Cosmic Insurance Corp Ltd v United Oil Co Pte Ltd

• Jurisdiction: Singapore
• Judge: Woo Bih Li J
• Judgment Date: 25 May 2006
• Neutral Citation: [2006] SGHC 85
• Date: 25 May 2006
• Subject Matter: Whether hospital expenses amounting to "compensation" within Act,Employment Law,Whether insurer entitled to indemnity for hospital expenses under s 18(b) of Act,Section 18(b) Workmen's Compensation Act (Cap 354, 1998 Rev Ed),Payment by employer's insurer of hospital expenses incurred in relation to injuries sustained by workman in the course of work
• Docket Number: District Court Appeal No 34 of
• Published date: 20 June 2006
• Defendant Counsel: Michael Eu Hai Meng (ComLaw LLC)
• Court: High Court (Singapore)
• Plaintiff Counsel: K Anparasan and Nadia Almenoar (KhattarWong)

25 May 2006

Woo Bih Li J:

Background

1 I will use the background facts relied upon by the district judge below as a guide for setting out the background to the appeal before me.

2 The plaintiff, Cosmic Insurance Corporation Limited (“Cosmic”), was at all material times an insurance company carrying on the business of general insurance in Singapore. The defendant, United Oil Company Pte Ltd (“United Oil”), was a company carrying on the business of storing and blending oils, additives and lubricants and had a factory located at 14 Tuas Drive 2, Singapore (“the factory”).

3 Protec Guards Management Services (“Protec”) was in the business of providing security guards, escort services and other general security services on commercial, industrial and private premises. Since August 1999, Protec had been providing United Oil with a security guard at the factory. Amongst other duties, this security guard, who was under the employment of Protec, maintained general security at the factory.

4 As an employer, Protec took out workmen’s compensation insurance policies with Cosmic for its employees, as required under s 23(1) of the Workmen’s Compensation Act (Cap 354, 1998 Rev Ed) (“the WCA”). The relevant insurance policy was Workmen’s Compensation Policy No PWC000-00001962 (“the policy”), which Cosmic issued on 27 July 2000. The policy was valid for the period between 19 July 2000 and 18 July 2001 and insured Protec against any liability that Protec might incur under the WCA. Both Cosmic and United Oil accepted that this policy was an “approved policy” for the purpose of s 23 of the WCA.

5 According to Protec’s general manager, one Mr Naushad Ali s/o Jabarulla Khan (“Naushad”), sometime on 2 November 2000, Protec’s regular security guard at the factory was not available for security duties. As a consequence, Protec despatched another of their employees, one Samuel Palraj (“Samuel”), to cover such security duties at the factory. Samuel had commenced employment with Protec only on 28 October 2000. It was not disputed that this was the first time that Samuel had been deployed to the factory and was unfamiliar with the premises.

6 Unfortunately, on the very same afternoon, Samuel met with an accident at the factory (“the accident”). According to a Ministry of Manpower investigation report filed after the accident, one Tan Ah Tee, a forklift driver employed by United Oil, had collided into Samuel as he was driving a forklift around the factory loading and unloading goods in the loading and unloading bay area of the factory. As a result of the accident, Samuel’s left arm was broken, and his right leg was amputated. He is now wheelchair bound, and continues to suffer the adverse effects of the accident.

7 Shortly after Samuel was injured on 2 November 2000, he was brought to the National University Hospital (“NUH”) for immediate treatment. At the request of NUH, Protec provided an indemnity to NUH for payment of Samuel’s hospital expenses. Naushad clarified that he informally consulted Protec’s insurance brokers, Bess General Insurance Agency (“Bess General Insurance”), of NUH’s request and was informed that the providence of such an indemnity was acceptable, given that Protec was covered by insurance. Protec went on to provide the indemnity and thereafter paid Samuel’s hospital bills as and when NUH sent such bills to Protec.

