TSANG MEI YING AND ANOTHER v. LAM PAK CHIU AND ANOTHER

HCPI 544/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. PI-544 OF 1998

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J U D G M E N T

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1. The Plaintiff brings this claim on behalf of herself, her children and her parents-in-law as dependants and on behalf of the estate of her late husband, who was tragically killed as a result of a fall from defective bamboo scaffolding in September 1995. Liability has been agreed, and approved by the Court, as to 85% on the part of the employers.

2. Certain heads of damage have been agreed. The bereavement award is fixed by law at $70,000. The funeral expenses have been agreed at $74,120.

Principles in relation to assessment of dependency

3. The starting point is to calculate the value of the dependency as at the date of death, usually as a percentage of the income of the deceased. It is then revised in the light of the income which he would have received at the date of trial had he survived. The best means of calculating the dependency is to set out item by item where possible, the value annually (or monthly) of the payments made for the benefit of the family as a whole subject to any deduction to represent the benefit to the deceased. It is a check on the reasonableness of such figures to compare the total with the net annual or monthly income of the deceased at the date of his death. The calculations are easier to make where the evidence clearly shows the deceased making a regular payment to his wife for running the family and the home, and also paying for certain fixed items e.g. rent. The reasonableness and the accuracy of such calculations often depend upon hard evidence, in the form of records, and oral evidence e.g. from the widow. Sometimes the picture can be more complex such as where the wife earns and contributes to the household, unless there is clear evidence which allows that to be treated in isolation so as to determine real dependency. Many items of dependency are common to the family whether there are children or not, and, if there are, when they leave home and the picture of dependency in other respects, changes. The common items remain part of the dependency picture. Examples of these are, rent, utilities (though these may vary according to exceptional use) and other fixed payments. Moreover as some dependents cease to be such, the dependency of those remaining in the household often increases. The modern practice is to deduct a percentage from the net income of the deceased to represent what he would have spent on himself. These percentages tend to be used "unless there is striking evidence to make the conventional figure inappropriate because there is no departure from the principle that each case must be decided on its own facts" (per O'Connor L.J. in Harris v. Empress Motors 1984 1 W.L.R. 212 (at p. 216-217).

4. The flexibility of the approach and the need to have regard to the facts of the case and the evidence adduced in relation to dependency was illustrated by Beldam, L.J. in Owen v. Martin and Another (April 15th 1992 - Court of Appeal) 1992 P.I.Q.R. 151

"No doubt there will be many claims under the Fatal Accidents Acts where parties agree that a conventional proportion is appropriate. I do not, of course, suggest that in arriving at the extent of the financial provision made by the deceased the court is bound to base its assessment precisely on the percentage of net earnings disclosed by sums spent for the benefit of dependents but the court is not entitled to cast aside altogether evidence which shows the proportion of the deceased's income actually spent for the dependents' benefit during his lifetime and to substitute a figure however conventional or appropriate in other cases."

It is not appropriate to calculate dependency on a simple equal mathematical division amongst all dependants of the sum given by a husband to his wife for the upkeep of the family home, its outgoings, and the general necessities of life. This is a wholly artificial approach and is a practice to be deprecated. It is not conducive to a calculation which is fair to either party.

Loss of Dependency of immediate family

5. At the time of his death Mr. To Shing Chiu was 42 years of age. He was a painter and had enjoyed a good consistent working record. There is no evidence to the contrary. His wife described him as a hardworking responsible man who had no wasteful vices. Again there is nothing suggested to the contrary.

6. His average net monthly wage was $16,708. Year on year since 1995 his wage would have increased. Mr. Paul Lam, for the Plaintiff contends that the annual increase would have been 8%. For the Defendants Mr. Samuel Chan argues that it should be an average of 6%. Taking into account the local economic factors over the last year or so I think 6% per annum is more probable. For the three years or so prior to trial the average would be in the region of $18,000 monthly. At the date of trial it would be about $20,000.

7. At the time of his death Madam Tsang recalls he was giving her $8,000 per month, paid the rent and utilities which came to about $1,632 monthly and gave his parents $2,000 monthly. He retained about $5,000 monthly for his own use. However his widow says, and I accept this unreservedly, that he bought meals for the family when they went out, occasional cinema tickets and presents for his children. He also bought clothes on occasions for his family. It is difficult to quantify this but a modest figure would be $1,000 monthly paid out of the sum he retained.

