TSUI NUEM v. CHEUNG WAI KUEN

HCPI 374/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES NO.374 OF 1998

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Judgment

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1. The plaintiff was injured on 24 May 1993 when travelling in the front passenger seat of a light goods vehicle driven by the defendant. This is the assessment of his ensuing damages following the entry by consent of interlocutory judgment in his favour on 3 July 1995.

2. After the accident the plaintiff was taken to United Christian Hospital where he was found to have suffered bruises and abrasions to his forehead, a fractured left arm with nerve injury, and a comminuted fracture over the right elbow. He was in hospital for 11 days and continued to receive outpatient treatment thereafter. The plaintiff's claim for pain, suffering and loss of amenities in the sum of $400,000 is agreed, and an award is duly made.

3. The main area of dispute between the parties covers the plaintiff's loss of earnings for both pre- and post-trial periods. The defendant accepts neither the multiplier nor the pre-accident earnings advanced by the plaintiff, and argues further that the plaintiff has failed to mitigate by not working when he could have done.

4. The plaintiff was employed at the time of the accident as a delivery worker with Fan Shing Plastic Factory, and he was working in that capacity when the accident occurred. In his evidence however it emerged that the plaintiff was more than a mere delivery worker; he had in fact owned his own business in Fo Tan in mainland China, which he operated with a partner. Whilst doing so, he apparently lived in Hong Kong but spent half of each month at the business. He was obliged to give this up when he and his partner in the venture separated. At this point he came to work for the proprietor of Fan Shing Plastic Factory, one Ah Tsang, who was a friend.

5. The relevance of this history is that the plaintiff's own business in Fo Tan was apparently of the same nature as that of his new employer - namely the manufacture and wholesale bulk delivery of plastic bags. It was apparently because of his expertise, and moreover because of the goodwill inherent in his customer contacts in Hong Kong, that he and Ah Tsang reached an agreement on his employment.

6. According to the plaintiff the terms of his employment were orally agreed between himself and Ah Tsang. They amounted to a monthly salary of $6,500, an extra month's pay as annual bonus, and commission on the sale of plastic bags at the rate of $10 per pack of 10,000 larger bags or 20,000 smaller bags. The plaintiff himself is the only witness of this, as he said that Ah Tsang's business collapsed sometime in 1995, and when he tried to contact him for evidence in the present context Ah Tsang had moved away. The plaintiff has not since then been in contact with him.

7. In addition to his oral evidence the plaintiff adduces three documents which substantiate to some extent the nature of his employment, although not its precise terms. At pages 43/44 of the bundle of documents is a letter from Fan Shing Plastic Factory stating that he was employed as a sales and marketing executive, as well as a delivery worker, from April to May 1993. This confirms that the plaintiff was not just a delivery worker, but was offering to his employer (and potentially to the labour market as a whole) experience and skills in the fields of sales and marketing.

8. This conclusion is in one respect favourable to the plaintiff's interests, and in another respect less so. In his favour, in a context where there is little independent evidence of the terms of his employment, it disposes the court to consider him worth more to an employer than a mere delivery worker. By contrast, his extra skills and experience make it less easy to accept that he was unable to find work at all after the accident, largely, he claims, by reason of his reduced physical capabilities.

9. The second document supporting the plaintiff's version of his terms of employment appears at pages 45/46 of the bundle. It shows receipt of commission payment for the month of April 1993 in the sum of $4,200 at the rate of $10 each for 420 packets. This is the rate of commission to which the plaintiff testified, and relates to the only completed month of his employment, which commenced in April and effectively terminated with the accident on 23 May 1993.

10. At pages 47/48 of the bundle is a receipt from the plaintiff to his employer for the Employees Compensation payment in respect of the accident. This is of significance only insofar as it confirms the employer/employee nature of the relationship.

11. Cross-examined about his commission for the uncompleted month of May 1993 up to the accident, the plaintiff said he had sold about 400 packs by then, and there were $7,000 worth of goods on the vehicle at the accident, for which he anticipated commission of $2,000. He said this would have given him commission of about $6,000, but he did not receive it because his employer set it off against the loss of the goods on the vehicle.

12. The defence does not dispute that the plaintiff received a salary from his employer. In the answer to the revised statement of damages the figure of $6,500 per month is accepted, although Mr. Wong for the defendant cast doubt on the plaintiff's credibility in his closing argument. This suggestion arose out of the plaintiff's evidence in cross-examination when he said that the goods on the vehicle at the time of the accident were destined for the Yacht Club at Sai Kung. These were to be sold by weight, and his commission would be based on the difference between the price he paid Ah Tsang and the price for which he sold them to the customer.

13. This of course amounts to a different basis for the calculation of commission from that advanced by the plaintiff in his evidence in chief. This apparent anomaly was not explored by Mr. Wong in his further cross-examination, nor was it later clarified by Mr. Chow for the plaintiff in re-examination. The evidence was offered by the plaintiff entirely naturally and with no appearance either of confusion or reluctance. It would be consistent with both his evidence and his demeanour if he were referring to a one-off method of calculation of commission for this particular consignment only. However, a finding to that effect would be speculative in the absence of clarification.

