LAU HO WAH v. YAU CHI BIU

Headnote

                Employees' Compensation Ordinance - claim for compensation for permanent partial incapacity unsustainable where the injury or combination of injuries is not covered by the first schedule to the Ordinance and the applicant is shown to be earning at the same or enjoyed at a higher rate of remuneration than that enjoyed before the accident.

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JUDGMENT

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McMullin, V.-P. :

1. The appellant, LAU Ho Wah, runs a small transportation company. The respondent, YAU Chi Biu, was regularly employed by him in work which involved pushing a hand cart loaded with fruit and occasionally in helping to load the fruit on to lorries.

2. The respondent received injuries resulting from an accident while he was in the employment of the appellant on the 24th July, 1984.

3. Proceedings were subsequently commenced on his behalf in the District Court for compensation under the Employees' Compensation Ordinance Cap. 282 (The Ordinance"). On the 24th July, 1984 Judge Henry Wong made an award in a sum of $98,665.00 in his favour. This figure includes $6,336.00 in respect of sick leave pay for the six months between the 24th September, 1982 and the 30th March, 1983 and also a sum of $1,584.00 for loss of earnings for four months from April 1983 to July 1983. These two sums totalling $8,427.00 are not in dispute. The disputed award is the balance of $91,238.00 which was awarded by the District Judge under Section 9 Sub-section l(b) upon evidence which persuaded him that the respondent had sustained a 60% permanent partial incapacity for work within the meaning of the Ordinance.

4. This sum was calculated upon the basis of pre-accident monthly earnings of $1,584.00. This sum, although not the sum originally claimed by the respondent, was conceded by his Counsel to be the correct figure on the evidence actually placed before the Court. He also conceded that the sum awarded was derived from a proper application of the formula supplied by Sections 7 and 9 of the Ordinance to this basic monthly wage.

5. Mr. Bell for the appellant takes a single point upon this appeal. It is a novel point and it arises from the unusual circumstance that, ever since the conclusion of his period of sick leave, the respondent has been in employment with another employer at a monthly wage of $2,000.00, i.e. over $400 more than he was earning per month prior to the accident.

6. It is convenient at this point to refer to the nature of the accident and the injuries. On the 24th September, 1982 while he was helping to load one of his employer's lorries, the defendant fell from the lorry and struck his head upon the ground. He was taken to hospital where he remained as an in-patient for one month. The fall had caused damage to the brain which resulted in some impairment physical, mental, emotional and psychological and which, on the testimony of specialist witnesses, is likely to be permanent.

7. After discharge from hospital the respondent received out-patient treatment at Tang Chi Ngong Surgical Specialist Clinic between October 1982 and August 1983. At the trial, Dr. Shroff, a neuro-surgeon and Ms. LEE TAM Oi Chun, a qualified clinical psychologist, gave evidence for the respondent while Dr. NG Shi Hon, a neurologist, was called on behalf of the appellant. Each of these specialists had, prior to trial, carried out extensive examinations of the appellant and reports prepared by them were also submitted in evidence.

8. It is unnecessary to refer either to that evidence or to the substance of those reports in any detail. All three specialist witnesses were of the opinion that the respondent had suffered a degree of permanent damage which would leave him less fit for work than he had been prior to the accident. The physical part of that damage was a mild weakness of the left arm and leg. The major part of the persisting damage was perceived by all three witnesses as falling into the category of mental and psychological effects including increased irritability, impaired memory and some reduction in concentration and reasoning powers.

9. In October 1983 Dr. Shroff was of the opinion that it might be possible for the respondent to return to his former work provided it involved light physical duties and if he were subject to supervision all the time. Giving evidence at the trial, however, both he and Dr. Ng were of the opinion that this combination of effects, resulting in permanent damage, would also cause a permanent reduction in the respondent's earning capacity. Dr. Shroff put the overall reduction at 60 to 70% while Dr. Ng placed it at 50 to 60%. Both gave 30% as the figure they would attach to loss of earning capacity due to the weakening of the left upper and lower limbs.

