CHUNG MAN YAU AND ANOTHER v. SIHON CO LTD

1996, NO. 199
(Civil)

Headnote

Personal injuries.

Claim for future loss of earnings by unlicensed hawker allowed.

Principles upon which a claim for loss tainted by illegality will be granted or refused considered. Tam Choi and Ho Wai Hing v The Kowloon Motor Bus Co (1933) Ltd OJ Action No. 2997 of 1973 unreported. Not followed.

Mak Yuk-kiu and Anor v Tin Shing Auto Radio CTR Ltd and Anor [1981] HKLR 77 considered.

IN THE COURT OF APPEAL

1996, No. 199
(Civil)

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J U D G M E N T

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Mortimer, V.-P. :

1. This is the 1st plaintiff's appeal limited to quantum of damages in a personal injuries case in which Leonard J made an award on 9 August 1996.

The facts

2. On 14 October 1993 the appellant plaintiff and his wife were walking along a pavement in Kowloon. Part of the defendant's concrete balcony was so decrepit that it collapsed. It fell striking them. Fortunately the appellant's wife sustained only minor injuries. She was the 2nd plaintiff at trial and does not appeal. On the other hand the appellant sustained serious injuries which included a depressed fracture of the skull, fractures of two ribs and severe lacerations. After making such recovery as he will make, he is left with moderately severe disability. The area in his skull where bone had to be removed has now an acrylic cover. He has weakness on his left side - particularly in his hand, arm and leg. He has tinnitus in one ear, dizziness and he suffers from headache. Also he has depression and irritability affecting personal relationships. He cannot drive. He is on medication.

The trial

3. The judge formed an adverse view of him and held that he was exaggerating his disability. The judge found in the end that he "suffered an impairment of the whole person of 20%" - a finding which, for my part, is neither meaningful nor useful. Perhaps the judge had some help from the doctors but it matters not. This finding is not relevant to this appeal.

4. For pain suffering and loss of amenity the judge awarded $470,000 and that is not subject to challenge. The issue for our consideration relates to the appellant's loss of earnings following the accident and his future loss.

5. The appellant made a living from hawking but he held no licence. He had arrangement with his Chinese godmother, an 85-year old lady who herself held a hawker's licence for a fixed pitch outside 150 Woo Sung Street. The lady was too old and infirm to hawk. So they all pretended that the appellant was her assistant in order to comply with the Hawker (Urban Council) By-laws Cap. 132. The appellant paid the lady and she was responsible for the pitch and had to attend it, but he hawked there illegally. All hawking is illegal in Hong Kong unless done under licence.

6. The judge's findings on this are at p.12 of his judgment. He said:

"The licensee, P1 and P2 [those were the husband and wife] made false declarations to the Urban Council to the effect that P1 and P2 were assistants to the licensee in the licensee's hawking business (which did not exist). Later, further false declarations were made so that P2 was appointed deputy to the licensee. Thus it was made to appear to the officials responsible for enforcing the Hawker By-laws that a hawker business was being run by the licensee at the stall with the assistance of P1 and P2. That was a complete sham. P1 was unlawfully running his own hawker business without a licence.

This is not a case where the authorities were deliberately turning a blind eye to the arrangement. The authorities were being deceived. In any event, if the authorities had, as a matter of policy, turned a blind eye to the illegal hawking, such a policy would not have rendered the activity legal."

The judge held that the appellant was not entitled to any damages for future loss of earnings. His finding is to be found at p.11 of his judgment:

"It is common ground that P2 did not and does not hold a hawker licence. Hawking without a licence is illegal as being a contravention of Section 83B of the Public Health and Urban Services Ordinance Cap. 132. A plaintiff in an action for damages for personal injuries is not entitled to any award in respect of a loss of earnings from unlicensed hawking. In Tam Choi v Ho Wai Hing and Anor CA19 of 1974 (unreported) the Full Court upheld a decision of Briggs CJ that an illegal hawker could not recover damages for loss of earnings as such in a running-down case. This principle has been followed in a number of High Court decisions. See Mak Yuk-kiu & Anor v Tin Shing Auto Radio CTR Ltd and Anor [1981] HKLR 77."

In the trial, however, the judge had heard the evidence of the appellant's claim for this loss. The appellant's records were shown to be chaotic but the judge assessed the loss at $3,000 per month and said that if he had made an award he would have taken 12 as his multiplier.

