HONG KONG MACAU HYDROFOIL CO LTD v. NG CHUN WAI AND OTHERS

A.J. Folio No.209 of 1984

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

ADMIRALTY JURISDICTION

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JUDGMENT

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1. This is an Appeal against part of an assessment of Damages undertaken by Master Perrior. It came before me as a single judge as the reference is made pursuant to order 75 rule 43.

2. Master Perrior assessed damages in respect of all the claims which were made by passengers or their personal representatives as a result of a collision between 2 Hydrofoils.

3. The assessment was made after the determination of a limitation action and in accordance with an order I made for the apportionment of moneys held in Court.

4. A consequence of this is that the total of the amounts which were awarded exceeded the amount held in Court and it was necessary to reduce the amounts pro rata to the claims.

5. This meant in effect that the parties who would be detrimentally affected by the appeal if successful in whole or part were the other claimants on the funds.

6. At the commencement of the appeal Mr. Pirie for the Appellant, who was acting on the instructions of the Director of Legal Aid, informed me that a fund comprising approximately ¢150,000 had been set aside to provide for unforeseen contingencies and he had seen fit to make a concession on behalf of his client that even if the amount awarded exceeded the amount of this fund they would forego seeking to obtain a repayment of the moneys which had already been paid to other Claimants.

7. The appeal was limited to the award which had been made to Luk Siu Chun who is the Administratrix of the estate of Luk Siu Sze who died in the collision.

8. Master Perrior deals with this claim from page 44 to page 51 of the reasons he gave for the Assessment.

9. The grounds of the appeal are as follows:

10. It would appear from a reading of the reasons given by the Master for his Decision that he encountered considerable difficulty in accepting the evidence of the Deceased's mother concerning the financial contributions which had been made by the Deceased both to herself and her husband. It is evident that the Master came to a conclusion that it would have been impossible for the Deceased to have made the payments which were claimed and also effect the other savings referred to out of the meagre income which she received.

11. He also experienced difficulty in calculating a figure due to the evidence which was given by botn the Deceased's mother and Luk Siu Chun the Deceased's sister to the effect that the Deceased had entertained plans to join her mother who was resident in Ecuador South America.

12. Indeed the Master appears to have been so perplexed by the uncertainties that faced him that he considered that the only course open to him was to make a lump sum award in the form of a "consolatum" of $30,000 to which of course was added the usual award for less of expectation of life.

13. In reaching this conclusion the Master placed reliance upon a passage from a recent assessment made by Master Jones in Wai Kang Kwan the Administratrix of the Estate of Wai Sau Lai Deceased v. Wong Wing Hong and Another A1803 of 1989 unreported.

"However much sympathy the parents evoke, the court is an impartial arbitrator between the parties. It must vigorously, albeit with understanding and humanity, follow established principles and practice in making its award. This is particularly important in assessing damages for death and personal injury, where an element of speculation is necessarily present. The court must not however speculate beyond such future probabilities as may reasonably be inferred from present facts. The assumptions I am asked to make by plaintiff's counsel have little foundation in reality and I decline to make an award for accumulation of wealth."

14. I have no doubt that this was the wrong approach to this matter. I accept that it is by no means a simple matter to assess damages which are payable in such circumstances.

15. There was however a considerable amount of evidence which was available to the Easter concerning the Deceased's earnings and her spending habits. I refer to the evidence of both the Deceased's mother and the evidence of Luk Siu Chun. None of their evidence was subjected to serious cross examination. In my view none of the evidence was inherently incredible. I accept that parts of the evidence concerning moneys which the Deceased had saved was necessarily incomplete. However the fact that on the evidence she had succeeded in saving nearly 75% of her earnings of $3,700 pm was not a complete impossiblilty as suggested by the Master. In this connection her outgoings were minimal and it is not inconceivable that she may have been able to both effect the savings claimed and also to have made the contribution which it was claimed she had made to her parents. In any event the Master has given insufficient reasons for rejecting this evidence.

16. The next matter which has to be considered is the correct approach which should have been adopted by the Master.

17. The general principles applicable to fatal accident cases was set down at some length by Lord Diplock in Cookson v. Knowles 1979 AC 556. These principles nave also been followed in Hong Kong in numerous cases.

18. Perhaps the most convenient formulation of the principles is the one contained in the judgment of Roberts C.J. at p.338 of The Personal Representatives of Wong Sai Chuen, Deceased v. Tam Mei Chun and Another 1983 HKLR 331.

