Lai Tat Wah and Another v. Franki Contractors Ltd

HCA011169/1983

Action No. 11169 of 1983

Damages - Fatal Accidents Ordinance - Law Amendment and Reform (Consolidation) Ordinance - Employees' Compensation Ordinance.

S.26(1) of the Employees' Compensation Ordinance is aimed at avoiding double benefit and an award under the Ordinance is not to be set off against damages recovered under the Fatal Accidents Ordinance or the Law Amendment and Reform (Consolidation) Ordinance unless in each case the beneficiary is the same.

Further held that the conventional award for damages for loss of expectation of life should now be $20,000.

Action No. 11169 of 1983

IN THE HIGH COURT OF JUSTICE

BETWEEN

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Coram: Hon. Mantell J.(In Chambers)

Dates of Hearing: 1st, 5th June, 1984.

Date of Delivery of Judgment: 21st June, 1984 (In Court)

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JUDGMENT

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1. This is a claim under the Fatal Accidents Ordinance and the Law Amendment and Reform (Consolidation) Ordinance which harbours its share of "intellectual alligators"⁽¹⁾ and also raises a novel question as to the effect upon such a claim of the proviso to section 26(1) of the Employees' Compensation Ordinance.

2. I shall set out the facts as simply as I can. On 11th June 1982, through no fault of his own, Lai Tin Sung was electrocuted at the construction site where he was working when he came into contact with the "live" frame of a spotlight which was being used to allow building work to continue after dark. He was killed outright. At the time he was 32 years of age and in the defendant's employment as a ganger. He left behind him an aged father, a "widow" and three children. I use the term "widow" in parenthesis because the ceremony of marriage which he underwent in 1972 with Cheung Kwai Ying, the lady in question, is not one which since 1971 has been capable of resulting in a valid marriage, although he and Madam Cheung regarded themselves as married and so, I am told, could at any time have regularised their relationship by registration, (alliteration unintentional). Madam Cheung is now 32 years of age. The three children, illegitimate in the circumstances, are Lai Ka Ming, a daughter born on 8th December 1973 now 10, Lai Ka Ki, a son born on 8th February 1975 now 9, and Lai Ka Wing, a son born on 27th December 1977 now 6. Father, Lai Tat Wah is 75 years of age. Until Lai Tin Sung's untimely death, all the above lived as one family and could be regarded as his "de facto" dependants. It is agreed that with overtime, the deceased was earning $5,600 per month at his death. By reason of the reduced amount of overtime by then available, his earnings would have come down to $5,250 at the date of trial. His mean wages between death and trial would have been $5,425. It has been agreed between all parties that his prospective earnings from the date of trial onwards should be taken as $5,250 monthly. The evidence as to how the deceased applied his income came from Madam Cheung whom I accept as a witness of truth. She told me that $3,000 went on family expenses; $500 went to father, to supplement a modest competence of his own; $500 to $600 for family treats; and the rest, about $1,500 was for the deceased's own additional personal expenses or to do with as he pleased. As an unmarried man, his income would have been liable to tax. As a married man, the allowances would have left no part of his earnings chargeable. The evidence from Madam Cheung was that he certainly had communications from the Inland Revenue and I accept that he probably made returns; but whether he was paying tax or not at the time of his death seems to me to make no difference to any of the relevant calculations. If he was, it must be that the small amount involved came out of the money he kept for himself and would continue to do so. If he was not, it is likely that such would continue to be the case or, if confronted with a demand, that he would have met the situation either by validating his marriage or by using part of his own money to pay the tax rather than by reducing the level of support for his family.

3. Now I come to the anomalous position created by Ordinance. On these facts under the Employees' Compensation Ordinance, Madam Cheung, the children and father are all, or may all be counted, dependants. Section 3 provides, inter alia:

" 'dependants' means those members of the family of an employee who were wholly or in part dependent upon his earnings at the time of his death, or would but for the incapacity due to the accident have been so dependent, and, where the employee, being the parent or grandparent of an illegitimate child, leaves such child so dependent upon his earnings, or being an illegitimate child, leave a parent or grandparent so dependent upon his earnings, shall include such an illegitimate child or parent or grandparent respectively. "

