CHUNG MAN YAU and Another v. SIHON CO. LTD.

1995, P.I. No. 117

H E A D N O T E

Tort - negligence - nuisance - personal injuries - damages - loss of illegal earnings, whether recoverable - whether notional future loss of legal earnings may be claimed.

An unlicensed hawker injured when a balcony collapsed on him in the street was not entitled to claim loss of earnings from his illegal hawker business. Since all the evidence indicated that he would continue to work full-time as an unlicensed hawker there was no basis for an award of loss of future lawful earnings.

1995, P.I. No. 117

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. This is an action for damages for personal injuries. The writ was issued on the 30th March 1994.

2. On the 14th October 1993, the first named Plaintiff Mr. Chung Man Yau (P1) was walking along the pavement (which is part of the highway) in Bowring Street Kowloon, together with the second named Plaintiff, Madam Kwan Siu Hung (P2) who is his wife. As they were passing the building at No. 2 Bowring Street, a concrete balcony which was part of that building and which protruded over the pavement, collapsed. Some of the concrete fell upon and injured them. The Registered Owner of the building at that time was the Defendant, Sihon Company Limited.

3. The Plaintiffs' claim as amended is for damages for negligence or alternatively nuisance.

Negligence

4. The burden of proof lies upon the plaintiffs who rely upon the doctrine of res ripsa loquitur in view of the fact that the balcony collapsed and injured them. I find that the doctrine does apply. Just as the fall of the ceiling of a theatre, hitting a member of the audience, was held to be prima facie evidence of negligence on the part of the occupiers of the theatre - Page v. St Helen's Theatre Ltd. [1974] K.B. 30 - so here the collapse of the balcony on the plaintiffs is prima facie evidence of negligence on the part of the person responsible for the maintenance of the building.

5. The Defendant tried to rebut the presumption of negligence. In order to succeed it had to show that the accident was just as consistent with its having exercised due diligence as with its having been negligent. That it failed to do and I find that the plaintiffs have discharged the onus of proving negligence.

6. The building was an old one, the Occupation Permit having been issued in 1948. The various floors were let separately. A full survey after the accident showed that the building was generally dilapidated and that comprehensive maintenance had not been carried out since work had been done by a previous owner pursuant to a statutory repair notice in 1981.

7. It was the opinion of Mr. Lee Yun Sang, Chief Structural Engineer of the Building Department, that the cause of the collapse was corrosion in the reinforcing steel in the concrete balcony, due to seepage of water into the concrete.

Responsibility for maintenance

8. There was no evidence of any arrangement made between the Defendant and the tenant of the 1st floor flat with regard to repairs but it was clear from the evidence of Mr. Peter Wong Wing Cheung, the Company Secretary and Managing Director of the Defendant that the Defendant did consider itself under a duty to carry out repairs to the building generally. He said in evidence:

"Whenever we received a complaint of any problem from tenants we would attend to it - usually I personally or notify a decorating company or someone to take care of it."

When asked "if repair work was needed to be done would you do it and pay?" He replied

"It depends on what the repair is. If the damage was done by the tenant or relates to interior equipment the tenant will take responsibility himself. In some cases I do not care because if I think the complaint is not justified I will not take action."

9. The Defendant's accounts show a paltry $3,000 spent on maintenance from the purchase of the building in 1991 to its sale in 1995.

Building out of Plumb - MTR works

10. There was some evidence that the building had in 1976 been found to be slightly out of plumb but I was satisfied by the evidence of Mr. Lee Yun Sang that the total lean was an insignificant 1 in 88. It had not increased since 1981 and had not caused the collapse.

11. Work connected with the Mass Transit Railway in 1976 may have contributed slightly to the lean of the building and may have caused some vibration damage but I am satisfied that it did not produce a latent defect which caused the collapse. Repairs had been carried out in 1981 by a previous owner.

The Load on the Balcony - Change of Use

12. The photographs show that the tenant had used the balcony to store thread and buttons, though the flat was designed for domestic use and that at some time additions had been made to the balcony's structure. Mr. Lee's evidence was that the extra load might over time have caused micro-cracks to develop. The cracks would have made it easier for water to seep into the concrete and corrode the reinforcing rods.

