LO HING KIN NELSON v. THE PERSONAL REPRESENTATIVE AND/OR THE EXECUTOR AND/OR THE ADMINISTRATOR OF THE ESTATE OF LAM YUK WAN (DECEASED) AND ANOTHER

CACV 206/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 206 OF 2015

(ON APPEAL FROM HCPI NO 14 OF 2012)

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J U D G M E N T

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Hon G Lam J (giving the judgment of the Court):

Introduction

1.  The plaintiff was injured in a traffic accident on 18 June 2009.  Lam Yuk Kwan, the tortfeasor whose estate was represented by the 1^st defendant, died in the same accident. The 2^nd defendant was the insurer responsible.  The plaintiff brought the action in the Court of First Instance for damages for the personal injuries he suffered.  Interlocutory judgment was entered in 2012.  

2.  This is an appeal by the plaintiff and a cross‑appeal by the 2^nd defendant against the assessment of damages by Deputy High Court Judge Leung in his decision dated 14 August 2015.

Background

3.  The plaintiff was 34 at the time of the accident.  Since 2003 he had owned and run a business in the name of Sui Ki Metal Company (“Sui Ki”) in the trading and transportation of metal stripped from dismantled scaffoldings, hoardings, billboards and signage.

4.  Prior to the accident, the modus operandi of this business, as described by the judge in §46 of his judgment, was as follows:

(1) Upon invitation by the site manager towards the end of the construction work, Sui Ki would bid for the metal scaffoldings to be dismantled.  Upon winning the bid, the plaintiff would arrange for workers and heavy machinery to carry out the dismantling work, depending on the size and volume of the scaffoldings.  The dismantled parts of the scaffoldings would eventually be transported from the site and sold as scrap metal.

(2) The plaintiff, who took charge of the administration work, prepared the quotations and tender documents, attended tender interviews, hired workers, rented machinery, liaised with scrap metal buyers, and kept records of income and expenditure.

(3) While on the site, the plaintiff personally surveyed the scaffolds to be dismantled in order to come up with a bid.  The plaintiff would check the screws, consider the weight bearing and the method of welding and decide how the metal bars were to be cut as well as how they were to be transported.  This often meant the plaintiff had to climb up and down.

(4) The plaintiff supervised the execution of the work.  He also personally carried out some more dangerous dismantling work such as working at a height of 20 metres.

5.  As a result of the traffic accident, the plaintiff suffered comminuted fracture of the lower tibia and fibula as well as a crack fracture of the right clavicle in his right leg.  The fracture was treated with open reduction and internal fixation.  Bone grafting was performed in June 2009.  He was also treated for acute post‑traumatic stress disorder, and was eventually discharged on 20 July 2009 after 33 days in hospital.

6.  By the time of the last follow‑up examination in April 2010, the fractures had totally healed.  All together the plaintiff had attended 23 sessions of physiotherapy and 5 sessions of psychiatric consultation.  A piece of broken screw had to be removed from the plaintiff’s leg in May 2011, and he was advised to consider having an operation for the reconstruction of the mal‑aligned distal tibia.

7.  The plaintiff’s treating doctors certified sick leave for him for a total of 675 days as follows:

18 June 2009 – 14 January 2011

7 April 2011 – 7 May 2011

19 May 2011 – 24 July 2011

17 November 2011

8.  For the trial below, the parties’ experts produced two joint reports dated May 2011 and April 2013 respectively.  The experts agreed there was varus deformity and internal rotation deformity in the plaintiff’s right leg.  There was difference in tibial length between the right and left side, and the tibia distal fragment was about 7 degrees varus in alignment compared to the left.  They also agreed there was 15 to 20 degrees of internal rotation of the right talus.  In practical terms, they agreed that the plaintiff would be able to cope with activities of daily living with mild to moderate compromise, particularly in sports.