10. At the trial the solicitor for the appellant contended that since the respondent had been able to resume work at a rate of remuneration above that which he had enjoyed prior to the accident he was not entitled to claim under this head at all. This argument was rejected by the trial judge. In his written judgment, he says:

"Having considered evidence on this aspect I find it as a fact that the Applicant had suffered from brain injury which led to his personal and behavioural changes. I also say that, although he is able to obtain employment which pays him a little more than what he earned before the mishap, the adverse effect of the accident on his mental and physical abilities ought to be duly compensated. In this connection I consider that 60% disability is a fair and reasonable percentage. "

He went on to make his assessment arriving at the figure which has been set out above.

11. Mr. Bell has referred us to a number of English and Hong Kong decisions. The English cases were of course all decided under the former Workmen's Compensation Legislation and are now of merely academic interest in that jurisdiction. They include Irons v. Davis and Timmins Ltd.⁽¹⁾; Pomphrey v. Southwark Press⁽²⁾ and some other cases from which, as Mr. Bell puts it, it is crystal clear that under the English legislation compensation was awarded only for such physical injury or impairment as resulted in a reduction in earning power, and further that where the power to earn wages at the same rate as prior to the accident was shown to exist, there could be no award of compensation at all.

12. Mr. Bell asks us to say that, although there are certain differences between the two bodies of legislation, the Hong Kong Ordinance is generally speaking modelled upon the English legislation and that these English cases should therefore be regarded as good authority for the interpretation of Section 9 which he asks us to adopt. He has referred us also to several District Court cases in which, following the English decisions, judges have held that compensation is for loss of earning capacity and not for loss of physical or mental capacity.

13. The observations of Lord McNaghten in the English case of Ball v. William, Hunt & Sons Ltd.⁽³⁾ to that effect were enlisted both by Deputy Judge Cheung in Victoria District Court case 44 of 1983, Show Chung Kai v. Gammon Building Construction Ltd., and Judge Eric Li in Victoria District Court case 17 of 1983 Tsang Lin v. Tong Ling Shipping Enterprises Co. Ltd.. A similar view of the local legislation was taken by Judge O'Connor in 1973 in the case of Leun Kam Mum v. Freedom Weaving & Dyeing Factory Ltd. (in Receivership), Case No. 150 of 1973.

14. It may be said at once that the plain intention of this legislation is to compensate an injured employee for the loss of "earning capacity". This is clear not only from the wording of Section 9 of the Ordinance itself but also from the definition of "partial incapacity" which appears in Section 3. That goes as follows (omitting a fault in the spelling of the initial word):

"'partial incapacity' means, where the incapacity is of a temporary nature, such incapacity as reduces the earning capacity of an employee in any employment in which he was engaged at the time of the accident resulting in the incapacity, and, where the incapacity is of a permanent nature, such incapacity (which may include disfigurement) as reduces his earning capacity in any employment which he was capable of undertaking at that time:

 

        Provided that very injury specified in the First Schedule, except such injury or combination of injuries in respect of which the percentage or aggregate percentage of the loss of earning capacity as specified in that Schedule against such injury or injuries amounts to 100 percent or more shall be deemed to result in permanent partial incapacity;"

15. The present respondent is an unskilled workman and the kind of work in which he is presently employed falls within the description of the concluding words in paragraph (b) of subsection 1 of Section 9, viz: work "which the employee was capable of undertaking at that time" (that is to say at the time of the accident).

16. The relevant parts of Section 9 read as follows:

17. The First Schedule to the Ordinance describes some 40 categories of physical injury and appoints a percentage of loss of earning capacity which must be attributed to any particular injury falling into any one of those categories. In the present case we are not dealing with an injury specified in the First Schedule and therefore the provisions of paragraph (b) of Section 9 apply as also do the provisions of paragraph (ii) of the proviso to that subsection.

18. Mr. Bell contends that where a person has, in some sense, been permanently disabled by an accident but retains thereafter the capacity to earn at the same or at a higher rate in similar employment, the Court in awarding compensation must take into account the existing earning capacity in making this award. Such "earning capacity", he says, can be established - as it was in the present case - by evidence of actual earnings in a particular class of employment over a given period. He would make no distinction in this regard between injuries specified in the Schedule and other injuries not so specified, and maintains that where in fact there has been no reduction in earning capacity an applicant does not get as far as the First Schedule at all even if his injury happened to be one which fell within one of those 40 categories.

