CHU WO HEUNG AND ANOTHER v. HUI LAI WA AND OTHERS

HCPI 952/1996

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJSURIES CASE NO.952 OF 1996

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J U D G M E N T

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1. On 3 August 1994, Yuen Fook Wah ("the Husband") a resident owner of a flat in Lung Fung Garden, Fanling was killed when an awning erected by the 4th defendant with the permission of the 5th defendant collapsed. A metal pipe of this awning penetrated into the chest of the Husband killing him. The awning was a flimsy and dangerous structure. He left behind his wife, Chu Wo Heung ("the Wife") and two children of the marriage, Chin Pang and Chin Yu. The Wife was then aged 29 and the sons aged 2 and 1. The Husband himself was aged 40.

2. After a trial on liability, Seagroatt J held in May 2001 that the 4th and 5th defendant were both liable for the accident and held the 4th defendant 1/3 to blame and the 5th defendant 2/3 to blame.

3. The parties were unable to agree on quantum and therefore the trial on quantum came before this Court with the main oral evidence coming from the testimony of the Wife. The 4th and 5th defendants ("the Defendants") called no oral evidence.

Life before the accident

4. The Husband was not a native of Hong Kong. He was born in China in 1954 and lived there until coming to Hong Kong in 1971 at the age of 18. He then worked in Hong Kong for some 18 years in various jobs with no known success. In 1989 he met the Wife and also started driving professionally as a driver of goods vehicle between China and Hong Kong.

5. He married the Wife on 22 July 1991. Two children were born to the marriage, the first son in 1992 in Dongguan and the second son in 1993 in Hong Kong. They lived in Dongguan and the regular work of the Husband was to drive his goods vehicle from Dongguan to Hong Kong and then drive back from Hong Kong to Dongguan. His major customer was Cheuk Hung which gave him a lot of work.

6. Payment was made to the Husband by both cheques as well as cash. The bank accounts of the Husband which have been studied at the trial disclosed large number of cash transactions, namely deposits in cash and withdrawal in cash. The true nature of these cash transactions are not stated.

7. The Husband did not keep proper record of his business transactions and practically no documentary material was produced to the Court evidencing his business dealings. The only business record which is of value is the log book pages recording the trips done by the Husband for Cheuk Hung for the period from 1991 to 1993.

8. Over the years, the Husband had managed to purchase properties in China and in Hong Kong. A larger Hong Kong property was purchased to replace the small Hong Kong property bought in early 1992 and sold a few months later. The large Hong Kong property was purchased with bank finance and this property is Lung Fung Garden in Sheung Shui where the Husband met with the accident.

9. The death of the Husband was not known to the Wife immediately after it occurred. She was apparently kept ignorant even though she came to Hong Kong to look for him. Eventually she did find out but that was long afterwards in 1996. She also managed to recover the Hong Kong property where she and her children have resided thereafter.

10. The Husband died leaving behind total assets valued at $3.7 million comprising of funds in various banks totally over $2 million and the Sheung Shui property worth $2.4 million less the mortgage of just under $1 million.

11. The substantial assets left behind by the Husband unfortunately attracted also the attention of the Inland Revenue which then using the Asset Betterment Statement method assessed the income of the Husband for 1990 to 1995 and required additional payment of tax of $477,077. The demanded tax was paid and the assessment of the tax liability of the Husband for those years is the source of substantial argument by the Wife that her Husband's income was very large in the years before his death.

Dispute on quantum

12. What was the amount of income which the Husband earned in the period before his death is critical in this case. This is a question which took up most of the time at the hearing. The Wife unfortunately could not help very much probably because she did not know. I formed a reasonable impression of her as a witness. She came from a rural background in China and she was relatively uneducated. On the whole, I accept her evidence subject to reservation specially when it is clear that she was exaggerating her case. It was however unfortunate that I found it necessary to find against her on many aspects of her case which had been pitched unreasonably high by those acting for her.

13. The parties differ on practically all heads of claim. To assist the Court, Mr Yau for the plaintiffs has helpfully divided up the quantum claims into the following 14 Headings:-

(1) Net Earning;

(2) Loss of Dependency of Wife and children;

(3) Pre-Assessment Period;

(4) Total Pre-Assessment Loss of Dependency;

(5) Multiplier for Loss of Dependency;

(6) Total Post-Assessment Loss of Dependency;

(7) Multiplicand for Pre-Assessment Loss of Accumulated Wealth;

(8) Total Pre-Assessment Loss of Accumulated Wealth;

(9) Multiplier for Loss of Accumulated Wealth;

(10) Total Post-Assessment Loss of Accumulated Wealth;

(11) Bereavement;

(12) Funeral Expenses;

(13) Interest on Bereavement; and

(14) Interest on Accrued Pecuniary Loss.

