Hong Kong Court rejected claims for loss of entrepreneurial services for lack of logical quantification
Chan Kam Pui and Yang Wei, the Administrators of the estate of Yang Feng, deceased v Dr Lam Man Ho and Others  HKCFI 2027 (HCPI 128/2013)
In Chan Kam Pui and Yang Wei, the Administrators of the estate of Yang Feng, deceased v Dr Lam Man Ho and Others  HKCFI 2027 (HCPI 128/2013), the Hong Kong Court dismissed the plaintiffs’ leave application to plead a head of loss of service dependency, due to a lack of logical quantification of the loss. That head of loss related to entrepreneurial services provided by the deceased in managing the real estate properties inherited by the dependants.
In March 2010, Yang Feng delivered her third and youngest daughter. However, she passed away shortly after her daughter’s delivery. There is an on-going action brought for medical negligence against the doctors (the first and second defendants), the hospital (the fourth defendant), and the healthcare company (the fifth defendant) involved in the delivery of the baby.
The present application was made by the plaintiffs, the Administrators of the deceased’s estate, to amend the statement of damages for the action. The plaintiffs sought to introduce two new heads of damages: “Pre-Trial Entrepreneurial Skilled Services” and “Post-Trial Entrepreneurial Skilled Services” as loss of service dependency suffered by the three daughters of the deceased pursuant to s.6(1) of the Fatal Accidents Ordinance (Cap.22) (FAO). The plaintiffs pleaded the loss to be the full rental income in respect of each property that the deceased had ownership of.
The court agreed that a dependant may make a claim for damages under s.6(1) of the FAO if the dependant could establish that there is a loss of expectation of a future pecuniary benefit from the deceased. The claim could be premised on the economic or pecuniary loss arising from the deceased’s flair and energy in management of properties which would have increased the capital and income value of those properties.
However, dependants would have no claim under s.6(1) of the FAO if they have inherited the source of the income. It is because in that case, they would not have lost any income.
In quantifying the loss of services rendered by a deceased, the court identified two common approaches. The financial loss could be determined by ascertaining either the monetary cost of replacing the services provided by the deceased, or the extent to which the portfolio or asset managed by the deceased would have been more valuable than the asset managed by or on behalf of the dependant.
Whether there was a prima facie case of loss of service dependency?
On the assumption that the deceased’s entrepreneurial skills would have applied to the properties and would have provided an economic or pecuniary benefit to her dependants, there was a prima facie case of loss of dependency by reason of the loss of the entrepreneurial services provided by the deceased.
Whether the quantification of the loss of service dependency was logical?
The court held that the plaintiff’s quantification of the loss – which the plaintiff asserted was equal to the full rental income of the deceased’s share in the property portfolio - was illogical. The total monthly rent has been and would have been received without any input from the deceased. The plaintiff’s quantification also violated the well-established principle that rental income is not capable of forming part of a dependency claim when the properties are inherited by the dependant.
For the reasons set out above, the court held that the plaintiff’s quantification was untenable and unarguable both as a matter of logic and as a matter of law. While a claim should still be allowed if the amount claimed is liable to be adjusted or reduced at trial, the court held that this claim does not fall within the situation envisaged above because it has no prospect of success given the fallacy in the quantification of loss.
The court stated, obiter, that it may have been logical to quantify the loss by comparing the value the daughters would likely rent the flats out at and what the deceased would have achieved with her skills had she survived. The court, however, remarked that this quantification is regarded as uncertain and speculative in nature by English courts.
The decision demonstrates that the court is prepared to accept loss of entrepreneurial services under loss of service dependency provided the claimants and litigants apply a legitimate approach to quantify their claim. Whilst there is no single right method of quantification, claimants and their lawyers should adopt a logical approach, preferably with support from circumstantial evidence which would show the value of the deceased’s entrepreneurial services.