KWAN LAI KUEN v. NATIONAL INSURANCE CO. LTD.

1995 P.I. No. 960

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES LIST

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J U D G M E N T

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Introduction

1. This is a claim arising out of a fatal accident. Liability has been admitted by the insurers of the person responsible for the accident, and judgment for damages to be assessed has been entered. The awards for bereavement and special damages have been agreed. What has not been agreed are the pre-trial dependencies, the post-trial dependencies and the award for loss of accumulation of wealth.

The deceased

2. The deceased was 20 years old at the time of his death in March 1994. He was unmarried, and had been living at home with his parents and two of his three elder brothers. He was a badminton player of exceptional ability. He had joined the national junior squad in 1985, and had become a member of the national team in 1992. He had said that he wanted to be a professional badminton coach.

3. He started work when he left college in 1992. His job as a messenger was part-time so that he could concentrate on badminton, and he earned $2,800.00 a month. He did not make any contributions to the family pool, but he would from time to time pay his father "tea" money. However, in January 1994, he changed to a full-time job with the same employers, working for them as a junior clerk earning $6,000.00 a month. He had only been in this job for two months when he died.

The claim under the Fatal Accidents Ordinance (Cap. 22)("the FAO")

4. Damages for bereavement are agreed at the statutory figure of $70,000.00, but the extent of the dependency claims is in dispute. The deceased had two dependents: his mother (the Plaintiff) and his father. The evidence as to the extent of the dependencies came from the deceased's mother alone, and I have scrutinised it with care bearing in mind that the Defendant has no way of challenging it by direct evidence. Having said that, though, I find the facts to be as follows.

5. The deceased's family was of modest means. His father (who was 55 at the time of the deceased's death) had been a public light bus driver for many years. However, in 1990, as a result of decreasing health, and as a result of his elder sons beginning to make financial contributions to the family's upkeep, he began to reduce his workload. By the time of the deceased's death, he was earning about $2,000.00 a month, and had ceased making any significant contributions to the household expenses. However, for a period of 18 months and so between 1995 and 1997, one of the deceased's brothers, Tsang Ching Hong, was not working as a result of psychiatric illness, and during that period the deceased's father contributed about $1,500.00 a month towards the family's upkeep. Indeed, I find that the deceased's father contributed about $1,500.00 a month for the household expenses for most of the time, if not the whole of the time, since the deceased's death.

6. The deceased's mother (who was 52 at the time of the deceased's death) had worked since the deceased had started school. By March 1994, she was working as a cleaner and messenger earning $4,500.00 a month. Her earnings have now increased to $5,500.00 a month. Over the years, she has contributed almost all her earnings to the family's upkeep, retaining only about $500.00 a month for her own personal expenditure.

7. So far as the deceased's three brothers are concerned, they were all self-sufficient by the time that the deceased died. The eldest brother, Tsang Ching Keung, worked as a clerk earning $8,000.00 a month. Before the deceased began to work full-time, Tsang Ching Keung had contributed most of his earnings towards the family's upkeep, but that had reduced to $2,000.00 a month by the time the deceased started to work full-time. The second brother, Tsang Ching Po, had married and was living away from home. However, he continued to make contributions to the household expenses of between $2,000.00-$3,000.00 a month, though he stopped doing so when the deceased began to work full-time. The third brother, Tsang Ching Hong, worked as a clerk. He earned $5,000.00 a month, and contributed $3,000.00 a month towards the family's upkeep. He returned to work earlier this year following his illness, but he has changed his job twice since then.

8. Accordingly, in December 1993, before the deceased began full-time employment, the respective contributions of the family members to the household expenses were:

The Plaintiff	$4,000.00
The deceased's father	-
Tsang Ching Keung	$2,000.00
Tsang Ching Po	$2,500.00	(on average)
Tsang Ching Hong	$3,000.00
	$11,500.00

This tallies with what I find to be the monthly family expenditure at the time. The Plaintiff estimated it at $12,365.00 a month. However, that sum included a figure for miscellaneous expenses of $3,500.00 a month. I think that that was more likely to have been in the region of $2,500.00 a month, which resulted in a monthly family expenditure at the time of about $11,365.00.