Earnings

14. Of all the heads of claim the quantum of the income or earning of the Husband was the most contentious part of the whole trial. This is not surprising because of its critical importance, the lack of contemporaneous documentation in support and having regard to the fact that the plaintiffs put up three very different versions on earnings.

15. In the original Statement of Claim endorsed on the Writ dated 10 September 1996, it was pleaded in paragraph 9(a) that:

"The plaintiff was a transportation worker and his monthly salary was estimated to be at least HK$20,000 (subject to discovery). The plaintiff cannot be sure of the figure of the deceased's monthly salary unless and until discovery of the wages record against the deceased's employer was made."

16. In the Re-Re-Re-Amended Statement of Claim dated 26 July 1999, paragraph 9(a) pleaded a totally different case thus:

"The deceased owned a plastic toys factory in Dongguan, China and a transportation business in Hong Kong. The deceased also carried on business of currency exchange in China and his monthly income was estimated to be in the region of HK$300,000."

17. In the Statement of Damages dated 21 February 2001, the third version of the plaintiffs is pleaded thus at paragraphs 1, 2 and 6:

"1. .... At that time, he earned his income and profits from several sources. He owned a lorry (registration no. EZ8537) and used it to carry on the business of transporting goods for reward between Hong Kong and Mainland China under the auspices of Kong Hing Transportation Company. In addition, he and his cousin Yuen Lai Yin set up a toy factory in Dongguan, China. Finally, he carried on an unlicensed money exchange operation in China.

2. ... his gross income at the time of the accident is estimated to be in the region of $200,000 per month. It is further estimated that half of that amount was attributable to the last-mentioned source of income.

...

6, For purpose of assessing loss of dependency and other heads of damages herein, only income of the deceased from the first 2 sources mentioned above would be brought into the account. They would be in the total sum of $100,000. No account will be taken as to the earnings the deceased would make out of the money-exchange operation given the rather risky nature of the business."

18. It can be seen therefore that the original claim made in 1996 of income of $20,000 (not less) jumped to $300,000 in 1999 and then went down to $100,000 in 2001 and that position of $100,000 was maintained at the trial. The bulk of that income of $100,000 was said to be derived from the truck driving business. What the Husband was earning from the truck driving business in the period before his death is therefore central to the final outcome of the trial.

19. I first start with the gross income from the trucking business. The only contemporaneous document submitted to the Court by the plaintiffs on the trucking income is the Cheuk Hung Log Book (341a to 341o) evidencing the trips between Hong Kong and China done by the Husband setting out the dates, the trips and the sums earned. I place great weight on that document ("the Log") and it is not suggested that the Log is anything but genuine, contemporaneous and containing a true record of the relevant transactions. The Log shows that in 1991 the Hong Kong to China leg commands $1,200 but the China to Hong Kong leg commands $900 but that in 1993 the respective legs had gone up to $1,400 and $1,000. The Log also shows that on many days during all those months there were either no trip recorded or that there was only a one-way trip recorded. Two questions were raised arising from this, namely did the Husband work for others apart from Cheuk Hung and whether the Husband was also regularly doing more than one round trip in one day.

20. So far as daily round trip is concerned, it seems to be clear from the nature of the work and the distances covered that it was practically physically impossible to do more than one round trip per day. This goods vehicle transportation makes sense because each truck had to be fully loaded with goods. It takes time to go to a place in Hong Kong and in Dongguan to loan a full cargo and it takes time to unload a cargo (specially if there is not just one pick up or drop off point). It is not realistic to suggest no matter how hard the Husband was prepared to work that it was possible to do more than one round trip per day. In fact it seems to me that the nature of the work was such that it was not possible to do 30 round trips (60 single trips) a month. There must be many days when either there was no work or that there was just enough work for only one single trip and the Husband had to drive back with no cargo or stay the night and return next day with cargo. A study of the Log shows a range of total single trips in one month, from a low of 9 in May 1993 to a high of 34 in October 1991. I accept that Cheuk Hung was not the exclusive customer of the Husband and that whenever there was no work from Cheuk Hung, he worked for others in respect of which there was no record submitted to the Court. Doing the best I can, I find as a fact that the Husband was doing 20 round trips a month or 40 single trips per month at the average rate of $1,100 per trip. I find therefore as a fact that from his truck business his gross income per month was $44,000.

