CHRISTOPHER GORDON YOUNG v. LEE CHU

CACV 131/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 131 OF 2003

(ON APPEAL FROM HCPI 1484/2000)

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JUDGMENT

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Hon Le Pichon JA:

1. I agree that the Defendant's appeal should be dismissed and the Plaintiff's appeal by way of Respondent's notice should be allowed to the extent that the judge's discount of 20% for residual earning capacity be set aside for the reasons given by Yuen JA. I also agree with the costs order nisi she proposes.

Hon Yuen JA:

2. This is an appeal by the Defendant and in effect a cross-appeal by the Plaintiff from a judgment of Deputy High Court Judge Wright in a personal injuries action. The judge found the Defendant negligent but also found the Plaintiff contributorily negligent.

3. Neither party is now contesting liability but each has appealed against the judge's apportionment of liability and the quantification of damages. Instead of dealing separately with the parties' respective appeals, it would be more convenient to deal with the issues raised.

Facts

4. The action arose from an accident which occurred on Tai Tam Road at about 6 o'clock on a Saturday morning in March 2000. The Plaintiff (then 52 years of age) was on the return leg of an early morning ride on a powerful motorcycle. He was riding along Tai Tam Road from the direction of Shek O towards the direction of Stanley.

5. The Defendant was driving a motorcar on his way to the Tai Tam Country Park for his routine morning exercises. He was travelling in the same direction as the Plaintiff on Tai Tam Road.

6. At the material location, Tai Tam Road is a dual carriage-way but there was no other traffic along the road when the accident occurred. The Plaintiff and the Defendant were the only witnesses to the accident. Although the Defendant's wife was in the car, she did not give evidence at the trial.

7. The accident occurred where Tai Tam Road had straightened out after a series of S-bends. As the parties approached, Tai Tam Road widened considerably into what the judge called a "4-way intersection", with the dual-carriageway Tai Tam Reservoir Road to the left and an approach road to the Tai Tam Country Park to the right. About 15 metres down the Country Park approach road, there was a drop-arm barrier. Along this distance of 15 metres, there was an area where cars could be parked (albeit at risk of collecting a ticket) after which people could proceed on foot into the Country Park.

8. As the parties approached the "4-way intersection", there was a "hazard warning area" i.e. an area marked with hatched white lines ("the hatched area") at the centre of the road to the right of the lane on which they were travelling. What came after this hatched area was an area with no markings, of about one car's length ("the unhatched area"), which then became a pocket for vehicles in the opposite direction to stop before turning off to their right to the Reservoir Road.

The accident

9. The collision occurred in the unhatched area, when the Plaintiff's motorcycle was overtaking the Defendant's car on the right and the Defendant was turning right - across the path of the motorcycle - towards the Country Park approach road. The Plaintiff's motorcycle collided with the driver's door of the Defendant's car, the Plaintiff was thrown off and sustained serious injuries.

10. It is perhaps ironic that the accident occurred at a location which both parties knew well.

Plaintiff's case

11. The Plaintiff accepted at trial that he had started his overtaking manoeuvre in a hatched area. He had however considered it safe to do so because he did not expect the Defendant's car to turn right, as he knew that vehicular access to the Country Park approach road was restricted. He said he had not noticed any signals indicating that the Defendant's car would be turning right.

12. Although he had noticed that the Defendant's car had been braking intermittently (but was not turning left down the Reservoir Road), he thought it was just slowing down before proceeding. After he had started overtaking, the Defendant's car picked up speed but he thought he would finish the manoeuvre as his motorcycle was powerful enough to do so.

Defendant's case

13. As for the Defendant, he admitted that he had not looked in the rear-view mirror or the wing mirror before turning right to the Country Park approach road. He considered it had not been necessary as he was aware that there was a hatched area to his right and he did not expect any vehicles to be overtaking on a hatched area. The Road Users Code provides that motorists should not overtake at a junction, or where it would involve driving over an area marked with hatched white lines.

14. The Defendant gave inconsistent evidence in respect of signalling to turn right, which evidence will be discussed later in this judgment.

Judge's finding of Defendant's negligence

15. The trial judge found the Defendant was negligent in not having checked for vehicles behind him before turning right at a "4-way intersection". If he had done so, he would have noticed the Plaintiff's motorcycle with its headlights switched on.

16. Further the trial judge found (after considering inconsistencies in the Defendant's evidence) that the Defendant was negligent in not having signalled.

Judge's finding of Plaintiff's negligence

17. The trial judge also found that the Plaintiff was negligent in attempting to overtake when and where he did. He found "it was as naive of the Plaintiff to say that he was entitled to disregard the possibility of the Defendant turning right because the area into which he would turn is a road with restricted access as it is for the Defendant to say that there was no duty on him to check his rear view mirror because of the presence of the hatched area".

18. The trial judge did not find the Plaintiff negligent in accelerating to try to finish his overtaking manoeuvre after the Defendant had picked up speed.

Extent of Contributory Negligence

19. The judge found the Defendant was 2/3 to blame for the accident and the Plaintiff, 1/3. The Defendant has appealed from that apportionment. The Plaintiff had in his Respondent's Notice asserted that there should have been no finding of contributory negligence. No cross-appeal was however filed. In his skeleton submissions Mr Graham, counsel for the Plaintiff, has now indicated that liability is not contested on appeal but that the parties both contest the finding of one-third contributory negligence.

Apportionment of liability

20. The guiding principle in an appeal from a judge's apportionment of liability was set out in the judgment of Sir Thomas Eichelbaum NPJ in Wishing Long Hong v Wong Kit Chun (2001) 4 HKCFAR 289. It was held that an apportionment of liability was a discretionary exercise, and in the absence of an error of law, an appellate court was justified in interfering only in exceptional circumstances, such as where there was a misapprehension of a material fact or where the result was outside the limits reasonably available to the trial judge.

21. Mr Leong SC, leading counsel for the Defendant, submitted first that the Plaintiff should have been more culpable than the Defendant because he (the Defendant) had, in fact, signalled that he was turning right; and secondly, that even if the Defendant had failed to signal, the parties were equally to blame.

22. First, it was submitted that the judge should have found that the Defendant had in fact signalled. I am not prepared to interfere with the trial judge's finding of fact. It is well-established that the finding of facts is the function of the trial judge and an appellate court should not disturb his findings unless the appellant demonstrates that there was no evidence to support the finding, or that the finding was contrary to incontrovertible evidence which the trial judge had overlooked. It was not enough for the appellant to show that there was little evidence to support the trial judge's finding or that it was contrary to the weight of the evidence (Tang Kwok Ming v Daxprofit Scaffolding Ltd [1999] 1 HKC 657).

23. In the present case, there was evidence before the trial judge on which he could find that the Defendant had not in fact signalled. Mr Leong SC has criticized the reasons given by the trial judge for this finding. I agree that some of the reasons given may be of little weight. But in my view, the trial judge was entitled to find that the Defendant had not signalled as the Defendant had given 3 different versions of the time when he switched on the indicator. Mr Leong SC submitted that the inconsistent versions may have been due to a lapse of memory. Nevertheless, the trial judge, having seen and heard the witness, was entitled to find that by reason of the inconsistencies, the Defendant had failed to satisfy him that he had signalled. In any event, even if the Defendant had signalled, given his evidence that he turned on the indicator just as he was turning or in only a matter of seconds before turning (transcript p.725L - 726C), the warning would in any event have been too late.

24. Mr Leong SC then submitted that even if the Defendant had not signalled, he should have been held only equally to blame and should not have been found to be 2/3 to blame. Mr Leong SC referred to an English case decided in 1964 (Holdack v Bullock Brothers (Electrical) Ltd (1964) 108 Sol Jo 861) where the apportionment of liability was similar to the present case and suggested that the scooter driver was less to blame on the facts of that case than in the present case because there was no hatched area and therefore no breach of the Road Users Code. He therefore submitted that the Plaintiff should have been more to blame here. Mr Leong SC also referred to a decision of this court (Rogers VP, Le Pichon and Yuen JJA) in Cheung Wai-kuen v Wong Man-she CACV 415/2002 (10 July 2003) which upheld a trial judge's award of 40% contributory negligence for a motorcyclist who was overtaking on a straight road. Mr Leong SC submitted that since the Plaintiff in the present case had started overtaking in a hatched area, he should have been held more to blame.