19. Mr. Mackay for the respondent maintains that there is a significant difference between the English legislation and that which applies in Hong Kong. Section 9, he says, embodies a radically different approach which is intended to bear hard upon employers. He points out that, other than in Section 10, which deals with temporary incapacity, there is no provision in the Hong Kong legislation for periodic payments corresponding with the periodic weekly payments for permanent partial incapacity coupled with a system of review such as prevailed under the former legislation in the English jurisdiction. The English decisions, he says, are simply irrelevant to the Hong Kong situation.

20. Like Mr. Bell Mr. Mackay does not seek to draw any distinction, in relation to the right to compensation, between injuries falling within the Schedule and those not specified therein. But this leads him to precisely the opposite conclusion. He points to the proviso to the definition which plainly states that the scheduled injuries are deemed to result in the designated loss of earning capacity. The law, he says, thus prevails over any evidence to the contrary and once the applicant has established the existence of a scheduled injury he has a right to the appropriate compensation whatever his earning position may be in fact when he comes before the Court. He concludes by saying that if that is so in the case of what one might call a "scheduled applicant" then there is no good ground in justice or in logic for refusing compensation to an employee who can show some disability of a permanent character which does not fall within any of the scheduled categories, simply because at the time of the application there is evidence to show that his actual earning capacity has not been reduced.

21. Insofar as the scheduled injuries are concerned Mr. Mackay is quite clearly right. Were it not for the proviso to the definition of "partial incapacity" in Section 3, there might be substance to Mr. Bell's contention that some degree of incapacity to earn must be shown in fact before the applicant can get his case within the Schedule at all.

22. The law as it is presently framed can only be understood as giving to any person who can show an injury of the scheduled kind compensation calculated by reference to the fixed degree of earning incapacity appointed to that injury in the Schedule. The proviso to the definition in Section 3 of the Ordinance cannot be regarded as setting up a rebuttable presumption of fact any more than the figures in the Schedule, read together with the provisions of Section 9(i) or (ii) can be said merely to establish a ceiling to the quantum of compensation awardable in the given case, the actual amount of the award being determined by the evidence. Only by some such route as that could Mr. Bell's interpretation of Section 9 be sustained. But whatever the true intention may have been, the language used by the Legislature is clear and it is wholly against him. Save as provided in S. 9(lA) - which is not material in this case - there is no room within these provisions for evidential considerations to intrude upon the expressed intent to grant compensation in respect of any of the scheduled injuries at a rate ascertainable only by reference to the fixed figures in the Schedule.

23. No assistance can be derived on this point from the English decisions since the English legislation did not provide by way of schedule for specified degrees of incapacity as does the Hong Kong law. The English case law supports Mr. Bell only so far as it accords with the principle, which in Hong Kong has statutory force, that incapacity, whether total or partial, means incapacity to earn. Counsel in the present case are in agreement upon this point and the English cases are of no assistance on the question which is of primary importance here: Does the proved capacity to earn at or above the pre-accident rate disentitle the applicant to recover anything in respect of his injury?

24. In New Zealand the Workmen's Compensation Act of 1922 did, however, provide in very similar fashion by way of a schedule for the degree of incapacity to be attributed to specified injuries. In Grace v. Auckland Gas Co. Ltd. ⁽⁴⁾ the Court was construing a schedule which was evidently in very similar terms to that contained in the later Act and Sim, J. said:

"In the case of the injuries specified in the second schedule to the Act, the Legislature has said, in effect, that these injuries must be presumed conclusively to have affected the earning capacity of the injured worker to the extent therein specified, and the worker is entitled to the specified compensation, although his earning capacity may not have been diminished at all."

This view of the matter was approved by the New Zealand Court of Appeal in Boyes v. smyth⁽⁵⁾ where it is quoted by Myers, C.J. at page 1433.

25. The different approach to compensation under the former English law is admirably illustrated by the decision in Pomphrey v. Southwark Press⁽²⁾, one of the cases relied upon by Mr. Bell. Although the Court of Appeal in that case did indeed uphold the right of an employer to be granted an order suspending weekly payments in the case of a workman who was earning more after the accident in which he had sustained his injury than he had been earning before, thus differing from the trial judge, it also ordered that the amount awarded by the judge should be reduced to the nominal sum of one penny per week, purely for the purpose of keeping the workman's claim alive so that if, at a future date, his injury should result in reducing his capacity to darn he would be entitled under the Act to have his case reviewed.

