. Miss Esther Lau, another psychologist, said that Pui Ki dribbled onto her sofa during the interviews in the period from January 1995 to April 1995. 284. Her face is asymmetrical Dr Wong said her facial muscles are weaker on the left side and the right side is strong and that explains about her appearance, namely, the angle of mouth on the left side is lower than the right, so the right angle of her mouth moves more energetically than the left. This also explains why she dribbles. 285. Dr Wong's evidence on her facial problems is confirmed by my own observation when she gave evidence in court. Dr Shroff also referred to her left facial paralysis. Dr Yu said there was a mild facial palsy. Dr Lau's observation that there is no problems with her face is simply not acceptable. 286. From my observation she is indeed a very obese young person. Sadly to say, her appearance and body movement do give an impression, mistaken it may be, of someone who is mildly mentally handicapped. d. Speech 287. There is a speech problem as detected by the doctors and observed by me as well. Dr Wong also tested her tongue and find that because of the weakness of the tongue muscles, she could not control her tongue in order to pronounce clearly and she speaks with a slurring sound. Her voice is high pitch in a sing song voice. Some words were slurred and the delivery was made in an non-fluent manner. The choice of words was very childlike. e. Severe head injuries 288. She suffers severe head injuries and there is a serious diminution of her mental power. There was a loss of I.Q. of 14 points, memory and concentration were impaired. While she was an average student before the accident, she is now at the bottom of the class in the lowest stream. Her results for the April 1995 school examination showed that out of eight subjects she failed in seven of them. For English she achieved 22 out of 100 marks; Mathematics, 7 out of 100, Science, 16 out of 100; Economics and Public Affairs, 46 out of 100; Geography, 22 out of 50; Chinese History, 36 out of 100; English History, 28 out of 100. Dr Wong's evidence, which I accept, is that she will not proceed beyond Form 5 and will certainly never enter university. The minimum I.Q. for a university student is about 110 to 115. Her most recent I.Q. assessment in 1993 was 86. 289. Dr Lau said Pui Ki is extremely motivated to study. She has a sense of efficacy in scholastic attainment and hopes to rise one day to a decent social status. He said Pui Ki's wish for higher education might not be an impossible task. Given the fact that she is already receiving extra tutorial, to suggest that she could still pursue some higher education is to ignore the stark reality of the situation. f. Psychological 290. I have dealt with in detail the psychological problems of Pui Ki. 20. Employment 291. Although Dr Wong initially said that Pui Ki could engage in a simple manual job that does not require too much physical exertion or swift body coordination, he subsequently changed his opinion. He concluded that short of a charitable employer, it is practically impossible for her to hold a job in the open market due to the cumulation of her handicaps. His view is that employment in a sheltered workshop is the best she could hope for. The sheltered workshops catered for mentally and physically handicapped workers. Basically the workers do simple assembling works. Sometimes they work outside such as cleaning or despatching letters but basically they do very repetitive simple tasks. The average earnings is about $500 per month. 292. After careful consideration of the evidence, I come to the conclusion that Pui Ki will be unable to obtain employment in the open market and her chance of employment in the future is confined to the sheltered workshop run by social welfare agency. I accept the evidence of Dr Shroff and Dr Wong. 293. I accept the evidence of Dr Shroff on the medical conditions of Pui Ki. In his cross-examination, he agreed that there was improvement in the condition of Pui Ki between 1992 and 1995. However in his two earlier reports he said there was no expectation of further improvement in her condition. I do not consider that this will made Dr Shroff's evidence unreliable. His two reports were in respect of examinations of Pui Ki in May and November 1991. The improvements came between 1992 and 1995. There is a cognitive impairment because of the brain injury with a reduction of about 11% in the I.Q. level. The school result is the most realistic illustration of the deterioration of her intelligence level. Psychologically, it will take a long time for her to accept her handicap and for her to regain her self-esteem and a balanced emotion and to achieve a better inter-relationship with her peers. 