Bushra Bibi and Another v. Method Building & Engineering Works Ltd (in Liquidation) and Others

HCPI 301/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 301 OF 2012

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BETWEEN

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D E C I S I O N

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1.I have handed down a number of decisions in this action. On 8 April 2014, I handed down my Reasons for Judgment after a trial on liability which had taken place on 27 March 2014. Before that, I had heard the parties on 21 January 2014, 28 January 2014 and 26 March 2014 on how proceedings should be conducted in a fatal accident action where the alleged dependants are in conflict with each other. On 26 March 2014, I had also received representations from the parties in HCPI 764/2012 and HCPI 197/2013 on this issue. I handed down my decision on that matter on 16 April 2014.

2.A typographical error had crept into §16 of my decision of 16 April 2014 which I had corrected in a subsequent corrigendum.  I note that the same typographical error has been reproduced in the report of my decision in [2014] 3 HKC 114 at p.126 A-B.  The report should properly read as follows:

“Upon the grant of the second carry on order, the title of the action should be amended as follows:

“BETWEEN

	XYZ, the person appointed to represent the estate	1st Plaintiff
	administratrix of the estate of ABC, deceased (by
	Carry On Order dated )
	XYZ, on behalf of herself and the other defendants	2nd Plaintiff
	of ABC
	and
	DEF	Defendant”

3.As quantum had been agreed in this action, subject to the issue of apportionment, I directed that the conflict between the dependants in this case be resolved at the apportionment hearing in the absence of the defendants.  That hearing took place on 23 July 2014. 

4.Mr. Khalid Mehmood (“the deceased”) had married Madam Bushra Bibi on 24 September 1985.  They had four children born between 1986 and 1994.  All of them are adults.  Madam Bibi petitioned for divorce in FCMC 5718/1996 and, on 5 November 1996, she obtained an order that the deceased pay $4,000 per month by way of maintenance for her and the children.  On 3 August 2004, the deceased married Madam Cerina Shella Calinog.  The marriage certificate contained a statement that the deceased was divorced[1]. A child of this union was born on 29 May 2005.  The deceased died on 2 July 2009.  Competing claims for employees’ compensation were filed by Madam Bibi in DCEC 1311/2009 and by Madam Calinog in DCEC 244/2010. The employees’ compensation claims were settled with the approval of court and the settlement sum apportioned as follows:  $73,829.21 to each child, $258,332.25 each to Madam Bibi and Madam Calinog, and $36,750 in respect of funeral expenses.  Madam Bibi and her four children received employees’ compensation in the total sum of $553,569 and Madam Calinog and her son received employees’ compensation in a total sum of $332,141.46.[2]

5.Gross damages have been agreed between the parties in this case as follows:

	Claim	Sum agreed
1	PSLA	$75,000
2	Bereavement	$150,000
3	Loss of accumulation of wealth	$100,000
4	Loss of Dependency	$2,087,485.11
5	Loss of services	$100,000
6	Funeral expenses (paid in the employees’ compensation proceedings)

6.According to the calculations of Mr Patrick Burke who appeared on behalf of Madam Calinog, the agreed damages, inclusive of interest, came to the sum of $2,661,987 as shown in the following table:

	Claim	Sum agreed	Interest rate / amount	Total
1	PSLA	$75,000	2% pa $75,000 x 2% pa x 27/12 months = $3,375 (27 months had passed since the service of the writ)	$78,375
2	Bereavement	$150,000	8% pa 150,000 x 8% pa x 48.75 /12 months = $48,750 (48.75 months had passed since the accident)	$198,750
3	Loss of accumulation of wealth	$100,000	Nil	$100,000
4	Dependency	$2,087,485.11	4% pa $599,242.48x 4%pa x 48.75/12 months = $97,377	$2,184,862
5	Loss of services	$100,000	Nil	$100,000
6	Funeral	Paid in EC proceedings		Nil
				$2,661,987

7.At the apportionment hearing, it became readily apparent from a perusal of the statement of damages filed on behalf of Madam Bibi and her four children that the amount of employees’ compensation received by them exceeded the amount of damages they could properly claim for loss of dependency.  As Mr Neal Clough, who appeared for Madam Bibi, rightly, did not press for any of the damages agreed as damages for loss of dependency to be apportioned in favour of his clients, and as Mr Burke did not assert that the amount of employees’ compensation paid to Madam Bibi and her children could be “clawed back” (on account of the fact the employees’ compensation paid to them exceeded the loss of dependency suffered by them), the so-called conflict between the dependants no longer existed and the hearing quickly turned into a hearing for the apportionment of the agreed damages.  After some further exchanges between the parties and the bench, I indicated that, subject to any submissions that the 1^st , 2^nd and 3^rd defendants might wish to make on this point, I was minded to approve the settlement if damages for loss of accumulation of wealth were agreed at nil and if the agreed award for loss of dependency was increased by $100,000, and to apportion damages as per the table below:

APPORTIONMENT TABLE

1	GROSS DAMAGES		$2,661,987
2	Deduct Employees’ Compensation	Employees’ compensation and interest agreed in the total sum of $1,070,079 Less  $36,750 – paid for funeral expenses (not to be deducted from gross damages as no such expenses were claimed in this action)  $73,809.21 – not to be deducted from gross damages as this sum remained in the District Court pending a claim by Faizal, a son of the deceased from another union  $73,809.21 – not to be deducted from gross damages as this sum remained in the District Court pending a claim by Farooq, a son of the deceased from another union[3] $184,368.42 $885,710.58	$885,710.58
3	NET DAMAGES		$1,776,276.42
4	LESS	1. PSLA: $78,375 2.  Bereavement: $198,750 Total: $277,125	$277,125
5	NET SUM DEPENDENCY / LOSS OF SERVICES		$1,499,151.42
		SUM TO MADAM BIBI/ CHILDREN
6		1. Dependancy – Nil 2. PSLA: $78,375 3. 4/5th of Bereavement award:  $159,000[4] Total: $237,375	$237,375
		SUM TO MADAM CALINOG/ SON
7		1. Net award: $1,499,151.42[5] 2. 1/5th of Bereavement award: $39,750.00[6] Total: $1,538,901.42	$1,538,901.42

8.In their written submission dated 27 August 2013, the 1^st, 2^nd and 3^rd defendants indicated that the items of damages set out in §5 above had indeed been agreed and, further, that they had no objection to the intended apportionment of the sum of HK$100,000, agreed as damages for loss of accumulation of wealth, to the award for damages for loss of dependency so as at to reduce the former to nil and increase the latter by HK$100,000.  It was also clear from the apportionment table provided by the defendants that they did not take issue with the deduction of employees’ compensation in the lesser amount of $885,701.58 as set out in the table in §7 above, instead of the full amount of $1,070,079.Mr Clough also indicated that his clients did not wish to make any submissions in connection with the reduction of the award of damages for loss of accumulation of wealth to nil.  Finally, it was apparent from Mr Burke’s written submissions of 4 November 2015 that he was no longer asserting that credit ought not to be given in respect of that portion of the employees’ compensation payment made to Madam Bibi and her 4 children which exceeded the actual loss of dependency suffered by them[7].

9.Given these submissions, I approve the apportionment of the agreed damages in the manner as set out in §7 above, after the deduction of part of the employees’ compensation payment also as set out in §7 above.  I direct Mr Burke to provide me with a written statement on how the award for loss of dependency which has been apportioned in favour of Madam Calinog and her son should be apportioned between them and what orders I should make as regards payment out and investment of the amounts apportioned in favour of the son who is almost 10 years old now.

10.The remaining difference between the parties turned on the question of interest.  The 1^st, 2^nd and 3^rd defendants contended that the agreed damages for pre-trial loss of dependency in the sum of $599,242.48 should attract interest from the date of accident up to the date of payment of employees’ compensation on 2 September 2010 and that, as the employees’ compensation paid was more than the amount of the pre-trial loss of dependency, no interest was payable after 2 September 2010.  The only point taken in this regard by Mr Burke is that the employees’ compensation settlement was only approved by court on 17 September 2010 and that payment was only received by his clients on 1 October 2010 so that interest should be awarded up to 1 October 2010.

11.The other dispute between the parties turned on the rate of interest payable on the award for loss for bereavement, the defendants contending that the rate of interest ought to be 2% per annum for the period of 48.75 months from the date of death to the date of the hearing on 24 July 2014 and Mr Burke contending that the rate of interest over this period of time ought to be at the judgment rate of 8% per annum. 

12.Given the continuing dispute on the interest to be awarded on the agreed damages, it falls upon me to exercise my discretion to award interest on those agreed damages.  I remind myself that I am compelled by section 48(2) of the High Court Ordinance, Cap 4, to award interest unless I am satisfied that there are special reasons why I should not do so.

