B + B Construction Co. Ltd. v Sun Alliance And London Insurance Plc

CourtCourt of Final Appeal (Hong Kong)
Judgment Date18 Jun 2001
Citation[2001] 3 HKLRD 135; (2001) 4 HKCFAR 201
Judgement NumberFACV29/2000
SubjectFinal Appeal (Civil)
FACV000029/2000 B + B CONSTRUCTION CO. LTD. v. SUN ALLIANCE AND LONDON INSURANCE plc

FACV000029/2000

FACV No. 29 of 2000

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 29 OF 2000 (CIVIL)

(ON APPEAL FROM CACV NO. 18 OF 2000)

_____________________

Between :
B + B CONSTRUCTION COMPANY LIMITED Appellant
(formerly known as Franki Contractors Limited)
AND
SUN ALLIANCE AND LONDON INSURANCE plc Respondent

_____________________

Court: Chief Justice Li, Mr Justice Bokhary PJ, Mr Justice Chan PJ, Mr Justice Nazareth NPJ and Sir Anthony Mason NPJ

Date of Hearing: 24 May 2001

Date of Judgment: 18 June 2001

____________________

J U D G M E N T

____________________

Chief Justice Li :

1. I agree with the judgment of Sir Anthony Mason NPJ.

Mr Justice Bokhary PJ :

2. I too would dismiss this appeal with costs for the reasons given by Sir Anthony Mason NPJ with whose judgment I agree.

Mr Justice Chan PJ :

3. I agree with the judgment of Sir Anthony Mason NPJ.

Mr Justice Nazareth NPJ :

4. I also agree with the judgment of Sir Anthony Mason NPJ.

Sir Anthony Mason NPJ :

Introduction

5. This appeal, pursuant to leave granted by the Appeal Committee, concerns the scope of the indemnity provided for in an insurance policy dated 3 January 1994 effected by Pak Kee Transportation Company Limited ("Pak Kee") with the respondent insurer ("the insurer"). The claim for an indemnity by the appellant is unusual in that the claim is not made under an insurance policy effected by the appellant itself; the claim is made under an insurance effected by the appellant's sub-contractor, Pak Kee.

6. The appellant claims indemnity in respect of sums which the appellant has had to pay (1) to Cheung Ping, an employee of Pak Kee, who had been injured by the negligence of an employee of the appellant, the contractor; (2) to Pak Kee, in reimbursement of the amount which Pak Kee had to pay to its injured employee by way of employees' compensation; and (3) in settlement of costs.

The facts

7. On 5 October 1994, nine months after Pak Kee had taken out the policy which is the subject of these proceedings, the appellant engaged Pak Kee to provide labour for the carrying out of H-piles driven works under a sub-contract which obliged Pak Kee to provide employees' compensation insurance "for his labour and for those of his own sub-contractors". Although the sub-contract provided that

"The workmen's compensation insurance policy shall be taken out in joint name of the sub-contractor (i.e. Pak Kee) and [the appellant]",

this was not done.

8. On 8 October 1994, Cheung Ping was injured at the site of the appellant's works in an accident which was wholly the fault of an employee of the appellant. In Cheung Ping's action for employees' compensation in the District Court against Pak Kee, Pak Kee was ordered to pay employees' compensation in the sum of $198,846.13, interest in the sum of $9,002.82 and costs which were agreed at $12,000.00, all of which were indemnified under the policy.

9. In September 1997, Cheung Ping brought an action in the High Court against Pak Kee and the appellant for damages for personal injuries. Pak Kee instituted third party proceedings against the appellant to recover the employees' compensation paid under the District Court judgment. In that action, apart from the judgment given by Suffiad J in favour of Cheung Ping against the appellant for $759,797.05, judgment was given in favour of Pak Kee against the appellant in the third party action for the three amounts awarded against Pak Kee in the District Court action. Suffiad J ordered the appellant to pay Cheung Ping his costs of the High Court action and to pay Pak Kee's costs in defending that action and in bringing the third party proceedings, including its costs of defending the appellant's counterclaim in those proceedings.