And by a further proviso where the court is satisfied on an application being made by a woman in accordance with rules made under the Ordinance that the woman and the deceased were living together as man and wife at the time of the accident and that the woman was wholly or partially dependent on the earnings of the deceased at the time of his death or would but for the incapacity due to the accident have been so dependent, the court may, in its absolute discretion, order that the woman be deemed to be a dependant for the purposes of the Ordinance. Whether or not Madam Cheung is to be so deemed is, therefore, a matter within the absolute discretion of the court. Under the Fatal Accidents Ordinance, the children are dependants by reason of section 2(2)(c), as is father under section 2(1) but not Madam Cheung. Section 2(2)(c) provides that an illegitimate child shall be treated as the legitimate child of his mother and reputed father. Madam Cheung does not fall within the definition of "wife" and "dependants" means "wife, parent, child and any person who is, or is the issue of, a brother, sister, uncle or aunt". Madam Cheung is not a wife within section 2(1) of the Intestates Estate Ordinance, nor are the children by reason of section 2(2). Only father is entitled to benefit from the estate by reason of section 4(7). Only father therefore has any prospect of benefiting from an award under the Law Amendment and Reform (Consolidation) Ordinance.

4. Application having been made by Madam Cheung under the Employees' Compensation Ordinance, the defendant paid $168,000 into court which was apportioned by order of His Honour Judge Blackwell on 30th May 1983 so as to give Madam Cheung $118,000, each of the children $15,000 and father $5,000.

5. Only father and the three children have any claim as dependants under the Fatal Accidents Ordinance. The calculation of father's dependency is a somewhat academic exercise, or would be if the evidence was before me upon which to make the calculation, in that any sum recovered is bound to merge with a much larger entitlement under LARCO. But although I am able to determine the value of the dependency at the date of death, which I shall assume would continue undiminished, I do not have any evidence as to the life expectancy of a man of 75 in Hong Kong. Doing the best I can and making adjustment for contingencies and acceleration of payment, I should think that a multiplier of 5 from the date of death would be appropriate. If I take, therefore, the monthly dependency at death as being $1,000, that is one-sixth of $3,000 being the amount paid in for family expenses plus one-sixth of the $600 allocated to entertainment plus the $500 which I have mentioned, the total entitlement under the Fatal Accidents Ordinance is 12 x $1,000 x 5 which comes to $66,000. Mr. Yu for the children has suggested multipliers of 10, 7 and 6 years respectively from the date of death and Mr. Clayton does not seriously quarrel with that suggestion. Nor do I. Mr. Yu also suggests a monthly dependency of $600 in each case, that is one-sixth of $3,000 plus one-sixth of the $600 said to be spent on family treats. Mr. Clayton has attacked both figures, so far as he was able in cross examination of Madam Cheung, though with commendable courtesy and restraint. He suggested rather obliquely that the deceased may have kept more than the $15,000 alleged for himself in order to finance his gambling debts, but Madam Cheung would have none of it. Mr. Clayton also suggested that his very long working hours would have left very little time for joint family recreation. But I rather take the view that being the hard-working and dedicated family man that he was, the deceased was much more likely to spoil his family in the short periods he was in their company. I do not think that the figures are unreasonable and the product of them is $43,200 for Lai Ka Ming, $50,400 for Lai Ka Ki and $72,000 for Lai Ka Wing.

6. I approach the calculation of the Law Amendment and Reform (Consolidation) Ordinance award under two heads, loss of expectation of life and the lost years.

Loss of Expectation of Life

7. There was no appreciable interval between the cause and the fact of death and I have not, therefore, taken account of pain and suffering. What may be recovered is what has come to be described as the conventional sum which, in Hong Kong, has been set at $15,000 ever since the decision in Yeung Wing v. V.S.L. Engineers.⁽²⁾ In that case, the Chief Justice suggested periodic revision of the figure and I have been invited to do just that. It has been pointed out to me that in the three years which have elapsed since Yeung Wing's case, the purchasing power of the dollar has fallen. Now $20,000 will barely go as far as did $15,000 then. I think the time has come for the so called conventional award for loss of expectation of life to be increased to $20,000 and that is the award I make.

