SHIU WAI KUEN v. CHAN HAU MAN AND ANOTHER

HEAD NOTE

Industrial Law -

Employees' compensation - permanent partial incapacity - assessment of loss of earning capacity under S. 9 of the Employees' Compensation Ordinance (Cap. 282) for non-schedule injury - increase in amount of compensation levels in S.7 since date of accident - relevant date for assessing amount of compensation - effect of amendment to Ordinance increasing compensation levels - application of presumption against retrospectivity - consideration of Ogden Industries Pty Ltd v. Lucas [1970] AC 113 P C.

Held - The presumption against retrospectivity applies cc claims under S. 9 - relevant date is the date of the accident - amount of compensation specified in S. 7 current at date of accident is the relevant amount - Chan Kam v. Standard Chartered Bank Hong Kong Trustee Limited Civil Appeal No. 36 of 1988 followed.

IN THE DISTRICT COURT OF HONG KONG
HOLDEN AT SHATIN
EMPLOYEES' COMPENSATION NO. 16 OF 1991

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IN THE MATTER OF AN APPLICATION BETWEEN : -

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JUDGMENT

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1. The Applicant claims compensation under the Employees' Compensation Ordinance (Cap. 282) in respect of an injury incurred when he collided with a 3-wheel trailer on a road in Luk Fung District in Kwangtung Province in the PRC at about 2 a.m. on the 20th June 1989. (The Application gave the time of accident as 2 p.m., but leave to amend to 2 a.m. was sought and granted at the trial.).

2. The Applicant was a professional driver aged 30 years at the time of the accident. His injuries, particularly to the right foot, were severe, and it was common ground that he would never be able to drive professionally again.

3. The 1st Respondent, the employer Mr. CHAN Hau-man trading as Chong Yip Transport Co., did not appear at the trial. By Notice filed on the 25th September 1991 he gave notice that he intended to act in person. He was not present when the trial began at 10:35 a.m. on the 11th October 1991 and I was informed that he was delayed in Shenzen, having some problems with some goods. Attempts were made to contact the 1st Respondent through his office during the morning without success. Dr. YEUNG Po-sun, the expert medical witness for the Applicant, was in court and I decided to proceed with the case, at least with his evidence. The 1st Respondent's answer contained a formal denial of the allegation in paragraph 1 of the Application that on the 20th June 1989 personal injury by accident arising out of and in the course of his employment was caused to the Applicant. The 1st Respondent admitted that he employed the Applicant, but otherwise put the Applicant to strict proof of paragraph 1 of the Application. The Applicant was also put to proof of the allegations in respect of the accident and the injury and other matters alleged in paragraph 3 of the Application. The 1st Respondent claimed, further or in the alternative, that the alleged personal injury was not caused by the alleged incident, or, alternatively, the alleged personal injury was attributable to the serious and wilful misconduct of the Applicant and consequently the alleged incident did not arise out of and in the course of the employment of the Applicant. No Hearsay Notice under S.47 of the Evidence Ordinance and RSC Order 38 was given by the 1st Respondent. No praecipe for writ of subpoena ad testificandum was filed by the 1st Respondent in respect of his own doctor, Dr. Lee, or any other witness. The 2nd Respondent, the insurer, was added by order pursuant to its Summons to be added dated and filed the 27th March 1991.

4. After Dr. Yeung gave his evidence in chief and had been cross-examined by Miss Pinto,counsel for the 2nd respondent, I adjourned the hearing until Monday, 14th October 1991 in the hope that the 1st Respondent would be able to attend. Efforts were made both by the Court and the Solicitors for the 2nd Respondent to inform the 1st Respondent's office that the case was to continue on the Monday. In the event the 1st Respondent again did not appear.

