SHC Capital Ltd v NTUC Income Insurance Co-operative Ltd

• Jurisdiction: Singapore
• Judgment Date: 05 August 2010
• Date: 05 August 2010
• Docket Number: Originating Summons No 135 of 2010
• Court: High Court (Singapore)

SHC Capital Ltd

Plaintiff

and

NTUC Income Insurance Co-operative Ltd

Defendant

[2010] SGHC 224

Chan Seng Onn J

Originating Summons No 135 of 2010

High Court

Contract–Contractual terms–Express terms–Interpretation of terms in defendant insurer's contract extending coverage to acts of employees of subcontractors–Applicability of provisos to clause extending coverage to acts of employees of subcontractors

Insurance–General principles–Contribution and average –Plaintiff insurer and defendant insurer having common insured under separate insurance policies–Defendant insurer providing more extensive coverage to insured than plaintiff insurer–Plaintiff insurer indemnifying insured when under no legal obligation to do so –Whether defendant insurer legally obligated to reimburse or contribute towards any payment made by plaintiff insurer to insured

Pan-United, the owner of an industrial site, engaged Simei Engineering & Trading ( Simei ) as its main contractor, who in turn subcontracted works to EIN Engineering and Construction ( EIN ) and Hup Hin Trading Co Pte Ltd ( Hup Hin ). Hup Hin further subcontracted works to Hock Swee Seng Contraction and Transportation ( Hock Swee ). During the course of work, Hock Swee's employee injured EIN's employee, Omar Bin Hoydeen ( Omar ). Omar later commenced proceedings against Pan-United, Simei, EIN and Hock Swee in the tort of negligence claiming damages for his personal injuries. Consent judgment was entered in that suit, and liability was apportioned between all the parties. EIN and Simei collectively assumed 26.7% liability for Omar's injuries, which amounted to $317,664.70. No apportionment of liability was made between Simei and EIN.

Prior to the accident, the plaintiff insurer, SHC Capital Ltd ( SHC ) issued to Simei and EIN each a separate workmen's compensation policy, insuring them against liability for injuries to employees sustained in the course of work by way of an operative clause in each policy ( SHC Policies ). In SHC's policies issued to Simei and EIN, SHC had excluded liability where the insured had been double insured, by way of a Non-contributory Clause. The defendant insurer, NTUC Income Insurance Co-operative Ltd ( NTUC ) had issued a workmen's compensation policy to Pan-United ( NTUC Policy ) which contained an operative clause which was almost identical to the operative clauses in the SHC Policies. NTUC later extended the coverage of the workmen's compensation policy to all tiers of subcontractors. In a Cross Liability Clause it was also provided that it shall be deemed that each subcontractor had been issued a separate policy by NTUC. In an endorsement, NTUC provided by way of a Contingent Liability Clause that the coverage provided by its workmen's compensation policy was extended to cover the insured against liability for damage caused by acts of their subcontractors' employees, subject to two provisos: (a) that its subcontractor does not have other insurance, or (b) more specific insurance.

After claims were made against the SHC Policies, SHC indemnified Simei and EIN for their liabilities to Omar. Simei and EIN had also made claims against NTUC, who denied liability under the NTUC Policy. SHC then sought a declaration from the High Court that first, NTUC's workmen's compensation policy covers both EIN and Simei, and secondly, that NTUC was liable to contribute to SHC fully or in part for the amount which SHC had paid out in respect of EIN and Simei's liability to Omar. NTUC argued that the NTUC Policy was not on risk because proviso (a) to the Contingent Liability Clause had excluded its liability to make a contribution to SHC in the event of double insurance.

Held, granting the declarations sought in prayers 1 and 2:

(1) The operative clauses in both the NTUC Policy and the SHC Policies insured against the risk of a claim by the insured's own employee arising from personal injuries sustained in the course of employment. Since the NTUC Policy applied to Simei and EIN by virtue of the expansion of coverage to all tiers of subcontractors and the Cross Liability Clause, and it was not disputed that Simei and EIN had been insured under the SHC Policies, Simei and EIN had been double insured in respect of liabilities for injuries totheir own employees in the course of work. EIN was double insured for its liability to Omar, who was EIN's employee. However, since Omar was not Simei's employee, Simei had no legal right to an indemnity under either of the policies unless the insurance coverage provided to Simei had been separately extended by other clauses in the policy to claims by non-employees: at [23].