9. As for the deceased himself, the Plaintiff claims that he had begun to pay her $4,000.00 a month out of his salary of $6,000.00 as his contribution to the family pool, and that he had begun to deposit $500.00 a month with her for her to keep as his savings. I appreciate that these claims are easy to make and difficult to refute, but I found the Plaintiff an honest witness who was doing her best to recollect things as accurately as she could. Although she may have been mistaken about the contributions which her husband made to the household expenses after December 1993, and although her evidence as to how much Tsang Ching Keung had been contributing prior to December 1993 was not in accordance with her witness statement, I find that she has accurately recalled the amount of the contributions which the deceased made and the savings which he deposited with her in the two months before he died.

10. In reaching that conclusion, I have not overlooked the fact that the deceased could have paid his earnings into one of the three bank accounts he operated, nor the fact that he would only have had $1,500.00 to spend on himself. The former may be explicable on the basis that he was less likely to spend the $500.00 on himself if his mother kept it for him. As for the latter, I recognise that the deceased was spending less on himself than he had been when he was working only part-time, but his badminton activities had become more of a pastime than before.

11. All in all, this was a typical Hong Kong family in which the parents had worked hard to provide for their sons, but had hoped to take things easier when their sons had grown up and were able to contribute to the family's upkeep. I think it probable that, if the deceased had lived and continued to contribute to the household expenses, the deceased's father would have retired by Lunar New Year 1995, but that the deceased's mother would have continued working for another few years, especially as for a while the family would not have had the benefit of any contributions from Tsang Ching Hong.

12. I have no reason to believe that the deceased would not have remained in full-time employment for the foreseeable future, or that he would not have continued to contribute $4,000.00 a month towards the family's upkeep. The question is: for how long would he have continued to make such contributions? It is more likely than not that he would in due course have married, moved out of his parents' home, and had his own family. But I accept that he was a filial son, and I think it more likely than not that he would have continued to pay his parents a sum of money every month for their upkeep for the rest of their lives.

13. As for the amount, I think it probable that he would have continued to pay $4,000.00 a month towards the family's upkeep until he married and left home. Both Ms. Sze Kin for the Plaintiff and Mr. Ashok Sakhrani for the Defendant have addressed me at some length as to what the deceased's net contributions would have amounted to. I do not think that this issue is susceptible to detailed analysis, and doing the best I can on the material before me, I estimate that of the sum of $4,000.00 a sum in the region of $1,500.00 would have been attributable to his own upkeep. Accordingly, the dependencies of his parents during that period would have been $2,500.00 a month in all. I do not propose to identify the proportions in which his parents would have benefited from that sum, though I accept that in the first few years his father would have benefited more whilst his mother continued to work.

14. I shall assume that the deceased would have left home when he was 25. At that stage, he would, I think, have reduced his contributions to, say, $2,500.00 a month (though none of that would have been attributable to his own upkeep), but as the years went by and both inflation and his earnings increased, I believe that by the time he was 30 his contributions would have increased to $3,000.00 a month. That would not be an uncommon pattern in Hong Kong. I should add that the deceased's maternal grandmother lives with the family. I do not think that the deceased's contributions to his parents would have decreased when she died.

15. The deceased died 3 years and 81/2 months ago. Accordingly, the award I make for the pre-trial dependency claim of the deceased's parents is $2,500.00 x 44.5 = $111,250.00.

16. As for the post-trial dependency claim, the ages of the deceased's parents at the time of his death were such that, in my view, 12 years is the appropriate multiplier. The deceased would have attained the age of 25 in July 1998. Accordingly, the award I make for the post-trial dependency claim is:

$2,500.00 x 7.5	=	$18,750.00
$2,500.00 x 60	=	$150,000.00
$3,000.00 x 32	=	$96,000.00
		$264,750.00

The claim under the Law Amendment and Reform (Consolidation) Ordinance (Cap. 23) ("LARCO")

17. Damages are claimed for the benefit of the deceased's estate under LARCO under two heads: special damages, and loss of accumulation of wealth. The special damages are now agreed at $36,945.00.