5. The 1st Respondent had been given ample opportunity to give some explanation for his failure to attend but had failed to do so. His defence was basically a general denial, with the allegations mentioned above which had not been paticularised in any way. I took the view that if there was any substance in these allegations they would have been made known or be known to the insurer. In all the circumstances I felt that the case should proceed and that the interests of the 1st Respondent would be sufficiently safeguarded by the insurer, which was represented. The Statement of Grounds of Opposition of the 2nd Respondent contained a denial that the Applicant sustained injuries as alleged by an accident arising out of and in the course of his employment and generally overlapped with the 1st Respondent's Answer. Accordingly I ruled that the trial continue in the absence of the 1st Respondent.

6. The Applicant gave evidence as to the circumstances of the accident. He explained that it was normal to be making his way back to Hong Kong at this time of night. It was normal for him to make night runs. There being no evidence or suggestion by counsel for the 2nd Respondent that the accident did not arise out of and in the course of the Applicant's employment, I find that the injuries were sustained in an accident arising out of and in the course of the Applicant's employment by the 1st Respondent. There was no evidence of any serious and wilful miscouduct by the Applicant and accordingly I find that the proviso to section 5 of the ordinance had no application in the present case.

7. Dr. Yeung assessed the Appplicant's loss of earning capacity at 70%. Dr. David Lee, on behalf of the 1st Respondent, in his report dated 30th August 1991 assessed the loss of earning capacity at 60%. He arrived at that percentage by reference to a below knee amputation (50%, which he thought the Applicant would have to have) and adding 5% for muscle wasting etc of the right leg and a further 5% for scarring. A Certificate of Assessment of the Employees' Compensation (Ordinary Assessment) Board issued in 1991 gave a 42.5% figure.

8. Dr. Yeung accepted that the physical findings in Dr. Lee's report were similar to his own. (See his letter dated 20 September 1991, exhibit D1). Both doctors agreed that the Applicant would in future only be able to do light jobs of a comparatively menial nature. Until the accident the Applicant had been on a basic salary plus allowance and commission, producing in good months approximately $12,000.00. Dr. Lee thought that the Applicant might be able to earn $3,000.00 - $4,000.00. In his evidence the Applicant said that he had made one attempt, in September 1991, to find a job, but had not been successful. The difference between the two doctors was in their approach to the assessment of loss of earning capacity. Dr. Lee thought that the starting point was the equivalent of a below knee amputation to which certain additions were to be made, whereas Dr. Yeung thought that the injury was similar to the loss of a leg at or above knee level, thus justifying a 70% figure as per the Schedule to the Employees' Compensation Ordinance.

9. Dr. Yeung, in his report and confirmed in evidence, was of the opinion that the Applicant had a 50% permanent disability, but the loss of earning capacity was higher because the Applicant could not work as a normal worker, but could only do some light job. As to amputation, he would prefer to leave the leg alone if the pain was not very severe. If an amputation was necessary, a below knee amputation would be appropriate, but 50% was not the appropriate percentage. 50% assumed an otherwise healthy leg. The Applicant had wasting, stiffness and fracture which very much weakened the remaining function of the right leg. The left leg injury increased the disability. In Dr. Yeung's opinion the correct approach was not to start with 50% and make additions, but to take the leg as a whole. If additions were to be made, he would add about 10% for the muscle wasting, which was significant, and the knee stiffness. Scarring was very subjective and could range between 5% and 20%. On Dr. Lee's approach Dr. Yeung would reach a figure of 70% to 75%. However, Dr. Yeung thought that the proper approach was to take the leg as a whole and on that basis he considered the injuries to be equivalent to the loss of a leg at knee level.

10. Of course, I have not had the benefit of Dr. Lee explaining his approach, but in any event I believe that the approach of Dr. Yeung is the more logical one, i.e. one treats the leg as a whole and then looks to the Schedule to find an appropriate equivalent injury from which one arrives at a percentage, rather than Dr. Lee's approach of finding a basis percentage and then making additions. I appreciate that in appropriate cases the different approaches could produce the same result. In any event, even on Dr. Lee's approach, Dr. Yeung would arrive at a percentage of the same amount or more than that on his global approach. I prefer the approach of Dr. Yeung and I accept the percentage figure supported by him. That figure is also reasonably consistent with the figures we have for pre-accident earnings and potential earnings. Accordingly I find the percentage loss of earning capacity to be 70%.