25. With respect to Mr Leong SC, there is little value in citing cases for the apportionment of liability on the individual facts of those cases. An apportionment of liability is not an arithmetical calculation with one absolute answer. As with all exercises of discretion, an appellate court should only interfere, in the absence of mistake of law or misapprehension of fact, where the judge's apportionment is "outside the generous ambit within which a reasonable disagreement is possible". No doubt cases like those cited by Mr Leong SC to this court could have been referred to the trial judge as they might have been of assistance to the judge when he was deciding apportionment on the evidence that he had seen and heard. However, the trial judge must be left to decide on the facts of each case what the proper apportionment should be, and short of the exceptional circumstances referred to by the Court of Final Appeal in Wishing Long Hong, it would not be right for this court to interfere.

26. Mr Leong SC also submitted, on the basis of the passage in the trial judge's judgment quoted at paragraph 17 above, that if the trial judge found that it was "as" naive for the Plaintiff to say that he was entitled to disregard the possibility of the Defendant turning right because the area into which he would turn is a road with restricted access "as it is" for the Defendant to say that there was no duty on him to check his rear view mirror because of the presence of the hatched area, then they should have been held equally blameworthy.

27. With respect, the trial judge was not, in that passage, weighing up the respective degrees of liability of the Plaintiff and the Defendant. He was rejecting the Plaintiff's allegation that he was not contributorily negligent at all because he could not have anticipated anyone turning into the approach road to the Country Park.

28. In any event, there is not a significant difference in terms of apportionment of liability between 50% and 66.66 % and an appellate court which does not have the "feel" of the case as the trial judge did should not tinker with his decision.

29. I do not see any grounds which suggest that the trial judge had misapprehended any material facts or which show that the result he arrived at in his apportionment of liability was outside the limits reasonably available to him. Accordingly I think this court should not interfere with his exercise of discretion and the Defendant's appeal against the apportionment of liability should be dismissed.

30. I then come to the submissions made on behalf of the Plaintiff. In my view, the trial judge was entitled to find on the evidence that the Plaintiff was a third to blame for the accident. The Plaintiff was overtaking at a place which was inherently risky when there was other traffic on the road. Although Mr Graham criticised the trial judge's use of the term "4-way intersection", it is clear from paragraph 7 of the judgment that the trial judge had a clear idea of the location and he was using this term as a form of shorthand only. The fact was that this was not a simple straight stretch of road. The approach road on the right was the only convenient place where people entering the Country Park could leave their cars without obstructing Tai Tam Road.

31. Mr Graham submitted that the Plaintiff's failure to anticipate that the Defendant would turn right had not been pleaded. It is correct that it had not been pleaded specifically, but no objection was taken at trial and the Plaintiff had ample opportunity to deal with the point in his evidence.

32. As for the Plaintiff's failure to anticipate that the Defendant would turn right, the Defendant's car had been slowing down, with its brakelights showing intermittently, actions which were indicative that he was preparing to undertake a manoeuvre of some kind (in contradistinction to Davidson v Garner, the case cited by Mr Graham).

33. The Plaintiff said in cross-examination that he realized that the Defendant was not turning left. That is obvious because if he had expected the Defendant to turn left down the Reservoir Road, he (the Plaintiff) would not have needed to overtake. With the Defendant turning off to the left, the Plaintiff could simply have carried on with no traffic in front of him.

34. To the right was the access road for the Country Park. Since the Defendant had been braking intermittently, indicating an intention to undertake a manoeuvre of some kind, and since he was not turning left down the Reservoir Road, it should reasonably have occurred to the Plaintiff that the Defendant might be intending to turn right towards the entrance to the Country Park.

35. Mr Graham referred to the trial judge's use of the word "possibility" in the passage quoted in paragraph 17 above and suggested that the Plaintiff should not have been held liable for merely failing to anticipate a "mere possibility". However the trial judge did not say that any possibility, however minute or however remote, would render the Plaintiff negligent. It is clear from the trial judge's reference to "the reasonably prudent motorist" that the judge was saying that the Plaintiff should reasonably have foreseen that if he chose to overtake at that place, he might hurt himself; and although (as the trial judge found) the Defendant did not signal, it is trite law that in one's reckonings, one must take into account the possibility of others being careless.

36. Accordingly, I am not persuaded that this court should interfere with the trial judge's apportionment of liability and the Plaintiff's appeal (albeit by way of Respondent's Notice) should also be dismissed.

Quantum

37. I then come to the quantum of damages. The trial judge found that the Plaintiff lost consciousness briefly. He was taken to hospital where he was found to have suffered compression fractures of the vertebrae from T4 to T7; posterior dislocation of the left shoulder, with tearing of the muscles of the rotator cuff; a fracture of the sternum; contusion of the lung; left trochanteric bursa injury; abrasions; laceration of the external auditory canal of the right ear with temporary loss of hearing; and sub-conjunctival haemorrhage of the right eye. It was subsequently established that he had also suffered a hyperextension injury of the cervical spine causing two fractures in the C7 vertebra.

Fracture of Sternum

38. As a result, the Plaintiff has a permanent deformity in the sternum.

Dislocation of Left shoulder

39. The Plaintiff's left shoulder at first gave him the most cause for concern, but there was some improvement. There was no residual pain but he remains unable to lift or rotate his left arm as fully as before the accident.

Fractures of cervical vertebra

40. The two C7 fractures, together with pre-existing cervical spondylosis, has caused restricted mobility and he may have to have fusion surgery at a later stage.

41. The Defendant has submitted on appeal that the trial judge was wrong to have given "too much weight" to Dr Shroff's report on this injury and to have taken this injury into account when assessing the award for pain and suffering and loss of amenities. Mr Leong SC has based this submission on the grounds that Dr Shroff's report was not in the bundle of medical reports (although it was in another bundle before the trial judge) and the Plaintiff had "deleted" this injury from his revised statement of damages. Indeed he submitted on appeal that the Plaintiff had "abandoned his complaints about fractures of the cervical spine".

42. In my judgment, the trial judge was right to have taken this injury into account. Whilst it is correct that Dr Shroff's report was not in the bundle of medical reports, Dr Shroff's report had been referred to in the report dated 29 December 2001 of Dr Lau, the Plaintiff's medical witness. Dr Lau reported the Plaintiff's complaints of occasional pain and crepitation at the base of the neck. He himself measured the Plaintiff's range of neck movement and observed "some restriction in the mobility of his neck". Having gone through the report of Dr Chiang the Defendant's medical expert, Dr Lau stated his opinion that

"as [the Plaintiff] was asymptomatic with his neck before the accident, the accident should be regarded as the cause of the persistent pain in his neck. If not for the accident, it is certainly possible for him to have remained asymptomatic with his neck in the years to come".

There was therefore clear medical evidence before the trial judge, not from Dr Shroff, but from Dr Lau on the injuries to the neck.

43. As for the Defendant's submission based on the deletion in the revised statement of damages, the statement had originally included as paragraph 3(l) "two fractures of C7 indicative of hyperextension of cervical spine (whiplash injury). This injury is expected to cause the Plaintiff pain, suffering and loss of mobility in the future". In the revised statement, the above passage was deleted and in its place there were substituted the sentence "the Plaintiff also now suffers from loss of mobility and chronic mild pain in his neck".

44. However, it is misreading the revised statement of damages to suggest that the Plaintiff had abandoned his claim to damages for the fractures to the C7 vertebra. The injuries sustained by the Plaintiff as a result of the accident were listed in paragraph 13(4) of the Amended Statement of Claim. Sub-paragraph (ix) referred to "hyperextension of cervical spine (neck) resulting in 2 fractures in the C7 vertebrae". This was never deleted. The "deletion" in the revised statement of damages relied on by the Defendant was from a list under the general heading "the Plaintiff was diagnosed to have suffered the following impairment and/or disabilities which would require prolonged treatment". In my view, it was right for the Plaintiff to have kept the fractures in the List of Injuries in the Amended Statement of Claim and to have deleted them from the List of Disabilities, replacing then with a description of the consequential impairment and/or disability.

45. Accordingly, I do not think the trial judge should be criticized for including the cervical injuries in his assessment of pain and suffering and loss of amenities.

Thoracic spine

46. The main area of the Plaintiff's continued pain and discomfort is in the region of the thoracic spine. It was agreed between the medical experts that the compression fractures of four thoracic vertebrae resulted in a kyphotic (abnormal curving) deformity of the thoracic spine. The medical opinion accepted by the trial judge was that "the deformity and the abnormal stress to the region have led to muscle fatigue of the long spinal muscles and therefore the severe pain in the interscapular region". The judge found (and it is not challenged now on appeal) that this muscular pain is due to the deformity resulting from the fractures of the thoracic vertebrae.

