Hong Kong Academy of Law

and
The Actuarial Society of Hong Kong
CPD Seminar
26 November 2009

Professor W.S. Chan (Professor of Finance, Faculty of

Business Administration, CUHK)
Dr. F.W.H. Chan (Associate Dean, Faculty of Law, HKU)

Livingstone v Rawyards Coal

Co (1880) 5 App Cas 25
Q

Lord Blackburn: Where any injury is to be

compensated by damages, in settling the
sum of money to be given you should
as nearly as possible get at that sum of
money which will put the person who has
been injured in the same position as he
would have been in if he had not sustained
the wrong.(at 44)

Multiplicand/Multiplier approach
Q

Multiplicand: the future loss of

income, and annual consequential
expense.
Multiplier: to discount the future
pecuniary values into a present lump
sum amount.

Multiplicand/Multiplier approach
An example:
Age at trial: 30
Retirement age: 60
Loss of future income in the next 30 years
between 2009-2039
Multiplier:
30? >30? < 30?

Taylor v OConnor [1971] AC 115

Q

Lord Pearson: I do not think that

actuarial tables or actuarial evidence
should be used as the primary basis
of assessment. There are too many
variables, and there are too many
conjectural decisions to be made
before selecting the tables to be
used

There would be a false appearance of

accuracy and precision in a sphere

where conjectural estimates have to
play a large part. The experience of
practitioners and judges in applying
the normal method is the best primary
basis for making assessments.

Lord Brennan QC:

Q

The conventional approach when I was

first at the Bar was often encapsulated by
the calculation of the multiplier by which
you simply divided the expected life-span
by 2 and added 1 up to a maximum 16 for
loss of earnings and 18 for whole of life
loss! Surely an active role of the actuary in
the law would have produced more
sophisticated techniques than that!

Lee Woon Sun v Wong Kin

Keung [1976] HKLR 296
Q

Justice Huggins: I do not have their horror

of such tables, but I agree that tables must
remain servants and not become the
masters. There are so many uncertainties
involved even where tables are used that
the tables do not make the assessment
any more satisfactory than one made
without them, but equally they need not
make it any less accurate.

Chan Pui Ki (1995)

HK Court of First Instance
Q

HK$120,900 (multiplicand)
x 30 (multiplier)

= HK$3,627,000.

Chan Pui Ki (1996)

HK Court of Appeal
Q

HK$108,000 (multiplicand)
x 15 (multiplier)

= HK$1,620,000.

U.K. Ogden Tables

Actuarial Tables with Explanatory
Notes for Use in Personal Injury
and Fatal Accident Cases
Q by Sir Michael Ogden QC
Q

Wells v. Wells [1999] AC 345

Q

The House of Lords: The Ogden tables

should now be regarded as the starting
point, rather than a check. A judge should
be slow to depart from the relevant
actuarial multiplier on impressionistic
grounds, by reference to a spread of
multipliers in comparable cases especially
when the multipliers were fixed before
actuarial tables were widely used.

The present role of the actuary

Q
Q
Q
Q
Q
Q

insurance and pensions industry

corporate finance
investment
health care
derivatives
public finance initiatives and major
capital projects

Actuarial Tables for Use in PI Cases

Three

Groups of Tables:

Multipliers for pecuniary loss for term certain

Multipliers for pecuniary loss up to retirement
Multipliers for pecuniary loss for life

Underlying Principles
Q

The court calculates precisely the proper

discount for the value-of-a-lump-sum-inadvance by reference to tables. There are two
types of tables. One is for pure arithmetical
discount calculations and the other is for
actuarial calculations. As is emphasized in
Kemp and Kemp (The Quantum of Damages,
September 1998, at para.8-001/1), it is important
at the outset to understand the differences
between them.

(1) Multipliers for pecuniary loss for term

certain
Q

pure arithmetical discount tables show precisely

what capital sum is needed to yield a given
annual income for a fixed number of years at a
given assumed interest rate, so as to leave
nothing at the end of the period.
An illustration:

(2) Multipliers for pecuniary loss up to

retirement

The term is set to the retirement age

Actuarial tables take account of mortality for early

receipt of a lump sum.

As in the previous illustration, it can be seen that

there is always the chance that the recipient
might not be alive by the end of each year. If, for
example, the recipient dies in the middle of Year
1, the two $1 payments originally payable at the
end of Years 2 and 3 would not need to be paid
out at all.

(2) Multipliers for pecuniary loss up to

retirement
An illustration

(3) Multipliers for pecuniary loss for life

The term is set to infinity.

