CHAN KA LIM v. CHOW WAI KIN

CACV 405/2007

IN THE HIGH COURT OF THE

hong kong special administrative region

court of appeal

civil appeal no. 405 of 2007

(on appeal from HCPI NO. 727 of 2004)

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J U D G M E N T

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Hon Rogers VP:

1.  I agree with the judgment of Le Pichon JA.  The result is very close indeed to that arrived at by the judge.  The various calculations and estimates that a court is required to make, sometimes can demonstrate that minute calculations tend to obfuscate the ultimate function which is to give a claimant fair compensation for the loss suffered.

Hon Le Pichon JA:

2.  This is an appeal and cross appeal from an amended judgment of Deputy High Court Judge Carlson dated 14 November 2007 awarding the plaintiff the net sum of $4,430,258.50 (after discounting 50% for contributory negligence) by way of damages for injuries sustained in a road traffic accident.  At the conclusion of the hearing judgment was reserved which we now give.

Background

3.  In August 2001, the plaintiff, then aged 20, was injured in a collision sustaining injuries which required an amputation, from the shoulder, of his right arm.  He was right-handed.

4.  The plaintiff was born in 1981.  He left school in 1995 having completed Form 3 and went to work as an apprentice for his father’s company, Kwong Chun, which was engaged in the business of servicing and re-conditioning industrial printing machines for resale.  The job was physically demanding because it involved climbing onto and also going underneath the printing machines in order to get at the various moving parts which needed servicing and lubrication and sometimes complete replacement.  The cleaning fluid used caused the surrounding area to become greasy and slippery and the plaintiff needed to use both hands to maintain his balance.  The conditions of work and the physical demands of the job itself meant that it was work for an able-bodied and two-handed man.

5.  The plaintiff made good progress.  Apart from acquiring all the necessary technical skills, he also learned how to manage the company, the other employees and to deal with clients.  When his father decided to go to live on the Mainland in order to develop the business there, the plaintiff then aged 17 was left to run the company in Hong Kong.  By then he had completed his apprenticeship and was sufficiently qualified to be considered a “sifu” (master).

6.  About two months prior to the accident, his elder brother with whom the plaintiff has always had an uneasy relationship joined the business.  They could not get along and the plaintiff resigned.  At the time of his resignation he was being paid $11,000 a month together with $1,000 monthly food allowance as well as a year-end double pay and a bonus of one month’s salary.  His average earnings were thus approximately $13,800 a month.

7.  Two weeks prior to the accident, the plaintiff became an apprentice graphic designer for Powerful Plastic Engineering Company Ltd, a company owned by the father of a good friend.  The job was based on the Mainland and the pay was modest at $6,000-$7,000 a month although the plaintiff was provided with free accommodation, free meals three times a day and a travel allowance to and from Hong Kong.  Notwithstanding the significant drop in salary, the plaintiff’s expectation was that upon completion of his apprenticeship he would have moved up to become a computer graphic designer and even on to management staff where he might have expected to earn $20,000 a month in addition to the other benefits.

8.  The accident necessitated two operations but the wound healed well.  The judge dealt very fully with the medical evidence in §§ 12-32 of his judgment and for present purposes, it is unnecessary to go into that evidence by way of background although reference will be made to some of that evidence in relation to the specific issues raised on this appeal.

9.  Suffice it to say that notwithstanding the traumatic accident, to his credit, the plaintiff, has accepted his misfortune and handicap.  He has adopted a positive attitude and learnt to work with his left hand.  Nevertheless he remains severely handicapped and would always be compromised with only one functional hand.  While the Hospital Authority has provided the plaintiff with a harness type of prosthetic arm, all the medical experts consider that, overall, it is pretty useless, given its weight (apparently some 10 lbs) and general limitations.

10.  For two years after the accident, the plaintiff remained at home and did not work.  In August 2003, his father arranged for him to work in his factory on the Mainland which initially consisted of calling customers, processing their orders and bookkeeping.  As his work confidence gradually built up, he felt able to do more technical work.  However, his father’s business declined in 2005.  At the end of that year the plaintiff returned to Hong Kong having spent 28.5 months with his father on the Mainland.  In January 2006 he began working for his elder brother who, by then, had registered a new business name (Lai Lim) for the Hong Kong business.

