Huationg (Asia) Pte Ltd v Lonpac Insurance Bhd

• Jurisdiction: Singapore
• Judge: George Wei J
• Judgment Date: 23 December 2015
• Neutral Citation: [2015] SGHC 326
• Date: 23 December 2015
• Docket Number: District Court Appeal No 8 of 2015
• Published date: 29 December 2015
• Plaintiff Counsel: Teo Weng Kie and Loh Ling Wei (Tan Kok Quan Partnership)
• Hearing Date: 25 September 2015
• Defendant Counsel: Raymond Wong and John Lo Ying Xi (Wong Thomas & Leong)
• Court: High Court (Singapore)
• Subject Matter: Contract,Contractual terms,Employer's,Liability insurance,Insurance

George Wei J:

This is an appeal against the decision of the learned District Judge (“the DJ”) to allow an insurer’s claim against an employer for the reimbursement of a sum of $140,000 which the insurer had paid in respect of a Work Injury Compensation Insurance Policy.

Background Parties

Lonpac Insurance Bhd (“the Respondent”) is a Malaysia-incorporated company and carries on, in Singapore, the business of insurance as authorised by the Monetary Authority of Singapore in accordance with the Insurance Act (Cap 142, 2002 Rev Ed).

Huationg (Asia) Pte Ltd (“the Appellant”) is a Singapore-incorporated company and carries on the business of, inter alia, supplying cranes and operators of such cranes for use in the construction industry.

From 22 August 2010 to 21 August 2011, the Appellant maintained a Work Injury Compensation Insurance policy with the Respondent (“the Policy”) in accordance with s 23 of the Work Injury Compensation Act (Cap 354, 2009 Rev Ed) (“the Act”). For ease of narration, I will refer to the regime established by the Act, including the relevant subsidiary legislation, as the “WICA Regime”. Under the Policy, the Respondent agreed to indemnify the Appellant against all liabilities that the Appellant might incur under the Act in respect of any injury suffered by, inter alia, the Appellant’s employees as a result of any accident arising out of and in the course of his employment.

Under s 23(1) of the Act, the employer is obligated to insure and maintain insurance under an approved policy with an insurer against all liabilities which he may incur under the Act in respect of any employee employed by him. An “approved policy” is defined in s 23(4) as a policy of insurance not subject to any conditions, exclusions or exceptions prohibited by regulations made under the Act. I note in passing that the reference to “exclusions” was added in 2012. I also note that an employer who fails to maintain an approved policy is guilty of an offence under s 35(1)(b).

Circumstances leading up to the Suit

The following facts are undisputed. The Appellant was the employer of Tan Thian Kok (“the Deceased Employee”) who had been deployed as a crane and hoist operator at a work site at Halifax Road.

On 26 June 2011, the Deceased Employee’s deployment began at 8pm and was scheduled to end at 8am the following day. During the deployment, the Deceased Employee sought and was granted permission to leave the worksite on his motorcycle to purchase food. There was no canteen or food available at the work site. While travelling on his motorcycle, the Deceased Employee met with a fatal road traffic accident in the early hours of 27 June 2011 (“the Accident”).

On or about 31 October 2011, the Commissioner of Labour (“the Commissioner”), in the exercise of his power under s 24 of the Act, assessed the amount of compensation payable to the dependants or the estate of the Deceased Employee to be $140,000 (“the Assessed Compensation”). Thereafter, a Notice of Assessment of Compensation (“the Notice of Assessment”) was served on both the Appellant and Respondent.

On 11 November 2011, the Respondent lodged an objection to the Notice of Assessment. Consequently, the Commissioner directed parties to attend pre-hearing conferences which were conducted by an Assistant Commissioner.

During the pre-hearing conferences, the Respondent, through its representatives, averred that it was not liable to pay the Assessed Compensation by virtue of an exception (“the Motorcycling Exception”) found under the “Travelling To & From Work Extension (Within Singapore Only)” extension clause (“the Travelling Extension”) within the Policy Schedule. The Travelling Extension reads as follows:

TRAVELING TO & FROM WORK EXTENSION (WITHIN SINGAPORE ONLY)

IT IS HEREBY DECLARED AND AGREED THAT THIS INSURANCE SHALL ONLY APPLY TO AN EVENT HAPPENING TO A WORKMAN ARISING OUT OF AND IN THE COURSE OF EMPLOYMENT BY THE [APPELLANT].

THE FOLLOWING EVENTS SHALL ALSO BE DEEMED TO BE ARISING OUT OF AND IN THE COURSE OF HIS EMPLOYMENT WHEN OCCURRING WHILST THE WORKMAN ON ANY WORKING DAY :–

(1) IS TRAVELLING DIRECTLY BETWEEN HIS PLACE OF RESIDENCE AND PLACE OF EMPLOYMENT AND ANY OTHER PLACE FOR THE PURPOSE OF HIS EMPLOYMENT AND VICE VERSA (2) IS HAVING A MEAL BREAK

PROVIDED THAT :–

A) ANY SUCH EVENT GIVING RISE TO A CLAIM UNDER THIS POLICY IS NOT INCURRED DURING OR AFTER ANY SUBSTANTIAL INTERRUPTION OR DEVIATION FROM THE JOURNEY MADE FOR A REASON UNCONNECTED WITH HIS EMPLOYMENT WHICH WOULD ORDINARILY HAVE MATERIALLY ADDED TO THE RISK OF INJURY B) THE INSURED BENEFITS SHALL BE ASSESSED IN ACCORDANCE WITH THE ACT BUT ALWAYS LIMITED TO S$10,000.00 PER WORKMAN IN RESPECT OF DEATH, PERMANENT INCAPACITY AND MEDICAL EXPENSES (EXCLUDE INDEMNITY FOR WAGES).

