LEE KAM LIN v. FULL WISE LTD t/a FISHING BAY RESTAURANT

DCEC 2005/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 2005 OF 2012

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ASSESSMENT OF COMPENSATION

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INTRODUCTION

1. This is the assessment of compensation payable to the applicant under sections 9, 10 and 10A of the Employees’ Compensation Ordinance(“ECO”) (Cap.282). Interlocutory Judgment on liability has already been entered in favour of the applicant on 21 June 2013.

2. Couched within this assessment is also an appeal lodged by the applicant by way of a Notice of Appeal dated 11 December 2014 filed pursuant to section 18 of the ECO against the assessment of the Employees’ Compensation (Ordinary Assessment) Board made under its Certificate of Review (Form 9) dated 8 December 2014, by which the applicant’s loss of earning capacity was assessed at 7.5%.  The applicant appeals against this assessment and contends that the percentage loss of earning capacity on which I should base my assessment should be 10%, being the combined effect of her physical injuries and psychiatric impairment as assessed by her medical experts.  I shall deal with this appeal in further detail later in this judgment.

3. On the day of the hearing of the assessment on 13 May 2015 the respondent was absent.  It did not appear by a solicitor, nor did it appear by a director duly authorized by its board to act on its behalf pursuant to Order 5A rule 2 of the Rules of the District Court (“RDC”) (Cap 336H).  I noticed that the respondent had in fact failed to enter an appearance from early on in these proceedings from the first hearing through the various subsequent directions hearings.  However, it would appear from numerous affirmations as to service of orders and other court documents filed in this case that the respondent had all along been adequately informed of the progress of the proceedings, and had been given every opportunity to participate in the case.

4. At the hearing, Mr Kenneth Lam, who represents the applicant, also directed me to evidence filed on behalf of the applicant showing that the respondent had been given sufficient notice that the case would be called upon by early May this year.  A copy of the applicant’s opening submissions had also been served on the respondent on or about 8 May 2015 at its registered office[1], which was also its business address according to a recent business registration search conducted on the respondent on 16 March 2015 by the applicant’s solicitors.

5. In the circumstances, I considered there would be no injustice caused to the respondent to proceed with the assessment of compensation in its absence.  I therefore exercised my discretion under Order 35 rule 1(2) of the RDC and proceeded with the hearing on 13 May 2015.

6. Mr Lam has also indicated to me that the Employees’ Compensation Assistance Fund Board has been informed of these proceedings.  They have not applied to intervene and be joined as a party, and there is no indication of an intention on their part to do so.

THE ACCIDENT

7. The applicant was the only witness to testify at the hearing. Her evidence was uncontroverted and I did not find any part of her evidence to be exaggerated or unreliable and I accept her evidence as truthful[2]. She was born on 29 October 1956 in the Guangdong Province.  She moved to Hong Kong in 1999.  A divorcee, she is now living with her daughter.  She was aged 55 on the day of the accident forming the subject of this case, when she suffered injuries to her right knee whilst she was working for the respondent.

8. She joined the respondent on 14 December 2011 to work as a general worker or assistant at the dim sum take away counter of its restaurant, namely the “Fishing Bay Restaurant” in Un Chau Street, Kowloon (“the Restaurant”).  Her duties were to help cook dim sum and rice and selling food items to customers over the take-away counter at the Restaurant, assisting colleagues at the roast meat counter, as well as cleaning the take-away counter.

9. During the busy lunch hours, at about 12:20 pm on 6 February 2012, whilst she was working in the Restaurant, she proceeded to the kitchen to get some clean plates and bowls for use by her at the take-away counter, and by her colleagues at the roast meat counter.  On her way out from the kitchen, she walked through a passageway carrying with her a pile of clean bowls and plates.  Her way was obstructed by the presence of a large electric food mixing machineplaced outside the door of the kitchen.  According to the applicant, as she tried to pass through, her right arm came into contact with the inch-thick handle of the mixing machine causing it somehow to swing and hit against her right inner knee.  She felt immense pain immediately to the extent her right knee gave way and she had to kneel down.  According to her evidence, she later saw a bruise the size of an egg over her right knee on that day (“the Accident”).

10. She immediately reported the Accident and her injury to the person in charge, who asked her to sit down and take a rest.  As it was a busy day, the applicant decided after a while to continue with her work despite her pain, before she finally went off duty at around 3 pm to return home.  She did not expect the pain and bruise to last, so she applied some ointment over her injured knee, massaged it with a hot boiled egg, and took some anti-inflammatory pills at home.

