Lim Keenly Builders Pte Ltd v Tokio Marine Insurance Singapore Ltd

• Jurisdiction: Singapore
• Judgment Date: 30 June 2011
• Date: 30 June 2011
• Docket Number: Civil Appeal No 87 of 2010
• Court: Court of Appeal (Singapore)

Lim Keenly Builders Pte Ltd

Plaintiff

and

Tokio Marine Insurance Singapore Ltd

Defendant

[2011] SGCA 31

Chao Hick Tin JA

,

Andrew Phang Boon Leong JA

and

VK Rajah JA

Civil Appeal No 87 of 2010

Court of Appeal

Contract—Contractual terms—Rules of construction—Main contractor sued by employee of subcontractor for injury suffered while working on project worksite—Whether workmen's compensation policy applied to require insurer to indemnify main contractor in respect of liability to subcontractor's employee

Insurance—Liability insurance—Workmen's compensation policy—Main contractor sued by employee of subcontractor for injury suffered while working on project worksite—Whether workmen's compensation policy applied to require insurer to indemnify main contractor in respect of liability to subcontractor's employee

The appellant was the main contractor for a construction project (‘the Project’) . In respect of the Project, the appellant contracted two insurance policies with therespondent insurer, viz, a Workmen's Compensation Policy No DWCP 07 S 001548 (‘the WC Policy’) and a Contractors' All Risks Policy No DGCR 07 S 004322 (‘the CAR Policy’) , respectively. The appellant was sued by a workman (‘the Plaintiff’) who had been seriously injured while working at the Project worksite. The Plaintiff was employed not by the appellant but by one of the appellant's subcontractors. The appellant then brought third party proceedings against the respondent, claiming an indemnity under the WC Policy and/or the CAR Policy, although they abandoned their reliance on the CAR Policy at trial and relied solely on the WC Policy. The Plaintiff and the appellant reached a settlement on the first day of trial, and the trial then proceeded solely in respect of the appellant's claim against the respondent. Parties' arguments centred on the interpretation of the operative clause (‘the Operative Clause’) as well as other features of the WC Policy.

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 respondent would ‘indemnify the Insured against all sums for which the Insured shall be liable to pay compensation under the Legislation or at Common Law ...’, whilst ‘ [T] he Insured’ was defined in the ‘Name of Insured’ clause as: ‘Lim Keenly Builders Pte Ltd [the appellant] [and] /or their sub-contractors of all tiers and level [sic] as contractor [and] /or M/s Kim Teck Leong (Pte) Ltd [and] /or the Land Transport Authority as principals for their respective rights and interests’. The appellant took the position that the WC Policy covered not only the liability of each contractor towards its own employees, but also liability incurred by one contractor to the employees of any other contractor within the class of insured defined in the WC Policy. The respondent, on the other hand, took the position that the WC Policy only covered the liability of each contractor to its own employees, and that it therefore did not apply to this case because the Plaintiff had sued the appellant instead of the subcontractor who was his employer. The trial judge dismissed the appellant's claim.

Held, allowing the appeal:

(1) A plain reading of the Operative Clause supported the appellant's construction. The interpretation of the Operative Clause depended on the definition of ‘the Insured’ referred to in the clause. ‘ [T] he Insured’ referred to in the Operative Clause was defined in the ‘Name of Insured’ clause, a plain reading of which showed that all the contractors involved in the Project were to be treated as a single entity for the purposes of the WC Policy: at [36] to [38].

(2) Furthermore, this plain reading of the Operative Clause fully accorded with the commercial purpose of the WC Policy. It was undisputed that the appellant was required to arrange for all the necessary insurance policies pertaining to the Project, and that this arrangement was in line with common industry practice. In this context, and especially given the interaction between the WC Policy and the CAR Policy, it was strange to imagine that the parties intended the application of the WC Policy to depend on so technical a distinction as whether the injured Plaintiff chose to sue the appellant or Utracon: at [39] to [42].

(3) The other specific features of the WC Policy did not detract from this plain reading of the Operative Clause: at [49]to [56].

[Observation: If the meaning of a clause was clear from the language of the clause itself, having regard to the context of the contract, it was unnecessary to canvass arguments pertaining to other specific features of the contract to ‘aid’ the interpretation of this clause, except where these specific arguments might demonstrate that the meaning of the clause was not so clear as it appeared at first blush: at [28].]

