CHI YUK PUI v. GRACE MIND CORPORATION LTD t/a TSUNO JAPANESE RESTAURANT

HCPI 917/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 917 OF 2014

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J U D G M E N T

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1. This is an assessment of damages which I heard, in exceptional circumstances, in chambers so as to enable Ms T Leung of Kenneth W Leung & Co. to appear at the assessment. At the hearing on 20 April 2015, I expressed my oral reasons for doing so, and for dealing with this case that had been commenced in the District Court, as follows^[1]:

“Before you start, I think I just wish to have it on the record that I am giving leave in exceptional circumstances for this case to be heard in chambers.

Since last year, I have been directing a number of District Court actions, similar to this one, to be transferred to me in the High Court for me to case manage, because I wanted to establish a new protocol for cases of this nature where injury has been sustained in the course of employment but where the defendant employer has failed to get proper insurance cover so that the matter has to be addressed with the Employees Compensation Assistance Fund Board (“the ECAS Fund Board”) established under the Employees’ Compensation Assistance Ordinance, Cap. 365 (“the Ordinance”).

In a number of those cases, the ECAS Fund Board intervenes in the proceedings and becomes an additional party to the proceedings and defends the claim as if it were the defendant. And in those cases, the court’s discretionary powers enable it to make an award of costs against the Fund Board should it consider it is right to do so[2].

But in cases of this nature, where the ECAS Fund Board has decided not to participate in the proceedings, then, what will happen is that, at the end of the hearing for the assessment of damages, the undefended assessment of damages - I should, I think, mention in passing that in all these cases the defendant does not participate at all in the proceedings with the result that there is an interlocutory judgment entered for damages to be assessed and the assessment is then undefended.

So what happens is that, at the end of the assessment of damages, final judgment will be entered for a certain sum of money as damages, together with interest, and costs against the absent defendant, and, then, the plaintiff will have to make an application to the ECAS Fund Board for a relief payment.

Pursuant to the provisions of the Ordinance, the ECAS Fund Board will make the relief payment in the sum as assessed by the court, but it will not pay any interest and, more importantly, it will not pay any costs incurred in obtaining that judgment.

So what then happens is that, in these cases, the relief payment, or part of the relief payment will be used to satisfy the costs incurred in bringing the proceedings, which, of course, is a necessary step because, under the provisions of the Ordinance, the prerequisite to claiming a relief payment is that one must obtain a judgment in a competent court of law.

This is particularly problematical in the assessments of damages that take place in the District Court, where the claims are below a million dollars, and where I have come across cases where the costs involved in obtaining that judgment are disproportionate to the amount of the claim. Indeed, in some cases, more than 50 per cent of the relief payment can go towards those costs.

It is with a view to trying to correct this situation[3] that I have embarked on this course of case managing these cases but, after today’s hearing, I will hand down a judgment in which I will set out a protocol by way of guidance to the District Court Personal Injuries Judge and to his masters so that they can do what I have tried to do, which is to be very active in managing the costs to be incurred in the exercise of obtaining that undefended judgement, and ensuring that steps are taken to proceed to an assessment of damages which are proportionate, and that excessive costs are not incurred.

Part and parcel of that exercise is for the court also to make a summary assessment of the costs and, to enable the court to do that, I have asked the solicitors, in a number of cases that I have case-managed, to prepare statements of costs and, also, to let me know the costs that were awarded to them in the corresponding employees’ compensation claim[4].

Quite often, the work done in the employees’ compensation claim could be used in the assessment of damages. The witness statement used in the employees’ compensation proceedings could be used in the assessment of damages, perhaps supplemented by a further statement in respect of one or two items of claim which are outside the ambit of the employees’ compensation proceedings. And, more importantly, the expert report[5] obtained for the employees’ compensation proceedings, usually from an orthopaedic specialist, could be used because the issues addressed in such reports would be relevant to the assessment of damages as well.

Because the focus of the exercise is driven by the strong need to ensure that excessive costs are not incurred, and that they are proportionate to the claim being made, I have taken the exceptional step of hearing this case in chambers, rather than in open court, so that the additional cost of briefing counsel would not have to be incurred.