Since trial

7. Since the trial, there has been an important development. On 25 June 1997 the appellant, who had apparently been applying for the hawker's licence for many years, was granted the hawker's fixed pitch licence for the very place where he had been operating for many years before the accident. An application to admit fresh evidence to prove this was allowed. In the end, Mr Lai, for the defendant, quite rightly did not oppose its admission. The consequence is that the issue before us, although an important one and far from easy, is limited. It cannot be said that the appellant's continuing loss after he was granted this licence is not recoverable. Also, Mr Martin Lee SC, Mr Earnest Cheung with him, rightly concedes that he is unable to pursue his claim in the amended Notice of Appeal for loss of earning capacity or, as it is sometimes called, Smith v Manchester damages.

The issue

8. The limited issue is whether the appellant is entitled to recover his loss of earnings from unlicensed hawking between the day of the accident - 4 October 1993 - and the day when he received his hawker's licence - 25 June 1997 - and whether in this respect the judge was wrong in refusing this claim.

The Hong Kong decisions

9. There are a number of Hong Kong decisions in which claims for loss of earnings by illegal hawkers have been disallowed. Some of those cases have been cited to us. The first is Tam Choi and Ho Wai Hing v The Kowloon Motor Bus Co (1933) Ltd OJ Action No. 2997 of 1973 unreported, which contains this passage in the judgment of the then Chief Justice. It concerned an illegal hawker:

"It is against public policy that a person engaged in an illegal activity such as hawking without a licence should benefit from such illegal activity. I will therefore make no award under this head."

This broad decision went on appeal in Civil Appeal No. 19 of 1974 also unreported. It is clear from the judgment that counsel did not challenge the relevant ruling of the Chief Justice but interestingly Huggins J (as he then was) said this:

"The fact which was the foundation of the alleged misdirection was that the Plaintiff at no time had a licence to carry on business as a hawker. There was no evidence that she had applied or intended to apply or had contemplated the possibility of applying for a licence."

10. The third Hong Kong case cited to us was Mak Yuk-kiu and Anor v Tin Shing Auto Radio CTR Ltd and Anor [1981] HKLR 77. A fatal accident claim in which Roberts CJ took the view, as I do, that the decision in the Court of Appeal in the Tam Choi'scase is not one which binds this Court.

The appellant's submissions

11. For the appellant Mr Martin Lee SC invites this Court to examine the point afresh and to say that on the facts of this case it is not contrary to public policy to allow the claim. He cites authority - to which I will turn - and contends that fairness dictates that the appellant should recover his established loss. He cites in particular the Australian case Mills v Baitis [1968] VR 583.

The respondent's submissions

12. Mr Thomas Lai in an attractive argument submits that even though we are not bound by authority, we should not overturn the principles laid down and followed in established and accumulated Hong Kong cases which decide that recovery will not be given for loss of earnings by illegal hawkers. He limits his submissions to illegal hawkers and contends that illegal hawking is a serious problem in Hong Kong and we should not by our decision endorse or approve chaos on our streets by a decision in favour of the appellant and particularly we should not follow the Australian case, Mills v Baitis, as a decision over 30 years old dealing with wholly different social circumstances in Victoria.

Illegality as a bar to recovery

13. There is authority and learned comment upon illegality as a defence to liability in tort. The scope and the principles to be applied, however, in such a defence, remain uncertain. As the authors of "Clerk and Lindsell on Torts" 17th edn at paras 3-03 comment:

"No cause of action arises from illegal or flagrantly immoral acts: ex turpi causa .... The application of ex turpi causa in tort remains of uncertain ambit. The very use of the Latin tag in tort is disputed."

14. When considering the relevant question, what damages the court will award when the basis of the loss is said to be tainted by illegality, there is a dearth of authority.

15. The principles are elusive but for my part I find considerable assistance from the Australian case, Mills v Baitis. It was a case at one end of the spectrum. The plaintiff claimed damages for loss of earnings as a motor engineer. But motor repairing was not a permitted use of his premises under the planning legislation which provided penalties for such a non-permitted activity. The court held however that public policy did not prohibit that plaintiff from recovering.

16. Gowans J in an impressive analysis considers the authorities and reviews them in both Australia and England. He ends his examination by a consideration, first, of whether the maxim ex turpi causa can be invoked in these words:

"It may be then that the maxim itself cannot be invoked to exclude from the measure of damages in respect of personal injuries caused by negligence a head of damage which has some association with illegal activities. But if the maxim itself cannot be invoked resort is then had to the more general principles of public policy as producing the same result."

