CHU KANG YEE v. GIANT OCEAN LTD

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. Mr Chu Kiu Chi ("Mr Chu") was a stevedore employed by the 1st Defendant. He was killed in the course of his employment. The administrators of Mr Chu now bring this action against the 1st Defendant. The action against the 2nd Defendant has been discontinued.

Facts

2. On 5th November 1988, Mr Chu was a member of a work gang involved in the loading of fertilisers onto a vessel called M.V. Alsod in the Hong Kong harbour. Next to M.V. Alsod was a lighter known as "Kwai Por 5020". Moored alongside Kwai Por 5020 was another lighter known as "Giant Ocean No.4" and next to this vessel was a lighter carrying fertilisers. This lighter discharged fertilisers into Giant Ocean No.4. Giant Ocean No.4 was a floating packing factory on which the 1st Defendant packed the fertilisers into nylon bags of 50 kg each which were then conveyed to Kwai Por 5020 by the conveyor belt. The Kwai Por 5020 acted as a transit station for the bags of fertilisers to be loaded to M.V. Alsod. The bags delivered from the conveyor belt landed onto one or more nylon net slings spread out on the bottom of the hold of Kwai Por 5020. The nylon net slings were attached to the hooks from the derrick of M.V. Alsod by the 1st Defendant's servants. When it was considered that there were enough bags in the net sling and it was considered full, it would then be lifted by the derrick and loaded into the cargo hold of M.V. Alsod.

3. The loading operations were described by the following, namely, Siu Pui Kan, a co-worker of Mr Chu; Leung Kwong Ping, the derrick operator; Lam Wing Fai, the signal man; Leung Siu Fai, the loading ganger of the 1st Defendant and Leung Shu Choi, another stevedore working on Kwai Por. They have made witness statements and Mr Szeto, a representative of the 1st Defendant who was authorised by the court to represent the 1st Defendant, agreed that their statements be admissible as evidence.

4. From their evidence it emerged that Mr Chu was originally working on the lighters. When the 4th or 5th batch of cargoes were lifted up to the M.V. Alsod, someone complained to Leung Siu Fai ("Mr Leung") that some bags were torn. Mr Leung then asked Mr Chu to go to M.V. Alsod to check the bags. Mr Chu then went to the hold of M.V. Alsod. Leung Kwong Ping, the derrick operator, said that when some fertilisers were lifted up from the lighter and were on top of the hold in M.V. Alsod, he saw a worker coming out from the hold. He stopped the derrick by instinct. The M.V. Alsod was a little bit unsteady and a bag of fertiliser fell out from the net and dropped to the hold. He shouted to warn the worker but the fertiliser hit the worker. The worker that was hit was Mr Chu.

Safe system of work

5. In Speed v. Thomas Swift & Co. Ltd. [1943]1 KB 557, it was held that an employer's duty to provide a safe system of working must be considered in relation to the circumstances of each particular job, and if he delegates that duty, he remains responsible for any inadequacy of the system, and cannot excuse himself by showing that he had good grounds for relying on the competence of the person to whom he delegated it. In General Cleaning Contractors Ltd. v. Christmas [1953] AC 180, Lord Oaksey held that:

"In my opinion, it is the duty of an employer to give such general safety instructions as a reasonably careful employer who has considered the problem presented by the work would give to his workmen. It is, I think, well known to employers, and there is evidence in this case that it was well known to the appellants, that their workpeople are very frequently, if not habitually, careless about the risks which their work may involve. It is, in my opinion, for that very reason that the common law demands that employers should take reasonable care to lay down a reasonably safe system of work. Employers are not exempted from this duty by the fact that their men are experienced and might, if they were in the position of an employer, be able to lay down a reasonably safe system of work themselves. Workmen are not in the position of employers. Their duties are not performed in the calm atmosphere of a board room with the advice of experts. They have to make their decisions on narrow window sills and other places of danger and in circumstances in which the dangers are obscured by repetition."

