Cheng Yau Chi and Another v. Chung (or Joan) So and Another

HCA000394/1978

Coram: Garcia, J. in Court

Date of Judgment: 24 November 1979

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JUDGMENT

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1. This is an action brought by the administrators of the estate of Lung Cham-sum, deceased, under the Law Amen dment and Reform (Consolidation) Ordinance Cap. 23 and the Fatal Accidents Ordinance Cap. 22. The deceased was killed in a traffic accident on the afternoon of 23rd April, 1975, such accident having occurred as a result of a collision in Castle Peak Road between a 9 1/2 ton lorry No. AW7404 driven by the 1st defendant going in the direction of Yuen Long, and a private car No. AS4875 driven by the deceased going towards Kowloon. As a consequence of the accident the 1st defendant was summonsed on the 22nd October, 1975 for the offence of dangerous driving causing death to which he pleaded not guilty. After a trial on the 16th February, 1976 he was convicted of the offence of careless driving and fined $400. The second defendant who is the owner of the said vehicle was summonsed on three counts arising out of the same accident also on the 22nd October, 1975 for permitting the use of the lorry when.

2. On 16th March, 1976, the 2nd defendant pleaded guilty to the three said offences and he was convicted and fined $100 for the first offence, $100 for the second offence and $150 for the third offence. By agreement of the parties the record of the said convictions of the 1st and 2nd defendants was adduced in evidence. In my view there was ample evidence adduced at the trial of the 1st defendant to found his conviction for careless driving and also for the convictions recorded against the 2nd defendant. Section 62(1) and (2) of the Evidence Ordinance Cap. 8 are in identical terms with Section 11 of the Civil Evidence Act 1968 of the United Kingdom. Section 62(2) of the Ordinance reads:-

"In any civil proceedings in which by virtue of this section a person is proved to have been convicted of an offence by or before any court in the Colony-

Section 11 of the Civil Evidence Act 1968 was considered in the case of Stupple v. Royal Insurance Co., (C.A.) 1971 1 Q.B. 72 where Lord Denning, M.R. said:-

"Taking a running-down case where a plaintiff claims damages for negligent driving by the defendant. If the defendant has not been convicted, the legal burden is on the plaintiff throughout. But if the defendant has been convicted of careless driving, the legal burden is shifted. It is on the defendant himself. At the end of the day, if the judge is left in doubt the defendant fails because the defendant has not discharged the legal burden which is upon him. The burden is, no doubt, the civil burden. He must show, on the balance of probabilities, that he was not negligent: see Public Prosecutor v. Yuvaraj [1970] 2 W.L.R. 226, 231, in the Privy Council quite recently. But he must show it nevertheless. Otherwise he loses by the very force of the conviction."

Once the convictions have been proved and they are in this case, the legal burden of proof shifts to the defendants. The defendants in this case have not adduced any evidence whatsoever to show that they were not negligent in causing the accident and on the principles so succinctly and clearly enunciated by the learned Master of the Rolls I find the defendants fully liable to the plaintiffs in respect of the latters' claim.

3. The deceased was married with two children one of whom was born on the 10th January, 1971 and the other on the 20th November, 1974. He was in good health and according to the widow was quite active during his life time. Besides being the sole support of his family, he also contributed to the support of his father who was in mainland China and he used to send him from $150 - $200 per month for that purpose. However, his father died at the beginning of this year, but there is no dispute over the award of the sum of $6,600 in respect of his dependence for support up to the time of his death.

