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[PI – QUANTUM – Interest on PSLA] Birkett v Haynes

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*816 Birkett v Hayes and Another

1976 B. No. 169

Court of Appeal

18 March 1982

[1982] 1 W.L.R. 816

Lord Denning M.R. , Eveleigh and Watkins L.JJ.

1982 Feb. 8, 9, 10; March 18

Interest—Award of damages—Personal injury cases—Sum for pain, suffering and loss of amenities—Appropriate rate of interest on award

In an action for negligence in respect of personal injuries suffered as a result of a road accident, the plaintiff was awarded damages, after a reduction of 25 per cent. because she had not been wearing a seat belt at the time of the collision, of £224,747. The total award included a sum of £30,000 for pain and suffering and loss of amenities, with interest from the date of service of the writ to the date of trial, a period of 4 2/3 years, at the rate of interest of the short term investment account, which amounted to over £16,000, subsequently reduced by 25 per cent.

On appeal by the first defendant against the award of interest: —

Held, allowing the appeal, that since the award of general damages was calculated taking into account the effect of inflation during the period from the date of service of the writ until the date of trial, interest awarded on those damages to compensate the plaintiff for being kept out of the capital *817 sum during that period should be low to avoid injustice to the defendant by over-compensating the plaintiff; that interest at 2 per cent. was the appropriate rate and should be regarded as a guideline for the rate for interest on general damages in personal injury cases in future (post, pp. 820E, H — 821A, C–E, 822G–H, 823D–E, 824H — 825B).

Pickett v. British Rail Engineering Ltd. [1980] A.C. 136, H.L.(E.). applied .

Jefford v. Gee [1970] 2 Q.B. 130, C.A. and Cookson v. Knowles [1977] Q.B. 913, C.A. ; [1979] A.C. 556, H.L.(E.) considered .

Per curiam . In deciding the period for which interest should be awarded all the circumstances of the case should be taken into account. Where, for instance, the plaintiff was responsible for unjustifiable delay in bringing the action to trial, interest for a period shorter than the time from the date of service of the writ to the date of trial should be awarded (post, p. 825A–B, D–G).

Order of Michael Davies J. varied.

The following cases are referred to in the judgments:

The following additional cases were cited in argument:

APPEAL from Michael Davies. J.

The first defendant, Brian Hayes, appealed against the award of interest on general damages to the plaintiff, Sandra Elizabeth Birkett, in an action in which she claimed damages for negligence in respect of personal injuries sustained in a road accident. The trial judge awarded interest at the short term investment account rate for the period from the date of service of the writ to the date of trial. The grounds of the appeal were that the guideline for the awarding of interest laid down in Jefford v. Gee [1970] 2 Q.B. 130 was not appropriate in the economic conditions currently prevailing and should be changed; that where general damages were awarded on the scale for figures current at the date of trial interest should be awarded at a rate appropriate to times of stable currency; and that an award of interest on general damages at*818 rates of interest currently prevailing did not provide fair compensation for the plaintiff but over-compensated the plaintiff and penalised the defendant.

The facts are stated in the judgment of Lord Denning M.R.

Representation

  • Piers Ashworth Q.C. and Peter Ripman for the first defendant.
  • Mark Potter Q.C. and Michael Baker for the plaintiff.

Cur. adv. vult.

LORD DENNING M.R.

March 18. The following judgments were read.

It was a tragic accident. It happened on February 23, 1975. The plaintiff was in the passenger seat. Her husband was driving. She was not wearing her seat belt. There was a collision with another car. She was thrown forward and upward. She received a devastating head injury. Her brain suffered a grave and profound shock. She has ever since been in hospitals or in homes. It has left her with a “behaviour disorder.” Whereas before the accident she was exceptionally able, intelligent and attractive, now she behaves so strangely that she needs constant attention. She tires out everyone who tries to look after her.

On May 10, 1976. the plaintiff by her next friend issued a writ claiming damages for negligence. The action did not come on for trial for 4½ years. The judge was Michael Davies J. He gave judgment on January 19, 1981. He assessed the total damages as £299,663, but he reduced them by 25 per cent. because she was not wearing her seat belt, thus giving judgment for £224,747. No question has arisen on that award except as to one item. That is as to the damages for pain and suffering and loss of amenities. The judge said of it:

“The plaintiff’s life has been virtually ruined; and she knows it. Apart from her disability, including the loss of the enjoyment of her work and most of the pleasurable activities of life, she has lost her happy marriage — and I repeat, she knows it. At my invitation counsel suggested what the bracket should be. Mr. Potter submits £25,000 to £30,000; Mr. Ashworth submits £20,000 to £30,000. In my judgment this is clearly a case for an award at the top of the bracket, and I award the sum of £30,000.”

In addition, the judge awarded interest on that sum of £30,000. He awarded it from the date of the service of the writ, May 10, 1976, to the date of trial, January 19, 1981. That is, for 4 2/3; years. He took the rate of interest allowed by the court on short term investment account — that may be 9 per cent. or 10 per cent. or even more. It came to over £16,000. That is, in all, £30,000 plus £16,000. Reduced, of course, by 25 per cent. to £12,000, as she was not wearing a seat belt.

The guidelines in Jefford v. Gee

The question in this case is as to that award of interest of £16,000. In Jefford v. Gee [1970] 2 Q.B. 130 we gave a guideline as to the interest on the item for pain and suffering and loss of amenities. We said that it should be awarded from the date of the service of the writ until the date of trial. This is what I said, speaking for the court, at p. 147: *819

“In the words of Lord Herschell in London, Chatham and Dover Railway Co. v. South Eastern Railway Co. [1893] A.C. 429 , 437, interest should be awarded ‘from the time of action brought at all events.’ From that time onwards it can properly be said that the plaintiff has been out of the whole sum and the defendant has had the benefit of it. Speaking generally, therefore, we think that interest on this item (pain and suffering and loss of amenities) should run from the date of service of the writ to the date of trial.”

Looking back at it now, I feel that guideline was an error. It treats the item (for pain, suffering and loss of amenities) as accruing due at the date of service of the writ: whereas it does not. It is more like the item for cost of future care or for loss of future earnings in which interest only runs from the date of trial. But still the guideline has stood since 1971, and, as I will show, it is now too late to alter it.

Meanwhile, however, we made an attempt to alter it. It was in Cookson v. Knowles [1977] Q.B. 913 .

The alteration in Cookson v. Knowles

In the succeeding years we met with racing in flation. So in Cookson v. Knowles [1977] Q.B. 913 in one single judgment we altered the guideline. I said, at p. 921:

“The plaintiff thus stands to gain by the delay in bringing the case to trial. He ought not to gain still more by having interest from the date of service of the writ. We would alter the guideline, therefore, by suggesting that no interest should be awarded on the lump sum awarded at the trial for pain and suffering and loss of amenities.”

