(A) Introduction
In Ip Siu Chi v. Kwan Wing Hang trading as Fai Hung Construction Company and others (CACV 217/2024, date of judgment: 10 February 2026), [1] the Court of Appeal provided valuable clarifications on three key aspects of personal injury litigation: the assessment of damages involving pre-existing conditions, the principles governing costs orders following an increase in the District Court’s jurisdiction and the importance of efficient case management in related employees’ compensation proceedings.
The Plaintiff appealed against the trial judge’s assessment on the pre-trial and post-trial loss of earnings as well as the decision on costs.
Allowing the appeal, the Court of Appeal held that 30% reduction should not apply to the pre-trial loss of earnings as the Plaintiff's inability to work was caused entirely by her physical injuries to which the pre-existing condition did not contribute. Further, regarding the post-trial loss of earnings, the Court of Appeal held that applying the same 30% reduction was wrong where the trial judge had already taken the same pre-existing condition into account when selecting a lower multiplier for future loss of earnings.
The Court also reaffirmed that a plaintiff who properly commences an action in the High Court (based on the jurisdictional limit at that time) has an accrued right to costs on the High Court scale, and does not lose that right simply because the District Court's jurisdiction is later increased.
Moreover, the Court of Appeal criticized the significant delay in the related employees’ compensation proceedings. The Plaintiff received her compensation nearly five years after the accident. The Court of Appeal urged all the responsible parties, including lawyers, the Legal Aid Department and the District Court, to implement more robust case management to ensure that such statutory claims are speedily dealt with.
(B) Facts
On 5 December 2015, the Plaintiff, who was a scaffolder, sustained injuries when she fell from height during dismantling bamboo scaffolding (the “Accident”). She claimed damages against the 1st Defendant (the principal/main contractor), the 2nd Defendant (the subcontractor of the 1st Defendant) and the 3rd Defendant (a subcontractor of the 2nd Defendant). [2]
Two joint expert medical reports were obtained. The joint orthopaedic expert report, prepared by Dr Ko and Dr Wong, confirmed that the Plaintiff's orthopaedic injuries were caused by the Accident. [3]
The joint psychiatric report was prepared by Dr Fan and Dr Chan. The Judge accepted Dr Chan’s opinion that the Plaintiff was suffering from Post-Traumatic Stress Disorder and depressive illness, caused by exposure to a stressful event, namely, the Accident. [4]
(C) The District Court’s Rulings
The Judge found on the undisputed expert evidence that the Plaintiff had pre-existing psychiatric conditions. Applying Chan Kam Hoi v Dragages et Travaux Publics [1998] 2 HKLRD 958, the Judge held that the Plaintiff’s pre Accident psychiatric conditions, the Accident and the related stressors caused by the Accident had all contributed to her post-accident psychiatric symptoms. As such, the Judge concluded that a 30% reduction in damages was appropriate to take these matters into account and applied this reduction across all heads of damage. [5]
By a judgment dated 6 May 2024 (the “Judgment”), the Judge found for the Plaintiff after trial and awarded her damages of $1,509,202 against all Defendants. [6]
As for costs, the Judge ordered that the costs awarded be on the High Court scale from the date when the Writ of Summons was issued (15 November 2018) to the date when the award for Employees’ Compensation was issued (25 January 2021) or when discovery has taken place and after documents had been produced (whichever is later), and thereafter be on the District Court scale (the “Decision on Costs”). [7]
(D) The Plaintiff’s Appeal
The Plaintiff appealed against the Judgment and the Decision on Costs on the following grounds: [8]
(1) The Judge erred in discounting 30% in relation to the damages for pre-trial and post-trial loss of earnings (“Ground 1”); and
(2) The Judge erred in ordering the Plaintiff’s costs after the date of the Employees’ Compensation Award or date of discovery (whichever is later) be taxed on District Court scale (“Ground 2”).