18. So far as the accumulation of wealth is concerned, I respectfully agree with the view expressed by Kaplan, J. in Re Lau Chuen Fat [1994] 2 HKLR 173 at pp.182 and 184:

"... what the court has to consider is whether, at the date of death by natural causes, there would have been an accumulation of wealth, the realization of which the tortious death has prevented. The mere fact that some savings can be shown at the date of the tortious death is not tantamount to saying that such savings would have been in existence at the date of the natural death ... What the court has to look at is whether or not at the date of death by natural causes the deceased would have achieved an accumulation of wealth. That means that he would have saved it during his working life, not spent it during his retirement and died possessed of it ..."

This approach was adopted by Deputy Judge Jones in Ho Pang Lin v. Ho Shui On [1994] 2 HKLR 313. Having agreed with Kaplan, J.'s approach, he said at p.317:

"I suggest that there are three situations a court will have to consider on the issue of accumulation of wealth. First and most simply, there is the deceased with the obvious savings pattern. This should be applied in quantifying the accumulation and perhaps upgraded for a likely increase, for example when the future departure of children from the household would increase the disposable income.

The second category is where there is no savings pattern and no indication whatsoever from the lifestyle of the deceased whether or not accumulation was likely. This situation would usually be found when the deceased was a young person whose lifestyle had not yet crystallized into a recognizable pattern. This was precisely the position I addressed in Wai Kang Kwan in declining to make an accumulation award to the estate of a young girl who died at 17. Not only did the evidence fail to disclose a savings pattern, but there was no indication that the deceased either was or was not likely to have accumulated wealth. In those circumstances an award could only have been speculative.

The third category of situation is that of the deceased without any identifiable savings pattern, but whose habits and lifestyle indicate a probability that he would accumulate wealth. As always, the court must avoid speculation. However, if thrift, frugality, responsibility and perhaps good employment prospects clearly emerge from the evidence then an award should be made even if the contemporary income is fully utilised, for example on maintaining a young family."

I agree entirely with these remarks.

19. Mr. Sakhrani suggested that the deceased falls into the second category. In my judgment, he falls into the third. He had decided that the time had come for him to take full-time employment, he had decided to set aside part of his earnings as his savings, and he had indicated his responsibilities as a dutiful son by beginning to contribute a significant proportion of his earnings to the family's upkeep. Although he was only a young man when he died, his actions in the last few months of his life demonstrated that a pattern of behaviour was beginning to emerge. The fact that he died as a pillion passenger in the early hours of a normal working day, and that he owned a crash helmet when he did not own a motorcycle, do not persuade me to think otherwise.

20. The difficulty is in identifying what the accumulation of wealth would have been. Deputy Judge Jones said at p.318:

"In this third situation, when the court is satisfied that accumulation would have occurred but can find no evidential basis to quantify it, I suggest that a global award is appropriate. Compensation in this form is frequently awarded in personal injuries cases for loss of earning capacity. Loss of future earnings can usually be calculated mathematically, however loss of earning capacity reflects a Plaintiff's diminished value in the labour market and is not therefore susceptible to calculation. Nonetheless, it is recognised for compensation and will attract a global award.

Similarly, I suggest, should the court treat an award for loss of accumulation of wealth when it is satisfied that there would have been accumulation, but cannot quantify it mathematically. This approach would also comprehend Kaplan J.'s point that savings at retirement would often have been spent, and hence be unavailable to the estate, by the notional date of natural death. This would be one factor to consider in regard to the lifestyle and age of the deceased in reducing the global award or in declining to make one at all."

I agree with these observations as well.

