Mohammed Shahid Late Mahabubur Rahman v Lim Keenly Builders Pte Ltd (Tokio Marine Insurance Singapore Ltd, third party)

• Jurisdiction: Singapore
• Judge: Steven Chong JC
• Judgment Date: 07 May 2010
• Neutral Citation: [2010] SGHC 142
• Plaintiff Counsel: Namasivayam Srinivasan (Hoh Law Corporation)
• Date: 07 May 2010
• Docket Number: Suit No 305 of 2009
• Hearing Date: 08 April 2010,05 April 2010,06 April 2010
• Subject Matter: Insurance,Contract
• Published date: 14 May 2010
• Citation: [2010] SGHC 142
• Defendant Counsel: Boo Moh Cheh (Kurup & Boo),Richard Kuek and Adrian Aw (Gurbani & Co)
• Court: High Court (Singapore)
• Year: 2010

Steven Chong JC: Introduction

The provision of insurance to cover workmen for claims against injuries and death in the course of their employment is a common feature of the construction industry. In fact, it is statutorily embodied in s 23(1) of the Workmen’s Compensation Act (Cap 354, 1998 Rev Ed) (“the Act”) (now s 23(1) of the Work Injury Compensation Act (Cap 354, 2009 Rev Ed)). The principal purpose of the insurance is to ensure that employers provide adequate cover for claims by workmen under the Act. Main contractors and sub-contractors, as employers, typically arrange insurance policies that they believe comprehensively cover all eventualities arising from injuries by such workmen. It is also not uncommon for the main contractor to arrange insurance policies to cover the workmen employed by its sub-contractors.

The question which arises in this dispute is whether the insurance policy which was arranged by the main contractor ostensibly to cover all workmen involved in the project, including those employed by its sub-contractors, covered claims for indemnity by the main contractor against its insurer in respect of its liability at common law, rather than under the Act, to workmen who were employed by its sub-contractor. The present dispute examines the adequacy or lack thereof of insurance policies that are arranged by main contractors in the belief that they are sufficiently comprehensive to cover all situations arising from injuries to workmen in the course of employment of the construction project. It is hoped that this decision would shed some light on the scope and coverage of such policies so that contractors and their insurance brokers can review them to determine whether they in fact cover the intended liabilities and if not, whether steps should be taken to address the gaps in future.

Background Facts

The plaintiff is a Bangladeshi national who was injured on 5 November 2007 while working at a factory construction site at Tuas South Avenue 3 (“the worksite”). At the material time, he was employed by Utracon Structural System Pte Ltd (“Utracon”) which was the sub-contractor engaged by the defendant (itself the main contractor engaged by M/s Kim Teck Leong (Pte) Ltd, the developer/owner of the worksite) for the post-tensioning works for the concrete flooring at the worksite.

While the plaintiff was working on the scaffolding at the worksite, the work platform gave way and caused him to fall through the scaffolding from a height of about nine metres. The plaintiff sustained serious injuries as a result of the fall and commenced the present action against the defendant for breach of statutory duties and for occupier’s liability. The defendant then brought the Third Party proceedings against Tokio Marine Insurance Singapore Ltd (“the Insurer”) for an indemnity under the Workmen’s Compensation Policy No DWCP07S001548 (“the WC Policy”) and/or the Contractors’ All Risks Policy No DGCR07S004322 (“the CAR Policy”) for the damages payable to the plaintiff. The Insurer denied that the indemnity claim is payable under either of the insurance policies.

On the first day of the trial, the plaintiff settled his claim against the defendant and interlocutory judgment was entered at 95% liability in favour of the plaintiff. Thereafter the trial continued only as to the defendant’s indemnity claim against the Insurer. At the close of the defendant’s case, the defendant clarified that it was not proceeding under the CAR Policy. The defendant’s claim therefore rests solely under the WC Policy.

The dispute between the parties is essentially a question of construction of the terms of the WC Policy, the most material of which is the Operative Clause, which states that:

NOW THIS POLICY WITNESSETH 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 Company will subject to the terms exceptions conditions and warranties, and any memorandum if applicable, contained herein or endorsed hereon (all of which are hereinafter collectively referred to as the Terms of this Policy) indemnify the Insured against all sums for which the Insured shall be liable to pay compensation either under the Legislation or at Common Law, and will in addition pay all costs and expenses incurred by the Insured with the written consent of the Company.