That judgment was given on July 29, 1977. Our view was given immense support by the Report of the Royal Commission on Civil Liability and Compensation for Personal Injury (Cmnd. 7054) eight months later, in March 1978. The reasoning (c. 16, paras. 747 and 748) is so compelling that I venture to set it out in full:

“Nevertheless, we agree with the Law Commission’s conclusion, and with the rule in Cookson v. Knowles , that no interest should be awarded on non-pecuniary damages. As we have pointed out elsewhere, in present economic conditions an investor may well be unable to do more than maintain the real value of his investment, once tax and inflation are taken into account, if indeed he can manage to do this. To award no interest on non-pecuniary damages may therefore be at least as favourable as the award of interest at a market rate on damages for past pecuniary loss. A more important justification, however, lies in the conventional nature of non-pecuniary damages. We do not think that it would be appropriate to subject essentially arbitrary figures to detailed financial calculations. If an attempt were to be made, allowance would have to be made for inflation in selecting the appropriate interest rate. It would also, strictly speaking, be necessary to apply interest at the half rate only to that part of the damages relating to non-pecuniary loss before trial, assessed on the scale current at the date of injury. This would all be highly artificial.

“We recommend that the rule in Cookson v. Knowles that no interest should be awarded on damages for non-pecuniary loss should stand; and that it should be applied in Scotland and Northern Ireland.”

*820

Cookson v. Knowles was taken to the House of Lords , but no view was expressed on this point: see [1979] A.C. 556 , 573 per Lord Diplock:

“The question of damages for non-economic loss which bulks large in personal injury actions, however, does not arise in the instant case. It has not been argued before your Lordships and I refrain from expressing any view about it.”

The overruling of Cookson v. Knowles

In Pickett v. British Rail Engineering Ltd. [1980] A.C. 136 the House of Lords did consider the point. They overruledCookson v. Knowles . In doing so they made no mention of the Report of the Royal Commission or the reasoning in it. In deference to the decision of the House of Lords in Pickett v. British Rail Engineering Ltd. [1980] A.C. 136 , Mr. Ashworth felt bound to concede that we were bound to give some interest on the award of damages for pain and suffering and loss of amenities. But he contended that we were free to determine what should be the rate of interest. He pointed to one or two indications that this might be varied according to the circumstances of the case. In Cookson v. Knowles [1979] A.C. 556 , 579E–F, Lord Scarman said it might depend on “currently prevailing financial conditions.” And the Royal Commission said, in paragraph 747, that “allowance would have to be made for inflation in selecting the appropriate interest rate.” I turn, therefore, to consider the relevant considerations on this point.

The method of assessment

The important thing to notice is that the judge assessed the figure of £30,000 (for pain and suffering and loss of amenities) on the value of money at the date of the trial on January 19, 1981 — and on the plaintiff’s condition at that date. Everyone accepted that this was the right way of doing it. The figure for pain, suffering and loss of amenities is always assessed at the date of the trial. The judge then has before him the full story up to that date, and the outlook for the future. This plaintiff’s condition may have deteriorated more than expected, or it may have improved. The judge has to award compensation for the past, and also for the future pain, suffering and loss of amenities. The future that lies ahead, beyond the date of trial, is often of more consequence than the past. The judge awards a lump sum at the date of trial to cover all.

Apart from inflation

If the currency had remained stable from 1976 to 1981, and the plaintiff’s condition had remained unchanged, neither improved nor deteriorated, I should have thought that the award in 1976 would have been — not £30,000 — but only £20,000, or thereabouts. I can see no reason why that £20,000 should be any different from a contract debt. Suppose that the plaintiff was owed a debt of £20,000 due in May 1976, but judgment was only given in January 1981. The plaintiff would get interest only on £20,000 for those 4 2/3 years. The interest would have been about £8,000. She would only have got £28,000 at the trial. She would not get £30,000.

The effect of inflation

But the currency did not remain stable from 1976 to 1981. There was racing inflation. So that the plaintiff in 1981 received £30,000. I can see no *821 possible justification for giving her interest on that inflated figure for the 423 years — when she would not be given it on an admitted debt of £20,000 due at the date of the service of the writ. Taking Lord Herschell’s words: she was not kept out of £30,000 for those 423 years. She was only kept out of £20,000. Nor did the defendants get the benefit of the use of £20,000.

The effect of tax

Even if she is to be regarded as having been kept out of £30,000 from the date of the service of the writ (May 10, 1976) she may — or may not — have invested it on short term investment account. If she had invested it, she would have had to pay tax on the interest she received from it. But now, if interest is awarded her on £30,000 from the date of the service of the writ, for 4 2/3 years, she gets the interest without deduction of tax and without having to pay tax on it. Alternatively, she might not have invested it, but spent it in other ways. In that case she would have got no interest at all.

Conclusion

All these considerations convince me that, if interest is to be awarded from the date of the service of the writ (as Pickett’s case [1980] A.C. 136 compels), then that interest should be very low indeed. There is nothing to guide us but the feeling of what is fair. You must remember that she is getting the £30,000 assessed at the date of trial, and also she is getting interest on it over the preceding 4 2/3 years. Having discussed it with my brethren, I would Put the interest at 2 per cent. and recommend it as a guideline for future cases.

EVELEIGH L.J.

Section 3 (1) of the Law Reform (Miscellaneous Provisions) Act 1934 reads:

“In any proceeding tried in any court of record for the recovery of any debt or damages, the court may, if it thinks fit, order that there shall be included in the sum for which judgment is given interest at such rate as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the judgment: … “

Section 3 (lA) of the Law Reform (Miscellaneous Provisions) Act 1934 (as inserted by section 22 of the Administration of Justice Act 1969 ) provides:

“… the court shall exercise that power so as to include in that sum” (i.e. the judgment for damages) “interest on those damages or on such part of them as the court considers appropriate, unless the court is satisfied that there are special reasons why no interest should be given in respect of those damages.”

In Jefford v. Gee [1970] 2 Q.B. 130 the Court of Appeal laid down guidelines as to the appropriate rate of interest and in so far as damages for Pain and suffering and loss of amenities was concerned, that rate was said to be the rate allowed by the court on the short term investment account, taken as an average over the period for which interest is awarded. That period in relation to such general damages was held to be from the date of service of the writ to the date of trial.