26. No such right has been given to the employee under the Ordinance. The absence of any provision to cover such future contingencies is in itself an indication that it was intended that, as regards scheduled injuries, compensation was to be granted at the stated rate on proof of the sustaining of the injury.

27. This being the state of the law as it relates to scheduled injuries can it be said that any different rule should apply to injuries not so particularized? One must have considerable sympathy with Mr. Mackay's complaint that this would be a very unjust result where good evidence is given of disablement which may be quite as palpable in its effects as any of physical injuries described in the Schedule, and which may possibly be more disagreeable, in terms of general disability, than many of them.

28. The difficulty is in extending the plain words and figures of the Legislature relating to scheduled injuries to the area of unscheduled injuries in relation to which no loss of earning capacity is "deemed".

29. Mr. Mackay suggests a link between these two legislative areas. The eighth item in the Schedule, the final item in the list of gross disablements to which 100% incapacity is assigned reads: "any other injury causing permanent total disablement. "

30. Counsel suggests that this read together with the concluding words of Section 9(1)(b)(ii) offers to the Court the means of dealing with all unspecified injuries so as to avoid an unjust discrimination between claimants whose cases fall within one as against those whose claims fall within the other of these two categories. This would mean that where the evidence of earning capacity runs counter to the percentages in any case involving a scheduled injury it must be disregarded, whereas in cases of the other class evidence - such as that given by the specialist witnesses in the present case - becomes all-important.

31. Whichever view be taken of these provisions in Cap. 282 one encounters some degree of friction between common sense and apparent - or possible - legislative intention. On either view the Court may find itself obliged to disregard evidence of a perfectly acceptable kind which in the one case (scheduled injury) would have favoured the employer and in the other (unscheduled injury) the employee. However, the Ordinance obliges the Court to resolve any such contradiction in favour of the employee in the case of scheduled injuries but makes no provision of the kind to suit the circumstances of the claimant whose case is not within the Schedule. Indeed, although there would seem to be here a class omissus, it is not easy to see how injuries of the kind with which we are concerned in the present case could be accommodated within the same framework as that provided for the scheduled injuries since that in effect establishes in every case a fixed figure which is applicable to a readily identifiable mutilation or defect. Though the Legislature has purported to do so, ostensibly by reference to loss of earning capacity, the net result is to provide relief of a kind similar to common law damages for personal injury irrespective of financial loss. Unscheduled injury is not so covered and, anomalous as the result may seem, the words in Section 9(1)(b):

"...... loss of earning capacity permanently caused by the injury ..........."

would seem to oblige proof of some loss of earning capacity in fact before the formula in paragraph (ii) of the proviso to that Section can be invoked.

32. The present state of the law cannot be regarded as satisfactory. A person in the position of the present applicant is under the special disadvantage that his claim has now been dealt with for all time. Yet if he should lose his present employment it may be that he subsequently will find himself at such a disadvantage in the market generally that genuine loss of pre-accident earning capacity may result. The Legislature might well care to consider some provision whereby the future interests of such workmen are protected. As the law stands, however, I do rot think the respondent was entitled to any compensation under Section 9. I would allow the appeal and set aside the award.

(1) (1899) 2 Q.B.D. 330

(2) (1901) 1 Q.B.D. 86

(3) (1912) A.C. 496 at 501

(4) (1913) 15 G.L.R. 442

(5) (1933) N.Z.L.R. 1427

Hon. C.J. :

33. I am in general agreement with the judgment which has just been delivered and I do not wish to add anything.

Silke, J.A.:

34. The respondent was a workman employed by the appellant who operates a small scale transportation company. He does not have fixed number of workers. The respondent, while a casual worker with him, was regularly employed. His job was to push a handcart laden with fruits and to load them on to and off a lorry. He put in an average of 24 to 25 days' work a month. His income was calculated on the basis of $1,900 for a full month's work.

35. On the 24th September 1982 the respondent was involved in an accident arising out of and in the course of his employment. He suffered brain damage, as a result of which there was a 5% chance of epilepsy developing. He suffered some weakness in his left limbs. The medical examiner felt that he was capable of light work and assessed his loss of earning capacity at between 60% to 70%.

