Intergraph Systems South East Asia Pte Ltd v Zhang Yiguang (suing by the committee and estate of his person, Tong Wen Li)

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 10 November 2004
• Neutral Citation: [2004] SGCA 52
• Docket Number: Civil Appeal No 52 of 2004
• Date: 10 November 2004
• Published date: 24 November 2004
• Year: 2004
• Plaintiff Counsel: Harish Kumar and Mark Yeo (Engelin Teh Practice LLC)
• Citation: [2004] SGCA 52
• Defendant Counsel: Doris Chia and Adeline Chong (Harry Elias Partnership)
• Court: Court of Appeal (Singapore)
• Subject Matter: Implied terms,Whether intention to confer benefits of insurance on employees to be equated with intention to create trust of insurance moneys for employees,Trusts,Whether terms of company's employee handbook impliedly incorporated into employment contract,Contractual terms,Whether evidence of intention of both parties to incorporate terms of company's employee handbook into employment contract existing,Company taking out insurance policies to benefit employees,Creation of trust,Contract,Company's employee handbook mentioning employee's insurance benefits,Whether employee of company contractually entitled to moneys paid under insurance policies taken out by company

10 November 2004

Woo Bih Li J (delivering the judgment of the court):

Introduction

1 The respondent, Zhang Yiguang (“Zhang”), is a Chinese national and a Singapore permanent resident. He was employed by the appellant, Intergraph Systems South East Asia Pte Ltd (“Intergraph”), as a GIS Application Specialist on 4 October 1999.

2 On 13 June 2002, whilst Zhang was on a business trip in Atlanta, United States of America (“USA”), he sustained a severe and permanent head injury in a motor accident. On being notified of Zhang’s accident, Intergraph immediately contacted his wife Mdm Tong Wen Li (“Mdm Tong”) and made arrangements to send her to Atlanta. Intergraph helped Mdm Tong obtain a visa to enter the USA and also took care of the initial expenses for her trip, which included business class return airfare, cash advances, accommodation, rental for furniture and other miscellaneous expenses. Intergraph also arranged for one of its junior employees, Ms Chua Hui Lyn (“Ms Chua”), to accompany Mdm Tong to Atlanta and assist with any administrative matters that might arise. Mdm Tong and Ms Chua left for Atlanta on 17 June 2002.

3 On 9 September 2002, Zhang was brought back to Singapore in a specially equipped carrier at a cost of $27,369.58. Intergraph bore the expenses incurred and subsequently received a partial indemnity of $5,000 under a travel insurance policy. Mdm Tong returned to Singapore at around the same time as her husband.

4 Prior to and during Zhang’s period of employment, Intergraph had maintained the following three group insurance policies with Insurance Corporation of Singapore Ltd whose obligations were taken over by Aviva Ltd (“Aviva”):

(a) The Group Term Life Insurance Policy (“the Life Policy”);

(b) The Group Personal Accident Insurance Policy (“the Accident Policy”); and

(c) The Group Hospital & Surgical Insurance Policy (“the Hospital Policy”).

5 Intergraph paid for all the premiums due under the policies and was the named assured therein. Under the terms of the policies, Aviva became liable to pay Intergraph certain sums of money upon the occurrence of any of the prescribed events to any one of Intergraph’s employees. In respect of Zhang’s accident, Intergraph eventually received a total of $468,089.50 from Aviva. The breakdown of payments received under each policy is as follows:

(a) $186,912 under the Life Policy based on the last drawn salary of Zhang at $5,192 multiplied by 36 months;

(b) $280,368 under the Accident Policy based on 150% of the said sum of $186,912; and

(c) $809.50 under the Hospital Policy in respect of medical expenses incurred in Singapore.

6 In the meantime, Intergraph had kept Zhang on its payroll for 12 months from the date of the accident pending payment by Aviva which came later. Consequently, Intergraph paid $73,152.98 for Zhang’s salary, contributions to the Central Provident Fund and transport allowance for this 12-month period.

7 After receiving payment from Aviva, Intergraph made an offer to Mdm Tong to pay her $373,824, which was 80% of the $467,280 it had received from Aviva. This offer was not accepted. Mdm Tong was appointed the committee of the person and estate of Zhang and, in that capacity, she commenced the present action for payment of the entire $467,280 as well as to claim the $5,000 which Intergraph had received under the travel insurance policy issued by another insurer.

