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B HCPI 232/2011 B
[2018] HKCFI 1024
C C
IN THE HIGH COURT OF THE
D HONG KONG SPECIAL ADMINISTRATIVE REGION D
and
K K
M _________________________ M
N
Before: The Honourable Mr Justice Bharwaney in Court N
O
Dates of Hearing: 12-15 January, 18 January, and 27 April 2016
O
Date of Agreed Chronology: 17 August 2016
P P
Date of Judgment: 9 May 2018
Q Q
_______________
R
JUDGMENT R
_______________
S S
T T
U U
V V
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A A
B
B
INDEX
C
DID MADAM FAN COHABIT WITH THE DECEASED AS HUSBAND AND WIFE C
FOR AT LEAST 2 YEARS BEFORE HIS DEATH? ...................................................... 5
D
THE EARNINGS OF THE DECEASED ...................................................................... 12 D
THE ASSESSMENT OF THE AWARDS FOR LOSS OF DEPENDENCY ................ 47
E
HOUSEHOLD EXPENSES IN PHILADELPHIA AND HONG KONG AND E
MADAM FAN’S PERSONAL EXPENSES ................................................................. 51
F
AIR TICKETS AND FAMILY TRIP EXPENSES ........................................................ 66 F
K
THE MULTIPLIER TO BE ADOPTED IN THIS CASE TO ASSESS POST-TRIAL
LOSS OF DEPENDENCY ............................................................................................ 86 K
N
THE AWARD FOR LOSS OF ACCUMULATION OF WEALTH ............................... 90
N
OTHER CLAIMS AND INTEREST ............................................................................. 98
O SUMMARY OF THE AWARDS MADE ...................................................................... 99
O
COSTS ......................................................................................................................... 100
P LIBERTY TO APPLY .................................................................................................. 101 P
Q
Q
1. This is an assessment of damages in a fatal accident action
R
brought by the plaintiffs, Ms Kan Wai Ling and Madam Fan Mei Na R
S (“Madam Fan”), who are the co-administratrices of the estate of Kan Siu
S
Hong (“the deceased”). The deceased sustained fatal injuries in a traffic
T
accident that occurred on 11 February 2009 at Lam Kam Road, Pat Heung, T
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A A
B
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New Territories. By a consent order dated 2 December 2015, interlocutory
C judgment for damages to be assessed was entered in favour of the plaintiffs C
M (a) Madam Fan, the former wife of the deceased, who was born on M
S
the accident. He is aged 22 years and 11 months today; and
S
T
T
1
[CBB/114 §11] [T/2S]
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(d) Madam Wong Lai Sheung, the mother of the deceased, who
C was born on 28 July 1934 and was aged 74 years and 7 months C
G time that Madam Fan, Kan Wai Ling and Kan Ho Chuen stayed in Hong G
Kong and in the United States in the years preceding the death of the
H
H
deceased was the subject matter of inquiry during the hearing.
I
I
5. The allegation of Madam Fan, that she was cohabiting with the
J
deceased at the time of the accident, was in dispute. However, it was J
K common ground that she was a dependant of the deceased, being a former
K
wife of the deceased within the meaning of section 2(1)(a) of the Fatal
L
Accidents Ordinance, Cap. 22. It was also common ground that Kan Wai L
M Ling and Kan Ho Chuen, the daughter and the son of the deceased, were
M
dependent on him at the time of the accident. The extent of their dependency
N
and that of Madam Fan, and of Wong Lai Sheung, was a matter of some N
O controversy.
O
wealth.
Q
Q
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A A
B
B
Did Madam Fan cohabit with the deceased as husband and wife for at least
C 2 years before his death? C
N
10. Madam Fan obtained a United States Permanent Resident Card N
Q whom she married in 1997, after her divorce from the deceased5. She said
Q
6
in evidence that she married Mr Lam because she loved him . She added
R
that she took her two children to live with Mr Lam in the United States and R
S
S
2
[CBB/111 §5]
3
[CBB/112 §6]
T 4
[T/13P] T
5
[T/13T] [T/14J-S]
6
[T/14L]
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that they lived as husband and wife7. That relationship did not last and
C eventually she returned to Hong Kong with her son sometime at the end C
19988. When it was suggested to her that her relationship with the deceased
D
D
had broken down, she said: “You cannot say that our relationship has totally
E broken down because we still had children”9. In fact, just as Madam Fan E
had married Mr Lam in 1997 after her divorce, so did the deceased re-marry.
F
F
Madam Fan stated in the supplemental witness statement dated 15 March
G
2013 that the deceased married her sister, Sherry Fan, on 3 June 1997 at the G
H
San Po Kong marriage registry in Hong Kong, that they did not hold any
H
wedding ceremony and had never lived together, and that two or three days
I
afterwards, Sherry Fan left Hong Kong and returned to the United States I
J where she applied for the deceased to be granted permission to reside in the
J
United States10. Just as Madam Fan divorced Mr Lam, so did the deceased
K
subsequently divorce Sherry Fan. Although the marriage of Madam Fan to K
L Mr Lam and the marriage of the deceased to Sherry Fan, and their
L
subsequent divorces, give the impression that their marriages were
M
marriages of convenience, to enable applications for Green Cards to be M
N issued to Madam Fan and to the deceased, I need not make any findings on
N
this point. In the course of her cross-examination, Madam Fan conceded that,
O
even before, and when Madam Fan was dating the deceased prior to their O
P marriage, her sister, Sherry Fan, actually liked the deceased 11 . She also
P
stated that she did not actually know the deceased had filed an affidavit in
Q
Q
support of his petition to divorce Sherry Fan in which he had stated that they
R had cohabited together in a flat in Waterloo Road12. R
S 7
[T/17L] S
8
[T/23J]
9
[T/24P]
T 10
[CBB/157 §8] T
11
[T/21K]
12
[CB3/3032] [T/21H]
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11. Madam Fan explained that when she returned with Kan Ho
C Chuen to Hong Kong from the United States at the end of 1998, she C
was close to the site where he was working14. Eventually, the deceased had
F
F
to return possession of the Ma On Shan flat and he moved to the Shanghai
G
Street property at the end of 1999, “because there was nowhere that he could G
H
move to”15, and he occupied a room in the front portion of the Shanghai
H
Street flat, which was different from the portion that she was occupying 16.
I
She did not assert that they were living together there as husband and wife. I
J
J
12. Madam Fan stated that this state of affairs continued for about
K 6 years until she moved into a flat at Room 1206, Fung Yam House, On K
Yam Estate, Kwai Chung, in October 2005. The deceased did not move
L
L
with her and he remained in Shanghai Street17.
M
M
13. She was asked about her knowledge of where the deceased
N lived after she had moved out. She admitted that she did not know when the N
deceased moved out of the Shanghai Street unit because “[he] did not tell
O
O
me,”18; and she also said that, after she left the Shanghai Street flat, the
P deceased continued to rent that place “but whether he did go back to stay, I P
do not know”19.
Q
Q
R
R
13
[T/26M-Q]
S 14
[T/26T-27A] S
15
[T/27L-N]
16
[T/27M]
T 17
[T/29K-O] T
18
[T/4H]
19
[T/29P]
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14. Madam Fan started to spend more of her time in the United
C States after November 2005. The records from the Immigration Department C
showed that she was out of Hong Kong for 74 days from 11 November 2005,
D
D
129 days from 17 February 2006, 12 days in September 2006, and 278 days
E from October 2006 to July 200720. E
F
15. Subsequently, the deceased moved out of the Shanghai Street F
L
L
16. There was no evidence that their relationship changed after
M
July 2007 and there was no evidence that they started to live together as M
N husband and wife. Whilst I accept the evidence of Madam Fan that “[in the
N
two or three years before the accident, we] were cohabiting with each
O
other,”24, in the sense that they were living in the same premises, I am not O
S
S
20
[CB3/3064]
21
[T/4M]
T 22
[T/4P] T
23
[T/37B]
24
[T/7Q]
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children does not lead me to conclude that they were cohabiting as husband
C and wife. C
D
17. The fact that counsel for the plaintiff, Mr C K Wong, did not D
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COURT: So those are the matters to be examined. But of course
it seems to be unnecessary to ask intimate and indelicate
C questions… C
MR WONG: Yes, exactly, that’s my point.
D
COURT: …when it does not further your claim.” D
E
18. In the course of my exchanges with Mr Wong, I had mentioned E
J find that I am unable to do so. In Fung Suen Sim v. Liu Chun Pong,
J
HCPI 896/2007, 23 December 2011, I had stated that:
K
K
“42. In cases such as the present where the most important factor
L in the calculation of the award is the earnings of the deceased, as L
opposed to income from other sources, a practice has developed
of expressing the annual dependency as a percentage of the annual
M
earnings of the deceased. Percentages have become conventional M
in cases where the surviving widow had been wholly dependent
N on her husband and did not use her own income, if any, to support
N
the common household expenditure. This practice was explained
and supported by O’Connor L.J. in Harris v Empress Motors
O [1984] 1 WLR 212 at p.216-217: O
“In the course of time, the courts have worked out a simple
P solution to the … problem of calculating the net dependency P
under the Fatal Accident Acts in cases where the dependants
are wife and children. In times past, the calculation called for
Q
a tedious enquiry into how much housekeeping money was Q
paid to the wife, who paid how much for the children’s shoes
R etc. This has all been struck away and the modern practice is
R
to deduct the percentage from the net income figure to
represent what the deceased would have spent exclusively on
S
himself. The percentages have become conventional in the S
sense that they are used unless there is striking evidence to
T
T
25
[T/126L-M]
26
P’s Closing Submissions, §37 at pp. 27-32.
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make the conventional figure inappropriate because there is
no departure from the principle that each case must be
C decided on its own facts. Where the family unit was husband C
and wife, the conventional figure is 33% and the rationale of
D this is that broadly speaking, the net income was spent as to
one-third for the benefit of each and one-third for the joint D
benefit … Where there are children, the deduction falls to
E 25%.” E
The reason for the smaller deduction in the latter case is that
F earnings are presumed to be split four ways in the latter case, F
rather than three ways, namely, one-quarter for the deceased, one-
quarter for the wife, one-quarter for the children, and one-quarter
G
for joint use. Thus, the conventional figures adopted 66.6% of G
earnings, to assess the dependency of a widow alone, and 75% of
H earnings, to assess the dependency of a widow and children.”
H
43. It is appropriate to adopt these percentages in the present
I case to reflect, not only the financial contribution made by the
deceased to his wife, but also the value of the dependency I
represented by the savings he would have accumulated for the
J benefit of his dependants.” J
T
T
27
At p. 217.
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cha” or for a meal together28 but, apart from isolated and occasional joint
C expenditure of that nature, there was an insufficient joint element in the C
patterns of expenditure of the deceased, on the one part, and Madam Fan
D
D
and the children in the United States, on the other part, to enable the
E application of the formula set out in Harris v Empress Motors. E
F
F
The Earnings of the Deceased
G
G
21. The business of Cheung Hong was the transport of construction
H
waste for disposal at various dumping sites in Hong Kong primarily using H
I
the six 24-ton dump trucks owned by the deceased. The deceased ran his
I
business single-handedly29 from his home30. The turnover in and the income
J
from the transportation business was very substantial. The total income J
M accountant who has worked for more than 40 years in Hong Kong, and
M
Mr Martin Tupila, a chartered accountant specialising in forensic accounting
N
for more than 10 years, were appointed by the parties respectively to review N
O the accounting record and report on the profits earned by Cheung Hong over
O
this period of time. In their joint report dated 31 March 2015, they agreed
P
that the parties had little knowledge about the business and that the books P
S 28
Madam Fan gave evidence that “[sometimes] he saw that I was alone at home and hearing that I was S
bored, he took me out for a meal. I did not always follow him.”: [T/67C-D].
29
[T/2U]
T 30
[T/3A-4I] T
31
[CBC/429 §3.2.1]
32
[CBC/598 §2.1.1-2]
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her 2nd supplementary witness statement that she did not participate in the
C business of the deceased and that she did not know how much income the C
could be identified from the bank statements, such as insurance, repairs and
F
F
maintenance, and licencing fees, these were in addition to the invoices
G
provided; and that there was evidence that some of the invoices provided G
H
were settled in cash and, given the nature of the business, that it was likely
H
that other cash withdrawals were used to pay business expenses.
I
I
22. The stark difference between the parties is highlighted by the
J
J
initial positions taken by the experts: Mr Lau was of the opinion that Cheung
K Hong earned a profit of HK$5,953,396 over this period of time35; Mr Tupila K
was of the view that Cheung Hong suffered a loss of HK$204,155 over this
L
L
period36.
M
M
23. Given the substantial difference between the experts and the
N
time it would take to review their evidence, I drew the parties attention to N
O the relevance of that evidence to the issues before me in this case in these
O
terms:
P
P
“COURT: Mr Wong, in the light of my indication to you that I am
most unlikely to apply the Harris v Empress method of assessment
Q
to this case and that I will be looking at hard evidence of the actual Q
dependencies by way of remittances and by way of payments
R towards the Hong Kong household and payments to Madam Fan
R
before Mr Kan’s death, is it that critical for us to actually go
S
S
33
[CBA/89] [CBB/165]
T 34
[CBC/607-1] T
35
[CBC/274]
36
[CBC/435§3.4.5]
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through the complex exercise of trying to ascertain what was the
true income of the business?
C
MR WONG: It’s still critical. C
D
COURT: Because whatever was the income, whatever was the
true profit and loss status of the business, it is clear beyond D
peradventure that earning $21 million of income in two and a half
E years was substantially more than was needed to support the E
family in America and to support Madam Fan in Hong Kong.
F MR WONG: My Lord…
F
COURT: So the only relevance of that would be going towards
G trying to prove a claim for loss of accumulation of wealth.
G
MR WONG: Correct.
H COURT: But that claim has to be substantially discounted, H
because of -- and so is the exercise worth it? For two experts to
come and give evidence and whether I take the [projection]
I
method37 or some other method - of course I am most likely to find I
that their business was profitable. I am most unlikely to find that
J he earned everything and spent everything on the business, which
J
is Mr Tupila’s situation, which runs contrary to what I sense to be
the commonsensical view of the situation.
K
But between the extreme of Mr Tupila’s situation and perhaps the K
halfway point that Mr Lau is advocating via the projection method,
L if you apply the projection method percentages, and then you L
follow the formula in my decision in Fung’s case and do the
arithmetic and discount it for early receipt, are we talking more
M
than a few hundred thousand dollars? Are we even in the range of M
half a million?
N
MR WONG: Well, my Lord… N
COURT: And in that context, is it really sensible to call two
O experts? Why not just make an agreement? O
…
P
COURT: No, I’m just only talking about the economics of it, P
Mr Wong. If we spent so much money on experts just for an
Q award which is unlikely to exceed half a million dollars, is it
Q
worthwhile?
R MR WONG: My Lord, it depends. Assuming…
R
COURT: No, I’m just asking you to do the maths.
S
S
37
The projection method uses historical data, such as Inland Revenue returns, to project future profits and
T
losses. Based on returns submitted to the Inland Revenue by Cheung Hong, Mr Lau estimated an average T
gross profit ratio of 12.42% which he applied to the gross income earned for the period from 1 April 2006
to 1 February 2009 to arrive at gross profits in excess of $2.5m [CB?/536-537].