4. Immediately prior to his death the deceased was the sole proprietor of the Tai Yip Medicine Co. at Tse King House, Flat A, 1st floor, Kau Yuk Rd., Yuen Long, New Territories, and the value of his whole interest in the company has been assessed at $107,693 in the provisional schedule of property disclosed on his death. The deceased started his business about nine years prior to his death and although the widow states that she has some idea of the business in which he was engaged in, she herself is not quite clear as to what exactly was involved. As far as I understand it, and this stems from the statement made by her that after the deceased's death there was some stock left in the company valued at between $70,000 - $80,000, the deceased's business consisted in the obtaining of medicines from suppliers at wholesale prices and later selling the goods in bulk to customers such as doctors and clinics at current market rates and the marginal difference between these two prices provided the profit for the company. This view is reinforced by the appearance in the schedule to which I referred to earlier of this amount of the deceased's interest in the said company. From this business he derived profits in the total sum of $148,329.08 for the years from 31st March, 1972 to the 23rd April, 1975. It has further been stated that for a period of about 4 years that is, the period covered by the figures of net profits earned by the business, the deceased had been giving the sum of $2,500 per month to his widow for household expenses. The figures set out in para. 7 of the Statement of Claim indicate only the net profits of his business and a submission has been made by the defence to the effect that because there was only a net profit of $16,764.63 for the year ending 31st March, 1972, it was not possible for the deceased to have provided the sum mentioned by the widow which she says was given to her for the support of the family. This submission, in my view, does not take into account the fact that there may have been profits in previous years which were not utilised and again the figures which are given are only net profits. There may have been drawings made by the deceased either by way of salaries to himself or drawings for the purpose of providing support for his family which are not reflected in net profits, and it is not conclusive that just because the net profit for that particular year was much below the amount stated to have been paid towards the support of his family he was not able to do so out of other funds which the widow says he had. There has been a reference to the schedule of disclosed property after the deceased's death that there was only a small amount of cash in the house, that is, $400, and only a small credit balance in the name of the Tai Yip Medicine Co., that is, $2,363.71. Whilst these are small amounts when viewed in the context of the amount given to the widow for household expenses, account must be taken of the interest of the deceased in the business stated as $107,693, a part of which sum was reflected in the amount of stock which the widow herself values at between $70,000 to $80,000. In making that submission Mr. Leung has made no reference to such of the assets of the company from which drawings could have been made to provide the necessary financial support for the family aside from net profits. In my view, the amount which the widow had stated to have been provided by the deceased is accepted at $2,500 a month this figure includes certain payments made by the deceased to the widow in order to enable her to meet certain extraordinary items of household expenditure, and such finding also meets the objections regarding the savings made by the widow (see Gavin v. Wilmot Breeden Ltd., (1973) 1. W.L.R. 1117). The house in which the family lives in has been purchased by instalments and during his life time the deceased paid those instalments at the rate of $660 a month from his own resources that is, not from the $2,500 per month which he gave to the widow for household expenses, and in addition he provided the sum of $150 per month, also from his own resources, towards the support of his father. This additional expenditure of $810 per month added to the $2,500 a month which the widow states was the extent of support which the deceased provided towards the household, has prompted a further submission on behalf of the defendants that none of the net profits for any of those years would have enabled the deceased to meet such expenditure. Here again I would refer to the remarks I made earlier regarding the submission made in respect of the profits for the year ending 31st March, 1972. The widow has variously stated that the amount which her deceased husband used to provide her with was between $2,500 and $3,000 per month and she has given an account of how this money was spent with regard to the household. She has had to pay something like $200 per month for public utility charges, rates at $90 per month, the cost of a servant to look after the children when she was at work between $500 and $600 per month and the cost of food which includes food for the servant, came to about $1,000 a month. Besides these expanses the children go to school and although no details of any fees payable to the schools in which they study have been given by the widow, some expenses will have been incurred for transportation, meals and other sundries connected with schooling. Moreover, she has had to pay during the life time of her husband the cost of travelling to and from Yuen Long either in the course of her work or to take the children out. No account either has been taken of the fact that clothing will be required for herself and the children. She has admitted that of the amount of $2,500 a few hundred dollars a month is saved from the household expenditure but these savings would be used for the purpose of replenishing some of the household articles or articles of clothing herself and the children so that, in fact, $2,500 would be used almost exclusively for the payment of household expenditure.