36. Dr. Shroff, a neurosurgeon, called on behalf of the respondent said:

"It would not be difficult for the applicant to go back to his job by pushing a trolley from point A to point B or by assisting people doing similar work. The difficulty to him now is to take care of himself in relation to others and to life generally, rather than to hiss normal work. "

37. In August 1983 the respondent entered into fresh full time employment at wages of $2,000 per month. That is in excess of his pre-accident wage. His fresh employment is cleaning floors and wiping tables. Between April and August of 1983 he had been partially employed in the same form of work by the same employer but a stand-in worker did his job for him. His new employer said that he normally sent his staff to various locations to work on their own at cleaning work. He stated that he kept the respondent on his payroll because the respondent worked very hard under supervision.

38. The respondent applied under the Employees' Compensation Ordinance, Cap. 282 - "the Ordinance" - for compensation under its sections 9 and 10. No quarrel is taken with the award made under section 10, for compensation during his temporary incapacity while recovering from the accident.

39. Under section 9 the trial judge made an award of $91,238. Of the section 9 application he said:

"Dr. Ng, neurologist, who was called by the Respondent disclosed more or less the same findings as those of Dr. Shroff and Mrs. Lee. He put the Applicant's loss of capacity to work in the order of at least 50%, whereas Dr. Shroff estimated it at between 60% and 70%. In spite of those experts' estimations, counsel for the Respondent maintained that since the Applicant was able to assume work anew from August 1983 at slightly higher pay than before the accident, compensation to him under S.9 for permanent partial incapacity should be reduced to. ‘nil’. Having considered evidence on this aspect I find it as a fact that the Applicant had suffered from brain injury which led to his personal and behavioral changes. I also say that, although he is able to obtain employment which pays him a little more than what he earned before the mishap, the adverse effect of the accident on his mental and physical abilities ought to be duly compensated. "

40. He then took 60% disability as a fair and reasonable percentage.

41. It has been argued for the appellant in this appeal that the trial judge approached the matter from the wrong aspect treating it as something more akin to a personal injuries claim, rather than, as it should have, a claim confined within the provisions of the Ordinance.

42. There is substance in this submission. Under the Workmen's Compensation Acts in the United Kingdom it was normal for an order for weekly payments of compensation to be made. These payments were subject to review from time to time in the light of a change of circumstance. They could be reduced to nil, or to a nominal sum in order to keep the future rights of the workman alive. The scheme of the Employees' Compensation Ordinance is somewhat different, in that one final lump sum payment is made instead of separate weekly payments. This may well be because of the volatile nature of the smaller Hong Kong companies which might not be in a position, over an extended period of time, to make weekly payments.

43. Section 9(l) of the Ordinance reads:

"Subject to subsection (IA), where permanent partial incapacity results from the injury the amount of compensation shall be -......"

the section then goes on to deal with scheduled injuries and with unscheduled injuries. It is a prerequisite for compensation under either of those headings that there be " permanent partial incapacity" but this is deemed, by the proviso to that definition in section 3, to exist in respect of scheduled injuries. It is not so deemed in respect of unscheduled injuries.

44. A definition of "partial incapacity" is set out in section 3 of the Ordinance:

"'partical(sic) incapacity' means, where the incapacity is of a temporary nature, such incapacity as reduces the earning capacity of an employee in any employment in which he was engaged at the time of the accident resulting in the incapacity, and, where the incapacity is of a permanent nature such incapacity which may include disfigurement as reduces his earning capacity in any employment which he was capable of undertaking at that time:". (Emphasis added)

45. It is clear that the legislation, in respect of unscheduled injuries, was intended to cover a permanent partial incapacity which related directly to a loss of earning capacity in any employment which the employee was capable of undertaking at the time of the accident. The employee here was in a somewhat unusual position in that the form of work he was doing at the time of the accident was not dissimilar from the form of work which he is now doing. His "earning capacity" is not diminished in the sense that his earnings now are greater than his earnings at the time of the accident.

46. One must be careful to see that these strict provisions are not abused. The Legislature might care to consider some provision whereby the future interests of an employee suffering from an unscheduled injury are protected.

47. With respect, I must differ from the trial judge both as to his approach and as to the result which he achieved. In this case I do not think the respondent to have been entitled to any section 9 compensation. I, too, would allow the appeal.