Both sets of hearings, whether in open court or in chambers, are, nevertheless, conducted in public, as any member of the public can come into the courtroom and listen to the proceedings. However, I have taken this exceptional step because this case ought to have been heard in the District Court where, of course, a solicitor has a right of audience in open court[6].

This exceptional course will not be repeated because, after I hand down my decision in this case, setting out the proper protocols, I will not have to deal with these types of actions anymore.”

2. At the hearing of the assessment of damages, I received into evidence the documents contained in the hearing bundle, including the report of Dr. Tio Man Kwun Peter dated 26 December 2013. Dr. Tio is an orthopaedic expert and I received his report into evidence without the need for him to give oral evidence. The plaintiff also gave evidence in the witness box and confirmed the truth of his witness statement which he relied on as his evidence in this case.  The defendant did not appear to challenge the evidence that was adduced before me.  I accept the evidence of the plaintiff and the expert opinion of Dr. Tio. 

3. The claim arose out of an accident at work that occurred on 11 August 2011.  At the time, the plaintiff had been employed by the defendant as a cook.  He fell from a height when he was trying to obtain some cooking ingredients.  He fell about 2 metres and struck his right wrist on a chopping board as he fell before landing on the ground.  The report from the Accident & Emergency Department of Kwong Wah Hospital, which he attended that night after the accident, stated that he fell with resulting right wrist contusion and that, on examination, his right wrist was swollen and tender.  X-ray of the right wrist found widened distal radio-ulnar joint (“DRUJ”).  He was admitted to the Orthopaedics Unit for further management. Clinical examination revealed pain on wrist supination and X-ray revealed no definite fracture but suspected DRUJ instability.  He was provided with a dynacast and discharged on 12 August 2012.  Thereafter, he attended the outpatient department for treatment until March 2012, and also received physiotherapy treatment from November 2011 to January 2012. 

4. At the expiry of his sick leave, he was assessed by the Medical Assessment Board which found that he suffered a 0.5% permanent loss of earning capacity. He claimed employees’ compensation and also appealed against the assessment of the Medical Board.  On 5 June 2014, he was awarded employees’ compensation in the sum of $72,328.  That sum has not been recovered from the employer and an application for relief payment has been made to the ECAS Fund Board.  The plaintiff brought proceedings for damages at common law on 17 December 2012.  As the defendant had failed to give notice of intention to defend, interlocutory judgment, by default, was entered on 3 September 2013 for damages to be assessed.   

5. The plaintiff was 20 years old at the time of the accident and is now 24 years old.  He was employed to work as a cook by the defendant from May 2011. In the employees’ compensation proceedings, Deputy District Judge Phillis Loh found that the plaintiff earned $10,300 per month prior to the accident. 

6. Although the respondent did not appear to contest the employees’ compensation proceedings, just as it does not appear to contest these proceedings, the finding by the Deputy DistrictJudge, which was a finding that was arrived at after a hearing on the merits, is a finding that creates an issue of estoppel in the present case.  In fact, the plaintiff framed his claim for loss of earnings based on this amount and does not seek to assert that he earned more than this sum prior to the accident. 

7. The plaintiff had been a delivery man for a year prior to commencing his employment as a cook in May 2011.  His work as a cook was onerous at times and required him to carry materials weighing up to 20 kgs.  After the accident he was granted sick leave until 29 January 2012.  As he still felt pain in his right wrist quite frequently, he did not commence work until March 2012 when he started to work as a handicraft worker earning a daily rate of $500 per day.  He was responsible for cutting paper to create various characters and making handicrafts for a shopping mall, and he did not have to engage in any heavy manual labour.  

8. Dr. Tio examined the plaintiff on 30 November 2013.  In his report dated 26 December 2013, he noted that the plaintiff complained of residual intermittent pain over his right wrist upon paper cutting for over 5 to 10 minutes and upon maintaining a stationary position for over 5 to 10 minutes.  The pain occurred once or twice a week, and lasted a few minutes.  He also noticed occasional clicks over his right wrist[7].  He had to change to his left hand after using his cutter for a long period of time or if he had to lift weights for a long period of time.  Dr Tio found, on his examination, that the plaintiff suffered from residual subluxation and tenderness over right DRUJ, with minimal reduction in the range of movement.  There was no muscle wasting.  The X-ray of the right wrist showed minor dorsal subluxation when compared to the left wrist.

