CHAN WING v. CHAN WAI HUNG t/a HOLLY ENGINEERING CO

DCEC 768/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 768 OF 2011

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ASSESSMENT OF COMPENSATION

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1.  This is a claim by applicant, Chan Wing, against the respondent, Chan Wai Hung trading as Holly Engineering Co, for compensations pursuant to the Employees’ Compensation Ordinance (“Ordinance”), under section 9 for permanent partial incapacity, section 10 for temporary incapacity, and section 10A for payment of medical expenses. Interlocutory judgment has already been obtained on 23 December 2014, and the matter came before me for assessment of the compensations in the absence of the respondent, who had resisted the claims all the way from the commencement of the applicant’s application in June 2011, but took no action after the applicant had obtained a judgment (“Judgment”) in the High Court in a personal injuries claim (HCPI 167/2012) against the respondent. After perusing the papers and the relevant affidavit of service, I was satisfied that the trial could rightly proceed without injustice to the respondent for non-deferment of the hearing.

The applicant’s income

2.  The applicant was born in 1949 and was 61 years old at the time of the accident which occurred on 14 October 2010. In the High Court Judgment of Deputy High Court Judge Winnie Tam, SC, the applicant’s monthly income for the purposes of computing pre-trial loss of earnings had already been determined at $7,000.  It was made on the basis of the applicant's daily wage rate of $700 as a master level plasterer, and working averagely for about 10 days in a month, due to his semi-retired status. Unexpectedly, no information of the applicant’s monthly income was available in the written opening submissions of Mr Tse of Yip Tse Tang, who represented the applicant at the hearing, so that the hearing was almost like a case as if no written submissions were handed up until after a trial had started.  In the closing submission handed up at the start of the hearing, Mr Tse confirmed an adoption of $700 as the applicant's monthly earnings for the purposes of the Ordinance.  However, if such an adoption were made – apparently an attractive one since findings on monthly income had already been made in High Court – it remains to be determined whether one of the methods of calculating earnings prescribed in section 11 would have yielded the same result, and if not, does the latter figure prevail.  This is not an academic question for section 11 computation of earnings is a self-contained statutory regime, and in my judgment, must be deferred to, irrespective of what determinations were made in personal injury cases.

3.  The 3 computation methods in section 11(1) do not apply to the applicant’s case, because they rested on the premise that the injured employee was employed by the same employer for the specified periods prescribed therein, as interpreted in Lai Cheung Kwong v Lo King Sum [2008] 3 HKLRD 645, per Cheung JA in paras 2 to 5.  Since the applicant’s accident on 14 October 2010 happened hours after the applicant’s first day of work, it can hardly be appropriate to regard him as being employed by the respondent for any one of those specified periods.  The computation method in the 2^nd limb of section 11(2) is perhaps the only one which can apply, given the applicant’s “impracticable” circumstances due to the brevity of his employment.  However, there is no evidence adduced in this application before me to gauge up what would be the earning of persons of similar earning capacity, in the same master grade, employed in the same class of employment, and in the same district.  It therefore falls upon me to accept without a better alternative, $7,000 as the applicant’s monthly earnings for the purposes of the Ordinance, and to regard this figure as one which, had the relevant evidence been adduced, might well have been determined under the 2^nd limb’s computation.

Compensation for temporary incapacity – section 10 of the Ordinance

4.  The most pertinent part of section 10(1) of the Ordinance provides that where temporary incapacity results from the injury of an employee, the compensation shall be the periodical payments hereinafter mentioned, or a lump sum calculated accordingly, having regard to the probable duration of the incapacity, and that such periodical payments shall be at the rate proportional to a monthly payment of four-fifths of the difference between the monthly earnings which the employee was earning at the time of the accident, and the monthly earnings which he is earning or is capable of earning, in some suitable employment during the period of the temporary incapacity after the accident.  Section 10(2) provides, inter alia, that for the purposes of section 10, a period of absence from duty certified to be necessary by a registered medical practitioner or an Ordinary Assessment Board shall be deemed to be a period of temporary incapacity.