And Lord Tucker at p.195 held that:

"It was said by Goddard L.J. in the Court of Appeal and by Viscount Simon in this House in the case of Colfar v. Coggins & Griffith (Liverpool) Ld. (1943) 76 LI.L. Rep.1, 4 (C.A.); [1945] A.C. 197, 203 that in these cases the plaintiff must allege and prove specifically what is the defect in the system of which he complains. In other words, it is not sufficient that the system adopted was in fact unsafe, he must show something which could reasonably have been done or omitted which would have made the system reasonably safe and that this failure was the cause of his accident."

6. The Hong Kong case of Ng Kam v. Sun Wan Company, (High Court Action No.4126 of 1984) is an illustration of the application of these principles.

Failing to provide a safe system of work

7. In my view, the accident was caused by the 1st Defendant in failing to provide a safe system of work in two respects. Firstly, there was an unsafe loading of the bags and secondly, there was a lack of warning to the stevedores working in the hold in M.V. Alsod.

Unsafe loading of bags

8. According to Mr Moore, an expert instructed by the Plaintiff, net slings may be used for a variety of items although the general principle is that the goods stowed thereon do not rise above the sides of the net when the net is lifted and suspended by the side strops or loops. The reasoning behind this principle is that the sides of the net hold the goods within the confines of the net. If the goods extend beyond the net, i.e. cartons or bags piled in such a way that they rise higher than the sides, the tiers above will not be secured. The principle behind any form of slinging is that the items being slung, may be suspended safely. This not only entails that the sling is of suitable strength to support the load within but that the goods being slung are secured and are not displaced when suspended or when the load is being moved either vertically or horizontally. In the present case, bags were being poured into the net slings with no effective stacking of the bags within the net. When a quantity of bags, thought to be 30 to 40, had been dropped into the net, the lifting loops or legs of the net were then brought together over the bags and attached to the hook of the lifting tackle. As long as the sides of the net encompassed all of the bags within, then there will be no problem. However, if any of the tiers of bags extend above the sides, each bag would not be secured within the net sling. These bags would be just resting on the surface of those other bags below the sides of the net. Any lateral movement of the net could therefore cause these bags to shift position. If the movement was severe or the bags were initially near the side of the net, bags could be displaced and fell from the net.

9. Mr Moore is of the view that there should be a "checklift" of the sling when the sling is lifted. The winch operator should begin the hoisting slowly such that the load is suspended just slightly above the surface from which it has been lifted. Further hoisting is then halted and an inspection should then be made to verify that the load within the sling is secured, i.e., the goods within will not become displaced or crushed by continue lifting. It is only after this procedure had been complied with then the operator should proceed with the hoisting and the transfer of the load from one position to the other.

10. The bags were normally comprised of a single outer layer of close woven polypropylene material with the individual strands being approximately 2 to 3 mm in width. Although made of polypropylene, local workers tend to refer to all such synthetic material as nylon. Within the outer woven material, an inner polyethylene inner bag is fitted. Due to the nature of the material used, the surface of the bags is relatively smooth and offers less fictional resistance when compared with bags manufactured by natural fibres such as hemp, flax or cotton.

11. Mr Getty, an expert called by the 1st Defendant, admitted that the sling was not safely loaded but maintained that the 1st Defendant was not negligent in the loading operation. He said that in his experience the checklift procedure is not required. He said the cargoes would be lifted at a slow speed and when it reached a meter high, the cargo would settle in the sling, then the signal man would signal the hoisting of the sling.

12. Leung Siu Fai, the ganger said that he had not seen the accident but according to his past experience, the bag of fertiliser slipped out from the sling net and dropped to the bottom of the hold was probably because of bad stacking of the cargoes or the sling net had hit the coaming.

13. In my view, the bag of fertiliser would not have fallen out from the net if the bags in the net were securely loaded onto the net and that bag was probably placed above the sides of the net. This caused the bag to fall off from the net. There is no evidence in the present case that the slings were lifted up slowly first. On the contrary, the evidence show that the operation was carried out at a very fast pace. The bags were poured into the net. There was no counting of the number of bags that were poured into the net and there was no inspection of the sling to see whether the bags were securely loaded before the sling was lifted up to the cargo hold. According to Leung Shu Choi, the rising speed of the cargo runner was quite fast.