11.  The total award before any discount for contributory negligence was over $8.8 million comprising a number of heads of damage.  Those that are relevant on this appeal and cross appeal are the following:

	$
Prosthetic expenses	5,777,580
Pre-trial loss of earnings	756,000
Loss of future earnings	705,000
Loss of earning capacity	500,000

The appeal

12.  Mr Kwok who appeared for the defendant raised three main issues relating to (1) the prosthetic expenses; (2) the question whether the judge should have drawn certain inferences from the movements in the plaintiff’s bank and credit card accounts which, if answered in the affirmative, would impact upon his pre-trial loss of earnings; and (3) the award for loss of earning capacity.  He also raised a number of subsidiary points.

Prosthetic expenses

13.  Professor Lee of Hong Kong University, a consultant clinical psychologist, whose report the judge accepted, concluded his report thus:

“86.      It is important that Mr Chan be provided with the financial resources to acquire a high-quality prosthetic right arm to improve his cosmetic and functional status.  This is important not only in terms of functional improvement.  Should Mr Chan see himself as being less stigmatised by his physical anomaly, his emotional condition would also improve.”

14.  The view of Mrs Shelley Chow, the occupational therapist jointly appointed by the parties is little different: in response to question 3 put to her, namely, whether an electric prosthetic arm is reasonably necessary for the plaintiff in light of his disabilities, Mrs Chow opined:

“Mr Chan may find a lightweight cosmetic prosthesis would make socialising and going out less stressful to him, and give him a social life again, plus he may be more confident to visit family members such as his grandmother again.  A functional prosthesis which is comfortable and useful may also assist him to perform tasks bilaterally as he has become quite unilateral.  He may find that having good prostheses improves his self-confidence and self-esteem.”

Although Mrs Chow expressed reservations as to whether the plaintiff would actually use the prosthesis, that is not an issue on the appeal given the judge’s clear finding on this point in § 35 of his judgment.  See § 16 below.

15.  Therefore, at a minimum, there appeared to be a consensus that the plaintiff should be provided with a lightweight cosmetic prosthesis that is electrically powered.  It is not suggested that the prosthetic arm provided by the Hospital Authority is suitable or that the plaintiff can reasonably be expected to use it.

16.  § 35 of the judgment reads:

“35.      In respect of this aspect of the case I am satisfied that the Plaintiff would use an Otto Bock if I made provision for one.  I also find that it is entirely reasonable, given his disability, that he should be provided with one.  This is not a case where questions of necessity arise or any doubts can be entertained that the Plaintiff would use the prosthesis.  Whilst this is very much the “Rolls Royce” model and is priced as such it is entirely right that the Plaintiff ought to have the best on the market.  Having lost the whole of his dominant arm he should be provided with the best available electrically powered replacement together with the accessories that go with it.”

Mr Kwok submitted that the judge had applied the wrong test by giving the plaintiff “the best on the market”.  Rialis v Mitchell (1984) 128 Sol Jo 704 established that the correct test is one of reasonableness: whether what was claimed was reasonable for the claimant’s needs.  It was suggested that the appropriate award for the prosthesis should have been $200,000 instead of almost $5.8 million.  In support of the figure of $200,000, Mr Kwok relied on the report of Mrs Chow.

17.  As part of her answer to question 3 referred to in § 14 above, Mrs Chow outlined private sector costs as follows:

“Private Sector costs:

Hong Kong Polytechnic University Jockey Club Rehabilitation Engineering Clinic –

Above elbow (short stump – upper 1/3^rd of upper arm) prosthesis

…

(ii)        Myoelectric (powered) prosthesis – approx. $150,000 to $200,000

(iii)       Cosmetic prosthesis – approx. $80,000

Each consulation $350”

It is to be noted that Mrs Chow’s report was wholly uninformative as to the features of the electrically powered ‘lightweight cosmetic prosthesis’ she was recommending.  It provided no details whatsoever (for example, as to weight and functionality), much less any technical data.  Nor was it clear whether she had in mind only (ii) above or (ii) plus (iii).

18.  Question 4 put to Mrs Chow specifically asked her to address the estimated costs, maintenance and frequency of replacement.  She answered as follows:

“Mr. Chan could consult the Rehabilitation Engineering Clinic at the Hong Kong Polytechnic University on Tel. 2766 4454 or Otto Bock Hong Kong Limited.  Approximate costs have been given above.  As the prosthesis is constructed from modular components no specific brands for each part can be given as it depends on the individual’s needs.

Replacement periods depend on whether the prosthesis is comfortable, functional and used.  There is usually a 1 year guarantee and further follow-up for maintenance could be estimated at 2 visits per year, with replacement every 4 to 5 years.”