INJURIES AND TREATMENT

11. On the following day, however, the pain did not subside and her right knee became red and swollen instead, and she found herself sweating with the pain.  Despite so, she returned to work as she reckoned the Restaurant would be busy as usual.  Eventually she could not withstand her pain anymore and she went to the Accident and Emergency Department of Caritas Medical Centre for treatment that afternoon.  Examination at the medical centre revealed tenderness and bruising over her right knee.  She was discharged with pain-killers.

12. Three days after the Accident, her employment was terminated by the respondent.

13. Theapplicant attended the Caritas Medical Centre again on 9 February 2012.  Radiological examination did not show any fracture.  Owing to the persistent pain over her right knee, she continued to attend the Accident & Emergency Department of the medical centre on various occasions until 17 April 2012.

14. Between 13 February 2012 and 1 June 2012, the applicant went for treatment at the Cheung Sha Wan Jockey Club General Out-patient Clinic where her condition was found to have gradually improved.  During more or less the same period, she also attended the General Practice Clinic of the Caritas Medical Centre. In the meantime, it seemed her pain was kept under control with painkillers and Chinese medicine.  She also received treatment from a bonesetter.  There was still tenderness over the medial side of her right knee when she was examined at the Caritas Medical Centre again on 18 June 2012, but she reported significant improvement.

15. The applicant went through 11 sessions of physiotherapy between 8 June 2012 and 11 July 2012.  She reported of on and off right knee pain during walking.  There was still tenderness over the medial side of her right knee.  The range of movement was full and the muscle power over theright knee was grade 4 out of 5.  There was no ligamentous laxity.  Squatting was full.  The treatment she received included short wave diathermy, knee mobilization and strengthening exercises. Her right knee pain showed gradual improvement and upon discharge from physiotherapy in July 2012, the overall improvement was said to be 80% and there was no pain during walking.  However, pain over her right knee was still elicited on prolonged squatting although the range of movement in her right knee remained to be full.

16. On 28 September 2012 the applicant wasexamined at the Department of Orthopaedics& Traumatology of the Caritas Medical Centre.  There was no local tenderness, no knee laxity and her range of motion was full.  Subjectively, she felt she had achieved 90% improvement and she wanted to find a new job for herself.  Radiological examination showed no fracture, while there was medial joint line osteophyte present.

17. The applicant attended the Employees’ Compensation (Ordinary Assessment) Board on 21 December 2012 and 7 February 2013 for assessment.  She was assessed to have suffered 0% loss of earning capacity as a result of the right knee injury[3]. She applied for a review of the assessment and subsequently, as will be mentioned below, she was assessed to have suffered 7.5% loss of earning capacity on review by reason of the combined effect of her knee injury and her related psychiatric impairment.

PSYCHIATRIC IMPARIMENT

18. Her psychiatric symptoms came to the surface when on 4 February 2013, she was sent to the Accident & Emergency Department of the Caritas Medical Centre after she demonstrated adepressedmood and exhibited suicidal ideas that were apparently related to the Accident.  She was diagnosedwith adjustment problem with insomnia and depressive reaction.  For her condition she attended follow-up consultations.  She was subsequently referred to the Integrated Mental Health Program of the Cheung Sha Wan General Out-Patient Clinic and was seen by the doctor of the program on 29 May 2013.  She reportedly has been suffering from a low mood since September 2012 associated with sleep disturbance, loss of energy and a feeling of worthlessness.  In fact, during her oral testimony she was unable to control her emotions at one stage when she talked about her inability to work and her feeling of worthlessness.

19. Dr Liu Wan Wan, Associate Consultant of the West Kowloon Psychiatric Centre, interviewed the applicant on 13 January 2014.  The diagnosis was depression and anti-depressants were given. Thereafter the applicant was given regular follow-up treatment at the West Kowloon Psychiatric Centre.  Her sleep improved with the medication, but since her mood was dysphoric her medication was stepped up.

20. When seen on 22 September 2014 at the West Kowloon Psychiatric Clinic again, the applicant reported to have better sleep and appetite.  She also indicated she took Chinese medicine for her insomnia.  She was said to be in contact with reality but her mood remained slightly dysphoric.  No psychotic feature was noted and she no longer had any suicidal idea.

RECENT EXAMINATION OF HER KNEE CONDITION

21. The applicant attendedthe Cheung Sha Wan Jockey Club General Out-patient Clinic again on 25 July 2014 and reported of persistent right knee pain.  An MRI scan of her right knee taken on 20 July 2014 showed that she suffered right knee osteoarthritis changes, medial meniscal injury, posterior crucial ligament sprain and suspected anterior cruciate ligament sprain.