9. Dr Tio was of the opinion that the plaintiff had reached maximal medical improvement and was able to resume his duty as a kitchen worker with mild degree of disability after prolonged use of his right wrist, and that he would benefit from intermittent breaks.  He assessed the degree of impairment of the whole person at 2.5%.  He also considered that the sick leave that had been granted up to end of January 2012 to be reasonable and appropriate.  

10. The plaintiff gave evidence that he had ceasedworking as a handicraft worker since July 2014 and was now employed as a driver, earning $16,500 per month.  He drove a private car and did not have to do heavy manual work.  He considered his duty as a driver to be lighter than his work as a handicraft worker and his former work as a cook in a Japanese restaurant.  He also stated that his condition had improved since his examination by Dr. Tio in November 2013.  Although he continues to have occasional clicks over his right wrist, his feeling of tiredness of his right wrist after working for about 5 to 10 minutes has now improved.  Although he still has residual pain over his right wrist, it does not occur as frequently as before.  He would only feel pain after working with his right hand or right wrist for a period of 15 to 20 minutes.

PSLA

11. Ms Leung submitted that I should award the sum of $200,000 as damages for PSLA and referred me to the cases of Chung Hok Sung v Li Kam Ming and Or.[8] and to Tang Bo Ling v Chan Po[9].  Both decisions related to more serious injuries involving fractures.  I assess and award damages for PSLA in the sum of $150,000 to the plaintiff in this case. 

Pre-Trial Loss of Earnings and Loss of MPF

12. I award damages to the plaintiff under this head of claim in the sum $71,703.45.  I do so based on pre-accident earnings of $10,300 which he suffered for a period of 6.63 months, being the period over which he was granted sick leave and an additional period of one month, which I award to him as a reasonable period of time for him to search for suitable employment.  I also increase the total loss of earnings over this period by a factor of 1.05 to represent his loss of MPF over this period of time.  $10,300 x 6.63 months x 1.05 produces the sum of $71,703.45, which I award as pre-trial loss of earnings and MPF.   

Loss of Earning Capacity

13. Given the mild degree of residual disability, which has improved and is likely to improve further, I find that this is not an appropriate case in which to award damages for loss of earning capacity, and I decline to do so. 

Special Damages

14. I am satisfied that the plaintiff has expended a total sum of $4,640 in respect of medical expenses, travelling expenses and tonic food expenses which I award in full.

Employees’ Compensation

15. As stated in §4 above, the plaintiff was awarded a sum of $72,328 as employees’ compensation.  Ms Leung informed me that the plaintiff is likely to obtain a relief payment from the ECAS Fund Board in this amount very shortly and that he was prepared to give credit for this sum.  On that basis, I award damages in the net sum as calculated below:

PSLA	$150,000.00
Pre-trial Loss of Earnings & MPF	$71,703.45
Special Damages	$4,640.00
Sub-total:	$226,343.45
Less: Employees’ Compensation	$72,328.00
Net award:	$154,015.45

In addition, I award interest on damages for PSLA at a rate of 2% per annum from the date of service of the writ to the date of judgment. I also award interest on pre-trial loss of earnings and MPF and special damages at the rate of 4% per annum from the date of the accident to the date of judgment.

Summary of Assessment of Costs

16. An important part of the case management of cases like the present case is to make a summary assessment of the costs incurred so as to protect, as much as reasonably possible, against the depletion of the relief payment by excessive or unreasonably incurred costs.

17. The plaintiff’s solicitors were able to have the costs of the employees’ compensation proceedings taxed and allowed in the total sum of almost $175,000 as party and party costs.  They claim party and party costs of these proceedings for damages at the District Court scale in the sum of just under $137,000, and disbursements in the sum of just under $2,800.

