By Vivian Yu

Hong Kong, 12 March 2026: The Court of Appeal has delivered important guidance on how judges should assess loss of earnings when an injured worker already has health problems – and has sharply criticised serious delays in paying employees’ compensation. In Ip Siu Chi v Kwan Wing Hang & Others [2026] HKCA 204 (CACV 217/2024), the CA allowed the plaintiff’s appeal and clarified the principles established in a landmark judgment almost three decades ago.

The CA held that any discount for pre-existing (including psychiatric) conditions must be applied to separate heads of loss – for example, pain and suffering, loss of life expectancy, loss of earnings and the like – rather than as a single percentage across all heads. This is particularly relevant to loss of earnings attributable to orthopaedic injury alone, or to future loss of earnings where the multiplier has already been reduced to reflect pre-existing vulnerability.

Chan Kam Hoi [1998] 2 HKLRD 958 remains the leading authority on taking pre-existing conditions into account when assessing damages. In that case, the CA held that where a pre-existing condition was likely to lead to disability and loss in the absence of the injury, the following should apply:

• the usual method of assessing recoverable loss is to take account of those risks by an appropriate assessment of general damages (such as pain, suffering and loss of amenities);
• pre-trial loss of earnings may also be reduced only if the risks during the years concerned are sufficiently high; and
• for post-trial (future) loss of earnings, the most accurate way to reflect the risks of the pre-existing condition is usually by a reduced multiplier, in particular where the plaintiff’s working life is likely to be limited by that condition.

In Ip Siu Chi, the CA has emphasised this framework must be applied separately to each head of loss. A percentage reduction that is appropriate for one head cannot be applied across the board, especially where the loss under another head is caused by a different injury or has already been reflected in the assessment (such as by a lower multiplier). The CA noted that the relevant passage in Chan Kam Hoi had not been drawn to the trial judge’s attention.

The CA heard that the plaintiff was a scaffolder who sustained orthopaedic and psychiatric injuries in a construction site accident in 2015. She had a significant pre-existing psychiatric history. The High Court judge found that her post-accident psychiatric symptoms were caused by both her pre-existing condition and the accident – and thus applied a 30% reduction. There was no appeal against that figure or its application to pain, suffering and loss of amenities.

However, the judge also applied the same 30% reduction to pre-trial loss of earnings and post-trial (future) loss of earnings. After deducting employees’ compensation, she awarded just over HK$1.5 million in damages and ruled that the plaintiff’s costs were to be taxed on District Court scale. The plaintiff appealed on both quantum and costs.

The CA allowed the appeal on both grounds and held the trial judge to have been “plainly wrong” in her rulings on pre-trial loss of earnings, loss of future earnings and costs. It set aside the High Court judgment, instead awarding the plaintiff damages of more than HK$2.4 million and costs on High Court scale as well as the costs of her appeal.

Notably, the CA was also highly critical of the delay in the plaintiff receiving compensation under the Employees’ Compensation Ordinance (Cap. 282), having finally collected the monies some four years and nine months after bringing her claim. The CA described the hold-up as “unacceptable” and “appalling”, adding that the Ordinance’s aim of providing a speedy, no-fault remedy for injured workers was “clearly not met” in this case.

There are several key takeaways from the CA’s judgment. Firstly, Chan Kam Hoi should be applied by separate head of loss, while a percentage reduction that properly reflects pre-existing conditions for general damages must not be applied automatically to loss of earnings. Secondly, where the judge has already taken pre-existing conditions into account in choosing the multiplier (or otherwise), a blanket percentage reduction across all heads is likely to amount to double discounting. And thirdly, the defendant bears the burden of proving that a pre-existing condition falls within the scenarios that justify a reduction.

The CA’s judgment underscores the need for parties in personal injury cases to receive sound legal advice so that they understand their rights and obligations and are fully aware of the relevant arguments and precedents. Here at BC&C, we have a burgeoning insurance and personal injury team handling all manner of cases relating to employees’ compensation, healthcare, motor incidents and property damage, among others. For all aspects of insurance law, we are ready to assist.

Vivian Yu is a Senior Associate with BC&C. She focuses primarily on insurance and personal injury litigation and has experience in dealing with a wide range of personal injury and liability claims, including employees’ compensation, public liability, motor and recovery claims. She can be contacted at Vivian@boasecohencollins.com.

Trainee Solicitor Jeffrey Li contributed to this article.