As appears from her answer, the costs she had given in response to question 3 were ‘approximate’ costs only.  She was unable to be more specific.  Rather, she suggested that the two possible suppliers be consulted.  Therefore on any view the $200,000 figure mentioned in Mrs Chow’s report could hardly be considered ‘reliable’.  It was unsatisfactory in a number of respects: it was ‘approximate’; it did not appear to reflect the ‘cosmetic’ element in Mrs Chow’s recommendation; it did not take into account the cost of the several replacements needed given its lifespan and the plaintiff’s remaining working life; it did not deal with the need (if any) for a spare prosthesis.

19.  Apart from the report of Mrs Chow, the judge had the benefit of the Prosthetic Assessment Report of Mr Raymond Ng who had been jointly instructed by the parties.  Mr Ng recommended the Otto Bock myo-electric hand comprising a hand device system for functional activity and a silicon cosmetic hand for cosmetic purposes which would enable the plaintiff to perform delicate tasks such as typing, buttoning his shirts and tying his shoelaces and make it easier to him to grasp fragile objects or liquid filled containers.  Mr Ng stressed the need to have two sets so that they may be used interchangeably and in case one of them is out of order.  Mr Ng provided a comprehensive breakdown of the costs involved including professional charges and maintenance costs as well as the respective lifespan of the principal prosthesis and the spare one required.  At the judge’s request, Mr Ng also gave oral evidence.

20.  As appears from § 36 of the judgment, the judge was “much impressed” by Mr Ng’s report and his evidence that the Otto Bock would give back to the plaintiff a great deal of the “functionality” he has lost.  The judge considered that the whole of the package recommended

“will provide lifting strength in the arm itself, fine touch and grip of the hand and, cosmetic appearance will be very greatly enhanced.  This is bound to provide the plaintiff with, of course, far more amenity as well as greatly reduce the cosmetic defect of having suffered a full-length amputation.  I am also satisfied that it will go a long way to improve his general outlook on life in terms of adding to his social confidence and improve, together with psychological counselling, his depressed mood.”

21.  Viewed objectively, the judge was providing the plaintiff with no more than what was reasonable in the circumstances.  Notwithstanding the language used in § 35 of his judgment, it was not a question of the judge picking a Rolls-Royce model from a number of options.  Given the lack of specificity and information as to the prosthesis Mrs Chow was recommending, the evidence did not present the judge with a choice.  In the circumstances, it could hardly be said that the judge’s award was unreasonable.  In my view Mr Kwok’s criticism of the judgment on this issue is misplaced and must be rejected.

Pre-trial loss of earnings

22.  The judge awarded the plaintiff the sum of $756,000 as his pre-trial loss of earnings.  That sum comprised four components:

(1)       For the period of two years immediately after the accident (up to 11 August 2003) when he went up to the Mainland to work for his father, the judge quantified the loss on the basis of $8,000 a month for 24 months, totalling $192,000.  It was accepted that at the date of the accident the plaintiff was earning a salary of $6,000 from Powerful.  In addition, the judge accepted that he received fringe benefits (three meals a day, lodging and transport) which the judge valued at $2,000 a month.

(2)       For the period of 28.5 months from 11 August 2003 to 31 December 2005 when he went to work his father, the judge awarded the plaintiff $370,500 as he was satisfied that over this period the plaintiff’s earning capacity would have been $13,000 a month which was the salary he had been earning when he left the family business.  During this period the judge found that the plaintiff’s father was letting him have small amounts of money to give the appearance that he was being useful and refused to make any deductions for the amount the plaintiff received from his father.

(3)       For the period of 22.5 months from 1 January 2006 to the date of judgment the judge concluded that the plaintiff’s earning capacity would have been $15,000 a month.  However, during the whole of this period, the plaintiff had been working for his brother who paid him $8,000 a month.  The judge held that this amount had to be deducted from his notional earnings.  The net loss of earnings for this period was thus $7,000 a month or $157,500 for the period of 22.5 months.

(4)       The loss of MPF benefit was the final component, quantified at $36,000.

23.  The defendant’s case is that the plaintiff did not suffer any pre-trial loss of earnings at all.  In support of his submission, Mr Kwok relied heavily on the bank statements and credit card accounts for the period between February 2001 and June 2006 disclosed by the plaintiff.  Having analysed the details, Mr Kwok submitted that substantial amounts had come into the account and substantial amounts had gone out.  It was said that this pattern of activity began in May/June 2002 after the receipt by the plaintiff of over $1 million in insurance monies and according to the plaintiff’s evidence remained the case at the date of trial.  Mr Kwok invited the court to draw the inference that the payments in and out were related to work and that the payments in of some $344,000 over this period reflected the plaintiff’s earnings.

