How Much Is a Leg Worth in Hong Kong? Proposal for Reforming Personal Injury Compensation

Abstract

This article examines the rationale for and effectiveness of compensation awarded for pecuniary and non-pecuniary loss in Hong Kong personal injury disputes. Special consideration is given to the assessment of damages for pain, suffering and loss of amenity (PSLA). In addition, the potential use of structured settlements or periodic payment orders (PPOs) as a substitute for (or together with) lump-sum awards is explored. The primary sources of data are the full texts of judgments issued in personal injury cases by the Hong Kong judiciary since 1976. In catastrophic personal injury cases, lump-sum awards hinge on estimates of the claimants' life expectancy and investment returns adjusted for inflation. However, claimants may exhaust their funds by exceeding their projected life expectancy or receiving lower-than-expected investment returns. PPOs provide for regular payments over a claimant's lifetime, adjusted annually based on an inflation index. Reforms focused on PSLA and the use of PPO are recommended.