In Cookson v. Knowles [1977] Q.B. 913 in relation to Jefford v. Gee *822

[1970] 2 Q.B. 130 Lord Denning M.R. said, at p. 921C: “At that time inflation did not stare us in the face. We had not in mind continuing inflation and its effects on awards.” He went on to say that as awards were assessed on the current value of money as at the date of judgment the plaintiff would receive a larger sum than he would have done at the date of the writ and said, at p. 921D:

“We would alter the guideline, therefore, by suggesting that no interest should be awarded on the lump sum awarded at the trial for pain and suffering and loss of amenities.”

However, in Pickett v. British Rail Engineering Ltd). [1980] A.C. 136, the House of Lords held that as interest on general damages was awarded for the purpose of compensating a plaintiff for being kept out of the capital sum between the date of the service of the writ and judgment the Court of Appeal erred in not awarding such interest and the order of the trial judge should be restored. It is therefore clear in the present case that the plaintiff was entitled to interest, for there were no special reasons why it should not be given. The change in the value of money was not a special reason, for it affected everyone alike.

In Pickett’s case [1980] A.C. 136 the argument was concerned only with the question whether interest was recoverable. Concentrating as they did upon this vital issue, counsel had agreed the rate of interest between themselves. The House of Lords did not consider it. Consequently, while in the present case there is an entitlement to interest, that rate is such “as the court considers appropriate.” What is appropriate must be determined in the light of all the relevant circumstances at the date of the trial.

While inflation does not amount to a special reason for the court to refuse to award interest, it does not follow that the inflationary element which exists in the relevant current interest rates is not a factor to consider when determining the appropriate rate of interest.

In Pickett’s case Lord Wilberforce said, at p. 151:

“Increase for inflation is designed to preserve the ‘real’ value of money: interest to compensate for being kept out of that ‘real’ value. The one has no relation to the other. If the damages claimed remained, nominally, the same, because there was no inflation, interest would normally be given. The same should follow if the damages remain in real terms the same.”

Lord Wilberforce is saying that the two objectives are separate, but he does not say that current rates of interest have no relation to inflation. Moreover, he does not say what the compensatory rate of interest shall be.

It cannot be disputed that current rates of interest today have a large inflationary element. This element was adverted to in Cookson v. Knowles [1979] A.C. 556 , where Lord Diplock said, at p. 571: “Inflation is taken care of in a rough and ready way by the higher rates of interest obtainable as one of the consequences of it …” If damages were assessed on the basis of the value of the pound at the date of the writ, then there would be an overwhelming case for the award of interest at rates which carry an inflationary element. Such rates would seek, albeit imperfectly, to achieve two objects, namely to preserve the value of the award and to compensate for the late receipt of the money. In my opinion, however, it cannot be right to apply such interest rates to an award which already takes into account the need for preserving the value of money. We must look for some other rate of interest.

*823

There have been various statements giving reasons for the award of interest. In many we find a reference to the defendant wrongfully withholding the money from the plaintiff. Thus in London, Chatham and Dover Railway Co. v. South Eastern Railway Co. [1893] A.C. 429 , 437 Lord Herschell, L.C. said:

“… I think that when money is owing from one party to another and that other is driven to have recourse to legal proceedings in order to recover the amount due to him, the party who is wrongfully withholding the money from the other ought not in justice to benefit by having that money in his possession and enjoying the use of it, when the money ought to be in the possession of the other party who is entitled to its use.”

However, I do not think it is right in determining the rate of interest to proceed upon the basis that a defendant should be penalised. Indeed, I do not understand Lord Herschell to be suggesting this. There are many cases where the plaintiff does not wish to have his damages assessed as quickly as possible. The medical reports may be uncertain. His prospect of employment may be difficult to determine. There are a number of reasons where neither side is anxious to proceed expeditiously. On the other hand, it is fair to say that the plaintiff has not had the money, while the defendant has had the advantage of not having been compelled to pay. It seems to me that we should seek to discover a rate of interest which will compensate the plaintiff in recognition of the fact that a sum of money in respect of general damages should be considered, over the relevant period, as existing for his benefit.

That sum of money might have been thought to be the value of the award at the date of the writ with interest rates which counter inflation or the value at the date of the judgment with interest rates less the counter-inflationary element. However, Pickett’s case [1980] A.C. 136 tells us that it is upon the award at the date of judgment that interest must be based and therefore the lower rate of interest is appropriate.

In Cookson v. Knowles [1979] A.C. 556 Lord Diplock in relation to the calculation of fatal accident damages said, at p. 571:

“In times of stable currency the multipliers that were used by judges were appropriate to interest rates of 4 per cent. to 5 per cent. whether the judges using them were conscious of this or not.”

The Judgments Act 1838 , now repealed, provided for interest at 4 Per cent. At the time of Jefford v. Gee [1970] 2 Q.B. 130the court regarded 6½per cent. as appropriate. In retrospect one can discern the early signs of inflation. I therefore think that we should start by assuming a true earnings rate of interest of 4 per cent.

At the time that Jefford v. Gee [1970] 2 Q.B. 130 was decided an award of interest was taxable in the hands of the plaintiff. The Finance Act 1971 removed the liability for tax. In British Transport Commission v. Gourley [1956] A.C. 185 it was held that in assessing damages for loss of earnings the plaintiff’s liability for tax on those earnings should be taken into account. In awarding interest on general damages at a true earnings rate, we are seeking to compensate the plaintiff for the loss of the money which his award could have earned. This would indicate that the principle in Gourley’s case [1956] A.C. 185 should apply. On the other hand, the sums payable as interest will be relatively small and it will generally be *824 undesirable to add to the expense of litigation by seeking to achieve a precise determination of the plaintiff’s actual loss. Most plaintiffs will be paying tax at the basic rate. Some would not have invested the money at all. Others might have skilfully used it in interest free stock.

In awarding interest the judge is exercising a discretion. In the great majority of cases the plaintiff could have proceeded with greater dispatch; and yet it may well be wrong to deprive him of interest particularly as the defendant will have had the use of the money. I therefore think that we should approach this matter upon the basis that the court should arrive at a final figure which will be fair, generally speaking, to both parties.

It is not a fair basis upon which to award interest to assume that the defendant should have paid the proper sum (and this means the exact sum) at the moment of service of the writ. It is true that he must be paid some interest from that date because a sum of money was due to him. Unlike the case of a claim for a fixed money debt, no one can say exactly how much. The plaintiff does not have to quantify his demand and yet in most cases he is in the best position to evaluate his claim. The defendant may not have the material upon which to do so. He may not have had the necessary opportunity for medical examination. The plaintiff may not have given sufficient details of his injuries for anything like an estimate, as opposed to a guess, to be made of the value of the claim.

