Lonpac Insurance Bhd v American Home Assurance Co

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 30 November 2011
• Neutral Citation: [2011] SGHC 257
• Court: High Court (Singapore)
• Docket Number: OS 100 of 2011
• Year: 2011
• Published date: 25 January 2012
• Hearing Date: 28 July 2011
• Plaintiff Counsel: M Ramasamy and Nagaraja S Maniam (M Rama Law Corporation)
• Defendant Counsel: Hong Heng Leong and Sunita Carmet Netto (Ang & Partners) the defendant.
• Subject Matter: Contract,Contractual Terms,Admissibility of Evidence
• Citation: [2011] SGHC 257

Judith Prakash J: Introduction

The plaintiff (“Lonpac”) and the defendant (“AHA”) are insurance companies operating in Singapore. Both of them issued workmen’s compensation policies covering, inter alia, the liability of Rotary Engineering Ltd (“REL”) to compensate its employees who suffered work related injuries. The main question is whether there is double insurance so both Lonpac and AHA have to contribute to the compensation ordered to be paid to an injured worker. The answer to this question may, however, be dependent on whether extrinsic evidence can be admitted to help the court in the task of construing the policy issued by Lonpac.

REL is part of a corporate group known as the Rotary Group of Companies (“the Group”). Lonpac has, for a number of years, issued a workmen’s compensation policy to the Group. This policy (“the annual policy”) is issued on an annual basis and covers the calendar year. Among other things, it covers the liability of REL to its employees for work-related injuries. The annual policy has been issued in 2006, 2007 and 2008 (to specify only the material years) and if Lonpac is liable under the annual policy, its liability will arise in respect of the annual policy for the period 1 January 2008 to 31 December 2008. The wording of the annual policy in each year has been more or less identical.

AHA also issued a workmen’s compensation policy but only in respect of REL’s liability specifically and not in respect of that of other companies in the Group. This policy (“the project policy”) was issued on 3 March 2006 and was to be effective until 2 June 2008 plus a “maintenance period” of 12 months. The policy covered REL’s workmen’s compensation liability arising in connection with a specific project to construct petroleum storage and terminal facilities on Jurong Island (“the project”) in which REL was the main contractor employed by Universal Terminal (S) Pte Ltd (“UT”).

The accident and the claim

On 29 November 2008, one Ganesan a/l Subramaniam (“the claimant”), who was a crane and hoist operator employed by REL, was injured in an accident while working on the project. On 23 December 2008, the claimant applied to the Commissioner of Labour for compensation under the Work Injury Compensation Act (Cap 354).

Based on an initial assessment by the National University Hospital, the Ministry of Manpower (“MOM”) served a notice of assessment on AHA requiring it to pay the sum of $54,900 to the claimant. AHA objected to the notice of assessment on the basis that it was only liable to pay 50% of the sum, and that Lonpac was liable to pay the other 50% under the doctrine of double insurance.

Having heard arguments from both parties, on 19 January 2011, the Assistant Commissioner of Labour (“the Assistant Commissioner”) ordered Lonpac and AHA to each pay 50% of the compensation sum assessed by MOM to the claimant in full and final settlement of his claim. The Assistant Commissioner rejected Lonpac’s application to adduce oral and other evidence to show that the claimant was not covered by the annual policy. Lonpac was dissatisfied with this decision and therefore lodged an appeal by way of the present proceedings.

These proceedings

By the originating summons herein, Lonpac has applied for an order that the decision of the Assistant Commissioner made on 19 January 2011 (“the Decision”) ordering that Lonpac and AHA each pay the claimant the sum of $27,450 as compensation in Workmen’s Compensation Claim Case No 0825361E (LCH3) be set aside or revised. The originating summons also states that the following substantial questions of law have arisen in this matter viz: Whether the Assistant Commissioner had erred in disallowing the admission of extrinsic evidence; and Whether the Assistant Commissioner had erred in finding that Lonpac and AHA were each liable to pay $27,450 to the claimant.

As an aside, I understand that this dispute has not held up payment to the claimant and that he has in fact received the full amount due to him.

It was not disputed below and is not disputed before this court that: The claimant was an employee of REL working on the project when he was injured; The claimant was injured in the course of his employment with REL; The sum payable to the claimant was $54,900 as specified in the notice of assessment; and AHA is liable under the project policy to pay compensation to the claimant.

Discussion

An insurer has the right to claim contribution from another insurer in a case of double insurance i.e. the risk insured and the person insuring are the same (Poh Chu Chai, Principles of Insurance Law (LexisNexis, 6th ed., 2005 at p 1244). This appeal therefore hangs on whether the annual policy also covers the risk triggering the application of the project policy in this case ie the risk of injury to the claimant, as REL’s employee, in the course of the project (“the Risk”). Although the class of insured under the annual policy is wider than the insured under the project policy – the former being the Group as a whole whereas the latter is only REL – as far as the Risk is concerned, the person insuring is the same.

As stated above, the primary issue is whether the annual policy also covers the claimant’s claim, thereby triggering the doctrine of double insurance and rendering Lonpac liable to pay half of the compensation amount. This is a question of construction of the annual policy and the main dispute is whether extrinsic evidence can be admitted to aid the court in its task of construing the annual policy. The Assistant Commissioner treated the issue of construction as being separate from the issue of the adduction of oral evidence and both parties’ written submissions proceed on the same basis. It appears to me, however, that the second issue (ie, whether extrinsic evidence is admissible to construe the policies) is necessarily a subsidiary issue of the first (ie, the proper construction of the annual policy). If extrinsic evidence is admissible to construe the annual policy, it must be taken into account to reach a proper construction of the annual policy – it does not seem sensible to reach a conclusion on the proper construction of the annual policy before answering the question of whether extrinsic evidence is admissible to construe the annual policy.

As a starting point, a plain reading of the terms of the annual policy does suggest that it insures against the Risk. The annual policy is drafted very widely, in particular: The “Business/Profession” covered includes “Engineering Construction Works in the field of (1) Civil and Structural Works (2) Buildings (including piling works) (3) Electrical, Engineering & Scaffolding Works (4) Mechanical Piping and Related Works (5) Engineering, Construction, Installation, Consultants, Designers and Builders (6) Integrated Maintenance and Repair Services”; The “Place/Places of Employment” covered is defined as “At the above address [ie, 61 Jurong Island Highway, Singapore 627860] and anywhere in Singapore as governed by the Workmen’s Compensation Act” [emphasis added]; and The categories of employees for the purposes of calculating the Total Estimated Annual Earnings are (i) “Managers/Management Staff”; (ii) “Clerical Staff” and (iii) “all other employees” [emphasis added]. It should be noted that against each category of employee a figure was set out under the rubric “Estimated Annual Wages, Salaries and other Earnings”. These figures were as follows: On...