21. Having established a gross income per month from the trucking business the next task is to find out what was the net income after deducting all the trucking expenses, such as fuel, insurance, maintenance, tolls, fees and charges. I have practically nothing to go on coming from the plaintiffs. Mr Yu has referred me to the Report of Annual Survey of Transport and Related Services where the profit margin ranged from 32% (1998) to 49% (1991). It seems to me that this general survey covers truck drivers driving locally in Hong Kong as opposed to the long distance drivers who command by the nature and difficulty of their work a much higher profit margin. Doing the best I can in the circumstances, I find as a fact that the monthly net income of the Husband was $26,400 on the basis that the profit margin was 60%.

22. Mr Yau argued that I should adopt the IRD Asset Betterment Method and that I should not try to work out the actual trucking income of the Husband and the other income of the Husband. I disagree. Firstly because it has to be clearly established by evidence as to what was the income of the Husband and if he had more than one line of income then what was the income from each line. Secondly because having regard to the concession made by the plaintiffs that the money exchange income is to be ignored then an important component of the IRD Asset Betterment Method is undermined. Thirdly because I agree with Mr Yu that the IRD Asset Betterment Method is fundamentally flawed.

23. The foundation of the IRD Asset Betterment Method is that over a period of years the Husband had built up assets of certain value. The assumption is that there was no asset built up prior to that date. There was simply no evidence placed before the Court as to what asset the Husband had in 1989 at the start of the period in question. In fact having regard to the fact that the Husband had been working in Hong Kong for some 18 years prior to 1989, it seems to me somewhat perverse to assume that there was no asset built up at all over those years. I therefore reject the IRD Asset Betterment Method as a means to identify the net income of the Husband or the loss of dependency of his family.

24. It seems to me that in this case, the Court ought to be careful in assessing what was the net income of the Husband and what was the loss of dependency because of several factors. Firstly because of the lack of contemporaneous documents. Secondly because of the lack of independent third party evidence. Thirdly because of the allegation that the Husband was involved in three lines of work, each bringing in income. Fourthly because most of the bank documentation shows that cash was extensively used both to deposit money and to withdraw money but cash has no character which can be related to the true nature of the transaction. The circulation of cash tells nothing. Finally the built up of assets can give a deceiving picture unless one is able to identify the way the asset was built up and in this case, it is almost impossible because of the paucity of data.

25. I therefore do not regard it as being reasonable to indulge in speculating on what was the large income of the Husband from his allegedly fast built up of assets. The Husband was said to have three lines of business and apart from the trucking business on which there is some foundation of certainty, there is very little hard evidence on the other two lines of business.

26. In relation to the money exchange business there was originally in 1996 no allegation that there was such business or that it brought in income. Then there was the subsequent allegation that this business brought in very large income and the final abandonment of any income being derived from money exchange business. The large cash movements in the bank accounts of the Husband might well suggest that in one way or another he was involved in the illegal business of money exchange or of other nature. Afterall long distance travel such as being undertaken on a regular basis by the Husband can give rise to illegal and profitable activity such as smuggling. But these activities could not possibly form a proper basis for claims of loss of proper earnings or loss of dependency.

27. The toy business that the Husband was supposed to have invested into is a murky business with most unsatisfactory evidence. I do not accept the evidence of the Wife on this. There was simply no basis for the Court to find that the Husband had derived any part of his income prior to his death from the toy business.

28. I therefore come to the conclusion in relation to Heading (1) that the Husband was engaged in profitable trucking business with a net income of $26,400 per month. I realise of course that this is a much higher figure than $12,350 submitted by Mr Yu and that it is even higher than the $20,000 figure stated in the Statement of Claim in 1996. But I must have regard to the reality of the boom years in 1991 to 1993. $12,000 would be regarded as a rather low income and certainly wholly inadequate to support a family such as that of the Husband. Here we have someone who had to work long hours with some danger and travelling long distances and quite often even sleeping away from one's home. In all the circumstances, I do not regard the sum I have found of $26,400 to be unreasonable. It is right and I so find.

Loss of dependency

29. The only dependants in this case are the Wife and the two children. I do not regard any other person as being a dependent although some of them such as the mother-in-law might have benefited in the past indirectly through the Wife from the largess of the Husband.

30. The evidence that the Wife and the children came to live in Hong Kong was not challenged and I have no doubt that had the Husband lived, the same thing would have happened, namely that the Wife and the children would move to Hong Kong where they would receive a better education and where the standard living would have been much higher. This would of course entail a much larger contribution from the Husband towards his family.