294. With her injured left leg, she could not be engaged in a job which would require constant movement. With her unsteady gait, one just could not really expect her to, say, deliver mails in a hurry from office to office in an area like Central. It is suggested that she could be a receptionist, but with her cosmetic impairment, unless an employer wishes to hire someone on charitable grounds, it is unlikely that she would be placed at the front of an office. The suggestion that she could be a cashier is, I think, out of the question because of her intellectual impairment. While there are mentally handicapped persons who are engaged in cleaning jobs, this would be out of the question for her. The only job that would be open to her would be sedentary in nature. She could not be a secretary, Dr Lau's suggestion that she may be a computer operator is given without too much thought. Could there really be a computer operator using one hand only? Although she can now use her right hand, there are great difficulties with her hand movement. 295. Miss Marion Cheung is the division supervisor of the Rehabilitation Division of the St. James Settlement which operates sheltered workshops for the disabled. 296. Miss Cheung assessed Pui Ki's work ability. She was of the view that Pui Ki cannot obtain a job in the open labour market. Her work ability is limited because of her inadequate fine motor function. Her work speed is very slow. Miss Cheung was of the view if she was asked to do the packaging and mailing work, she would have difficulties in putting the papers into the envelope. Miss Cheung said that there is a lot of difficulties in promoting sheltered workers into open employment. She said her workshops have tried to train someone with spasticity in one of her upper limb to operate photo-copying machines. The problem is that the worker would have difficulties in arranging the paper with just one hand. It would be difficult for Pui Ki to do the cleaning jobs available in the open market. She would also have difficulties with the messenger jobs. She would have problems with packaging and photo-copying because that would require heavy lifting and also because of the speed required to do that type of job. Miss Cheung said the greatest problem will be speed, no matter how hard she try, the momentum will just not be there. 21. Disaster 297. Mr Yu submitted that Pui Ki's injuries fall into the substantial injury category. He said the present case is slightly more serious than Liu Suet Un and Leung Lai Ha. I disagree. I find that the injuries placed her in the category of disaster. Her disabilities must be viewed cumulatively. 298. The evidence adduced before me cuts a pathetic figure of Pui Ki. Whereas one would expect a 16 year old girl with lots of friends, has a lively social life and generally enjoying life with her family and friends, we have here a girl who spent a lot of time watching cartoons on TV at home and folding paper objects. She has virtually no friends among her age group, she refuses to go out with her family and relatives at social gathering. She fears that people are staring at her in a strange way when she is out of the house. 299. There are serious problems in other areas. She suffers frequent, almost daily, headaches which is due to the post-concussional effects of the head injury. 300. There is a life long chance, at present 7%, but reducing, of post-traumatic epilepsy. 301. She has suffered disruption to the development of her personality from the age of 9 to 16. This being the critical development period of an adolescent resulting in a fixation of her personality at an earlier stage than her actual years. 302. She suffered major psychological problems arising from the accident with consequent symptoms such as inadequate emotional responses, lack of insight, an example is that she felt that "she has been manufactured into another person", unrealistic aspirations, denial, she has become a loner, withdrawn, unresponsive and sullen. 303. Her chance of marriage and having children is now minimal, although it must pointed out that she is not pursuing any claim for loss of prospect of marriage under the head of pain suffering and loss of amenities. 304. She has no friends. She is teased by her peers and is likely to remain substantially friendless throughout her life. She is in conflict with her mother. She has attempted suicide which was described by the psychiatrist as a cry for help. 305. I have no doubt that Pui Ki has a warm personality as well. She offered food to her teachers and made paper foldings for the doctors. In court, I have observed the tender moment of Pui Ki putting her head on her father's shoulder while waiting to give evidence. Like all human beings she has many facets of her personality. I am satisfied with Dr Wong's evidence that her warmth is due to the fact that she has had a very happy childhood from birth to the time of the accident. However, this does not mean that she is not suffering from any problems, the problems are obvious to her parents, her uncle and her school teachers. 306. She is unemployable in the open market. 307. She does require constant care and attention because of her limited range of movement. 308. She will be incapable of leading a normal or independent adult life. She is deeply aware of her disabilities. 309. She will from time to time in the future require psychiatric counselling and treatment and possibly in-patient treatment if and when she meets the ordinary crisis of life, such as the passing of her parents, change of environment or rejection by others. 310. In Chun Yat Nam, the Court of Appeal reversed the finding of the master and came to the conclusion that the injuries sustained by the plaintiff was within the category of gross disability. At p.24 of the judgment, Penlington J.A. held that:
311. In present case, Pui Ki's injury is even worse. She is hemiplegic, her left hand is practically useless. She has permanent brain damage causing 11 points of loss of LQ. She has serious psychological problems and they are more than mere irritability and depression. She has no prospect of getting employment and the only prospect for her is to work in sheltered workshops. She is in an overall worst position than Chun Yat Nam because he was already married. He retained a high degree of physical mobility. He was a psychologically mature adult at the time of the accident and his psychological problems may for that reason be less serious and disabling. There was no suggestion that he was friendless or isolated from interpersonal relationships. He has no cosmetic defects or speech defects or the hemiplegic gait which made her looks mentally handicapped. His education was completed. 312. In Lee Ting Lam, Cons J.A. held that there may be in a particular case factors not in themselves disabling, which are sufficient to take that case from one category into another. In the present case, the cumulative effect of the disabilities of Pui Ki would take her case into the low range of the disaster situation. 22. Comparables a. Hong Kong awards 313. The authorities cautioned the use of guidelines without reference to comparable. In Chan Wai Tong at p.181, Lord Fraser held that:-
314. In Lau Chi Ping, Cons J.A. at p.653G held that:-
315. I have referred to the following cases in my assessment. In Liu Suet Un v. Yu Man Fai, (High Court Action No.4433 of 1985), (Decision of 31st March 1986 by Master Perrior). Girl of 6 years old at the date of the accident suffered compressed depressed fracture of the skull bone requiring immediate surgery; fracture of the shaft of the humerus, appreciable brain damage involving, in particular, the left temporal lobe of the brain. Victim became aggressive, bad-tempered and uncooperative, nervous in public and frustrated over small matters. Appreciable cognitive impairment. Further surgery required to insert an acrylic graft. 31% chance of late post-traumatic epilepsy. Lower end of the serious category. Award of $96,000 for PSLA. 316. Yuen Yee Tak v. Hung Sang Engineering Works (High Court Action No.8495 of 1994), (Decision of 16th June 1988 by Master O'Donnell). Victim was 18 1/2 at the time of the accident. Severe brain injuries. In hospital for 6 months. Left limbs suffered from spasticity dyspraxia and marked incoordination. Plaintiff experienced difficulty in performing simple errands. Unable to participate in active sports such as swimming, bowling or soccer. Experienced frustration with disability and quarrelled easily over trivial matter. Substantial injury. Award of $175,000 for PSLA. 317. Tsang Kwun Chiu v. Yuen Hoi Sang (High Court Action No.2703 of 1988) (Decision 29th June 1990, Nazareth J.), weakness and fatigue in right leg, inability to squat for long, can only climb stairs very slowly, feeling of fatigue, of heaviness on right side of his head, impairment of memory, inability to lift heavy weights and to stand vibrations, suffered from dizziness. Substantial injury category. $220,000 for PSLA. 318. Leung Lai Ha v. Ho Sau Ling (High Court Action No.3582 of 1990), (Decision of 18th June 1993 by Master Jennings). A baby aged four months at the time of accident, was six at the time of the trial. Head injury with post-traumatic, hydrocephalus (accumulation of fluid, causing enlargement of brain), has a shunt or drain attached to her head in order to drain fluid from the brain, she has subdural haematoma and intracerebral haematoma as well as diffuse cerebral edema and contusion will require three neurosurgical operations. Functioning at levels consistently below those expected of children in her age group. Intellectual and behavioural disabilities, maladaptive, destructive and self-destructive behaviour pattern. If these patterns persist, severe psychiatric complications are likely to develop. Will be left with very significantly intellectual and behavioural impairment for the rest of life as well as social and family relation. Upper end of substantial injuries. $300,000 for PSLA. 319. Leung Sai Kui v. F. Zimmern & Co, (High Court Action No.1 151 of 1995, Decision of 11th July 1986 by Master Suttill). Young male suffered serious head injury. Initially hospitalised for 2 1/2 months. For the next five years suffered spasticity of left limbs, leftsided convulsions, incontinence and fits of violence. The plaintiff then suffered a severe convulsion, resulting in infarction involving the right interior cerebral and middle cerebral arteries territories of the brain. This caused a general deterioration of the plaintiff. Permanent disability : the plaintiff was mentally and physically disabled and required full