ESPIRITU MARCELINO N AND ANOTHER v. LO KIT

HCPI 1266/1997

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 1266 OF 1997

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J U D G M E N T

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1. On 20 October 1997, the first Plaintiff, a professional free-lance musician was on the balcony of his second-floor, one-room rented home in Reclamation Street, Yaumatei, cooking the evening meal. His wife, with their three week old son, was inside the apartment.

2. Suddenly a section of the balcony upon which he was standing collapsed, and Mr Espiritu fell with it. It was the section near the sink and water tap which are exterior to the interior lavatory. His wife heard the sound of a crash. She rushed to the balcony and saw the gaping hole; she heard her husband's voice calling from below. It must have been a traumatic experience for her as it was for her husband, albeit in a somewhat different form.

3. What brought about the collapse of this balcony described in a report from the C & E of the Buildings Department as a cage? The photographs supplied bear out this descriptive term. It was found to be an unauthorised structure which is scarcely surprising. An investigation revealed why the collapse had occurred.

4. The live load was minimal. The I-beam lost its support strength because it was seriously corroded. There was no secondary support. The reason for the corrosion was quite simple. All the metal supports were exposed to the elements. The cage was immediately above the hopper resulting in there being a damp environment. Its use as a kitchen involved periodic cleaning. Water could seep through the tile joints and cracks in the screeding. It was old, subject to atmospheric corrosion, poorly constructed and not maintained.

5. The owner when notified declined to carry out the remedial work. Consequently the powers under the Buildings Ordinance were invoked and Government contractors removed the remains of the cage, made good the external wall and bricked up the opening which had afforded access to the cage.

6. This is not the first case in these courts involving illegal structures which have constituted great danger for the users and anyone passing beneath them. In many cases extreme tragedy has resulted from collapse. The Defence in this case, in the face of the Building Department's requirements and action, nonetheless blamed the Plaintiffs for the collapse by contending that they had used the balcony as a kitchen and positioned heavy items such as a cooker and gas cylinders, base for a cooker, sink and air-conditioner, thus overloading the balcony, and for ignoring an alleged oral stipulation at the time when the lease was entered into, that the larger section of the balcony was to be used for hanging laundry only.

7. The Building Department's report was agreed before trial yet the Defence was maintained until the end of the Plaintiff's case. At that time, Mr Kevin Wong, counsel for the Defendant, realistically accepted the hollowness of this Defence and conceded liability. His cross-examination of the Plaintiffs had not, in fairness to Mr Wong, sought to maintain the allegations in the Defence. There will therefore be judgment on liability for the Plaintiffs. No question of contributory negligence is pursued. I shall need to return to this aspect in short form at the end of this judgment.

Quantum

A. The First Plaintiff

Pain, suffering and loss of amenity:

8. Miraculously the first Plaintiff's injuries were not severe. Mr Espiritu suffered nonetheless a head injury involving a 10 centimetre laceration of the vertex of his skull and a 2 centimetre injury to his left cubital fossa when a metal rod entered the fleshy region of his elbow. There was a 2 centimetre cut over his right loin which also required sutures.

9. Neurologically he suffered attacks of nervousness and anxiety and bouts of forgetfulness. In July 1999 when he saw Dr Philip Mao, Mr Espiritu was complaining of discomfort in his back, left side of his chest and occasional headache. His physical injuries have by now resolved and the injury to his left little finger - potentially of some significance to a pianist - has not left any permanent disability.

10. He is of essentially a nervous disposition, and as he clearly had some psychological problem consequent upon the accident he was referred to Professor Peter Lee, the Clinical Psychologist. He concluded that there was a genuine emotional shock which, with his physical injuries, had combined to affect his confidence in his career as a musician, so much so that he gave it up for a while. He has a minor anxiety disorder which has affected many aspects of his life. Clearly he is not as robust psychologically as many, and his lack of confidence and consequent withdrawal from the musical scene, have made it more difficult for him to adjust to the economic downturn which has affected the musical entertainment industry as well. All his difficulties are attributable to the accident. Professor Lee suggests that a short course of five sessions of psychotherapy is necessary. He had seen him in April 1999. Dr Ng Kee-On later saw the Plaintiff (December 1999) and came to the same conclusion. He agreed that the short course of psychotherapy recommended by Professor Lee should overcome his remaining problems.