14. Mr Getty referred to a photograph from the book entitled "Modem Ship Stowage" by Joseph Leeming, a U.S. Department of Commerce publication of 1942, reprinted in 1957, in which it was shown that a number of bags making up the sling was above the rim of the net. He said that this is a generally accepted and well-established practice; the upper layers being retained in the sling by the forces of gravity friction and compression between the strobes or legs of the net's sling. With respect to Mr Getty, it is not helpful to refer to a photograph in a book re-printed in 1957 to support his argument that it is not unsafe to have bags stowed at the rim of the net. At most the photograph could simply be an illustration of the net sling method of loading. To rely on such a photograph to justify that it was safe to load goods at the rim of the net is misleading and contrary to the safe system of loading as testified by Mr Moore whose evidence I accept.

Failure to provide warning

15. Section 44 of the Shipping and Port Control Ordinance, Cap.313 provided that a person in charge of works shall not carry out, or cause to be carried out, any works in a condition or manner that does not provide adequately against unnecessary risk of accident or bodily injury.

16. Regulation 35 of the Shipping and Port Control (Cargo Handling) Regulations provided that no person under 18 years of age and no person who is not sufficiently competent and reliable shall be employed to operate any lifting appliance, whether driven by mechanical power or otherwise, or to give signals to the operator of such appliance, or to attend to falls on winch ends or winch drums.

17. Regulation 43 provided that:

18. In the Code of Safe Working Practices for Merchant Seamen published by the Department of Transport of U.K., it was stated that before giving a signal to hoist, the signaller should receive clearance from the person making up the load that it is secured, and should ascertain that no one else would be endangered by the hoist. Before giving the signal to lower, he should warn persons in the way and ensure all are clear (Para.3.6).

19. In the Stevedoring Safety Guide issued by the Marine Department of Hong Kong. It was provided at p.13 that a signalman should always be used when loading or discharging cargo at a hatchway unless the crane or winch driver has an unrestricted view of the load at all times. The signalman should do his utmost to protect all persons working at his hatch against accidents. Before a load is hoisted from or lowered into a hold, the signalman should warn all persons working below in the vicinity to stand clear of the hatch square until an ascending load is cleared of the upper most hatch coaming or conversely a descending load has reached the position where it can be safely manoeuvred or handled by such persons.

20. Mr Moore is of the view that if the stevedores working in the hold of M.V. Alsod were forewarned about the sling being suspended overhead, they could have stood clear in accordance with safe working practice.

21. It is clear from the evidence that no warning was given prior to the load being swung over the hold. The signalman, Mr Lam did not warn the workers. He was only engaged to signal the lifting of the sling from the lighter onto the M.V. Alsod. The derrick operator said that on seeing the bag being displaced, a warning was shouted to those below. This warning would be too late as the load was already above the hatch. The 1st Defendant argued that there was no requirement for the signalman by virtue of paragraph 2 of Regulation 43. This is a misreading of the Regulation. The signalman would not be required if the winch operator has a clear and unrestricted view of both of the holds where work is being carried on. In the present case there is no evidence that the winch operator could see both holds. Although the signalman, Mr Lam, said that the derrick operator had told him before work that he could see the inside of the hold, in the Death Inquest the derrick operator stated that he was not able to see who was hit by the bag when it fell - "the bag that came out of the net fell into the hold - but I did not see where it landed." The failure to provide warning to the workers is another instance of the unsafe system of work in the loading operation.

Inevitable accident

22. Mr Getty suggested that stevedoring was inherently hazardous. He seemed to suggest that the accident was an inevitable accident. In The Schwan - The Albano [1892] p.419, Lord Esher MR held that:

"In my opinion, a person relying on inevitable accident must shew that something happened over which he had no control, and the effect of which could not have been avoided by the greatest care and scale. That seems to me to be the very distinction which was taken, and was meant to be taken, between the case of inevitable accident and a mere want of reasonable care and scale."

23. Whilst stevedoring may be dangerous in that the workers have to deal with heavy loads, the hazard in this case was caused by the breach of duty on the part of the 1st Defendant in failing to securely load the sling and in failing to implement a warning system to the workers in the hold. This is not a case of inevitable accident at all. It was suggested that the accident may be caused by the sudden movement of the vessel because of the wave and because of the sudden jerking of the derrick movements. The operation was conducted in the harbour, the movement of waves must be one of the factors to be considered by the 1st Defendant in devising a safe system of work. Similarly, when the bags were put into the sling, the operation must take into account any sudden jerking movement so that nothing would be dislodged from the sling.

