WONG CHI HO JACKY v. POON YUK SHAN

HCPI 910/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO.910 OF 2002

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D E C I S I O N

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1. This case raises the not uncommon question of whether the costs of a successful plaintiff in a personal injuries action commenced in the High Court should be taxed on the High Court scale or the District Court scale, when the amount recovered is within the jurisdictional limit of the District Court.

2. I shall first describe the salient facts.

3. The plaintiff was employed as a local courier. He was injured in a traffic accident on 11 August 2000. He lost consciousness momentarily after the accident. He also suffered injuries which included fractured clavicle of the right shoulder and soft tissue injury to the left knee. He was hospitalized for nine days and given sick leave for some 23.5 months.

4. Fortunately the plaintiff recovered reasonably well. In August 2002 he found employment as a mechanic in a garage. When he was seen by a neurologist in July 2002, he was diagnosed to have suffered mild post-concussional syndrome, with no significant improvement expected. The neurologist was of the view that he could have returned to gainful employment by August 2001, i.e. one year after the accident. Loss of earning capacity was estimated at 1%.

5. The plaintiff was also seen by a specialist in orthopaedics in August 2002 who observed that the injuries to the right clavicle and the left knee healed satisfactorily. The specialist opined that he could return to his pre-injury employment or as a mechanic, but did not say as from what date. He assessed the plaintiff's loss of earning capacity at 6%.

6. On 27 September 2002, the Employees' Compensation (Ordinary Assessment) Board ("the Board") assessed the plaintiff's loss of earning capacity at 7% and the period of absence at 23.5 months. The assessment for loss of earning capacity was subsequently revised to 4% after a review on 24 January 2003 but the period of absence was confirmed.

7. In the meantime, the plaintiff started Employees' Compensation proceedings in the District Court on 3 May 2001. Those proceedings were eventually compromised by a Consent Order made on 18 August 2003. The amount of employees' compensation was agreed at $293,873.00 inclusive of interest, of which $230,844.30 had already been paid to the plaintiff as advance payment.

8. The plaintiff commenced the present action in the Court of First Instance for common law damages on 11 October 2002. In the Schedule of Damages, the total amount claimed was some $1.2 million plus interest, excluding employees' compensation payment. The gross amount claimed was revised subsequently to $1.3 million plus interest.

9. The defendant did not dispute liability and judgment on liability was entered by consent on 28 November 2002. Eventually, the amount of damages was agreed at $541,055 gross. As noted above, the employees' compensation payment was agreed at $293,873.00, so the net amount recovered by the plaintiff in this action was $247,182.00. At the time when this action was commenced in October 2002, the jurisdictional limit of the District Court was $600,000.

10. The parties were not able to agree whether the plaintiff's costs of this action should be taxed on the High Court scale or the District Court scale. On 7 April 2004, Master Jeffries ordered that the plaintiff's costs be taxed on the High Court scale. From that order the defendant appealed to this court.

The relevant principle to be applied

11. Although at the hearing I was told by Mr Victor Gidwani, counsel appearing for the defendant, that there was no dispute as to the relevant applicable principle, which it was said was to be found in Lai Ki v. B+B Construction Co. Ltd [2003] 3 HKLRD 192 and Yuen Yiu Kwong v. Chan Kwok Chuen [2003] 2 HKLRD 70, it turned out that the parties did not fully agree on the matter.

12. It was common ground that the test to be applied was that stated in Lai Ki. In that case Seagroatt J (who, of course, was the judge in charge of the Personal Injuries List at the time) confirmed and adopted the test as stated by Glyn-Jones J in Hopkins v. Rees & Kirby Ltd [1959] 1 WLR 740 at 742 :

"Putting myself as far as I can, in the position of the plaintiff at the time when he issued that writ, am I satisfied that it was then obvious that this was a county court action, or was it an action which, when tried by one judge rather than another, might have resulted in an award exceeding [the jurisdictional limit] excluding any reduction for contributory negligence?" (emphasis added)

Seagroatt J then observed, at 197H that :

"The acid test therefore has been, ignoring all questions of contributory negligence, has the plaintiff a reasonable prospect of recovering a sum of money in excess of the [District] Court jurisdiction?" (emphasis added)

13. However, the parties were not in agreement on the treatment of the amount of employees' compensation at the time when the plaintiff commenced proceedings in this court.

14. The position of the defendant, as advanced by Mr Gidwani, was that the periodical payment already received by the plaintiff should be taken into account. In the present case, that was $121,950.00 as at 4 October 2002, a week before the present writ was issued. Alternatively, Mr Gidwani submitted that even if no account was taken of the employees' compensation, the gross amount recovered was still within the District Court jurisdiction.