Moreover, in many cases the plaintiff’s condition will not have stabilised. We all know that the picture at the date of trial can be very different from that which was given at the date of writ. It is nobody’s fault as a rule, but simply a reflection of the difficulty in forming an accurate medical opinion. There may be an unexpected change for the worse. In this case the interval after service of the writ will help to ensure a proper figure for damages which will be greater than that which the plaintiff would have obtained at the time of the writ. On the other hand, if his condition has improved and his award is less in consequence, this will mean that the defendant has been saved from the possibility of paying more than he should have done. These considerations show that, while it is right to regard the plaintiff as having been kept out of an award, we should not regard it as necessarily resulting in a loss to him of 4 per cent of the judgment sum. I appreciate that against this argument it may be said that the judgment sum is the true figure to work on and that any lower figure, inflation apart, which might have been awarded at an earlier trial, would have been unfair to the plaintiff because, as we now know, the claim was really worth the sum now awarded. However, to award interest on this sum as though it were a debt is to call upon a defendant to pay interest upon a figure that was never demanded and which at the date of the writ is usually sheer guesswork. These considerations lead me to the conclusion that what I call the true earnings rate of interest, namely 4 per cent., if appropriate to a debt, is too high when applied to general damages.

Moreover, the recipient of interest at 4 per cent. will generally pay tax of at least 30 per cent. and therefore, after tax, the net interest is only 2.8 per cent.

As the plaintiff does not pay tax on the interest on general damages and as I regard 4 per cent. gross as too high, we must look for a net figure below 2.8 per cent. There was evidence in this case that to very select bodies, such as pension funds, two recent government stock issues which are index Linked had all been taken up. The actual interest rate which these produced of course fluctuates according to the figure at which *825 the stock stands after issue but the evidence was that around 2 per cent. was enough to attract investors. National savings index-linked certificates also produce only a very low rate of interest.

These considerations lead me to regard the figure of 2 per cent. as appropriate for interest on an award of general damages. I would further say that I respectfully agree with the comments which Watkins L.J. has told me he proposes to add.

WATKINS L.J.

For the reasons provided by Lord Denning M.R. and for those just given by Eveleigh L.J., I agree that (1) the appeal should be allowed so that the rate of interest awarded to the plaintiff on general damages will be 2 per cent., and (2) in future all awards of general damages should bear the like rate of interest.

I would add a reference to section 22 of the Administration of Justice Act 1969 which in amending section 3 of the Law Reform (Miscellaneous Provisions) Act 1934 provides that the court shall exercise its power to award interest on damages or on such part of the damages as the court considers appropriate, unless the court is satisfied that there are special reasons why no interest should be given in respect of those damages.

Clearly these provisions confer a discretion on the court to decide what part of an award of damages shall carry interest, the rate of that interest and the period for which it should be given. That discretion has now to be exercised so as, following the decision in Pickett’s case [1980] A.C. 136 , to award interest on general damages in personal injury cases at, following the guidelines now laid down by this court, the rate of 2 per cent. and, having regard to the circumstances of the case, for the period deemed to be appropriate.

Usually this period will run from the date of the writ to the date of trial, but the court may in its discretion abridge this period when it thinks it is just so to do. Far too often there is unjustifiable delay in bringing an action to trial. It is, in my view, wrong that interest should run during a time which can properly be called unjustifiable delay after the date of the writ. During that time the plaintiff will have been kept out of the sum awarded to him by his own fault. The fact that the defendants have had the use of the sum during that time is no good reason for excusing that fault and allowing interest to run durinsg that time.

LORD DENNING M.R. I would like to add one word after hearing Watkins L.J.’s judgment. It means that there can be an addition to the guideline. The interest, even at 2 per cent., should not necessarily be awarded for the whole period from the date of the service of the writ. The period may be reduced considerably: and only awarded for a lesser time according to the circumstances of the case.[Reported by SUSAN DENNY. Barrister-at-Law]

Representation

  • Solicitors: Hexlall Erskine & Co.; Mowll & Mowll, Canterbury.

Appeal allowed. No order as to costs.

[Road Traffic] KMB v Yick Kwok Keung

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KOWLOON MOTOR BUS CO (1933) LTD v YICK KWOK KEUNG & ANOR

– [1991] 2 HKC 632

DISTRICT COURTDEPUTY DISTRICT JUDGE MOHAN BHARWANEYACTION NO 2846 OF 199117 October 1991

  • Tort — Road accident — Contributory negligence — Collision between two vehicles on highway — Duty of driver in front to give warning before stopping — Nature of warning which ought to be given
  • Tort — Damages — Repair and loss of use of bus — Method of assessing loss of use — Delay in effecting repairs — Effect of failure to mitigate loss on multiplier — Standing charge cost method of assessment

The plaintiff’s bus driven by its employee was travelling in the slow lane of Tuen Mun highway heading towards Yuen Long slightly after noon on 18 April 1989. Another bus in front of the plaintiff’s bus stopped in response to the direction of a police officer. The plaintiff’s employee stopped accordingly and gradually. A lorry of the second defendant driven by the first defendant, which was following the plaintiff’s bus, failed to stop in time and collided with the rear of the plaintiff’s bus.The defendants alleged contributory negligence as there was no warning given by the plaintiff’s employee. The plaintiff claimed damages for repair and loss of use of the vehicle on the basis of a ‘standing daily cost charge’.

Held, granting the plaintiff’s claim:

  1. The first defendant had failed to keep a proper lookout and failed to keep a safe distance from the plaintiff’s vehicle in front of him to enable him to stop in time to prevent a collision.
  2. The plaintiff’s driver was not contributorily negligent. A driver who is decelerating and bringing his vehicle to a gradual stop is under no duty to give any warning over and above that provided by his illuminated brake lights. In any case, on a balance of probabilities, the first defendant would not have seen or reacted in time to any further warning.
  3. The plaintiff had an obligation to mitigate loss. To allow the damaged bus to be idle for 40 days was too long although the period of 26 days taken for the repair work was not excessive. A total multiplier of only 56 days was allowed.
  4. The claim for depreciation was based on the average life of an operational bus. The plaintiff permitted 13% of its fleet to be on standby at any one time. The claim must be discounted to reflect the longer life of a standby bus. An adjustment of the claim for depreciation based on a 15-year lifespan would be fair in the circumstances. Once this adjustment was made, the standing charge cost method of assessment provided, on the evidence available, a fairer and reasonably stable measure of calculating damages for loss of use, as compared to the interest on capital and depreciation measure. Birmingham Corp v Sowsbery [1970] RTR 84 ; (1969) 113 SJ 877 applied. Kowloon Motor Bus Co (1933) v A-G default (A791/84, unreported) distinguished.[1991] 2 HKC 632 at 633