Contributory negligence

24. The defence suggested that Mr Chu had not retreated fast enough from the falling cargo and that he had not kept a proper lookout of the danger. This is misconceived. In the first place, Mr Chu was unable to see what was happening above him because he was under the coaming. As soon as he came out from the opening of the hold he would be hit by the falling cargo. There is no chance for him to retreat fast enough from the falling cargo. The only thing that could be done to avoid any accident was for warnings to be given to the workers in the hold while the cargo was above them so that they would not come out from the hold at that time.

25. The 1st Defendant seemed to suggest that Mr Chu and his co-workers were experienced stevedores and they should take care of themselves during the operation. Again, this argument is misconceived. It is for the employer to provide a safe system of work and to instruct the workers how to carry out the system of loading. As Earl Jowitt in General Cleaning Contractors Ltd. v. Christmas stated :

"You cannot blame the men for not taking every precaution which prudence would suggest. It is only too easy to be wise after the event. He was doing the job in the way which the employers expected him to do it, and if, if they had taken proper safeguards, the accident would not have happened."

26. In my view, liability is established against the 1st Defendant and I shall now deal with the question of damages.

Quantum

27. Mr Szeto for the 1st Defendant informed the court that the 1st Defendant did not wish to challenge the quantum to be assessed by the court and he did not attend the hearing on quantum.

Mr Chu's earning at death

28. Mr Chu was born on 19th September 1949. He came to Hong Kong in 1979 when he was aged 30 and lived in Hong Kong until he died, nine years later on 10th November 1988, at the age of 39.

29. In a letter dated 7th December 1988 by the 1st Defendant to the Commissioner of Labour, the 1st Defendant stated that the average number of working days of Mr Chu was 10 days. The basic wage per day was HK$153.50 and the regular overtime wages were of the same amount. His average income per month was HK$3,070. It was stated that when he "had no work at this company, he would go to other companies to work because his employment was not of a fixed nature."

30. In a social investigation report dated 8th September 1989, it is said that according to the family members, Mr Chu was earning about $500 per day with an average working day of 20 days per month, making a total of$10,000 per month.

31. According to Chu Kang Yee, the elder brother of Mr Chu, Mr Chu told him that he was earning on average $15,000 per month. He was able to earn $600-$700 per day on heavy work involving cement. He worked on average 20 days a month and on an exceptional job, he would earn more than $1,000 per day. The minimum he would earn would be $350 per day at about 5-6 days a month. The rates prescribed by the unions are like minimum rates and understated the real position.

32. Taking into account the savings of Mr Chu, his remissions of money to his family in China and his assets, all of which I shall deal with in detail later, I am satisfied that he was earning quite substantially at the time of his death. His brothers have given evidence that he was an extremely hardworking person. I am prepared to accept Mr Barretto's suggestion that for the purpose of the calculation $13,000 per month should be used. This figure is based on an average income of $650 x 20 days per month.

What would Mr Chu have been earning now?

33. I accept that had Mr Chu continued to live, he would probably be a ganger now. He was an extremely hardworking person and as the evidence showed he was selected to do work involving the checking of the cargoes. For the purpose of the calculation, the figure of $20,000 per month is used. This figure can be cross-checked with the rate of a ganger in the 1995 agreement between the Goods Loading, Unloading and Transportation Workers' Union and Cargo Supervisors' Association. The ganger's wages is $401. The average earning would be $401 x 2 shifts x 25.5 working days = $20,451.

34. The increase in earnings of Mr Chu is ($20,000 - $13,000) ÷ $13,000 x 100 = an increase of 53.8%, say 54% in seven years.