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MR WONG: My Lord, assuming this is merely for discussion, I
don’t think there is any dispute between the two accountants, with
C the papers on hand, Mr Lau said, well, the so-called net profit C
before the…
D COURT: There’s no dispute. The only dispute is whether the D
unknown withdrawals are business related or partly business
E
related.
E
MR WONG: Yes.
F COURT: That’s the only dispute.
F
…
G COURT: So that’s what I’m asking you to consider, applying the G
formula in Fung’s case to 2.8 million and to 7 million and see what
H
figures you get, and then reconsider whether it is not better just to
make an agreement on that head. Because it seems to me… H
Q 24. Despite this exchange, the parties failed to reach agreement and Q
S 25. Mr Lau had not given expert evidence in any court or tribunal
S
before this occasion. He has appeared as an advocate for his clients on a
T
T
38
Counsel for the defendant.
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number of occasions before the Inland Revenue Board of Review. He was
C at pains to explain that he was not performing an audit. He was simply C
reconstructing the profit and loss account of Cheung Hong for the period
D
D
from 1 April 2006 to 11 February 2009 based on the turnover and expenses
E invoices provided to him. He compared the former to the income deposited E
into the company’s bank accounts and, applying the methodology set out in
F
F
his report dated 17 December 201239, he arrived at a turnover amount of
G
HK$20,474,508.17 and profits of HK$5,953,396.48 for the period from G
H
1 April 2006 to 11 February 2009. At trial, Mr C K Wong for the plaintiff
H
happily accepted the larger turnover amount of HK$21,377,392 arrived at
I
by Mr Tupila in his report40. I
J
J
26. Mr Lau very quickly abandoned his projection method in the
K course of his cross-examination41. It was clear on the evidence that the K
deceased had grossly understated his income to the Inland Revenue. The
L
L
profit and loss accounts submitted to the Inland Revenue bore no
M resemblance whatsoever to reality42. By way of example, the profits and M
loss account for the year ended 31 March 2007 submitted to the Inland
N
N
Revenue showed gross income of HK$953,205 and expenses of
O HK$763,492. Mr Lau’s reconstruction for this period showed gross income O
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to investigate what the real facts are. The contents of a tax return
are admissible evidence and ought to be accepted as correct unless,
C on the totality of the evidence adduced, the court is satisfied that C
the true position is otherwise than that set out in those returns. As
D Reyes J. said in his judgment in the decision of the Court of Appeal
in Christopher Gordon Young v Lee Chu (CACV 131/2003, 19 D
May 2004), at §132:
E
“In ascertaining damages consequential on a wrong, a Court E
has to investigate the actual facts. However tempting, the
F Court cannot prejudge its assessment of the facts on the basis F
that a plaintiff derived a significant tax advantage by
presenting a certain picture of his affairs in his tax returns and
G
should be held to that picture. The picture painted in the tax G
returns may or not have been accurate in its characterization
H of fact. The picture cannot bind a judge. The Court may thus
H
find at the end of the day that the true state of affairs was
something other than that depicted in a plaintiff’s returns. In
I appropriate circumstances, the Commissioner of Inland I
Revenue may consider whether or not a plaintiff has wrongly
J obtained a benefit for which he should be re-assessed to
additional tax or penalized in some way. But that is a decision J
for the Commissioner. It does not affect the Court’s
K investigation of fact.” K
S deceased ran the business from his home. He did not have to pay office rent
S
nor rental for vehicles as he owned the dump trucks used in the business. He
T
T
44
[CBC/570]
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did not even draw a salary for himself45. Whilst the industry average for this
C particular type of business was showing losses 46 , the purchase by the C
deceased of dump trucks between May 2007 and May 2008 47 and the
D
D
increasing turnover of the business, from HK$6,545,726 for the 12 months
E ending on 31 March 2008, to HK$7,997,84948 for the 11 and a half months E
M Figure 1: Comparative Profit and Loss Account of Cheung Hong for the
M
Review Period
N
N
DPL 51
JLA 52
DPL JLA DPL JLA DPL JLA
Note
O 1 Apr 2006 1 Apr 2006 1 Apr 2007 1 Apr 2007 1 Apr 2008 1 Apr 2008
to to to to to to Total Total O
31 Mar 2007 31 Mar 2007 31 Mar 2008 31 Mar 2008 11 Feb 2009 11 Feb 2009
P INCOME
P
Transportation 3.2.2 &
6,774,502 6,833,817 5,554,273 6,545,726 8,145,733 7,997,849 20,474,508 21,377,392
Service Income 3.2.3
Q
3.2.4 to Q
Other Income - 93,967 - 56,070 - 61,885 - 211,922
3.2.6
R
R
45
[T/217J-218B]
46
A loss ratio of 7.7% [CBC/440, Figure 6].
S 47
[CB3/3037, 3041 & 3043] S
48
See Figure 1 in §28 below.
49
P’s Closing Submissions p.3 §4
T 50
[CBC/490] T
51
Mr Lau
52
Mr Tupila
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A A
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DPL51 JLA52 DPL JLA DPL JLA DPL JLA
Note
1 Apr 2006 1 Apr 2006 1 Apr 2007 1 Apr 2007 1 Apr 2008 1 Apr 2008
C to to to to to to Total Total
31 Mar 2007 31 Mar 2007 31 Mar 2008 31 Mar 2008 11 Feb 2009 11 Feb 2009 C
E Insurance
3.3.2 &
- 2,774 5,644 9,262 68,044 66,190 73,688 78,226
3.3.3 E
K Sundry expenses 3.3.23 620 5,775 3,290 1,141 6,000 4,370 9,910 11,286
K
4,374,631 3,513,399 4,262,677 3,971,516 5,843,544 6,501,396 14,480,852 13,986,311
FINANCE
L COSTS
3.3.24 &
L
Finance charges - - - - 40,260 - 40,260 -
3.3.25
M TOTAL 4,374,631 3,513,399 4,262,677 3,971,516 5,883,804 6,501,396 14,521,112 13,986,311
EXPENSES M
N PROFIT FOR
2,399,871 3,414,385 1,291,596 2,630,280 2,261,929 1,558,338 5,953,396 7,603,003
THE PERIOD N
ADJUSTED
O PROFIT /(LOSS) 3.4 2,399,871 (776,530) 1,291,596 610,123 2,261,929 (37,748) 5,953,396 (204,155) O
FOR THE PERIOD
P
P
29. I find as a fact, based on Mr Lau’s and Mr Tupila’s review of
Q
the business and other records, that: Q
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(c) the deceased has withdrawn cash from Cheung Hong to pay for
C his personal expenses and settle his credit card bills; and C
D (d) cash advances taken out in the name of the deceased through
D
his personal credit cards were deposited into Cheung Hong to
E
maintain its cash flow. E
F
F
30. Mr Tupila stated in his report dated 15 December 2014 that:
G
“2.3.2 I am unable to tell with certainty, which expenses are of a G
business nature and which are personal as it appears from my
H analysis that the Deceased has interchangeably used his personal H
bank accounts and credit cards with those of the Cheung Hong’s.
Consequently, I have assumed that all expenses and income are
I
business related unless indicated otherwise from available bank I
and credit card statements.”
J
J
A court of law cannot make findings of facts based on such assumptions.
K
Findings of fact must be evidence based. If there is insufficient evidence to K
L enable a court to make a finding of fact on the issue, it is duty bound to say
L
so.
M
M
31. Although this was the first time Mr Tupila had given evidence
N
N
in court, he had prepared many forensic accounting reports for court use.
O The first area of controversy that emerged during his cross examination was O
the adjustment that Mr Tupila had made to the total income earned during
P
P
the period in question of HK$21,589,314, being transport service income of
Q HK$21,377,392 and other income of HK$211,922. He reduced this total Q
R
amount of HK$21,589,314 by the sum of HK$1,697,845, as shown by the
R
calculations contained in Figure 4 of his report dated 15 December 201453.
S
During this period, he found unidentified deposits from bank statements in S
T
T
53
[CBC/436, §3.4.6]
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the sum of HK$18,524,117 (these are listed in Annexure 10 to Mr Tupila’s
C report54) which he could not match to any transport service fee or income C
H
H
32. Under cross examination, Mr Tupila said:
I “Q. How much do you say had not been given and had been I
omitted?
J A. Well, there’s an additional 1.7 million that hasn’t been J
provided. And I accept that some of those may be capital in nature,
K
maybe some of that 1.7, or maybe all of that 1.7 is money that was
deposited from a loan. I can’t determine that. But this is all K
additional, all additional information to what was provided in the
L invoices. L
…
M Q. Mr Tupila, I just want to clarify and confirm from you that M
the estimate of 21 million five hundred is for -- you have been
N through all the sales invoices, you have also looked at the bank
accounts and that’s the figure that you agree was the revenue of N
Cheung Hong during that period.
O
A. Yes. O
T 54
[CBC/496-52]. Whilst there were many ATM transfers, most were cheque deposits. T
55
The balance of the deposits shown on the bank statements (i.e. HK$21,377,392 less HK$18,524,117)
could be matched to transport service fee invoices.
U
U
V
V
- 22 -
A A
B
B
A. I agree.
C Q. …as the income…
C
A. Yes.
D Q. …of Cheung Hong. But be that as it may, with the invoices D
which Mr Lau had done, and your calculation, the difference is
only about 5 per cent56, it’s not a significant difference.
E
E
A. Yes, I accept that. I agree.”
F
33. Mr Tupila produced a number of attachments. Attachment 4 F
G was a schedule showing the utilisation of a loan from Hang Seng Bank taken G
57
out by Cheung Hong . There is no suggestion that this loan formed part of
H
H
the unidentified deposits of HK$1,697,845. The loan credit of HK$250,000
I on 28 September 2006 is not shown on Annexure 10. Attachment 5 was a I
schedule showing credit card instalment loan repayments of loans taken by
J
J
the deceased58. The attachment shows that:
K
(a) on 1 April 2006, the deceased paid his 5th of 8 instalments of K
L his loan from AIG Credit Card Company (“AIG”) and that the
L
loan amount and interest due on it was HK$46,666.64
M
(HK$5,833.33 x 8); M
N (b) as soon as he had repaid the last instalment on 1 July 2006, the N
T 56
$1,697,845/$21,589,314 = 0.077 or about 7.7%. T
57
[CB3/3289]
58
[CB3/3290]
U
U
V
V
- 23 -
A A
B
B
amounted to HK$20,720.04 (HK$3,453.34 x 6) which had to
C be repaid in 6 instalments, the first on 31 January 2007; C
D (d) in about August 2007, he took out a loan from BEA – Visa Card.
D
The loan amount and interest due on it amounted to HK$52,020
E
(HK$8,670 x 14) which had to be paid in 6 instalments, the E
I
14 instalments. The 4th repayment was on 29 February 2008.
I
The loan amount and interest due on it amounted to HK$49,000
J
(HK$3,500 x 14) and he had to pay a handling fee of J
M
35. I am unable to correlate any of the aforesaid loan drawdown M
N with any unidentified deposits into Cheung Hong’s or the deceased’s bank
N
accounts at or around the dates of the loan drawdowns. Whilst the deposits
O
of HK$1,697,845, remain unidentified, I find, on a balance of probabilities, O
P that these deposits were income earned by Cheung Hong and that they were
P
not loans that had been raised and paid into the bank accounts. I will work
Q
with round figures from this point. For these reasons, I am not prepared to Q
R reduce the starting point profit figure of HK$7.6m59 by the amount of the R
unidentified deposits in sum of HK$1.7m.
S
S
T
T
59
See §28 above.
U
U
V
V
- 24 -
A A
B
B
36. More controversial were the further adjustments Mr Tupila had
C made in respect of the expenses of the business of Cheung Hong. He found, C
H
only source of funds for the settlement of expenditure would have been one
H
of Cheung Hong’s and the deceased’s bank accounts or credit cards, he
I
adjusted the unidentifiable withdrawals as shown in his Figure 562: I
J
Figure 5: Adjustments to Unidentifiable Bank Withdrawals: J
K
1 Apr 2006 1 Apr 2007 1 Apr 2008 K
Description to to to Total
31 Mar 2007 31 Mar 2008 11 Feb 2009
L
L
Unidentifiable withdrawals as per
3,412,424 2,756,769 3,625,341 9,794,534
bank statements (A)
M
Less Unmatched expense invoices: M
T 60
[CBC/515-529] T
61
[CBC/437]
62
[CBC/437]
U
U
V
V
- 25 -
A A
B
B
37. In addition to Mr Tupila’s adjustment of HK$5.65m in respect
C of unidentifiable withdrawals, he also adjusted unknown ATM withdrawals C
cash withdrawals were entirely used for settlement of cash expenses and he
F
F
treated them as part of Cheung Hong’s expenditure64.
G
G
65
38. In the joint report , Mr Lau offered his opinion that of this
H
H
amount of unidentifiable withdrawals of about HK$5.65m, 69 withdrawal
I transactions appeared to be funds drawn for personal use which he set out in I
66
his Appendix 1 . These were withdrawals in various rounded amounts each
J
J
in the sum of or exceeding HK$20,000. 5 of these were each in the sum of
K HK$100,000 and one in the sum of HK$120,000. Mr Tupila disagreed with K
Mr Lau on this point. He said in his evidence in chief:
L
L
“I think the assumption that any large round-number transfer must
M be personal in nature is without any basis, and as we’ve seen this
morning, there are other transactions, which are round sum M
numbers over 20,000, which are clearly business-related expenses.
N So I would disagree with Mr Lau’s assumptions that any round N
sum transfer over 20,000 is personal.”67
O
O
During his cross examination, he gave evidence as follows:
P
P
“Q. … you’ve got about 4.1 million of invoices which have not
been settled.
Q
Q
A. Yes.
R Q. So you have very fairly deducted 4.1 from the 9.8.
R
A. Yes.
S
S
63
[CBC/503-514]
64
[CBC/437, §3.4.9]
T 65
[CBC/600] T
66
[CBC/606-7]
67
[T/260O-Q]
U
U
V
V
- 26 -
A A
B
B
Q. With a remaining of 5.6 million.
C A. That’s right.
C
Q. And you have also fairly told us, because you were not able
D
to differentiate personal or business, you assumed all were
business. D
A. Yes.
E
E
Q. Assuming of course we are now left in a vacuum, if Mr Kan
is alive, of course, we can ask him and then you’ll have the
F explanation and then you will be able to do the proper assessment. F
A. Yes.
G
Q. But because of that, well, we are left with nothing, out of the G
5.6…
H
A. Yes. H
Q. …Mr Lau said at least 2.8, with his experience - you may
I have your own idea but, well, we are left with this reckon. I
A. Yes, I take your point. I don’t, I certainly don’t agree with
J Mr Lau that it’s 2.8, I don’t think he can substantiate that, but it J
must be something, I accept that there are some personal expenses.
K Q. And do you agree with me that… K
COURT: Looking at a best educated guess, what do you think
L that would be, I mean, looking at it in the round, out of the
L
5.6 million?
M A. Well, the only -- I mean, it’s impossible to guess.