5.  The applicant’s certified period of absence in the Certificate of Assessment (Form 7) dated 3 April 2012 (which certified just under 17 months of absence, between 14 October 2010 to 14 Mar 2012), has been supplanted by the Medical Certificates of Princess Margaret Hospital certified by its medical officers, and which certified the necessary period of absence as between 14 October 2010 to 2 May 2012, an extended period of exactly 567 days. So taking $7,000 as the applicant's monthly earnings at the time of the accident, and a 30-day month:-

Compensation for temporary incapacity

= $7,000 x 4/5 x 567/30

= $105,840

Payment of medical expenses – section 10A of the Ordinance

6.  The relevant part of section 10A(1) provides that if, in any employment, personal injury is caused to an employee by accident arising out of and in the course of his employment, his employer shall be liable to pay the medical expenses for the medical treatment in respect of such injury.  Section 10A(3) provides, inter alia, that medical expenses which the employer is liable to pay shall be payable in accordance with the Third Schedule of the Ordinance in respect of the period during which the employee receives medical treatment, until the attending registered medical practitioner certifies that in his opinion, no further treatment is required. Paragraph 1 of the Third Schedule provides, inter alia, that where an employee is given medical treatment as an in-patient in a hospital, the medical expenses payable by the employer are the total amount of the medical expenses incurred or the total amount at the rate of $200 for each day of stay in the hospital, whichever is less.  Paragraph 2 of the Third Schedule provides that where an employee is given medical treatment other than as an in-patient in a hospital, the medical expenses payable by the employer are the total amount of the medical expenses incurred or the total amount at the rate of $200 for each day on which medical treatment is given, whichever is the less.

7.  Having scrutinized the documentary evidence, I am satisfied that the applicant is entitled to $9,373, consisting of $7,748 for expenses incurred for hospital stays as an in-patient at Princess Margaret Hospital, and $1,625 as medical expenses incurred at Princess Margaret Hospital and Shatin Hospital as an out-patient.

Compensation for permanent partial incapacity – section 9 of the Ordinance

8.  Section 9(1)(b) of the Ordinance effectively provides that where permanent partial incapacity results, the amount of compensation shall be, in the case of an injury not specified in the First Schedule of the Ordinance, such percentage of the compensation which would have been payable in the case of permanent total incapacity as is proportionate to the loss of earning capacity permanently caused by the injury in any employment which the employee was capable of undertaking at the time.  The compensation which would otherwise have been payable in the case of an employee’s permanent total incapacity is premised on section 7 of the Ordinance. Section 7(1)(c) effectively provides that where permanent total incapacity results from the injury of an employee, the amount of compensation shall be, in the case where he is 56 years of age or above, a lump sum equal to 48 months’ earnings, or 48 times the relevant amount specified in the Sixth Schedule of the Ordinance, whichever is less. 

9.  According to the medical report of Dr Brian Choa dated 12 July 2012, which postdated the Certificate of Assessment (Form 7) dated 3 April 2012 by some 3 months, the expert opined that in view of the applicant’s left hemiparesis with total paralysis of his upper limb being permanent, the applicant will not be fit to do work of any kind, and that his loss of earning capacity is therefore 100%, rather than the 70% loss certified in Form 7.  Since the applicant's injury is not listed under the First Schedule, section 9(1)(b) applies to the applicant's case.  As the applicant was 61 years old at the time of the accident, section 7(1)(c) is relevant in the calculation of his permanent partial incapacity.  Further, as the relevant specified amount under the Sixth Schedule at the time of his accident was $21,500, pursuant to Legal Notice 93 of 2010, which took effect from 1 August 2010, and as his monthly earnings were deemed to be $7,000, the latter lesser figure is applicable in his case.  Hence, by reason of the application of section 9(1)(b), his compensation for permanent partial incapacity is calculated thus:-