22. Dr Chan Ka Wah, an orthopaedic specialist who examined the applicant on 21 August 2014 and studied an MRI scan taken of the applicant’s right knee in July 2014, observed that she was suffering from a grade 3 tear of her posterior horn of medial meniscus.  The diagnosis was torn meniscus of the right knee.  It was suggested to the applicant that she could undergo arthroscopic menisectomy, but she said she would prefer to continue with follow-up treatment at theOrthopaedic Department of the Caritas Medical Centre.

23. As mentioned, above, the applicant attended the Employees’ Compensation (Ordinary Assessment) Board for review of her condition.  She was seen on 1 September, 11 September and 24 November 2014 by members of the board and on review, she was assessed to have suffered 7.5% loss of earning capacity as a result of (i) her right knee injury which resulted in right knee stiffness, weakness and pain, as well as (ii) her psychiatric impairment.

EXPERT OPINION

Dr James Kong Kam Fu – orthopaedic specialist

24. Dr James Kong Kam Fu, an orthopaedic specialist, examined the applicant on 15 January 2015 and noted in his report dated 27 January 2015 that the applicant was complaining of intermittent pain, weakness and stiffness in her right knee.  She also complained of a pulling sensation on her right thigh.  She was seen walking with a stick.  Without the stick she walked with a mild limping gait.  She was unable to perform single leg standing on her right leg.  She was also unable to perform tip-toe walk or heel walk.  She could squat half way with both hands holding onto a desk or chair.  Examination of her knee revealed no muscle wasting but there was tenderness found on the right medial joint line.  A meniscal pathology test performed on her right knee turned out a positive result.

25. Dr Kong agreed that the applicant suffered right knee contusion with medial meniscus tear in the Accident.  The symptoms demonstrated by the applicant were justified, although sheseems to have a pre-existing condition of osteoarthritis of the right knee.  He also considered that the conservative treatment received by the applicant in the past, namely medication, physiotherapy, acupuncture and rest had been reasonable.  He also advised that in case of meniscus tear, if symptoms persisted, it was prudent to consider surgical treatment in theform of arthroscopic meniscus repair with or without menisectomy[4].  He observed that theapplicant wasstill suffering from modest residual right knee pain from the meniscus tear.  There was still tenderness along the medial joint line with reduced range of motion of her right knee.

26. Dr Kong was of the view that it would be difficult for the applicant to resume her previous work as a restaurant worker because of her residual orthopaedic impairment in the right knee.  He observed that she could switch to other more sedentary types of work such as a car park attendant, security guard, or cashier.

27. Dr Kong considered the sick leave given to the applicant between 7 February 2012 and 17 November 2014 had been reasonable[5].  The prognosis was fair and there would be a mild degree of residual orthopaedic impairment.

Dr Kwan KaLik, Felix - psychiatrist

28. The applicant was examined by Dr Kwan KaLik, Felix on 8 January 2015.  In his report dated 10 January 2015, Dr Kwan noted that her mood was depressed and her affect was flattened.  Her speech was relevant and coherent and she had good understanding of her circumstances.  Her thoughts weregenerallywell organized. However, she had negative thoughts about her future and she harboured a sense of worthlessness.  Dr Kwan’s diagnosis was that she suffered Major Depressive Disorder after the Accident and it is Dr Kwan’s opinion that her present condition is not caused by her previous marital discord and divorce.  According to Dr Kwan, the stressors are the Accident with its resultant pain symptoms and the long term consequences associated with the physical symptoms.

29. Dr Kwan noted the following significant symptoms of depression during consultation with the applicant:-

(i) Decreased energy;

(ii) Feelings of excessive or inappropriate guilt;

(iii) Difficulty in thinking, concentrating or making decision;

(iv) Transcient thoughts of death or suicide;

(v) Tense emotions;

(vi) Somatic complaints;

(vii) Sense of worthlessness;

(viii) Excessive crying;

(ix) Excessive worrying.

30. Dr Kwan thought her symptoms were genuine, and believed that the psychological symptoms had aggravated her perception of her knee symptoms.  He opined that the applicant needs further pharmacological treatment in order to achieve further improvement, and he recommended the applicant should see a clinical psychologist.  He was of the view that the applicant is unlikely to be able to resume her pre-injury occupation in view of her mental condition.  She should consider working on a part-time basis on duties that do not require lifting heavy loads.  It was also suggested that she should apply for supported environment services through medical social service.  Dr Kwan was of the opinion that the impairment level caused by the mental problems of the applicant was mild to moderate. Her social functioning would also be affected by her symptoms of depression and her right knee pain, and her ability to perform some daily household activities might even be affected.