Cases referred to

Birmingham Corp v Sowsbery [1970] RTR 84 ; [1969] 113 SJ 877

Kowloon Motor Bus Co (1933) v A-G (A791/84, unreported) default

Kowloon Motor Bus Co (1933) v Ho Kwok Man (VCJ 6219/86, unreported) default

Other legislation referred to

Road Users Code p 41

Action

This was a claim by the plaintiff for damages suffered as a result of a traffic accident. The defendants alleged contributory negligence on the part of the plaintiff. The facts appear sufficiently in the following judgment.DEPUTY DISTRICT JUDGE MOHAN BHARWANEY

The plaintiff brings this action against the defendants to recover damages suffered as a result of a traffic accident, which occurred shortly after noon on 18 April 1989, on the Yuen Long bound carriageway of Tuen Mun Road, near Tsing Lung Tau. There is no dispute that the plaintiff’s omnibus (the bus), registration no DG 316, sustained damage on that occasion when the front of a goods vehicle (the goods vehicle), registration no DU 7492 , owned by the second defendant and driven by his servant or agent, the first defendant, collided with the nearside rear of the bus. The issues on liability are whether the collision was caused or contributed to by the negligence of the first defendant and, if so, whether there was any contributory negligence on the part of the plaintiff’s servant who drove the bus at the material time. I proceed to resolve the question of liability before dealing with quantum.Liability

The scene

The accident occurred on the inside or slow lane of a three lane carriageway. At the material time, the road surface was dry and the weather was fine. Visibility was good. No sketch plan of the locus in quo had been prepared nor were any photographs of the scene produced. The driver of the bus, Shum Cheong Shun, who gave evidence, drew a rough sketch of the scene of the accident, which he produced (P-3). This showed that there was a left hand bend in the carriageway before it straightened out. Mr Shum did not describe this bend as being either gentle or sharp. The sketch depicts the bend as being slightly more marked than a gentle bend. The first defendant, Ying Kwok Keung, who also gave evidence, acknowledged the presence of the left hand bend in the road but did not describe how marked or sharp it was. Mr Shum did say that there were trees to the left of the bend which apparently did not obscure his view of the part of the carriageway after the bend. Having regard to this evidence, I find, in the absence of a proper sketch or photographs, that the curvature of the road was similar to that[1991] 2 HKC 632 at 634depicted in the rough sketch drawn by Mr Shum. I also accept the evidence of Mr Ying and find that the carriageway was level at the bend in the road but started to run slightly downslope thereafter.

The plaintiff’s version

Mr Shum gave evidence that, at the material time, he had been driving his bus on the inside lane following another bus, a Victory model bus also belonging to the plaintiff company (the Victory bus), at a speed of about 55 to 60 km/h. The distance between the two buses was about 40 feet, about the length of a bus. When he was negotiating the bend in question, he noticed a traffic policeman come out from the shoulder of the road on the left hand side of the inside (or slow) lane and signal the Victory bus to stop. The bus in front did so and Mr Shum stopped his bus as well. He did not stop his bus abruptly. He stopped his bus ‘naturally’ and so did the Victory bus in front of him. Eight to ten seconds after he had stopped his bus and engaged his handbrake, he heard a bang from the rear of his bus and felt his bus shake. He looked in his rear view mirror and saw the defendants’ goods vehicle. After ascertaining that no one had been hurt, he alighted from his bus and saw the driver of the goods vehicle clearing away glass fragments of his broken windscreen. He also saw a small white police car in front of the Victory bus and a private car in front of the police car. The police car was flashing a blue light which he had not seen before he had stopped his bus. He did not know why the policeman stopped the Victory model bus nor the reason why the private car was stationary at that part of the road. All the vehicles had come to a stop in the straight section of the road, as depicted on his rough sketch. After ascertaining that nobody in the bus and in the goods vehicle had been injured, the policeman told him and the driver of the goods vehicle that it was dangerous for the vehicles to remain stationary at that location and suggested that they drive the vehicles to another safer place if they wished to further discuss or settle the matter.Under cross-examination, Mr Shum said that he had seen the policeman signal the Victory bus to stop before his own bus, DG 316, had negotiated the left hand bend. He, therefore, prepared to slow down and to stop his bus. He did so by not accelerating when he negotiated the bend and by braking when his bus was at the end of the bend. When his bus had come to a complete stop, it was eight feet behind the stationary Victory bus. He had looked at his three rear view mirrors all along the journey on Tuen Mun highway and did so when he braked to stop his bus but he did not see the defendants’ goods vehicle. He did not see any vehicle before he negotiated the bend and could not see any when he was inside the bend. He did not pay attention to the vehicles in the other two lanes. He agreed with the suggestion that the collision occurred within a few seconds, a very short period of time, after he had completely stopped his bus.[1991] 2 HKC 632 at 635

The defendants’ version

Mr Ying gave evidence that he had been driving the goods vehicle along the middle lane of the Yuen Long bound carriageway of Tuen Mun Road. As he was negotiating a left hand bend, he saw vehicles behind him so he indicated and cut into the slow lane. He drove at a speed of about 55 to 60 km/h in fourth gear. His braking system was normal. Before he cut into the slow lane, he did look but did not see any vehicle in front on the slow lane. However, he saw the plaintiff’s bus in front of his vehicle after he had cut into the slow lane. The distance between them was about 40 feet. Suddenly the bus stopped abruptly. He immediately applied his foot brakes but was unable to avoid a collision. The bus driver did not give any indication before he stopped the bus but he saw that its brake lights were lit. After the collision, he alighted from his vehicle and only saw two vehicles stopped at the scene, his vehicle and the other bus, and he saw one police officer there. He explained that he had changed lanes in order to give way to vehicles behind him and he clarified that his vehicle had completely entered the slow lane before he started to negotiate the left hand bend.Under cross-examination, Mr Ying said that he was sure that he saw a bus in front to his left and passing traffic on his right before he cut into the slow lane. The distance between his vehicle and the bus in front was at least 40 feet or more before he changed lanes. The distance between them was reduced to 35 to 40 feet as he changed lanes, probably because the bus reduced speed in order to negotiate the bend. He reduced the speed of his vehicle as well, in order to negotiate the bend and, then, after he had entered the bend, he accelerated a little and maintained that speed. Before the collision, he did not lose sight of the bus at any time. Their respective speeds were about the same. He disagreed with the suggestion that his vehicle had been too close to the bus in front and pointed to the far end of the court room (some 60 feet away) as representing the distance between them. He could not avoid a collision because the bus stopped abruptly. On seeing its braking lights and seeing that it suddenly reduced speed and the distance between them getting shorter, he applied his footbrakes immediately but could not avoid a collision, in fact it happened so suddenly. He said that it was possible that there were more vehicles stationary at the scene after the collision than he had mentioned during his evidence in chief, indeed, he saw a motorcycle there.