9.  The plaintiff’s case at trial was that up to July 2011, he was unable to go to any construction site and could not therefore carry on the business of Sui Ki.  In July 2011 he resumed contracting work from construction sites although he aimed at safer dismantling and transportation works, which only required him to supervise the workers on site.

The plaintiff’s claim and the judge’s award

10.  At trial four heads of claim were contentious: (1) pre‑trial loss of earnings; (2) future loss of earnings; (3) loss of earning capacity; and (4) expenses for future medical treatment (though the amount was agreed).

11.  For the pre‑trial period from the accident to July 2011, the plaintiff claimed that he was unable to work at a construction site at all and thus to carry on the business of Sui Ki, which led to an average monthly loss of income in the sum of $67,962.04, based on the results of the business in the financial year 2008/09.[1] The pleaded claim for this period was based on the 675 days of sick leave, which omitted the intervening days.  Allowing the plaintiff to expand his claim to cover the “gaps”, the judge awarded $1,699,051 to the plaintiff in respect of this period ($67,962.04 per month x 25 months).  The judge found that, having regard to the plaintiff’s physical and psychiatric condition after the accident, it would be unreasonable to expect him to attend a construction site until late July 2011, being 2 months after the removal of the metal implants from his leg and the last psychiatric follow‑up consultation.[2]

12.  For the pre‑trial period after July 2011 and for post‑trial loss of earnings, the plaintiff’s pleaded case was that as a result of the accident, he could not perform the same high‑risk duties for Sui Ki’s business as before.  Sui Ki actually ran at a loss for the financial year 2011/12. Doing the best possible, the plaintiff could only find employment of a sedentary nature with a monthly salary at $11,000.  He therefore claimed damages based on a monthly loss of profits of Sui Ki ($77,006.33) less $11,000 together with MPF benefit of 5%.  For post‑trial loss of earnings, the plaintiff pleaded the same figure for the multiplicand and a multiplier of 19.29, giving rise to a claim for $15,151,831.26 (ie ($77,006.33 – $11,000 x 1.05) x 12 x 19.29).

13.  At trial, however, the plaintiff stated in his evidence that others in the same field could earn around $20,000 to $30,000 per month in the transportation of materials for construction sites.  Deviating from his pleaded case, the plaintiff contended that he had been running Sui Ki after July 2011 at a loss, and his pre‑trial loss of earnings from that time onwards was therefore (i) $67,962.04 per month[3]; alternatively (ii) $42,962 per month ($67,962.04 less $25,000 being the median between $20,000 and $30,000)[4].

14.  For post‑trial loss of earnings, again deviating from his pleaded case, the plaintiff contended at trial that even if he could carry on the previous business by employing a substitute worker to perform the tasks used to be done by the plaintiff before, such a worker would cost the plaintiff $30,000 per month.  Alternatively, the plaintiff could take up sub‑contracting work in transportation earning $30,000 per month.  The multiplicand should therefore be not less than $37,962 ($67,962.04 minus $30,000), or $40,000 after inflation.  In light of the evidence that the plaintiff expected to retire at 60, the plaintiff reduced the multiplier contended for at trial to 16.[5]  In the plaintiff’s closing submissions at trial, the claim for post‑trial loss of earnings was therefore quantified at $7,680,000 (ie $40,000 x 12 x 16).[6]

15.  The judge rejected the plaintiff’s contention and did not award any damages for loss of earnings for the period from August 2011 to the trial or the post‑trial future.  He considered it was uncertain what business opportunities were available for Sui Ki.  The monthly income of $67,962.04 was based on the results of the financial year 2008/09 which were largely attributable to a one‑off project at Ngau Tau Kok, the largest that Sui Ki had undertaken.  There was uncertainty whether future business would be as profitable.[7]