M
COURT: You know the documents more than anybody else in
N
this courtroom, even more than Mr Lau.
N
A. Yes. The only…
O COURT: You say it’s impossible to guess.
O
A. It’s impossible to guess but if you look at all of the
P statements, and I guess if you do a comparison of what I can
identify as being business and what I can identify as being P
personal, the vast majority of the transactions are business.
Q I don’t know the number off the top of my head but we’re Q
probably talking more than 95 per cent are business. And I
suppose you could apply that sort of ratio to the unknown
R
ones. But there’s no scientific way of determining what R
these unidentified transactions are.
S
… S
Q. But still having looked at all these, you maintain that out of
T the 5.6 million unidentified withdrawals, and more than T
U
U
V
V
- 27 -
A A
B
B
3 million ATM withdrawals, you reckon only 5 per cent was
for personal expenses.
C
A. Well, I’m just saying that based on my… C
D
COURT: He said it’s impossible to guess.
D
A. Yes.
E MR WONG: Then I won’t go through that point.”68
E
M
40. The decision of the Court of Appeal in Ashcroft v Curtin [1971] M
N 1 WLR 1731, bears on the point in question. I quote from the headnote of
N
that judgment:
O
O
“The plaintiff was a skilled precision engineer who carried
on a successful business through a private company, of which he
P was the active managing director. He kept only rudimentary P
records and the company’s accounts were unreliable. He was
Q severely injured in a road accident caused by the defendant’s
negligence, as a result of which he could not stand noise, suffered Q
from blackouts, vomiting, headaches, loss of balance and became
R easily tired. His injuries prevented him from working as an R
engineer and seriously prejudiced him in running the company,
which he continued to manage for five years after the accident.
S
S
In an action against the defendant claiming damages for pain,
suffering and loss of amenities, and for financial loss based on a
T
T
68
[T/293H-S, 300I-M]
U
U
V
V
- 28 -
A A
B
B
decline in the company’s profitability caused by the plaintiff’s
impaired efficiency, Donaldson J. awarded £15,500 general
C damages, of which £5,000 was for pain, suffering and loss of C
amenities and £10,500 for financial loss.
D On appeal by the defendant: – D
Held, allowing the appeal, that although there was a decline
E in the company’s profitability after the accident which had been E
caused by the plaintiff’s injuries, it was impossible in the absence
of reliable accounts to quantify it, and accordingly, the claim for
F
financial loss failed (post, pp. 1737F–G, 1738D–E) …” F
…
G
G
69
In his judgment Edmund Davies LJ stated :
H
H
“In a one-man company of this kind, with an actively
I
working managing director of undoubted efficiency, there is a
high probability that injuries such as he sustained would not only I
interfere drastically with the quality of his life, but would also
J have a damaging effect upon the business which he had created J
and still controlled. … Regrettably vague though the evidence is,
my conclusion is that it points not only to a decrease in
K
profitability since 1965, but also to that decrease being due to the K
accident.
L My greatest difficulty is in quantifying the loss. Mr. May L
submits that the task cannot be performed and that the failure
M should result in a “nil” award on this aspect of the case. Having
rejected the accounts as “largely unreliable,” Donaldson J. is said M
to have “plucked out of the air” the figure of £1,500 as
N representing the company’s annual profitability loss. Mr. May N
says that it cannot be justified and that the consequent award of
£10,500 cannot stand. No figure, so it is urged, can replace it.
O
O
That is a conclusion to which I have been frankly loth to
arrive, for it does not seem to me to meet the justice of the case.
P
It means that, in the words of Holroyd Pearce L.J. in Daniels v. P
Jones [1961] 1 W.L.R. 1103, 1109: “ … arithmetic has failed to
Q provide the answer which common sense demands.” Furthermore,
Q
it is a conclusion which Mr. Kidwell submits is not inescapable.
He points out that the plaintiff’s uncontradicted evidence is that
R he would have to pay, on 1969 rates, between £2,500 and £3,000 R
per annum to anyone of his skill and experience to do similar work.
S He stresses that the judge’s multiplicand of £1,500 would
represent only £2,200 gross, and that by taking as low a multiplier S
as seven he made, if anything, an excessive allowance for all
T
T
69
At p.1737E – 1738E.
U
U
V
V
- 29 -
A A
B
B
possible contingencies. But I am very doubtful about the validity
of this approach, for if another man had been engaged to do the
C plaintiff’s pre-accident work, it does not follow that the profits C
would have gone down by the amount of his salary. On the
D contrary, I see the force of the observation of Mr. May that , as no
other man was in fact engaged, it is irrelevant to consider what D
would have happened if he had been, for, so far from producing a
E drop in profitability, his engagement might equally well have led E
to a realisation of that 10 per cent. increase which Mr. Boulter
F
assumed would have enured but for the accident.
F
In Bonham-Carter v. Hyde Park Hotel Ltd. (1948)
64 T.L.R. 177, Lord Goddard C.J., who found it possible to arrive
G
at a conclusion despite the extremely unsatisfactory evidence as to G
damages, said, at p. 178:
H “Plaintiffs must understand that, if they bring actions for H
damages it is for them to prove their damage; it is not enough
I to write down particulars, and, so to speak, throw them at the
head of the court, saying: ‘This is what I have lost; I ask you I
to give me these damages.’ They have to prove it.”
J
So approaching the matter, the unsatisfactory conclusion to which J
I have felt myself driven is that, while the probability is that some
K loss of profitability resulted from the plaintiff’s accident it is quite
K
impossible to quantify it. Nevertheless I regard it as improbable
that the loss would be anything like in the region of £10,500.”
L
L
41. The editor of Munkman on Damages for Personal Injuries and
M
M
Death (12th ed.), stated at p.110:
N
“11.65 Unfortunately the plaintiff in Ashcroft v Curtin [1971] N
3 All ER 1208, [1971] 1 WLR 1731, CA had not been diligent in
O keeping his accounts prior to the accident. Whilst there was no
O
allegation of any wrongdoing, because of the vagueness of the
accounts it was impossible for any accountant to calculate the loss
P suffered. As a result, even though the court conceded some loss P
must have occurred, no award was made for loss of profit.
Q 11.66 If there are problems with the accounts in an accident Q
claim it may be possible to employ an accountant to update the
accounts. The costs of this will have to be borne by the claimant
R
and therefore it is advisable to retain a separate accountant to the R
‘forensic’ accountants used to quantify the loss since the costs of
S retaining the expert are likely to be recoverable.”
S
V
V
- 30 -
A A
B
B
“… the basic principle that a claimant must prove his case by
evidence capable of supporting the conclusions to which the court
C is invited to come … No doubt he had in mind the principles often C
expressed to the effect that judges must often simply do their best
D or approach an issue on a broad brush basis, but these principles
have limitations. There is a need for evidence and there is a need D
for an analysis of such evidence; then the judge can make findings
E of fact by drawing inferences and doing the best he can, but on the E
evidence which is available.”
F
F
Crane J. in Bordin & anr. v. St. Mary’s NHS Trust, No. 1998-B-697 stated
G at pg. 9: G
N
N
44. At this point, I address the submissions made by Mr Sakhrani,
O on behalf of the defendant, regarding Cheung Hong’s cash flow problems. O
I accept that Cheung Hong must have had ongoing cash flow problems
P
P
which caused him to borrow at relatively high rates of interest from 2006
Q into 200870. However, cash flow problems do not mean that the business Q
was not ultimately profitable when the transportation service income was
R
R
ultimately received. Indeed, a total of HK$911,638, being transportation
S service income from the business of Cheung Hong, was paid into the S
accounts of Cheung Hong and of Madam Fan, after the death of the deceased,
T
T
70
See §33 above.
U
U
V
V
- 31 -
A A
B
B
from 25 February to 30 April 200971. As stated in §27 above, the purchase
C by the deceased of dump trucks between May 2007 and May 200872 and the C
R 71
[CBB/115, §14] R
72
[CB3/3037, 3041 & 3043]
73
See Figure 1 in §28 above.
S 74
[CB3/3273-3274] S
75
[CB3/3278]
76
There was a dispute whether payment for a telephone land line was a company expense and whether
T
payment of hire purchase instalments was properly accounted as a company expense, which I deal with T
below.
77
Assuming that these amounts are correctly described aa company expense.
U
U
V
V
- 32 -
A A
B
B
demarcation and he expressly stated that there was no scientific way to
C demarcate between company and personal expenses. C
D
46. However, Mr Sakhrani submitted that the percentage D
R
of 18.6% and 81.4% as providing a reliable demarcation of personal and
R
company expenses. I reiterate that Mr Tupila did not support any such
S
S
T 78
By reason of the fact that Table 1 was in peach colour [CB3/3252]. T
79
[CB3/3256-3258]
80
[T/242T-243D]
U
U
V
V
- 33 -
A A
B
B
demarcation and he expressly stated that there was no scientific way to
C demarcate between company and personal expenses. C
D
47. I return to the question whether I can accept Mr Lau’s opinion D
G
During his cross examination, Mr Lau said:
G
“Q. You said: “Of the $5.6 million unidentifiable withdrawals,
H 69 withdrawals of $2.82 million appeared to be fund drawn out
H
[for private personal use]”82, right?
I A. Yes.
I
Q. So may I take it, then, that the issue you are now raising is
J in relation to the 69 withdrawal transactions?
J
A. Yes.
K Q. Which you say appeared to be personal, right?
K
A. Yes.
L Q. Right. L
A. Part are personal, yes.
M
Q. That’s right. M
A. Yes.”83
N
N
I did not understand Mr Lau to be saying that part of the HK$2.82m were
O
O
spent on personal expenses; he was saying that part of the HK$5.65m,
P namely, HK$2.82m, were spent on personal expenses, which is what he had P
T 81
D’s Closing Submissions pp.19-20, §25(b) T
82
[CBC/600]
83
[T/233G-L]
U
U
V
V
- 34 -
A A
B
B
expenses. Although there were some business expenses in round numbers
C of, and over, $20,000, the existence of such business expenses does not lead C
H
balance of probabilities, that unidentifiable withdrawals in amounts less than
H
HK$20,000 were also made for personal expenses, such that part of the
I
remainder of HK$5.65m was also used for personal expenses. In all I
S
S
T
T
84
See §28 above.
U
U
V
V
- 35 -
A A
B
B
50. I turn to deal with the other adjustments made by Mr Tupila
C and to a concession he had made regarding credit card double counting. The C
K
7,603,003 K
PROFIT FOR THE PERIOD
(A)
3,414,385 2,630,280 1,558,338
L
L
…85
M
M
LESS:
N
Unknown ATM Withdrawals 3.4.9 888,473 819,298 1,416,130 3,123,90186 N
T 85
I have only reproduced part of Figure 3 that is relevant to our purposes. T
86
I have reduced this amount to HK$1.56m in §49 above.
87
I have reduced this amount to HK$2.82m in §49 above.
U
U
V
V
- 36 -
A A
B
B
Note 1 Apr 2006 1 Apr 2007 1 Apr 2008
C to to to Total
31 Mar 2007 31 Mar 2008 11 Feb 2009 C
E …88
E
HK$332,931.
J
J
N
insurance, telephone charges, repairs and maintenance and other operating
N
expenses. The total expenses amounted to HK$13,986,311 during the
O
period in question. Mr Tupila also stated in §3.4.12 of his report dated O
P
15 December 2014 that he had identified other bank charges, insurance89,
P
telephone charges, repairs and maintenance, licensing fees and other
Q
miscellaneous expenses90 for which invoices had not been provided or were Q
R
R
S
S
88
I have only reproduced part of Figure 3 that is relevant to our purposes.
T 89
Annexure 7 contains a list of the insurance charges, telephone charges, repairs and maintenance, and T
licensing fees [CBC/487-488].
90
In Annexure 13 [CBC/530-532].
U
U
V
V
- 37 -
A A
B
B
not available. I have reproduced these additional expenses from Figure 3 as
C follows: C
D
1 Apr 2006 1 Apr 2007 1 Apr 2008 D
Note
to to to Total
E 31 Mar 2007 31 Mar 2008 11 Feb 2009
E
Bank charges 3.4.12 1,733 1,680 4,056 7,469
F
Insurance 3.4.12 - 54,283 73,316 127,599 F
Telephone charges 3.4.12 703 381 3,383 4,467
G
Repairs & Maintenance 3.4.12 - 1,760 3,424 5,184 G
Licensing fees 3.4.12 560 1,671 10,488 12,719
H
Miscellaneous & other H
3.4.12 2,243 81,049 153,380 236,672
unknown expenditure
I
I
54. Mr Wong submitted that the two largest items of these
J additional expenses, being “insurance (HK$127,599)” and “miscellaneous J
T 91
[CB3/819] T
92
[T/283F-289J]
93
[CBC/530-532]
U
U
V
V
- 38 -
A A
B
B
Instalments of hire purchase of dump trucks in Tupila’s
Attachment 2 [CB3/3273, 3274]: Instalments for dump trucks are
C capital in nature and cannot be treated as expenses. C
…
D
Auto-toll expenses [CB3/3274]: Both Mr. Lau and Mr. Tupila D
considered auto-toll expenses when compiling their profit and loss
E figures based on “statements from Autotoll Limited” [CB1C/378 E
– 381; 433/3.3.20]. As the auto-toll expenses have been deducted,
a further deduction of auto-toll expenses in Tupila’s Attachment 2
F
is double accounting. Mr. Tupila accepted that if he had already F
deducted the auto-toll amount and he deducted this amount from
G the bank statements again, there would be double accounting
G
[T/295N – 296E].
H Items in Tupila’s Attachment 6 [CB3/3291]: These items are
duplicates. The item described as “Shing Tak Tyre Poly94, Hong H
Kong” can be found at DP Lau’s Report [CB1C/365]. The item
I of “Crown Motors Ltd – Hino Hong Kong” is a duplicate of I
Tupila’s Attachment 2 [CB3/3273]”95.
J
J
56. I accept Mr Wong’s submissions that the land line charges in
K the total sum of HK$8,52496 ought to be removed as they were not business K
invoices from Shing Tak Tyre Polytechnic Co. Ltd. and Crown Motors Ltd.
N
N
- Hino Hong Kong98, falls away.
O
O
57. I also accept Mr C K Wong’s submissions that the amount of
P
P
HK$127,599 relating to life and health insurance premia ought to be
Q removed as they were not business expenses. I am satisfied from my perusal Q
R 94
Shing Tak Tyre Polytechnic Co. Ltd. R
95
P’s Closing Submissions pp.6-9, §11
96
Being the total of the PCCW-HKT-DDA payments from the BEA - Visa Card listed in Attachment 2
S
[CB3/3273]. Mr Tupila conceded this in evidence in chief [T/263M]. S
97
See §§50-51 above.
98
Namely, the duplication of invoices from Shing Tak Tyre Polytechnic Co. Ltd. (HK$1,760) (appearing
T
once in CBC/365 as a listed invoice and again in Attachment 6 [CB3/3291] as a credit card expense) and T
Crown Motors Ltd. - Hino Hong Kong (HK$3,423) (appearing once in Attachment 2 [CB3/3273] as a
credit card expense and again in Attachment 6 [CB3/3291] as a credit card expense).