47. Although the pain is muscular and not skeletal, it is not as if it is any less painful, although the pain may be alleviated by massage, acupuncture, manipulation and other non-operative means. The pain started 2 months after the accident. It has been described in the various medical reports as "persistent and severe", "significant", "disturbing" and "deep stabbing". The medical opinion was that the condition would become static in one and a half to two years after the accident. By the time of the trial, three years had elapsed and the trial judge accepted that there was no improvement in the condition of the Plaintiff's back and neck. I will return to the effect of this injury in a later section of this judgment.

Pain and suffering and loss of amenities

48. As far as pain and suffering and the loss of amenities is concerned, both parties agreed at trial that the Plaintiff's injuries were in the "serious injury" category although there was disagreement as to where they fell within that category. It was not challenged at trial that the injuries have meant that the Plaintiff could no longer pursue various sports activities which he used to enjoy, including sailing and other water sports and motor-cycling. The trial judge said it was "almost self-evident that the Plaintiff suffers from a material reduction in his enjoyment of life" and that there was an "overall real impairment".

49. The trial judge found that the injuries fell toward the upper end and awarded $500,000, about 8% below the upper end of $540,000. It has been submitted on behalf of the Defendant on appeal that there should be a reduction in the award as the cervical injuries should have been excluded. As discussed in paragraphs 40-45 above, I do not think the cervical injuries should have been excluded, but even if they were, I do not think that would have led to any substantial reduction in the award, as the trial judge had found that "much of this [the reduction in his enjoyment of life] would be attributable to his shoulder injury alone".

Loss of earnings

- Background

50. I come then to the claim for loss of earnings. By way of background, the Plaintiff was a barrister, but for a number of years prior to the accident, he had been spending time pursuing a number of other interests. In 1994, he spent time writing a novel which has not been published. In 1995, he tried (apparently unsuccessfully) to salvage a computer business in which he had invested. In 1996, he spent time travelling to Australia for personal reasons. In 1997 to 2000, he helped his wife start a new business in Hong Kong. As events transpired, there has since been a breakdown in the relationship and it has not been suggested that the business has any relevance to his claim.

51. As a result, one can see no consistent pattern of earnings. (His earnings have been helpfully set out in a table at paragraph 73 of the trial judge's judgment).

52. Apart from the difficulty this posed for a court trying to determine the loss of earnings, there was also a dispute between the parties as to the reliability of the earnings alleged for the year ended 31.3.2000, which will be discussed later in this judgment.

- Winding up practice

53. The Plaintiff wound up his practice in August 2000, 5 months after the accident. This was accepted by the trial judge as being a reasonable decision, as even the Defendant's medical expert accepted that an absence of 1 1/2 years from work was reasonable. At trial, the Plaintiff's case was that his only earnings were as a cartoonist for which he received $15,000 a month (or $180,000 a year).

54. The trial judge accepted that the Plaintiff's injuries would affect his work basically because the Plaintiff cannot sit or stand for any stretch of time without significant pain in his thoracic region. The only way to alleviate the pain would be to change his position (by sitting instead of standing or vice versa) or by lying on his back. Obviously, this would pose a difficulty not only in court work, but also even for work done in an office. If severe pain occurs frequently and unpredictably, it would be difficult for the Plaintiff to concentrate on work requiring sustained mental effort.

55. Most importantly, the trial judge's finding of fact, having seen and heard the Plaintiff, was that "realistically, the Plaintiff is unable to return to his former occupation as a barrister".

The judge's approach - discounting damages by residual earning capacity

56. Having said that however, the trial judge held that the Plaintiff had not discharged the onus of satisfying him to the "full extent" of the damages claimed. The trial judge said at paragraph 66:

"Conversely, I am not persuaded that he is precluded entirely from earning some form of income aside from that from his present activities as a cartoonist. It is not a question of whether the defendant has discharged any onus regarding the plaintiff's failure to mitigate his damages but rather that the plaintiff has not discharged the onus to satisfy me to the full extent of the damages he says he has suffered. He testified that he simply had not tried to return to practice. He had thought about requalifying as a solicitor but had dropped the idea, having convinced himself that the job is demanding and that he would be unable to do more than an articled clerk or junior solicitor. Even if he were correct in that assessment I see no reason why other fields of suitable employment should not be open to him. His evidence is that he has no formal training in business, nor any outside the field of his profession; he has limited capital, upon which he is living, which he does not wish to risk by investing in a business depending upon his own skills".

57. In that passage, the trial judge mentioned 3 aspects of a residual earning capacity - the first was a return to "practice", by which he must have meant the Plaintiff's practice as a barrister. The second was requalifying as a solicitor. The third was "other fields of suitable employment".

58. In paragraph 68, the trial judge carried on to discount the Plaintiff's loss of earnings by a "residual earning capacity" of 20%. He said:

"The Plaintiff is presently earning some $15,000 a month as a freelance cartoonist. As indicated earlier, he had similar income before the collision so I ignore it for the purpose of the claim. It does provide some indication, however, that he has a potential earning capacity. Doing the best I am able, and recognising the arbitrariness of the figure, I determine that the Plaintiff has a residual earning capacity of 20% - whether he achieves that by taking the occasional brief, by drawing more cartoons or by taking up employment in an entirely new field. ..."

Tang Shau-tsan

59. The trial judge derived support for this approach of a "residual earning capacity" from a case called Tang Shau-tsan v Wealthy Construction Co Ltd CACV 58/2000. In that case, a carpenter had been injured and claimed that he could no longer work as a carpenter. The trial judge however found that he could have carried on working as a carpenter if he wanted to, but that whilst he could still carry reasonable loads, he had limited ability to lift heavy loads. The medical witnesses gave opinions that the Plaintiff had a loss of earning capacity of 10%. On the basis that that was a realistic assessment of his loss in the labour market, the judge gave an award of 10% in respect of future loss of earnings.

60. On appeal, this court (Mayo VP, Rogers and Woo JJA) held that statements of opinion by medical experts in relation to earning capacity were inadmissible, but that the trial judge had not relied on the medical witnesses' estimates but had made an estimate of his own. The judge had before him material that the plaintiff was not able to return to the full extent of his work as a carpenter by reason of his difficulties in lifting heavy loads. Rogers JA held:

"In my view, the approach of trying to assess the likelihood of the plaintiff finding employment with his continuing disability is a reasonable approach if quantified on the likely number of extra days per month for which the plaintiff would not find employment. ... [B]oth a fully able carpenter and a carpenter in the position of the plaintiff would probably receive the same daily wage although the plaintiff should be given credit for the likelihood that he would find it more difficult to obtain work".

61. That case was therefore simply an illustration of damages for handicap in the labour market, sometimes known as a Smith v Manchester Corporation award [1974] 17 KIR 1. The parties before us indicated that the trial judge had not asked for submissions on whether a Smith v Manchester Corporation award was suitable in the present case or on the authority relied upon.

62. With respect to the trial judge, this approach is appropriate where the plaintiff has or should have returned to his previous work, but by reason of his injury, would reasonably be expected to be less competitive than before. In the present case however, the trial judge had accepted that the Plaintiff could not realistically return to practice as a barrister. Unlike a carpenter who might get less work because contractors would not take him on for those jobs involving heavy loads, it is difficult to see how the Plaintiff could have taken "the occasional brief" when severe pain striking unpredictably would make concentrated mental effort difficult.

63. The trial judge had found that the Plaintiff had acted reasonably in winding-up his practice as even the Defendant's medical witness took the view that he could not have worked for 1 1/2 years after the accident. The winding-up of practice was in mitigation of loss.

64. In my judgment, if it were to be suggested that the Plaintiff should (without any improvement in his condition) thereafter set up chambers again in the hope of picking up the "occasional brief" which required little mental effort, then the burden must be on the Defendant to show the viability of returning to practice and maintaining chambers in the hope of getting this type of "occasional brief". There was no evidence that this sort of work was available such that the Plaintiff should have taken the risk of re-establishing his practice.