8 Consequently, sometime in 2000 or 2001, Protec made various claims against Cosmic under the policy for some of the hospital expenses paid by them on behalf of Samuel. Those claims came up to around $48,000.00. After assessing them, Cosmic reimbursed Protec, through Bess General Insurance, an amount of $44,215.45. Naushad explained that Protec did not claim reimbursement for all of Samuel’s hospital expenses because he was informed that Cosmic was going through some financial difficulties at that particular time, and hence it would be difficult to get full reimbursement from it. Hence, Protec only claimed the substantial amounts. The $44,215.45 eventually paid out by Cosmic comprised:

(a) the sum of $25,473.32 paid by Cosmic to Protec on 25 April 2001, being medical expenses incurred by Samuel on 2 November 2000; and

(b) the sum of $18,742.13 paid by Cosmic to Protec on 25 July 2001, being medical expenses incurred by Samuel on 2 November 2000.

9 On 18 March 2004, Cosmic commenced action against United Oil claiming the above two sums amounting to $44,215.45, as well as an amount of $3,578.00 being adjuster’s fees under s 18(b) of the WCA.

10 The district judge below dismissed Cosmic’s claim. Cosmic then appealed but, in its appeal, it dropped the claim for the adjuster’s fees. Cosmic’s appeal for an indemnity for the hospital expenses raised the issue as to whether the hospital expenses constituted compensation under the WCA and hence claimable under s 18(b). Sections 18(a) and 18(b) of the WCA state:

Where any injury for which compensation is payable under this Act was caused under circumstances creating a legal liability in some person other than the employer to pay damages in respect thereof –

(a) the workman may take proceedings against that person to recover damages and may claim against any person liable to pay compensation under this Act, but he shall not be entitled to recover both damages and compensation; and

(b) if the workman has recovered compensation under the Act, the person by whom the compensation was paid, and any person who has been called upon to pay an indemnity under section 17 (3), shall be entitled to be indemnified by the person so liable to pay damages as aforesaid.

11 It was undisputed that Samuel had not recovered any compensation under the WCA and instead had claimed damages against United Oil. As for s 17(3) of the WCA, it was not relevant.

The court’s reasons and conclusion

12 Section 18(a) allows a workman to initiate proceedings to claim damages under the common law and to claim compensation under the WCA, but not to recover both damages and compensation. In Singapore Bus Service Ltd v Lim Swee Pheng & Sons (Pte) Ltd [1978–1979] SLR 225 (“Lim Swee Pheng”), Buang bin Abdullah (“Buang”) was a lorry driver who was trying to repair his lorry after it had broken down. He was underneath the lorry when the defendant’s bus collided into the lorry, causing the lorry to lurch forward and run over him. Buang died from his injuries leaving behind two sons who had not been dependent on him. The insurers paid compensation under the WCA and claimed an indemnity from the defendant under s 18(b). The defendant’s main contention was that the indemnity was limited to the amount which the workman or his dependants could have recovered in a claim for damages. The Court of Appeal disagreed that it was so limited. In reaching this conclusion, Wee Chong Jin CJ also said that the object of s 18(a) was to prevent the enforcement of the double remedy and recovery of both damages and compensation.

13 Apparently, Samuel had not claimed the hospital expenses in his common law action against United Oil. Accordingly, if Cosmic was indemnified for what it had paid out for such expenses, there would be no double recovery or double payment in that United Oil would not have paid twice for the same head of claim. However, since a workman is not entitled under s 18(a) to recover both damages and compensation, I was of the view that this means that when, for example, he has recovered damages under his common law claim, he cannot recover compensation under another head of claim which was omitted from his common law claim. In other words, all the heads of claim must be included in his common law claim and not some under the common law claim and some under a claim for compensation. A fortiori, an insurer like Cosmic cannot recover under s 18(b) when the workman did not recover compensation under the WCA. This is reinforced by the first limb of s 18(b) which states “if the workman has recovered compensation under this Act”.

14 Cosmic sought to rely on what Wee CJ said in Lim Swee Pheng to the effect that s 18(b) provides that the wrongdoer should not escape the consequences of his wrongful act. However the reference to what Wee CJ said was taken out of context. What Wee CJ said at 229, [7] in respect of s 18(b) was:

Where the workman or his dependants elect to claim and recover compensation under the Act when his injury was caused by the wrongful act, of a ‘stranger’, s 18(b) provides that the wrongdoer should not escape the consequences of his wrongful act by giving the workman’s employer an entitlement to be indemnified by the wrongdoer in respect of the compensation which he has paid. [emphasis added]

It seemed to me that Lim Swee Pheng was therefore an authority against, and not in favour of, Cosmic’s position on the general scheme of the WCA.

15 Nevertheless, Cosmic pursued its...