11. In determining the amount of the Applicant's claim under Section 9 of the Employees' Compensation Ordinance I must first determine the sum to be multiplied by 70%. The parties are in disagreement as to what is the correct sum. Mr. Neo, for the Applicant, says that the correct sum is $485,000, the figure set by resolution of the Legislative Council effective from 1 January 1990. Miss Pinto, for the insurer, contends that the figure current at the date of the accident, i.e. $394,000, applies.

12. The compensation figures change regularly. More recently, changes have occurred in 1985 (LN 321 of 1985), 1987 (LN 390 of 1987) and 1989 (LN 386 of 1989). Unfortunately the legislation and the amending resolution do not say specifically what is the relevant date for determining the compensation.

13. There are various possibilities as to what is the relevant date, namely

1. the date of the injury;

2. in the case of death, the date of the death; and in the case of permanent total or partial incapacity, the date when it became clear that the incapacity was permanent and either total or partial;

3. the date of the application;

4. the date of the hearing;

5. the date of the award.

14. Miss Pinto argued in favour of possibility 1. Mr. Neo argued for the new figure since 1 January 1990, on the basis that the application was made on the 1st March 1990 after the new figure came into effect, relying on possibilities 3, 5 and 6. He referred to the presumption against retrospectivity in the construction of statutes, anticipating Miss Pinto's argument. He claimed this was not a matter of retrospectivity, but one of the variation of the amount of compensation to be awarded by the Court and the relevant date was either the date of the application or the date when the award was made. He argued that once the change of compensation level was made the previous figure was no longer relevant. It was, he said, natural that the amount should change from time to time by reason of inflation. He argued that if the legislature had intended to restrict the compensation to that prevailing at the time of the accident, it could have said so and as it did not it was clear that the new figure should be used. Variations in quantum have to be distinguished from other forms of amendment, such as those imposing liability or extinguishing rights or altering jurisdiction. Variations in the amount of compensation were analogous to variations in the statutory interest rate where the appropriate rate was that at the time the award was made. Mr. Neo referred to the texts relied upon by Miss Pinto (which I refer to hereafter) and he argued that the presumption against retrospectivity related only to important issues, such as those affecting accrued rights and jurisdiction, not to changes in quantum.

15. At the hearing I was not referred to any local authority on the point or indeed any decided cases. But when this judgment was in final draft I was sent a copy of the Court of Appeal decision in Chan Kam v Standard Chartered Bank Hong Kong Trustee Limited by the solicitors for the insurer under cover of a letter informing me that neither the solicitors for the Applicant nor themselves wished to address me on that case. I had already come across that decision in my own researches on the point and I refer to it below. Miss Pinto informed me that the practice was to apply the amount of compensation current at the time of the accident.

16. Miss Pinto referred me to Craies on Statute Law (7th ed.) starting at P387 and then went on to PP397 et seq. She referred me also to Cockram The Interpretation of Statutes (3rd ed.) starting at P124. Both these texts deal in detail with the presumption against retrospectivity and the situations in which it does and does not apply. Miss Pinto very properly directed my attention to P129 of Cockram and the paragraph there dealing with retrospectivity in relation to procedure and how new procedural matters govern, even though the cause of action arose before the change in the law. She went on to emphasise that the benefit of amendments should not be applied retrospectively where they impose a heavier duty on another party. But in the end, after referring me to the principles, she left it to me to determine, as she put it, where in the band I wished to place this type of amendment.

17. Some policy arguments were raised. In favour of the relevant date being that of the injury, it was argued that to permit a later date would encourage delay in making claims to take advantage of possible increases in the rate. But there is a time bar for claims in the Ordinance in section 14. It was also argued that any other date would be unfair to insurers, but they could, and presumably do, reflect the possibility of increased rates and consequently larger claims in fixing the premium payable.