65. As for requalifying as a solicitor, the trial judge had not rejected the Plaintiff's evidence that he did not think he would be able to find suitable work even if he re-qualified. If it were to be suggested that the Plaintiff could be a litigation solicitor, then he would have the same difficulties working in court as the trial judge found he would have as a barrister. If it were to be suggested that the Plaintiff should train for a completely different type of work as a solicitor, then the question must arise whether he would be as competitive in the labour market as young graduates without his physical disabilities. Although the trial judge did remark that the Plaintiff seemed to have "convinced himself" that he would not be up to it, neither did the trial judge reject the Plaintiff's doubts, and it would be noted that when he referred to the 20% residual earning capacity in paragraph 68 of the judgment, re-qualifying as a solicitor was not referred to as a specific option.

66. As for the suggestion that he could draw more cartoons, there was no evidence at all that there was any demand, either from the South China Morning Post for more cartoons, or from any other persons.

67. I then come to the trial judge's view that the Plaintiff had a residual earning capacity "by taking up employment in an entirely new field", without there having been any evidence on what those fields might be and what earnings he could make from them. Of course the onus is on the Plaintiff to prove loss, but that is proved by his inability to resume his pre-accident occupation or engage in similar types of work.

68. If the Defendant were to suggest that the Plaintiff could have taken on work in an entirely new field (say, teaching English), then I would have thought the onus would be on the Defendant to cross-examine the Plaintiff with evidence on the availability of the work, his qualifications for it, and what earnings he could have made from it. The Plaintiff would then be able to meet the factual allegation made against him that he had failed to mitigate his loss by taking up that work, and the trial judge would then be able to decide on the evidence whether the Plaintiff had acted reasonably or otherwise in failing to take up that work in mitigation of his loss. But I think it would be far too onerous on a plaintiff to have to prove a negative - that there was no other employment in any field (whether it suited his age or social standing or personal circumstances) that he could have obtained - failing which his damages would be discounted by an arbitrary residual earning capacity.

69. Further, it is difficult to understand how the earnings from an entirely new field could be assessed by reference to a percentage of earnings from the Plaintiff's practice. This is particularly so since the Plaintiff's earnings from his practice were so controversial. It is not as if the trial judge was simply using shorthand for an absolute figure he had in mind.

70. For the reasons above, I consider that the discount of 20% for residual earning capacity should be set aside.

Quantum of earnings

71. I then come to the loss of earnings. For the period from the accident to trial, the trial judge took the average gross fee income for the 3 years prior to the accident ($1,327,764). This had been arrived at by taking an average of the gross fee income for (1) the year ended 31.3.1998, of $1,081,130 (2) the year ended 31.3.1999, of $1,066,320 and (3) the year ended 31.3.2000, of $1,689,265.

72. The Defendant has submitted on appeal that this was an incorrect approach as the gross fee for the last year had not been prepared on a receipts basis as in previous years and included a sizeable fee charged for a matrimonial case for which his fees had yet to be taxed under legal aid regulations.

73. In my view, the Plaintiff cannot be criticized for not having prepared his accounts on the receipts basis as he was winding-up his practice. In any event, the Defendant cannot have it both ways. In the absence of any finding by the trial judge that the Plaintiff would not have been able to receive any fees for which he had issued fee notes, the use of the "receipts" basis for calculating gross fees for the previous years already meant that the Plaintiff has claimed a lesser sum in damages than if the Plaintiff were to have used a "receivables" basis.

74. As for the submission based on the fees for the matrimonial case which had not been taxed under legal aid regulations, Mr Leong SC did not suggest that the trial judge should have undertaken a taxation of the Plaintiff's fees. Nor did he suggest that the Plaintiff had deliberately deferred the taxation exercise. That being the case, it is in my judgment speculative for the Defendant to suggest that the Plaintiff may have part of his fees reduced in legal aid taxation. The fact is the Plaintiff is not suing the Defendant for those fees. He is simply proving the level of earnings that he was capable of making in his practice.

75. As noted above, the Plaintiff had pursued a number of other interests in the 7 years before the accident but his evidence was that he would have returned to full-time practice in 2002, when he expected his wife's business to get properly underway. The trial judge was however not convinced that the drop in earnings was due entirely to the Plaintiff's having devoted time to those other interests. As the trial judge put it, the Plaintiff readily absented himself from practice for extended periods to pursue other interests and therefore an allowance had to be made for this tendency.

76. The trial judge assessed the Plaintiff's post-trial average annual gross fee income to be $1,750,000. The judge assumed that, but for the accident, the Plaintiff would continue to practise as a barrister for some 9¹/² years from the date of trial until he was at least 65 years old. Although accepting that there would be an increase in the Plaintiff's receipts as he re-established himself at the Bar, the judge noted that the Plaintiff's "best-ever year for gross fees was 1993/4 and even then he only just broke $2,000,000.00". The judge continued (at paragraph 87 of his judgment):-

"Taking that into account and based upon the material and considerations to which I referred when considering pre-trial loss of income, I assess the plaintiff's average gross fee income to be $1,750,000 per annum."

77. The pre-trial "considerations" which the trial judge had in mind appear to have included the impact on the Plaintiff's livelihood as a barrister of his history of "substantial absences from full time practice". But the judge explicitly stated (at paragraph 88 of his judgment):

"In arriving at this figure [$1,750,000] I have excluded from consideration the possibility of the plaintiff devoting less than his full attention to his practice. I regard the proper place to allow for such a contingency as being in the determination of the multiplier."

78. For the multiplier, the judge thought that 8 constituted "a realistic basic claim" or starting point. He then reduced the figure of 8 to 7 because he believed that there was "a real prospect" of the Plaintiff "once again straying from full time practice to pursue other interests".

79. The Plaintiff has submitted that the trial judge's approach on post-trial income is flawed due to "double discounting". On the one hand, the judge apparently took into account the Plaintiff's protracted absence from full-time practice when arriving at an annual gross fee income of $1,750,000. On the other hand, the judge reduced the multiplier for the same reason.

80. I do not think that there has been double discounting. The trial judge took the view that the Plaintiff's previous absences from practice had at least 2 implications. First, it would take time for the Plaintiff to re-establish himself fully in practice. Second, the Court could not ignore the possibility of the Plaintiff taking similar long leaves from practice in the future. The judge took into account the first factor in deriving the multiplicand of $1,750,000. He expressly left the second implication for the multiplier. In my judgment, the trial judge was entitled to do so.

81. The Defendant invited this court to further reduce the multiplier from 7 to 5. But, by the same token, I do not see any basis to characterise the judge's choice of a multiplier of 7 as unreasonable.

82. Finally, Mr. Graham questioned the trial judge's deduction of average annual expenses of $800,000 from the Plaintiff's pre- and post-trial annual gross fee incomes in order to arrive at net income figures. The judge based the deduction on expenses of around that sum contained in the Plaintiff's tax returns filed with the Inland Revenue. The Plaintiff says that the judge ought to have accepted his oral evidence to the effect that the actual monthly expenses necessarily incurred were about $17,000 only.

83. In my view the trial judge was justified to give weight to the Plaintiff's tax returns when estimating the Plaintiff's average monthly expenses. In light of what had been declared by the Plaintiff as deductible in his annual tax returns, it was entirely understandable that the judge should regard the significantly reduced amount ventured by the Plaintiff at trial as "fanciful" (see paragraph 85 of the judgment). That was a finding of fact entirely within the trial judge's function.

Order

84. The Defendant's appeal is accordingly dismissed. The Plaintiff's appeal by way of Respondent's Notice is allowed to the extent that the judge's discount of 20% for residual earning capacity is set aside.

85. Since the Plaintiff has substantially succeeded, I would make an order nisi that the costs of the appeal be to the Plaintiff to be taxed if not agreed.

Hon Reyes J:

86. I have read the judgment of Yuen JA in draft. I agree with her conclusions. I, too, would dismiss the appeal and allow the respondent's notice by cross-appeal in part as explained in Yuen JA's judgment. I confine myself to commenting on the Plaintiff's criticisms in his respondent's notice of:-

(1) the judge's finding that the Plaintiff had a residual earning capacity of 20%; and,

(2) the deduction of $800,000 as expenses from the Plaintiff's annual gross income in the calculation of pre- and post-trial loss of earnings.