13. It was, however, Mr. Lee's evidence, that visible signs would have appeared well before the collapse and the corrosion would have been detected upon inspection by an expert. I am satisfied that, if the landlord had bothered to inspect, it would have detected cracks and should then have called in an expert who would have diagnosed the problem.

14. Some indication of the Defendant's attitude to its responsibilities may be found in the fact that, having been served with a statutory repair notice after the collapse, it promptly sold the building unrepaired and at a large profit. It appears that the Defendant's only interest was in profiting from the rents and it ignored its duty to keep the building in repair. Mr. Wong said that he had no right to enter and inspect the flat but there is no evidence that he ever sought to do so or attempted to inspect the exterior.

Concrete mix

15. The cement content of the concrete used in the construction of the balcony was shown by tests to be 9.5% whereas the recommended content is 11.97% but Mr. Lee said that the strength was acceptable (assuming, of course, that the reinforcing steel was intact).

16. I find that negligence is proved. The balcony collapsed because of the failure by the Defendant to keep the building in good repair. The seepage of water was due to want of maintenance. The water corroded the reinforcing rods and caused the collapse. There must have been warning signs if the Defendant had bothered to look for them.

Nuisance

17. As is said in the headnote to the report of Wringe v. Cohen [1940] 1 KB 229:

"If, owing to want of repair, premises on a highway become dangerous and constitute a nuisance, so that they collapse and injure a passer-by or an adjoining owner, the occupier or owner of the premises, if he has undertaken the duty to repair, is answerable, whether he knew or ought to have known of the danger or not.

Aliter, if the nuisance is created not by want of repair, but by the act of a trespasser or by a latent defect."

18. It is common ground that the premises in question became dangerous. It is not denied that they constituted a nuisance. The balcony undoubtedly collapsed and injured the Plaintiffs. The flat to which the balcony belonged was part of the building which the Defendant owned. It was the Defendant's duty to keep it in good repair. The nuisance was not due to the act of a trespasser or a latent defect as I have already found when considering the negligence issue. It resulted from the Defendant's failure to keep the building in good repair. I find that the Defendant is liable in nuisance as well as negligence.

Quantum of Damage

19. At the time of trial the Plaintiffs sought to rely upon a decision of Cheung, J. in order to persuade me to depart from the conventional basis for assessing damages in a case such as this. The result of the appeal against Cheung, J.'s decision is now known. See Chan Pui Ki v. Leung On CA 263 of 1995, as yet unreported. The tariff for damages for pain suffering and loss of amenities has now been brought up to date but a novel method of calculating future loss of earnings, accepted by the trial judge, did not find favour with the Court of Appeal. Insofar as it may be necessary to calculate future loss of earnings in this case, I can disregard the actuarial evidence led for the Plaintiffs in support of the method of calculation which has now been disapproved by the Court of Appeal.

Quantum of Damage. P1.

20. Mr. Chung Man Yau was born on the 14th July 1954 and on the 14th October 1993, the date of the accident, he was a healthy man aged 39 years working as a hawker of children's garments. He is now 42.

21. P1 was admitted to the Queen Elizabeth Hospital on the day of the accident. According to the medical report concerning his admission he was fully conscious with stable pulse and blood pressure but there is some evidence from him and from his wife that he was drifting in and out of consciousness.

22. There was an 8cm long deep laceration at the right occipital area with a depressed skull fracture underneath. His left fourth and fifth ribs were also fractured. He was managed conservatively and discharged on the 28th October 1993.

23. On the 30th October 1993 he was admitted to the Kwong Wah Hospital complaining of numbness of the left fingers. Surgery was carried out on the 5th November 1993 to remove the depressed fracture and P1 was discharged on the 18th November "with no neurological deficit".

24. On the 11th March 1994 P1 was admitted to the same hospital for "post-traumatic cranial defect". On the 18th March he underwent surgery when an acrylic cover was placed over the hole in his skull. He was discharged on the 26th March 1994, after which he received follow-up treatment as an out-patient.

25. The several medical reports which are in evidence indicate that as a result of the operation P1 has weakness in his left arm and leg and he suffers from post-concussional syndrome as evidenced by headaches, dizziness and tinnitus. There is also evidence that he suffers from depression and irritability which causes difficulties in his personal relationships. Because of the dizziness he has given up driving. The accident has had an adverse effect on his libido.