24.  The same point had been taken before the judge below.  The plaintiff’s explanations for the payments out was that he had lent money to his friends who had made partial repayments and that he had also paid a substantial amount to his mother.  The judge, noting that the plaintiff did not call any witness to corroborate his explanations, concluded as follows:

“42.      …My conclusion is that many of the Plaintiff’s explanations of these transactions are not convincing and I am not prepared to accept them as the truth.  Nevertheless, the fact is that Mr Kwok’s suggestions in cross-examination cannot stand-alone.  The evidence is simply not there.  All that Mr Kwok has succeeded in doing is to persuade me that I should not accept the Plaintiff’s case at face value on these transactions.  That is as far as it can go.  He has not been able on this evidence to erect a positive case raised on his cross-examination.  All I can say is that a great deal of money has gone in and out of the accounts, the explanation for which in many instances I am not prepared to accept.  This is the extent to which I am permitted and prepared to go.”

25.  Mr Kwok criticised the judge for “erasing” the evidence of the transactions and ignoring the 16 pieces of evidence identified in paragraph 13 of Mr Kwok’s skeleton.  It was said that had the judge taken that other evidence into account, he should have made the inference that after the accident either the plaintiff’s earnings from the family business exceeded or equalled $8,000 a month or that he had engaged in some form of income-producing activity which produced income of that level.

26.  I do not agree.  As Scrutton LJ succinctly observed in Hobbs v Tinling (C.T.) and Co Ltd [1929] 2 KB 1 at 21:

“…    If by cross-examination to credit you prove that a man’s oath cannot be relied on, and he has sworn he did not go to Rome on May 1, you do not, therefore, prove that he did go to Rome on May 1; there is simply no evidence on the subject.”

The judge’s approach was plainly correct and followed well-established principles.  The ‘other evidence’ relied on did not take matters further since, taken individually or collectively, it was not evidence of the plaintiff’s earnings.  Mr Kwok’s challenge on this issue must therefore fail given the absence of evidence to establish a positive case.

Loss of earning capacity

27.  In making an award of $500,000 under this head, the judge appeared to have proceeded on the basis that there was a concession from the defendant to that effect.  Having been referred to the relevant part of the transcript, it would appear that the judge had misinterpreted Mr Kwok’s submissions below.  Mr Kwok was suggesting an alternative to adopting the conventional multiplier multiplicand approach for assessing future loss of earnings.  The alternative approach canvassed was to capitalise all future loss by awarding a lump sum to compensate for future loss of earnings as well as for loss of earning capacity.  Pausing there, I would make the observation that the alternative approach of quantifying future loss by way of a capitalised sum is not only likely to lead to confusion but is also wrong in principle.

28.  Mr Lam who appeared for the plaintiff submitted that the judge’s award under this head should not be disturbed unless the court considered it manifestly wrong.  Counsel are agreed that, as a general rule of thumb and depending very much on the facts of the particular case, an award for loss of earning capacity could reflect up to two years’ earnings.  In the present case, having regard to all the circumstances and in particular to the judge’s finding of what the plaintiff was capable of earning at the date of trial but for the accident ($15,000 a month or $180,000 per annum), the judge’s award does appear to be excessive.  I would reduce the amount to $360,000.

Miscellaneous points

29.  Mr Kwok also took a number of subsidiary points which sought to impugn findings of fact made by the judge relating to what he considered the plaintiff to be capable of earning but for the accident for the period when he went to work for his father on the Mainland from August 2003 to December 2005 and for the period from 1 January 2006 to the date of judgment when he worked for his brother, being the respective sums of $13,000 and $15,000 per month.  I fail to see how the defendant could even begin to argue that the judge’s findings were plainly wrong given the level of his earnings when he worked for the family business prior to the accident and the judge’s assessment of the plaintiff’s ability.  In my view, the defendant’s challenge does not even get off the ground.

30.  The remaining point taken related to whether in assessing his pre-trial loss of earnings during the period when he worked for his father on the Mainland, a deduction of $1,500 a month should have been made to reflect the amounts he received from his father.  The judge found that the plaintiff received nothing more than “pocket money”, that his presence could hardly be categorised as “employment” and accepted the plaintiff’s evidence that he received no salary from his father.  The defendant has not been able to direct the court to any evidence to the effect that the plaintiff was receiving $1,500 a month as salary.  In those circumstances, the point plainly has no merit and must be rejected.

The cross appeal

31.  This relates to two matters: (1) whether, in respect of the plaintiff’s loss of earnings for the period of 22.5 months when he worked for his brother from 1 January 2006 to the date of trial, the judge was correct in holding that the $8,000 per month received from the plaintiff’s brother should be taken into account; and (2) whether in assessing the plaintiff’s future loss of earnings, the multiplicand of $3,500 per month used by the judge was correct.