I. Background

87. I gratefully adopt the summary of the facts found in Yuen JA's judgment.

II. Discussion

A. Residual earning capacity

88. The judge thought that the Plaintiff, despite his injury, could still be gainfully employed in work additional to drawing daily cartoons for the South China Morning Post. This is evident from Judgment §66:-

"Conversely, I am not persuaded that he is precluded entirely from earning some form of income aside from that from his present activities as a cartoonist. It is not a question of whether the defendant has discharged any onus regarding the plaintiff's failure to mitigate his damages but rather that the plaintiff has not discharged the onus to satisfy me to the full extent of the damages he says he has suffered. He testified that he simply had not tried to return to practice. He had thought about qualifying as a solicitor but had dropped the idea, having convinced himself that the job is demanding and that he would be unable to do more than an articled clerk or junior solicitor. Even if he were correct in that assessment I see no reason why other fields of suitable employment should not be open to him. His evidence is that he has no formal training in business, nor any outside the field of his profession; he has limited capital, upon which he is living, which he does not wish to risk by investing in a business dependent upon his own skills."

89. Although the judge does not explicitly state why he thought that the Plaintiff could engage in "other fields of suitable employment," he was entitled to form the view which he did. In Biogen Inc. v. Medeva Plc [1997] RPC 1, Lord Hoffmann observed (at 45):-

"The need for appellate caution in reversing the trial judge's evaluation of the facts is based upon much more solid grounds than professional courtesy. It is because specific findings of fact, even by the most meticulous judge, are inherently an incomplete statement of the impression which was made upon him by the primary evidence. His expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualification and nuance ... of which time, and language do not permit such exact expression, but which may play an important part in the judge's overall evaluation."

The Plaintiff gave evidence at trial. The judge would have formed an opinion, based on his perceptions of the Plaintiff in the witness box and the judge's own experience of daily life, as to whether the Plaintiff could continue working. It would be nearly impossible for the judge fully to articulate the many, often subtle, reasons for his overall impression that the Plaintiff had a prospect of gainful employment post-trial. Having seen and heard, the judge drew his conclusions and this Court which did not have the benefit of itself seeing and hearing the witness should accord full weight to the judge's perceptions and instincts.

90. The difficulty lies in giving practical effect to the judge's impression. His view as to the Plaintiff's potential for work has to be translated into monetary terms in a way which is rational and which is consistent with the evidence and the judge's other findings. The problem is that, given his premises and the evidence, I do not think that it was open to the judge to reflect his impression by positing that the Plaintiff could earn 20% of what he used to earn as a full-time practising barrister. There are 3 reasons why I think so.

91. First, at Judgment §65 the judge held that "[l]ooking at the evidence as a whole..., realistically, the plaintiff is unable to return to his former occupation as a barrister". The judge therefore accepted that the Plaintiff was wholly justified in his decision to retire from practice altogether as a result of his accident. The judge said:-

"58.	It was suggested to the plaintiff on behalf of the defendant that he had made the decision to close his practice before August 2000 and that the decision was unrelated to the injuries he sustained. He disputed this. He testified that he had already been advised by practitioners whom he had consulted prior to August 2000 that the long-term prospects were that he would be left with a residual disability. In these circumstances, rather than maintain the expense of his practice without any income, he decided to close it.
59.	That is a proper answer to the defendants suggestion and an acceptable decision. Even Dr Chiang accepts that a period of 11/2 years inevitably would have a seriously damaging effect on a barrister's practice..."

If the Plaintiff could not be faulted for quitting the Bar entirely, it was inconsistent to hold that the Plaintiff should nonetheless have remained in part-time practice and earned 20% of his former full-time income. Having given up his practising certificate and chambers, the Plaintiff simply could not be a part-time barrister.

92. If by a 20% residual earning capacity the judge was estimating the Plaintiff's potential income from non-Bar work by reference to a percentage of what the Plaintiff earned as a barrister, such methodology would be flawed. The circumstances which generate an income in job X do not necessarily do so in job Y. Thus, for example, it does not follow that, because a person only works 20% of the total time which he used to work at the Bar, his monthly salary as (say) a secretary would be 20% of his monthly net profit at the Bar.

93. As Mr Graham (appearing for the Plaintiff) pointed out, the judge's approach leads to paradox. The judge found that, but for the accident, the Plaintiff would have earned $408,482 per year net of tax during the pre-trial period. From this the judge subtracted $81,696.40 to reflect his finding as to the Plaintiff's 20% residual earning capacity ($81,696.40 = $408,482 x 20%). As far as the judge was concerned, the Plaintiff therefore had the capacity to earn $6,808 ($81,696.40 ( 12) per month. The judge also found that, but for the accident, the Plaintiff would have earned $788,500 per year net of tax post-trial. Again the judge subtracted a figure ($157,700) to reflect 20% residual earning capacity. This translates to a monthly income of $13,141.67. The judge's methodology thus postulates that, in absolute terms, despite his injury, the Plaintiff had a residual capacity to earn twice as much per month post-trial as pre-trial. That cannot be right. But this curious result is the consequence of calculating how much the Plaintiff could earn in some future job as a percentage of his earnings in the past as a barrister.

94. Second, the judge founded his residual capacity approach on dicta from the Court of Appeal's decision in Tang Shau Tsan v. Wealthy Construction Company Ltd., unrep., CACV 58/2000, 5 April 2000. I do not think that the authority supports the judge's methodology.

95. In Tang the plaintiff carpenter injured a left index finger which had to be amputated. At first instance, Deputy Judge Woolley held that the plaintiff could still work as a carpenter although he would have to avoid heavy work and lifting. There was evidence that carpenters worked an average of 20 days per month. The plaintiff adduced 2 expert reports which both suggested that he had sustained "a 10% loss of earning capacity". On that basis, the trial judge concluded that the plaintiff would lose 2 days' income (10%) from every 20-day working month.

96. On appeal, Rogers JA (with whom Mayo VP and Woo JA agreed) stated (at 5I-N):-

"An expert witness can give evidence as to the nature of the plaintiff's injuries, what effect that has on the plaintiff physically and what lasting effect that is likely to have. Statements of opinion in relation to earning capacity are, in my view, inadmissible, either from a doctor or even from an occupational therapist. Indeed, to a large extent, they seem to me to be confusing, at best, and meaningless at worst. The expression of the earning capacity in percentage terms is particularly unhelpful and indeed confusing because it is imprecise."

Mayo VP echoed Rogers JA's sentiments as follows (at 9J-N):-

"I also find myself in agreement with the observations made concerning the evidence given by Dr Mao and Ms Alice Tsang. Clearly any expert evidence given by them should have been confined to the Plaintiff's medical condition. It was not permissible for them to venture to give opinions relating to the labour market a subject upon which they were not competent to express an opinion."

97. Nevertheless, although he doubted the appropriateness of a measure of "10% loss of earning capacity," Rogers JA went on (at 7E-R):-

"In making his calculation , the judge in effect calculated the plaintiff's loss at the equivalent of two days per month. Having heard the evidence, particularly of Mr Chan speaking of his current experience as an employer, the judge came to the conclusion that the likely number of days now worked by a carpenter is something in the region of 20. Hence, taking 10% of that was the equivalent of taking two days per month.

In my view, the approach of trying to assess the likelihood of the plaintiff finding employment with his continuing disability is a reasonable approach if quantified on the likely number of extra days per month for which the plaintiff would not find employment. It is, perhaps, a more realistic approach than trying to assess any likely loss of earnings by taking a lower daily rate. Without evidence as to what daily rate a carpenter who could not lift heavy weights could expect to obtain, it would only be conjecture that such a carpenter would, in fact, receive a lower rate of pay than a fully able bodied carpenter. The greater likelihood is that both a fully able carpenter and a carpenter in the position of the plaintiff would probably receive the same daily wage although the plaintiff should be given credit for the likelihood that he would find it more difficult to work."

98. The last sentence of Rogers JA's dictum just quoted suggests that an award for "loss of earning capacity" should be treated as compensation for the likely handicap which an injured plaintiff might face (relative to a person in full health) in securing work should the plaintiff have to find a new job. There is authority for construing the concept of "loss of earning capacity" in such way. For instance, Charlesworth & Percy on Negligence (10th ed.) states (at §§4-89 - 4-90):-

"Occasionally, the claimant has returned to gainful employment either at the same rate of remuneration as at the day of the injury or at a lower rate but the claimant continues to suffer from residual disability. In such cases, if the claimant were to lose his employment, he would suffer a loss because he would be handicapped in finding alternative work on account of his residual ability. The modern practice of the court is to award a lump sum to compensate the claimant for this handicap on the labour market. This head of loss is often referred to [as] 'Smith v. Manchester damages' after the decision in Smith v. Manchester Corporation [(1974) 17 KIR 1; (1974) 118 SJ 597 (CA)]. The factors usually taken into account in assessing such a loss are the degree of residual disability and the risk of the claimant being forced onto the labour market. Judges must be aware of the risk of overlap between damages for future loss of earnings and damages for loss of earning capacity or handicap on the labour market. The claimant must also demonstrate a substantial risk of being forced onto the labour market as opposed to a negligible risk. The assessment of damages for handicap on the labour market is particularly difficult to predict and there is no formula which can be applied to assist the courts and practitioners in estimating a value for such damages. The judge must weigh all the relevant factors and do the best he can.