21. Applying these considerations to the circumstances of the deceased, I find it more probable than not that he would have accumulated some wealth by the date of his death from natural causes. Any global award will have, as Deputy Judge Jones noted, an arbitrary element. As he said, the figure should be on the conservative side, and related as far as possible to what is known about the deceased's lifestyle. I bear in mind that the deceased would have had many years ahead of him to accumulate wealth, but I also bear in mind that the wealth which he would have accumulated has to be discounted substantially to reflect the accelerated receipt of the wealth which would have accrued to his estate when he eventually died from natural causes. Doing as best I can, I award the sum of $100,000.00 for loss of accumulation of wealth.

Conclusion

22. The total award, excluding interest, will therefore be as follows:

Interest

23. It is agreed that the award for the post-trial dependency claim does not attract interest, and that the award for the pre-trial dependency claim should attract interest at half the judgment rate over the period from the date of the deceased's death, i.e. 5.84%. In addition, it is agreed that the award for special damages should also attract interest at half the judgment rate over the period from the date of the deceased's death, i.e. 5.84%. I leave it to the parties to calculate the actual interest which these awards should attract. What is not agreed is the interest on the awards for bereavement and for loss of accumulation of wealth.

24. Bereavement. In Ng Chai Man v. Leung Ngan [1983] HKLR 303, the Court of Appeal held that the rate of interest to be awarded in personal injury actions on damages for non-economic loss should be 2% from the date of the issue of the writ. That has been consistently applied to damages under the FAO. However, it has recently been departed from in two cases. In Tsang Choi Yung v. United Christian Hospital [1994] HKLJ 292, an award for bereavement attracted interest at half the judgment rate from the date of death. And in Chu Kang Yee v. Giant Ocean Ltd. [1996] 1 HKC 284, Cheung J. (who is enormously experienced in this field) awarded interest on an award for bereavement at "the full special investment account rate" from the date of death. In doing so, he followed an English decision of Popplewell J., Khan v. Duncan, reported in Kemp & Kemp, "The Quantum of Damage", vol. 1, paras. 16-031/2.

25. The reasoning in that case was that an award for bereavement

"is a sum which is incurred as at the moment of death, that unlike general damages upon which 2% is paid, the figure does not increase as the years go by so that interest is to be reduced for that reason. It seems to me to be more akin to special damages."

Popplewell J. awarded interest at the rate of 11.5%, which was the prevailing rate of interest on sums invested in court on special account. He did so because he saw

"no reason in principle why [the award] should attract only 2% when the defendants had the benefit of that money and no doubt invested it at a much higher figure than that since the date of death".

The Hong Kong equivalent of sums invested in court on special account is the rate of interest payable on suitors' funds. I see the force of Popplewell, J.'s reasoning, and I propose to follow Cheung J. in following the decision of Popplewell, J., on the footing that the decision of the Court of Appeal in Ng Chai Man did not cover the particular form of non-economic loss which an award for bereavement represents. Accordingly, the award for bereavement will attract interest at the prevailing rate of interest payable on suitors' funds from the date of the deceased's death. Again, I leave it to the parties to calculate the actual amount of interest which the award for bereavement should attract.

26. Loss of accumulation of wealth. I repeat what Kaplan, J. said in Lau Chuen Fat:

"... what the court has to consider is whether, at the date of death by natural causes, there would have been an accumulation of wealth, the realization of which the tortious death has prevented."

No case has been referred to me in which an award for loss of accumulation of wealth has attracted interest when the award was calculated in the light of that principle. That is not surprising. Since (a) interest is awarded for the delayed receipt of damages, and (b) an award for loss of accumulation of wealth has to be discounted to reflect its accelerated receipt, no interest can be awarded on such a head of loss.

Costs

27. On the information before me, there is no reason why costs should not follow the event. Accordingly, the order nisi I make as to costs is that the Defendant must pay to the Plaintiff her costs of the action, to be taxed in accordance with the Legal Aid Regulations if not agreed.

(Brian Keith)

Judge of the Court of First Instance