18. Neither of the texts to which I was referred deals with workers' compensation legislation. There is no doubt however that the presumption against retrospectivity has been used in this context in the past. I need only mention cases like Moakes v Blackwell Collierv Co [1925] 2KB 64 CA and Clement v. D. Davis and Sons Ltd [1927] AC 126 HL decided under the old UK workers' compensation legislation. But the judicial approach to statutory interpretation has changed over the years.

19. Some assistance on the point is to be found in other jurisdictions which still have legislation similar to the Employees' Compensation Ordinance. For example, the point is covered in some detail in Mills, Workers Compensation (New South Wales) 2nd ed. I quote from P8 :-

"[16] Commencing dates of amending legislation. The course of amending legislation has almost invariably been in the direction of the workers' interests, either by way of increasing the money benefits or by way of ameliorating conditions of entitlement to benefits. Such amendments raise various questions: are the new benefit rates or conditions applicable to cases where the injury (or the incapacity or the death of the worker) occur before the date of the commencement of the amending Act... The problem has become more acute as changes in the rates of benefit have become more frequent...

    Principles of statutory interpretation are against giving such amendments any retrospective operation. "Generally there is a strong presumption that a legislature does not intend to impose a new liability in respect of something that has already happened, because generally it would not be reasonable for a legislature to do that. So if a worker has already sustained injury or contracted a disease at a time when the employee is under no statutory liability to him, arising out of that injury or disease, there would in general be a presumption that an Act bringing that injury or disease within the scope of compensation would not apply to that case: otherwise there would be liability on the employer arising out of a state of things which existed before the Act was passed. But this presumption might be overcome not only by express words in the Act but also by circumstances sufficiently strong to displace it": Sunshine Porcelain Potteries Pty Ltd v Nash (1961) 104 CLR 639 PC."

20. Pausing there, I note that in the extract from the Privy Council case quoted it is a new liability that is being referred to. In this case we are concerned not with the creation of a new liability, but the proper quantification of an existing liability.

21. I return to Mills' book at P191 where he deals with section 7(1)(a) of the (NSW) Workers Compensation Act. That section (the first in Part II entitled Compensation and entitled Liability of employer to employees for injuries) states in sub-section (1)(a) that a worker who has received on injury whether at or away from his place of employment (and in the case of the death of the worker, his dependants) shall receive compensation from his employer in accordance with this Act. Incapacity benefits are dealt with in section 9 and at page 256 of the book there is a table showing changes in those benefits over the years.

"[132] Paragraph (1)(a) : Date of accrual of employer's liability. The earlier view had been that the employer's liability to pay compensation occurred at the time of the injury: see the cases given in Australian Iron and Steel Ltd v. Coal Mines Insurance Pty. Ltd. (1951) 52 SR (NSW) 47; Ogden Industries Pty Ltd v. Lucas (1967) 116 CLR 537 (HC); (1969) 118 CLR 32 PC. Accordingly, the entitlement to benefit was to be determined by the law in force at that date, unless the statute provided otherwise... However, in the case of death, compensation is payable only where the worker leaves dependants, and the definition of "dependant" in section 6(1) refers explicitly to circumstances existing at the time of the worker's death. Accordingly, it had generally been accepted that questions relating to dependency in death claims were to be treated as an exception to the general rule, but otherwise it had been taken that death claims were to be determined, like claims relating to incapacity, according to the law as at the date of the injury. Although the worker's right to claim specific benefits depended in each case on the  happening of a further event, such as incapacity (S9)... that was to be regarded as merely quantifying the employer's liability which had arisen when the injury occurred...

   The Ogden Industries case has changed this, at least in the case of claims arising out of the death of the worker. The worker had received an injury in February 1965. On 1 July 1965 an amending Act had redefined the word "dependant" and had increased the amount of the death benefits. The worker died on 7 July 1965 and the question was whether the dependants' claim was to be determined according to the law at the date of the injury or the date of the death, the amending Act being silent on the point. The majority of the High Court decided in favour of the date of death and the Privy Council on appeal agreed.