8 Zhang’s claim was on the basis that he was contractually entitled to the insurance moneys. Alternatively, Zhang’s claim of entitlement was on the basis that a trust had been constituted in his favour and Intergraph held the insurance moneys as trustee for him. Intergraph disputed Zhang’s claim on the basis that it was entitled to the insurance moneys as the party contracting with the insurers and it was entitled to decide what to do with the insurance money. Intergraph also made a counterclaim on the basis that if Zhang were entitled to the insurance money, Intergraph was entitled to set-off various expenses it had incurred on account of the accident and would be liable to pay only the balance thereof to Zhang. Intergraph’s counterclaim was resisted by Zhang on the basis of estoppel as well as on the basis that the expenses for which a deduction was sought by Intergraph were unreasonable, unfair and unconscionable.

9 In the hearing before the High Court, Zhang was successful in his claim for the $467,280 but not for the $5,000 (see [2004] 3 SLR 360). Intergraph consequently appealed against the decision of the judge except for his decision on the $5,000. There was no appeal by Zhang. After hearing arguments, we allowed Intergraph’s appeal on the main point in that Intergraph was entitled to the insurance money and could decide what to do with it. Consequently, Intergraph’s appeal on its counterclaim became academic and we made no order on it.

10 We should, however, mention that although Intergraph’s notice of appeal extended to the whole of the decision below save for the $5,000. Intergraph did not pursue its position in respect of the $809.50 received under the Hospital Policy. Thus, although Intergraph’s Case initially referred to the insurance moneys paid by Aviva on the three policies, para 6 of its Case stated that its appeal was in relation to Zhang’s claim to the insurance money under the Life Policy and the Accident Policy, and Intergraph’s counterclaim to be entitled to deduct various sums for expenses paid by Intergraph. Likewise, in the conclusion of Intergraph’s Case at para 195, it was submitted, inter alia, that Zhang was not entitled “to the insurance proceeds of the Life Policy and Accident Policy”. Consequently, para 1.1 of Zhang’s Case in response noted that “[t]he subject matter of the Appellants’ appeal is the insurance proceeds received by them from two (2) group insurance policies”. Intergraph’s subsequent Skeletal Arguments also mentioned the Life Policy and the Accident Policy as being the material ones, without mentioning the Hospital Policy. In oral submissions, there was also no mention about its position on the Hospital Policy specifically.

11 It seemed to us that Intergraph had intended to abandon its appeal in respect of the relatively small sum of $809.50 received under the Hospital Policy. If so, Intergraph should have stated this specifically to avoid any misunderstanding. In any event, Intergraph did not pursue its position in respect of the Hospital Policy in its Case or Skeletal Arguments, or in its oral submissions, and Zhang did not have an opportunity to respond thereto. Accordingly, even if Intergraph had not intended to abandon its appeal in respect of the Hospital Policy, it was deemed to have done so. Accordingly, our order in allowing Intergraph’s appeal extends only to the insurance moneys received under the Life Policy and the Accident Policy. Consequently, Zhang is entitled to the $809.50 received under the Hospital Policy.

12 In the circumstances, it is not necessary for us to deal with the Hospital Policy in our reasons which are set out below.

The contractual entitlement argument

13 Zhang’s contractual claim to the insurance moneys was premised on two documents:

(a) his Employment Contract dated 4 October 1999; and

(b) Intergraph’s Employee Handbook (“the Handbook”) which had been on Intergraph’s website even before the date of Zhang’s Employment Contract.

14 Clause 11 of the Employment Contract stated:

(11) Medical BenefitsAdmission for Employee to the Company’s non-contributory medical, dental and hospital scheme. Dental benefits apply after 6 (six) months employment.

15 The foreword of the Handbook stated that the purpose of the handbook was, inter alia, to provide every employee a written statement of “their rights and obligations”.

16 Clause 7.3 of the Handbook stated:

7.3 Insurance

All employees are entitled to the benefits of insurance protection under the following schemes at the Company’s cost. Employees based in Singapore, Myanmar and Vietnam are covered by (the Insurance Corporation of Singapore). For employees based in Malaysia, Indonesia and Philippines, please contact your local office administrator for details of your insurance coverage.

7.3.1 Medical Insurance

A non-contributory medical scheme will be provided to employees starting from the commencement date of employment. The scheme covers clinical visit, hospitalization and surgical expenses.

Health care coverages extend to the end of the month in which an employee terminates.

7.3.2 Group Life Insurance

A sum of four (4) times the annual salary in the case of expatriate staff, or three (3) times annual salary in the case of local staff is granted to the member at the date of death.

7.3.3 Employees’ Compensation Insurance

Employees who suffer injury by accident arising out of and in the course of the Company’s employment will be entitled to compensation according to the provisions of the Employee Compensation Ordinance.

For full details of the insurance coverage for Singapore, Myanmar and Vietnam, please see Appendix 3.

[emphasis added]

17 It was common ground that Appendix 3 contained the Life Policy and the Accident Policy. It was also common ground that the Employment Contract did not expressly incorporate the terms of the Handbook. Although Zhang did rely on implied incorporation as well, the judge below concluded that...