The applicant’s loss of earning capacity and the section 18 appeal

31. As mentioned above, the applicant has lodged an appeal pursuant to section 18 of the ECO against the assessment of 7.5% loss of earning capacity as set out in the Certificate of Review (Form 9) issued by the Employees’ Compensation (Ordinary Assessment) Board on 8 December 2014.  Mr Lam contended that the assessments by the applicant’s two medical experts, namely Dr Kong and Dr Kwan should be preferred.  The combined percentage of loss of earning capacity should then be 10%. However, Mr. Lam accepts that the medical experts are not competent to give evidence on loss of earning capacity and their evidence is simply to assist the court in arriving at the correct percentage by setting out their expert opinions on the injuries, treatment, diagnosis and prognosis of the applicant.

32. For the principles applicable to section 18 appeals, Mr Lam cited the case of Chen Yong v Chiu Yuk Lin & Leung Tak Meng t/a Luen Lik Engineering Co, DCEC No 1411 of 2011, Deputy District Judge Norman Hui, 18 February 2013.  At paragraphs 40 and 41 of the judgment the learned Deputy Judge derived the proper approach from two cases to which he was referred to:-

“40. Mr. Cheng has helpfully cited the decision of Deputy District Court Judge Bharwaney (as he then was) in Chu Chin Yiau v. Ray On Construction Co Ltd [1992] 1 HKC 246 at 248G-I which held the following:

   “In fact, whether an appeal is lodged pursuant to s 18(1) or application made for compensation under s 9 or, indeed, both procedures resorted to at the same time, it is clear that a court approaching the matter has to start afresh, relying not only on the certificate of the Board but also on any other evidence, especially medical evidence, adduced before it to assess the loss of earning capacity permanently caused by the injury suffered in an accident at work (Chan Kit v Sum Wo Industrial Manufactory [1989] 2 HKLR 230 at 233 and Yip Fong Ming v Joint-Effort Engineering Co & Anor (ECC 128/88, 17 May 1989 p3, unreported)).”

41. I would additionally refer to the case of Tsang Kwong Tong v Tennile Decoration & Design Ltd and Ors., CACV No 42 of 2006, 10 October 2006 referring to the ratio in Chan Kit v Sam Wo Industrial Manufactory [1989] 1 HKC 115 at 118D to E, where Hunter JA held that the correct test to apply for an appeal brought pursuant to section 18 against an assessment of the Board made under section 16D or 16G is as follows:

“… the court’s jurisdiction appears to be appellate. But one has then to remember that these boards are acting on their own knowledge. They hear no evidence. They keep no record. They give no reasons so that they provide no material which explains the basis of their approach. They only produce a result. Although the procedure by way of appeal may be properly so described in order to bring about a reversal of their decision if the court is so minded, it is plain that a court approaching this matter has really got to start afresh.””

33. The learned Deputy Judge in Chen Yong further referred to[6] Kan Wai Yip v Everbest Port Services Limited, DCEC No.383 of 2008 where Her Honour Judge Ng adumbrated at paragraph 43 of her judgment some factors that are pertinent to assessing loss of earning capacity.  These factors include the injuries suffered by the employee and the resulting impairment, the employee’s age, education and background, his degree of difficulty in finding placement in the labour market, and a comparison of the earnings that he is capable of with his impairment and the earnings he would have been able to make but for the injuries.  These are matters of facts for a judge to evaluate and, with the assistance of the medical evidence, to come to his own assessment as to loss of earning capacity.

34. I shall adopt the same approach set out above in dealing with the section 18 appeal. I remind myself however that the medical experts’ assessment of loss of earning capacity is not to be taken into account by the court and the court should form its own view after reviewing all the relevant facts and the injuries suffered by the employee – see the case of Tang Shau Tsan v Wealthy Construction Company Limited CACV No.58 of 2000, 5^th April 2000 (CA) and the cases referred to in paragraph 44 of the judgment of Judge Ng in Kan Wai Yip v. Everbest Port Services Limited mentioned above.

35. Whilst the review of assessment conducted by the Employees’ Compensation (Ordinary Assessment) Board took place on various dates as recently as in September and November 2014, as described in Hunter JA in Chan Kit, the court is not privy to the reason or reasons the Board had in coming to its assessment on review.  However, of all the materials the Board might have had, it certainly did not have the reports of Dr James Kong dated 27 January 2015 and Dr Felix Kwan dated 10 January 2015 before it during the review.