The defendant accepts that to succeed, the claim must come within the Operative Clause, for it is common ground that the burden of proof is on it to prove its claim under the WC Policy: Hurst v Evans [1917] 1 KB 352.

The parties, however, are at odds as to the true construction of the Operative Clause, and it will be helpful to set out their respective submissions, as well as the issues that arise for my consideration.

The Parties’ Submissions

The defendant submits that, on the true construction of the Operative Clause, the WC Policy deems the plaintiff to be a “workman in [the defendant’s] employment” who sustained personal injury by an accident “arising out of and in the course of his employment by [the defendant]”, notwithstanding that, at the material time, the plaintiff was not employed by the defendant but by its sub-contractor, Utracon.

The defendant has raised several interesting and creative arguments in reliance on other terms of the WC Policy in aid of its claim: First, the defendant argues that the Interpretation Clause in the WC Policy, as well as the definition of the term “employer” in the Act, support its reading of the Operative Clause. Second, the defendant relies on the “Name of the Insured” Clause under the WC Policy, which refers to the defendant and all its sub-contractors of all tiers and levels as “contractor”. It is common ground that Utracon as one of the sub-contractors was covered as an “Insured” under the WC Policy. The defendant submits that since the defendant and all its sub-contractors (including Utracon) are collectively referred to in the “Name of Insured” Clause as “contractor” in the singular, it follows, as a matter of definition, that the plaintiff should be treated as an employee of the defendant for the purposes of the WC Policy even though he was in fact employed by Utracon. In other words, both the defendant and Utracon, being defined as the singular “contractor”, are deemed by the WC Policy to be the same “Insured”. Third, the defendant also relies on the insertion of a “Risk No 001” Clause in the WC Policy. Fourth, the defendant seeks to attach significance to the deletion of 2 Exceptions in the WC Policy. Finally, the defendant submits that, since the WC Policy is ambiguous, it should be interpreted in its favour by applying a contra proferentem construction.

The Insurer submits that, on the true construction of the WC Policy, the defendant’s claim for indemnity does not fall within the Operative Clause.

The Insurer accepts that the employees of Utracon were covered under the WC Policy. However, it submits that the WC Policy only responds to claims brought by one of the Insured in respect of liability, at common law or under the Act, incurred by that Insured to any workman employed by that Insured. Accordingly, given that the plaintiff was, at the material time, employed by Utracon, the WC Policy would only be engaged if the plaintiff had successfully sued Utracon, and the claim for indemnity against the Insurer was now being brought by Utracon. Since, however, the claim is being brought by the defendant, who was not the employer of the plaintiff, the indemnity claim is not payable. Put simply, the WC Policy covers indemnity claims brought by the relevant Insured provided the liability of the relevant Insured arose as a result of a claim by a workman against the relevant Insured qua employer. The WC Policy does not cover the relevant Insured, in this case the defendant, against its liability to the plaintiff qua occupier of the worksite. In other words, the Insurer submits that, contrary to the defendant’s submissions, the defendant and Utracon are not deemed by the WC Policy to be the same “Insured”.

The Insurer further submits that the clear position as set out in the Operative Clause is not altered by the “Name of the Insured” Clause or by the insertion of the “Risk No 001” Clause or by the deletion of the Exceptions. The insertion and the deletions were to address different purposes and do not change the scope or ambit of the Operative Clause.

The Issues

A number of issues therefore arise for my determination, namely: (a) The effect of the definition of “Employer” in the Act on the construction of the WC Policy; (b) The effect of the “Name of Insured” Clause; (c) The effect of the “Risk No 001” Clause; (d) The effect of the deleted Exceptions; (e) The applicability of a contra proferentem construction of the WC Policy.

Before I go on to examine these issues, however, I would like to say a bit more about the Operative Clause.

The Operative Clause

As stated, the defendant must bring its indemnity claim within the Operative Clause in order to succeed in this action, but the main obstacle that stands in the way of the defendant is the undeniable fact that the plaintiff was not in its employment at the time of the accident. Instead, he was employed by Utracon.

The inherent difficulty facing the defendant is self-evident when a plain reading of the Operative Clause is adopted, for it reveals that the term “Insured” must be understood as referring to different entities in order for the defendant’s claim to be maintained:

NOW THIS POLICY WITNESSETH that if any workman [the plaintiff] in [Utracon’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 [Utracon] in the Business, the...