Sometimes, the award for loss of earning capacity comprises a single sum to take account of future loss of earnings and any potential handicap on the labour market. In reality, there is no clear distinction between damages for future loss of earnings and damages for handicap on the labour market. They are both species of loss of future earnings capacity and the courts are flexible in the approach to the assessment of this head of loss in order to do justice in any individual case. In Foster v. Tyne & Wear County Council [[1986] 1 All ER 567], Lloyd LJ cited with approval the following passage from Law Commission Report on Personal Injuries Litigation, Assessment of Damages:-

'The courts sometimes draw a distinction between "future loss of earnings" and "loss of earning capacity" ... but this distinction seems to be based on nothing more concrete than the precision with which, from the evidence available, it is impossible to quantify the loss. There is, we think, no real distinction between these two heads of damage; where the evidence precludes mathematical assessment the court has perforce to make the best estimate it can, but that estimate is still an estimate of probable future pecuniary loss.'"

But, so understood, the notion of "loss of earning capacity" would be different from that of "residual earning capacity" applied by the judge in the present case.

99. Charlesworth argues that damages for "future loss of earnings" and damages for "loss of earnings capacity" are at the end of the day both ways in which the law attempts to compensate a claimant for future pecuniary loss. However, that does not mean that the 2 heads are identical (as opposed to merely overlapping) concepts.

100. In suggesting a 20% residual earning capacity, the judge here was addressing the question how much the Plaintiff could actually earn on his own notwithstanding his injury. By his 20% residual earning capacity figure, the judge was not assessing the different (albeit connected) question whether the Plaintiff might face handicap in entering the job market post-trial and (if so) how to compensate him for such. The former question of loss of future earning is capable of being answered with a degree of precision. It often entails mathematical assessment. By its nature, the latter question of loss of earning capacity cannot admit of a precise answer. The concept of "handicap" is too intangible and elusive for that. To answer the question, the judge must be qualitatively satisfied that a person may be forced into the job market and, due to his injury, will have to exert himself to secure a job similar to the one previously enjoyed. But once so satisfied, the judge usually can only award a rough and ready lump sum. Over the quantum of that lump sum, different judges may reasonably differ.

101. I have so far focused on the last sentence in Rogers JA's dictum quoted in §12 above. Given that the judge's "residual earning capacity" differs from "loss of earning capacity" as just discussed, the last sentence of the dictum provides no underpinning for the judge's methodology.

102. Does the rest of Rogers JA's dictum (or for that matter the judgment in Tang) support the judge's approach? The difficulty with Tang is that it criticises the use of "loss of earning capacity" percentages as meaningless and subjective, while it upholds the trial judge's resort to a 10% figure apparently based on evidence as to loss of earning capacity. Rogers JA argues that the trial judge in Tang was entitled to regard the plaintiff carpenter as losing 2 out of 20 days' income. The judge was clearly influenced by the "10% loss of earning capacity" asserted by the 2 experts called on behalf of the plaintiff carpenter. However, the Court of Appeal held that such evidence has to be ignored. If so, how could the judge justifiably derive his figure of 2 out of 20 days? The judgments of the Court of Appeal are silent on this.

103. Rogers JA suggests that the trial judge's approach to future loss of earning was reasonable because "quantified on the likely number of extra days per month for which the plaintiff would not find employment". The observation does not make explicit the evidential basis on which the quantification of 10% proceeded in the first place. It is suggested that the trial judge's approach is "a more realistic approach than trying to assess any likely loss of earnings by taking a lower daily rate". The precise practical import of this view is unclear. Indeed, mathematically, there may be no palpable difference.

104. For instance, take the formula: P x D x Y where P represents percentage loss of earning capacity, D the number of working days per month for a carpenter in full health, and Y the income which a carpenter in full health can expect per month. It should not matter whether:-

(1) one first multiplies D by P (to quantify a number of days per month for which the claimant in Tang would not find employment) and then by Y; or,

(2) one first multiplies Y by P (to quantify a lower monthly rate at which the claimant in Tang would have to work as a result of injury) and then by D.

The result is the same either way.

105. The true question (it seems to me) is the basis for ascertaining the value of P. Tang casts serious doubt on the propriety of using a loss of earning capacity percentage for P. I do not think that Tang goes any further. I do not therefore believe that Tang justifies the residual earning capacity methodology used here by the judge.

106. Mayo VP's judgment does not alter the view which I have just expressed. He amplifies Roger JA's comments as follows (at 9O-10C):-

"It is however clear from the judgment that the Judge reached the conclusions he did by making his own assessment of the position. His task was not a simple one by virtue of the Plaintiff making no real attempt to rejoin the labour market as a skilled carpenter. The Judge was in my view fully entitled to find that having regard to the extent of his incapacity he would not have been able to continue working as a carpenter even though he may not have been able to lift heavy weights. In my view the Judge may have erred on the side of generosity in the amount of sick leave he allowed and in allowing a 10% loss of earning capacity."

107. I suggest that it would be best if Tang were confined to its unique facts. Fortuitously, the plaintiff there could continue to work as a carpenter. Accordingly, whatever the problems associated with using a loss of earning capacity percentage to calculate loss of future earnings, it was possibly acceptable in the limited circumstances of Tang for the trial judge to reckon future earnings by a percentage (even if ultimately subjective) of the plaintiff's former earnings in the same calling. The situation in the instant case is different. Given the nuanced tension in Tang between the criticism of loss of earning capacity percentages and the approval of the trial judge's use of just such a percentage, one must be cautious in reading Tang as expressing any principles of wide application.

108. Third, the 20% at which the judge pinned the Plaintiff's residual earning capacity does not seem rooted to any evidence.

109. At Judgment §68, the judge stated:-

"The plaintiff is presently earning some $15,000 a month as a freelance cartoonist. As indicated earlier, he had similar income before the collision so I ignore it for the purpose of the claim. It does provide some indication, however, that he has a potential earning capacity. Doing the best I am able, and recognising the arbitrariness of the figure, I determine that the plaintiff has a residual earning capacity of 20% -- whether he achieves that by taking the occasional brief, by drawing more cartoons or by taking up employment in an entirely new field. I will make the adjustment to post-tax income."

The judge frankly acknowledges that there is a degree of arbitrariness in his figure of 20%. To flesh out how he arrives at such a figure, he links the percentage to 3 suggestions of possible employment for the Plaintiff. Unfortunately, there are difficulties with each suggestion.

110. If the judge meant that the Plaintiff could take up an occasional brief as a barrister, the finding would be inconsistent with the judge's earlier conclusion that the Plaintiff was entitled to give up practice altogether. Income from an occasional brief could not therefore be a viable prospect for the Plaintiff.

111. If by his reference to the occasional brief the judge was referring to being briefed as a solicitor, there is no self-evident link between the earnings of a part-time solicitor and 20% of the Plaintiff's income as a barrister. Why would the Plaintiff as part-time solicitor earn such percentage as opposed to some other percentage? Previously the judge had noted the Plaintiff's doubts as to whether he would be able to be more than an articled clerk or junior solicitor. It is well-known that articled clerks and junior solicitors are normally paid a range of salaries, depending upon the firm for which they work. If so, it is not clear why the Plaintiff's earnings should be treated as 20% of his income as a barrister. In actuality, the judge made no express finding that the Plaintiff could work as an articled clerk or junior solicitor. Nor does he explain his basis for believing that at the Plaintiff's age (55 at trial) the Plaintiff could realistically find work with a firm as an articled clerk or junior solicitor.