U
U
V
V
- 39 -
A A
B
B
of Annexure 7 that the entire list of insurance premia set out therein related
C to life and health insurance. Indeed, Mr Tupila appeared to accept that in C
99
[T/289J]
T 100
[CB3/3273-3274] T
101
13 payments of HK$16,388 and 4 payments of HK$11,000.
102
[CBC/530-532]
U
U
V
V
- 40 -
A A
B
B
Q. But let me just pick up that for a second. You buy a vehicle
on hire-purchase. The capital cost of the vehicle and the loan
C repayment, the capital part of it, is all to be sucked out of the C
account, as you just explained.,
D A. Right. D
Q. But what about the depreciation occasioned by that vehicle?
E How does one classify that? E
A. All right. So that’s my second -- I should finish. I said that
F there were two examples that I should provide.
F
Q. Right.
G A. The second example is where it’s not a cash loan, and it’s an G
actual purchase of a vehicle or something else.
H Q. Right. H
A. In that situation, there is no deposit of money into the
I accounts, so I wouldn’t have picked up anything which I classified
I
as revenue. So an adjustment needs to be made. Firstly, to take
away the expense that I categorised, because it’s a repayment of a
J loan, it’s not an expense. But there is a further accounting entry J
that needs to then be added -- adjusted in, which is the depreciation
K of that asset -- of that fixed asset. And typically, what would
happen is, if I have, for instance, a loan, say, I have a hire-purchase K
over 5 years, I would depreciate the asset over that same life. So
L any capital repayment that I made would be [matched] by a L
depreciation of the same amount of that asset. So again, if you are
talking about the profit and loss, the effect -- the impact of
M
removing these items would be zero, because you are removing M
the capital -- you’re removing the repayment of the loan, but your
N depreciation -- depreciating the asset. And again, the only item
N
that remains is the interest component, and that’s an expense. [my
emphasis]
O
O
Q. Right. And the last matter...
P COURT: But that would only happen over the course of five
years. P
A. Well, so whatever...
Q
Q
COURT: The impact within the one year would not be --
would be there, right?
R
R
A. Well, what the accounting standard sets for -- there is no
standard for a hire-purchase, so typically happened as hire-
S purchase is considered as a finance lease. What the standard says S
is that the assets needs to be depreciation -- depreciated over a
T period no longer than the duration of the contract itself. So if the
hire-purchase agreement was for three years, it could depreciate T
the asset over three years. If it was five years, it would depreciate
U
U
V
V
- 41 -
A A
B
B
over five years. But what it means is, you’re essentially matching
the depreciation with the loan repayment.”103 [my emphasis]
C
C
59. Mr Tupila has taken a shortcut by treating the instalment
D
D
payments under the hire purchase agreements as a business expense. These
E payments are of a capital nature and ought to be removed. However, if that E
were to be done, one would need to input the depreciation of the vehicle
F
F
under hire purchase as a business expense. As it is common to depreciate a
G vehicle under hire purchase over the same period of time as the hire purchase G
“28. …If there is reasonable certainty that the lessee will obtain
L
ownership by the end of the lease term, the period of expected use L
is the useful life of the asset; otherwise the asset is depreciated
M over the shorter of the lease terms and its useful life.
M
29. The sum of the depreciation expense for the asset and the
N finance expense for the period is rarely the same as the lease
payments payable for the period, and it is, therefore, inappropriate N
simply to recognise the lease payments payable as an expense.
O Accordingly, the asset and the related liability are unlikely to be O
equal in amount after the commencement of the lease term.”
P
P
61. Mr C K Wong has performed some calculations of what the
Q depreciation ought to be. He has come up with a figure of $339, 291.53105. Q
R
R
103
[T/263T-265H]
104
Annex III to D’s Reply Closing Submissions
S 105
P’s Closing Submissions at p.5, §6: “… provision should be made for the three dump trucks which the S
Deceased made hire purchase agreements at HK$330,000 on 8 December 2007 i.e. 431 days before the
Accident [CB3/1136], HK$782,904 on 20 March 2008 i.e. 328 days before the Accident [CB1C/401], and
T
HK$840,399 on 26 May 2008 i.e. 262 days before the accident [CB1C/402].Adopting a 5-year straight T
line depreciation rate, which is sufficiently generous as one of Cheung Hong’s available dump trucks at
the time of the Accident was manufactured in 1990 [CB3/617], a further HK$339,291.53 should be
U
U
V
V
- 42 -
A A
B
B
However, these calculations for depreciation have not been addressed by Mr
C Lau nor put to Mr Tupila. In the circumstances, whilst Mr Tupila’s shortcut C
F
62. Based on the findings that I have made above, I conclude, on a F
I
Adjustments to Profit based on Additional Transactions in Bank and Credit
I
Card Statements:
J
J
L
L
PROFIT FOR THE PERIOD
3,414,385 2,630,280 1,558,338 7,603,003
M Add: $ 8,524 wrongly
7,611,527 M
deducted as expenses106
…
N
N
LESS:
O
That part of Unknown ATM O
Withdrawals that I have
1,560,000107
found to have been expended
P on business expenses P
Credit card repayment 332,931 108
S
deducted [HK$782,904 x 20% x 328/365 + HK$840,399 x 20% x 262/365 + HK$330.000 x 20% x 431/365 S
= HK$339,291.53]”.
106
See §56 above.
T 107
I have reduced this amount to HK$1.56m in §49 above. T
108
Removed to avoid double-counting
109
I have reduced this amount to HK$2.82m in §49 above.
U
U
V
V
- 43 -
A A
B
B
Note 1 Apr 2006 1 Apr 2007 1 Apr 2008
C to to to Total
31 Mar 2007 31 Mar 2008 11 Feb 2009 C
I …
I
J
63. The period in question from 1 April 2006 to 11 February 2009 J
N
64. I must express my gratitude to Mr Lau and to Mr Tupila for N
O
their assistance which has enabled me to determine this controversial issue.
O
S 110
See §57 above.
S
111
Under s.28 and Schedule 4 of the Inland Revenue Ordinance, Cap. 112.
112
Schedule 4 of the Inland Revenue Ordinance, Cap. 112. S.31(1) of the Inland Revenue Ordinance, Cap.
T 112, provides that “an allowance (child allowance) shall be granted under this section in the prescribed T
amount in any year of assessment if the person had living and was maintaining at any time during the year
of assessment an unmarried child who was - (a) under the age of 18; (b) of or over the age of 18 years but
U
U
V
V
- 44 -
A A
B
B
HK$50,000 per child. Mr Kan Ho Chuen, the son of the deceased, was aged
C 13 years and 8 months at the time of the accident. Although Kan Wai Ling, C
the daughter of the deceased, was aged 24 years 4 months at the time of the
D
D
accident, she had already completed her education and had started work in
E 2007113. Accordingly, the deceased would only have been able to claim one E
child’s allowance for the year 2008/09, making his total allowance of
F
F
HK$158,000. Applying these allowances to HK$1,032,000 reduces the net
G
chargeable income to HK$874,000. Of this amount, HK$120,000 would be G
H
charged to tax of HK$8,400 and the balance HK$754,000
H
(HK$874,000 - HK$120,000) would be charged to tax of HK$128,180,
I
making a total tax of HK$136,580, calculated as follows: I
J
For the years of assessment 2008/09 to 2016/17 inclusive114 J
K
(a) Upon the first $40,000 2% K
(b) Upon the next $40,000 7%
L (c) Upon the next $40,000 12% L
(d) Upon the remainder 17%
M
M
R
R
S
S
under the age of 25 years and was receiving full time education at a university, college, school or other
T
similar educational establishment; or …”. T
113
[CBB/134 §5]
114
Schedule 2 of Cap.112.
U
U
V
V
- 45 -
A A
B
B
At the standard rate of 15%115, the tax on HK$1,032,000 would amount to
C HK$154,800. In this case, personal assessment would result in less tax being C
paid.
D
D
Ordinance, Cap. 112, the amount of tax under personal assessment was
F
F
reduced by HK$8,000. The net tax due would be HK$128,580
G
(HK$136,580 - HK$8,000) and the net income after tax would be G
H
HK$903,420 (HK$1,032,000 - HK$128,580) per annum or HK$75,285 per
H
month (HK$903,420/12).
I
I
J
67. In January 2009, the Composite Consumer Price Index stood at
J
98.8116. In January 2015, the Composite Consumer Price Index stood at
K
123.1117. In January 2016, 2017, and 2018, the year on year change in the K
N the level in January 2009. I find that the present notional income of Cheung
N
Hong would have risen by the same percentage to HK$1,339,536
O
(HK$1,032,000 x 129.8%), after taking into account inflation since O
R
R
S
S
115
Schedule 1 of Inland Revenue Ordinance, Cap. 112.
116
[CB3/3164] See also Personal Injury Tables Hong Kong 2016 at p.77 against the month January 2009.
T 117
Personal Injury Tables Hong Kong 2016 at p.78 against the month January 2015. T
118
Monthly Report on the Consumer Price Index, Table S2 on p.8.
119
Cf. my findings in §28 of Fung Suen Sim v. Liu Chun Pong.
U
U
V
V
- 46 -
A A
B
B
68. As Kan Ho Chuen would be completing his 5-year
C undergraduate course in Drexel University in 2018, the deceased could C
H
HK$165,311, making a total tax of HK$174,761, calculated as follows:
H
I
For the year of assessment 2017/18 and for each year after that year:
I
L
Net Chargeable Tax L
Income Rate $
M $
M
On the First 45,000 2% 900
N On the Next 45,000 7% 3,150
On the Next 45,000 12% 5,400 N
R paid.
R
S
S
T
T
120
Schedule 4 of Inland Revenue Ordinance, Cap. 112.
121
Schedule 1 of Inland Revenue Ordinance, Cap. 112.
U
U
V
V
- 47 -
A A
B
B
69. In addition, the amount of tax under personal assessment for
C the year of assessment is to be reduced by HK$30,000122. The net tax due C
The median pre-trial notional net income after tax would be HK$1,049,098
F
F
per annum (HK$903,420 + HK$1,194,775/2) or HK$87,424 per month
G
(HK$1,049,098/12). G
H
H
The Assessment of the Awards for Loss of Dependency
I
I
70. As mentioned in §5 above, it was common ground that
J
Madam Fan and Kan Wai Ling and Kan Ho Chuen, the daughter and the son J
K of the deceased, were dependent on the deceased at the time of the accident.
K
The extent of their dependency and that of Madam Fan, and of Madam
L
Wong Lai Sheung, the mother of the deceased, was a matter of some L
M controversy.
M
Empress Motors for the reasons set out in §§18 to 20 above. I will assess
O
O
the awards for loss of dependency by considering the evidence of the
P contributions made by the deceased to his dependants prior to is death. P
Q
72. It was pleaded in the Re-Revised Statement of Damages123 that: Q
R “7. At the time of the accident, the Deceased, Fan Mei Na, Kan R
Wai Ling and Kan Ho Chuen lived together in Hong Kong and US.
S Kan Wai Ling worked in US and Kan Ho Chuen studied in US.
Kan Wai Ling returned to and stayed in Hong Kong together with S
the family for about 1 month each year. Kan Ho Chuen returned
T
T
122
As announced in the 2018-2019 Budget on 28 February 2018.
123
[CBA/4-6 §§7-9]
U
U
V
V
- 48 -
A A
B
B
to and stayed in Hong Kong together with the family for about
3 months each year. Fan Mei Na stayed at Hong Kong and at US
C together with the family for about 9 months and 3 months C
respectively each year. The Deceased stayed at Hong Kong and
D stayed at US together with the family for about 11 months and
1 month respectively each year. D
E
8. At the time of the accident, Fan Mei Na was a housewife,
Kan Ho Chuen was a student studying in the 8th Grade in the E
Middle School in US, and Kan Wai Ling worked as an accountant
F in US earning about US$56,000 per year before tax. Kan Wai F
Ling did not contribute to the household expenses of the family.
G 9. At the time of the accident, the monthly household expenses
G
of the family were as follows:-
H
H
Home in Hong Kong
I Rent HK$1,600.00 I
Water, electricity and gas HK$500.00
J Telephone and internet HK$300.00 J
10% of car park and petrol of HK$790.00
K private car (HK$7,900 x 10%) K
10% insurance of private car HK$113.09
L (HK$1,130.94 x 10%) L
Food, miscellaneous expenses and HK$20,000.00
M entertainment (including dining
M
outside)
N HK$23,303.09 N
O
Home in US O
S
S
73. The observations of Lord Goddard CJ bear repeating,
T
particularly in relation to the bald assertion that food, miscellaneous T
U
U
V
V
- 49 -
A A
B
B
expenses and entertainment (including dining outside) amounted to
C HK$20,000 per month. He said: C
she married Mr Lam Wai Shing in May or June 1997 who then sponsored
H
H
her application for residence in the United States126. In her supplemental
I witness statement, Madam Fan had said that both before and after her I
divorce from the deceased, they had been living like a married couple. She
J
J
made no mention in her witness statements of her marriage to Mr Lam Wai
K Shing. Her evidence that the deceased was supporting her while she lived K
with her husband Mr Lam is difficult to accept127. She had moved to the
L
L
United States in February 1998128 with her son and daughter and had lived
M
with Mr Lam in New York where her daughter attended school 129 . She M
N
subsequently divorced Mr Lam after she had learned, in October 1998, that
N
he was having a relationship with another woman130. At the end of 1998,
O
she returned to Hong Kong with her young son131. Her daughter remained in O
P
the United States and lived with Madan Fan’s parents who took care of her132.
P
After Madan Fan returned to Hong Kong with her son, they stayed at the flat
Q
Q
R
124
In Bonham-Carter v. Hyde Park Hotel Ltd (1948) 64 TLR 177, cited by Kempster JA in World Realty
Ltd. v. Kwan Ngar Yin [1987] 3 HKC 148. R
125
[T/13R]
126
[T/13T-14T] [CB3/3029]
S 127
[T20/B-D] S
128
[T17D-F]
129
[T/17L-R]
T 130
[T/23F-I] T
131
[T/23H-K]
132
[CBB/118 §18] [T/72A-D]
U
U
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V
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A A
B
B
in 313 Shanghai Street while the deceased stayed at a rented flat in Ma On
C Shan133. Eventually, the deceased had to return possession of the Ma On C
Shan flat and he moved to the Shanghai Street property at the end of 1999
D
D
“because there was nowhere that he could move to”134 and he occupied a
E room in the front portion of the Shanghai Street flat, which was different E
from the portion that she was occupying135. This state of affairs continued
F
F
until she moved into a flat at Fung Yam House in October 2005136. The
G
deceased did not move with her and he remained in Shanghai Street 137 . G
H
Madam Fan started to spend more of her time in the United States after
H
November 2005. Subsequently, the deceased moved out of the Shanghai
I
Street subdivided room and, according to Madam Fan, he “frequented” the I
S 133
[T/26P-U] S
134
[T/27L-N]
135
[T/27M]
T 136
[T/29K] T
137
[T/29K-O]
138
[T/4M] See also §§10-15 above.