11. It is now about 2 1/2 years since his fall. He should be completely recovered by the end of this year. I have to assess damages on the basis of his vulnerable personality. It is not open to the Defendants to argue that he ought to have made a more robust effort to get back into the musical world earlier. In my view the proper figure for general damages is $225,000.

Loss of earnings

12. This has been a difficult area for all concerned.

13. The only reasonably reliable guide to his preaccident earnings has been the profit and loss accounts for the two complete financial years prior to the accident. These accounts were prepared for the business Ace Promotions under which he traded. The Inland Revenue accepted these accounts for tax purposes and Mr Espiritu benefited from what seems to be a generous taxation approach. It is clear that the payments which he was allowed to set off against the gross income included his own income from the business. All his earnings, both in his own name and in that of Ace Promotions, came under the umbrella of the business.

14. In order to calculate his real income it is necessary to add back to the proportion of the payments to Talents which reflects his own fees, the benefits which he derived from the other items set off as outgoings of the business e.g. half the rent and other outgoings on his apartment. Exercising a degree of guesswork in relation to some of those items e.g. in relation to the telephone bill which included foreign calls to the Philippines which were more likely to be to family and friends rather than for strictly business purposes, the true figure for earnings comes in the range $140,000 to $150,000 at least.

15. The problem which then arises is to what extent did the accident diminish his earnings? In the financial year ended March 1998, the year of the accident, there must have been some loss of earnings because clearly his injuries prevented him from playing an instrument and also from organising the continuation of other functions. He was able to continue his performances at the Harbour Plaza until February 1998. Thereafter there is a significant downturn in engagements and income, with the exception of the month of May 1998.

16. The figures for year ending 31 March 1996 are:

Instrument Rental	79,000	(Plaintiffs own)
Office Rental	35,208
Telephone (half)	20,000
Drinks, Food (half)	1,225
Utilities	4,111
	$139,544

I am sure that this is a minimum figure and that there are other benefits hidden in the expenditure column which should be added to the above to reflect real net earnings.

17. For the year ended 31 March 1997, adopting the same approach, the figure is $143,069. Turnover also shows an increase on 1995/1996 although this was a substantial reduction on 1994/1995. For the year of the accident (year ending 31 March 1998) there was again an increase on the previous year although receipts may even have been increased by advance payments. On the basis of the same calculation the net income is approximately $173,000.

18. The monthly earnings range between approximately $11,600 to $14,400. In one particular respect this is a deceptive figure because this Plaintiff was earning a minimum of $9,000 per month (up to $13,000 per month) from one performance at the Harbour Plaza Hotel. It would not be unreasonable to assume that once all the figures have been analysed in detail he would be earning nearer $20,000 monthly and that is the figure I propose to use. It is supported by his receipts and by a realistic view of the profit and loss account.

19. However the greater problem is calculating precisely what he has lost by way of income - if it is capable of exact assessment - following the accident. There are no accounts for the year ended 31 March 1999. The business had in fact been abandoned by then. His evidence is that he is currently able to earn only some $3,000 - 4,000 monthly.

20. The overall economic factor has to be built into the equation. I have concluded that by the end of this year he will be in a position to compete in the entertainment industry without any loss which can be attributed to the accident. It is impossible to calculate a loss on the basis of whole or partial monthly earnings and it is more appropriate to take a lump sum. Inevitably this is an arbitrary approach. Some indicator is his loss of the Harbour Plaza engagement which had reached $13,000 for the once a month engagement. This ceased in February 1998 but had formed the backbone of his income. I think a lump sum of $200,000 fairly reflects the loss until the end of 2000 and the overall uncertainties.

