Insurance Law

• Date: 01 December 2011
• Citation: (2011) 12 SAL Ann Rev 351
• Author: LEE Kiat Seng LLB (Hons) (National University of Singapore), LLM (Maritime Law) (London); Advocate and Solicitor (Singapore); Adjunct Associate Professor, Faculty of Law, National University of Singapore.
• Published date: 01 December 2011

Construction of extension cover in workmen's compensation insurance policy

17.1 Lim Keenly Builders Pte Ltd v Tokio Marine Insurance Singapore Ltd[2011] 4 SLR 286 is an appeal, to the Court of Appeal, from the decision of the High Court in Mohammed Shahid Late Mahabubur Rahman v Lim Keenly Builders Pte Ltd[2010] 3 SLR 1021. One thing which is clear from the decision of the court of first instance and that of the appellate court is, whilst both courts agreed that the contra proferentum rule should only be invoked where there is a genuine ambiguity and that there was no ambiguity in the policy under consideration, there was divergence as to what was the ambit and meaning of the operative clause.

17.2 The facts of the case are simple: the appellant company was the main contractor at a worksite. A subcontractor was engaged to carry out works at the worksite. An employee of the subcontractor suffered injuries during the course of the works. An action was commenced by the employee against the appellant for beach of statutory duties and under occupier's liability. The appellant joined the respondent insurer to the proceedings. At trial, the appellant accepted 95% liability. The appellant continued the claim for an indemnity from the respondent insurer. The claim was denied on the construction of the policy.

17.3 The High Court had emphasised that Endorsement B to the policy was clear. Whilst the clause extended the cover of the policy to injuries suffered by workmen employed by the subcontractors of the appellant while performing work for the appellant, the extension was limited in its scope: it only extended liability for claims under the Work Injury Compensation Act (Cap 354, 2009 Rev Ed) but not for common law claims, such as the one based on occupier's liability. This was crucial as the accident did not occur whilst the workman was carrying out work for the appellant and the claim had been settled on the basis of occupier's liability.

Decision of the court

17.4 The Court of Appeal took a more fundamental approach to the question of whether the policy responded to the claim: what is the ambit of the operative clause (Operative Clause) in the policy?

17.5 The Operative Clause provided that if any workman in the Insured's employment shall sustain personal injury by accident or disease caused during the Period of Insurance and arising out of and in the course of his employment by the Insured in the Business, the respondents would indemnify the...