time nursing care. There is no active movement in his left limbs and poor control of his right limbs, severe visual disability, incontinence, severe slurred speech and a shortened lifespan. Disaster category $450,000 for PSLA. b. U.K. awards 320. Lamey v. Wirral Health Authority, Current Law Year Book [1993], 418, (Decision of 22nd September 1993, Mr Justice Morland). Plaintiff suffered anoxic brain damage at birth. She was aged 11 at trial but had ability of a 6 year old. She was mentally handicapped and mental ability was unlikely ever to develop beyond that of a child of 10 or 11. The only residual physical disability was clumsiness although there was also permanent asymmetry of the mouth and a slight speech defect. She was uninhabited and hyperactive and was unsafe to go out without supervision of an adult all times. Unable to live independently and was not expected to be able to undertake any paywork. General damages £80,000. 321. Roderigues v. Woods, Kemp & Kemp, pra-003, (Decision of 3rd May 1994, Otton J). Female aged 48 at the day of accident. Left acute sybdural haematoma. Also acute delayed posterior fossa extradural haematoma and hydrocephalus. The plaintiff sustained some cerebral atrophy and was unable to use her left arm and hand and had severely limited use of her left leg. She also had orthopaedic injuries, principally fractures of the pelvis, minor fracture of the vertebrae. She was left with a severe cognitive deficit Her abilities being no better than borderline retarded. She had a marked impairment of memory, significant attentional problems and inefficiency of information processing, required 24-hour care. General damage £80,000. 322. Crane v. Oliver [1994]12 CL102 (Decision of 19th October 1994, Smith J). Serious head injury with brain damage and there was a risk of post-traumatic epilepsy of 5%. Impairment of intellect, affecting memory and intelligence, full I.Q.s had declined by 20%, mild expressive language difficulties, causing difficulties in naming and word, finding and some difficulties in executive functioning, consisting of problems with abstract thinking and planning. He had impaired concentration and tended to tire easily. Personality profoundly affected by the accident. He was impulsive, social skills had impaired and had difficulties for seeing consequences of his action. Speech slurred and writing slow. Impairment of the cutaneous sensation over the left side of the face and left side of the tongue, Incoordination of four limbs, no prospect of obtaining employment in the open market and his prospect of marriage had been lessened. He would require long-term support by way of rehabilitation in a structured setting. General damages £60,000. 23. Award for pain suffering and loss of amenities 323. The award for pain suffering and loss of amenities for disaster should be revised to $1,000,000 onwards. As Pui Ki is at the low range of the disaster situation, the award is $1,000,000. V. Other damages 1. Domestic helper 324. Cons J.A. in Lee Ting Lam held that in the last two categories, i.e. gross disability and disaster, additional awards can be expected to cover nursing or other attendant care. 325. Pui Ki is seeking damages to employ a part-time domestic helper. She is not claiming damages for a full-time domestic helper. This is understandable. She and her parents are living in a small flat in a housing estate and by virtue of their social background, they are used to looking after themselves. The purpose of having a domestic helper is to accompany Pui Ki to therapy sessions, social activities centres which is necessary to widen her social repertoire. Eventually the helper may assist her to sheltered workshops. With her injuries she would not able to lead an independent life. After the parents' death, she would definitely need help with household chores such as cooking and cleaning. She just could not do these herself because of her physical handicap. Her so-called cooking skill is really confined to the use of the micro-wave oven in warming up the food and the making of jelly candies. 326. I am satisfied there is a need for such a helper. Furthermore, the need of the helper would relieve the mother so that she could recover from her difficulties which in turn would help to speed up the recovery of Pui Ki. 327. The father is now aged 48 and the mother is 47 years of age. Before the accident, the mother used to have two jobs. Because of the accident, she took leave of her jobs from April 1989 to September 1990. In October 1990, she returned to one of her jobs. She now earns $4,500 per month. If she was doing both jobs, she could be earning about $7,000 a month. She said that after the accident, she did not feel that she have enough energy to do both jobs and also it was important that she should return home as soon as possible so that the child is not left at home for too long. 328. The parties agreed that the mother would in any event leave one of her jobs. Even if the mother has to give up one of the jobs, I am satisfied that an award should be made. It is instructive to refer to the case of Housecroft v. Burnett where O'Connor L.J. at p.341 stated that:-