15. On the other hand, Mr Clement of the plaintiff's solicitors suggested that the periodical payment already received by the plaintiff was only the "high point". He submitted that there were, in the circumstances of this case, three alternatives but without indicating which was the correct one :

(a) The "high point" being the amount of periodical payment already paid at the time of commencement of the High Court action.

(b) An "intermediate point", being HK$99,000, which arose in this case in the following way. Following the first assessment by the Board on 27 September 2002, the defendant contended that the assessment by the Board was excessive and that the loss of earning capacity should be reduced to 4% (which the defendant was eventually successful in reducing) while the period of sick leave should be reduced to six months (which it failed to reduce). The defendant claimed that on that basis the plaintiff had been overpaid, and HK$99,000 was the correct amount if the plaintiff had to make a refund.

(c) The "low point", being zero.

The authorities

16. In Lai Ki, Seagroatt J considered that the starting point for the consideration of the question in issue was section 32 of the District Court Ordinance, which in so far as material provided as follows :

"(1) The Court has jurisdiction to hear and determine any action founded on contract, quasi-contract or tort where the amount of the plaintiff's claim does not exceed $600,000.

(2) In this section ... the amount of the plaintiff's claim means the amount the plaintiff claims after taking into account -

(a)	any set-off or any debt or demand the defendant claims or may recover from the plaintiff;
(b)	any compensation, as defined in section 3 of the Employees' Compensation Ordinance (Cap. 282), paid to the plaintiff under that Ordinance; and
(c)	any contributory negligence,

that the plaintiff admits in his statement of claim."

17. Seagroatt J then observed, at 195J-196B, as follows :

"The operative sections for consideration have two specific potential results. The first, employees' compensation which has been paid, is quite clear. It means that in evaluating the plaintiff's claim for the purpose of deciding in which forum to commence proceedings, the amount of that compensation actually paid must be deducted. That is obviously good sense quite apart from the legislative provision. Since credit has to be given for such compensation received in claims for damages for personal injuries (or fatal accident claims), it is proper to look at the amount of damages recoverable, net of such compensation already received, for the purpose of commencing proceedings in the appropriate forum." (emphasis added)

18. And later on, at 196E-H :

"[Section 32] is not straightforwardly drafted however. The expression 'that the plaintiff admits in his statement of claim' governs all three matters to be taken into account. However, in relation to (b), the employees' compensation payment, what really operates is that the compensation has been paid, not whether the plaintiff admits the payment in the statement of claim. My construction of this provision is that account must be taken of the fact of payment of this compensation. It would be wholly artificial and destructive of the true intent of the section if the plaintiff were to able to argue that although he had received the sum, he had not admitted it in his statement of claim and therefore it should not be taken into account for the purpose of determining the amount of the claim and therefore the appropriate forum." (original emphasis)

19. It would seem, therefore, that the judge considered that only actual payment already paid would count.

20. In Yuen Yiu Kwong, which was decided before Lai Ki but was not referred to in the latter case, the facts were that the amount of employees' compensation had already been known about a month before the commencement of the High Court proceedings, although it is not clear from the report whether the amount had been paid. Recorder Chan SC said, at 75E-G :

"It may well be the case that if at the time when proceedings for damages is issued, the plaintiff does not know the amount of employees' compensation he may be entitled, it would be proper to ignore the possibility of any award under the Employees' Compensation Ordinance. However, in the present case, the amount of compensation under the Employees' Compensation Ordinance was known approximately one month before the issue of the writ. In the circumstances, I am of the view that in selecting the forum, the plaintiff, or his legal advisers, should take into account that the amount awarded would be subject to employee's [sic] compensation deduction." (emphasis added)

21. It is therefore possible to argue that the Yuen Yiu Kwong decision went further than Lai Ki if Recorder Chan SC considered that where the amount of compensation had been ascertained, even if not paid, it should still be taken into account.

22. However, in my judgment, it is not necessary to resolve this potential inconsistency for the purpose of disposing of this appeal. This is because section 32(2) requires "any compensation, as defined in section 3 of the Employees' Compensation Ordinance" to be taken into account. Section 3 of the Employees' Compensation Ordinance defines "compensation" in the following terms :

"'compensation' means any of the following -

(a) compensation payable under sections 6, 7, 8, 9, 10 ..."

while section 10 in turn provides that :

"(1) Where temporary incapacity whether total or partial results from the injury, the compensation shall be the periodical payments hereinafter mentioned ..."

23. There is no dispute in the instant case that the amount of $121,950 was periodical payment paid pursuant to section 10. Hence that amount was "compensation ... paid to the plaintiff under that Ordinance" within the meaning of section 32(2)(b). Accordingly, in considering the value of the plaintiff's claim at the time when this action was commenced, account must be taken of that sum.