(2) NTUC's defence that its liability to SHC was excluded by proviso (a) to the Contingent Liability Clause was relevant only in so far as EIN's liability is concerned. However, before proviso (a) might have any bite, the main provision of the Contingent Liability Clause had to be applicable to EIN. The Contingent Liability Clause provided coverage to the insured . The word insured had to be read as having the same meaning as it had been used elsewhere in the policy, which meant Pan-United and all tiers of subcontractors: at [24].

(3) The Contingent Liability Clause which insured against liability for the acts of employees of their sub-contractors for which they may be responsible covers a different scope of liability from that which was covered by the operative clause in the NTUC Policy. The former expanded the coverage afforded to Pan-United, or any other insured, such as EIN and Simei, against liability for breaches of duties by the employees of its subcontractors. The Contingent Liability Clause was construed as extending NTUC's cover to an insured person against the risk of its subcontractor injuring any person,who was not the insured's own employee. This was because the NTUC Operative Clause would already have covered the insured's liability to its own employees for injury sustained in the course of work. The word sub-contractors in the Contingent Liability Clause was construed widely to include all tiers of subcontractors, as it would make no commercial sense for the Insured to be insured only against liability for the acts of its immediate subcontractor: at [25] to [27].

(4) The main provision of the Contingent Liability Clause was inapplicable to EIN because Omar was injured by the acts of the employee of Hock Swee, who was Simei's, not EIN's subcontractor. Thus, the provisos were inapplicable to exclude NTUC's liability to EIN. EIN was therefore double insured by both NTUC and SHC with respect to Omar's injuries. Given that SHC's Non-contributory Clause had excluded liability for indemnifying EIN's liability to its employee, Omar, in the event of double insurance, the SHC Policy issued to EIN was not on risk. Since the NTUC Policy did not also have an equivalent exclusion clause in the event of double insurance, NTUC was 100% liable to provide an indemnity to EIN: at [30].

(5) The main provision of the Contingent Liability Clause applied to Simei, who was liable for the tortious acts of Hock Swee's (who was a subcontractor within the meaning of the Contingent Liability Clause) employee under the consent judgment entered against it. NTUC was thus liable to indemnify Simei under the Contingent Liability Clause unless either of the provisos to the same applied. Proviso (a) would exclude NTUC's liability to indemnify Simei against claims for the damage caused by the acts of Hock Swee's employees only if Hock Swee had purchased insurance against the risk of his employee injuring a third party like Omar. In the absence of evidence that Hock Swee had taken out any insurance policy to that effect, proviso (a) was inapplicable. Since proviso (a) was inapplicable, a fortiori, proviso (b) was inapplicable. Proviso (b) would limit NTUC's liability to indemnify Simei only if Hock Swee had been covered by more specific insurance. There was no evidence that Hock Swee had been covered by more specific insurance. Since the Contingent Liability Clause covered Simei and both of the provisos did not apply, the NTUC Policy was on risk and NTUC was liable to indemnify Simei: at [31] to [34].

(6) Since SHC had paid out to Omar although it was not obliged to do so under the SHC Policies, the main issue was whether it was entitled to a contribution or reimbursement from NTUC. The right of contribution existed as between co-insurers who had insured the same assured against the same risk, in respect of the same subject matter. Thus, when two insurers were liable for the same loss, the insurer called upon to make payment might have the right to seek payment from the other insurer for the amount it had paid out in excess of its proportion of liability. In the case of contribution, it was essential that both the plaintiff and defendant were jointly and/or severally liable to the same third party in respect of the same debt. In the case of reimbursement, the plaintiff and defendant need not be jointly and/or severally liable to the third party in respect of the same debt. It would suffice if a plaintiff was compellable or compelled under the law or by necessity to fully discharge the defendant's debt, and did not act officiously in so doing. Apart from this distinction, the two concepts were in substance the same: at [35] to [37].

(7) The remedies of contribution or reimbursement were restitutionary in nature, and were aimed at preventing the unjust enrichment of a defendant who had been conferred a benefit by the plaintiff's payment to the defendant's creditor. Thus, the remedy of contribution or reimbursement would prevent unjust enrichment to a defendant, whose liability was extinguished pro tanto by the claimant's payment to the defendant's creditor: at [38].

(8) The general rule that equity did not assist a volunteer applied, and therefore no right of contribution or reimbursement would exist at law if a claimant had paid out to a...