16.  Further, the judge found that the plaintiff was not disabled from carrying on with the administration and supervision work he did for Sui Ki.  The judge also rejected the plaintiff’s evidence that he was the only person who could carry out work for Sui Ki at substantial heights or that the work previously done by the plaintiff that required climbing up and down could not be delegated.[8] The judge considered that the plaintiff might have been entitled to claim for any extra business expenses necessitated including the cost of hiring assistance to take up part of his previous on‑site role in the business, but noted that there was no claim made on that basis.[9]

17.  As for loss of earning capacity, the plaintiff claimed a lump sum of $132,000 representing 12 months’ wages at the notional salary of $11,000 per month.  Noting that the purpose of an award under this head is to compensate a plaintiff for his handicap in the labour market in the form of difficulty in being gainfully employed as a result of the disability, the judge found that no risk of the plaintiff’s disadvantage in the labour market had been made out, and pointed out that the pleaded case based on a sedentary job with a salary of $11,000 was not pursued at trial. Accordingly, no award was made under this head.

18.  Finally, the judge rejected the plaintiff’s claim for the expense of future medical treatment, agreed at $80,000, which represented the cost of the corrective surgery referred to by the experts.  The judge was not satisfied that the plaintiff had a genuine intention to undergo that surgery.

The plaintiff’s appeal

19.  In his appeal, the plaintiff challenges the judge’s refusal to award any sum as damages for (i) loss of earnings after July 2011 (both pre‑trial and post‑trial); (ii) loss of earning capacity; and (iii) future medical expenses, ie cost of the corrective surgery.

Loss of earnings

20.  On this appeal, Mr Kuman Ramanathan SC (who did not appear below) pointed out that the judge found as a fact that the plaintiff himself used to take part in the scaffolding dismantling work together with his workers, that he used to conduct survey work on site for the purpose of putting together the tender which often required him to climb up and down, and that he was prevented by his post‑accident condition from doing so.[10]  Counsel submitted that as a matter of general principle, having found that plaintiff did suffer physical handicap, the judge should award the plaintiff a sum of money which would put him in the same position as he would have been in if he had not sustained the injury in question.  He submitted that the judge was plainly wrong in not awarding any damages for loss of earnings after July 2011 despite the physical disabilities found which prevented the plaintiff from performing part of his pre‑accident role in the business.

21.  Specifically, Mr Ramanathan SC relied on the judge’s observation that the plaintiff “could have been entitled to claim for the extra business expenses including the cost of extra outside help and operating cost to take up part of his pre‑accident roles on site in his business”[11] and submitted that the plaintiff was entitled to damages representing such expense at a daily rate of $750 to $800 and therefore to (i) damages for pre‑trial loss of earnings after the last day of sick leave in November 2011 in the sum of $507,000 ($750 per day x 26 days x 26 months) or $540,000 ($800 per day x 26 days x 26 months); and (ii) damages for post‑trial loss of earnings in the sum of $3,744,000 ($750 per day x 26 days x 12 months x 16) or $3,993,600 ($800 per day x 26 days x 12 months x 16).

22.  With respect, we are unable to accept this contention.  Quite plainly this was not how the case was run below.  As the judge noted, there was no alternative claim at trial for damages representing the additional operational cost for Sui Ki necessitated by the plaintiff’s injury.  The plaintiff’s case below was for loss of profits based on a loss of the business hitherto conducted, not for the cost of hiring a substitute worker to continue the same business.  At trial, the plaintiff argued that there was no evidence to suggest a substitute worker would be able to perform the type of work that the plaintiff used to do.[12]

23.  This is not a technical pleading objection.  The question of loss is a fact‑sensitive issue.  If loss of earnings was claimed on the basis that additional operational cost would be needed to generate the pre‑accident level of business and income, evidence would be required to show the amount of additional cost or how it could be ascertained and that it would have been necessary or justified to incur it in the business.  Because the case was not run in that way, there was no exploration of the evidence along these lines at all at trial.  On the well established principle set out by Bokhary PJ in Flywin Co Ltd v Strong & Associates Ltd (2002) 5 HKCFAR 356 at §38, advancing such a new case is not permissible “unless there is no reasonable possibility that the state of the evidence relevant to the point would have been materially more favourable to the other side if the point had been taken at the trial”, which is in our view not the case here.