"However, it seems to me that there can be no doubt, in the case of Gammell [1981] 2 WLR 248 (which has not reaches the House of Lords at the time of the trial in Yeung Wing) that the correct approach for a trial judge, in assessing the free balance trust be as follows -

	(a)	he assesses the net income (i.e. the income after tax) which the deceased. would have been expected to receive during his lost years;
	{b)	he deducts from this figure only the "cost of maintaining himself" (otherwise described as "personal expenses”),
	(c)	these "personal expenses" will include the cost of housing, food, clothing, travelling, insurance, a holiday entertainment, social activities and perhaps a car;
	(d)	the "personal expenses" should reflect the deceased's own pattern of expenditure when alive and the general standards of reasonable expectation of persons of his background, status and income.
	(e)	the contributions which the deceased would have made to his family do not form part of the cost of maintaining himself. Nor do his savings, if any.

The effect of such a formula will be that an award under LARCO will exceed the amount to be awarded under FAO, save only where the deceased's "personal expenses" would have absorbed the whole of his net earnings. Thus in most cases, where there is a LARCO award for lost years, the FAO award will merge with it and disappear.

In White [1982] All ER 410, the judge reached the view that the average available surplus in a case such as that of the deceased would be one-third of his net earnings for the first five years after death when it was assumed he would continue to live with his mother, and one quarter of the net earnings thereafter, when it was assumed he would be married.

The case illustrates well the traps which lie in wait for trial judges seeing to calculate the free balance. Webster, J. J, has found that the deceased's personal expenses increased from 2/3, when he had only a mother to support, to 3/4 when he had to support a family. Surely, it would be more natural for a young man to reduce what he spends oh himself when he acquires a wife and family - not to increase it.

Nor can I see how a reasonable young man would spend only 25% of his net income on his family leaving 75% for his own personal expenses.

If I am correct, the calculations in White are quite unrealistic and seem to flow from the confusion likely to arise in calculating a free balance which deducts some types of personal expenditure and ignores others.

The House of Lords has stated that there should be no conventional award, which I take to mean a fixed sum which is applied without reference to the circumstances of the plaintiff, as happens in the case of damages for loss of expectation of life. This does not however, seem to prevent the courts from adopting a starting point, which is what the trial judges in Yeung wing [1981] HKLR 130, in this case and in White all sought to do.

Although the starting point suggested in Yeung wing [1981] HKLR 130 was, in view of Pickett [1980] AC 137 and Gammell 119611 2 WLR 248, wrong in law, I think, it would be helpful to substitute another, if a sensible figure can be devised.

Lord Diplock in Gammell [1981] 2 WLR 248 has said that the net surplus for lost years will (discounting savings which the deceased might have set aside out of his income) be substantially the same as the damages which the dependant's would nave been awarded under FAO.

Guided by this statement, I suggest that it is open to a trial judge, having assessed the FAO dependency:-

As a starting point, it would be reasonable, in my view, to adopt the formula proposed by the trial judge in Yeung Wing [1981] HKLR 130 of taking 10% of the deceased's net earnings as the amount of his notional savings, a method which received the approval of this court in Yeung Wing [1981] HKLR 407 on appeal.

The natural thrift of the inhabitants of Hong Kong suggests that this is not an unreasonable assumption. Certainly, it is borne out by the facts of this case, which establish a saving of $400 a month out of notional income after death of $4,617.

The free balance should therefore be the sum of the following -

        The LARCO figure is therefore $680,107."

19. I do not consider that there was any valid reason for the Master not to accept the evidence concerning the Deceased's earnings prior to her death and the evidence of what she would have earned had she lived. Her earnings at the date of her death were $3,700 pm. These earnings would have increased to$8,440. In this connection I can see no reason not to include the $700 the Deceased earned outside her normal employment.

20. The main problems however which are encountered in this case relate to the amount which the Deceased would have been able to save and the uncertainty created by her apparent decision to have at some time in the future to Ecuador to join her mother.

21. I do not consider that these imponderables were of such a nature as to render any attempt to resolve them futile as appeared to be the view of the Master.

22. I consider that the solution to the first imponderable lies along the lines adopted by Mr. Commissioner Clough as he then was in Zee Peter and Tung Bean the Administrators of the Estate of Zee Leonard Deceased v. Yau Yat Shing and Another unreported being case 8977 of 1981.

23. Mr. Commissioner Clough was faced with a situation replete with different variables and unforeseen possibilities and had this to say at page 19.

"In accordance with the approach laid down by the Chief Justice at p.10 in the Wong Sai-Chuen case when applying Gammell v. Wilson (Supra) I have to deduct from the ascertained net income for the lost years only the costs the deceased would have incurred in maintaining himself ("personal expenses"). These expenses will include the deceased's cost of housing food clothing, travelling, insurance, a holiday entertainment, social, activity and perhaps a car and these expenses should reflect the deceased's own pattern of expenditure when alive and the general standards of reasonable expectation of persons of his background, status and income.