U
U
V
V
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A A
B
B
(4) The Deceased would have given pocket money to his mother
Wong Lai Sheung until she passes away or the Deceased
C retires. C
D
Below is a summary of recurrent expenses claimed per month in
HK$: D
E
Household expenses in Philadelphia and Hong E
39,917.09
Kong and Madam Fan’s personal expenses
F Madam Fan’s air ticket expenses 2,535 F
Family trip expenses for dependants 1,980
G
Kan Ho Chuen’s personal expenses 5,356 G
V
V
- 52 -
A A
B
B
C HK$
C
Rent 1,600
D
D
Water, electricity, gas 300
E
Telephone and internet 500 E
I
Madam Fan gave evidence that the monthly household expenses I
of the flat in Philadelphia are as follows [CBB/120/§23]:
J
J
US$
K
Mortgage repayment 1,180 K
O
Miss Kan gave evidence that she did not contribute to household O
expenses in the Philadelphia home even after she began to work
P [CBB/134, 135/7].
P
As there is no challenge that “the Deceased paid for everything
Q financially” [T/7P-U, 12M-P], the household expenses in Hong Q
Kong and Philadelphia and Madam Fan’s personal expenses add
R up to HK$23,303.09 + HK$2,130 x 7.8 = HK$39,917.09 per
month.”139 R
S
S
T
T
139
P’s Closing Submissions at §§38-42 and 59.
U
U
V
V
- 53 -
A A
B
B
77. Mr C K Wong conceded, in the course of the cross examination
C of Madam Fan, that direct payments from the banks accounts of the deceased C
into the bank accounts of Madam Fan in Hong Kong could not be
D
D
identified 140 . I do not accept as credible the statement in Madam Fan’s
E witness statement dated 30 March 2012 that the deceased used to deposit E
HK$20,000 into her bank account every month for her saving141. Madam
F
F
Fan has made very limited discovery of her bank passbooks, having only
G
produced a bank passbook of Bank of China for the period from 1 February G
H
2001 to 18 December 2002 and a bank passbook of Hang Seng Bank for the
H
period from 14 November 2005 to 15 March 2011. Bank passbooks covering
I
the period from 2003 to 13 November 2005 have not been produced. I have I
L evidence 142 . Having found that Madam Fan has made an untruthful
L
statement in her witness statement dated 30 March 2012, I must approach
M
the rest of Madam Fan’s evidence would caution and evaluate it carefully. M
N
N
78. The particulars of the household expenses set out in Madam
O Fan’s witness statement duplicate the same particulars in the Re-Revised O
R
the contributions made by the deceased towards the Hong Kong household
R
expenses as credible and I am prepared to assess damages for loss of
S
S
T 140
[T/76A-J] T
141
[CBB/121 §26]
142
[T122Q-126G]
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U
V
V
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A A
B
B
dependency, based on these contributions, except for her bald assertion that
C he contributed HK$20,000 per month for food, groceries, entertainment and C
H
table of expenses some of which are recorded with two decimal places, such
H
as the monthly cost of insurance for private car use in Hong Kong of about
I
HK$113.09 and the monthly cost of insurance and tax in Philadelphia in the I
L to ascertain how much the deceased gave to Madam Fan per month towards
L
the cost of food, groceries, entertainment and miscellaneous expenses.
M
M
79. I have already found in §20 above that the deceased would pay
N
N
when he and Madam Fan went out for “yum cha” or for a meal together 143.
O I also accept the evidence of Madam Fan that the deceased would, on O
occasion, take her to join gatherings with the drivers of the dump trucks and
P
P
other business associates144. Notwithstanding her divorce from the deceased
Q
and the subsequent marriage to, and divorce from, Mr Lam, and Q
R
notwithstanding that they did not live together as husband and wife, I am
R
satisfied that the deceased regarded her as a former wife who would continue
S
S
T 143
Madam Fan gave evidence that “[sometimes] he saw that I was alone at home and hearing that I was T
bored, he took me out for a meal. I did not always follow him.”: [T/67C-D].
144
[CBB/114 §12]
U
U
V
V
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A A
B
B
to be financially dependent on him. Given his substantial income, he would
C have had no difficulty supporting her financially. Further, the evidence she C
O
I accept the evidence of Madam Fan that the staff of Cheung Hong O
P considered her to be the wife of the deceased and telephoned her in America
P
146
with the news of his death . She immediately returned to Hong Kong and
Q
did the best she could to collect the receivables of the business from the Q
R bosses of Cheung Hong’s business associates who treated her well147. They R
S
S
T 145
[T/36R – 37E] T
146
[T/115J & T]
147
[CBB/115 §14] [T/58N-59L]
U
U
V
V
- 56 -
A A
B
B
were quite willing to pay those receivables to her and they issued cheques
C payable to her148. C
D
80. I accept the evidence of Madam Fan that the deceased kept cash D
E at both the Shanghai Street flat as well as in the Fung Yam house flat, from
E
which he would make payments to her for her personal and household
F
expenses149. However, from mid-2005 onwards Madam Fan spent more F
G time in the United States. From the statement of her travel records, she was G
away from Hong Kong, travelling by air via the Hong Kong airport, for
H
H
828 days out of 1503 days 150 , during which period of time the deceased
I would not have been making any cash payments to her for her personal and I
household expenses in Hong Kong. The records show that she left Hong
J
J
Kong for about two months from July to September 2005, for about two
K months from November 2005 to January 2006, for about four months from K
February 2006 to June 2006, for a very substantial period of about nine
L
L
months from October 2006 to July 2007, for about two months from
M December 2007 to February 2008, and for about two months from April to M
June 2008151. Looking at the matter broadly, and taking into account the
N
N
finding I made in §91 below, I find that that the average monthly cash
O contributions the deceased made to Madam Fan for her expenses on food, O
R
I find that the total average monthly contribution made by the deceased to
R
Madam Fan for expenses incurred in Hong Kong amounted to HK$13,300
S
S
148
[T/59R-T]
T 149
[CBB/121 cp27] [T/83I-K] T
150
[CB3/3066-1] P’s Closing Submissions at §29(3)
151
[CB3/3065-3066]
U
U
V
V
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A A
B
B
(HK$10,000 + HK$3,300152) and I award damages for loss of dependency
C on this basis. C
D
81. I should mention that I do not accept the submissions of Mr C D
G expenses, but also the cost of the many trips made by Madam Fan and her G
153
children to Shenzhen over this period of time . This claim was not pleaded
H
H
in the Re-Revised Statement of Damages and Madam Fan did not give any
I evidence that the deceased’s alleged contributions of HK$20,000 per month I
included these expenses. What she said, in re-examination, was:
J
J
“This $20,000 includes daily household expenses, including
K expenses on utilities, living expenses, including expenses on
breakfast, lunch and dinner, the three meals, and miscellaneous K
items. And when Kan Siu-hong went to work, when I was alone,
L I would sometimes go shopping, buying things, going to shopping L
arcades, meeting my friends, my schoolmates and relatives. This
$20,000 is an estimate. And when my children came back to Hong
M
Kong, they would incur expenses on entertainment and M
transport.”154
N
N
82. The evidence Madam Fan gave regarding her financial
O
dependence on the deceased at the time of their divorce in 1997 155 was not O
152
See §78 above.
T 153
P’s Closing Submissions at §29 T
154
[T/112A-D]
155
[CB3/3029] [CBB/112 §6] [CBB/157 §11] [T/39O]
U
U
V
V
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A A
B
B
utilities, insurance and government rent in the total sum of US$2,130 per
C month. Inexplicably, no claim has been made in respect of any contributions C
towards the cost of food, transport and clothing. The overall preparation of
D
D
this case on the part of the plaintiff’s solicitors left much to be desired,
E particularly having regard to the lack of discovery of relevant banking E
H
preparing this case for the plaintiffs. There is also the distinct possibility that
H
the parents of Madam Fan, who resided in the United States, made
I
contributions to meet the needs of Madam Fan and her children living in I
J Philadelphia. Given the incomplete discovery in this case and the complete
J
failure on the part of the plaintiffs to discover the bank passbooks and
K
accounts in the United States of Madam Fan and Kan Wai Ling, I have K
L insufficient evidence to say any more than that. In any event, I only respond
L
to claims which have been made and not claims which might have been
M
made. M
N
N
84. As set out in the agreed chronology prepared by the parties
O dated 17 August 2016, a property in 2135 Tyson Avenue, Philadelphia, was O
R
statement issued by an organisation called World Savings has been
R
disclosed156. This document is dated 13 April 2006 and shows that Madam
S
Fan had an outstanding loan of US$69,249. Whilst it appears to have been a S
T
T
156
[CB3/3111]
U
U
V
V
- 59 -
A A
B
B
loan taken out to finance the purchase of the Tyson Avenue property, I am
C unable to make any such finding in the absence of direct evidence. Another C
loan agreement was made on 10 July 2006157 when Madam Fan borrowed
D
D
US$120,000 from another organisation called Countrywide Home Loans
E with a monthly instalment repayments, spanning 15 years, of US$1,181, E
H
out to repay the earlier loan from World Savings or whether it was an
H
additional loan taken out by Madam Fan. As at 12 March 2007, the
I
outstanding principal balance owing to Countrywide Home Loans was I
J US$116,326158. It appears that the principal balance under this loan was
J
reduced to the sum of US$105, 628 as at 3 May 2009159.
K
K
85. On 18 January 2016, I had directed the plaintiffs to provide,
L
L
with their written closing submissions, a schedule of documentary evidence
M of remittances made by the deceased to the United States; a schedule of M
R
is sufficient evidence, from the money exchanges, and the remittances to
R
these bank accounts in the United States, that were made by the deceased,
S
S
T 157
[CB3/1140-1142] T
158
[CB3/1140-1142, 3112]
159
See the Agreed Chronology dated 17 August 2 016 at p.8.
U
U
V
V
- 60 -
A A
B
B
to establish that Madam Fan and his children were dependent on his financial
C contributions towards their expenses incurred in the United States. C
D
86. Mr C K Wong submitted, in the plaintiffs’ closing submissions D
E that160:
E
“Lack of evidence of fund transfer in the USA
F 30. There was also a complaint of lack of evidence that funds F
from the Deceased were exchanged for use in the USA. However:
G (1) Remittance slips showed that from 12 January 2005 to G
3 February 2009 i.e. in 4 years, US 86,500 was remitted to
H
Miss Kan and Madam Fan. The records are summarized
below7: H
Amount
I Date Recipient Reference
(USD) I
Total: 86,500
O
O
(2) It is not the Plaintiffs’ case that all the funds from the
P
Deceased for use in the home in Philadelphia were P
transferred by remittance. Madam Fan said that the
Q Deceased:
Q
“exchanged the money and handed it to me. If he did
R not have the time, he would either give me the cash and
told me to exchange it to US dollars or he would R
transfer money into my Hang Seng Bank account and I
S would directly go to Hang Seng Bank to exchange the S
money into US dollars. In any event, for the deposit
T
T
160
At pp. 21-24 §30
U
U
V
V
- 61 -
A A
B
B
and withdrawal into and from my account, it was
money given to me by him.”
C
C
(3) The bold and underlined sentence in the above quote is
D
supported by evidence. By comparing Madam Fan’s travel
records (as summarized in [CB3/3066-1]) and records of D
Hang Seng Bank, in 9 out of 12 occasions which Madam
E Fan travelled overseas via airport, various sums of HK E
dollars were exchanged for USD shortly before the dates of
departure8:
F
F
Date Amount exchanged Departure date
G
USD 2,000 [CB3/1206] 12/07/2005 G
04/04/2005
??/11/20059 USD 5,000 [CB3/1207] 11/11/2005
H
H
13/02/2007 USD 3,000 [CB3/1208] 17/02/2007
V
V
- 62 -
A A
B
B
(a) The available records show a total of USD 120,000 was
exchanged / remitted in the 4 years before the Accident.
C This translates to USD 2,500 per month. C
(b) Thus, Madam Fan’s evidence that “If [the Deceased] did
D not have the time, he would either give me the cash and D
told me to exchange it to US dollars or he would transfer
E
money into my Hang Seng Bank account and I would
directly go to Hang Seng Bank to exchange the money E
into US dollars.” is truthful and honestly made.
F
(c) The only remaining question is whether the statement F
“[the Deceased] exchanged the money and handed it to
G [Madam Fan]” is believable. However, it is reasonable
G
that sometimes Madam Fan would be responsible for
exchanging USD (and there is evidence that she did this
H before 9 out of 12 flight trips), and sometimes the task H
was done by the Deceased. There is nothing inherently
I improbable in Madam Fan’s evidence.
I
(d) Importantly,the single largest expense item denominated
in USD is household expense of the Philadelphia home
J
(USD 2,130 per month). The remittance (on average at J
least USD 2,500 per month plus cash brought to the USA)
K is more than sufficient to support the Philadelphia home.
K
7
This table is prepared in accordance with paragraphs 5 and 6 of the directions
L
of the Court on 18 January 2016. L
8
This table is prepared in accordance with paragraphs 5 and 6 of the directions
M of the Court on 18 January 2016.
M
9
While the date of transaction was not shown, the transaction was done on or
before 14 November 2005, because it was not shown in Madam Fan’s passbook,
N
the first entry being 14 November 2005 [CB3/903].” N
O
O
87. Mr Sakhrani produced a similar schedule which he attached to
P his reply closing submissions as Annex II. He agreed that remittance slips P
from 12 January 2005 to 3 February 2009 had been disclosed in the total
Q
Q
amount of US$86,500, as set out in the table which I have replicated in §86(1)
R above. With the exception of one item, he also agreed with Mr C K Wong’s R
S
table, which I have replicated in §86(3) above, showing money exchanges
S
from Hong Kong dollars to US dollars. The total amount of Hong Kong
T
dollars exchanged amounted to US$34,000. Mr Sakhrani, rightly, did not T
U
U
V
V
- 63 -
A A
B
B
agree with the entry in that table dated 3 July 2008 in the sum of US$10,000,
C for the reason that the relevant entry showed that foreign currency had been C
exchanged into Hong Kong dollars and then deposited into Madam Fan’s
D
D
account, rather than the other way around161.
E
E
88. I do not agree with Mr Sakhrani’s submissions that a monthly
F
average should be taken of the remittances and money exchange transactions F
average of all remittances, big and small. I have determined that the 4 years
N
N
and 2 months preceding the death of the deceased was the most appropriate
O period to use to assess the claims for loss of dependency. Having made this O
R
for example, for the purchase of a capital asset.
R
S
S
T
T
161
[T/Submissions/31J-32M, 33K]
162
D’s Closing Submissions at p.29 §38(b)
U
U
V
V
- 64 -
A A
B
B
89. The 2nd table lists out the money exchange transactions when
C Hong Kong dollars was exchanged for US dollars. The source of the funds C
came from the bank account of the deceased in respect of the 2 transactions
D
D
in February 2007. Cash was paid for the money exchange transaction in
E April 2005. The other exchange transactions listed were funded from E
Madam Fan’s Hang Seng bank savings account. I accept the submissions
F
F
that Mr C K Wong made in respect of the source of funds for these money
G
exchange transactions. I am satisfied on the evidence that the deceased had G
H
provided the cash to be converted into US dollars in order that Madam Fan
H
could take the US currency with her to the United States to pay for the
I
household expenses in Philadelphia. I
J
J
90. Disregarding the US$10,000 transaction in July 2008, the other
K remittances and money exchange transactions, spread over a period of K
4 years and 2 months (or 50 months), were of the total value of US$110,500.