36. Dr Kong’s and Dr Kwan’s reports comprehensively set out not only the detailed background, both personal and medical, of the applicant, but also their latest observations, diagnosis and prognosis of the applicant after consultation in January 2015.  Both doctors had been provided with the Certificate of Review (Form 9) dated 8 December 2014 and there is no doubt they were fully aware of the result of the review of assessment by the Board when proffering their expert opinion.

37. More importantly, both experts have reviewed the applicant’s condition in detail and have given helpful evaluation of her injuries and treatment.

38. Dr Kwan has set out in detail the current psychiatric symptoms the applicant is suffering from, and has given a prognosis that she would require regular follow-up for her depression and psychological intervention through a clinical psychologist.  Further, Dr Kwan opined that the applicant is likely to be unable to resume her pre-injury occupation and recommended she should apply for supported employment services through medical social service.

39. Dr Kong has also given a comprehensive evaluation of the applicant’s current condition.  He also opined that it would be difficult for the applicant to resume her previous occupation and it is advisable she should turn to more sedentary types of jobs such as a car park attendant, cashier, security guard or telephone receptionist.

40. Having considered the evidence in the round, I find for the applicant in the section 18 appeal, and assess that she is suffering from a 10% loss of earning capacity having regard to the combined effect of the residual impairment in her right knee, as well as her psychiatric condition.  

The applicant’s earnings for the purposes of the ECO

41. The applicant’s monthly earnings at the time of the accident should be calculated according to section 11(1) of the ECO which provides:-

“Subject to this section, for the purposes of this Ordinance the monthly earnings of an employee at the time of the accident shall be the earnings-

(a) for the month immediately preceding the date of the accident; or

(b) computed in such manner as is best calculated to give the rates per month at which the employee was being remunerated during the previous 12 months if he has been so long employed by the same employer, but, if not, then for any lesser period during which he has been employed by the same employer, whichever calculation is more favourable to the employee.”

42. The applicant started to work for the respondent on 14 December 2011.  She was paid by the hour at the rate of $30 and she worked for 9 hours a day 30 days a month. Her daily wage was thus $270 and she was paid by way of cash by the respondent on the 5^th and 20^th days of each month.

43. In her witness statement, the applicant stated that since the Restaurant had been running busy, she was required to work on 3 out of the 4 paid rest days a month and she would be given an additional day’s salary ($270) for each of those rest days on which she actually worked on top of her basic salary for each day of paid leave.  When she testified, however, she clarified that she was in fact given 3 paid rest days a month and for the two months she had worked for the respondent prior to the Accident, she was only required to work on 2 of those 3 paid rest days each month.  This means that she would be entitled to an additional day’s salary for the 2 rest days when she was supposed to enjoy paid leave.  Thus, for those 2 rest days each month when she was required to work, she would be paid $540 (ie double her daily wage of $270) for each day.

44. The applicant was also provided with two free meals by the respondent every day, the value of which amounted to about $43 in total for each day. Under section 3 of the ECO, the value of food provided by the employer is included within the definition of ‘earnings’ for the purposes of the ordinance, so the value of the daily free meals provided by the respondent should be taken into account in calculating the applicant’s earnings.

45. Thus, the monthly earnings of the applicant to be adopted for the purposes of this assessment[7] under section 11(1) of the ECO, given there appears to be no difference on comparison between the amounts under section 11(1)(a) and (b), is assessed as follows:-

[($30 x 9) x 30 days + $270 x 2 days + ($43 x 30)] = $9,930

QUANTUM OF COMPENSATION

Section 9 – permanent partial incapacity

46. The physical injuries suffered by the applicant, namely contusion of her right knee and meniscus tear, and the psychiatric impairment she consequentially suffered do not fall within the First Schedule to the ECO. As such section 9(1)(aa) and (b) of the ECO are the applicable provisions here:-

“9. Compensation in case of permanent partial incapacity

(1) Subject to subsection (1A)[8], where permanent partial incapacity results from the injury the amount of compensation shall be-

(a) in the case of an injury specified in the First Schedule …

(aa) in the case of an injury not specified in the First Schedule, the aggregate of the compensation which would have been payable in respect of the injuries; and

(b)  in the case of an injury not specified in the First Schedule, such percentage of the compensation which would have been payable in the case of permanent total incapacity as is proportionate to the loss of earning capacity permanently caused by the injury in any employment which the employee was capable of undertaking at that time …”

47. Section 9(1A) requires a court to consider the special circumstances of an employee in calculating the amount of compensation in the event that an assessment, without taking into account such special circumstances, of the employee’s percentage incapacity under section 9(1) would be substantially less. In the present case, it is not the applicant’s case that there are any special circumstances to be taken into account.