329. The claim under this head is an alternative to a claim for recompense for the mother's service which is recoverable at law. In Hunt v. Severs, Lord Bridge at p.363 stated that:-
330. According to the information provided by the Labour Department on 31st May 1995, the current rate for a full-time (but not live in) local domestic helper ranges from $6,000 to $8,000 per month. The hourly rate of a part time local domestic helper is about $40 to $60. Doing the best I can, I find that $4,000 per month is a fair basis to assess the salary of a part-time domestic worker. 331. Based on Mr Quant's "Lifetime Multiplier for female", the multiplier is 34 for a discount rate of 2.7% and 45 for a discount rate of 1.2%. After discounting 10% for viciccitudes of life, the multipliers are 30 and 40 respectively. The average is 35 which I will adopt as the lifetime multiplier. 332. The award under this head is:- 333. $4,000 x 12 x 35 (multiplier) = $1,680,000 2. Psychotherapy, family and occupational therapy 334. All the medical practitioners agreed Pui Ki must receive psychological treatment. Dr Wong said that without treatment, she is highly likely to become a chronic invalid who will be mostly completely dependent on others. Dr Patrick Leung said that the Plaintiff has a mild depression which is treatable and which overshadows her intellectual performance. Her case has not been treated as aggressively as he would prefer. He recommended individual and family therapy and participation in activities organised by social services group. 335. It is extremely important for Pui Ki to have psychotherapy in order to help her to accept her handicap and to help her to deal with her negative emotion. Therapy is also required for the mother because if the mother does not improve, it will have a negative effect on the daughter. 336. After the accident in 1989, apart from one session with Mr Whyte. Pui Ki only began to receive psychotherapy from Miss Esther Lau in January of 1995. Mr Griffiths complained that the Defendants had refused to provide the costs for the psychotherapy until recently. This is disputed by Mr Yu. This is not a matter I need to go into, I am satisfied that the treatment as recommended by Dr Wong should be followed. 337. Dr Wong said it was also necessary to have occupational therapy in order to widen the range of movement, dexterity and coordination of the limbs. It is needed to maintain the level of function to minimise the deterioration. 338. Initially, Dr Wong recommended 28 sessions of individual therapy, seven sessions of family therapy and 28 sessions of occupational therapy. 339. He later revised his recommendation as follows:-
340. He suggested allowance should be given for upward adjustment of fees in the region of 10% to 15% per year. The approximate total costs is:-
341. Dr Wong said that he revised his figures because he had to consider the progress Pui Ki has made so far and also in respect of the mother's response to therapy. Miss Esther Lau was of the view that the progress in therapy has been extremely slow and minimum. He said that paradoxically sometimes an increase in psychotherapy sessions actually reflects an improvement in the conditions of a patient and the therapy should be pursued to its fullest possible extent. in respect of the occupational therapy, Dr Wong said that the increased sessions was because initially he had under-estimated Pui Ki's physically handicap. 342. Dr Lau disagreed that Pui Ki would be a chronic invalid. This is so even without treatment. I have to say that having considered the evidence of Dr Lau, I come to view that he has lost his impartiality as an expert witness. There are far too many instances when he tries to minimise the problems of Pui Ki. I find that I could not rely on his evidence on the assessment of Pui Ki. I am satisfied that Dr Wong as the treating psychiatrist who supervise Miss Esther Lau and follow the progress of Pui Ki since 1994, is in a better position to advise on the matter. I would accept his recommendation of treatment and the costs of $85,000. 3. Long term psychiatric treatment 343. Dr Wong envisages three possible outcome for the future of Pui Ki:-
344. Dr Wong said the best estimate is that she is likely to achieve an outcome between the first and second scenario. 345. Dr Wong said that no fewer than 10% of the population in Hong Kong suffer from psychiatric morbidity. In the case of Pui Ki, even though by the time the psychotherapy has achieved a 100% result, she is basically a vulnerable person and her resilience would be lower than the rest. It is highly likely that she will remain single. By the time she survives her parents so that the family support no longer exists and together with the changes when she goes into middle life, there is a reasonable chance that psychiatric treatment is required. 