24.  The plaintiff’s approach on this appeal is to ask the court to adopt the undisputed cost of hiring a full‑time basic casual worker (at the daily rate of $750 or $800) as the additional operational cost necessitated.  This does not in our view meet the objection.  It is true there was evidence that the existing workers of Sui Ki were each paid $750 a day at the time and that a substitute worker of the contractor company Paul Y was paid a daily wage of $800.  But no one could have appreciated there was to be an alternative claim on the basis of the cost of hiring such a worker on a full‑time basis as the plaintiff’s substitute.  If assistance was needed only for the purposes of the site survey for preparing the tender or doing dismantling work at substantial heights, it might not have had to be provided by an additional full‑time employee.  In any event, the evidence was that a project might last only for a few days, and that Sui Ki’s workers did not work on a monthly continuous basis.  There was no investigation of the scope and amount of the additional assistance involved or whether, for example, the other existing experienced workers of Sui Ki could have provided it in addition to their other duties.  Indeed, cross‑examination of the plaintiff by the 2^nd defendant’s counsel on the topic of the monthly income of (and thus the time worked by) Sui Ki’s casual workers was truncated.  There was of course no finding on any of these matters by the judge since the point was not raised.

25.  In the course of giving evidence, the plaintiff did mention that the cost of hiring a person to replace him would be $60,000 to $70,000 per month, but no basis was given and the matter was not as carefully investigated as it would otherwise have been had there been a claim based on the additional operational cost necessitated.  These figures are in any event very different from the quantification advanced in this appeal.

26.  Mr Ramanathan SC argued that it was for a defendant to establish that the plaintiff has failed to mitigate his loss and that the judge wrongly reversed the burden by requiring the plaintiff to advance an alternative claim based on the additional operational cost necessitated.  With respect, we do not think the judge erred in this respect. As the judge pointed out, it was for the plaintiff to prove loss caused and, in particular, two “key elements” of causation in his case, namely: (i) that but for the accident, Sui Ki would have had business and profits in volume and amounts at least similar to those before the accident; and (ii) it was the plaintiff’s condition resulting from the injury that prevented him from running the business and making such profits.[13] The plaintiff’s case was that he had lost all the profits of Sui Ki because it could no longer carry on business as before — a contention which the judge rejected.  The judge considered that the same kind of business could have been carried on with hired help on the tasks the plaintiff used to but could no longer perform.  There is no appeal against these findings.

27.  It is important to note that the plaintiff was not a salaried employee or casual worker whose income would necessarily cease as he was prevented by injury from doing physical work.  Instead, the plaintiff was the proprietor of a business with a staff (and was also assisted by his father and to a lesser extent by his brother in administrative work).  The plaintiff’s income was not derived from a fixed salary for work done; it was not even measured by Sui Ki’s revenue, but by its net profits.  These profits came from the price differential between his purchase of the dismantled metal from the site and the sale of those materials to his purchasers, after deducting cost of labour and transportation and other expenses.  To recover damages for lost income, it was for the plaintiff to show how his injury caused a drop in such net profits of the business either because of reduced revenue or increased expenditure.  So although the judge also used the language of mitigation of loss in a number of paragraphs[14], his rejection of the plaintiff’s case was squarely reached as a finding that the plaintiff had failed to prove causation.

28.  His primary case on loss having been rejected, if the plaintiff wished to claim damages for the cost of hired help with which the business could (on the judge’s finding) have been carried on, it was plainly for the plaintiff to advance such an alternative claim.  We are accordingly unable to accept the argument that the judge erred in reversing the burden.