Medical expenses

21. There are modest expenses of $1,000 to represent doctors fees and travelling expenses. These are agreed.

22. Although not specifically pleaded in the Statement of Damages there is clear agreed evidence that he needs the five sessions of psychotherapy and I will take the median figure of $2,000 per session producing a total of $10,000.

2nd Plaintiff

Pain, suffering and loss of amenity

23. Undoubtedly Mrs Espiritu suffered shock, on seeing the hole in the balcony and hearing her husband's voice calling for help from below, developing into an acute stress disorder. The usual problems and symptoms followed. It affected her work. Permanent disability is not expected. She is a resilient lady. Dr Ng Kee-on does not disagree with Professor Lee although he had not considered, it seems, the effect of the initial shock.

24. The amount claimed in respect of this head of damage is $75,000. The Defendant failed to put forward an alternative figure although no assertion is made that there is no basis for this head of damage. There is simply a denial of the amount. I think $75,000 is a reasonable figure. She has had over two years of anxiety directly attributable to the Defendant's negligence.

Loss of earnings

25. This is claimed at $26,000. It represents loss of half her salary for the months in which she worked part-time so as to look after her husband and keep matters going at home. It is a reasonable figure on her evidence. I accept it. The Defendant simply denies the sum claimed without providing a proper answer. The sum claimed is therefore allowed.

Summary

26. There will be judgment for the first Plaintiff for $436,000 plus interest at the appropriate rates for the relevant periods.

27. There will be judgment for the second Plaintiff for $86,000 plus interest on the same basis.

28. The Plaintiffs will have their costs of this action to be taxed if not agreed.

The Defendant's action for possession and mesne profits in the District Court

29. It emerged during the course of the evidence that the Defendant commenced proceedings on 30 June 1998 claiming rent and possession of the premises. He alleged amongst other things that the Plaintiffs were in breach of the tenancy agreement in causing the collapse of the balcony. If it were not for the fact that he has managed to obtain a judgment, one could be forgiven for thinking that the action was a tongue-in-check reaction to the personal injury action against him.

30. The landlord's proceedings were not commenced until two weeks after the Statement of Claim was served in the personal injury action. The Espiritus applied for Legal Aid. They were refused. I cannot understand why. They were granted Legal Aid for their personal injuries action in July 1998.

31. The home-made Defence to the landlord's action was filed on or about 24 August 1998. There was a counterclaim for damages for, inter alia, personal injuries and loss of income. The collapse of the illegal structure was specifically pleaded when the matter came before the Learned District Judge on 11 September 1998. The Espiritus, were unrepresented. Judgment had apparently already been entered against the Espiritus. It is quite clear that the landlord's solicitors did not acquaint the Learned Judge with the position regarding the Personal Injuries Action which had arisen out of the collapse of the balcony, causing loss of income and a fundamental change in the premises which had been leased and for which rent was being claimed. I have read the Judge's notes which are wholly silent as to the existence of another action which clearly affected the merits of the landlord's action. The Judge was misled. Had she been properly informed she would in my view have set aside the judgment pending the outcome of the Personal Injuries Action. Although the landlord claims rent for the two months prior to the collapse of the balcony, there is nothing to assist on the merits of that. His solicitors, the solicitors in this action, claim that they were instructed by the landlord in respect of arrears of rent in late November 1997. This was more than a month after the collapse of the balcony. Strangely enough there is no claim by the landlord in either action for the cost of demolishing the collapsed balcony and making good which he contends was caused by the breaches of the agreement on the part of the Espiritus. That is probably a fair indication that the landlord himself did not consider there was any merit in his claim.

32. In my view the Plaintiffs in this action should apply to the District Court for the judgment there to be set aside. I have caused a note to be put on the District Court file alerting it to the position.