18. I consider the claims to be excessive given that the greater part of the work was already done in the employees’ compensation proceedings.  I recognise that additional work had to be done in order to prepare the case for damages for personal injury and, in particular, work had to be done to prepare the case on liability, and also to update the case as regards quantum.  However, the matters raised in these proceedings were fairly straightforward.  There was no need, in my view, for two senior solicitors to be involved in the preparation of this work.  Ms Teresa Leung, who was admitted in 1992, could have prepared this case with the assistance of a junior solicitor and a senior litigation clerk.  The number of hours claimed, a total of 52 hours, for the preparation of the case, including taking instructions, drafting documents, perusing documents, including the expert’s report[10], correspondence and telephone attendances, and legal research including research on precedents on PSLA, and for court attendances was also excessive. I would allow 35 hours for a case of this nature, 35% of which I would allow at the hourly rate of $2,600 charged by Ms Leung, 50% at the hourly of $2,100 for a junior solicitor, and the balance at the hourly rate of $660 for a senior litigation clerk. Taking these matters into account and proceeding on a broad-brush basis, I allow profit costs in the sum of $75,000 and disbursements in the sum of $1,764.  I disallow the claim of $1,000 for travelling expenses, search fees, post and photocopying charges, and miscellaneous expenses as these are part of profit costs.

19. It can be seen from the above that despite my less than generous approach in my summary of assessment of the costs, the costs which I have allowed comes to about 50% of the relief payment that can be expected from the ECAS Fund Board as a result of my award of damages.  It seems to me to be unjust that a great, or greater, part of the amount paid by the ECAS Fund Board in order to compensate for loss and damage, and pain and suffering should be utilised to pay the legal costs incurred to obtain the judgment for damages.

20. Going forward, it is my sincere hope that solicitors who are assigned by the Director of Legal Aid to conduct claims of this nature, once they realize that the defendant’s employer is uninsured and that the ECAS Fund Board does not wish to intervene, may consider conducting the proceedings[11] on a pro bono basis in order to avoid the injustice that a substantial part of the relief payment to be made by the ECAS Fund Board would be absorbed by their costs.  Even though undefended assessments of damages in the High Court can be heard by a master in open court where solicitors have a right to audience, I would welcome pro bono assistance from the junior Bar to conduct such assessments, whether in the High Court or in the District Court.

The way forward

21. Going forward, the master case managing such undefended cases should ensure that costs are controlled and kept at a reasonable level. Although there may be cases which might merit a different approach, masters exercising their powers of case management are likely to direct that the claim for damages should only be allowed to proceed after the employees’ compensation proceedings have been concluded.  The same expert report deployed in the former proceedings should be relied on in the action for damages.  So as not to incur unnecessary costs in preparing the case on liability, interlocutory default judgment for damages to be assessed should be obtained after service of the writ and indorsement of claim pursuant to Order 13 of the Rules of the District Court or of the High Court.  Whilst the employees’ compensation application and the action for common law damages can be commenced in tandem, a Statement of Damages, relying on the expert report used in the employees’ compensation proceedings[12] should be prepared and served only after default judgment has been obtained and after the employees’ compensation proceedings have been concluded.  The witness statement used in the employees’ compensation application can be used in the assessment of damages, supplemented by a further witness statement to deal with the various heads of claim at common law.

22. The case can then proceed to a Check List Review hearing.  Only one such hearing ought to be required at which the master is likely to direct that the witness statements stand as evidence in chief; that the expert report be adduced without calling the maker; that an opening submission be served in advance of the hearing of the assessment of damages which could stand as final submissions; and that a statements of costs incurred and to be incurred in the proceedings should also be submitted in advance of the assessment hearing, together with a statement of the costs awarded to them in the corresponding employees’ compensation claim.  The assessment of damages could be fixed to last no more than 1 to 2 hours at which the plaintiff can be called to confirm the truth of his witness statements.  After assessing damages and entering final judgment for the damages as assessed, the master can then make a summary assessment of costs, as I have done in this case.

23. After this judgment, I need not case manage any more of these undefended cases.  I will re-transfer the cases that are under my charge to the District Court to be case managed in a manner that will ensure that costs are controlled and kept as low as reasonably possible.