13.The difference between the parties on the first point is small. I award interest on pre-trial loss of dependency in the sum of $599,242.48 at the rate of 4% per annum from the date of the death up to 17 September 2012, being the date of approval of the settlement of the employees’ compensation proceedings from which point of time the sanctioned payments made were available for payment out. 

14.The courts have turned full circle in the manner in which they award interest on damages for bereavement.  Soon after the statutory award was enacted, the courts were awarding interest on the award at the rate of 2% per annum from the date of death on the footing that this was a non-pecuniary award and ought to attract interest at the same rate as general damages for pain and suffering and loss of amenities of life.[8]  Mr Justice Cheung, as he then was, broke rank inChu Kang Yee and Chu Kiu Tang, the administrators of the estate of Chu Kiu Chi, deceased v Giant Ocean Ltd and Anor, HCA 8383 of 1991, 15 December 1995, and held that interest on the statutory award for bereavement should be awarded from the date of death at the full special investment account rate, following the decision of Popplewell J in Khan v Duncan (9 March 1989, unreported).  In that case, Popplewell J awarded interest at 11.5% per annum on the award for bereavement, saying that it seemed to him that this non-pecuniary loss was one “which is incurred as at the moment of death, that unlike general damages upon which 2% is paid, the figure does not increase as the years go by, so that interest should be reduced for that reason”, and that the bereavement award was “more akin to special damage”.  In Kwan Lai Kuen, the administratrix of the estate of Tsang Ching Kin, deceased v National Insurance Co Ltd [1998] 1 HKC 98, Mr Justice Keith, as he then was, equated the UK short term investment account rate with the rate payable on suitor’s funds in Hong Kong, and awarded interest at that rate from the date of the death of the deceased.

15.The short term investment account rate, which is set by regulation, has been used in awarding interest on some heads of loss in England.  At the time when Popplewell J awarded interest at the full short term interest account rate, the rate stood at 11.5%.  It has since fallen.  The short term investment account has been succeeded in England by the High Court special investment account, the rate of which is fixed from time to time by the direction of the Lord Chancellor pursuant to regulation.  The rate was 6% per annum from February 1, 2002, but was reduced to 3% as from February 1, 2009 and, since July 2009, has been 0.5%.  The rate payable on suitor’s funds in Hong Kong has also fallen[9]. Cheung J awarded interest on the bereavement award at the rate of 12% per annum in 1995.  In recent years, the rate obtainable on suitor’s funds has fallen below 2%.  By way of contrast, the judgment rate has remained at 8% per annum for many years in England as well as in Hong Kong.

16.In Law Yuet Kwai v Secretary for Justice and Anor. [2002] 3 HKLRD 727, Mr Justice Suffiad noted that interest should normally be awarded at the full special investment account rate on the bereavement award from the date of death to the date of judgment.  He went on to hold that:

“… since the present full special investment account rate based on the suitor’s fund rate is currently below 2%, the rate usually awarded for general damages, I propose to adopt 2% as the rate for interest under this head.”

Since his judgment in Law Yuet Kwai v Secretary for Justice and Anor., interest on the bereavement award has been awarded at 2% per annum from the date of death until the date of judgment.  I also did so in my judgment in Fung Suen Sim v Liu Chun Pong and Anor. (HCPI 896/2007, 23 December 2011). Hence my statement above that the courts have turned full circle: we started at 2% per annum and have come back to 2% per annum as the rate of interest on damages for bereavement.  Should we continue to award interest at this rate on damages for bereavement?

17.In England, interest is awarded on past loss and expenses at half the High Court special investment account rate for continuing loss and expenses and at the full special investment account rate for damages for bereavement, and also at the full special investment account rate if the loss or expenses were incurred on just one occasion[10].  There is an anomaly in Hong Kong where interest on pre-trial loss and expenses is awarded at half the judgment rate whilst interest on damages for bereavement is awarded at the full rate payable on suitor’s funds.  I would also break rank and depart from the previous decisions made on the award of interest on damages for bereavement. In my judgment, interest on damages for bereavement is to be awarded at the full judgment rate from the date of death until the date of judgment.  The award is a statutory one created under the provisions of the Fatal Accidents Ordinance, Cap.22.  I find support for my decision in another decision of Mr Justice Suffiad in Kong Yuk King, the intended administratrix of the estate of Lau Pik Yan, the deceased, v Wong Yiu Wing (HCPI 713/1998, 23 October 1999), in which he awarded interest on damages for bereavement award at the full judgment rate.  One-off expenses such as funeral expenses attract interest at the full judgment rate.  The entitlement to damages for bereavement accrues at the time of death.  The governing principle in the award of interest on damages for personal injury or death is that interest is paid to a claimant for being kept out of the money which ought to have been paid to him.  The bereavement award should also attract interest at the full judgment rate from the time of death to the date of judgment. 