The lost years

8. I do not intend to review the authorities. No one has attempted to disuade me from adopting either the approach advised as correct by the Court of Appeal in Wong Sai Chuen v. Tam Mei Chun & others⁽¹⁾ following Gammell v. Wilson⁽³⁾ or the alternative method there suggested which is to add to the total dependency figure any notional savings over the period of the lost years. Theoretically it might seem that whichever approach is followed one arrives at the same result. Miss Mok, in what was, if I may say so, a seductive submission made all the more inviting because she reproduced the bones of her argument in writing and thus provided for a mathematically, incompetent judge readily adoptable figures, has argued that the free balance should be set at $3,500 per month for the whole of the lost years period; which, although her calculation is carried through somewhat differently, would mean at that rate from the date of death for whatever I deem to be the appropriate multiplier. The figure of $3,500 has been produced by Miss Mok by subtracting the deceased's own expenditure and entertainment and family expenses from the agreed income at the date of death. The defect in that approach, if I may say so, lies in the fact that not only has Miss Mok taken the income at death rather than the income as it is agreed to be as from the date of trial, but also proceeds upon the assumption that the element to be deducted, that is the deceased's own personal expenditure, would remain the same over the whole period. Nor does it take account of the fact that as time goes on, one dependant after another will drop out of the reckoning, so that in the end depending on the period of the multiplier, one might be left with only Madam Cheung and on the figures used by Miss Mok, a dependency of $600 per month. Miss Mok might counter by saying that any reduction in dependency is to be transferred to the notional savings account so that one ends up with the same global sum. I do not think that is realistic in the case of a static income and in a time of increasing costs. I think it more likely that the sums released by dependants dropping out would be just as likely to be consumed by increased personal expenditure on the part of the deceased had he lived. In my opinion, rough and ready though it may be, the second approach is to be preferred in the particular circumstances of the present case and it is better to calculate first the dependency and add to that savings which may be taken in the absence of other evidence as the accepted or conventional figure of 10% of income. On that basis, as first father and then the children drop out of the picture, the dependency would reduce as follows:

If, as I am satisfied it is, the correct multiplier in this case should be 15 years, the calculation would seem to be as follows:

bringing the total dependency to $339,600.

9. By my working, notional savings at 10% of mean earnings of the $5,425 per month for the period between death and trial gives $12,835.55 and using the same rate for the balance of the lost years, that is after trial, on the sum of $5,250 per month gives $82,078.05. The total award for lost years, therefore, is $434,514.05 to which must be added $20,000 for loss of expectation of life to produce $454,514.05 for the damages recoverable by or on behalf of the estate under LARCO which figure is to be contrasted with the $649,866.00 which results from Miss Mok's method of calculation.

10. The next question is: how do these findings come together having regard to the long established rule in Davies v. Powell Dufferyn Associated Collieries Ltd. ⁽⁴⁾ that LARCO damages must be set off against Fatal Accidents ordinance damages in the hands of the same recipient and to the provisions of section 26(1) of the Employees' Compensation Ordinance? Section 26(1) reads:

I do not have difficulty applying the first principle. It only affects father as the sole potential beneficiary under the estate and has the result of extinguishing his Fatal Accidents Ordinance award. Likewise, there is no difficulty with regard to the effect of the Employees' Compensation award on the position of the children. The awards under the Fatal Accidents Ordinance must be reduced by the amount received under the Employees Compensation Ordinance. Nor is there any difficulty, I believe, in applying the proviso to section 26 to the LARCO award in so far as there has been a payment under the Employees' Compensation Ordinance to father. The LARCO award must be reduced pro rata, that is the set off must be applied after merger of FAO damages and the LARCO award. There might be some argument based on the case of Chan Yuk Sum v. Wong Pai Kwan & another⁽⁵⁾ that the set off should be against FAO damages before merger so as to leave the LARCO award intact; but in my judgment, such an approach would result in double recovery and, for reasons which will appear, it is my view that the object of the Employees' Compensation Ordinance and in particular, of section 26 is to avoid that consequence. In that, I believe, I have some support from the observations of Mr. Justice Briggs, as he then was, in the case which I have just cited. ⁽⁵⁾ But the question arises as to whether the LARCO award should be further reduced by the amount paid under the Employees' Compendation Ordinance to Madam Cheung which would not, otherwise in the peculiar circumstance of this case, be used in reduction of any award made either under the Fatal Accidents Ordinance or the Law Amendment Reform (Consolidation) Ordinance. The problem can never arise, of course, where an employee claims damages in his lifetime, whether or not they include a claim for lost years, and also claims employees' compensation but it does arise, says Mr. Clayton in a persuasive submission, after death because by the definition section, it is provided that:

"Save for the purposes of section 17 or where the context otherwise requires, any reference to an employee who has been injured shall, where the employee is dead, include a reference to his legal personal representative, or to his dependants or any of them or the Official Administrator or such other officer as the Governor may appoint to act on behalf of the dependants of the employee."