The $8,000 per month deduction

32.  When the plaintiff returned from the Mainland, he went to work his brother.  The judge found that by then, he had become very experienced on the technical aspects of the work although his physical handicap meant that he had to have an assistant to help him and, accepting the medical evidence of Professor Lee and Dr Anita Leung as to the plaintiff’s condition and capabilities, the judge made a finding that the plaintiff was “able to do a proper job of work of the company” and was being paid his current worth.

33.  The plaintiff’s evidence is that a printing machine technician would have been paid $12,000 a month plus a year end double pay and bonus.  The average monthly cost to the company would have been $14,000.  Instead, in addition to paying $8,000 to the plaintiff, the company had to pay the assistant $7,800 ($300 x 26) a month.  The fact that this arrangement resulted in an added cost to the company is a matter which the judge recognized.  This result, however, does not have the effect of undermining in any way the judge’s finding that the plaintiff was able to do a proper job of work and was being paid commensurately for that.

34.  Mr Lam sought to criticise the judge for not accepting the note sent in by the plaintiff’s brother to the effect that he was expecting repayment because the brother had not been called to give oral evidence.  It was said that this was not entirely fair because the letter had been included in a hearsay notice and the defendant could have made an application for cross-examination.  In my view, the judge was perfectly entitled to attach little weight to the brother’s note given the evidence before him as to the plaintiff’s ability to work during this period.

35.  For these reasons, Mr Lam’s challenge to the deduction of $8,000 per month falls to be rejected.  Nevertheless, the award of $157,500 as the plaintiff’s net loss for this period of 22.5 months needs to be varied to reflect the unchallenged evidence of the plaintiff in his third supplemental witness statement made in May 2007 that for two months prior to the making of that statement his brother had been unable to pay him the $8,000 a month because of cash flow difficulties.  It would appear that this aspect was neither challenged nor explored further at trial.  In those circumstances, I consider it appropriate that a sum of $16,000 should be added to the award of $157,500.  Accordingly the pre-trial loss of earnings should be adjusted and revised upwards from $756,000 to $772,000.

The multiplicand of $3,500

36.  In assessing the plaintiff’s loss of future earnings, the judge proceeded on the basis that the Otto Bock prosthesis would have a very real impact in improving his ability to work.  Having found that the plaintiff was capable of earning $15,000 a month and that without prosthesis he was capable of earning $8,000, the judge reached the conclusion that with the prosthesis the plaintiff would be capable of earning $11,500 a month.  The multiplicand was thus $3,500 being the difference between $15,000 and $11,500.

37.  Mr Lam does not challenge the reasonableness of the amount of $15,000.  As I have already rejected his challenge to the judge’s finding that the plaintiff was able to earn $8,000 without the prosthesis, I do not see on what basis it can be said that the judge’s finding that with the Otto Bock prosthesis the plaintiff would be capable of commanding a salary of $11,500 is manifestly wrong.  Absent that, there is no basis for this court to interfere with the judge’s finding.

38.  The only respect in which I would differ from the judge is that it would be unreasonable to expect the plaintiff to be earning $11,500 a month immediately on being provided with the prosthesis.  He would need some time to learn how to use the prosthesis effectively and to get accustomed to it.  He would need time to look for a new job.  In my view I consider that two years would be a reasonable period for the transition.  Accordingly the plaintiff’s future loss of earnings should be assessed on the following basis: (7,000 x 12 x 2) + (3,500 x 12 x 14) = $756,000.  In addition there would be the 5% loss of MPF benefit of $37,800.  The total award would therefore be $793,800 instead of the sum of $705,600 the judge awarded.

Conclusion

39.  Therefore I would allow the appeal only to the extent of reducing the award for loss of earning capacity from $500,000 to $360,000, a reduction of $140,000.  On the cross appeal, I would allow it to the extent of (1) increasing the pre-trial loss of earnings from $756,000 to $772,000 (an increase of $16,000); and (2) increasing the amount awarded for future loss of earnings from $705,600 to $793,800 (an increase of $88,200), resulting in an aggregate increase of $104,200.

40.  On the question of costs, given that in the context of the overall amounts challenged on this appeal and cross-appeal, the difference of $35,800 which after deduction for contributory negligence is no more than $17,900 is de minimis.  Neither side can be said to have been successful.  Accordingly I would propose an order nisi that there be no order as to costs on the appeal and cross-appeal.

Hon Cheung JA:

41.  I agree.

Hon Rogers VP:

42.  There will accordingly be an order in terms of paragraphs 39 and 40.