    In the High Court only Barwick CJ and Kitto J adhered to the view which had previously governed such cases. According to them, the respective rights and liabilities were to be determined according to the law as it stood at the date of the injury. At that date the liability to pay compensation accrued to the employer. The rates then prescribed, and the definition of the class entitled to the benefits at the time, governed the liability of the employer, although the quantification of the liability might have to await the happening of future events. The Chief Justice in particular thought that the matter was settled by authority, and that the legislatures had long acted on this basis.

    The majority of the Court (Taylor, Windeyer and Owen JJ) thought otherwise. In their opinion, there could be no present right or liability unless and until the persons who could claim the right were in existence and were identifiable, and this position could not arise until the death of the worker, as a result of the injury, occurred. Strictly speaking, the case is authority for this proposition only so far as it touches the claim of the dependants to the benefits payable on the death of the worker ... but there is much in the majority judgments to suggest that liability in other cases also arises only when incapacity results from the injury ... the judgment of Windeyer J contains the clear statement: "The obligation 'to pay compensation in accordance with the Act' arises when incapacity or death ensues from the injury..." [note that the Employees' Compensation Ordinance in section 5 also refers to a liability to pay compensation in accordance with the provisions of the Ordinance]. The words "in accordance with the Act", according to His Honour, are given a new content of meaning with each amendment to the Act, and he bore in mind that amending Acts are meant to take their place in an existing and continuing system of workers' compensation law... Owen J... doubted whether it could ever be said that the employer's liability arose at the time of the injury, unless injury and incapacity were simultaneous. From this it follows that His Honour regarded the liability as not arising at all from the injury, only from the incapacity or death, as the case may be ..."

22. I have quoted, at some length, extracts from the commentary in Mills' book because it conveniently addresses the problem in principle. I have looked at the Ogden case and some of the cases cited in it. Ogden's case contains a very detailed review of the authorities up to that time, looks at the presumption of retrospectivity, the effect of the Acts Interpretation Act (in the Hong Kong context the Interpretation and General Clauses Ordinance, Cap. 1, section 23 (c)) and the policy reasons which come into play in this situation. As appears from the extract from Mills' book quoted above, Ogden's case marked a radical departure from the previous law. By a majority of three to two, the High Court held that in the case of death it is the date of death which is determinative, not just of dependency but in all respects. With respect, I find the views of the majority in relation to death compelling and persuasive. What they said in relation to incapacity may be more equivocal, but the logic, as I see it, is that if the date of death is the determinative date for the rate of compensation benefit on death, then the date of the "crystallization" of the incapacity, i.e. when it can be said that the injury has resulted in permanent total incapacity or permanent partial incapacity, must be the determinative date for the appropriate rate of compensation benefit. That is, of course, unless the Ordinance gives another date. I appreciate that there may be some difficulty determining when the incapacity in crystallizes. In fact the Ordinance itself gives some assistance in determining whether permanent total incapacity or permanent partial incapacity has resulted from the injury. Sections 7(3) and 9(3) contain a deeming provision for this purpose. In the case of non Schedule injury paragraph (b) of each of these provisions deems the relevant incapacity to result upon an assessment by an Ordinary Assessment Board, a Special Assessment Board or the Court (in this context "Court" meaning the District Court: Employees' Compensation Ordinance S3). I interpret this to mean whichever is the later assessment. If the point were free of authority, I would be prepared to held that the crystallization of the incapacity occurred at the date of the award of the Board or Court, whichever was the later. I appreciate that such a conclusion might result in a different rate being applied for Schedule injuries by virtue of sections 7(3)(a) and 9(3)(a), where, presumably, the incapacity is deemed to result as soon as it is clear whether the incapacity amounts to 100 per cent or more or less than 100 per cent. This difference might tend to derogate from the construction I would be prepared to place on paragraph (b) in those provisions. On the other hand, in the case of permanent partial incapacity section 9(4), which permits the assessing body to have regard to post-accident earnings, could be said to support an argument against the date of the accident being the relevant date.