    Personal savings and any contributions the deceased would have made to his family do not form part of the cost of maintaining himself. Counsel for both parties pressed me to accept that the court should not allow for any possible marriage of the deceased and contended that the dictum of the Chief Justice at page 9 of Wong Sai Chuen's case expressed the ruling of the Court of Appeal that in assessing damages for the lost years the court was bound to treat a man who was single at his death as if he would have remained so.

The relevant passage in the chief Justice's judgment is as follows:-

"It is worth noting that in White (1982) 1 All E.R. 410 the deceased plaintiff was unmarried at his death, so that the notional cost of supporting a non-existent family increased the award under this head. This seems to me to be an unnecessary leap in the dark. I would have thought that the effect on the estate of the deceased should be based upon the facts as they were when he died and that a single man should be treated as if he would have continued to be so."

I do not understand the dictum to be going so far as obliging me not to take into account (as Croom Johnson J. did in Ashley v. Vickers (Supra) the prospect of marriage of a young man of 28 consistently with the settled practice of the courts in FAO dependency claims in respect of dependants of young single men and women.

However, as the free balance of net income of the deceased to be ascertained comprises what the deceased had hoped to nave available as spendable surplus income after allowing only for toe deduction of the cost of. maintaining himself & accordance with his background and status he marriage factor can in my view only be relevant in the present assessment because on marriage many of a bachelor's expenses are directed into supporting his wife and family. To this extent the prospect of marriage can, in my view, properly be taken into account as one of the relevant considerations without making any assumptions that marriage would necessarily have occurred.

In the present case the deceased was on the threshold of what promised realistically to be a successful career in the garment industry. His earnings were modest but the probability is that they would have increased dramatically in 1981 and that by July 1982 his monthly salary. would have more than doubled. By January 1982 his salary after tax would have been virtually trebled.

At the time of his death his expenditure on his personal expenses was probably confined to the balance of $1,500 (30 per cent of his income) per month after making payments amounting to a total of $3,500 to his parents and grandmother. His background was not one of riches but he came of a family who were well off enough to own their own flat and a motor car, the latter evidently acquired from the money made available from the family tailoring business.

A young man of the deceased's background would in my view have been likely to expand his personal expenditure very soon after entering a substantially increased salary bracket. Whether or not he would have married and had a family I consider it probable that he would very soon have entered into an appreciably more independent and expensive manner of life than that he enjoyed before his death. There must have been a realistic prospect of his acquiring a motor car and acquiring or renting a flat of his own and spending money, albeit not extravagantly, on entertainment, a holiday and insurance in audition to the ordinary necessaries of life.

Doing the best I can when attempting, necessarily by guesswork, to assess all these imponderables and nearing in mind the high cost of accommodation and living generally in Hong Kong. I consider that taking the 15 lost years as a whole the deceased would probably have spent about 45 per cent of his net income on his personal expenses as contemplated by that expression in Wong Sai Chuen's case. I make no attempt to ascertain a different, percentage for any particular period of the lost years because the very substantial increase in income would have occurred by July 1981 and I consider it likely that the deceased would have adjusted his standard of personal expenditure to his increased income."

24. The Court of Appeal accepted this approach unreservedly. I am satisfied that the conclusions reached are valid and of considerable assistance in determining the correct approach to this case.

25. There was clear evidence that the Deceased was an extremely diligent and conscientious person and that it was her habit to save a large part of her earnings. She was also very frugal and filial.

26. It is however necessary to balance this against the other imponderable I have referred to namely her proposed plans to go to Equador. There is very little evidence to indicate how long she would have remained in Ecuador and how much she would have been able to earn or save while she was there. I do however consider that it is necessary to make a substantial discount in the amount of the award on account of this factor.

27. In round terms and doing the best I can with the material available I hold that the free balance of the Deceased's income would have amounted to 60% of her earnings.

28. I would however reduce this percentage to 40% so as to take cognisance of the discount arising from the probability of her going to Ecuador for an unspecified period of time.

29. I agree with Mr. Pirie that the correct multiplier to adopt is 16. I am accordingly able to accept the first part of the draft assessment of Mr. Pirie which is as follows.

30. This appeal accordingly succeeds and the above amount will be substituted as the amount of the award in this case. I have not calculated the interest which should be payable on the award as I would like to hear submissions from counsel on this.

31. Having regard to the particular circumstances of this case I do not propose making any order for costs save that the costs of legally aided parties must be taxed in accordance with the Legal Aid Regulations.

32. In view of the possibility of difficulties being encountered as a result of the size of the award and the limited funds available to satisfy it there will be liberty to apply.