8. One complicating factor is that within two months of his death his daughter was employed and contributing to the household expenses though, as I find, only to the extent of a sum to cover the cost of feeding her. Initially she contributed $1,000 monthly and when her monthly wage increased to $8,000 monthly, her contribution went up to $3,000 monthly which exceeds her cost of keep. That increase no doubt resulted from the financial difficulties, experienced by the family since the father's death. I am satisfied that there would have been some increase in her contribution to the family budget with her increase in wage but not to the extent of it being trebled. In view of her age I do not think that there would have been any change in the overall dependency. Bearing in mind this frugal careful, but considerate father and husband, the sum would have remained the same. I think the quality of life in material terms would have improved.

9. The appropriate deduction from the sum he gave to his wife to represent the cost of keeping him must be a modest one in keeping with the fact that for his working week - usually 6 days - he bought his own meals except dinner. Taking the average payment to his wife over the three years period between death and trial as being $8,500, the deduction in respect of his own living expenses would have been $2,500 leaving a net figure of $6,000. The rent and utilities would have increased to an average of about $1,750. A further $1,000 monthly from his own pocket out of what he retained would make the monthly dependency for the immediate family $8,750 per month.

10. His monthly contribution to his parents would, I think, have remained at $2,000 until his daughter became more established i.e after about three years (i.e. by the time of trial).

11. The multiplier appropriate to a 42 year old man in this trade is in my view 13. For the three and half years prior to trial, at $8,750 per month, the dependency is 8,750 x 12 x 31/2 = $367,500, for his immediate family. The period of dependency of his parents must of course be significantly less - The multiplier is 7. To date of trial, i.e. 31/2 years, the figure is $2,000 x 12 x 3.5 = $84,000.

Post-trial dependency

12. It is always difficult to calculate to what extent dependency decreases as children become more self-sufficient and independent economically. I think that the dependency would have continued at the same rate for at least a further 8 years. His son, now 10 years would then be 18; his daughter 27 years. As the dependency of the daughter reduced, possibly being extinguished altogether by the time she was 23, that of his son and wife would have increased. After that 8 years cut off which is arbitrary in itself, since parents always contribute significantly to their children's material advancement, the dependency would have reduced to the extent that the sum of money he gave to his wife for maintaining the home would have reflected possibly a 40% (approximately) benefit for himself some of which he would have put in savings i.e. the sum spent on the home, keep, etc., would have been reduced.

13. For the eight years post-trial multiplier, the overall dependency would be approximately 2/3 rds of his income of $20,000 (immediate pre-trial figure) less say $3,000 to represent his own keep.

14. Taking an approximate monthly figure of $13,500, and deducting $3,000 to represent his keep at home leaving $10,500 monthly for the family including his parents, the proper figure at the time of trial would be $2,250 monthly for the parents. For them the multiplier is 3.5 from trial representing for them a future dependency figure of $94,500.

15. For his family I have to calculate the dependency over the 8 years period but after 3.5 years the monthly sum for his parents has to be re-allocated. The 3.5 years period for the family at a net monthly dependency of $8,250 produces 8,250 x 12 x 3.5 = $346,500.

16. After that 3.5 years period i.e. for the balance of 4.5 years, how should the now free sum of $2,250 monthly be considered or allocated? I do not think that this would be wholly redistributed as extra dependency or wholly expenditure on himself but the majority of it would be saved and added to the sums which he would have been saving already and therefore it falls to be considered under the loss of accumulation of wealth. Accordingly the mathematics is straightforward and is a further $8,250 x 12 x 4.5 = $445,500.

17. The only remaining period which falls to be considered is for the balance of the multiplier i.e. 13 - (3.5 + 8) = 1.5. For this last period I have to exclude the daughter (27 years plus) and possibly the son (18 years plus). Again I find this an artificial approach and highly unsatisfactory. The son may have developed into a candidate for tertiary education - some children are notoriously slow starters - but it is essentially a speculative area and I think it would be safer to regard the son as only marginally a dependent though of course living at home probably. It would be much safer, and I think more realistic to regard the money hitherto used by the young children as being applied to further savings for the most part.

18. The monthly dependency figure of $8,250 used hitherto should now be reduced to $5,000 leaving $3,250, rounded down to say $3,000, to become increased savings. The dependency sum for the last period should therefore be $5,000 x 12 x 1.5 = $90,000.