14. I do not find that this unresolved issue reflects on the plaintiff's credibility as a whole. His demeanour was good and he gave his evidence in a straighforward manner with no appearance of dissembling. I accept his evidence that he was earning a basic salary of $6,500 per month, and I accept that he was also earning commission on monthly sales. The plaintiff said he expected to earn around $6,000 per month in commission. He does not claim that amount, but he claims the $4,200 supported by the receipt for the month of April 1993. It also emerges from his evidence of sales for the uncompleted month of May 1993 that he would have expected a similar figure for that month.

15. Even with a finding of credibility, the plaintiff's evidence of one month's actual commission, plus a rough estimate for the uncompleted month, provides an unsatisfactory sample for assessing notional earnings over a working lifetime. It fails, through no fault of the plaintiff, to give a balanced view of earning prospects over a longer period and under different economic conditions. It would therefore be an injustice to the defendant to accept the plaintiff's April 1993 commission as definitive of all his earnings from the accident to the end of his working life.

16. I do not discount this evidence of the pre-accident commission earnings, as it amply demonstrates that the plaintiff was capable of earning substantial commission; it is the quantum which I am unable to find probable on such a brief sampling. However, considering this evidence together with his undisputed experience and contacts in the trade, I find it probable that he would have earned not less than $2,500 per month in commission.

17. Accepting as I do the plaintiff's credibility, I also have no difficulty in finding that he would have received a yearly bonus of one month's salary, and in so doing I take notice that such an arrangement is very common in Hong Kong. A sum representing this item has not been included in the total monthly earnings in the plaintiff's Revised Statement of Damages, however it is pleaded in the statement of claim and I accordingly allow it. I find therefore that the plaintiff's pre-accident monthly earnings (including one twelfth of his one month bonus) would be $9,541.66.

18. In seeking to establish the plaintiff's pre-trial loss of earnings Mr. Chow relied on an assumed annual inflation rate of 10%. Mr. Wong disputed this figure, relying on Cheng Sam Pak v Secretary for Justice [1998] 2HKC 551, although it should be noted that this case discusses the upgrading of PSLA awards for intervening inflation, rather than notional pre-trial pay increases for calculating loss of earnings.

19. The conventional 10% assumed annual increase in wage levels has become progressively less valid over recent years as the inflation rate has declined. I accept however that there has been considerable inflation since the accident, but as I am not offered statistics I am obliged to estimate on the conservative side. I place average inflation from accident to trial at 8% per annum, giving a figure over the 5 1/2 years since the accident of ($9,541.66 + 14,580.62) x 1/2 = $12,061.14 as the plaintiff's median monthly pre-trial earnings.

20. The plaintiff has not worked since the accident and claims a total loss of earnings thereafter. He said he had registered with the Labour Department in Tai Po but had not been offered employment, and that he was unfit since the accident to do manual work. Mr. Wong for the defendant argues that he has failed to mitigate his loss in the face of available employment.

21. In cross-examination the plaintiff agreed that Mr. Tsang had offered to take him back around May 1995, suggesting that he (the plaintiff) would merely sit with him on deliveries without doing any manual work. He agreed that it was his goodwill and not his strength which Mr. Tsang wanted, but the plaintiff apparently declined the offer. He said that he knew from creditors that Mr. Tsang's factory was closing as his business was in trouble, and he did not want to be involved with him in the circumstances. This evidence was not disputed, and I find the plaintiff's decision reasonable in the circumstances and not amounting to a failure to mitigate.

22. Asked further if he had other friends in the trade besides Mr. Tsang, the plaintiff agreed that he had, but said he had not approached any of them for work. His stated reason for failing to do so was his "face", in that the wholesalers had previously obtained their plastic bags from him as a manufacturer, and he did not now want to be subject to their orders as an employee. He wanted to work outside that particular trade.

23. Dr. Tsoi Chi Wah examined the plaintiff in July 1994 and again in April 1998. He concluded that the plaintiff should not lift heavy weights and that he was unable to resume his previous job as a delivery worker. He recommended light work, such as messenger, cashier, shop assistant or waiter, and said that the sick leave should be around two years from the accident. Dr. Tsoi confirmed his conclusions in giving oral evidence and was apparently unaware that the plaintiff's connection with the plastic bag trade extended beyond being a delivery worker.

24. In assessing the adequacy of the plaintiff's mitigation of his loss I bear in mind that Dr. Tsoi's suggested occupations are advanced only from the point of view of physical capability. I do not find it realistic that a man of 58 or 59 (allowing for Dr. Tsoi's recommended 2 years sick leave), with expertise in manufacturing plastic bags, should work as a waiter, messenger or watchman for example. In the plaintiff's failure to find such work I do not therefore find any failure to mitigate, a conclusion anyway reinforced by the absence of employment offers from the Labour Department.

