CHAN PAK TING v. CHAN CHI KUEN AND ANOTHER

CHAN PAK TING v. CHAN CHI KUEN AND ANOTHER

Cookson v Knowles assumption of a 4.5% net real return is no longer valid in Hong Kong. The court set differentiated discount rates by duration based on reasonable investment portfolios and recent historical performance: -0.5% for plaintiffs with future needs up to 5 years; 1% for needs up to 10 years; 2.5% for...

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Citation
CHAN PAK TING v. CHAN CHI KUEN AND ANOTHER
Parties
Plaintiff (hcpi 235/2011): Chan Pak Ting; 1st Defendant (hcpi 235/2011): Chan Chi Kuen; 2nd Defendant (hcpi 235/2011): Chan Yiu Fai Joe; Plaintiff (minor) (hcpi 671/2007): Li Ka Wai; Plaintiff (minor) (hcpi 228/2010): Yuen Hiu Tung; Defendant (hcpi 671/2007 & HCPI 228/2010): Hospital Authority
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
7 February 2013
Case Number
HCPI235/2011
Procedural Posture
Personal Injuries / Judgment on Preliminary Issue (discount Rate)
Outcome
Preliminary issue decided: Cookson/4.5% assumption rejected for Hong Kong; new discount rates established by duration
Legal Topics
Discount Rate, Multipliers, Future Losses, Management Fees, Investment Vehicles, Inflation (price Vs Wage), Periodic Review
Source Language
en
Tort Personal Injury Damages Actuarial Evidence Economic Evidence Discount Rate Multipliers Future Losses +4 more

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Parties

Chan Pak Ting

Plaintiff (hcpi 235/2011)

Chan Chi Kuen

1st Defendant (hcpi 235/2011)

Chan Yiu Fai Joe

2nd Defendant (hcpi 235/2011)

Li Ka Wai

Plaintiff (minor) (hcpi 671/2007)

Yuen Hiu Tung

Plaintiff (minor) (hcpi 228/2010)

Hospital Authority

Defendant (hcpi 671/2007 & HCPI 228/2010)

Procedural Posture

Personal Injuries / Judgment on Preliminary Issue (discount Rate)

Legal Issues

  1. 1 Whether Cookson v Knowles assumption of 4.5% net rate remains valid in Hong Kong
  2. 2 Appropriate net discount rate(s) and multipliers for future losses
  3. 3 Whether different discount rates should apply to earnings-related and non-earnings losses

Ratio Decidendi

Cookson v Knowles assumption of a 4.5% net real return is no longer valid in Hong Kong. The court set differentiated discount rates by duration based on reasonable investment portfolios and recent historical performance: -0.5% for plaintiffs with future needs up to 5 years; 1% for needs up to 10 years; 2.5% for needs exceeding 10 years. Management fees should be deducted where the chosen portfolio requires active management; wage-price differentials in Hong Kong are insufficiently large to justify separate earnings and non-earnings rates at present. The appropriate portfolio mixes and historical review periods were specified (short horizons: time deposits/EFNs; medium: EFNs and...

Court Disposition

Preliminary issue decided: Cookson/4.5% assumption rejected for Hong Kong; new discount rates established by duration

Orders

  • Discount rates set: -0.5% for needs up to 5 years; 1% for needs up to 10 years; 2.5% for needs exceeding 10 years
  • Costs nisi: defendants to pay plaintiffs' costs of trial of the preliminary issue and related applications, with certificate for three Counsel; plaintiffs' own costs to be taxed pursuant to the Legal Aid Regulations