L
L
Dividing this amount by 50 months produces a monthly average of
M US$2,210, which is in excess of the monthly amount of US$2,130 claimed M
R
that the remittances and money exchanges from the deceased, amounting on
R
average to about US$2,130 per month, was in fact expended to make
S
mortgage repayments and to meet the other expenses listed in §76 above. S
T
Clearly, there were other needs such as Kan Ho Chuen’s additional expenses,
T
which I have dealt with in §§97 and 98 below, which might have been met
U
U
V
V
- 65 -
A A
B
B
from the remittances and money exchanges from the deceased. I will grant
C liberty to the plaintiffs to apply to me in due course to apportion my total C
H
H
91. Having made these findings, and this award, I need not make a
I decision on the other disputed matters raised in Mr C K Wong’s submissions I
set out in §86 above in respect of this particular claim. However, as these
J
J
matters might impact on the other claims for loss of dependency, I shall
K proceed to deal with them. I do not agree with the submission contained in K
§86(4) that, as regards the further entries set out in the table in that sub-
L
L
paragraph, there was ample evidence that Madam Fan withdrew substantial
M amount of cash in Hong Kong dollars shortly before her overseas trips and M
that the only reasonable inference was that the cash was withdrawn for the
N
N
purpose of the overseas trips. As Mr Sakhrani cogently submitted, and
O which submission I accept, it is reasonable to infer that money exchanged O
into US dollars and withdrawn from the account, shortly before Madam
P
P
Fan’s return to the United States, was withdrawn for the purpose of being
Q
expended in the United States. The amounts withdrawn, shown on the table Q
R
in §86(4) above, had been withdrawn in Hong Kong dollars and, on one
R
occasion, US dollars was specifically deposited into the account to be
S
exchanged into Hong Kong dollars and then withdrawn in Hong Kong S
T
T
163
See §80 above.
U
U
V
V
- 66 -
A A
B
B
dollars. The only reasonable inference to draw from these withdrawals is
C that the monies withdrawn was to be expended in Hong Kong. I am satisfied, C
however, that the source of these funds was the deceased. The total amount
D
D
withdrawn in the course of the 3 years from 2006 to 2008 was the sum of
E HK$167,000, which amounts to an average annual sum of HK$55,667, or a E
V
V
- 67 -
A A
B
B
person per trip (including tour fee, tour guide fee and meals during
the trips and general spending), which was paid by the Deceased
C [CB1B/120/25]. In this connection, from 20 December 2006 to C
the date of Accident, the Deceased had 6 trips by flight, and was
D absent in Hong Kong for 81 days [CB3/3060-1]. Madam Fan also
explained that those trips were to Washington, Boston, and D
Niagara Falls [T/76A – C].
E
45. The only complaint made by the Defendant was that “this E
cannot even be true because Mr. Kan Siu-hong did not go to the
F US twice a year and the immigration records show that.” F
[T/75B – 77F], and the evidence appears to be that the Deceased
did not leave Hong Kong in 2003 and 2004 [T/75S – U]. Such
G
complaint was made without regard to the fact that Kan Ho Chuen G
went to Philadelphia to further his studies in July 2005. Plainly,
H the circumstances before and after 2005 are different.
H
46. The amount the Deceased paid for the three dependants in relation
I to family trips per month is US$500 x 2 trips x 3 dependants / 12 =
US$250 or HK$1,980 per month.”164 I
J
94. The Re-Revised Statement of Damages is very poorly drafted and J
K difficult to navigate. The averments making these claims are contained in §12
K
and §13(b) 165 . Mr Sakhrani rightly pointed out that no claims had been
L
advanced for the cost of family trips in China or other parts of Asia. Further, L
M no evidence was adduced why the cost of these trips, that were pleaded
M
166
originally in the sum of US$300 per person in the Statement of Damages ,
N
was increased to the sum of US$500 person in the Re-Revised Statement of N
S
S
164
P’s Closing Submissions pp.34-35
T 165
[CBA/8] T
166
[CB3/3144]
167
[CBA/8 at §12]
U
U
V
V
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A A
B
B
95. I also allow as damages for loss of dependency the claim made
C by Madam Fan that the deceased paid for her air fares to and from the United C
States at a cost of about US$1,300 per round-trip. The summary of the trips
D
D
Madam Fan made in and out of Hong Kong airport168, and not counting the
E short trips of less than 2 weeks which were likely to have been trips within E
Asia, shows that in the 4 years from 2005 to 2008, Madam Fan made 8 trips
F
F
to and from the United States, which was approximately 2 trips per year. On
G
that basis, I assess and award damages for loss of dependency for loss of the G
H
contributions made by the deceased towards her air fares as follows:
H
US$1,300 x 2 x 7.8/12 = HK$1,690 per month.
I
I
L 96. In §66 above, I had found that, at the time of his death, the net
L
income after tax of the deceased was HK$903,420 per annum or HK$75,285
M
per month (HK$903,420/12). This income was sufficient to support his M
N contributions towards Madam Fan and his children in the total sum of
N
169
HK$32,770 per month (HK$29,910 + HK$1,690 + HK$1,170). In §67
O
above, I found that the present notional net income after tax of the deceased O
R Chuen to find that their loss of dependency today would be HK$42,535 per R
month (HK$32,770 x 129.8%). In §69 above, I found that the post-trial
S
S
notional net income after tax would be $1,194,775 per annum or HK$99,565
T
T
168
[CB3/3066-1]
169
See §90 above.
U
U
V
V
- 69 -
A A
B
B
per month (HK$1,194,775/12) and that the median pre-trial notional net
C income after tax would be HK$1,049,098 per annum C
I award damages for pre-trial loss of dependency to Madam Fan, Kan Wai
F
F
Ling and Kan Ho Chuen for the pre-trial period from the date of the death
G
on 11 February 2009 to the date of judgment, a period of about 9.25 years, G
H
in the total sum of HK$4,179,483 (HK$37,653 x 12 months x 9.25 years).
H
Ms Kan Wai Ling, the daughter of the deceased, was aged 24 years
I
4 months at the time of the accident. She is aged 33 years and 7 months I
L August 2011. I do not see any reason why the deceased would have reduced
L
his contributions towards the household expenses in Philadelphia or stop
M
paying the expenses of their family trips after Kan Wai Ling ceased to be M
P
P
V
V
- 70 -
A A
B
B
expenses which I have awarded above, Kan Ho Chuen also claims the
C following additional losses of dependency in the Re-Revised Statement of C
Damages171:
D
D
“
(i) Air fares between US and US$1,500.00 per year
E
Hong Kong (or US$125.00 per month) E
N now and then he would come back to Hong Kong and his father would give
N
him a lot of money in Hong Kong dollars to spend; and that, in the United
O
States, money would be given to him through the hands of his mother.173 O
R Chuen claims loss of the contributions the deceased made to him via his
R
mother, that must be considered in the apportionment exercise of the award
S
S
T 171
[CBA/11 §16(b)] T
172
[CBB/145 at §7]
173
[T/152F-H]
U
U
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V
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A A
B
B
I have made in respect of the loss of contributions towards the household
C expenditure (including expenditure on Kan Ho Chuen’s needs) that were C
H
H
99. In September 2013, Kan Ho Chuen commenced his studies in
I a 5-year undergraduate programme in Mechanical Engineering at Drexel I
174
University in the United States . In his supplemental witness statement
J
J
dated 4 December 2015, Kan Ho Chuen stated that he changed his studies
K in 2015 to study Marketing and International Business. The University K
offered a 5-year “Co-Op Programme”, meaning that university tuition was
L
L
combined with periods of working outside. Being a 5-year programme, he
M would graduate in September this year. He claims the following additional M
S
S
174
Agreed Chronology dated 17 August 2016 at p. 9. In his supplemental witness statement dated 4
T
December 2015, Kan Ho Chuen stated that he changed in 2015 to study Marketing and International T
Business.
175
[CBA/14 §23(b)]
U
U
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V
- 72 -
A A
B
B
100. Kan Ho Chuen supported these claims in his 2 witness
C statements but, apart from 1 tuition statement from Drexel University for C
related expenses. I remarked, in the course of his evidence, how easy it must
F
F
be to get a statement from the university’s bursary of the university fees paid
G
and how astonished I was that this was not done. G
H
H
101. I am pleased to note, having regard to the complete absence of
I any documentary proof to support the very substantial claims being made in I
respect of photography and related expenses, that Mr C K Wong has not
J
J
made any submissions in his closing submissions to support these claims.
K Even if he had, I would have dismissed these claims outright on the ground K
that I was not satisfied on the evidence adduced that these expenses had been
L
L
incurred.
M
M
102. No evidence was led as to who paid for the fees for Kan Wai
N
Ling when she was at university. Evidence that the deceased had done so N
O would have been cogent evidence from which one could infer that the
O
deceased would also have paid for Kan Ho Chuen’s university fees when he
P
became old enough to enter university. Notwithstanding the absence of such P
Q evidence, I find that the deceased would have paid Kan Ho Chuen’s
Q
university fees had this accident not occurred. Kan Ho Chuen lived with him
R
R
for a longer period of time then his elder daughter, Kan Wai Ling. Kan Ho
S Chuen returned to Hong Kong in late 1998 and lived here until September S
T
T
176
[CBB/182, 233]
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U
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V
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A A
B
B
2005, when he started to study in Philadelphia177. Even so, he returned to
C Hong Kong during his summer holidays and the deceased made many family C
trips together with Ho Kan Chuen178. I have heard no evidence that he was
D
D
estranged from his son, or that the deceased did not care for his son and did
E not have the affection for his son that a father would naturally have for his E
own son.
F
F
G
103. Some further documentation was discovered before written G
H
closing submissions were exchanged. Mr C K Wong submitted, in his
H
closing submissions179, that:
I “50. For the year 2013 – 2014, the tuition fee was US$37,540.01. I
After deducting US$8,702 of scholarship, the net amount paid was
J US$28,838.01 [CBB/233].
J
51. As to the other academic years, the tuition fee structure is as
K
follows [CB3/3225-3229]:
K
O
52. The account activity schedule of Kan Ho Chuen obtained O
from Drexel University is now available [CB3/3222-3224]. The
P total amount charged from August 2013 to February 2016 is
P
US$119,859.41 (including US$593.05 being late payment fee)…
Q …
Q
53. On 29 May 2015, there was a subtraction of US$17,655
R
from ENGRFTUG Tuition and a subtraction of US$790 of
ENGRFTUG University Fee. These sums might have been R
deducted because Kan Ho Chuen transferred to business major.
S Therefore these two sums should be reduced from the total amount S
T 177
Agreed chronology dated 17 August 2016 at pp. 1, 3. T
178
See P’s Closing Submissions at §§29(4) and 44.
179
At p. 37-40, §§50-57.
U
U
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V
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A A
B
B
charged. The net fees charged by Drexel for the 2 1/2 years is
therefore
C
US$119,859.41 – US$17,655 – US$790 = US$101,414.41. C
D
54. If we further exclude the late payment fee of US$593.05, the
total fees charged by Drexel is US$100,821.36. The schedule D
covers a period of around 2.5 years. Therefore, on average Kan
E Wai Chuen’s fees at Drexel has been about US$40,000 a year. E
55. There was a debate of to what extent Kan Ho Chuen’s tuition
F fees were covered by scholarship and grants. However, the right
F
question to ask is not what has actually been paid, but the best
estimate of Kan Ho Chuen’s university tuition fees and other
G expenses at the time of death: see Wong Wai Hang, supra. G
56. It is common sense that some USA universities offer more
H scholarships than others. There is no reliable evidence, let alone H
guarantee, for the Deceased to assume that any part of Kan Ho
I
Chuen’s tuition fees would be covered by scholarship. Thus, if
Kan Ho Chuen received scholarship, the Defendant should not I
benefit from Kan Ho Chuen’s ability; likewise, if Kan Ho Chuen
J performs poorly and has to retake courses in university (and hence
J
pays more tuition fees) than an average undergraduate, or incurred
late payment expenses because he did not make payments
K
punctually, the Defendant similarly should not be penalized by K
Kan Ho Chuen’s inability.
L 57. It has been pleaded in the Re-Revised Statement of Damages L
that the expenses for studying in the University are about
M US$40,000 per year (including tuition fees, textbooks, food and
other miscellaneous expenses) [CBA/14/23(b)]. The estimated M
claim matches with the account activity schedule of Kan Ho
N Chuen. The expenses of textbooks, food and other miscellaneous N
expenses are not shown in the schedule. It is submitted that the
estimate of US$40,000 a year is an accurate one and a
O
conservative estimate on the part of the Plaintiffs.” O
P
104. Instead of resolving the dispute, the account activity schedule P
Q
appears to have raised more controversy. In his closing submissions,
Q
Mr Sakhrani stated180:
R
“17. At the time of writing this submission, on 1st March 2016 the R
Plaintiffs’ solicitors disclosed a 3-page Account Activity from
S Drexel University in respect of the charges and payments on S
behalf of Kan Ho Chuen [CB3/3222-4]. These show:
T
T
180
At pp.13-14.
U
U
V
V
- 75 -
A A
B
B
(a) August 2013 – May 2014:
C the total tuition and other fees : US$39,231.33
C
check (sic) payments: -US$3,380.32
D loans: -US$9,401 D
refund disbursement: US$1,088.89
E grants/scholarship, etc: -US$25,625 E
unaccounted for shortfall: -US$1,193.90
F
F
(b) August 2014 – July 2015
G the total tuition and other fees : US$42,648
G
tuition payment plan: -US$5,756
H loans: -US$6,432 H
refund disbursement: US$2,198.97
I
grants/scholarship, etc: -US$20,917 I
S 105. Let me state at the outset that I strongly disagree with the S
submission that the right question to ask is not what was actually paid but
T
T
the best estimate, at the time of death of the deceased, of Kan Ho Chuen’s
U
U
V
V
- 76 -
A A
B
B
university tuition fees and other expenses. On this point, there is no better
C statement of principle than that contained in McGregor on Damages, C
that “[w]e have to assess what might have been: and what can be seen at the
J
J
trial since death, may substantially be influenced by the death itself.” That
K statement of principle is irrefutable: it applies to the situation where, for K
example, a child of the deceased drops out of university because the loss of
L
L
his father’s contribution towards his fees prevents him from carrying on his
M studies - the fact that he has dropped out of university does not prevent him M
from claiming damages for loss of the contributions his father would have
N
N
made towards those university fees had his father not been killed. It does
O
not apply to the present case where the child has been awarded a scholarship O
P
to cover part of those fees. Even if he were alive today, the contribution
P
Mr Kan would make towards Kan Ho Chuen’s university fees would be in
Q
the reduced amount of such fees. However, I agree with the submissions of Q
R Mr C K Wong that the student loans taken by Kan Ho Chuen ought not to
R
be deducted from his claim for damages for loss of dependency181. I have
S
found182 that that the deceased would have paid Kan Ho Chuen’s university S
T
T
181
P’s Reply Submissions at p. 20, §42
182
At §102 above
U
U
V
V
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A A
B
B
fees had he not been killed by this accident. I also find that, if the deceased
C were alive and was paying Kan Ho Chuen’s university fees, Kan Ho Chuen C
V
V
- 78 -
A A
B
B
Description Date Amount(US$)
C
Federal Seog Program 22-MAY-2014 367.00 C
M
M
The total value of the grants and scholarships over this period of
N 2.5 years was US$53,052, or an average of US$21,220 per year. I assess N
the cost of Kan Ho Chuen’s education at Drexel University for the period
O
O
of 5 years from September 2013 to the summer of 2018 to be US$18,780
P per year (US$40,000 – US$21,220) or HK$146,484 per year P
(US$18,780 x 7.8).
