AIG Asia Pacific Insurance Pte Ltd & Vision Marine Engineering Pte Ltd v AXA Insurance Pte Ltd

• Jurisdiction: Singapore
• Judge: Sheik Umar Bin Mohamed Bagushair
• Judgment Date: 21 April 2020
• Neutral Citation: [2020] SGDC 102
• Court: District Court (Singapore)
• Docket Number: Originating Summons No 75 of 2019
• Published date: 08 October 2020
• Year: 2020
• Hearing Date: 23 August 2019,20 December 2019,20 March 2020
• Plaintiff Counsel: Narayanan Ramasamy, Shahira Anuar (Tan Kok Quan Partnership)
• Defendant Counsel: Willy Tay (Willy Tay's Chambers)
• Subject Matter: Insurance,Applicability of the rule in Richards v Cox,Scope of exception to the motor vehicle insurance policy excluding liability for death or bodily injuries of insured's employees where the claim is made against the insured's authorised driver,Declaratory relief,Whether the applicants had standing,Whether standing established by the insured's right of contribution against the authorised driver
• Citation: [2020] SGDC 102

District Judge Sheik Umar Bin Mohamed Bagushair:

The Applicants commenced DC/OS 75/2019 (“OS”) for a declaration that the Respondent’s (“AXA”) Commercial Vehicle Policy No. VCA/P1372757 (“Vehicle Policy”) was engaged in respect of the plaintiffs’ claims (“Claims”) brought in DC/DC 631/2016 and DC/DC 3039/2016 (“Suits”). The 1st Applicant (“AIG”) acknowledges that its Work Injury Compensation Policy No. 1000114190-WC (“WICA Policy”) was engaged in respect of the Claims, and so seeks a declaration that AIG and AXA are to each bear 50% of the plaintiffs’ damages, legal costs and reasonable disbursements ordered in the Suits.

The OS was initially only commenced by AIG but after AXA raised issues of standing, AIG sought the Court’s leave to add the 2nd Applicant (“VM”) as a co-applicant. I granted leave to do so. VM was the contracting party and the insured under the Vehicle Policy and the WICA Policy. The Suits were commenced by two of VM’s employees (“plaintiffs”) who were injured in an accident on 30 May 2014. At the time of the accident, the plaintiffs were passengers in a vehicle driven by Mr. Erh Sim Chua (“Mr. Erh”), who was at that time also an employee of VM and an authorised driver under the Vehicle Policy. One of the Suits was commenced against VM, Mr. Erh and the driver of the other vehicle involved in the accident together with that driver’s employer, whilst the other suit was commenced against VM and Mr. Erh, though VM has since added the other parties as third parties.

AXA argued that the Claims fell within an exception in the Vehicle Policy and therefore denied that the Vehicle Policy was engaged. AXA also argued against the applicability of Richards v Cox [1942] 2 All ER 624 (“Richards v Cox”), a decision followed in the Court of Appeal decision of China Insurance Co Ltd v Teh Lain Lee and anor [1974-1976] SLR(R) 820 (“China Insurance”). For the reasons set out at [11] to [19], I am unable to agree with AXA and I therefore find that the Vehicle Policy was engaged, in that AXA was liable to indemnify Mr. Erh for the Claims that he faces in the Suits.

AXA argued that even if the Vehicle Policy was engaged, AIG and VM did not have standing to seek a declaration that both AIG and AXA are to bear 50% of the plaintiffs’ damages, legal costs and reasonable disbursements ordered in the Suits. In essence, AXA’s argument was that since neither AIG nor VM had rights that they could personally enforce against AXA, they could not seek the declaration. I am also unable to agree with AXA’s argument, for the reasons set out at [22] to [40].

Background

On 30 May 2014, Mr. Erh was driving VM’s vehicle no. YM 207G and transporting several VM workers when it met with an accident with a vehicle driven by one Mr. Thangavel Muthusamy (“Mr. Muthusamy”). At that time, Mr. Muthusamy was an employee of Vikash International Pte Ltd (“Vikash”).

Amongst the injured were two of VM’s employees, namely, Mr. Topon Das Robilal Das and Mr. Annaiya Vijayathevar Balakrishnan (whom I will refer to collectively as the “plaintiffs”). Mr. Topon Das Robilal Das commenced DC/DC 631/2016 against Mr. Erh, VM, Mr. Muthusamy and Vikash. Mr. Annaiya Vijayathevar Balakrishnan commenced DC/DC 3096/2016 against Mr. Erh and VM, with Mr. Muthusamy and Vikash subsequently added as third parties by VM.

The Suits proceeded for trial on liability before District Judge Loo Ngan Chor. Interlocutory judgment was entered for both Suits in favour of the plaintiffs. For DC/DC 631/2016, interlocutory judgment was entered against all four defendants on a joint and several basis but as between the defendants, liability was in the proportion of 70% liability against Mr. Erh and VM, and 30% liability against Mr. Muthusamy and Vikash. For DC/DC 3039/2016, default interlocutory judgment had already been entered against Mr. Erh earlier for his failure to enter appearance, and at the trial, interlocutory judgment was also entered against VM.