NOTWITHSTANDING THE ABOVE, THE [RESPONDENT] WILL NOT INDEMNIFY THE WORKMEN INSURED UNDER THE POLICY FOR ANY INJURY ARISING OUT OF OR IN CONNECTION WITH MOTORCYCLING OR PILLION RIDING OR ANY FORMS OF TWO WHEELER TRANSPORT.

SUBJECT OTHERWISE TO THE TERMS, CONDITIONS AND EXCEPTIONS OF THE POLICY.

[emphasis added in bold italics]

The Respondent took the view that the Motorcycling Exception (highlighted in bold italics above) excluded its liability under the Policy from any injury arising out of or in connection with motorcycling. On that basis, the Respondent contended that it was not liable to pay the Assessed Compensation since the Deceased Employee had been travelling on his motorcycle when he met with the Accident.

On 19 March 2012, at the third pre-hearing conference, the Assistant Commissioner indicated that the Respondent was compellable under the Act to pay the Assessed Compensation to the dependants of the Deceased Employee. In those circumstances, and in order to save costs, the Respondent consented at the third pre-hearing conference to pay the Assessed Compensation.

A Certificate of Order was made on 21 March 2012 on the following terms:

By consent, without admission of any liability, and without prejudice to any recourse which [the Respondent] may have against [the Appellant] in civil proceedings, [the Respondent] to pay … the [Assessed Compensation]…

On 9 April 2012, the Respondent paid to the Commissioner the Assessed Compensation in accordance with the said Certificate of Order. It is not disputed that the Respondent’s payment sufficiently discharged the Appellant’s liability to pay the Assessed Compensation to the dependants of the Deceased Employee.

The Suit

On 3 August 2012, the Respondent brought an action against the Appellant for reimbursement for the sum of $140,000 which they had paid as the Assessed Compensation (“the Suit”). The Respondent’s case was that it was not contractually obliged to pay the compensation but did so by virtue of legislation. Therefore, the Respondent claimed to be entitled to a reimbursement by the Appellant under the Policy.

The Appellant resisted the claim on the basis that the Motorcycling Exception was only applicable to cases that fell within the Travelling Extension and was not of general application to all cases that would be covered by the Policy independent of the Travelling Extension. Since it was conceded that the Accident clearly “arose out of and in the course of employment”, it fell outside of the Travelling Extension and the Motorcycling Exception was consequently inapplicable. Further and in the alternative, the Appellant claimed that the Motorcycling Exception was prohibited by law, viz, reg 2(1) of the regulations made under the Act (“the WICA Regulations”). For these reasons, the Appellant contended that the Respondent had no right of recovery against the Appellant.

As mentioned earlier, the DJ rendered his judgment in favour of the Respondent in the sum of $140,000. The DJ’s key findings are summarised below: The Motorcycling Exception was not prohibited by reg 2(1) of the WICA Regulations. The Motorcycling Exception applied to incidents that were covered by the entire Policy, not only those that were covered by the Travelling Extension. The Respondent had paid the Assessed Compensation as it was legally compellable to do so and in doing so, the Respondent had discharged the Appellant’s liability under the Act. The Respondent was entitled to recover the sum it had paid as the Assessed Compensation as it is a contractual term that the Appellant shall repay to the Respondent all sums paid by the Respondent which the Respondent would not have been liable to pay but for the legislation (“the Avoidance and Recovery Clause”).

Where necessary, I will discuss the DJ’s findings in greater detail.

Issues arising in this appeal

The appeal turns largely on a construction of two clauses, namely: (1) the Motorcycling Exception that is found within the Travelling Extension; and (2) the Avoidance and Recovery Clause. The Appellant’s arguments on appeal may be broadly characterised as follows: First, the DJ erred in construing the Motorcycling Exception as being of general application to all cases that would be covered by the Policy. Second, the Respondent was not entitled to rely on the Avoidance and Recovery Clause in the Policy.

The crux of the matter is whether the DJ was correct in determining that the Respondent was entitled, under the Policy and in these circumstances, to recover what it had paid out to the estate of the Deceased Employee. With this in mind, I turn now to the legal issues engaged by this appeal.

Analysis and decision The legal and regulatory backdrop

The employer’s liability for compensation under the Act is set out in s 3 of the same. The relevant portions of s 3 read as follows:

Employer’s liability for compensation

3.—(1) If in any employment personal injury by accident arising out of and in the course of the employment is caused to an employee, his employer shall be liable to pay compensation in accordance...