10. Suffiad J found that

"(i) the works carried out by Cheung Ping at the time of the accident was part of the H-pile driven works which fell within the definition of "Sub-Contract Works" in the sub-contract; and

(ii) Cheung Ping was injured in the course of his employment as a result of the negligence of the appellant's employee."

The present proceedings

11. It was in these circumstances that the appellant commenced the present proceedings by issuing a summons under O.14 and O.14A of the Rules of the High Court for final judgment against the insurer. The insurer then issued a summons seeking an order that the statement of claim be struck out and seeking answers to certain questions of law and for judgment against the appellant if the questions of law were answered in the affirmative.

12. Yam J answered the questions favourably to the appellant and made an order in terms of its summons and dismissed the insurer's summons. An order for costs in favour of the appellant was made on each summons.

13. The Court of Appeal (Godfrey VP, Woo JA and Ribeiro JA) allowed the insurer's appeal with costs in the Court of First Instance and the Court of Appeal. It is from that decision that the present appeal is brought.

The policy

14. By the policy dated 3 January 1994, which was described as an "Employee's Compensation Insurance" policy, the insurer agreed, for the period of one year from 15 December 1993 to indemnify the insured (which were stated in the Schedule to be "PAK KEE TRANSPORTATION COMPANY LIMITED AND HIS CONTRACTORS") against liability to pay compensation to injured employees in "the Insured's immediate service". The description of the insured which has just been quoted was typewritten as were other details of the particular insurance. The policy was, apart from the particular details, a printed form.

15. The printed part of the policy recited :

"Whereas the Insured carrying on the Business described in the Schedule and no other for the purpose of this insurance by a proposal and declaration which shall be the basis of this contract and is deemed to be incorporated herein has applied to the Company for the insurance hereinafter contained and has paid or agreed to pay the Premium as consideration for such insurance".

16. The printed part of the policy went on to express the indemnity in these terms :

"Now this Policy Witnesseth that if any employee in the Insured's immediate service shall sustain bodily 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 Jurisdiction Clause and the other terms exceptions and conditions contained herein or endorsed hereon (all of which are hereinafter collectively referred to as the Terms of this Policy) indemnify the Insured against liability at law (including liability under the Legislation set out in the Schedule) to pay compensation and claimant's costs and expenses in respect of such injury and will in addition pay all costs and expenses incurred with its written consent."

The reference to legislation in the Schedule was "Employee's Compensation Ordinance".

17. The policy contained a number of Exceptions. The relevant part of the policy was in these terms :

"Exceptions

The Company shall not be liable in respect of

1 the Insured's liability to employees of contractors to the Insured."

18. The policy also contained condition 1 which is as follows :

"Conditions

1. This Policy and the Schedule shall be read together as one contract and any word or expression to which a specific meaning has been attached in any part of this Policy or of the Schedule shall bear such specific meaning wherever it may appear."

19. In the Schedule "the Company" was described as "the insurer" and the "class of insurance" was described as "employees compensation", while the business was described as "Transp./Forwarding Agent/Site Contractor" and the geographical area was described as "HK". The Schedule listed the staff as follows :

"S/NO CATEGORY OF STAFF NO-OF-EMPL EST. ANNUAL WAGE
1 CLERICAL STAFF 4 418000.00 HK$
2 DRIVER/DELIVERY/MOTORCRANE OPR 5 700000.00
3 DELIVERY/TALLYMAN/FOREMAN/SITE WORKER W51 2 300000.00
4 DELIVERY/STEVEDORE/SITE WORKER W51 6 499200.00
5 CASUAL DELIVERY/WELDER/SITE WORKER W51 6 624000.00
TOTAL : 2541200.00"

The staff so listed were Pak Kee's staff. This does not affect the scope of the indemnity given by the policy.

The appellant's case

20. The appellant's first proposition, which was accepted by Yam J, is that the typewritten words "Pak Kee Transportation Company Limited and his contractors" provide an indemnity to Pak Kee's contractors as well as to Pak Kee. The appellant's second proposition is that the words "the Insured's" and the words "the Insured" where first appearing in the indemnity clause, but not where secondly appearing, should be read as referring to Pak Kee only. A similar construction is to be applied to the first Exception. There is, therefore, on the appellant's case, a difference in the scope...

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