112. The judge's suggestion that the Plaintiff could draw more cartoons is unsupported by evidence as to the market for such cartoons. Is anyone prepared to pay for further cartoons produced by the Plaintiff? The judge deducted $13,142 per month in the post-trial period to reflect his posited 20% residual earning capacity. According to the Plaintiff's Revised Statement of Damages, the South China Morning Post paid the Plaintiff some $900 per cartoon. The judge was accordingly estimating that the Plaintiff could sell some additional 16 cartoons ($13,142 ÷ $900) per month. Given that the judge found the Plaintiff's monthly income from cartoons (pre- and post-trial) has remained steady at about $15,000, there is no evidence that the Plaintiff could sell another 16 cartoons per month and nearly double his income from cartooning.

113. The judge finally raises the possibility of "taking up employment in an entirely new field". But what field does the judge have in mind and how can the Plaintiff's putative income from the unspecified field amount to 20% of his former earnings as a barrister? The suggestion is too open-ended to give rational motivation to the 20% residual earning capacity proposed by the judge.

114. In Lau Wing Sheng v. Chung Fat Mechanical Works Co. and another [1987] 2 HKC 180 there was evidence that the plaintiff welder could carry out sedentary work 18 months after his accident. But there was "no evidence whatsoever that he could have obtained such work". In response to counsel's submission that the lack of evidence on the point could be supplemented by robust common sense, Cons VP (with whom Hunter JA and Hooper J agreed) stated (at 185D-G):-

"Mr Litton [for the defendants] suggests that the judge was entitled to adopt a common sense approach to the situation and by applying his own knowledge of the conditions of the labour market, would necessarily have found that the plaintiff could have obtained such a job. It is well known that positions are available.

With respect, I do not think the judge is so entitled. Where a matter of fact is 'notorious,' a judge is, of course, able to rely on it without further proof. But I am not willing to accept the conditions of the labour market into that category. Evidence needs to be called. My Lord Hunter remarked during the course of argument, quoting from fairly recent experience, that officers from the Labour Department are commonly called in this regard and, in particular, from a special unit of that department which deals with workmen who have been injured."

115. Lau makes it clear that, although a judge may conclude that a claimant is able to take on work post-trial, in translating that impression into practical terms he is constrained by the evidence before him. He cannot assume that a person will be able to obtain a job. Instead, the judge must be satisfied not just that a plaintiff is capable of performing a specific job, but also that market conditions mean that the plaintiff has a realistic prospect of gaining employment in that job.

116. None of the judge's 3 suggestions meet the test in Lau. The judge himself ruled out the prospect of the Plaintiff being able to discharge the work as a barrister. Although he may possibly have thought that the Plaintiff could work as a solicitor, the judge did not consider the Plaintiff's prospects of obtaining employment in a solicitor's firm. Although the Plaintiff can draw more cartoons, the judge did not evaluate the market for additional cartoons. Finally, the judge's suggestion of employment in a new field lacked particularity. Without that specificity, it is impossible to assess whether the Plaintiff could perform in the unknown new field or find employment therein. Consequently, in light of this Court's decision in Lau, the resort to a 20% residual earning capacity here cannot stand.

117. Where does the rejection of the 20% residual earning methodology in this case leave one? On the one hand, the judge was entitled to form an impression that the Plaintiff could do some form of post-trial employment. On the other hand, the judge's attempt to reflect that impression in monetary terms was problematic. It seems to me that there are 2 courses of action open to this Court.

118. One option would be to remit the matter to the trial judge for further determination on 2 issues:-

(1) What specific job is there:-

(a) for which the Plaintiff would be qualified; and,

(b) for which there is likely be a market demand for the Plaintiff's services?

(2) How much is the Plaintiff likely to earn from such specific job?

119. I do not favour this first option. The Plaintiff has already re-lived the trauma of his accident in the course of a 4 day trial. Unless there is good reason for further trial, there should be finality in litigation. A personal injury victim in particular should be spared further anxiety. Lau indicates that, insofar as it is sought to establish that a plaintiff can take on other employment in the post-accident period, it is principally the defendant's responsibility to adduce evidence at trial to establish what that employment is and how much a plaintiff is likely to make from it. If a defendant has not made out a case on the evidence adduced at trial, this Court should not normally give him a second chance to make good deficiencies in his original presentation.

120. The second option is for this Court to take a view on the available evidence to see whether it is possible to discern an appropriate measure to reflect the trial judge's impression. In the absence of compelling material pointing to any rational measure, the Court should then simply hold that the Defendant has failed to discharge his evidential burden as indicated in Lau. This is the course which I favour in the circumstances of this case.

121. The Defendant pitched his case on quantum high at trial. He principally submitted that the Plaintiff could continue to work as a barrister or switch to becoming a solicitor. He failed to convince the judge of the former and did not wholly persuade on the latter alternative. There does not appear to have been cogent evidence before the trial as to what the Plaintiff could have earned as a junior or trainee solicitor. There appears to have been no evidence as to the Plaintiff's prospects of being hired as a junior or trainee solicitor at his age. Nor did the Defendant suggest any more moderated fall-back position. It does not seem, for instance, that material (statistical or otherwise) was put forward as to what the Plaintiff could earn (say) as a modest part-time clerical worker in a professional services sector or what his prospects of employment therein might be.

122. In the premises, I think that it would be appropriate here to hold the Defendant to the consequence of his concentrated, but unsuccessful, attempt to argue that the Plaintiff post-accident could earn nearly as much as he used to earn as a barrister. The consequence of such a case was that, in rejecting the Defendant's argument, the judge was left with insufficient material to quantify his impression that the Plaintiff could take on a more modest, part-time employment after his accident. Lacking evidential material, the judge should simply have awarded pre- and post-trial loss of earnings without an arbitrary 20% discount to reflect residual earning capacity.

B. Deduction of $800,000

123. Mr Graham submitted that the judge wrongly deducted expenses of $800,000 from the Plaintiff's gross fee income as a barrister to arrive at the Plaintiff's net fee income before tax. Mr Graham says that the judge should only have deducted expenses of about $17,262 per month. If Mr Graham is right, the Plaintiff's net fee income before tax would be significantly higher than the figure used by the judge in the calculation of pre- and post-trial loss of income.

124. The judge based the figure of $800,000 on the Plaintiff's tax returns. The Plaintiff's returns running from financial year 1992-1993 to financial year 1999-2000 claimed average annual expenses of $841,475.

125. Mr Graham suggests that approach was incorrect. In support, he cites the following passages from Kemp & Kemp on the Quantum of Damages in Personal Injury and Fatal Accident Claims (2003 ed.), vol.1:-

(1) At §5-088:-

"A deduction must always be made for the expenses necessarily incurred in earning the lost income."

(2) At §§13-080 to 13-082:-

"A claimant is entitled to be compensated for his loss of earnings even though he had in the past failed to disclose them to the Inland Revenue.

Mr Jowett QC, sitting as a deputy High Court Judge in Duller v. South East Lincs. Engineers [May 2, 1980 (unreported)], considered the position of a claimant who had not declared his earnings for tax purpose.

The claimant sought compensation for loss of part-time earnings as a barman to the date of trial, and future loss of the same. It was agreed that, before his accident, he had not declared these earnings for the purposes of income tax. The defendants sought to argue that the claimant was not entitled to compensation for loss of these earnings as the whole of the money had become tainted by the claimant's illegal behaviour in not disclosing these earnings for tax. The claimant argued that the earnings were not themselves illegal and the claimant had now been deprived of the capacity to earn, although it was conceded that credit would have to be given for income tax that would have been chargeable on the earnings.

It was held that the claimant was entitled to be compensated for this loss of earnings as special damage and as future loss items. The case of Burns v. Edman [[1970] 2 QB 541] was distinguishable. In that case the money originated criminally. Here, the money came lawfully into the claimant's hands; only later did he deal unlawfully with the Revenue, not the money. The claimant did not base this part of his claim on any unlawful act of his, and this part of his claim was not defeated by an allegations of illegality. Credit would have to be given for the income tax and National Health Insurance charges properly payable."

126. Mr Graham distinguishes between items which are allowed to be deducted from gross profit by the Inland Revenue Ordinance (Cap. 112) ("IRO") in the assessment of tax liability and items which are deductible for the purpose of calculating lost income in a personal injuries claim. The 2 sets of deductibles (Mr Graham says) are not necessarily the same. Tax law may permit a deduction which cannot be said as a matter of tort law to have been necessarily incurred in the earning of lost income. In relying on the Plaintiff's tax returns, the judge must have assumed that what was deducted from gross profit should likewise be subtracted from the Plaintiff's claim for lost income. The judge thereby ignored the Plaintiff's more reliable oral evidence that the expenses "necessarily incurred" (in a tortious claim sense) by him as a barrister should be significantly less.