Q
Q
R 107. In §69 above, I found that the median pre-trial notional net
R
income after tax of the deceased would be HK$1,049,098 per annum or
S
S
HK$87,424 per month (HK$1,049,098/12). I find that had he lived, the
T deceased would have had sufficient income to contribute the sum of T
HK$146,484 per annum to pay for Kan Ho Chuen’s university fees in
U
U
V
V
- 79 -
A A
B
B
Drexel from 2013 to 2018, in the total amount of HK$732,420
C (HK$146,484 x 5 years), in addition to the other contributions he made to C
E
Claim on behalf of Madam Wong Lai Sheung, mother of the deceased E
F 108. The plaintiffs no longer pursue a claim for damages for loss of F
G
dependency in respect of the deceased’s alleged contributions towards the
G
parents of Madam Fan. Mr C K Wong’s submissions only contain
H
submissions regarding the claim in respect of the loss of dependency of the H
I
mother of the deceased, Madam Wong Lai Sheung. The defendants contest
I
this claim because “nothing was said about the state of health of the
J
deceased’s mother today.”183 The parties have a continuing obligation to the J
K court up to the time that judgment is delivered to check and ensure that
K
statements contained in pleadings, such as a Statement of Damages,
L
continue to be true and accurate. If there has been an event or an occurrence L
M which detracts from the truth of any claim pleaded in the Statement of
M
Damages, it is the obligation of the party concerned to withdraw or amend
N
such claim. There is been no withdrawal or amendment of this particular N
P 109. The parties did not examine any witnesses in respect of this P
claim at trial. They were probably too preoccupied on the other and more
Q
Q
complex issues raised in the proceedings. I accept the evidence of
R
Madam Fan that the deceased would meet his mother about 10 times every R
S
year and would give her HK$2,000 to HK$3,000 every time he met her184,
S
T 183
D’s Closing Submissions at p.15 §20 T
184
See the Re-Revised Statement of Damages at CBA/12 §17(a) which is supported by a statement of truth
at CBA/23 and see Madam Fan’s witness statement at CBB/121 §28.
U
U
V
V
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B
B
amounting to about HK$25,000 per annum (HK$2,500 x 10). Madam
C Wong Lai Sheung was born on 28 July 1934. She was aged 74 years and C
7 months at the time of the accident and is aged 83 years and 9 months today.
D
D
I find that, but for his death, the deceased would have continued to gives
E sums of money to his mother, for as long as she lives, in the total sum of E
about HK$25,000 per annum. I find that he would not have increased these
F
F
payments to his mother on account of inflation but would maintained the
G
payments at or about this level. No evidence has been adduced of any G
H
increasing needs on her part. On the other hand, as she grew older, she
H
would probably spend less and less on herself. I award pre-trial loss of
I
dependency to her at the rate of HK$25,000 per annum for the period from I
J the date of death on 11 February 2009 to the date of judgment in the total
J
sum of HK$231,250 (HK$25,000 x 9.25 years).
K
K
S
S
T 185
At §96 above. T
186
At §107 above.
187
At §109 above.
U
U
V
V
- 81 -
A A
B
B
Post-trial loss of dependency
C
C
111. The deceased was born on 25 October 1957 and was 51 years
D and 3 months of age at the time of his death on 11 February 2009. If he were D
G
§29(c) it was averred that, but for the accident, the deceased would have
G
retired when he reached 70 years of age. I permitted Mr C K Wong to open
H
his case on both scenarios without requiring a further amendment of the Re- H
I
Revised Statement of Damages.
I
112. In Fung Suen Sim v. Liu Chun Pong HCPI 896 of 2007,
J
J
23 December 2011, I had stated:
K
“The multiplier K
45. I turn to consider the appropriate multiplier to be adopted in
L the present case. It is common ground that the multiplier should L
be adopted by having regard to the age and health of the deceased
M and, in particular, to the date when he would likely have retired if
the accident had not occurred. The age and health of the plaintiff M
is also relevant. At the time of death, the deceased was 58 years
N old. The plaintiff is now 61 years old and there is no doubt that N
she would live much beyond the likely retirement date of the
deceased.
O
O
46. It is also common ground that I should apportion that
multiplier, if it exceeded the pre-trial period, between the pre-trial
P
and post-trial period. There is ample authority to support this P
approach : Pritchard v J. H. Cobden Ltd [1998] Fam. 22, Corbett
Q v Barking, Havering and Brentwood Health Authority [1991] 2
QB 408 and White (Administratrix of White, deceased) v ESAB Q
Group (UK) Ltd (11 January 2002, unreported, QBD). There has
R been much criticism of this practice. It has been said that the R
discount for early receipt of the damages, implicit in the
S
calculation of the multiplier, should only apply to future losses
from the date of trial or date of assessment and that the effect of a S
choice of multiplier from the date of death is that the discount is
T applied to pre-trial losses, which ought not to be discounted for T
U
U
V
V
- 82 -
A A
B
B
early receipt, there be no early receipt of such losses. However,
the point was not taken and I say no more about it.”
C
C
E 113. At the time of trial, the parties were aware that an appeal was
E
going to be heard in the UK Supreme Court on whether or not the multiplier
F
in a fatal accidents action should be assessed as at the date of trial. It was F
I the joint judgment of the Supreme Court, delivered by Lord Neuberger and
I
Lady Hale, was given on 24 February 2016. In that case, a widower appealed
J
directly to the Supreme Court, pursuant to a certificate granted by the judge, J
K against a decision on the damages he had been awarded for future loss
K
following the death of his wife. The widower's wife had died from
L
L
mesothelioma aged 46, having contracted it from being exposed to asbestos
M during her employment by the respondent ministry. The ministry admitted M
liability in the widower's claim brought under the Fatal Accidents Act 1976.
N
N
The damages assessed included a multiplicand for the value of the income
O and services lost as a result of the wife’s death. The judge held that the O
multiplier was to be calculated from the date of death rather than the date of
P
P
trial, following the House of Lords' decisions in Cookson v Knowles [1979]
Q A.C. 556 and Graham v Dodds [1983] 1 W.L.R. 808. The issues were (1) Q
whether the Cookson and Graham approach properly reflected the principle
R
R
of full compensation; (2) if not, whether the instant court should depart from
S that approach, applying the Practice Statement (HL: Judicial Precedent) S
U
U
V
V
- 83 -
A A
B
B
114. The UK Supreme Court held that calculating damages for loss
C of dependency upon the deceased from the date of death, rather than from C
the date of trial, meant the claimant suffered a discount for early receipt of
D
D
the money when in fact the money would not be received until after trial.
E That resulted in under-compensation in most cases. The current approach in E
fatal accidents cases involved taking a multiplier as at the date of death and
F
F
then deducting from it the time which elapsed between death and trial. That
G
mixed up a calculation based on properly considered actuarial principles G
H
with an arbitrary arithmetical deduction. The Law Commission in their
H
report on Claims for Wrongful Death 188 had recommended that, as in
I
personal injury cases, actuarially calculated multipliers should be used for I
J calculating future losses in fatal accident cases from the date of trial.
J
Cookson and Graham had been decided in a different era, when the
K
calculation of damages for personal injury and death had been nothing like K
N Wells [1999] 1 A.C. 345 had laid to rest any doubts about using the tables in
N
the courts. While the Supreme Court should be very circumspect before
O
exercising its power to depart from previous decisions of the House of Lords O
P or the Supreme Court, there had been a material change in the relevant legal
P
landscape since the two House of Lords decisions, namely, the use of
Q
Q
actuarial tables to calculate future losses in personal injury and fatal accident
R cases. The application of the reasoning in those decisions was illogical and R
resulted in unfair outcomes. Accordingly, the Supreme Court would exercise
S
S
its power to depart from those decisions.
T
T
188
2 November 2002
U
U
V
V
- 84 -
A A
B
B
115. Not surprisingly, Mr C K Wong, in the plaintiff’s closing
C submissions, submitted that I ought to follow the decision of the UK C
Chan Tables”), which are based on the Ogden tables. He submitted that there
F
F
was no reason for Hong Kong not to adopt the approach of the Supreme
G
Court such that from now on the multiplier should be assessed as at the date G
H
of trial and not at the date of death 189 . Mr Sakhrani, in the defendant’s
H
closing submissions, conceded that the defendant did not contend that
I
Knauer v. Ministry of Justice should not be applied in Hong Kong190. I have I
L Dodds [1983] 1 W.L.R. 808 that the multiplier in a fatal accident case should
L
be ascertain as at the date of death. Although the Court of Appeal in Hong
M
Kong has applied the decision in Cookson v Knowles [1979] A.C. 556 on M
S
S
T 189
P’s Closing Submissions p.27 §35 T
190
D’s Closing Submissions p.33 §47
191
Chan Pui Ki v. Leung On [1996] 2 HKLR 401
U
U
V
V
- 85 -
A A
B
B
multiplier to be adopted in this case by having regard to the notional age of
C the deceased, had he lived, as at the date of this judgment. C
D
116. Although the defendant did not contend that Knauer v. Ministry D
Having regard to the findings I have made in connection with the profits
N
N
earned by the deceased from his dump truck transport business and the
O continuing profitability of the business, I see no basis for making the O
discount that has been sought by the defendant. It is accepted that the
P
P
discount due to the risk of natural death or disability might well be very
Q small in the pre-trial period from the date of death and the date of the Q
judgment which, in this case, is 9.25 years. Table E of the Ogden Tables193
R
R
is a table showing the factor by which the pre-trial damages should be
S
S
T
At p.33.
192
T
Actuarial Tables in Personal Injuries and Fatal Accident cases, 7th Ed., at p. 25. A similar table does not
193
appear in the Chan Tables 2016 although the point is noted on p.14, §51.
U
U
V
V
- 86 -
A A
B
B
multiplied in a fatal accident case to allow for the likelihood that the
C deceased would not in any case have survived to provide the dependency for C
the full period to the date of trial. In the case of a deceased male aged 50 194
D
D
and where the pre-trial period is 9 years, the factor is 0.98. If a similar table
E were to be produced based on the Hong Kong Life Tables, it is likely to E
show an even smaller discount factor, given the higher life expectancy in
F
F
Hong Kong, such that the reduction would be de minimus. For these reasons,
G
I decline to apply any discount to my assessment of the award for pre-trial G
H
loss of dependency.
H
I
I
The multiplier to be adopted in this case to assess post-trial loss of
J dependency J
M have retired if the accident had not occurred. The age and health of the
M
dependants claiming post-trial loss of dependency was also relevant. The
N
deceased was 51 years and 3 months of age at the time of his death on N
Q deceased.
Q
R
118. In Fung Suen Sim v. Liu Chun Pong196, I had concluded that the R
S
probabilities were that the deceased in that case would have continued his
S
T 194
The deceased in this case was 51 years and 3 months of age at the time of his death on 11 February 2009. T
195
See §112 above.
196
At §§49-50
U
U
V
V
- 87 -
A A
B
B
occupation as a sole proprietor of his wholesale vegetable business and
C would have carried on his business until he reached the age of 70. His pre- C
accident lifestyle was such that I could not conceive of any reason why he
D
D
would stop working, in order to pursue other activities, unless he had to stop
E by reason of ill health or business losses. I had found that the outlook for his E
business was very positive and continued to remain positive. I noted in that
F
F
case that I had not received any evidence that would have led me to conclude
G
that he was unlikely to remain healthy up to the age of 70. I found particular G
H
assistance from the decision of O’Connor J, as he then was, in Davies v
H
Whiteways Cyder Co Ltd [1975] 1 Q.B. 262 before reaching that conclusion.
I
In that case, Mr. Davies was killed in a traffic accident in 1971 when he was I
N an active man and highly enjoyed the business in which he was engaged,
N
which was carried out from his home. O’Connor J was of the view that it
O
was highly improbable that he would have wanted to retire before he reached O
P the age of 70. He also held that the probability was that the business would
P
have remained profitable for a long time to come.
Q
Q
R 119. The deceased in the present case also carried out his dump R
truck transport business from his home. Cheung Hong employed drivers to
S
S
operate the dump trucks. The deceased did not himself drive the dump trucks.
T I have already found that his business was profitable and I have assessed his T
notional net of tax income today to be HK$1,194,775 per annum or
U
U
V
V
- 88 -
A A
B
B
HK$99,565 per month (HK$1,194,775/12)197. Cheung Hong had purchased
C a dump truck in 2007 and 2 more dump trucks in 2008198. I have no basis to C
find that his business would not have remained profitable. His habit of often
D
D
travelling to Shenzhen for massages199 would not have prevented him from
E working until the age of 70. I accept the evidence of Madam Fan200 and find E
that, prior to his death, the deceased was in good health and lived a normal
F
F
life. He did not smoke or drink. He was a hard-working person, cheerful and
G
helpful, and he was well liked by his friends and business colleagues who G
H
liked to work with him. I have no basis to conclude that he was likely to
H
become healthy before the age of 70 years. I find that, but for his untimely
I
death, the probabilities are that the deceased would have continued to carry I
J on his dump truck transport business for a further 9.5 years until he reached
J
the age of 70.
K
K
R
R
S
S
197
At §69 above
198
[CB3/3037, 3041, 3043]
T 199
See §79 above. T
200
[CBB/122 §31]
201
Chan Pak Ting v. Chan Chi Kuen (No. 2) [2013] 2 HKLRD 1 at p.67 §133
U
U
V
V
- 89 -
A A
B
B
Post-trial loss of dependency of Madam Fan and Kan Ho Chuen
C
121. In §96 above, I had found that the loss of dependency of C
D Madam Fan and Kan Ho Chuen today would be HK$42,535 per month.
D
Applying that amount to the multiplier of 8.74 produces a post-trial loss of
E
dependency of HK$4,461,071 (HK$42,535 x 12 months x 8.74), which I E
G
122. I find that Kan Ho Chuen will remain dependent on the G
H
contribution of the deceased towards the household expenses in Philadelphia
H
up to the end of August 2018. I do not see any reason why the deceased
I
would have reduced his contributions towards the household expenses in I
J
Philadelphia or would have stopped paying the expenses of their family trips
J
after Kan Ho Chuen ceased to be dependent. The quantum of Kan Ho
K
Chuen’s post-trial loss of dependency can be determined when application K
202
HCPI896/2007, 23 December 2011 at §28
T 203
See Hong Kong Life Tables 2011-2066 September 2017 at p.7 §2.4 available at T
https://www.statistics.gov.hk/pub/B1120016072017XXXXB0100.pdf
204
See Hong Kong Life Tables 2011-2066 September 2017 at p.33, Table 13.