Findings

I was impressed by both witnesses and I found them both to be truthful. In so far as there were differences between their testimony, such as the presence of a motorcycle at the scene, I find the recollection of Mr Shum to be more reliable. In so finding, I do not conclude that Mr Ying deliberately told me lies but that his recollection of the number of stationary vehicles and the presence of the motorcycle was less reliable and probably mistaken.[1991] 2 HKC 632 at 636He was, of course, further back from those stationary vehicles. In addition, Mr Ying’s confirmation regarding the presence of the police officer at the scene supports Mr Shum’s testimony in that regard.I find that Mr Shum drove his bus in the manner and at the speed he described in the witness box and, that he saw a police officer walk out from the shoulder of the road to the inner lane, in the straight section of the carriageway after the left hand bend, and signalled the Victory bus to stop. Mr Shum had noticed the policeman before his bus started to negotiate the left hand bend in the road. The fact that the officer was willing to place himself in a position of some hazard, posed by the oncoming Victory bus, leads me to infer that he was some distance away from the Victory bus. I find that the Victory bus stopped gradually and that Mr Shum’s bus did so as well. Although he stopped some eight feet behind the Victory bus, I find merit in the submissions advanced by Mr Wong on behalf of the plaintiff that Mr Shum could have stopped his bus further back if he had wished to do so. I accept his evidence that he slowed down and stopped, firstly, by not pressing the accelerator when he negotiated the bend and, then, by braking when the bus approached the end of the bend until it came to a halt. Above all, I find that there was no emergency braking on the part of the bus, indeed, there is no suggestion on the evidence, and definitely not on the part of Mr Ying, that he heard the sound of screeching brakes or any other loud sound likely to be emitted by a double decker bus under emergency braking.The collision with the goods vehicle occurred in the straight section of the road after the left hand bend, some seconds after the bus had come to a halt and after Mr Shum had engaged the hand brake. It is clear to me that Mr Shum’s statement and demonstration of the time lapse was at best an approximation, albeit, an honest one and I am unable to be more precise in my finding regarding this time lapse.I also find that Mr Ying drove his goods vehicle in the manner and at the speed he described in his evidence. There is no suggestion of excessive speed in this case nor do I find any excessive speed on the part of either driver. I find that Mr Ying saw the bus in front of him in the slow lane before he changed lanes. His initial position in the middle lane and the presence of the bus in the slow lane in front of him would have obscured and, in my finding, did obscure his view of the police officer in front.I find further that the distance between the bus and goods vehicle closed because the bus decelerated as it negotiated the bend. Mr Shum said he did so and Mr Ying believed that to have been the case. Although the distance between the vehicles closed, I do not find that Mr Ying failed to keep a safe distance from the vehicle in front of him when he first changed lanes to follow the bus.Both witnesses gave similar estimates of the distance between his vehicle and the one in front, namely, about 40 feet. In Mr Ying’s case, this[1991] 2 HKC 632 at 637distance was further reduced by a few feet for the above reason. A review of the table of stopping distances set out on p 41 of the Road Users Code (the Code) suggests, at first blush, that a distance of 35 to 40 feet is unsafe for a speed of 55 to 60 km/h — that table gives a stopping distance of 35 metres (or about 110 feet) for a speed of 60 km/h. However, the table, although providing a useful measure for assessing a vehicle’s ability to stop in time to avoid colliding with a stationary obstruction, does not assist much when one considers what is a safe distance between moving vehicles — the vehicle in front does not stop instantaneously and the time it takes to stop will provide a cushion enabling the following vehicle to stop as well, providing, of course, that the driver of the latter keeps some distance to enable him to react and stop in time. Given present traffic conditions, modern efficient braking systems and the demands for an efficient use of our congested roads, I cannot conclude that a driver is necessarily negligent if he fails to maintain the overall stopping distance set out in the table at p 41 of the Code. The gap should never be less than the thinking distance of the following driver because, then, he would be unable to avoid a collision with the vehicle in front if it stops suddenly. How much longer the gap should be must be relative to the quality of the view ahead and of the lookout kept by the following driver; a driver who is alert and poised to react can get closer to the car in front than one whose attention is diverted, for example, by the majestic scenery or a conversation with his passenger. Even so, a gap of about 40 feet (or 12.5 m) at a speed of 60 km/h is, prima facie, insufficient and, therefore, evidence of negligence as it is less than the thinking distance of 15 metres provided by the table at p 41. There was no suggestion that Mr Ying’s thinking distance was less than this because his reactions were faster than the average driver’s reactions.However, I bear in mind the fact that it is notoriously difficult for witnesses, giving evidence in court many months and even years later, to accurately estimate distances and I find that Mr Ying had initially maintained a safe distance from the bus in front. I am supported in this finding by Mr Ying’s demonstration, in court, of the distance between the two vehicles which suggests a distance of about 60 feet (or about 19 m). Whatever may have been the actual distance, I find that Mr Ying maintained and continued to maintain a safe distance from the bus in front when he changed lanes to follow it, albeit, that the distance between them closed somewhat for the reason that the bus decelerated as it negotiated the bend.Unfortunately, the distance between the vehicles closed even further for the reason that Mr Ying, on his own admission and which I accept, accelerated a little after his vehicle entered the bend. This had the effect of closing the distance even further because there was no corresponding acceleration on the part of the bus.[1991] 2 HKC 632 at 638I find that Mr Shum had then or soon thereafter commenced braking. The unfortunate coincidence of these events and of the matters set out below was the belief, honestly and genuinely held by Mr Ying, that the bus stopped so abruptly that he was unable to avoid a collision despite emergency braking on his part when he first realized what was occurring. I have already found that Mr Shum did not stop his bus abruptly or suddenly. It follows that Mr Ying’s belief was mistaken. That mistaken belief, I find, arose from a failure on his part to appreciate that not only was the bus not accelerating out of the bend but that it had, in fact, commenced braking.That failure, in turn, arose from a failure on his part to keep a proper lookout and resulted in Mr Ying accelerating and further closing the gap between the vehicles to such a distance that he could not react in time to avoid a collision. Even if I were wrong regarding this latter conclusion, namely, that he failed to keep a safe distance from the bus in front, he certainly failed to keep a proper lookout, for the speed at which he was travelling and given the distance that he was in fact maintaining from the bus in front of him, either one failing or the other or a combination of both led to the subsequent failure to avoid a collision. In so driving the goods vehicle, Mr Ying departed from the standard of a reasonably prudent driver. I find that if he had kept a proper lookout initially or if he had increased his alertness when he further closed the distance between him and the bus, he would have been able to avoid the collision. His negligence caused or materially contributed to the collision and I find Mr Ying liable and the second defendant vicariously liable to the plaintiff in damages.