Later he considers a passage in Marles v Philip Trant & Sons [1954] 1 QB 29 citing Denning LJ:

" 'So far as this question of damages is concerned, the civil courts act on the principle that they will not lend their aid to a man so as to enable him to get a benefit from his own crime, nor will they help him to get reparation for the consequences of his own culpable criminal act'. Reference was then made to some decided cases as to which the Lord Justice said: 'In those cases the plaintiff was undoubtedly seeking to get reparation for the consequences of his own culpable crime.' His Lordship drew a distinction in that case (as he did in similar cases decided by him) between culpable crimes and other crimes."

In a further passage, Gowans J continued:

"But all this seems to be directed to a different subject-matter from that arising in the present case. It is not a case of enforcing rights resulting from a crime, or helping a plaintiff to get a benefit from a crime, or helping him to get reparation for the consequences of a crime. It is really a question as to whether the measure of the damages which would ordinarily flow from the admitted tort is to be treated as exclusive of compensation for loss of capacity to earn from an activity prohibited by statute in one of its aspects. If so, it must be on the basis that such loss is to be treated as damnum of a kind not recognised by law because of considerations of public policy, as was the case with damages for the death of a human being at common law ..."

Finally he reaches this conclusion:

"There was in this case nothing but unlawful acts on the part of the respondent producing a prior state of affairs upon which the appellant's negligence operated, with no causal connection between those unlawful acts and the negligence, and the provision in the Town and Country Planning Act 1961 is directed only at the place where the work was carried out, and gives no indication of an intention to disentitle an offender against the provisions of the Act from recovering compensation in full for personal injuries caused by that negligence."

I am satisfied that the question turns upon public policy, but as has been said on many other occasions, public policy is an unruly horse. Of itself, it gives little or no assistance to courts which are required to apply the principle. The ends of the spectrum create no difficulty. The above case is an example. At the other end of the spectrum there would be no question of a burglar disabled from pursuing his activities ever recovering his loss.

The principles to be applied

17. For my part, I would apply the principles which were discussed in the course of argument. As I see it, they are these. The court must examine all the circumstances - the nature of illegality complained of, the moral and criminal culpability and the plaintiff's conduct. Also any relevant legislation must be considered. Having done that the court must decide whether in all those circumstances it would affront the public conscience or offend the ordinary right-thinking citizen if compensation for the loss concerned is awarded.

Two Hong Kong judges

18. I turn in passing to consider the remarks by two former Hong Kong judges about the nature of illegal hawking. They both appear in the judgment of Roberts CJ in Mak Yuk-kiu and Anor. There he cites the words of Simon Li J (as he then was) in Wong Keung v Ng Kwok-leung HC Action 3145/75 unreported:

"While for myself I find it rather difficult to assimilate the earning of an unlicensed hawker with the illegal earning of a criminal - criminal in the sense as we understand it - I am bound by the decision of the Court of Appeal here. I would not express any further opinion on this matter. Sufficient it is to say that when the contribution comes from the earnings from unlicensed hawking it appears that that decision puts a stop to any claim on that basis."

Although in my judgment his view as to the effect of decision in the Court of Appeal was wrong, his view of illegal hawking is relevant. For his part, the Chief Justice said this:

"... in the majority of cases which come before the courts, the dependants will have been supported from earnings which are of an illegal rather than criminal nature, such as the proceeds of illegal hawking, illegal fortune-telling or perhaps the proceeds of running an unlicensed restaurant; such activities are widespread in Hong Kong and are far from serious criminality."

Conclusion

19. The circumstances of the instant case, as we now know them, are as follows:

(1) The appellant's hawking was carried out by deceiving the authorities and was a sham;

(2) The appellant was the Chinese godson of the licence-holder of a pitched stall. The stall itself was the subject of a licence. So far as the evidence is concerned, that stall was properly run. The most that could be said, it seems, was that the goods had spread on to the pavement beyond the pitch's limit from time to time.

(3) The appellant had previously applied for the transfer of the licence.

(4) He now is the holder of the licence for the pitch upon which he had been trading for so long.

(5) There was no causal connection between the defendant's negligence and the illegality.

(6) The legislation gives no indication that an illegal hawker should be disentitled from recovery. That legislation is regulatory in nature. Selling itself is not an illegal activity.

20. Finally, the court should not be astute, it seems to me, to deprive a plaintiff who has been injured and disabled through no fault of his own, from recovering his proved loss save in a clear case.

21. Balancing these considerations and applying the principles I have set out, in my judgment the appellant is not disentitled by his illegal hawking activity from recovering the loss which he has suffered. That is not to say that there may not be circumstances in which an illegal hawker may be disentitled to recover. That will be a matter for the judge concerned to decide applying the principles.