Monthly earnings x section 7(1)(c) multiplier x section 9(1)(b) percentage

= $7,000 per month x 48 x 100%

= $336,000

10.  At the trial, it was once thought that given Dr Chao’s expert opinion of the applicant’s 100% loss of earning capacity, the applicant’s team ought to have then amended the Application filed on 1 June 2011 to include a relief for section 7 compensation for permanent total incapacity, so as to take advantage of the statutory minimum prescribed under section 7(2) of the Ordinance, which provides that the amount of compensation payable under section 7(1) shall in no case be less than the amount specified in the relevant column of the Sixth Schedule.  The specified amount relevant to the applicant’s case is $352,000, pursuant to Legal Notice 93 of 2010, which prescribed $352,000 as the then statutory minimum taking effect from 1 August 2010.  Hence, the applicant was thought to be $16,000 worse off for having to be bound by $336,000.  Mr Tse for the applicant magnanimously resisted to seek an application to amend the Application, minding possible unfairness to the absentee respondent.  

11.  However, having re-considered the matter, I have now come round to the view that nothing is amiss in the applicant’s present plea, because critically, the amount of compensation under section 9(1)(b) is “such percentage of the compensation which would have been payable in the case of permanent total incapacity as is proportionate to the loss of earning capacity permanently caused by the injury”.  The reference to the “case of permanent total incapacity” is not to be construed as confined to section 7(1), but to section 7’s permanent total incapacity regime, thus including the statutory minimum under section 7(2).

12.  It appears that so far there is no direct precedent on the above interpretation of the applicability of the section 7(2) statutory minimum to section 9(1)(b) cases where the permanent partial incapacity is unusually elevated to 100%.

13.  However, there is a precedent consistent with this interpretation in the case of the special circumstances under section 9(1A), where the percentage of the loss of earning capacity ordinarily ascertained is substantially less than the real percentage of the loss of earning capacity permanently suffered in the special circumstances of the employee, including the impact of the injury to the employee’s former usual employment. In Chan Kam v Standard Chartered Bank Hong Kong Trustee Ltd [1991] 2 HKLR 455, the employee was a 72 year old watchman at the time of an accident, which resulted in a serious hip injury.  The compensation board assessed him as having suffered a loss of earning capacity at 20% which the District Court preferred over that of Dr Hornsfall’s assessment.  However, the Court of Appeal disagreed with the District Court and accepted a 100% assessment by Dr Hornsfall, taking into account the special circumstances of the injured, which showed that his true loss of earning capacity was far greater than the 20% technically assessed. It was appreciated that as a result of his hip injury rather than his senility, he had, for all practical purposes, been totally incapacitated for work.  Hunter JA, with Fuad VP and Penlington JA agreeing, took the view that both section 9(1A) and section 7 produced identical results because the special circumstances of employee required the court under 9(1A) to take 100% as his loss of earning capacity.  The Court of Appeal also observed with some critical comment that the watchman’s compensation calculation under section 7(1)(c) amounted to $95,199.84, but the statutory minimum under section 7(2) at the time of the accident was $92,000, which paled in comparison with $132,000 when he matter came before the courts.           

14.  So by reason of the above interpretation which I have no reservation not to adopt, the applicant is entitled to the statutory minimum under section 7(2), and I assess the applicant's compensation for permanent incapacity at $352,000 rather than $336,000.

Total assessed amount

15.  Therefore, the total quantum of the assessed amount to which the applicant is entitled is the sum of:-

Section 10 compensation for temporary incapacity + section 10A payment of medical expenses + section 9 compensation for permanent partial incapacity

= $105,840 + $9,373 + $352,000

= $467,213

16.  Since the applicant has so far not received any payment from the respondent, I am satisfied that he is entitled to a total assessed amount of $467,213, and that if he is still unable to recover from the respondent, he is at liberty, if so advised, to apply for assistance from the Employees Compensation Assistance Fund pursuant to section 17 of the Employees Compensation Assistance Ordinance (Cap 365).

Interest and costs

17.  I also award interest at half the current judgment rate on the compensation awarded from the date of the accident, 14 October 2010, to the date of this judgment, which is in line with standard practice in compensation cases.  As for costs, I make a costs order nisi that costs of the action shall be borne by the respondent to be taxed if not agreed, with certificate for counsel.  The applicant, who is legally aided, shall have his own costs taxed according to Legal Aid Regulations.  Should there be no application to vary this costs order nisi within 14 days from the date of this judgment, it shall thereafter become absolute.