Contributory negligence

Was Mr Shum in any way negligent and, if so, did any negligence on his part cause or materially contribute to the collision? I have already found that he stopped his bus gradually. In those circumstances, was he under a duty to warn vehicles following him of his intention to slow down and stop, over and above the obvious indication from his illuminated brake lights? Mr Shum said that he first saw the goods vehicle after the collision. I accept that evidence. However, I do not accept his further evidence that he looked at his three rear view mirrors when he commenced to brake. He may have looked at his rear view mirrors now and then along the journey on Tuen Mun Road but I find that he did not do so when he commenced braking as otherwise he could not have failed to notice the presence of the goods vehicle behind him. I have already found that Mr Ying was not driving at an excessive speed. It follows that this is not a case of a speeding vehicle suddenly and unexpectedly arriving at the scene. Whether he looked or not is however, not relevant to this issue because even if he did not look, he could not have failed, as a reasonable driver, to anticipate the presence of vehicles behind him on that busy highway. The question, therefore, is whether or not he should have done more than just brake and rely on his brake lights to warn vehicles likely to be following him. It was[1991] 2 HKC 632 at 639suggested that he should have switched on his hazard warning lights or his left indicator light. I reject that suggestion as being unreasonable and as placing an unreasonable burden on the Hong Kong motorist. Even if there was evidence to show that the bus was equipped with hazard warning lights, and there was none, I find that a driver who is decelerating and bringing his vehicle to a gradual stop, even on a busy highway such as Tuen Mun Road, is under no duty to give any warning over and above that provided by his illuminated brake lights.Even if I have erred on this point, I find that a failure on the part of Mr Shum to warn those behind him, by the use of hand signals or by switching on his left indicator light, did not cause or materially contribute to the collision because as I have already found, Mr Ying was not keeping a proper lookout and, on a balance of probabilities, would not have seen or reacted in time to such warning.There may well be a duty on the driver of a leading vehicle on a high speed highway such as Tuen Mun Road to give special warning, by a blast of his horn for example, over and above that provided by his illuminated brake lights if he intended to make a sudden emergency stop. But that was not the case here.A similar duty may also arise on the part of the leading driver, even if he intended to stop gradually, if he looked in his rear mirror when he commenced to brake (as a reasonably prudent driver would do) and saw that the following vehicle was very close behind him. That also was not the case here because if Mr Shum had looked in his rear view mirrors (or some of them) when he commenced braking, he would have seen the goods vehicle some distance behind him and certainly not close enough to his bus as to alert him to the need to give special warning. I find support for this finding in the evidence of Mr Shum, which I accept, that the collision occurred some seconds after he had already brought the bus to a halt and had engaged its handbrake. Even if I were wrong to make such positive findings, the onus of this issue is on the defendants and they have failed to satisfy me, on a balance of probabilities, that he would have been alerted to the need to give special warning had he looked in his rear view mirrors when he commenced braking.In the event, I find that there was no contributory negligence on the part of Mr Shum that caused or materially contributed to the collision.Quantum

The plaintiff claims damages for the cost of repairs to the bus ($29,802.02), a survey fee of $320 paid to Roger Houghton Motor Surveys Ltd and damages for loss of use of the bus ($37,180). The total amount claimed is $67,302. There is no counterclaim in respect of damage to the goods vehicle.[1991] 2 HKC 632 at 640

Cost of repairs and survey fee

I am satisfied on the evidence and in the absence of evidence from the defendants that the sum of $29,802.02 was reasonably incurred in repairing the damage caused by the collision and that it was reasonable to obtain the services of motor surveyor and to pay the fee claimed. I reject the rather astonishing suggestion made by Mr Kong, on behalf of the defendants, that Mr Raymond Lee, of the motor survey company, although qualified to assist me on the reasonableness of the amount of repair costs claimed by the plaintiff, was not an expert on the question of whether such work was reasonably necessary to repair the damage caused by the collision. Mr Lee is a Member of the Institute of Damage Surveyors (MIDS) and an Associate Member of the Institute of Motor Industry (AMIMI). He has 13 years experience in motor survey work. He surveyed the bus in question before confirming the correctness of the plaintiff’s vehicle repair report and adjusting the amount claimed to $29,802.02, which I award to the plaintiff under this head of claim together with $320 in respect of the survey fee.

Damages for loss of use

There is no doubt that a company such as the plaintiff, which offers franchised bus services and maintains a standby facility to ensure that there is no disruption to such services, is just as entitled to claim damages for loss of use as a claimant who hires a replacement vehicle during the period when repair works are carried out to his damaged vehicle and claims the amount of hire charges as damages for loss of use. The controversy in this case centered on, firstly, the multiplier to be used in assessing such a claim and secondly, the multiplicand.

Multiplier

The plaintiff claims damages for loss of use over a period of 65 days. The collision occurred on 18 April 1989. Mr Lee surveyed the bus and sent his report by 26 April 1989, which I find to be a reasonable period of time within which to do so. Mr Tsang, an assessor in the repair department of the plaintiff, received authorization to commence repairs on 27 April 1989. The actual repairs commenced a month later, took 26 days and were completed on 21 June 1989. I am satisfied on the evidence of Mr Lee and Mr Tsang and, indeed, the same was conceded by Mr Kong for the defendants that 26 days was a reasonable period of time within which to complete repairs.There is no doubt that there is, in law, a duty on the plaintiff to mitigate its loss by repairing the damaged bus as soon as reasonably possible. There is a ‘duty’ in the sense that the defendants are not liable for such loss of use which the plaintiff could reasonably have avoided by commencing repairs on the bus in question earlier than it in fact did. The question of fact I have to decide on the[1991] 2 HKC 632 at 641whether the plaintiff acted reasonably in commencing repairs one month after receiving Mr Lee’s report or rather since the onus of the issue is on the defendants, whether the defendants have proved that the plaintiff had acted unreasonably.In seeking to discharge this onus, they rely on the fact that the bus sat idly for a month and on the absence of any cogent evidence or explanation from the plaintiff why this was so. Mr Tsang’s explanation for the delay was that there was a shortage of manpower. I understood his evidence to be that there were sufficient workers to carry out the daily assigned work but not enough to cope with extra work. Why this was so was left unexplained. I was impressed by the submission of Mr Wong, on behalf of the plaintiff, that the plaintiff sought to strike a balance between hiring too many workers and leaving them idle and increasing overheads on the one hand and being understaffed on the other hand. However, no evidence was adduced on this matter and there was no evidence that the plaintiff had sought to strike such a balance.On the evidence, the repair work took 26 days but only commenced on 27 May 1989, some 40 days after the collision. I am satisfied, on the evidence and in the absence of explanation from the plaintiff, that any period in excess of 26 days within which to commence repairs, even taking into account the period of time required to have the bus surveyed, was excessive and that the plaintiff had acted unreasonably when it failed to commence repairs within 26 days from the date of the collision. I, therefore, only allow a multiplier of 52 days for the claim in respect of loss of use. In truth, there is very little evidence available to me to arrive at this conclusion but I think the defendants can justifiably point to the fact that the repairs only took 26 days and assert that it was unreasonable, in the absence of any or any proper explanation, for the plaintiff to wait longer than that to commence repairs on the bus.