22. It is, of course, quite wrong to think - as suggested by Mr Lai - that any decision in the appellant's favour in any way approves or endorses chaos in our streets or breaches of the hawking regulations.

23. For those reasons, I would allow the appeal and I would make awards as follows:

(1) the plaintiff's loss of earnings from the accident to the date of trial. That, no doubt, can be calculated. There will be an appropriate award of interest on those damages;

(2) the judge assessed future loss at $3,000 a month. There has been no submission that this assessment is wrong. I would award therefore $3,000 a month and take 12 as the multiplier, which I believe, comes to $432,000.

24. I would allow the appeal to that extent.

Godfrey, J.A.:

25. I agree; and would add only this.

26. In the Australian case of Mills v. Baitis [1968] VR 583, to which Mortimer, V.P. has already referred, Winneke CJ expressed the opinion that where the victim of an accident :

"..... has suffered a proved loss in connexion with an occupation which, although followed in a place forbidden by law, is in itself quite lawful, it would be artificial in the extreme and reminiscent of mid-Victorian hypocrisy to deny him the aid of the law to recover such loss from the apparent wrongdoer on the hypothesis that the general welfare of the State would be thereby advanced."

27. I entirely agree.

28. However, our case is not exactly covered by these words of Winneke CJ. Although hawking is not an illegal activity at common law, it must be accepted that, in Hong Kong all unlicensed hawking is illegal : see Ng Enterprises Ltd v. Urban Council [1996] 2 HKLR 437. On the hypothesis that the plaintiff in our case was at the material time an unlicensed hawker, he cannot be said to have been carrying on at that time an occupation "which ..... is in itself quite lawful". However, I would, for my part, be prepared to hold that even if the victim's occupation is not "in itself quite lawful" he should not be deprived of the compensation to which he would be otherwise entitled unless the occupation is in itself against the public good.

29. I would certainly deny compensation for "loss of earnings" to a professional burglar. As Gowans J remarked in the case cited (at p. 590) :

"..... a professional burglar does not earn money; he steals it; he does not put his earning capacity to use, he prefers not to use it."

But what of, say, the pimp, or the prostitute? I would deny compensation for "loss of earnings" to the pimp. In the case of the pimp, his "earnings" are derived from an activity which is both illegal and contrary to the public good. In the case of the prostitute, she, unlike the burglar, does put her earning capacity to use, if not good use; and prostitution, unlike pimping, is not in itself an illegal activity. Furthermore, the prostitute's earnings from prostitution are taxable, at any rate in England and Wales : see Inland Revenue Commissioners v. Aken [1990] 1 WLR 1374. It is obviously arguable that it hardly advances "the general welfare of the state" to deny compensation to the prostitute for loss of earnings on which the State would have taxed her. But, nevertheless, I would (not without some hesitation) deny such compensation to the prostitute, too. In Hong Kong, as in England and Wales, her profession (old though it is) would, I think, generally be regarded as contrary to the public good; and to allow her compensation for loss of earnings from prostitution would, in my judgment, be contrary to public policy.

30. I refer to these examples of other, questionable, ways of earning a living in order to demonstrate the distinction that I would draw between these cases, on the one hand, and the case of the unlicensed hawker, on the other hand. The question to be asked in all these cases is, in my judgment, whether considerations of public policy dictate the withholding of recognition by the court of the damnum suffered : see per Gowans J. in the case cited, at p. 589. In the case of the burglar, the pimp and (probably) the prostitute, I think that they do. In the case of the unlicensed hawker in this case I think they do not. But one must be wary of generalisation; each case of this sort will, in the end, turn on its own facts. What I have said in this judgment is intended to provide some guidance as to the proper approach, rather than to define the law to be applied, to each such case. There is nothing further I wish to add.

V. Bokhary, J.:

31. We now know that after Mr Justice Leonard had given judgment, the Appellant obtained a licence. So for the period following the obtaining of the licence, the question of illegality no longer arises; and for that period we can award the Appellant damages for loss of earnings without differing from the learned Judge as to the law.

32. For the period before the obtaining of the licence, however, the question of illegality remains. And here I too respectfully differ from the learned Judge. It seems to me that I ought to indicate in a few words of my own why I too differ from him here, particularly as his view had the support, or at least the apparent support, of a number of Hong Kong cases, although none in which there has been laid down any ratio decidendi binding us to decide against the Appellant in the present case.