18.I award interest on the agreed damages for bereavement at 8% per annum from the date of death up till today, being the date when I enter final judgment against the defendants to pay the agreed damages apportioned in a manner as set out in the table in §7 above.

19.I direct the solicitors for Madam Calinog and the defendants to submit an agreed revised table reflecting my awards of interest in this case.   

20.Let me deal briefly with the issue of costs.

21.The 1^st and 2^nd defendants have offered to pay the plaintiff’s costs in HCPI 262/2012 up to 17^th January 2013, when that action was stayed, to be taxed on common fund basis, if not agreed.  That offer has been accepted.

22.The 1^st and 2^nd defendants have offered to pay the costs incurred by Madam Calinog on the issue of quantum in HCPI 301/2012, to be taxed on a common fund basis, if not agreed, provided that there was no duplication with the costs incurred by Madam Bibi on the issue of quantum.  That offer has been accepted.

23.The 1^st and 2^nd defendants have submitted that the costs of the hearing on 23 July 2014 should be borne by the losing dependant over their dispute on how the agreed damages ought to be apportioned between them.  As it turned out, there was no dispute between the rival dependants on 23 July 2014 and the hearing proceeded in the normal course as a hearing for the approval of settlement and the apportionment of agreed damages. In Hse Fei Lun, the administrator of the estate of Lam Chu Yuk, deceased v. So Suk Yee & Anor., HCPI 606/2012, 10 April 2014, I held that:

“23. In conclusion, Order 80, rule 15 applies not only to cases involving persons under a disability, it applies to all cases where more than one dependant claims damages for loss of dependency under the FAO and it also applies to all cases where there are claims both under the FAO for loss of dependency and claims under the LARCO for loss and damage to the estate, such as, for example, a claim for loss of accumulation of wealth.

24. More often than not, the apportionment exercise, where the dependants are not in conflict, would be fairly straightforward and all that is needed is a memorandum of apportionment to be sent to the relevant tribunal. If the judge or master dealing with the matter agrees with the memorandum, he will dispose of the apportionment application on paper without the need for the parties to appear before him. Where, however, the judge or master does not agree with the proposed apportionment, he can call the dependants to appear before him for a short hearing to deal with the matter. In either case, the matter ought not to be very contentious or costly; so, to that extent, I think the concerns of the 1^st defendant to have to pay for this exercise can be allayed.

25. Of course, there may be other cases involving conflicts between different groups of dependants, which have been referred to and identified in the penultimate paragraph of the commentary at marginal note 80/15/4 (see §16 above).  In such cases, where the apportionment exercise is contested by the dependants in conflict, the cost of resolving that conflict ought to be borne, in most such cases, by the group of dependants whose contentions have failed, and not be borne by the defendant.”

I order that Madam Bibi’s and Madam Calinog’s costs of that hearing and of their further written submissions on apportionment and in relation to the remaining dispute on interest be paid by the 1^st and 2^nd defendants, to be taxed on a common fund basis, if not agreed.

24.The outstanding matter on costs is the costs incurred by Madam Calinog on the issue of liability in HCPI 301/2012.  There are 2 aspects of these costs to be dealt with: the pre-trial costs and the costs of the attendance by Mr Burke at the one day trial on liability.  The 1^st and 2^nd defendants agree to pay the costs of the former to be taxed on a common fund basis provided that there is no duplication of the work done by the solicitors of Madam Bibi.  They do not agree to pay the latter costs and rely on §42 of my decision handed down on 16 April 2014[11] in support of their stance.  Mr Burke has responded to those submissions by his submissions dated 4 November 2014[12], in the course of oral submissions at the hearing of the interim payment application on 16 December 2014, and by his letter dated 8 January 2015.  I direct the solicitors of the 1^st and 2^nd defendants to reply in writing to these submissions within 14 days’ of the receipt by them of the transcript of the hearing on 16 December 2014, so as to enable me to deal with this outstanding matter properly.

Mr Neal Clough, instructed by Massie & Clement, assigned by DLA, for the 1st and 2nd plaintiffs

Mr Chris Chuang, of Cheng, Yeung & Co, for the 1st and 2nd defendants

Mr Chan Chi Keung, of Bennett Chan & Co., for the 3rd defendant

Mr Patrick Burke, of Burke & Co., assigned by DLA, for Madam Calinog