25. I am however concerned by the plaintiff's reasons for not seeking work in the area of his own expertise, where the goodwill he enjoyed with bulk purchasers of plastic bags would have been a factor in his favour. It was, on his own frank evidence, a matter of his pride that he did not seek employment amongst the wholesalers to whom he had supplied plastic bags when he was a manufacturer. His goodwill and expertise, and not his strength as a delivery worker, were the reasons for Ah Tsang employing him, and I find it likely that others in the field would also have offered him work.

26. To evaluate his failure to mitigate in this context is not easy. He would be two years older when again available for employment. His goodwill would be to that extent diminished by his not being in contact with old customers whilst recovering from the accident. He was also diminished in physical capacity. It would therefore be unlikely that he would secure such a good deal as he had with Mr. Tsang. I do however find it probable that the plaintiff could have earned at least $4,000 per month in his own area of expertise and goodwill at the end of his sick leave in mid 1995. To that extent he has failed fully to mitigate his loss, and that sum will be applied in reduction of his monthly loss of earnings from the end of June1995 until the date of trial.

27. The plaintiff's gross pre-trial loss of earnings before the deduction for failure to mitigate will therefore amount to $12,061.14 x 66 months = $796,035.24. The $4,000 a month deduction as at the end of June 1995 will also be subject to 8% per annum escalation for inflation, giving at the date of trial a median figure for deduction of $(5,206.80 + 4,000) x 1/2 = $4,603.40. The period to trial from the end of June 1995 is 41 months and the deduction from the gross figure of $796,035.24 is therefore $(4,603.40 x 41) = $188,739.40. The net award for pre-trial lossof earnings is accordingly $607,295.84.

28. The plaintiff's present notional monthly earnings for the purposes of calculating future loss, and allowing for the deduction for failure to mitigate, will be $(14,580.62 - 5,206.80) = $9,373.82. To this figure the plaintiff seeks to apply a multiplier of 5, whereas the defence suggests 3 as the appropriate level. Mr. Chow has pointed to a number of authorities in the Hong Kong Law Journal multiplier tables. I will not analyse them in detail as it suffices to say that none of them support a multiplier of 5. The plaintiff is now aged 61, and the closest example as to age and occupation cited by Mr. Chow was Fok Por (A2555/92), where a 59 year old delivery worker was awarded a multiplier of 5, including however the pre-trial period. In the case of the plaintiff I find a post-trial mutiplier of 3 to be appropriate, which will realise an award for future loss of earnings of $(9,373.82 x 12 x 3) = $337,457.52.

29. The plaintiff also seeks a global award for loss of earning capacity due to his disadvantage in the labour market. This is opposed by the defence, and I agree that there is no basis for such an award in this case. The evidence does not support it, and it would anyway be inappropriate in the case of an unemployed man of 61 who is already receiving an award for loss of future earnings.

30. The plaintiff also claims the cost of $20,000 of an operation at a private hospital to remove a metal implant inserted in treating the fracture to his right elbow. The implant is now protruding and causing a skin irritation. According to Dr. Tsoi the operation is a minor one and can be accomplished under local anaesthetic. It can be done at a Government Hospital at a cost he assessed at $500 overall. Apparently the plaintiff had twice attempted to have this operation several years ago, but had on each occasion been frustrated by an equipment failure. He said in his witness statement that he was too frightened to have the operation after those experiences, and because he has heart disease. However he said in evidence that he was now prepared to have the operation, but wanted it done by a private doctor.

31. Dr. Tsoi said that the only disadvantage of an operation at a Government Hospital would be the waiting time of around six months. Apart from that, there would be no significant advantage in private treatment. The plaintiff has already delayed the operation after his experience with equipment failures, and in the circumstances the further six months waiting time for an operation in a Government Hospital does not appear critical. Dr. Tsoi described the operation as minor and said that equipment failure was rare. I therefore decline to make the award sought by the plaintiff, but award the sum of $500 suggested by Dr. Tsoi as the cost of Government treatment. As the plaintiff is unemployed, the further award sought of six weeks sick pay following the operation will not apply.

32. Following Mr. Wong's cross-examination of the plaintiff on travelling expenses and nursing fees, these are now agreed along with other special damages, save for the claim of $6,400 for the watch. According to the plaintiff, the make of the watch was "Tudor", and it was purchased in Hong Kong towards the end of 1992. It was therefore around six months old at the time of the accident. Mr. Wong did not appear to dispute the plaintiff's evidence, but pointed out that damages should reflect the second-hand value of the watch. In the circumstances, I award $6,000 for this item.

The total award is therefore:

PSLA (agreed)	$400,000
Loss of earnings pre-trial	$607,295.84
Loss of future earnings	$337,457.52
Future operation cost	$500
Watch	$6,000
Other special damages (agreed)	$30,095
Total	$1,381,348.36

33. Credit will be given for the sum of $136,881.76 already received as employees compensation. Interest will run on the general damages at 2% from writ to judgment, and on the special damages at half the judgment rate from the accident to judgment. Interest after judgment will be at the judgment rate.

34. I note that there has been a payment into court, and I therefore make a 14-day order nisi for costs to the plaintiff with a certificate for counsel. The defendant will have liberty to apply on costs in the event that the award has not beaten the payment in.