48. The applicant was born on 29 October 1956.  At the time of the Accident on 6 February 2012, she was 55 years old.  Therefore, under section 7(1)(b)[9], the correct multiplier in this case for calculating the denominator sum for permanent total incapacity, which is in turn used for assessment of partial total incapacity under section 9(1), is 72 months’ earnings.  This means the base figure, ie the compensation in the case of permanent total incapacity, will be:-

   $9,930 x 72 = $714,960

49. As for the proportion of this sum to be assessed as being the correct proportion reflecting the applicant’s partial incapacity[10], Mr Lam submitted that I should adopt the combined percentage of 10% loss of earning capacity assessed by the medical experts. To this end, again, the court is unable to accept the doctors’ assessments as to loss of earning capacity on face value.  

50. Mr. Lam specifically submitted that this case is not an appropriate one where the Paper Mills Formula[11] should be applied.

51. One recent example of an employees’ compensation claim where the Paper Mills Formula was applied is the case of Wong Kai Fun v Sun On Logistics Ltd & Employees’ Compensation Assistance Fund Board, DCEC No 5 of 2013, 20 May 2015, where Her Honour Judge Levy examined a rather unique case concerning an employee who suffered a concussion, hemorrhage in the brain, and fractured temporal bones from the work-related accident that led to cognitive impairment, symptoms of headache, giddiness and tinnitus.  The applicant there suffered from neurological impairment of giddy spells that prevented him from returning to his pre-accident occupation as a container truck driver.  The medical experts were miles apart with regard to the issue of the percentage loss of earning capacity the applicant was suffering.  The learned Judge was unable to discern the basis upon which the experts had reached their conclusions on the percentage loss of earning capacity, and it was quite obvious that the court was unable to derive any assistance from the medical experts in that regard.

52. The learned Judge observed that the parties did not seem to be able to point to any authority that provided clear guidance in relation to the circumstances under which the Paper Mills Formula is to be applied for the calculation of the percentage for the loss of earning capacity.  At paragraph 50 of her judgment the learned Judge said:-

“50. … It has been said by Mr Lin, citing Lau Man Keung v Yiu Wing Construction Co Ltd (CACV 2232/2001, unreported, 10 June 2002) at §28, that the Paper Mills Formula represents the intention of the legislature in s. 9(1)(b) of the Ordinance, that it can still be applied even though no special circumstances need to be shown (which seems to be the position in the Lau Man Keung case where the Court of Appeal applied the Paper Mills Formula to calculate the percentage loss of earning capacity even though it did not find there were any special circumstances).”

53. After referring to the arguments from the applicant’s opponent to the contrary, the learned Judge went on to observe:-

“52. The authorities (both the Paper Mills and Lui Kwong Yan cases) the parties have cited do not seem to have given any instructive guidance as to the circumstances for the invoking of the Paper Mills Formula. Neither do I find that the Lau Man Keung case Mr Lin has referred to can be relied upon as authority that the Paper Mills Formula is to be applied in a strait-jacket fashion irrespective of whether special circumstances exist.

53. Since it is not apparent from the discussion of the authorities above as to whether special circumstances need to be shown before the Paper Mills Formula is to be applied, care is required when deciding whether those special circumstances listed in s.9 (1A) of the Ordinance need to be shown for the invoking of the formula.  It may be more preferable for the court, when assessing the loss of earning capacity under s.9 (1) (b) of the Ordinance, to take into consideration all the circumstances, without perhaps the need to attach any label to the circumstances or being confined to those circumstances listed in s.9 (1A) of the Ordinance.  Such circumstances may include the opinions of the medical experts, the injured employee’s injuries, his skills and qualifications, the level of the wages in the field of employment he is capable of doing and his pre-accident employment as well as the impact the injuries have on his earning ability.”

54. For my part, I agree with Her Honour Judge Levy. I do not think the Paper Mills Formula is a straight-jacket and should be adopted in every case where section 9(1)(b), or even 9(1A), applies. A reading of the judgment of the Court of Appeal in Lau Man Keung v Yiu Wing Construction Co Ltd would confirm this.  It seems to me that the main reason for the Court of Appeal to apply the formula in that case was because of the diversity of medical opinions, it was difficult to come to an appropriate conclusion regarding the percentage loss of earning capacity in that case.  At paragraph 28 of the judgment of Leong CJHC (as he then was) delivering the judgment of the Court, His Lordship said:-

“28. There is a diversity of opinions on the applicant's loss of earning capacity between the experts themselves and between them and the Board. The percentages range from 1% to 5%. In the absence of further investigation into how these assessments were reached, we are not in a position to say which is appropriate. In these circumstances, we conclude that the formula in Hong Kong Paper Millas modified later by the Court of Appeal inLui Kwong Yan v Shui Hing Decoration Works & Anor[1993] 1 HKLR 168 should be adopted to ascertain the amount of compensation payable under section 9(1)(b).”