(E) Decision
Ground 1: The 30% Reduction on Loss of Earnings
The Court of Appeal held that the Judge was wrong to apply the 30% reduction to the Plaintiff's loss of earnings. Its reasonings are as follows:
Pre-trial loss of earnings
The Judge divided the pre-trial loss into two periods: (i) when the Plaintiff was on sick leave and could not work totally; and (ii) from the end of sick leave to trial when she could work at a reduced income. [9]
The Court of Appeal found that the Plaintiff's inability to work as a scaffolder was caused entirely by her orthopaedic injuries from the Accident. Her psychiatric condition did not contribute to this loss. Although there was some overlap in the sick leave periods for physical and psychiatric injuries, the Judge found that the Plaintiff was unable to return to scaffolding work due to her physical injuries alone. As such, the Plaintiff was entitled to the whole of the sick leave period on account of her orthopaedic injuries. Applying a reduction for a pre-existing psychiatric condition that had no impact on this specific loss would be illogical and would leave the Plaintiff worse off than if she had suffered only the physical injury. [10]
This reasoning applied equally to the second period of pre-trial loss of earnings. Irrespective of her post-Accident psychiatric condition, the Plaintiff's inability to resume work as a scaffolder was due to her orthopaedic injuries. The onset of her psychiatric condition had no additional impact on her capacity to perform her pre-accident job. As such, the 30% reduction should not apply and the Plaintiff was entitled to the whole of the second period of pre-trial loss of earnings. [11]
Post-trial loss of earnings
The Court of Appeal found that in selecting a multiplier of 14 for post-trial loss of earnings, the Judge had already taken into account the Plaintiff's pre-existing psychiatric condition as a factor that would possibly reduce the number of years she could work as a scaffolder. As such, it was inappropriate to apply an additional 30% reduction to the resulting sum. [12]
Ground 2: The Costs Order
The Court of Appeal held that the Judge was wrong to order that the Plaintiff’s costs be on the District Court scale for part of the proceedings and that the Plaintiff was entitled to costs on the High Court scale for the whole action on the following grounds:
(1) The action was properly commenced in the High Court in 2018 when the District Court limit was $1 million. The Plaintiff recovered more than this amount. Hence, there was no issue that the case was rightly begun in the High Court. [13]
(2) The subsequent increase of the District Court jurisdiction to $3 million was irrelevant. The Plaintiff had an accrued right to commence her action in the High Court based on the limit in force at the time. There is no provision rendering the increased benchmark retrospective. [14]
(3) The Court of Appeal rejected the Judge’s view that the Plaintiff should have sought a transfer after the jurisdiction increased or after discovery as such considerations only become relevant where the award falls below the $1 million limit in place at the time the action was commenced.
(4) The Judge did not find that the Plaintiff had exaggerated her claim. Therefore, it was unrealistic to expect her to seek a transfer to the District Court before the trial. [15]
Obiter: Delay in Employees' Compensation Proceedings
The Court of Appeal criticized the significant delay in the related employees' compensation proceedings. The Plaintiff received her compensation nearly five years after the Accident and four years and nine months after filing her claim. The Court described such delay as “unacceptable”. [16]
The Court highlighted the tardiness of the prosecution by the parties of the case and the laxity of supervision by the District Court of its progress. For example: the 1st and 2nd Defendants took over a year to file their Answer. Witness statements were ordered to be exchanged within 56 days more than two years after the claim was commenced. Joint medical examinations were only conducted three years after the claim was lodged. [17]
The Court of Appeal noted that had the case been properly conducted and managed, the compensation could have been quantified well before the commencement of the common law claim below. The delay in quantifying and obtaining the compensation means that for about two years after the commencement of the captioned action, the Plaintiff’s claim could not be properly quantified by reference to the compensation. Therefore, the Court of Appeal strongly urged all those responsible for handling employees’ compensation cases, including lawyers, the Legal Aid Department and the District Court, to implement due case management safeguards to ensure that such statutory claims are speedily dealt with. [18]
(F) Key Takeaways
This case is significant on the following grounds:
(1) Clarification on the Assessment of Damages involving Pre-existing Conditions: The Court of Appeal clarified that a global percentage reduction on total damages is not always appropriate. The reduction must be applied only to those losses to which the pre-existing condition actually contributes.
(2) Clarification on the Court's Discretion on Costs: The Court of Appeal clarified that where the judgment award falls below the Court's jurisdiction, the Court will consider whether the successful party acted unreasonably in commencing and/or continuing the action in the chosen forum. A subsequent increase in the District Court's jurisdiction does not automatically impose a duty on the successful plaintiff to transfer the case to a lower court or risk losing his costs protection, provided that his claim was reasonable and not exaggerated at the time it was brought.
(3) Judicial Scrutiny of Case Management: The Court of Appeal criticized the unsatisfactory delay in the related employees’ compensation proceedings. The responsible parties (including lawyers, the Legal Aid Department and the District Court) should implement proactive case management to ensure that such statutory claims are dealt with efficiently.
[1] https://legalref.judiciary.hk/doc/judg/word/vetted/other/en/2024/CACV000217_2024.docx
[2] Ip Siu Chi v. Kwan Wing Hang trading as Fai Hung Construction Company and others (CACV 217/2024, date of judgment: 10 February 2026), §14
[3] Ibid, §18
[4] Ibid, §20-§22
[5] Ibid, §24-§26
[6] Ibid, §14
[7] Ibid, §16
[8] Ibid, §17
[9] Ibid, §36
[10] Ibid, §38
[11] Ibid, §39
[12] Ibid, §45
[13] Ibid, §49
[14] Ibid
[15] Ip Siu Chi v. Kwan Wing Hang trading as Fai Hung Construction Company and others (CACV 217/2024, date of judgment: 10 February 2026), §50, §13
[16] Ibid, §53
[17] Ibid
[18] Ip Siu Chi v. Kwan Wing Hang trading as Fai Hung Construction Company and others (CACV 217/2024, date of judgment: 10 February 2026), §54
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