29.  Finally on this issue, it was submitted on behalf of the plaintiff that the fact that he had not advanced an alternative case did not preclude the court from taking a realistic approach and trying to assess any likely loss of earnings by making its own assessment of the position — even to the extent of awarding a lump sum of, say, $1 million if the conventional approach was felt too nebulous. 

30.  Reliance was placed for this submission on Tang Shau Tsan v Wealthy Construction Co Ltd (unrep, CACV 58/2000, 5 April 2000), but we do not think it assists the plaintiff.  There, a carpenter claimed damages on the basis that he was disabled by his injury from working in carpentry in future.  The trial judge however found that he could have carried on working as a carpenter although he would have to avoid very heavy work and lifting.  The judge nevertheless gave an award for future loss of earnings representing a 10% loss.  The Court of Appeal regarded this in effect as an assessment of a loss of two days per month, since on the evidence the likely number of days worked by a carpenter was in the region of 20, and held that, as such, it was a reasonable approach to assess the likelihood of the plaintiff not finding employment with his continuing disability. 

31.  On that basis the approach adopted there was akin to that often used in assessing an award for loss of earning capacity (as explained in Chan Wai Tong v Li Ping Sum referred to in §33 below).  It provides no support for the plaintiff’s submission in effect that the court may simply pick a figure it deems appropriate to reflect a recognised continuing disability.  We are unable to accept the plaintiff’s invitation which, with respect, is an invitation to venture into the realm of speculation and arbitrary quantification.

Loss of earning capacity

32.  It was submitted on behalf of the plaintiff that if no award is made for future loss of earnings, then damages should be awarded for loss of earning capacity in view of the plaintiff’s residual disabilities resulting from the accident.

33.  As the Privy Council stated in Chan Wai Tong v Li Ping Sum [1985] HKLR 176 at 183B–D, this head of damages is not a conventional award made in the abstract but a specific mode of compensation that has to be based on evidence:

“A claim for loss of future earning capacity usually arises where the claimant is in employment at the time when the claim falls to be evaluated. The claim is to cover 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 Limited [1977] 1 WLR 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.”

34.  In the circumstances of this case, where the plaintiff in fact continued to operate Sui Ki and the original case that he would have to settle for a sedentary job was not pursued, there was really no evidence of any risk that should be compensated by an award of this nature. There was no error in principle for the judge not to make an award under this head. 

Cost of the corrective surgery

35.  The judge applied the approach set out by Master Patrick Chan (as Chan NPJ then was) in Lam Kwong Ting v Ho Yau Yuen [1990] 2 HKC 381 at 385A–C, namely, that the cost of a future operation would only be awarded if the court is satisfied that the operation is based on medical advice, is necessary or reasonably required for the recovery or improvement of the injuries sustained or the relief of persistent pain and suffering, and is anticipated or likely to take place in the near or reasonably foreseeable future.  There is no challenge against this approach.

36.  The difficulty for the plaintiff on this appeal is that the judge, as a finding of primary fact based on credibility, concluded that the plaintiff’s assertion of his intention to undergo the operation in the near future was not to be believed.  The judge was not satisfied that the plaintiff had a genuine intention to undergo the surgery, noting that (i) considerable risks would be involved in the operation, and hence the plaintiff was understandably reluctant to undergo it; (ii) even by the time of trial, the plaintiff had no solid plan to undergo the surgery; and (iii) the plaintiff’s evidence about his intention to go for the surgery in the near future and his explanations for not proceeding with it up till then were not impressive at all.

37.  It is well established on the authorities that the plaintiff has to pass a high hurdle in challenging such a finding of primary fact on appeal.  Mr Ramanathan SC submitted that the judge failed to have regard to the relatively young age of the plaintiff (34 at the time of accident) and that there was no pressing need for him to consider surgical reconstruction immediately.  We do not think the judge had lost sight of the plaintiff’s age.  Even making allowance for his age, the plaintiff could not recover damages under this head based on a vague and tenuous possibility that he might eventually opt for the operation in the distant future.  Despite the plaintiff’s evidence that he intended to have the surgery in two years’ time, there is no suggestion, even by the time of the appeal, that he had actually undergone the operation.