U
U
V
V
- 90 -
A A
B
B
The calculation of the expectation of life is explained on p.5 of the
C publication and takes into account the risk of earlier death. I find that C
Madam Wong Lai Sheung, who is aged 83 years and 9 months today, is
D
D
likely to survive another 10 years. As the risk of earlier death is already
E taken into account in the calculation of expectation of life, it is appropriate E
to refer to Table 28 of the Chan Tables, being the table of multipliers for
F
F
pecuniary loss for term certain, to ascertain the appropriate multiplier to
G
apply. For a term of 10 years, the table produces a multiplier of 9.52 at the G
H
rate of return of 1%, which is the appropriate rate of return for a duration
H
not exceeding 10 years205. Accordingly, I award damages for post-trial loss
I
of dependency to Madam Wong Lai Sheung in the sum of HK$238,000 I
J (HK$25,000 x 9.52).
J
K
K
Summary of the awards for post-trial loss of dependency
L
124. The following is a summary of the awards I make in this action L
Q
Q
The Award for Loss of Accumulation of Wealth
R
R
125. At the time of his death on 11 February 2009, the deceased had
S net assets worth almost HK$860,000 (excluding the value of the dump S
T 205
Chan Pak Ting v. Chan Chi Kuen (No. 2) [2013] 2 HKLRD 1 at p.67 §133. T
206
At §121 above.
207
At §123 above.
U
U
V
V
- 91 -
A A
B
B
trucks owned by him and the insurance policies taken out by him208) as set
C out below: C
D
D
Item Amount (HK$) Reference
E
Cash and Receivables E
H
The deceased’s personal bank accounts 125,471.80 [CB3/615, 616]
H
Receivables of Cheung Hong 911,638 [CB1B/115/14]
I (received by Madam Fan)
I
Sub-total 1,347,261.96
J
J
Less Debts
K
Payroll expenses paid by Madam Fan (324,500.00) [CB3/3082] K
R
Credit card of Aeon (0) [CB3/1139]
R
S
S
208
[CBA/18]
209
Payments to Yee Tat Company, Wai Shing Vehicle Maintenance, Keung Chai Vehicle Rescue, Kam Tin
T
Filing Area, Tong Kung Leng, and for and for the private car nearing vehicle registration no. LV 6770. The T
other items, which are not expenses (for e.g. loan repayments) or which are related to the death of the
deceased, e.g. funeral expenses, have not been included.
U
U
V
V
- 92 -
A A
B
B
Item Amount (HK$) Reference
C
C
Credit card of Bank of East Asia (0) [CB3/634]
D Sub-total (490,711.02) D
E Grand-Total 856,550.94
E
H
126. The assets listed above have not been lost by his untimely death.
H
They form part of his estate. What has been lost is the net wealth he would
I
have accumulated, from the date of his actual death until the date of his I
J natural death, had the accident not occurred. Although a substantial part of
J
the assets listed above came from the receivables of Cheung Hong, those
K
receivables would contribute towards the accumulation of his wealth, as K
L much as his bank deposits would. I find that the deceased accumulated
L
wealth during his 24 years of working life, since he established Cheung
M
Hong in 1985 up to the time of his untimely death in February 2009 210, and M
N that he would have continued to do so, had the accident not occurred.
N
O 127. In Fung Suen Sim v. Liu Chun Pong 211 , I proposed a new O
P
method of assessing this award which has since been adopted in a number
P
of fatal accident cases212. The starting point is to have regard to the likely
Q
savings the deceased would have made, from the time of death to the time Q
R
of his retirement, had the accident not occurred. In §69 above, I found that
R
the post-trial notional net income after tax of the deceased would be
S
S
210
See §2 above.
T 211
At §§53-65. T
212
See the recent decision of Wilson Chan J in Chung Sui Cheong v. Tsang Wai Hung HCPI 1058 of 2015,
3 November 2017.
U
U
V
V
- 93 -
A A
B
B
HK$1,194,775 per annum or HK$99,565 per month (HK$1,194,775/12) and
C that the median pre-trial notional net income after tax would be C
H
the present case, the courts should adopt a savings rate of 10% of such
H
income to assess this head of claim. There is ample authority to support this
I
approach which was reviewed by the Court of Final Appeal in Lam Pak Chiu I
J & Anors v Tsang Mei Ying and So Sau Lin (Administratrices of the estate of
J
To Shing Chiu, deceased) [2001] 1 HKLRD 193 at p. 207:
K
K
“(i) Chan Yuk Yin v. Chan Cheung Wan (where Nazareth J
L awarded $154,860 by adopting a multiplier of 15, which was not L
disputed, and a multiplicand of 10 percent of earnings);
M (ii) Cheung Yuk Shiu v. Registrar General [1990] HKLY 514 M
(where Master Chan awarded $194,675 by adopting a multiplier
of 16 for a man who died aged 19 and a multiplicand of 10 percent
N
of earnings); N
(iii) …
O
O
(iv) Wong Mee Wan v. Kwan Kin Travel Services Ltd [1993]
HKLY 473 (where Mayo J awarded $153,000 by adopting a
P multiplier of 17 for a student who died aged 18 and a multiplicand P
of 10 percent of estimated earnings); and
Q (v) Ho Wun Chau & Another v. Chan Chuk Mui [1997] 3 HKC Q
666 (where Master Cannon awarded $100,800 by adopting a
multiplier of 14 for a man who died aged 34 and a multiplicand of
R
10 percent of earnings).” R
S
128. Applying a savings rate of 10% of pre-trial median notional net of S
T
tax earnings of HK$1,049,098 per annum would produce savings, over the pre-
T
trial period of 9.25 years, of HK$970,416 (HK$1,049,098 x 10% x 9.25 years).
U
U
V
V
- 94 -
A A
B
B
Applying a savings rate of 10% of post-trial notional net of tax earnings of
C HK$1,194,775 per annum would produce savings, over the post-trial period of C
time of his natural retirement at the age of about 70. These savings would grow,
F
F
during the period he was accumulating his savings, as well as during the period,
G
after his retirement, when he would have stopped saving. G
H
H
129. As I stated in Fung Suen Sim v. Liu Chun Pong 213 , it is
I inappropriate to use a multiplier to assess his notional savings over this I
period of time. The award under this head of claim is not a lump sum award
J
J
to represent the loss of a future continuing stream of income, which has to
K be discounted, on account of accelerated receipt, by the use of a multiplier. K
The above assessment has to be made in order to assess the total notional
L
L
accumulation of wealth from the time of death to the time of notional
M retirement, including any likely growth of these accumulated savings from M
investment returns. Once this amount has been assessed, the next stage is to
N
N
determine whether this accumulated wealth would grow, or be depleted, by
O the time of natural death. If there is a net balance at the time of natural death, O
this net balance, which is a future loss sustained by the estate of the deceased,
P
P
must be discounted for accelerated receipt. However, this discount is a
Q
discount for the accelerated receipt of a future lump sum loss rather than for Q
R
the loss of a future continuing stream of income.
R
T
T
213
At §58
214
At §60
U
U
V
V
- 95 -
A A
B
B
“The current practice is to assess multipliers, and discounts for
accelerated receipt, on the assumption that prudent investments
C made of the damages awarded to victims of torts would yield an C
annual return of 4.5% per annum (see Cookson v. Knowles [1979]
D AC 556 and Chan Pui Ki (an infant) v. Leung On [1995]
3 HKC 732). Where a court finds that the deceased would, but for D
the accident, have accumulated wealth from the date of his death
E to the date of his natural retirement and that he would have E
invested the wealth he accumulated, then, in order to be consistent
F
with the current practice, it is only right that the court should
assume that such investments would yield a similar rate of return F
of 4.5%. Although I have not attempted to make detailed
G calculations in this regard, I am probably not much off the mark G
in assessing the assumed return on savings to have augmented the
accumulated fund to about HK$1,300,000.”
H
H
I was off the mark to assess the accumulated fund to be about HK$1,300,000
I
I
as my re-calculations, using Excel software, show. These calculations are
J attached as Annex 1 to this judgment. J
K
131. The discount rate was reduced to 2.5% for future losses in K
N Building and Engineering Works Ltd (in liquidation) & Ors. [2014] N
215
3 HKLRD 21, I observed that :
O
O
“In Fung Suen Sim, the personal representative and
administratrix of the estate of Lung Kai Hon, deceased v. Liu
P
Chun Pong & Anor., HCPI 896/2007, 23 December 2011, I held P
that the claim for loss of accumulation of wealth, a remnant of the
Q abolished lost years’ claim, was unlikely to yield a very high
Q
award, even in cases where the deceased was likely to accumulate
substantial savings on account of the fact that he was a high
R
income earner and lived frugally. In that case, I assessed the R
award for loss of accumulation of wealth based on a rate of return,
S net of inflation, of 4.5% per annum. If the net rate of return of
S
2.5% per annum, assessed in Chan Pak Ting v. Chan Chi Kuen &
T
T
215
At footnote 21 under §38
U
U
V
V
- 96 -
A A
B
B
Anor. [2013] 2 HKLRD 1, is taken to make the assessment, the
award may be even lower.”
C
C
132. I set out in Annex 2 to this judgment my calculations, using
D
D
Excel software, to show the rate of growth of the deceased’s notional savings
E at the net rate of return of 2.5%, which I adopt in the present case, and which E
Wilson Chan J adopted in his recent judgment in Chung Sui Cheong v.
F
216 F
Tsang Wai Hung HCPI 1058 of 2015, 3 November 2017 . These
G calculations show that the accumulated savings would have grown to G
I 133. I now turn to consider what would happen to this fund during
I
the years from the date of notional retirement at age 70 to the date of natural
J
death. The current expectation of life for males is 81.3 years217. A male J
K aged 51 is expected to live another 31.84 years to the age of 82.84 years218.
K
Taking 83 years as the likely age of natural death of the deceased, I have no
L
L
doubt that a substantial part of the accumulated wealth would have been
M depleted, during the post-retirement period of 13 years, on account of his M
personal expenditure which would exceed the assumed rate of return of 2.5%
N
N
per annum on the accumulated fund.
O
O
134. I have assessed that he would be saving about 10% of his net after
P
tax income up to the time of retirement. I found that the post-trial notional net P
S
S
216
At §135.
T 217
See Hong Kong Life Tables 2011-2066 September 2017 at p.7 §2.4 available at T
https://www.statistics.gov.hk/pub/B1120016072017XXXXB0100.pdf.
218
See Hong Kong Life Tables 2011-2066 September 2017 at p.31, Table 12.
U
U
V
V
- 97 -
A A
B
B
trial contributions to his dependants amounted HK$42,535 per month219 and
C HK$2,083 per month (HK$25,000/12 months)220, a total of HK$$44,618, or C
about 50% of HK$89,609, leaving the balance 50%, i.e. HK$44,805 per month
D
D
(HK$89,609 x 50%) or HK$537,660 per annum, as his personal expenses,. His
E expenses after retirement are likely to be reduced by about one-third to about E
H
HK$2,742,082. Reducing this sum of HK$2,742,082 by 13% per annum, and
H
increasing the balance by the assumed rate of return of 2.5% per annum, will
I
result in a net reduction of the accumulated savings by 10.5% per annum. The I
J fund, therefore, will reduce to about HK$648,306 in 13 years’ time, being the
J
period of time between the notional date of retirement and the date of natural
K
death. K
L
L
135. I set out in Annex 3 to this judgment, my calculations, using
M Excel software, to show that the value of the accumulated fund at the time M
O 136. This remaining net balance on the notional date of death would
O
then have to discounted for accelerated receipt of 22.5 years from the date
P
of natural death to the date of judgment. Table 27 of the Chan Tables 2016 P
T
T
219
See §96 above.
220
See §123 above.
U
U
V
V
- 98 -
A A
B
B
appropriate discount factor to apply for this length of time. Applying this
C discount factor to the accumulated fund at the time of natural death produces C
G estate under the provisions of LARCO. This case again demonstrates that G
this remnant of the abolished lost years’ claim is unlikely to yield a very
H
H
high award221.
I
I
138. Before I leave this area, I ought to confess that I was, indeed,
J
off the mark in Fung Suen Sim v. Liu Chun Pong to award HK$450,000 as J
K damages for loss of net accumulation of wealth, but only slightly. I set out
K
in Annex 4 to this judgment, my recalculations, using Excel software, which
L
show that my award should have been HK$436,623. These miscalculations L
O I understand that the parties eventually reached a settlement and the appeal
O
was not pursued.
P
P
V
V
- 99 -
A A
B
B
the provisions of section 4(1), (2)(b) and (4) of the Fatal Accidents
C Ordinance, Cap. 22. I also award interest on this amount at the rate of C
E 140. I accept the evidence of Madam Fan that the funeral and related
E
expenses amounted to HK$140,496 (being funeral costs), US$2,420 (being
F
the cost of travel to Hong Kong from the United States for her and her F
G children) and US$6,191 (being the cost of the graveyard in the Greenwood G
223
Cemetery in the United States where he was buried) . I find that these
H
H
expenses were reasonably incurred and I award this head of claim, totalling
I HK$207,661224, in full. I also award interest on HK$207,661 at the rate of I
225
8% per annum from the date of death to the date of judgment .
J
J
R
R
222
Bibi Bushra and Nabela Qoser, the co-administrators of the estate of Khalid Mehmood, deceased v.
Method Building and Engineering Works Ltd (in liquidation) & Ors. HCPI 301/2012, 6 March 2015 at
S
§§14-17. S
223
[CBA/21] [CBB/123-124 §33] [T/8D]
224
Adopting an exchange rate of US$1 = HK$7.8.
T 225
Bibi Bushra and Nabela Qoser, the co-administrators of the estate of Khalid Mehmood, deceased v. T
Method Building and Engineering Works Ltd (in liquidation) & Ors. HCPI 301/2012, 6 March 2015 at §17.
226
See §139 above.
U
U
V
V
- 100 -
A A
B
B
(b) Damages for funeral expenses in the sum of HK$207,661 and
C interest thereon227; C
HK$369,534234.
N
N
O
Costs O
P 144. I make a costs order nisi that the defendant pays the costs of the P
R
R
227
See §140 above
228
At §96 above.
S 229
At §107 above. S
230
At §109 above.
231
At §141 above
T 232
At §121 above. T
233
At §123 above.
234
At §137 above
U
U
V
V
- 101 -
A A
B
B
Liberty to apply
C
145. I grant liberty to the plaintiffs to apply to me within 42 days to C
H
H
I (Mohan Bharwaney) I
Judge of the Court of First Instance
J High Court J
K
K
Mr Wong Chi-Kong and Mr Leon Ho, instructed by ONC Lawyers, for the
L plaintiffs L
Mr Ashok K Sakhrani, instructed by Deacons, for the defendant
M
M
N
N
O
O
P
P
Q
Q
R
R
S
S
T
T
U
U
V
V
Annex 1
HCPI 896/2007
Pre-trial loss of savings
Post-trial savings
Net
accumulation
of wealth 2742082*(1-10.5%)^13= 648,306
Net
accumulation of
wealth 1514617*(1-3.5%)^12.5= 970,274