And as we have seen the section goes on to provide that a woman cohabitee can be, and in this case was, deemed a dependant. So says Mr. Clayton in this case you could and should read the proviso as though "personal representative" were substituted for "an employee" in the first sentence, which, I think, must be right; but then continues Mr. Clayton obeying the mandate of the section you should go on and by a literal application of the words "any compensation which has been paid or is payable under the Ordinance" reduce the damage recovered under LARCO by the personal representative by the amount of the compensation paid by the employer under the Employees' Compendation Ordinance to Madam Cheung, which, I think, must be wrong. I cannot agree that the proviso should be read as being directed to compensation "to whomsoever paid". It must intend the case where the damages and the compensation have the same destination. The object of the proviso as I have said is not to avoid double payment but double recovery though, in fairness, no one could pretend that the legislature could have had the special circumstances of this case in mind when that particular proviso was enacted. Otherwise, the Employees' Compensation award to mother could be set off, and if Mr. Clayton is right, should be set off against the FAO damages recovered by the children supposing that there were no substantial LARCO award to be attached; and other equally curious results might follow. The authorities which have been cited to me are not directly in point in that they deal with rather different provisions but it seems to me that the reasoning in Kinneil Cannel and Coking Coal Co. Ltd. v. Sneddon and Waddell⁽⁶⁾ is not far for removed from that which I have attempted to introduce in the instant case. There, the House of Lords was concerned with section 29(1) of the 1929 workmen's Compensation Act which gave a workman an option to claim under the Act or at common law but which provided that the employer should not be liable to pay compensation for injury to a workman by accident arising out of and in the course of the employment both independently of and also under the Act. No difficulty arose under that Act with a living workman's claim but since after death, a reference to workman was to include a reference to dependants more than one person might and, in that case, did acquire the right to claim under the Act. One dependant claimed under the Act and it was argued that his election defeated the rights of the other dependants to claim at common law. The House of Lords rejected that argument. I cite from the speech of Lord Russell of Killowen at page 594:

"If this contention is sound some curious features suggest themselves. No provision is to be found anywhere in the Act dealing with the case where the group is not unanimous or stating how a minority is to be bound. Again, the group may be so composed that the majority of the dependants happen to be persons who have no claims outside the Act. Thev themselves have no option at all. Can they nevertheless exercise the group's option by proceeding under the Act, and so prevent other members of the group from asserting their claims independently of the Act? Or can the members of the group who can claim independently of the Act shut out all claims by members of the group whose only claims arise under the Act?"

and later

"For myself I can see no necessity for construing s.29, sub-s. 1, in a way which produces these results. I find no difficulty in construing it in relation to the dependants of an injured workman who is dead - as if (omitting immaterial words) it ran thus: 'but in that case the dependants may at their respective options either claim compensation under this Act or take proceedings independently of this Act; but the employer shall not be liable to pay to any dependant compensation .... both independently of and also under this Act.' "

Now, I recognise that the House of Lords was there dealing with a question of whether or not a particular party had a right to proceed by way of action and that is an obvious distinction which may be made between that case and the present one, but I do draw some strength from the approach adopted by the House of Lords in that case and it does seem to me that the proviso to section 26 can only require deduction to be made where damages and compensation under the Ordinance have fallen into the same hands. Therefore, in my judgment, no further deduction is to be made from the LARCO award than has been already indicated.

11. So, after deducting employees' compensation there will be judgment under FAO for the children in the sum of $120,600, being $28,200, $35,400, and $57,000 for Lai Ka Ming, Lai Ka Ki and Lai Ka Wing respectively. Again after subtracting employees' compensation there will be judgment under LARCO for $449,514.05. I make an order for interest at 7% per annum on the damages under FAO for the period from the date of the accident to the date of trial and at the same rate and over the same period on the damages for the lost years. I make an order for interest at 2% per annum on the damages for loss of expectation of life from the date of writ to the date of judgment. These rates are, I understand, agreed between counsel. The plaintiff's costs and those of the children are to be borne by the defendant and are to be taxed in accordance with the Legal Aid Regulations.

29/6/84         Further to an application by Mr. Yu, I make an order for payment into court of the sum of $120,600 in terms of a draft order submitted to me with the substitution of 28 for 7 days. I give the defendant liberty to apply as to time.

(2)    [1981] H. K.L.R. 131

(3)    [1981] 1 A.E.R. 578 H L

(4)    [1942] A.C. 601

(5)    [1973] H.K.L.R. 250

(6)    [1931] A.C. 575

Representation:

Alice Mok (William Sin & Co.) for plaintiff.

Benjamin Yu (D.L.A.) for dependants of the deceased.

Peter Clayton (Denton Hall and Burgin) for defendant.