5. I am satisfied from the evidence given by the widow that the amount which she uses for the household per month is $2,500. Mr. Leung has mentioned that in the course of her giving evidence the widow has said that the husband was quite particular about his food and he has sought to deduct the sum of $400 per month from the sum of $2,500 because the $400 would represent the amount which was utilized for the deceased and which should not be properly included in the claim for dependency. I agree with this observation and would therefore find that the total amount of dependency of the widow and the two children to be $2,100 per month. However, the main thrust of Mr. Leung's objections to meeting the claim of the plaintiffs is that the widow has since the death of her husband been concerned in the operation of the deceased's business and according to the assessment made by the Inland Revenue Department of the profits for the year from 1st April, 1975 to the 31st March, 1976, the assessed profits were only $2,147 whilst the income assessed for the year ended the 31st March 1976 was $17,299. The assessment for the year ended 31st March, 1976 is not in respect of profits from the company but it is said "to be assessed on your income after the date of the death of your late husband." There are no details of this assessment but it appears to me that from the allowances of $10,000 for herself and $5,500 for the children which are indicated in the assessment note that this assessment refers to her own income as an employee of the Overseas Trust Bank, Yuen Long Branch. She has explained, as far as the Tai Yip Medicine Co. is concerned, that she had tried after the death of her husband to continue with the business but because of the fact that she has had to go to work herself during the day and that she has also to look after the children in the evenings, she had not had either the time nor the strength to carry on with that business and therefore, shortly after the death of her husband, she had taken into employment her servant's son, a Mr. Tsang, and paid him a salary of $700 per month, to run the business. However, after carrying on for a few months and this is reflected in the profits assessed by the Commissioner of Inland Revenue where the profits are shown as being $2,147 for the year 1975/76, it is apparent that at that time the business was not very successful. She says that she had therefore let Mr. Tsang run the business on his own and although the company is nominally in her name, she took no part whatsoever in its operation and that the amount of $700 which she admits is indicates as the salary to Mr. Tsang was the amount which was drawn out by Mr. Tsang himself from the profits of the company in order to maintain contacts with suppliers and with the customers of the company. She also says that if the registration of the company is changed to that of Mr. Tsang the suppliers which her husband used to deal with would not continue to supply Mr. Tsang with goods and therefore the business would very quickly wind up. She stressed that this kind of business depends very much on personal contacts and if the business were to remain in her name, Mr. Tsang would be able to carry on. The line taken by Mr. Leung is that no award should be made to the plaintiffs because the widow and the 2 children of the deceased have not suffered any loss in pecuniary terms through the death of the deceased. He argues that shortly after the death of the deceased the widow operated the deceased's business herself and had employed Mr. Tsang at the salary of $700 per month to do the work for her while she herself went to work as an employee of the Overseas Trust Bank Ltd., at its Yuen Long Branch. Mr. Leung further argues that as this business was earning some profit to the extent of some $20,000 for the year 1978/79 (this figure is supposedly to indicate) she suffered no loss of dependency. The widow has been employed in the Overseas Trust Bank Ltd., for some time prior to the death of her husband and she has stated that she could not carry on with the running of the business because of her full-time commitment to that job and also because she has to supervise the children in the evening. The reason she says that the company has stayed registered in her name has been alluded to earlier and in fact the whole of the business has been transferred de facto to Mr. Tsang who had up-to-date paid her some $50,000 towards the amount assessed by the Commissioner of Inland Revenue as being the value of the deceased's whole interest in the said company. Mr. Leung has also described as improbable the arrangement said to have been made between the widow and Mr. Tsang, that is, that Mr. Tsang should run the deceased's business on his own account. But no matter how improbable this arrangement may sound nevertheless what the widow says regarding the continued registration of the company in her name, the personal character of that type of business, the reason why she had not been able to look after the business because of her job at the bank and the supervision of the 2 young children at home are matters which would have to be taken into account in assessing the credibility of her evidence and in view of the fact that no evidence has been forthcoming from the defendants at all, I find on the balance of probabilities that the business has been transferred to Mr. Tsang and she has no hand in its operation.

6. Counsel for the plaintiffs has submitted that even if the widow had taken ever the business of the Tai Yip Medicine Co., and had continued to operate it, on the analogy that if her husband had been a salaried employee at the time of his death and if she had stepped into his job after his death, she would, nevertheless, be entitled to damages for loss of dependency because her employment in that hypothetical situation would depend entirely on her own efforts. He applies the analogy to the instant case where even if the widow had taken over the business any profits that she makes out of the operation of that business would be entirely due to her own efforts and in particular, the personal character of the business which the Tai Yip Medicine Co., is concerned with. Even if I accepted the argument that the widow had taken over the business of the deceased, and I have not, the personal character of the deceased's business would, in my view, militate against her deriving any benefit from the death of the deceased other than the value of the whole interest of the deceased in the said company which is to be deducted from any award of damages made in her favour.

7. In my judgment the widow and the deceased's children have sustained a loss of dependency by reason of the deceased's death through the negligence of the defendants. In calculating the loss however account will be taken of the expenses which would be assigned to the deceased out of the amount which he provider for the household expenses of the family and these are assessed at $400 per month. The amount therefore which will be the multiplicand is $2,100 per month and a multiplier of 14 has been suggested by Mr. Fung. This figure has not been disputed by the defendants. I would agree that this is an appropriate multiplier to be used for this case taking into account the age of the deceased at the time of his death and the fact that he had been a healthy and active individual during his life time.

8. Reference has been made by counsel for the plaintiffs to an alternative claim on the principles set out by the House of Lords in the case of Pickett v British Rail Engineering Ltd., (1978) 3 W.L.R. 955. Since this claim is made under the Fatal Accidents Ordinance Cap. 22, and is being dealt with under its provisions, I do not think that it is necessary for me to make any further reference thereto.

9. The damages awarded to the estate would therefore be:-

(1) Under the Fatal Accidents Ordinance Cap.22

(2) Under the Law Amendment and Reform (Consolidation)

10. There will therefore be judgment for the plaintiffs in the sum of $259,757 with interest as follows:-

Representation:

Mr. Patrick Fung (Wilkinson & Grist) for plaintiffs

Mr. Raymond Leung (Hastings & Co.,) for defendants