55. Further, since the modified version of the Paper Mills Formula[12] uses a comparison between the wages an employee used to earn and the reduced amount of wages he is able to earn after the accident as the basis for arriving at the proportion loss of earning capacity, caution should be exercised in light of the words of Sir Owen Woodhouse inLau Ho Wah v Yau Chi Biu [1987] HKLR 1061 (PC) at p 1063:-

“In ordinary language the concept of earning capacity is certainly not limited to the present or to be measured by some immediate and possibly quite fortuitous achievement. It is concerned with a continuing state, with the potential of an individual and so very much with the future as well.”

56. I agree that even if one decides to apply the Paper Mills Formula, one should be fully alert to the distinction between loss of earnings and loss of earning capacity. This seems to have been acknowledged in Lui Kwong Yan v Shui Hing Decoration Works & Anor[1993] 1 HKLR 168 although the Court of Appeal found that on the facts there the loss of earning capacity was the same as the loss of earnings. 

57. The correct ingredients to be taken into account in conducting an assessment under section 9(1) or (1A) are the very provisions themselves.  In my view, the Paper Mills Formula is not a straight jacket and I do not understand the authorities to be saying that. In fact section 9(4) of the ECO provides that “[i]n assessing the loss of earning capacity for the purposes of subsection (3)(b)…the Court…may but shall not be obliged to give weight to any actual earnings of the employee earned after the accident causing the injury.” In my view, the Paper Mills Formula is to be used in appropriate circumstances where the court finds it most conducive to the justice of the case in determining the issues and arriving at a proper assessment. At the heart of each case up for assessment under section 9 is the percentage of loss of earning capacity. This is to be assessed having regard to all the relevant circumstances of the case. In this respect I agree with the approach taken by Judge Ng in Kan Wai Yip v. Everbest Port Services Limited and Judge Levy in Wong Kai Fun v. Sun On Logistics Ltd. & Employees’ Compensation Assistance Fund Board mentioned above.

58. On the facts of the present case, I do not think the Paper Mills Formula needs to be adopted here.  This is particularly so as I have allowed the applicant’s section 18 appeal. After taking into account all the factual circumstances of the applicant, I maintain my assessment that the total percentage of loss of capacity is 10%.

59. The amount of compensation payable under Section 9 is thus:-

   $714,960 x 10% = $71,496

Section 10 – compensation for temporary incapacity

60. Section 10(1) is the general provision and provides that where temporary incapacity results from the injury, the compensation shall be the periodical payments payable having regard to the probable duration, and probable changes in the degree, of the incapacity.  Such periodical payments shall be, or shall be at the rate proportionate to, “a monthly payment of four-fifths of the difference between the monthly earnings which the employee was earning at the time of the accident and the monthly earnings which he is earning, or is capable of earning, in some suitable employment or business during the period of the temporary incapacity after the accident”.

61. The applicant’s case is however based on section 10(2) which provides that a period of absence from duty certified to be necessary by, amongst other persons, a registered medical practitioner, shall be deemed to be a period of total temporary incapacity irrespective of the outcome of the injury.

62. The applicant was granted intermittent sick leave counting up to a total of 366 days between 7 February 2012 and13 April 2015, the details of which have been set out in a list helpfully prepared by Mr Lam summarizing the dates and number of days of sick leave granted[13].

63. As I mentioned above, the monthly earnings of the applicant for the purposes of the ECO assessed under section 11(1) is $9,930.  However, since the periods of intermittent sick leave granted to the applicant had extended beyond 24 months after the Accident, it seems that section 11(1B) of the ECO may come into play.

64. Section 11(1B)(a) provides that the monthly earnings to be adopted for the purposes of calculating compensation for temporary incapacity under section 10 shall be computed by reference to the earnings of a person with similar earning capacity employed by the employer[14] in similar employment by the end of the 24-month period.  To put it in more intelligible terms, it is obvious that the legislative intent behind the provisions is that account should be had of the likelihood of salary inflation in favour of a similar employee if the matter takes longer than two years to reach assessment.

65. In this regard, however, there is no evidence showing whether the respondent was employing any similar employee in similar employment by the end of the 24-month period since the Accident, ie, by 6 February 2014.  As the respondent has not participated in these proceedings, there is no such evidence or information forthcoming from them, and understandably, the applicant did not adduce such evidence.

