LAU CHE PING v. HOI KONG IRONWARES GODOWN CO LTD.

Headnote

    Guidelines for damages for disablement. (Lee Ting Lam revised).

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J U D G M E N T

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Cons, Ag. C. J. delivered the judgment of the Court:

1. This is an appeal, relative only to the question of damages, from the decision of Deputy Judge Duffy, as he then was, given on the 10th December 1987.

2. The Plaintiff was employed as a welder and general labourer by the Defendant Company in its scrap metal yard in Tuen Mun. His work involved filling used oil drums with scrap metal, which were then transported to another part of the yard by crane. On the 27th January 1984 one of the full drums broke free from the crane and fell some 15 feet onto the Plaintiff's ankle. The injuries and their consequences, are conveniently outlined in the judge's own words -

" In the accident the Plaintiff's left foot was very badly crushed and contaminated. Emergency debridement and surgical toileting was performed on the day of the accident when he was admitted to Princess Margaret Hospital and that treatment was continued until it had become obvious that the wound was so badly infected that a below knee amputation would have to be performed. That was done on 4th July. After a period of convalescence he was on 17th July sent to the Margaret Trench Medical Rehabilitation Centre in Kwun Tong where an artificial leg or prosthesis ass fitted. After about ten weeks' training in that centre he was able to use and walk independently on his new artificial leg and he was discharged on 5th October.

He is now able to walk without the need for sticks or crutches and while he walks at a much slower pace than before, and with a decided limp, he is nonetheless able to get around quite well, although there are problems with stairs and public transport. He said in evidence that he can wear the prosthesis for about one or two hours at a time, after which he feels pain in his stump, and if he continues to use the prosthesis for longer periods of time then the stump becomes abrased and sore. He did testify that the last time he required medical assistance for that complaint was about a year ago, and he does not seem to have required any further medical assistance since that time. However from being a young man who was vigorous and active in recreational pastimes such as the ball games usually played by youngsters in the parks and streets of Hong Kong, he is now completely unable to participate in these activities."

3. The judge awarded damages under the separate heads of medical expenses, pre-trial loss of earnings, future loss of earnings and finally for pain, suffering and loss of amenities. He refused to make an order for loss of future earning capacity, sometimes referred to as the risk on the labour market or Smith v. Manchester, damages. It is in respect of the last two items alone that the appeal is brought. It is suggested that the judge was wrong to refuse damages for loss of earning capacity, and that the figure $136,000 awarded for pain, suffering and loss of amenities was too low.

4. In Lee Ting Lam v. Leung Kam Ming⁽¹⁾ this court attempted to draw together the threads of the many decisions within the territory which had dealt with persons seriously disabled in one way or another. In doing so we thought that a general pattern became discernible, a sliding scale which could be divided into four categories according to the severity of the disablement. We labelled them serious, substantial, gross disability and disaster, and found that the range of awards in these categories, updating them as best we could in relation to the fall in value of money, was respectively $60,000.to $80,000, $80,000 to $100,000, $100,000 to $150,000 and $150,000 upwards.

5. Since then these ranges have been used extensively as guidelines, adjusted as appropriate for inflation. That is what was done below. The judge felt that the Plaintiff's injury fell within, but at the upper end of, the serious category. He made his award accordingly. But he did so with reluctance and expressly added his voice-.

"to those who call for an acknowledgement by the Court of Appeal that the dramatic developments that have taken place in Hong Kong over the past seven years demand an urgent reappraisal of the levels of these awards, which after all are supposed to reflect just such developments."

6. Mr. Tang, who appears for the Plaintiff in this Court, urges us to the same end. He suggests that either we abandon the guidelines altogether, on the ground that they encourage counsel and courts to fit disparate injuries into the categories and thereby detract attention from the injuries themselves; alternatively that we update the current ranges to reflect more fully the developments referred to by the judge.

7. At one stage Mr. Tang put forward a further approach, which can perhaps be succinctly put in television terms, as saying that Hong Kong should plug directly into the English channel. This approach is based on the advice of their Lordships of the Privy Council in Chan Wai Tong v. Li Ping Sum(2) that courts in Hong Kong should continue to look only at their own decisions "unless and until (they) are satisfied that social and economic conditions, including especially the rate of earnings, in Hong Kong are similar to those in England, or in such other jurisdiction as they wish to use for comparison". There are obvious difficulties in applying English awards directly, not least being the volatile nature of the rate of exchange between the Hong Kong dollar and the pound sterling. But Mr. Tang was in the end unable to lay a suitable evidential foundation for the suggestion that the social and economic conditions are now similar in the two jurisdictions and did not press the approach further. We need therefore make no comment, other than to observe that we would not exclude reliance upon English authorities in matters of principle. Useful guidance may perhaps be found with regard to rare or particular circumstances or by way of comparison of one injury with another. We should also mention, for the sake of the record, that a Notice of Motion filed on behalf of the Plaintiff and dated the 6th July, asking for leave to adduce further evidence in this appeal, was withdrawn during the course of the argument.