At the time of the accident, VM’s WICA Policy and Vehicle Policy were in force. Mr. Erh was an authorised driver under the Vehicle Policy. AIG’s position was that both the WICA Policy and the Vehicle Policy were engaged. AXA denied that the Vehicle Policy was engaged.

The issues that I have to decide are as follows: Was the Vehicle Policy engaged in respect of the Claims made in the Suits? If yes, should I grant the declaration that both AIG and AXA are to equally bear the plaintiffs’ damages, legal costs and reasonable disbursements ordered in the Suits?

Was the Vehicle Policy engaged? Parties’ arguments

The Claims in the Suits are made by employees of VM. AXA argued that this meant that Exception (ii) to Section II of the Vehicle Policy (the “Exception”) applied. The Exception essentially provided that AXA would not indemnify VM where there is death or bodily injury to any person in VM’s employment arising out of and in the course of such employment. AIG and VM argued however that whilst the Exception applied in respect of any liability incurred by VM, it did not apply to liability incurred by Mr. Erh who had also been sued. AIG relied on Richards v Cox and China Insurance for the principle that AXA’s liability to indemnify Mr. Erh was separate from its liability to indemnify VM and the Exception did not apply since the plaintiffs in the Suits were not employees of Mr. Erh.

Decision

I first set out the relevant provisions of Section II of the Vehicle Policy and the Exception:

SECTION II – LIABILITY TO THIRD PARTIES

1. The Company [i.e., AXA] will subject to the Limits of Liability indemnify the Insured [i.e., VM] in the event of accident caused by or arising out of the use of the Motor Vehicle or in connection with the loading or unloading of the Motor Vehicle against all sums including claimant’s costs and expenses which the Insured shall become liability to pay in respect of (a) death or bodily injury to any person (b) damage to property 2. In terms of and subject to the limitations of and for the purposes of this Section the Company will indemnify any Authorised Driver who is driving the Motor Vehicle provided that such Authorised Driver (a) shall as though he were the Insured observe fulfill and be subject to the Terms of this Policy insofar as they can apply (b) is not entitled to indemnity under any other policy

…

Exceptions to Section II

The Company shall not be liable in respect of

… (ii) death of or bodily injured to any person in the employment of the Insured arising out of and in the course of such employment

Under Singapore law, the Exception does not apply to a claim made against the authorised driver who is the employee of the insured, even though the injured party is the insured’s employee and the Exception would otherwise apply if the claim had been made against the insured. This appears to be the holding in China Insurance. In that case, the deceased was the insured’s employee. The deceased died in a collision involving a lorry and another vehicle. The insured owned the lorry and the lorry was driven by another employee of the insured, who was an authorised driver under the insured’s motor vehicle policy (for convenience I will refer to him as the “authorised driver”). The deceased’s legal representative sued the drivers of the vehicles, including the authorised driver. The deceased’s legal representatives obtained judgment against the authorised driver that went unsatisfied. They therefore requested that the insurer of the insured’s motor vehicle policy satisfy the judgment. The policy had provisions which were exactly the same as those in the Vehicle Policy, in particular the Exception, as set out below (China Insurance at [6] and [7]): 6 Paragraph 2 of s II of the policy provides as follows:

In terms of and subject to the limitations of and for the purposes of this section the company will indemnify any Authorized Driver who is driving the Motor Vehicle provided that such Authorized Driver – (i) shall as though he were the Insured observe fulfill and be subject to the Terms of this Policy insofar as they can apply; (ii) is not entitled to indemnity under any other policy.

7 Clause (ii) under the heading “Exceptions to s II” provides as follows:

The company shall not be liable in respect of death of or bodily injury to any persons in the employment of the Insured arising out and in the course of such employment.

The insurer in China Insurance argued that since the claim was being brought by the insured’s employee who had died in the course of employment, the exception applied and the policy was not engaged. The Court of Appeal rejected this argument and held that the policy was engaged. Several passages from Richards v Cox were cited in support. The Court of Appeal accepted first that under the policy, the insurer’s liability to indemnify the authorised driver was a separate and distinct liability from its liability to indemnify the insured. The Court of Appeal also accepted that whilst the exception may have applied vis-à-vis the insurer’s liability to the insured, it did not apply to the insurer’s liability vis-à-vis the authorised driver since the deceased person was not the authorised driver’s employee (but was instead the insured’s employee).

In my view, China Insurance is on all fours with this case. The provisions at issue there are the same as the provisions here (as set out at [11] above). Notwithstanding this, AXA sought to persuade me not to follow China Insurance.

First, AXA argued that the clauses in Richards v Cox were different from the one here, as well as the one in China Insurance, and therefore Richards v Cox can be distinguished. In Richards v Cox the clause providing for the insurer’s liability to indemnify the authorised driver provided that the insurer “will treat as though he [the authorised driver] were the insured person…”...