In the recent judgment of Kan Wai Ling and others v Kan Chi Fai  HKCFI 1024, the plaintiffs are the co-administratrices of the estate of the deceased who sustained fatal injuries in a traffic accident. The Court has decided on, among other things, (i) how the award for loss of dependency should be assessed; (ii) whether or not the multiplier for post-trial loss of dependency should be assessed as at the date of trial or at the date of the death of the Deceased; and (iii) how the award for loss of accumulation of wealth should be calculated.
How should the award for loss of dependency be assessed?
The Court discussed whether the formula set out in Harris v Empress Motors  1 WLR 212 can be applied to assess loss of dependency.
In Harris, the Court stated that the modern practice in assessing the loss of dependency is to deduct the percentage from the net income figure to represent what the deceased would have spent exclusively on himself. The percentages have become conventional in the sense that they are used unless there is striking evidence to make the conventional figure inappropriate.
Where the family unit was husband and wife, the conventional figure is 33% and where there are children, the deduction falls to 25%. The rationale of this formula is that in the case of husband and wife, 1/3 of net income would be spent for the benefit of each and 1/3 for their joint benefit. Where there are children the earnings are presumed to be split 4 ways, namely ¼ for the deceased, ¼ for the wife, ¼ for the children and ¼ for joint use. No deduction is made in respect of the joint portion as “one cannot buy or drive half of the motor car”.
In Kan Wai Ling, the Court held that this case is not a case where there was joint expenditure on rent and meals at home. There were insufficient joint elements in the patterns of expenditure of the deceased and the dependants. Therefore, the formula set out in Harris cannot be applied, and the Court will assess the award for loss of dependency by considering the evidence of the contributions made by the deceased to his dependants prior to his death.
Whether or not the multiplier should be assessed as at the date of trial?
In assessing the post-trial loss of dependency, the Court followed the decision of the UK Supreme Court in Knauer v Ministry of Justice  UKSC 9,  A.C. 908. In Knauer, the UK Supreme Court held that calculating damages for loss of dependency upon the deceased from the date of death, rather than from the date of trial, meant the claimant suffered a discount for early receipt of the money when in fact the money would not be received until after trial. That resulted in under-compensation in most cases. Therefore, the Court held that the multiplier to be adopted in assessing the post-trial loss of dependency shall be ascertained by having regard to the notional age of the deceased, had he lived, as at the date of trial.
How to calculate the award for loss of accumulation of wealth?
To calculate the award for loss of accumulation of wealth, the Court followed the method proposed in Fung Suen Sim v Liu Chun Pong  HKEC 1711, in which the starting point is to have regards to the likely savings the deceased would have made, from the time of death to the time of retirement, had the accident not occurred. Where there is no established pattern of savings but the evidence clearly shows that the deceased would likely have made some savings from his income, the Court should adopt a saving rate of 10% of such income to calculate the notional total savings of the deceased. These savings would grow, during the period the deceased was accumulating his savings, as well as during the period, after the deceased’s retirement, when he would have stopped saving.
The Court stated that it is inappropriate to use a multiplier to assess the deceased’s notional total savings, because the award for loss of accumulation of wealth is not a lump sum award to represent the loss of a future continuing stream of income, which has to be discounted, on account of accelerated receipt, by the use of multiplier.
After the notional total savings of the deceased are calculated, the Court would then determine whether this accumulated wealth would grow, or be depleted, by the time of natural death. The Court would reduce the sum by a percentage per annum for the deceased’s personal expenditure, and increase the balance by the assumed rate of return per annum. If there is a net balance at the time of natural death, this net balance, which is a future loss sustained by the estate of the deceased, must be discounted for accelerated receipt.
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This article was first published on ONC’s website.
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte. Ltd. accepts or assumes responsibility, or has any liability, to any person in respect of this article.