26. Medical estimates of the cumulative permanent impairment of P1 vary. He obviously exaggerated his complaints when examined by a doctor on behalf of the defence. Dr. Yu Yuk Ling in November 1995 put the cumulative permanent impairment at 18% and the loss of earning capacity at 25%. Doctor Philip Wen-Chee Mao assessed impairment of the whole person at 22% and disability at 50%. He had apparently been told by P1 that he was unable to do any work whereas the evidence indicates the contrary. Doctor Singer's psychiatric report suggested a permanent loss of earning capacity, with psychiatric treatment, at 60% and without it at 75%. His opinion was that impairment of the whole person was 30% with treatment and 40% without it. Doctor Law Wun Tong examined P1 on behalf of the defence on the 5th December and 9th December 1995. He found that P1 did not cooperate and exaggerated his disabilities but his general findings as to post-concussional syndrome were similar to those of the other doctors and his assessments were that permanent impairment was 15% and loss of earning capacity 25%.

27. In addition to the medical reports and the evidence given by the doctors in Court I had the advantage of being able to observe P1 closely while he gave evidence of a period of 4 days. He appeared to me to be in full possession of his mental faculties, coping extremely well with cross-examination in the sense that he employed various tactics to avoid difficult questions and to advance his own case. His memory appeared to be very good. Whilst I am satisfied that he did suffer some irreparable brain damage which has had an effect on the strength of his left arm and leg and that he did suffer post-concussional syndrome, I am also satisfied that he has exaggerated his deficiency with an eye on this litigation. That exaggeration has impressed some doctors more than others but I find on the basis of all the evidence, not excluding that of himself and his wife, that he should properly be treated as having suffered an impairment of the whole person of 20%.

Pain, suffering and loss of amenities

28. It is common ground between the parties that the Defendant's claim is one which falls into the "Serious Injury" category in the tariff affirmed in the Court of Appeal in Chan Pui Ki (supra). The range is between $400,000.00 and $540,000.00. Neither party has provided the Court with any decisions on comparable facts. The Plaintiff contends for the top of the scale and the Defendant for the bottom of it. Apart from the weakness in his left arm and leg and the physical symptoms of dizziness and headache, P1 has suffered adverse psychological effects in that he has lost his former energy and drive, his family life is affected and having been a happy and outgoing man he is now suffering a degree of clinical depression. A sum of $470,000.00 will be awarded for pain, suffering and loss of amenities.

Loss of future earnings

29. In the schedule of damages, P1's loss is described as follows:

"1. Loss of future earnings

(a) Earnings from retail business in Hong Kong

(i) the 1st Plaintiff is suffering a continuing loss of earning from his retail business in Hong Kong of at least HK$72,100.00 per month on average.

(ii) the annual loss of earning from his retail business is at least HK$865,200.00."

30. It is common ground that P1 did not and does not hold a hawker licence. Hawking without a licence is illegal as being a contravention of Section 83B of the Public Health and Urban Services Ordinance Cap. 132. A plaintiff in an action for damages for personal injuries is not entitled to any award in respect of a loss of earnings from unlicensed hawking. In Tam Choi v. Ho Wai Hing and Anor CA19 of 1974 (unreported) the Full Court upheld a decision of Briggs, C.J. that an illegal hawker could not recover damages for loss of earnings as such in a running-down case. This principle has been followed in a number of High Court decisions. See Mak Yuk-kiu & Anor v. Tin Shing Auto Radio CTR Ltd. and Anor [1981] HKLR 77.

31. I find that P1's claim in respect of loss of earnings and of future loss of earnings must fail since it relates to his earnings as an illegal hawker.

32. P1 pleaded that he was running his own business and gave evidence to that effect. Because he was unable to procure the issue of a hawker licence to himself, he found a lady who held a hawking licence in respect of the former business of her deceased husband. The lady was old and in poor health and was not running a hawker business so P1 paid her monthly sums of something over $2,000 for the use of her licence. By-law 13(1) of the Hawker (Urban Council) By-laws Cap. 132 provides that

"a licensee shall not transfer his licence to any other person. Any transfer or purported transfer of a licence shall be of no effect".

