Lo Siu Wa v Employees Compensation Assistance Fund Board And Another

Judgment Date26 January 2016
CourtHigh Court (Hong Kong)
Judgement NumberHCA799/2014
Subject MatterCivil Action

HCA 393/2014




ACTION NO 393 OF 2014


LO SIU WA Plaintiff


AND HCA 799/2014

ACTION NO 799 OF 2014


LO SIU WA Plaintiff



Before: Deputy High Court Judge Burrell in Court
Dates of Hearing: 6 and 7 January 2016
Date of Judgment: 26 January 2016




1. On 19 March 2007 the plaintiff was, in the course of his employment, using a circular saw doing carpentry work as part of renovations to shop premises in Tsuen Wan, New Territories. An accident occurred which resulted in fractured fingers, severed tendons and open wounds to his hands. At the time his employer was an interior design company called Nuovo Design Limited (“Nuovo”). Nuovo had engaged him four days earlier, on 15 March, to carry out carpentry works at the shop site. The plaintiff was a carpenter by trade. He had previously been regularly engaged by various employers to carry out carpentry work on numerous and various renovation projects in Hong Kong.

2. On this particular occasion he was being paid $800 a day but because he had only recently been engaged there was no documentation relating to his employment. He had not worked for Nuovo before. In a statutory declaration to the Labour Department dated 22 June 2007 Nuovo’s project manager, Mr Lee Chun Fai, explained that it was the company’s practice to take on carpenters on a casual basis and, as with this plaintiff, no contract of employment was signed. He explained that the plaintiff was treated as a self‑employed person.

3. Nuovo’s subsequent conduct with regard to the plaintiff and his accident was extremely uncooperative. They failed to report the accident to the Labour Department. They failed to pay any sick leave wages (certified from 19 March 2007 to 31 May 2008). They failed to attend or participate in the plaintiff’s Employment Compensation claim heard on 14 August, 2009 (assessed at $545,488.33 plus interest). They failed to pay the EC Award therefore, through his solicitors, the plaintiff caused Nuovo to be wound up thereby incurring further costs. The winding‑up order was made on 16 February 2011. Finally, the plaintiff also made a claim for common law damages under HCPI 84/2010. On 12 April 2012, he was awarded damages in an uncontested assessment hearing in the sum of $3,552,928.67 (net of the EC Award) plus interest.


4. These proceedings arise because Nuovo had, in 2004, taken out an insurance policy with the 2nd defendant (AXA) called an “Office Pak” policy. The plaintiff sought payment of his claim through this policy but AXA has declined to pay stating from the outset that the policy did not cover this plaintiff and/or this accident. In short, the plaintiff, through his solicitors, being informed that he had not been insured in his brief employment with Nuovo commenced proceedings against the 1st defendant (HCA 393/2014) (the Board), “the last resort” for payment of compensation for personal injuries sustained at work in such circumstances.

5. The Board takes the view that the Office Pak policy did cover the plaintiff’s accident and has declined payment and has insisted that AXA also be sued (HCA 799/2014). The two actions have been consolidated.

6. The issue is which defendant should compensate the plaintiff and pay him his unchallenged award for an injury sustained nearly nine years ago. All parties are agreed that the issue is substantially resolved by the answer to a single question namely, did the Office Pak policy cover the plaintiff at the time of his accident?


7. Although the outcome of these proceedings depends, almost entirely, on the answer to a single question the parties have helpfully formulated and agreed five issues on liability as follows:

(1) Whether the policy issued by the 2nd defendant to Nuovo with the policy number 681-2736131 was a policy issued for the purposes of Part IV of the Employees’ Compensation Ordinance, Cap 282 (“ECO”) in force at the time of the accident in relation to the plaintiff.

(2) Whether the 2nd defendant is statutorily liable to pay the plaintiff the EC Award, the PI Award and costs by virtue of sections 42 to 44 of the ECO.