Mr Chu's contribution

35. Mr Chu was married. He had a wife and four children. After he came to Hong Kong, his family continued to live in China. They lived in the land and house he purchased and built in the early 1980's. He provided for his family and dependants which included his widow, aged 39, his mother, aged nearly 68, his father, aged 65 who had since passed away and four children aged 15, 13, 10 and 7 years with a monthly sum of cash $2,000. He visited his family about every other month. In addition he purchased and provided numerous items such as clothes, household sundries, food, medicine and other things with an average monthly value of $2,000. Mostly, he paid the school fees directly but the figures cannot be ascertained now. He also from time to time purchased large items for the household. For example, in 1979 he bought numerous clothes, gifts, salt fish and other things which he asked his brother to bring back for him to China. These things were valued at $4,500. The other purchases were:

The average monthly purchase is $47,650 ÷ 7 years (or 108 months) = $441 per month. He also provided $300 to his father and $300 to his mother monthly.

36. His contribution to the dependants is as follows :

This is roughly about 39% of his income of $13,000.

37. The widow was able to save and keep for herself approximately RMB4,500 per year out of the money given to her by Mr Chu. The average monthly saving is $577, using an exchange rate of 1.538 = HK$6,921 ÷ 12 months. The share of each of the seven dependants is $560 :

38. The individual shares of the family members are as follows :

39. Widow $577 + $560 = $1137 equals to 8.74% of $13,000.

40. Four children $560 each equals to 4.3% of $13,000.

41. Parents each $560 + $300 = $860 equals to 6.6% of $13,000.

42. The median increase for the pre-trial period equals to 54% ÷ 2 = 27%.

Pre-trial dependency

Dependency of widow

43. Her dependency is from 5th November 1988 (date of accident) to trial.

Dependency of the four children

44. I agree with Mr Barretto's submission that the dependency of the four children should base on the likelihood that they all would have gone to university or tertiary education had it not been for Mr Chu's death. There were definite plans for the elder son Chu Wai Chung (born on 30th January 1973) to go to Japan to study. Chu Wai Yim (born on 15th December 1974) went to university. She recently graduated and now works as a computer operator. Chu Wai Heung (born on 25th October 1978) had planned to go to university but due to the financial conditions, she was unable to carry out the plans. She now works in a factory in Kwungtung. The youngest son Chu Wai Ching (born on 6th May 1981) attends Form 1 at a school in Hong Kong. The widow came to Hong Kong with the youngest son on 1st November 1993. The other three children are still staying in China. The loss dependencies of the children are calculated up to the 21st birthday of each individual.

Dependency of the mother

45. The pre-trial dependency of the mother would be from 5th November 1988 until trial: 84.5 months.

Dependency of the father

46. The dependency of the father is from the 5th November 1988 until his death in May 1991, a period of 30 months. Because of his early death, his dependency share of $860 would be available for redistribution among the remaining six dependants. As to the figure of $560 and the cash of $300, it would likely have been given to the widow whose dependency was comparatively low.

Calculation of Pre-trial dependency

47. The total pre-trial period is 84.5 months (i.e. from 5th November 1988 to date of hearing.) Two calculations are adopted for the pre-trial period, one based on the seven dependants for 30 months and one based on six dependants for the remainder of the pre-trial period of 54.5 months.

Total pre-trial dependencies

Post-trial dependencies

Widow

48. The deceased was 39 years of age at the time of his death. The widow would depend on the deceased until his nature death. The multiplier is calculated from the day of the deceased's death and not from the day of the trial (Cookson v. Knowles [1979] AC 556). According to actuarial evidence adduced in this hearing, the lifetime multiplier for male at age 39 is 30.8% at a discount rate of 1% and 25.7% at a discount rate of 2%. Following the approach in Chan Pui Ki v. Leung On & Kowloon Motor Bus Company Limited, (High Court Action No.A2006 of 1992), the discount rate of 1.2% is adopted and the appropriate multiplier for 1.2% is 29.6. The formula, by inverse interpolation is :

1÷(0.8÷30.8) + (0.2÷25.7) = 29.6

The post-trial multiplier is 270.7 months (29.6 or 355.2 months less pre-trial 84.5 months). The dependency would be $200,000 x 11.77% x 270.7 = $637,228.

The mother

49. The mother is now 75 years old. If she was in Hong Kong and in average health, a multiplier on an actuarial basis of 10.7 years would be given. But she has been in hospital and was described as in a weak condition. She is now living in China. Mr Barretto said that in view of the above factors, he would adopt a multiplier of 5 years. If a multiplier of 5 years is adopted, it means that there would not be any post-trial dependency due to the 84.5 months of pre-trial dependency. On this item I would simply give $10,000 to the mother for post-trial dependency.