The licensee, P1 and P2 made false declarations to the Urban Council to the effect that P1 and P2 were assistants to the licensee in the licensee's hawking business (which did not exist). Later, further false declarations were made so that P2 was appointed deputy to the licensee. Thus it was made to appear to the officials responsible for enforcing the Hawker By-laws that a hawker business was being run by the licensee at the stall with the assistance of P1 and P2. That was a complete sham. P1 was unlawfully running his own hawker business without a licence.

33. This is not a case where the authorities were deliberately turning a blind eye to the arrangement. The authorities were being deceived. In any event, if the authorities had, as a matter of policy, turned a blind eye to the illegal hawking, such a policy would not have rendered the activity legal. I am aware of a decision of Jones, J. in Ho Wing-chu v. Chan Kwok-keung and Anor [1988] 1 HKLR 95, which was not cited at the trial. There, Jones, J. held that damages were recoverable in relation to loss of earnings from an illegal business carried on in Kowloon Walled City because it was the Government's policy to turn a blind eye to the carrying on of an unlicensed and therefore illegal food business there. With respect to the learned judge, I do not think that it was open to him to disregard the illegality but in any event the case was decided on its own special facts in view of the unique circumstances which prevailed in the Kowloon Walled City before it was demolished. I would not follow it in the present case.

34. Though I must ignore P1's illegal business when considering the matter of damages, I have given some thought to the question whether, quite apart from loss of future earnings from that business, he is entitled to an award of damages in respect of the effect which his injuries have had on his earning capacity in general. A claim on that basis was not pleaded but the decision in Chan Wai-tong and Anor v. Li Ping-sum [1985] HKLR 176 suggests that a failure to plead a claim for loss of future earning capacity does not necessarily bar a plaintiff from recovering such damages since loss of future earning capacity is included in general damages.

35. In Tam Choi (supra) the Full Court was dealing with a case where a plaintiff had been making the greater part of her income as a hawker but had supplemented it by work in a factory for about 10 days each month. The judge based his assessment of loss of earning capacity, ignoring the illegal activity, upon the assumption that the plaintiff would never do more than an average of 10 days legal work in a month. Huggins, J., as he then was, said:

"In my view the learned judge came to right conclusion on this point. Such evidence as there was tended to show that the Plaintiff preferred hawking when she had the capital to buy stock. Indeed her evidence that her work in the factory was confined to times when she did not have enough capital is hardly consistent with her evidence of her higher earnings as a hawker and of the apparent regularity of her employment in the factory. It would not be justifiable to infer that the Plaintiff would change the habit of the past eight years, but rather was there a probability that she would continue it. It is true that if she did wish to make the change she would, on the findings of the learned judge, be unable by reason of her injuries to make it, but the possibility must be regarded as too remote for that loss of earning capacity to have a quantifiable value. The result may seem to some a harsh punishment for making a living in a manner regarded by society as criminal, but our task is to apply the law as we find it."

It may well be that the learned judge intended to insert the word "not" before "regarded" in the last sentence and that it was accidentally omitted but it makes no difference to the effect of what was decided.

36. Unfortunately for P1 all the evidence is that he was engaged full time in his illegal hawking business both before and after the accident and that he intended to continue to run that business full time. In the circumstances, there is no evidential basis for making any award in respect of notional future lawful earnings. I find on the evidence that P1 intends to continue with his illegal business. If I were to award him a notional sum for loss of future lawful earnings I would in fact be supplementing his future unlawful earnings so that he would obtain by a fiction that to which he is not entitled. Such a course would be against public policy.

37. P1 does not come to Court with clean hands. He has never paid any tax on his profits. He has deceived the authorities in order to be able to hawk without a licence.

38. A great deal of time was taken up at the trial in a detailed examination of such business records as P1 produced. P1 did not keep proper accounts and never submitted any tax return in respect of his business. The only tax return he ever caused to be submitted was on his own testimony wholly false and represented him to be an employee receiving a very low salary. A substantial number of relevant documents surfaced only during the course of the trial. It was left to counsel for the defence to try to make some sense out of the records and the evidence. He came up with a difference in net after tax profit per month, before and after the accident, of $4,371.70.