(3) Whether the plaintiff has taken reasonable proceedings to recover payment of the compensation and damages for which the employer was liable as required by sections 16(3) and 20A(3) of the Employees’ Compensation Assistance Ordinance, Cap 365 (“ECAO”).

(4) Whether it was reasonable in the circumstances, having regard to the likely costs of such proceedings, the resources available to the plaintiff and the award likely to be recovered from, for the plaintiff not to commence proceedings against the 2nd defendant before applying for relief payment under sections 16 and 20A of the ECAO.

(5) Whether the 1st defendant has correctly or wrongly rejected the plaintiff’s application for payment and relief payment under sections 16 and 20A of the ECAO.

Issues 1 and 2

8. Issues 1 and 2 may be considered together. Sections 43(1) and 44 of the ECO provide that:

Section 43(1):

“(1) Subject to this section, where in relation to an employee there is in force a policy of insurance issued for the purposes of this Part and the employer of the employee becomes liable to pay any sum under this Ordinance or independently of this Ordinance in respect of an injury to the employee arising out of and in the course of his employment, such sum shall forthwith become due and payable by the insurer, including any sum payable in respect of interest and costs, notwithstanding anything to the contrary in the policy of insurance.”

Section 44:

“(1) Every policy of insurance issued for the purposes of this Part shall be deemed to provide that any employee or other person having a claim against the person insured in respect of the liability in regard to which such policy was issued shall, subject to section 42, be entitled to recover in his own name, as though he were a party to the policy, directly from the insurer any amount which he would have been entitled to recover from the person insured.”

9. The first and only relevant question arising from these provisions is — was there in force at the material time a policy of insurance issued for the purpose of Part IV of the ordinance in relation to the plaintiff? Plainly there was a policy in force which had been issued for the purpose of Part IV. However, whether it was “in relation to the Plaintiff” is the matter in dispute.

10. The answer depends on the terms of the contract of insurance. The words in the policy must be carefully construed and interpreted. It is necessary therefore to set out in some detail what the policy actually said. Before doing so, important principles of construction are noted. Mr Anthony Ismail, counsel for AXA, has helpfully reminded the court of the words of Sir Anthony Mason NPJ in New World Harbourview Hotel v ACE Insurance Ltd (2012) 15 HKCFAR:

“The interpretation which should be adopted in the case of an insurance contract, as with other commercial contracts, is that which gives effect to the context, not only of the particular provision but of the contract as a whole, consistently with the sense and purpose of the provision. In arriving at the true interpretation, the court will read the words and expressions of the contract as ordinary commercial people would understand them in their context, preferring in appropriate cases that understanding to any technical legal meaning that the words or expressions may otherwise have.”

Also, Lord Hoffmann NPJ in Jumbo King Ltd v Faithful Properties Ltd (1999) 2 HKCFAR:

“… The construction of a document is not a game with words. It is an attempt to discover what a reasonable person would have understood the parties to mean. And this involves having regard, not merely to the individual words they have used, but to the agreement as a whole, the factual and legal background against which it was concluded and the practical objects which it was intended to achieve.

If the ordinary meaning of the words makes sense in relation to the rest of the document and the factual background, then the court will give effect to that language, even though the consequences may appear hard for one side or the other.

But the overriding objective in construction is to give effect to what a reasonable person rather than a pedantic lawyer would have understood the parties to mean. Therefore, if in spite of linguistic problems the meaning is clear, it is that meaning which must prevail.”

11. Finally Ma CJ in Fully Profit (Asia) Ltd v Secretary for Justice (2013) 16 HKCFAR:

“What emerges from these cases – and other authorities on contractual interpretation – is the overall importance of context when construing contractual terms. The statements of principle in Investors Compensation Schemeand inJumbo Kingrefer time and again to the relevant background against which the relevant contract and contractual terms must be viewed. It is in my view not particularly helpful in most cases to refer to the ‘ordinary and natural meaning’ of words because, as very often experience tells us, there can be much debate over exactly what is...

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