31. It was argued by Mr Yu in his final submission that the Pre-Assessment award for loss of dependency should be a low $60,000. It was argued on the basis that hardly any loss was suffered because the Wife admitted in evidence that one male friend then another male friend supported her and the children. The Wife was extremely uncomfortable when she gave her evidence about her relationship with these male friends and I can well understand her embarrassment and I accept her evidence on this aspect of the case. What it added up to for me was that she was willing to accept the generosity of boy-friends who had no obligation to provide for her or her family. A young attractive lady cannot be blamed upon loss of a husband and his financial support to accept the help of friends even male friends. Gifts can be received whether in the form of jewellery or a cheque but there are nevertheless gifts and not money earned or legally entitled to. No account should be taken of these private gifts in assessing the Pre-Assessment Loss of Dependency. The position is clearly stated in McGregor on Damages, 16th edition at para.1625. I need to quote only the short passage there cited from Lord Reid's speech in Parry v. Cleaver:

"... be revolting to the ordinary man's sense of justice, and therefore contrary to public policy, that the sufferer should have his damages reduced so that he would gain nothing from the benevolence of his friends or relations or of the public at large, and that the only gainer would be the wrongdoer."

The receipt of a gift before the accident does not reduce the obligation of the Husband to provide for the Wife and the children and I see no reason why after his death, the receipt of a gift by the Wife reduces her loss of dependency.

32. Mr Yu referred to the case of Tegel v. Madden [1995] NSWLR 591 but that is in respect of an application for on leave to appeal on a question turning on facts arising out of a local statute. The facts of our case is very different and I am clearly of the judgment that in this case no account should be taken of the fact that the Wife had received gifts from boy friends.

33. What then is the loss of dependency. Having two young children with the necessity that they have to be educated and properly looked after I have no doubt that a very large proportion of the Husband's net income of $26,400 would have to go the family. I assess the loss of dependency under Heading (2) at $16,000 per month which is a sum sufficient for the Wife and children and out of the total income, there will be enough left for the Husband's own considerable expenses plus a small saving.

34. So far as Pre-Assessment Period [Heading (3)] is concerned, the period in question is from 3 August 1994 (date of accident) to 18 July 2003 (date of Judgment), a period of eight years and 11.5 months or 107.5 months.

35. The total Pre-Assessment Loss of Dependency under Heading (4) is therefore $16,000 times 107.5 months or $1,720,000. This sum is of course much lower than the plaintiffs' final submission figure of $4.3 million but much higher than the Defendants' final submission figure of $60,000.

36. I now turn to the future. The first question which arises relating to the future is the multiplier for loss of dependency [Heading (5)]. The final pleaded figure of the plaintiffs is 13 and at the trial, leave was sought to restore the original pleaded figure of 15. I grant leave but in my judgment, having regard to all the circumstances, a proper multiplier should be 14.

37. Having regard to this multiplied of 14, the Total Post-Assessment Loss of Dependency of the Wife and children under Heading (6) is therefore $16,000 times (14 x 12 less 107.5) or $16,000 times 60.5, namely $968,000. This is to be contrasted with the plaintiffs' final submission figure of $3.95 million and the Defendants' final submission figure of $500,000.

Loss of accumulation of wealth

38. Having regard to the fact that the Husband travelled between China and Hong Kong on a daily basis, a fairly substantial amount would have to be spent by the Husband on himself. I do not regard him as an extravagant person. I believe that he would want to support his family properly as well as trying to save as much as he could from his income. The past history does suggest that he was capable of saving. I would asses the monthly sum he would save at $3,000 [Heading (7)], thereby leaving for his own spending and other expenses a monthly sum of $7,400.

39. The Total Pre-Assessment Loss of Accumulated Wealth [Heading (8)] is therefore $3,000 times 107.5 months or $322,500.

40. Having regard to my finding of multiplier of 14 under Heading (5), the multiplier for Loss of Accumulated Wealth under Heading (9) should also be 14 and it follows therefore that the Total Post-Assessment Loss of Accumulated Wealth [Heading (10)] is $3,000 times (168 less 107.5) or $3,000 times 60.5, namely $181,500.

41. Bereavement under Heading (11) is agreed at $70,000. Funeral expenses under Heading (12) is agreed at $185,000. Interest on Bereavement under Heading (13) is non controversial at 2% per annum.

42. So far as interests on accrued pecuniary loss [Heading (14) is concerned, I hold that interest rate of 4% p.a. should apply.

Conclusion

43. The conclusion is that the final sums I award are:-

Total Pre-Assessment Loss of Dependency	$1,720,000
Total Post-Assessment Loss of Dependency	$968,000
Total Pre-Assessment Loss of Accumulated Wealth	$322,500
Total Post-Assessment Loss of Accumulated Wealth	$181,500
Bereavement	$70,000
Funeral Expenses	$185,000
Interest on Accrued Pecuniary Loss	4% p.a.

44. I also make an order nisi for the costs of the Action in favour of the plaintiffs.

45. I further direct that the parties be at liberty to apply to ensure that the order to be drawn up will fairly reflect what is decided in this judgment.