Actuarial tables take account of mortality
for early receipt of a lump sum.
Medical expenses, costs of care.
An illustration

Construction of the Hong Kong Tables

A 2-year research project

Using official Hong Kong Government data for mortality
and mortality projections.
Discount rate: Chan & Chan (2003, Law, Probability and
Risk) recommended a 3.5% per annum.
Other factors:
Females vs Males
Different assumed pension age
Existing mortality vs projected mortality
Outputs (38 Multiplier Tables):
In book format (2nd Edition)
In web format

ACTUARIAL FORMULAE AND BASIS

Mortality Assumptions

Chan Pui Kis Case Revisited

(Should HK Actuarial Tables have been used)
Age at trial: 16.5
Discount rate: 3.5%
Gender: Female
Mortality: Hong Kong projected
Retirement age: 60
HK$108,000 (multiplicand) x 22.45 (multiplier)
= HK$2,424,600
**Chan Pui Ki (CFI/1995) Multiplier 30 HK$3,240,000
**Chan Pui Ki (CA/1996) Multiplier 15 HK$1,620,000

Recent Cases
Yeung
At

Wai Ming[2009] HKCU 1351

trial, the plaintiff was 33 years of age.

Master Yu: [Plaintiffs counsel] submitted
that I should adopt a multiplier of 16. He
relied on Personal Injury Tables Hong
Kong Having considered all the
submissions, I found that multiplier of 15 is
appropriate

Yeung Wai Ming [2009]

Q

Multiplier calculated from Table 21:

Age at trial: 33
Discount rate: 3.5%
Gender: Male
Mortality: Hong Kong projected
Retirement age: 55

Result: 15.26

LIMBU MUNI PARSAD

[2004] 953 HKCU 1
Plaintiff: Construction worker; the ladder
tilted suddenly causing the Plaintiff to
fall with his back landing on the ground.
Justice E. Toh: The Plaintiff is now aged
40 and at the date of the accident was
aged 37 I would adopt a multiplier of
12.

LIMBU MUNI PARSAD [2004]

Q

Multiplier calculated from Table 21:

Age at trial: 40
Discount rate: 3.5%
Gender: Male
Mortality: Hong Kong projected
Retirement age: 55

Result: 11.58

Pang Ping Sum [2005] 1440 HKCU

Suffiad

J: The Plaintiff is now 44 years

old I need to take into account that the
work of a hose operator is extremely
exertive and strenuous not to mention that
it is also potentially dangerous I am of
the view that a multiplier of 9 would be
appropriate to assess future loss of
earnings

Pang Ping Sum [2005]

Q

Multiplier calculated from Table 21:

Age at trial: 44
Discount rate: 3.5%
Gender: Male
Mortality: Hong Kong projected
Retirement age: 55

Result: 9.05

LEUNG KWOK KEUNG

[2004] 996 HKCU 1
The Plaintiff was a passenger in a car driven by
the Defendant.
Justice Wright: The plaintiff was 41 at the date
of accident and is 47 now. He testified that he
would have retired at age 65 which I see no
reason to doubt. He was in a responsible,
managerial position and was a man whose
skills were obviously in demand. There is no
suggestion that he indulged in any especially
hazardous pursuits

He is a smoker. He has been treated for

non insulin dependent diabetes mellitus
since 1995. The claimed work multiplier
of 10 is proper whilst a whole life
multiplier of 16 is appropriate.

Leung Kwok Leung [2004]

Q

Work Multiplier calculated from Table 25:

Age at trial: 47
Discount rate: 3.5%
Gender: Male
Mortality: Hong Kong projected
Retirement age: 65

Result: 12.99

Leung Kwok Leung [2004]

Q

Life Multiplier calculated from Table 19:

Age at trial: 47
Discount rate: 3.5%
Gender: Male
Mortality: Hong Kong projected

Result: 19.76

Leung Kwok Leung [2004]

Q

Paragraph 22 of the Explanatory

Notes of the Actuarial Tables:
Adjust the figure to take into
account of contingencies and risks
other than mortality.
e.g. any relationship between
smoking and ill health that leads to
a shorter life expectancy? Arguable

Dall v Choy Wing Wai [1997] 2 HKC

588E
Q

Justice Peter Cheung of CFI:

I tend to agree that the multipliers
for young persons or persons of
young age have been overdiscounted
Q: Is it true?

Case Name

Plaintiffs age
at trial

Common law Actuarial

multiplier
multiplier

Pang Ping Sum

[2005] CFI

44

9.05

Wong Lai Chuen

[2006] CFI

36

14

13.79

Yeung Wai Ming

[2009] CFI
Ho Ho Ming
[2006] CFI

33

15

15.26

29

14 (??)

17.01

Mung Yee Ki
[2005] CFI

26

15 (??)

18.16

Imtiaz Perviz
[2007] CFI

23

18

19.21

Chan Pui Ki
[1996] CA

16

15 (???) 22.45

Imtiaz Perviz [2007] HKCU 1441

He was only 23 years old when the trial

took place.
He suffered serious injuries during the
loading operation at a container terminal in
HK.
Judge Jill adopted the multiplier of 18.

Imtiaz Perviz [2007] HKCU 1441

Multiplier calculated from Table 21:

Age at trial: 23
Discount rate: 3.5%
Gender: Male
Mortality: Hong Kong projected
Retirement age: 55

Result: 19.21

Updating the Hong Kong PI Tables

Thank you very much!

We wish to acknowledge the support of a research grant from the

Research Grant Council of the HKSAR
(General Research Fund Project No. 741408 HKU )