8. The object of guidelines of this kind is to encourage consistency in awards and thereby provide a sound basis upon which claims may be settled without recourse to the court at all or at least in the early stages of litigation. Guidelines however are not without danger. As their Lordships remarked in the case to which we have already referred(3) -

"If attention is concentrated entirely on the description of the categories of injuries contained in the guidelines, without regard to the facts of actual decided cases, there is a risk that the description may be treated as if it had been contained in a statute, and may divert attention from proper comparisons."

9. Mr. Tang contended that with the passage of time that risk has become a commonplace reality, a fact confirmed to some extent by the experience of this Bench. Indeed this case itself is an example. Counsel for the Plaintiff in the court below opened her submission to the judge upon this aspect of damages by reminding the judge that the classic starting point in Hong Kong for awards under this head was the case of Lee Ting Lam"⁽¹⁾.

10. With the greatest respect, that is not right. The starting point is a comparison of the injuries in the case in question with injuries in similar cases in which awards have already been made by the court. Consideration must next be given to any special feature or features which might influence the award in the particular case and only then, when a tentative conclusion will already have been reached, should attention be turned to the established guidelines. If the tentative conclusion does not conform to the guidelines then serious consideration should be given to whether there is indeed sufficient justification for an award that is otherwise apparently out of line with the general pattern. This Court did not by Lee Ting Lam⁽¹⁾ intend to confine damages in a straight jacket. If the sartorial analogy is to be pursued, this Court hoped rather to provide them with what in earlier days would have been referred to as a good_.foundation garment, a garment upon which all other dresses appropriate for particular occasions would sit comfortably.

11. A second attack upon Lee Ting Lam⁽¹⁾ charges that the ranges fail to give sufficient headroom between the categories, or within the categories themselves. Thus in the present instance it is suggested that the injuries, being put by the judge at the upper end of the serious range, there was no room left to make further allowance for the Plaintiff's youth, the unsatisfactory nature of the prosthesis with which he had been supplied, and his previous athletic or open air interests.

12. In our view this argument exhibits a misunderstanding of Lee Ting Lam⁽¹⁾. The categories were not intended to be mutually exclusive. That is apparent from the judgment(4) -

"There is, of course, no rigid distinction. That cannot be, for severity of injury presents a sliding scale. Furthermore there may in a particular case be factors not in themselves disabling, which are sufficient to take that case from one category into another."

Indeed, that is what this Court thought appropriate to do in the circumstances of the plaintiff there. We are not disposed to do the same in the present instance. The factors put forward in support are not exceptional in this kind of injury and were all mentioned by the judge below in his judgment. Presumably he took them into consideration in his conclusion that the case merited placement at the upper end of the category. We see therefore no ground for interfering.

The figures outlined in Lee Ting Lam⁽¹⁾ were not intended to be immutable for all time⁽⁵⁾ -

"The figures at which we have arrived paint the picture as it is today. As time passes they too will have to be updated."

13. Updating is principally required because of the fall in the purchasing power of money. This can be, and regularly is, taken care of in each individual judgment by reference to the rate of inflation. There is no need for general interference by this Court except that we would remark that it is dangerous to adopt a standard rate of inflation of 10% for each year. That may have been a convenient rule of thumb at one time but is no longer appropriate in view of the wide variations that have occurred in the last few years.

14. However, apart from such automatic adjustment for inflation, a general adjustment of the guidelines may be necessary on account of change in social and economic conditions. With every respect to the judge below, we have not ourselves observed, in the last 8 years alone, the dramatic developments that he has found. But we are conscious that during that period Hong Kong has not stood still. Changes inevitably take place in the everyday life of any growing society and the expectations of the average person and family tend to increase as each year goes by. Hong Kong is no exception, and those changes must be reflected in the general standards of awards, otherwise the awards will cease to be regarded as fair and reasonable compensation.

15. While that principle is readily identifiable, the proper quantum of any change is not so easily found. It is not something that can be observed as a single feature in itself, nor can it be measured with mathematical exactitude. Nevertheless we have been referred to a great number of statistics which are found in publications such as the Hong Kong Monthly Digest of Statistics and the Hong Kong Social and Economic Trends. In particular we have been referred to various tables and comparisons of wages and wage and payroll indices. These indicate that there has been, since 1980, a general increase in the level of wages over and above the rate of inflation. That a variation in the level of wages is one of the factors to be considered is apparent from more than one judicial dictum⁽⁶⁾. But it is not the only factor, nor do we think it should be used by straight application as a specific percentage. Its increase does however confirm our common observation of a general rise in the standard of living since 1980 and to some extent it helps us to assess the extent of that rise. We cannot, of course, hope to be exact. Doing the best we can, we have come to the conclusion that fair and reasonable compensation in accordance with the divisions set out in Lee Tine Lam⁽¹⁾,and allowing for inflation up to date, should now be increased respectively to $135,000 to $180,000, $180,000 to $225,000, $225,000 to $340,000 and $340,000 upwards. In time these too may have to be further revised, but it must be remembered that too frequent alteration of guidelines lessens their value as a foundation upon which settlements may be negotiated.