33. Whether it involves the enforceability of a contract or, as in the present case, the recoverability of damages in tort, the effect of illegality can give rise to very difficult questions. I would not be so bold as to suggest any test by which the correct answer can be found in all cases. But it seems legitimate to speak generally to at least this extent: there is always a public policy consideration involved. That, I think, appears from the decision of the Supreme Court of Victoria in Mills v. Baitis [1968] VR 583 and the impressive array of authorities cited by that Court in support of the view which it took of the law.

34. The broad question seems to be: would it be more offensive to the notions of justice held by right-thinking people generally to allow a plaintiff to recover in light of the actual illegality involved or would it be more offensive to such notions to refuse him a remedy?

35. In the present case, I think that it is possible to come to a conclusion simply by reference to that question. And I think that here, where the Appellant's illegality consisted of fixed pitch hawking without a licence, allowing him to recover would be the less offensive course in all the circumstances.

36. Of course, unlicensed fixed pitch hawking is an illegal activity. So are the activities of a burglar and, to take the extreme example cited in the course of the argument, those of a professional assassin. But when it comes to how different forms of illegal activity are to be regarded in cases where damages for loss of earnings are claimed, the change that occurs as you travel from one extreme to the other must at some stage become not merely one of degree but utterly and obviously one of kind. The Appellant's illegal activity here lies at the least serious end of the range and differ in kind even from activities far less serious than, for example, burglary.

37. It is also to be noted that there is no causal link between, on the one hand, the Appellant's injuries and their consequences upon his earnings and, on the other hand, the illegal element of his occupation. There would be some such link in, for example, the case of an itinerant hawker hit by a speeding motor car as he was fleeing from the hawker control force. It is not difficult to imagine that the driver might be negligent in going too fast even as the hawker might be contributorily negligent in dashing across the road. In any action by the hawker for damages, his claim for loss of earnings may be attacked on the basis of some causal link between that claim and the illegal element of his activities. I do not take it upon myself to say whether that attack would or would not succeed. I merely make the point that no such attack can be made against this Appellant.

38. For all these reasons and those so much more cogently expressed by my Lord, the Vice-President and Godfrey JA, I am of the view that the Appellant's claim for loss of earnings succeeds in toto and not just in respect of the post-licence period. It succeeds even ignoring the licence eventually granted.

39. So I too am in respectful agreement with the terms of the order which my Lord, the Vice-President proposes in his judgment; and I too would allow the appeal in those terms.

Mortimer, V.-P.:

40. The appellant appeals against the judge's order for costs. The judge took an adverse view of the plaintiff and decided that he had wasted the court's time by advancing false claims which had failed. He thought that the case ought to have lasted 3 days whereas it in fact lasted 9 days. As a result, he made what is in the view of this Court a very unusual order. He ordered that the plaintiff should only have one-third of his costs and that he should pay two-thirds of the defendant's costs. Those are two separate orders.

41. First, we turn to the order in relation to the defendant's costs. When a defendant comes to court to meet a personal injuries claim, there are well-recognised means for the defendant to protect himself against the costs. In this case he chose not to pay in but to fight the case tooth and nail on every issue - on liability, on the medical reports and on damages. He took no steps to protect himself. Now he lost the case. In those circumstances, it is, to say the least, a most unusual order for a defendant who loses his case to have most of his own costs paid by the other side. In the view of this Court, it was an order which was wrong in principle. In those circumstances we set it aside.

42. But what about the plaintiff's costs? Unquestionably in the view of the judge the plaintiff did waste time. We have had put before us a very broad analysis of the time taken. The particular matter to which the judge took exception was the plaintiff's evidence about his losses as a hawker and his losses in business in China. It appears from the analysis put before us - which I must add is not agreed - that evidence on China investment took 2 hours. Of course, it may have taken rather longer. The evidence on his loss of earnings from hawking, however, took 4 days.

43. The plaintiff succeeded on liability which was a major issue, and on general damages only. On this the judge took the view that he should have a third of his costs.

44. On appeal, he has succeeded on his loss of earnings as a hawker, so the order for costs ought not stand entirely particularly now the plaintiff has succeeded on appeal on the one issue argued.

45. In those circumstances we think it right to set side the judge's costs order but give effect to the judge's view that the claim was exaggerated in the manner which was suggested by his counsel. In doing so, we order that he should receive three-quarters of his taxed costs below.

46. So far as the costs of the appeal are concerned, having considered the points put before us we see no reason why the costs should not follow the event. The appellant shall have his costs of the appeal.