Whether reasonable prospect of recovering more than $600,000

24. I turn to consider whether at the time the writ in this action was issued on 11 October 2002, there was any reasonable prospect of the plaintiff recovering more than $600,000, taking into account the periodical payment of $121,950 already received.

25. Mr Gidwani submitted, correctly in my view, that one must not just look at what was claimed in the Schedule of Damages; afterall the claim could be hopelessly inflated or wholly erroneous. He submitted that all the evidence, including the medical evidence, was already available at that time to enable the plaintiff to arrive at a reasonable valuation of his claim, and eventually the case was settled on the basis of the same evidence. The net settlement sum was nearly 60% below the jurisdictional limit of the District Court, and was not even close to the High Court jurisdiction. He also criticised the plaintiff for not having filed any evidence to demonstrate that at the relevant time he and his legal advisers considered that there was reasonably prospect of obtaining an award in excess of the District Court jurisdictional limit.

26. Mr Clement, while accepting that the Court must not just stop at the claim as framed in the Schedule of Damages, submitted that one cannot look at the eventual settlement amount. In my view that must be right since the relevant time for consideration was the time when the writ was issued. Furthermore, there might be all kinds of reasons why a plaintiff might wish to accept a sum lower, even much lower, than what his claim might be considered to be worth in order to settle the claim.

27. Mr Clement also reminded me the difficulty facing a plaintiff and his legal advisers : if the action were commenced in the District Court, the plaintiff would be forfeiting possible damages in excess of the jurisdictional limit of that court. It was therefore reasonable, in case of any doubt, to commence the action in the High Court so as not to compromise the plaintiff's position. In my view he is right but that is no more than part of the exercise in determining whether the decision to commence the action in the High Court was a reasonable one having regard to the circumstances prevailing at the time.

28. I am not persuade that I should take into account the lack of evidence from the plaintiff's side. The test, as I understand it, is an objective one, i.e. whether it would be obvious to a reasonable plaintiff or his legal adviser that the case was a District Court rather than High Court case. The subjective intent of the plaintiff and his legal advisers would not normally be relevant.

29. The plaintiff's claim as pleaded in the original Schedule of Damages was as follows :

PSLA	$ 250,000
Special Damages	$ 182,774
Pre-trial loss of earnings	$ 454,650
Disadvantage in labour market	$ 312,000
	$ 1,199,424

30. I was taken through the figures by both sides. There was no dispute that the claim for PSLA was reasonable. Mr Gidwani took issue with the other items. In relation to Special Damages, he complained that the expenses claimed for private medical care (some $88,300.00) were excessive and would not have been recoverable, and the loss of the plaintiff's motorcycle ($35,000) was not supported by evidence.

31. In relation to Pre-trial loss of earnings, Mr Gidwani submitted that the claim was inflated since it was based on a pre-trial monthly salary of $13,000 which was not supported by evidence. He submitted that the correct figure to use should be $11,500 which was the figure adopted by the parties in settlement negotiations. He further submitted that the plaintiff should have known that the period of sick leave was far too long, bearing in mind that the neurologist opined that the plaintiff could have returned to gainful employment in August 2001.

32. Lastly, he submitted that the claim for Disadvantage in the labour market was excessive.

33. Mr Clement's response to the above was, in short, that the claims advanced were not unreasonable on the basis of the available evidence. In particular, he pointed out that the plaintiff was given sick leave for 23.5 months and this period was accepted by the Board. The neurologist's assessment was from the neurological point of view only and the orthopaedics specialist did not comment on when the plaintiff could return to work. In relation to the claim for Disadvantage in labour market, he reminded me that the claim was made on the basis that the plaintiff's salary would have matched his pre-trial salary, otherwise there would be a claim for loss of future earnings which would be potentially higher.

34. I have carefully considered the submissions of both sides. While I agree with Mr Gidwani that the claim as advanced was probably overly optimistic, nevertheless I am unable to say that this is a case where it would have been obvious to a reasonable person in the plaintiff's position, properly advised, that the claim would be bound to be within the District Court jurisdictional limit after taking into account the amount of periodical payment already received. This seems to me to be a borderline case in which a reasonable lawyer could properly advise the plaintiff that he may be able to recover an award in excess of $600,000.00 limit even after taking into account the sum of $121,950.00.

35. I am therefore not satisfied that it was obvious to a reasonable plaintiff or his legal adviser that this case should have been commenced in the District Court rather than the High Court.

36. Accordingly, the appeal must be dismissed, save that I would vary the costs order made by the learned Master so that the plaintiff shall have the costs of the application before the Master to be taxed (rather than in any event) on the High Court scale. I make a costs order nisi that the plaintiff shall have his costs of this appeal, to be taxed on the High Court scale.