16. With regard to the Plaintiff in the present instance, like the judge below we have not been referred to any specific comparable case. We are concerned with the position as at December last year, that is 7 months ago. We understand that over the year as a whole the rate of inflation was 5.5%. In the circumstances, and again doing the best we can, we assess the damages for pain and suffering and loss of amenities at $175,000.

Loss of Earning Capacity

17. This head of damages is intended to reflect⁽⁷⁾ -

"the risk that, at some future date during the claimant's working life, he will lose his employment and will then suffer financial loss because of his disadvantage in the labour market. The court has to evaluate the present value of that future risk: see Moeliker v. A. Reyrolle & Co. Ltd. [1977] 1 W.L.R. 132, 140 where Browne L.J. dealt fully with this matter. Evidence is therefore required in order to prove the extent, if any, of the risk that the claimant will at some future time during his working life lose his employment. If he is, and has been for many years, in secure employment with a public authority the risk may be negligible. In other cases the degree of risk may vary almost infinitely, depending on inter alia the claimant's age and the nature of his employment. Evidence will also be generally required in order to show how far the claimant's earning capacity would be adversely affected by his disability. This will depend largely on the nature of his employment. Loss of an arm or a leg will have a much more serious effect upon the earning capacity of a labourer than on that of an accountant."

The evidence in the present instance was that of Mrs. Bernadette Lai, a Labour Officer employed in the Labour Department's Selective Placement Division. The P1aintiff was not in employment at the time of the trial. Following his recovery he had returned for a short while to the employ of the Defendant Company, but was unable to continue. Then a venture into pigeon breeding kept him going for some eighteen months, until lack of business obliged him to sell out in May last year. Mrs. Lai testified that with the Plaintiff's background and disability she would have expected him to be able to obtain employment as a watchman, lift operator or packer and assembler in the industrial sector, although she thought that openings for the last mentioned would not be numerous. The wages for a watchman would vary between $2,000 and $2,500 per month, and for the other jobs about $2,000. When asked how easy it would be to place a disabled worker similar to the Plaintiff, she replied -

"If he was not particularly choosy or wasn't too thin or looked too weak, we could perhaps place him in about one or two months but it very much depends on the market. If he, for some reason, lost the job we got him and came back for more help, it would probably take the same amount of time i.e. one or two months to get another job."

18. There was no direct evidence as to the probability that once placed, the Plaintiff would be likely to lose his job.

19. The judge accepted Mrs. Lai's evidence. When assessing the award for loss of future earnings, from the monthly wage that he found the Plaintiff would have earned in the future had he not been injured, namely $4,477, the judge deducted the sum of $2,250 as representing the Plaintiff's residual earning capacity. To the resulting figure of $2,227 he applied the agreed multiplier of 15 to give a total of $400,860.

20. If, as it is not unlikely in the natural order of things, the Plaintiff should from time to time within the next 15 years lose the employment he is then in and have to wait on any such occasion several months before the Labour Department can find further employment for him, he will naturally not receive during those periods the estimated $2,250. Put the other way round, he will for those periods be suffering an actual loss of $4,477 and not a loss in a reduced amount. Of course an able-bodied man may also lose his job from time to time. If that is a substantial probability, it will  be reflected in the choice of the multiplier. Apart from that however it is to be expected that in normal circumstances an able-bodied man will be able to find replacement employment more quickly than will a disabled man. The difference in the time taken is a true reflection of the latter's handicap in the labour market.

21. In refusing to make an award under this head the judge said -

"Mr. Chan argues that this has already been taken care of in the calculation for loss of future earnings, and while that would not necessarily be so in every case, I do agree that in the circumstances of this case such an award is inappropriate."

22. Unfortunately the judge does not say precisely why he thought it inappropriate. If he took the view that there was no substantial or real risk that the Plaintiff would be out of employment for any significant period then this Court would be very slow to interfere⁽⁸⁾.

23. However from the context in which the finding is made, we do not read the judge as having taken that approach. We think it more likely that he felt the matter had been taken care of, as Mr. Chan put it, in the calculation of the future earnings that had been made. With respect, as we have just pointed out, that is not so. The risk remained unmet. We understand that there is a tendency to adopt conventional figures with regard to this head of damages. That is not a proper approach. Each case must be considered on its own merits. In the particular circumstances we do not think the risk is a great risk and conclude that the sum of $15,000 would be appropriate.

24. For these reasons, we allow the appeal, increase the award of damages for pain, suffering and loss of amenities to $175,000, and add a further sum of $15,000 by way of damages for loss of earning capacity. We would be pleased to hear counsel as to costs.

(1) (1980) H.K.L.R. 657

(2) (1985) 1 A.C. 446 at 4578

(3) at page 458E

(4) at page 659

(5) at page 659

(6) see also Wright v. British Railways Board [1983] 2 A.C. 773 at 777F

(7) Chan Wai Tong v. Li Ping Sum above at page 460

(8) Davies v. Powell Duffryn Associated Collieries Ltd. (1942) A.C. 601 at 616 per lord wright