Chu Wai Heung

50. Chu Wai Heung has the balance of multiplier of 132 months - 84.5 months = 47.5 months. On an actuarial basis, the multiplier is 46.8 months (3.9 years x 12). The calculation is 20,000 x 5% x 46.8 months = $46,800.

Chu Wai Ching

51. Chu Wai Ching has the balance multiplier of 168 months - 84.5 months = 83.5 months. On an actuarial basis, the multiplier is 80.4 months (6.7 years x 12 months). The calculation is 20,000 x 5% x 80.4 months = $80,400.

52. According to the last table in the Ogden Table, namely, "multiplier appropriate to fixed period" the multiplier by reference to interest rate of 1.5% in respect of the following years is as follows :

Although Mr Barretto had not selected a multiplier appropriate to the four children at the time of the death, his calculation of the dependency of the children both for pre-trial and post-trial is not excessive.

Total post-trial dependencies

53. Total post-trial dependencies is $774,427 ($637,227 + $10,000 + $46,800 +$80,400).

LARCO claim

Accumulation of wealth

54. In Re Lau Chuen Fat (deceased), Chan Sim Lam v. Shun Shing Engineering [1994]2 HKLR 173. Kaplan J. dealt with the different approaches taken by the court as to how the accumulation of wealth should be calculated. For my part, and confining to the facts of this case, I would look at the evidence to see whether it is likely that there is a pattern of saving and whether there would have been any accumulation of wealth at the day of the nature death. In the present case, there is ample evidence pointing towards that direction. Mr Chu was an extremely hardworking man as shown by the evidence of his two brothers who were both in Hong Kong at the time of his death and who have frequent contacts with him. At his death, he had numerous assets :

55. Mr Barretto submitted that the pattern of saving is about 18 to 19% of his earnings per month. For the pre-trial accumulation of wealth, the calculation would be $13,000 x 127% x 19% x 84.5 months = $265,068.

Post-trial or future accumulation of wealth

56. Two of the children would have become independent within the pre-trial period. It can be assumed that the deceased having fewer dependants would be able to save more proportionately. Whereas he was spending 5% of his earnings on each of the two dependants, he would immediately after trial be able to save an extra 10% of his earnings. Therefore for the purpose of the post-trial saving calculation, I would adopt 29% of his earnings (19% pre-trial + 10%). Base on actuarial evidence, the appropriate multiplier for a 39 year old man to age 65, on a discount rate of 1.2% is 21.3 years. The balance of the multiplier is 21.3 x 12 months - 84.5 months = 171.1 months. The post-trial saving is $20,000 x 29% x 171.1 months = $992,380.

57. Mr Barretto further submitted that the deceased clearly had considerable capacity for further increased savings and accumulation as the other dependencies ceased, namely, the mother and the two younger children. Also he would have received benefits under the Mandatory Provident Fund. At the same time, one should attempt to remove from the savings the amount he would have spent on himself and supporting his wife during the time he was retired and therefore using some of his savings. Mr Barretto, however, argued that Mr Chu would not have needed to use up the savings during the years of his retirement. He already had paid for his house and land in China and he also purchased a place for himself in Hong Kong. Mr Barretto had set out in details calculations of these various items. It is not necessary for me to go into these in detail since there could not be any exact mathematical calculation in this area. Doing the best I can, I think the figure of $1.2 m would be the appropriate figure for his post-trial accumulation of wealth.

Summary

Apportionment of FAO Claims less ECC sums received

58. Employee's compensation was awarded on 15th January 1990 in the sum of $345,000.

59. 3/10th was apportioned to the two parents, i.e. $103,500 or $51,750 each.

60. 7/10th was to the widow and the four children, i.e. $241,500 or $48,300 each.

61. Mr Barretto suggested that in view of the relatively small sum apportioned to the children, the deduction for employee's compensation should be from the shares of the parents and the widow only. This suggestion is sensible and I will make the deduction in the manner as suggested.

Parents dependencies

62. Mother :

63. Father :

Widow dependency

Children's dependency

64. The share to the children will remain unchanged.

Costs

65. Costs nisi of the action shall be awarded to the Plaintiff.