39. Counsel for the defence submitted that some account must be taken of exaggeration on the part of the Plaintiff and of the well-known fact that there has been a general decline in the retail market in Hong Kong. I do take notice of the well-known fact that retail shop business has been declining in Hong Kong but there is no evidence as to the extent of the decline and there is no evidence as to trends in the hawker market. It may well be that the customers who are deserting the shops are making their purchases from hawkers.

40. I find that P1 was an unreliable witness when he was giving financial estimates unsupported by documents and I was not satisfied as to the authenticity of the written records which had been compiled after the accident.

41. Had I felt able to make an award for loss of earnings I would have estimated the loss at $3,000.00 per month and for loss of future earnings I would have taken a multiplier of 12.

Loss of China investment income

42. Again the evidence is not clear but it seems that P1 had an investment of RMB500,000 in a business in Mainland China. Either it was a loan to the proprietor of the business or it was working capital contributed by the 1st Plaintiff as a sleeping partner. P1 was unable to be more specific. The yield was an astonishing RMB35,000 per month. P1 withdrew the investment after his operation for the removal of the indented skull fracture and before the second operation when a cover was placed over the resulting hole. P1 was unable to make up his mind in evidence as to whether his motive was to protect the fund in case he did not survive or to deal with a cash shortage.

43. I am satisfied that there is no basis whatever for a claim for damages against the Defendant based upon the fact that the 1st Plaintiff chose of his own accord to bring to an end a high yielding investment, thus depriving himself of a substantial income. There will be no award under this head.

Special Damage: P1

Medical expenses

Tonic food

Travelling expenses

Medical reports. Whilst I do not say that the cost of a medical report can never properly be claimed as special damage, I hold that the cost of the medical reports in this case is part of P1's costs and disbursements in the litigation and I make no award under this head.

There will thus be judgment for P1 for the following sums.

There will be interest on the damages for pain suffering and loss of amenities at 2% per annum from the date of issue of the writ to date of judgment. There will be interest on the special damages at 6% per annum from the date of the accident to the date of judgment.

General Damages: P2

Pain, suffering and loss of amenities

Madam Kwan Siu Hung (P2) fortunately suffered only minor injuries although the experience of being under a collapsing balcony must have been terrifying. When she was attended in the accident and emergency department of Queen Elizabeth Hospital she was conscious and alert. X-rays revealed no fracture. Her general state was good and she was found to have:

"tender swelling over occiput

1cm abrasion over right ring figure

2cm abrasion over right knee

2cm abrasion over right chin

1cm abrasion x 2 over left knee

2cm abrasion over left ankle."

44. Madam Kwan was given an anti-tetanus toxoid vaccination. Her injuries were dressed and she was discharged. In evidence P2 said that she spent only 4 hours in hospital. P2 seeks an award of $30,000.00 under this head. In the absence of any evidence as to any after-effects, I do not feel, in view of the relatively minor nature of the injuries, that I can properly award a sum greater than $12,500.00 and I award that sum.

Special damage

45. P2 claims $410.00, the cost of a hospital report. This item is agreed and there will be an award of $410.00.

46. There will accordingly be judgment for the 2nd Plaintiff for the sum of $12,910.00.

47. There will be interest on the sum of $12,500.00 at 2% per annum from the date of issue of the writ to the date of judgment. There will be interest at 6% per annum on the sum of $410.00 from the date of the accident to the date of judgment.

Costs - P1

48. P1 has succeeded on liability but he was looking for an award of something over $5m. in respect of the China Investment and in the region of $5m. in respect of loss of earnings in his hawking business. Both claims were misconceived and failed. These misconceived claims caused a trial, which in my estimation could have been finished in 3 days, to be extended to just over 9 days. Time was wasted as a result of the failure of P1 to produce any proper financial accounts and as a result of the production during the course of the trial of a large number of documents which should have been discovered before the trial had begun. There will be an order nisi that the costs of P1 be taxed and that the Defendant pay only one third of P1's taxed costs. There will also be an order nisi that the costs of the Defendant in defending P1's claim be taxed and that P1 pay two thirds of the Defendant's said costs.

Costs - P2

49. There will be an order nisi that P2's costs be taxed if not agreed and paid by the Defendant.

(D.J. Leonard)

Judge of the High Court