23. However, whatever sympathy I might have for dates other than the date of the accident being the relevant date, is immaterial, because, as I have indicated, the point is not free of local authority. The issue of retrospectivity in the context of amendments to Cap. 282 was specifically dealt with by the Court of Appeal in Chan Kam v. Standard Chartered Bank Hong Kong Trustee Limited Civil Appeal No. 36 of 1988. Hunter JA., in giving the judgment of the Court, had to deal with the effect of changes in the minimum compensation amount in section 7(2) of the Ordinance. He said at P7 of the judgment:

"Very unfortunately neither the Ordinance nor the Notice give any indication as to the legislative intent; in particular whether the new minima are to apply in relation to accidents occurring after the new date, or to assessments or awards made after those dates. We can only repeat and echo the regrets of the Privy Council voical in identical circumstances in Ogden Industries Pty Ltd v Lucas [1970] AC 113, at P131E.

Having carefully considered the matter we have concluded that the normal presumption against giving retrospective effect to legislation prevails, so that the relevant date is the date of the accident: see Clement v Davis [1927] AC 126, Lucas case (supra) and Yew Bon Tew v Kenderaan Bas Mara [1983] 1 AC 533. Upon the happening of this accident on 29th October the appellant's right to claim, and the respondent's obligation to pay compensation "in accordance with the provisions of this Ordinance" occurred under S5(1). Both matters prima facie accrued in the terms of the Ordinance as it then stood".

24. While the three cases just mentioned do not deal with a section 9 situation (Clement v Davis is concerned with a death claim and discount for pre-death payments, Ogden Industries Pty Ltd v Lucas is concerned with a death claim and the class of dependents and Yew Bon Tew v Kenderaan Bas Mara is concerned with a limitation period) the application of the presumption against retrospectivity in relation to amendments to cap. 282 seems to me to be clearly established by Chan Kam v Standard Chartered Bank Hong Kong Trustee Limited and I am bound to follow that decision. Accordingly, I hold that it is the amount of compensation current at the date of the accident, i.e. the 20th June 1989, that applies in the present case.

25. I therefore assess the Applicant's claim under section 9 of the Ordinance as follows:-

$394,000 x 70/100 =$275,800

26. That sum of $275,800.00 is a lesser sum than 96 months' earnings at the rate mentioned hereafter.

27. The Applicant's section 10 claim is put as follows:-

$7,925.25 x 24 x 2/3 = $126,804

28. $7,925.25 is the average monthly wage, as per the list of Earnings (PP 9 and 10 of Applicant's Bundle of Pleadings) deducting the so-called tunnel charge, which was a reimbursement, from the total column. Miss Pinto accepted the accuracy of the mathematics, but did not agree the elements of the formula. I find that the Applicant was not capable of working for the period of 24 months from the date of the accident (see sick leave certificates in exhibit A4). I accept the figure of $7,925.25 for the purposes of the section 11 calculation and find the compensation payable under section 10 to be $126,804.

29. I find the medical expenses pursuant to section 10 A to be $2,093.00 (as per Exhibit A5).

30. Accordingly the total amount to which the Applicant is entitled is

$275,800.00 $126,804.00 $2,093.00 $404,697.00 =========

31. The Applicant is entitled to interest on the compensation awarded pursuant to section 21 (3). I fix the rate of interest at 6.25 per cent as per annum claimed by the Applicant, to be payable for the whole period from the date of the accident to the date of this order.

32. I give judgment for the Applicant for compensation and interest as above together with the costs of the Application (including the costs of the hearings on the 8th and 22nd April 1991 and of and incidental to the Summonses dated the 27th March 1991 and the 26th September 1991) to be taxed if not agreed. The Applicant's costs are to be taxed according to the Legal Aid Regulations. My order as to costs is an order nisi and I will hear the parties further on costs, if necessary.