38.  In our view the judge was entitled to come to the conclusion he did; the plaintiff has failed to demonstrate that the judge’s finding was plainly wrong.  Accordingly there is no basis for us to disturb his refusal to make an award under this head.

The 2^nd defendant’s cross‑appeal

39.  The 2^nd defendant cross‑appeals against the judge’s award of pre‑trial loss of earnings in the total sum of $1,699,051 ($67,962.04 per month x 25 months) for the period from the date of accident to July 2011. 

40.  The judge acknowledged the 2^nd defendant’s pleading objection that the plaintiff’s re‑revised statement of damages only made a claim for the days of sick leave during that period.  His reasons for not upholding the objection and for awarding damages for loss on the non‑sick leave days as well are that, in view of the medical evidence on the plaintiff’s physical and psychiatric conditions since the accident, it would be unreasonable to expect the plaintiff to attend a construction site, which would be instrumental in getting new business and necessary for supervision of the execution of the work.[15] Similarly, he considered it would be unrealistic to ignore the medical evidence when considering the non-sick leave days.  It would be awkward to differentiate the plaintiff’s continuing disability between intermittent sick leave and non‑sick leave days.[16]

41.  We see no error in these reasons.  It is trite that in a common law claim for damages, the court is not bound by sick leave certificates.  They are no more than part of the evidence which has to be evaluated in the light of the totality of the available evidence, including medical evidence before the court.  The judge had regard not only to the physical condition of the plaintiff, but also his psychiatric condition at the time.  The 2^nd defendant does not dispute either the judge’s finding that the plaintiff had to be at the site to supervise the execution of the work[17], or the evidence of the plaintiff’s psychiatric condition which prevented him from attending a construction site.  On this basis the judge is in our view entitled to make the finding he did, which was based on loss of business caused by the plaintiff’s condition resulting from the accident.

42.  In our view, the 2^nd defendant has not identified any palpable error in the judge’s approach or reasoning. The 2^nd defendant complained that the judge failed to give any or any sufficient weight to the fact that (i) the plaintiff’s income was in the form of Sui Ki’s profit, and (ii) Sui Ki continued to operate and generate income in some of the months after the accident.  But the judge was clearly aware of these facts, and had considered them.  The weight to be placed on these factors is a matter for the judge.  There was evidence that the income received by Sui Ki during the period in question was attributable to work that had been completed prior to the accident. 

Disposition and costs

43.  For these reasons, both the appeal and the cross‑appeal are dismissed.

44.  There will be an order nisi that the plaintiff do pay the 2^nd defendant the costs of the appeal and that the 2^nd defendant do pay the plaintiff the costs of the cross‑appeal.

[1] The pleaded monthly loss was $77,006.33 but this was based on the pre‑tax profits of Sui Ki for the financial year 2008/09.  At trial the plaintiff accepted the monthly loss based on post‑tax net profits was $67,962.04: see judgment below at §32.

[2] Judgment below, §§54–57.

[3] Plaintiff’s closing submissions for trial, §59.  There the plaintiff referred to the pre‑trial period from May (instead of July) 2011 onwards.

[4] Plaintiff’s closing submissions for trial, §66.

[5] Rounded down from 16.14, based on Table 7 of the Personal Injuries Tables 2013 with a discount rate of 2.5%.

[6] Plaintiff’s closing submissions for trial, §80.

[7] Judgment below, §§40–44.

[8] Judgment below, §§48–50.

[9] Judgment below, §58.

[10] Judgment below, §§48 & 50.

[11] Judgment below, §58.

[12] Plaintiff’s closing submissions for trial, §65.

[13] Judgment below, §38.

[14] Judgment below, §§45, 51, 58.

[15] Judgment below, §54.

[16] Judgment below, §55.

[17] Judgment below, §48.