346. To cater for the event that she may need psychiatric treatment in the future, allowance would have to be given to cover the cost of in-patient psychiatric treatment. On the average for the next 30 years, she may require one in-patient admission of 3-weeks duration. This does not mean she has to attend hospital every year. This is only an average worked out for the next 30 years. The maintenance fees per day in the first-class private ward of the Hospital Authority's hospital is $755. In addition, there will $2,000 per day for the fees of attending psychiatrist, occupational therapist and clinical psychologist and an $300 per day for medication. 347. Miss Lau is also of the view that Pui Ki requires access to psychological counselling in times of emotional difficulty on a long term basis. By this, she does not mean that she would be seen monthly for the rest of her life. But in time of crisis and emotional difficulty, she should have access to these services. 348. There cannot be any exact mathematical calculation under this head. This is not a case where Pui Ki has to undergo, for example, an immediate surgery in which the medical expenses can be estimated with some degree of accuracy. However, I do agree with Dr Wong that contingencies must be provided for in the event that she suffers a setback in her psychiatric well-being in the years to come. The chance is that such setback is likely to happen. I will adopt an average of $35,000 per year and use a multiplier of 35. The award is $1,225,000. 4. Minor damages 349. The agreed special damage is $350,514.30. The following items are not agreed. 5. Traditional treatment
350. So Wai Ching practises traditional Chinese medicine, namely acupuncture. Pui Ki sought her treatment for six months. The treatment was on her left side and leg. Her movement improved slightly as a result of the treatment. 351. Sin Kwun Hing treated her for a skin rash on her back. He described pills and ointment for the rash. The treatment was from August 1992 to November 1992. 352. Leung Wah practises traditional Chinese medicine. His treatment is an alternative treatment to acupuncture. It is in the form of massage. He applied ointment to the affected area and then used an instrument (similar to a ruler) to simulate the nervous system. She is responding to the treatment which gives her more control over her left hand and left leg. The treatment started in October 1994. The costs of each treatment was $500. She will attend another 20 treatment to complete the course. 353. The claim for traditional treatment was considered by Roberts C.J. in Yu Ki v. Chin Kit Liu [1981] HKLR 419 at 420 where he said:-
The parents considered the treatments to be beneficial, the sums are reasonable and I will allow the sum of $41,332. 6. Tonic food 354. Roberts C.J. in Yu Ki held that:-
355. In the present case, the mother prepared tonic food for Pui Ki for about 12 months after the accident. She estimated that she spent $1,300 a month on tonic food. This was mainly ingredients for making special soup. The ingredients include bird's nest, chicken essence, ginseng, snake and deer tail. Pui Ki sustained serious injuries in the accident and the idea of treatment by nourishing food is a matter which most of the Chinese population in Hong Kong would subscribe. Considering the expensive cost of bird's nest, ginseng and deer tail, the sum of $1,300 per month is a modest amount indeed. The total claim of $15,000 for tonic food is allowed. 7. Pension 356. Pui Ki claims loss of pension as a result of the injuries. It is dealt with by Mr Griffiths in his opening. Although the matter is not addressed in the closing submission, after the hearing Mr Griffiths by notice to the court and to the Defendants, informed the court that the claim for pension rights has not been abandoned. With the passage of the Mandatory Provident Fund Schemes Ordinance on 3rd August 1995, an employer has to contribute a minimum of 5% of the employee's remuneration to a provident fund and the employee has to do likewise. As I have not heard full arguments on the effect of the Ordinance, I will reserve my decision on this matter until further arguments from the parties. VI. Summary
VII. Judgment 357. The parties agree that the liability of the Defendants is to be assessed at 80%. The sum of $8,023,866 has to be reduced accordingly to $6,419,093. The sum of $39,200 which has already been paid should further be deducted. There shall be judgment to the Plaintiff for the sum of $6,379,893. 358. Interest on pain suffering and loss of amenities will be at 2% p.a. from the day of the issuance of the writ to date. There will be no interest on the claim for loss of future earning, psychotherapy, long term psychiatric treatment and domestic help. Interest is at 4% p.a. from the day of the accident to date on the special damages. 359. There shall be costs nisi of the action to the Plaintiff. 360. As the Plaintiff is under disability I shall hear further submission on the mode of investment of the awards.
Representation: Mr John Griffiths, Q.C., Mrs Barbara Kaplan and Mr Michael Winckless, inst'd by M/s Wilkinson & Grist, for the Plaintiff Mr Benjamin Yu, Q.C., inst'd by M/s Munro & Claypole, for the Defendants Photocopying of this Headnote is not allowed | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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