19. In the Plaintiffs Schedule of Damage, calculations of the monthly dependency have been based upon an equal division of the rent and utilities and of the mother's contribution to the monthly budget, as well as the deceased's, with an arbitrary "loading" of the children's share by $500 each. I think this is a wholly artificial approach. The son clearly had a greater share of the available money spent upon him. This is true dependency. The only realistic approach is to calculate the actual sum out of the deceased's earnings which represents the total dependency and make adjustments to reflect that sum which properly represents, as nearly as can be estimated, his own benefit - the whole exercise is essentially an estimate based on common sense or conventional wisdom. There must then be adjustments or a cut off as the picture of family dependency changes. This is the approach I have adopted because it more accurately reflects a true household economy and the way parents view and treat their children, rather than the mathematical division.

Loss of Accumulation of Wealth

20. Although the deceased had not accumulated any savings by the time of his death he was clearly in a position to have done so but for some unknown factors. He "retained" for his own use, subject to extra expenditure which a father breadwinner would naturally tend to spend on his family, about $4,000. It is probable that his earnings enabled his wife to accumulate savings from her own earnings. She told me she had accumulated $30,000 at the time of his death.

21. Since he was a frugal man and not given to selfish indulgence, I think he would have begun to accumulate some savings, probably of the order of $1,000 per month at or about the time of trial. This would have increased by the time his parents were no longer alive by about $2,000 per month. When his son was about 18 those savings would have increased further.

22. Applying the realities, translated into a calculation which is inevitably a degree arbitrary, I think the following is fair:

$1,000 x 12 x 4 =	48,000
then $3,000 x 12 x 4 =	144,000
then $6,000 x 12 x 2 =	144,000
	336,000

23. Should this figure be discounted to any extent by any exceptional vicissitudes (i.e. other than the normal risks and uncertainties of life and the acceleration of receipt which are already reflected in the multipliers) such as a particularly harsh economic climate? I think the figure could reasonably be rounded down to $320,000 to allow for a little over one year without savings in view of the current economic state.

24. I realise that this sum is significantly higher than contended for by Mr. Lam on behalf of the Plaintiff. However his figure is in my view far too modest given the deceased's earnings, his way of life, and the available earnings which would have found their way into some account to demonstrate a prudent and concerned breadwinner. I am sure his wife would have been an influence in that direction if he needed one.

25. I have considered the principles adopted and reviewed by Keith, J. in Kwan Lai Kuen v. National Insurance Co. Ltd 1998 1 H.K.C. at pp. 103-105.

The Plaintiff's Loss of Earnings

26. This loss is clearly recoverable in principle. It flows directly from the death of her husband and the negligence which caused it. She was unarguably "within the defined relationship to the deceased".

27. Mr. Chan has contended that she should not have given up her job to look after her children and should have arranged alternative child-minders. Her mother used to look after the children when she was at work. Following the death of her husband, his mother suffered depression and was unable to cope. In fact it appears the deceased's sister moved in to look after the mother when the other son moved out to get married. I am entirely satisfied that it was reasonable, indeed natural, for the widow to give up her job to look after her children when tragedy stuck this family.

28. She says that she has tried to find part-time work which would fit in with her son's timetable and I accept this. She has been unsuccessful. I am sure that given the significant change in their financial circumstances she would want to work, and will work at soon as the circumstances permit this.

29. Her own estimate is that she will be able to do a full-time job by the time her son is 14 years old i.e. in 4 years time. However getting such a job which matches her previous earnings may not be so easy. She will have been out of employment for about 7 years. The current economic climatic will take sometime for recovery. It may be years before the previous level of employment is attained. I think she is somewhat optimistic but she is a capable and determined lady. Realistically I should proceed on the basis that she will regain full-time employment with the commensurate wage-level, in 5 years time at the earliest (Multiplier of 4).

30. Her pre-trial loss of earnings is $6,000 monthly (as an approximate average over the pre-trial 42 months) producing $6,000 x 42 = $252,000.

31. Her post-trial income figure is approximately $6,500 monthly. The future loss is therefore 6,500 x 12 x 4 = $312,000.

Summary

Interest

32. Interest on items A, D(1) and F will be at half rates from the date of the accident. The parties are to agree this.

33. Interest on the bereavement award should be at the rate payable on suitor funds in line with the decision of Keith, J. in Kwan Lai Kuen v. National Insurance Co. Ltd 1998 HKC 98 (see also Khan v. Duncan (unreported March 9th 1989).

34. There will be judgment for the Plaintiff for $2,087,277 with interest, and costs to be taxed if not agreed. There will also be an order for Legal Aid taxation of the Plaintiff's costs.