127. Before this Court, Mr Graham stated that in claiming deductions in his tax returns the Plaintiff was guided by his accountant's advice. Acting on such guidance (which the Plaintiff assumes was proper professional advice), the Plaintiff claimed several substantial expenses (including (for example) the maintenance of a boat) which patently could not be "necessary" to practice as a barrister. Mr Graham was at pains to stress that, although the Plaintiff's tax returns were in one sense "inflated," they had been accepted by the Commissioner of Inland Revenue for the assessment of profits tax. There was no reason why the Defendant should obtain a "windfall" as a result of the "inflated" tax deductibles and pay the Plaintiff an amount which was significantly less than his actual damages.

128. I do not accept Mr Graham's distinction. Under IRO s. 16(1), in ascertaining profits tax in any year of assessment, a taxpayer may deduct outgoings and expenses to the extent to which they are necessarily incurred in the production of gross profit. I do not see any substantive difference between the test proposed by Kemp & Kemp for personal injury claims and that stipulated in IRO s. 16(1). The real question is the extent to which a Court can go behind the matters stated in a plaintiff's tax return. If the Court can do so, in what circumstances will it so act?

129. In Yim Fat Fong v. Wong Kim Hung and Wing Fai Electrical Suppliers Limited, unrep., HCPI1173/1996, 24 June 1999 Seagroatt J commented as follows (at p. 21):-

"During the course of the trial some documents eventually emerged from the Inland Revenue. It was apparent that disclosure of documents and proper preparation of the claim for damages under this head, had been sadly deficient. Those Inland Revenue document set out the profits for the financial years 1991/92 and 1992/93. The Plaintiff claimed that he had paid no tax since 1990.

The annual net profit returned for Inland Revenue requirements for 1991/92 was $40,923. In 1992/93 it was $35,136. This is in stark contrast to the claim for loss of profit on a monthly basis of between $12,000 (now and $40,000 originally. It may well be that banking documents show substantial sums being paid in and withdrawn, which are far in excess of the figures disclosed to the Revenue. However the claim must be based on the proving material. It would be wholly wrong to go behind the figures disclosed to the Inland Revenue. The Plaintiff's income and/or net profit may have been significantly more than stated on forms requiring honesty and truth. I am not prepared to say that the Inland Revenue has not seen the full picture (whatever that is) but these declarations are my yardstick. I do not look beyond them. The annual pre-accident loss of profits is therefore, allowing for ups and downs, $40,000."

130. I do not read Seagroatt J as saying that the Court will never look behind a claimant's tax returns when assessing lost income. Instead, Seagroatt J treats the question (in my view rightly) as a matter of evidence. On the material before him, the judge was not prepared to hold that the returns gave a false picture of the plaintiff's actual income. Understandably, the judge was sceptical of the profits orally alleged at trial, especially where the profits asserted were suddenly whittled down from $40,000 to $12,000 per month. Although the plaintiff's income might conceivably have been more than what was stated in his returns, on the balance of probability Seagroatt J felt that the returns were likely to be more trustworthy and the $12,000 per month belatedly advanced at trial to be suspect.

131. In McGuire Michael John Edmund v. AGW Holdings Limited (trading as A. G. Wilkinson & Associates) and Tam Yiu Cho, unrep., HCA4984/2001, 10 November 2003, the plaintiff's service company G paid profits tax on income earned from consultancy work for the 1st defendant over a certain period. The plaintiff later entered into a contract of employment with the 1st defendant. Upon his wrongful dismissal by the 1st defendant, the plaintiff claimed long service payment based not just on his years of service as an employee under a contract of employment but also on the years during which G provided consultancy services to the 1st defendant. The plaintiff said that, as his nominee company, G was simply a device to enable him to claim deductions from income which would otherwise have been paid to him as salary and assessable to salaries tax. The plaintiff could not have claimed deductions had he paid salaries tax on that income.

132. Citing Massey v. Crown Life Insurance Co. [1978] 2 All ER 576, Young & Woods Ltd. v. West [1980] IRLR 201 and Catamaran Cruisers Ltd. v. Williams [1994] IRLR 386, I held in McGuire (at s§97-103) that the Court was not bound by matters stated in a plaintiff's tax returns. In ascertaining damages consequential on a wrong, a Court has to investigate the actual facts. However tempting, the Court cannot prejudge its assessment of the facts on the basis that a plaintiff derived a significant tax advantage by presenting a certain picture of his affairs in his tax returns and should be held to that picture. The picture painted in the tax returns may or not have been accurate in its characterisation of fact. The picture cannot bind a judge. The Court may thus find at the end of the day that the true state of affairs was something other than that depicted in a plaintiff's returns. In appropriate circumstances, the Commissioner of Inland Revenue may consider whether or not a plaintiff has wrongly obtained a benefit for which he should be re-assessed to additional tax or penalised in some way. But that is a decision for the Commissioner. It does not affect the Court's investigation of fact.

133. The parties in the present case did not refer to McGuire. I merely mention the case to make it clear that I do not see any inconsistency between the principle which I discussed there and Seagroatt J's judgment in Yim. Both McGuire and Yim accept that tax returns are admissible evidence. In Yim Seagroatt J felt that it would be wrong in light of the totality of the proving material before him to go behind the returns. In light of all the evidence adduced in McGuire, I thought that it was appropriate to ignore the characterisation of the relationship between the plaintiff employee and the 1st defendant contained in G's tax returns.

134. That leaves the issue whether the trial judge was entitled here to attach significant weight on the Plaintiff's tax returns in assessing expenses at $800,000. The judge said this:-

85.	The claiming of amounts as expenses in past years must be predicated upon the basis that those expenses all were necessarily incurred to generate the gross fee income. I regard his [the Plaintiff's] estimation of his expenses at $8,000 per month or $96,000 per annum as fanciful. Apart from anything else, his calculation is based on the unrealistic assumption that whilst his income will rise in accordance with inflation, his expenses will not. Indeed, in his evidence he accepted that the figure is not tenable. He testified that his expenses in the future would have been whatever his accountant had told him would be claimable. That impresses me as being a truthful and likely approach. And, on that basis, having assessed his gross fee income pre-trial as equivalent to his past average income, there is no commonsense reason for not similarly taking his previous average expense. For the period April 2000 to March 2003 I assess the expenses at $841,475.00 per annum and net income this $486,289.000 per annum before tax, for which I shall allow a deduction of 16%.
...
89.	It follows from what I said previously (para. 85) that I do not accept his estimation of expenses. To allow for small economies which he may have been able to achieve, changes of policy in regard to deductible items of methods and other eventualities I assess average expenses during the same period as $800,000 per annum and net income as thus $950,000 per annum before tax, for which I shall allow a deduction of 17%."

135. Plainly, the judge carefully considered the Plaintiff's oral evidence as to the expenses of his practice and rejected the same. Like Seagroatt J in Yim, the judge regarded the Plaintiff's evidence at trial as "fanciful". No doubt the judge queried the large discrepancy between the deductibles of over $800,000 claimed in the Plaintiff's tax returns and the lower annual expenses alleged at trial. There should not have been such a significant discrepancy given that the principles underlying the calculation of the 2 sets of expenses are similar. Again, having seen and heard the Plaintiff as a witness, the judge arrived at a conclusion. His determination was impeccable and an appellate court should defer to his views.

III. Conclusion

136. I would allow the cross-appeal by respondent's notice in part by revising the judge's pre-trial and post-trial loss of income figures as follows:-

(1)	Pre-trial loss of income:-
	$486,289.00 x 84% (to reflect 16% tax) = $408,482.76
	$408,482.76 x 3 (25 March 2000 to 26 March 2003) = $1,225,448.28.
(2)	Post-trial loss of income:-
	$950,000.00 x 83% (to reflect 17% tax) = $788,500.00
	$788,500.00 x 7 = $5,519,500.00

Given the judge's conclusion on contributory negligence, the Plaintiff will be entitled to 2/3 of the revised lost income figures just calculated. Otherwise I would leave the judge's decision undisturbed.

137. I would dismiss the appeal. I agree with the costs order nisi proposed by Yuen JA.

Hon Le Pichon JA:

138. There will accordingly be an order that the Defendant's appeal be dismissed and the Plaintiff's appeal by way of Respondent's Notice be allowed in part by increasing the judgment sum from $4,147,384.76 to $5,046,712.41. There will also be an order for costs as proposed in paragraph 85.