66. Section 11(1B)(b), on the other hand, provides that if the employer does not employ any similar employee by the end of the 24-month period, then the figure should be calculated by reference to the rate of increase in the Consumer Price Index by the end of that period.  I have not been invited to make any adjustments to the monthly earnings pursuant to this sub-section.  Similarly, for the purpose of this sub-section, there is no evidence to show that the respondent was not employing any similar employee at the end of the 24-month period since the Accident.  As I said, I have not been invited to consider any submissions with a view to showing whether there have been an increase in the Consumer Price Index during the two years from the date of the Accident, but even if Mr Lam had made such submissions, I might well have betrayed some reservations as to whether section 11(1B)(b) has been triggered.  The reason is this: there has been no evidence to show whether the respondent was employing any similar employee upon the lapse of two years from the Accident, as is apparently required (in view of the way the sub-section is worded) before the court can decide on any adjusted amount of monthly earnings[15]. As this construction point has not been argued, I need not make a decision on it.

67. In the circumstances, I will fall back onto the figure of $9,930 as the monthly earnings for calculating compensation payable under section 10 for the entire periods of intermittent sick leave granted to the applicant.

68. The amount of compensation payable under section 10 is thus:-

   $9,930 x 366/30 x 4/5 = $96,916.80

Section 10A – medical expenses

69. The applicant has incurred a sum of $12,715 as medical expenses as a result of the injuries she sustained, details of which are set out as follows:

Caritas Medical Centre	$2,315
Yan Chai Hospital	$8,850
Cheung Yung Bonesetter	$500
Chinese Medicine Clinic	$1,050
	_______
Total:	$12,715

70. The applicant has mentioned in her oral testimony that there had been an extra amount of approximately HK$10,000 spent on consulting a bonesetter on various occasions in mainland China, costing about RMB230 each time.  The applicant said these expenses were paid by her sister.  In view of the fact that these items were not mentioned in her witness statement (which included an item for bonesetter fee already), and that no receipts have been produced, I indicated to Mr Lam that such evidence is not satisfactory and, in all fairness to the respondent who did not appear at the hearing, I was not prepared to accept it on face value. In any event, it is my understanding that medical expenses expended on treatment outside Hong Kong will require certification by the Commissioner of Labour before the amounts could be allowed in a claim[16]. Needless to say, there is no such certification as this evidence came out unexpectedly at the hearing.

71. Further, section 10A(1A) provides that “[m]edical expenses which an employer is liable to pay under subsection (1) shall, unless otherwise provided by agreement in writing entered into by the employer with the employee, not include those in respect of medical treatment given outside Hong Kong in relation to an accident occurring in Hong Kong.”  There is no suggestion or evidence to the effect that the applicant and the respondent have entered into any agreement in writing to cover medical expenses incurred outside Hong Kong.

72. For the reasons above, I will allow the sum of HK$12,715 mentioned above, but I will not allow the additional amount of alleged medical expenses incurred outside Hong Kong on consulting a bonesetter in the sum of HK$10,000 or so.

INTERIM PAYMENT PREVIOUSLY ORDERED

73. The applicant’s evidence is that periodical payments in the aggregate amount of HK$46,224 had been paid to her by the respondent.

74. However, at the hearing Mr Lam also alerted me to the order made by His Honour Judge Leung on 19 December 2014 ordering that interim payment in the sum of HK$64,154 be paid by the respondent to the applicant.  I am given to understand, and the applicant confirmed this in her oral evidence, that the interim payment so ordered to be paid has not in fact been paid.  So Mr Lam has rightfully reminded me not to deduct this amount from the compensation eventually assessed.

SUMMARY OF COMPENSATION

75. In summary, therefore, the compensation I assess to be payable to the applicant is itemized as follows:-

Section 9	$71,496.00
Section 10	$96,916.80
Section 10A	$12,715.00
	__________
Sub-total:	$181,127.80
Less periodical payment:	$46,224.00
	__________
Total:	$134,903.80
	=========

76. The applicant is also entitled to interest on the sum awarded calculated at half judgment rate (currently at of 4%) from the date of the Accident to the date of this judgment, and thereafter at judgment rate until payment.

77. The applicant shall have the costs of this assessment. I make an order nisi that the costs of this assessment shall be borne by the respondent, to be taxed if not agreed. As the applicant is legally aided, her own costs shall be taxed in accordance with the Legal Aid Regulations. If there is no application to vary the costs order nisi within 14 days, it shall become absolute.

78. I also direct the applicant’s solicitors to serve the relevant sealed order pertaining to this judgment together with a copy of this judgment on the respondent as soon as is practicable.

79. Lastly, I thank Mr. Lam for his assistance.