Awang bin Dollah v Shun Shing Construction & Engineering Co Ltd [1997] 2 SLR (R) 746; [1997] 3 SLR 677 (distd)

General Accident Fire and Life Assurance Corp Ltd v Midland Bank Ltd [1940] 2 KB 388 (refd)

New India Assurance Co Ltd, The v Dewi Estates Ltd [2009] HKCU 1403 (refd)

Tay Eng Chuan v Ace Insurance Ltd [2008] 4 SLR (R) 95; [2008] 4 SLR 95 (refd)

Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR (R) 1029; [2008] 3 SLR 1029 (refd)

Evidence Act (Cap 97, 1997 Rev Ed) s 95

Workmen's Compensation Act (Cap 354, 1998 Rev Ed) s 17

Work Injury Compensation Act (Cap 354, 2009 Rev Ed) s 17

Adrian Tan, Ong Pei Ching, Joseph Yeo Zhu Quan and Aziah Hussin (Drew&Napier LLC) and Boo Moh Cheh (Kurup&Boo) for the appellant

Richard Kuek Chong Yeow and Adrian Aw Hon Wei (Gurbani&Co) for the respondent.

Judgment reserved.

Andrew Phang Boon Leong JA

(delivering the judgment of the court) :

Introduction

1 This is an appeal against the decision of the High Court judge (‘the Judge’) who had dismissed the appellant's claim for an indemnity from the respondent insurance company under a Workmen's Compensation Policy (see Mohammed Shahid Late Mahabubur Rahman v Lim Keenly Builders Pte Ltd [2010] 3 SLR 1021 (‘the Judgment’) ) .

2 The issues that arise in this appeal are deceptively simple and centre, in the main, on the concept of construction of the contract between the parties. However, as we shall see, the principal difficulty lies in determining the scope of applicationof the insurance policy concerned.

Factual background

The parties

3 Lim Keenly Builders Pte Ltd (‘the Appellant’) was the main contractor for the design and erection of an industrial building at Tuas South Avenue 3/Tuas Bay Drive (‘the Project’) . In respect of this Project, the Appellant contracted two policies with Tokio Marine Insurance Singapore Ltd (‘the Respondent’) on 4 May 2007: a Workmen's Compensation Policy No DWCP 07 S 001548 (‘the WC Policy’) and a Contractors' All Risks Policy No DGCR 07 S 004322 (‘the CAR Policy’) .

4 The Appellant was sued by a workman (‘the Plaintiff’) who had been seriously injured on 5 November 2007 while working at the Project worksite. He had at the time been employed by Utracon Structural System Pte Ltd (‘Utracon’) , to which the Appellant had subcontracted post-tensioning works. The Plaintiff alleged that the Appellant had breached various statutory duties as well as its common law duty as occupier of the premises on which the Plaintiff had been injured.

5 The Appellant then brought third party proceedings against the Respondent for an indemnity under the WC Policy and/or the CAR Policy.

6 The Plaintiff and the Appellant reached a settlement on the first day of trial and interlocutory judgment was entered for 95% of the Plaintiff's damages, to be assessed. The trial thus proceeded solely in respect of the Appellant's claim against the Respondent for an indemnity. At trial, the Appellant abandoned its claim based on the CAR Policy, relying solely on the WC Policy.

The WC Policy

How the policy was concluded

7 The WC Policy and CAR Policy were simultaneously arranged and paid for by the Appellant through its insurance brokers, HSBC Insurance Brokers (Singapore) Pte Ltd. This was in line with the main contract for the Project, which required the Appellant to arrange for all necessary insurance policies before the work on the Project could commence, as well as with common industry practice whereby the main contractor typically arranges and pays for both the Contractor's All Risks Policy and Workmen's Compensation policies, for itself as well as on behalf of all its subcontractors. Accordingly, the letter from the Appellant awarding the subcontract to Utracon directed Utracon to ‘note that the Main Contractor [the Appellant] will be arranging for the Contractors' All Risks Insurance and Workmen's Compensation Insurance for the whole of the Works’ [emphasis added] .

8 As alluded to above (at [7]) , the Appellant arranged for these policies through HSBC Insurance Brokers (Singapore) Pte Ltd, specifically its agent, Mr Lye Meng Swee (‘Mr Lye’) . According to the Respondent's claims manager, Ms Swee Sow Chin (‘Ms Swee’) , the industry practice is that when a would-be insured is represented by an insurance broker, the insurance broker is the intermediary between the would-be insured and insurer. Ms Swee also gave evidence that brokers, as insurance professionals, would ‘have a good understanding of the scope of coverage of the policy as well as the policy terms and conditions and would be able to advise the main contractor and the other insureds under the policy accordingly’. This should be borne in mind given that, in the court below, Mr Lye testified that he had understood the scope of the W Cpolicy to be consistent with the construction put forward by the Appellant.

9 Following some e-mail...