Multiplicand

Miss Doris Lau Kwun Kan, the financial planning and costing manageress of the plaintiff, gave evidence and proved to my satisfaction that the daily standing charge cost to the plaintiff of the replacement bus was as follows:

(a) Interest on capital value. This was ascertained by applying the best lending rate prevailing during the replacement period (divided by 365

days) to the capital value, which was the written down value after depreciation, of the replacement bus. This exercise produced a daily interest charge of $152.

(b) Depreciation. This was calculated on a daily basis by taking the original purchase price of the replacement bus and depreciating the same on a straight line basis over ten years. This exercise (cost divided by ten years divided by 365 days) produced a daily figure of $189.

(c) Licence fee. The daily cost of the annual licence fee of the replacement[1991] 2 HKC 632 at 642

bus was obtained by dividing the annual licence fee by 365 days to produce $13.

(d) Insurance.A similar exercise on the annual cost of fire and third party insurance on the replacement bus produced a daily cost of $59.

(e) Overhaul. Instead of claiming the average cost of maintaining the fleet which would have included maintenance costs for ordinary wear and tear, a running expense and not a standing charge cost, the plaintiff restricted its claim to the average cost of the annual overhaul of the whole fleet made compulsory by the relevant regulations. An annual overhaul is required for each vehicle before it can obtain a certificate of roadworthiness. In addition, a major overhaul is required every four to five years in order to obtain a certificate of fitness for buses of a certain age. About one-fifth of the fleet undergoes this major overhaul every year. About 87% of the whole fleet was on the road on average, 13% being either on standby or undergoing maintenance. The daily cost was calculated by taking the actual expenditure of the compulsory overhaul of the whole fleet incurred in the year of the collision (omitting therefrom any element of daily maintenance) and dividing that amount by the total number of licensed buses and by 365 days to produce a daily cost of $311.

The total daily cost of the standby facility amounted to $724.The plaintiff only claims a daily cost of $572, omitting from its claim the sum of $152 being the daily interest on the depreciated capital value of the replacement bus, although Lane J, as he then was, had allowed damages for loss of use of a bus in Birmingham Corp v Sowsbery [1970] RTR 84 based on the daily standing cost charge, a figure which included ‘no running charges but does include a sum for expenses on capital’ (at p 85).Nevertheless, the claim of $572 a day, based on the standing daily cost charge, yields a higher award than the more conventional measure for such claims, namely, interest on capital and depreciation. The latter method, taking the above figures, produces a daily multiplicand of $341 and is considerably less than the plaintiff’s claim. It, therefore, falls to me to consider which measure I should select to assess this head of claim.Lane J in the Sowsbery case preferred the measure based on the standing cost charge since ‘the standing cost basis of calculation does not suffer, as the other method does, from possible fluctuations in capital value and interest rates’ (at p 87). According to Lane J, the latter method did not provide fair compensation at times of low interest rates and was better suited to a long-living chattel like a ship than a bus which depreciated rapidly.Hunter J, as he then was, in Kowloon Motor Bus Co (1933) Ltd v A-G (A791/84, 16 July 1984, unreported), preferred to award damages based on interest on capital and depreciation, as I understand his judgment, largely because there was no clear[1991] 2 HKC 632 at 643cost charges were in that case; the figures proffered for depreciation and maintenance being averages over the whole fleet of which a very small percentage was at any one time off the road on standby (at p 9). Those figures had to be reduced to reflect the lesser need for maintenance and lesser depreciation of a standby facility. In the absence of better evidence, Hunter J thought his proper course was ‘to stick to what I know, stick to an interest and depreciation calculation’. He found justification for doing so from the fact that the rise in interest rates had almost certainly closed the gap which existed between these two methods of computation.The observations of Hunter J do not apply with equal force here. The claim made in the present case in respect of overhaul costs eliminates running maintenance costs and there is no suggestion that the plaintiff was inefficient in permitting 13% of its fleet to be on standby or undergoing maintenance at any one time. However, the claim for depreciation was based, as I understood the evidence, on the average life of an operational bus. This must be discounted to reflect the longer life of a standby bus. An adjustment of the claim for depreciation based on a 15 year lifespan would be fair in the circumstances. Once this adjustment is made, and I am prepared to do so, the standing charge cost method of assessment provides, on the evidence available to me, a fairer and reasonably stable measure of calculating damages for loss of use, and is the one I adopt in the present case.The same measure was adopted by Scriven DJ in Kowloon Motor Bus Co (1933) Ltd v Ho Kwok Man & Anor (VCJ 6219/86, 4 April 1987, unreported). His reason for so doing was that the claim in the case before him related to a damaged bus whereas the claim before Hunter J was a total loss claim. With respect, that distinction, in my view, is not a valid basis for choosing one measure over another. The claim for loss of use was similar in both cases; in one, the standby bus was used until the damage was repaired, in the other, the standby bus was used until a replacement bus became available. In these circumstances, the measure of the cost of the standby facility ought to be the same in both cases.The adjustment to the claim for daily depreciation reduces the multiplicand to$509 (a 15 year lifespan produces a daily depreciation of $126 [$189 x 365 days x 10 years ÷ 15 years ÷ 365 days] which is $63 less than the amount claimed). I award damages for loss of use in the total sum of $26,468 ($509 x 52 days).

Total award

There will be judgment for the plaintiff for the sum of $56,590.02 and interest thereon at the rate of 10% pa from 21 June 1989, the day the bus was repaired to today.

Raymond Leung