XCHRX Wong Shu Kuen v. Vianet International & Services Co. and Another

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES COMPENSATION CASE NO. 557 OF 2000

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R U L I N G

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1. By this summons, the respondent is applying to join its insurance company as an additional respondent in these proceedings. The grounds of the application have been very helpfully set out in the summons itself. Yesterday I gave a ruling in this matter staying third party proceedings brought by the respondent against China Insurance Company Limited ("the insurance company") on the basis that the arbitration clause in the insurance policy required reference to arbitration before resort could be had to the courts. The background to the dispute between the respondent and the insurance company has been set out in that ruling and so I do not propose to repeat it again here, save where it becomes necessary to explain my reasoning in deciding this application.

2. At the heart of Mr Westbrook's submission for the respondent is the notion that the insurance company should be joined because it is a person appearing to be interested in these proceedings. This comes from the Employees' Compensation Ordinance Rules of Court Rules, Rule 24(1) which is in these terms:

"The court may at any stage of the proceedings on request made to it or of its own motion order that any person appearing to be interested be joined in the proceedings."

3. That interest is established by section 43(1) of the Employees' Compensation Ordinance ("the Ordinance") which is as follows:

"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 independantly 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."

4. This provision is in turn reinforced by section 44(1) of the Ordinance which provides that:

"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."

5. These two sections form part of Part IV of the Ordinance which inter alia requires an employer to take out compulsory insurance, subject to limited exceptions, covering accidental injury in the course of an employee's employment (see S.40 which I need not set out here). From these provisions it is plain that the Ordinance contemplates that an injured workman would be able to enforce any award that he or she may obtain from the court directly against the insurance company.

6. Experience shows that, not infrequently, insurance companies will seek to be joined as respondents in order to protect their interests in the proceedings provided that they can show a sufficient reason based on the issues in the particular case in which the application is made. Unusually in this matter, the insurance company is not applying to join. It, in fact, resists the application which is being made by its insured.

7. As I have set out in my previous ruling, the insurance company has purported to repudiate the policy with the respondent but notwithstanding that repudiation, valid or otherwise, section 43(1) still imposes a liability on the insurance company to pay out under any award. If the repudiation is held to be justified, the insurance company can then claim an indemnity from its insured, in this case the respondent. That is how the Ordinance operates - protecting the injured workman's rights and leaving it to the employer and its insurer to deal with their differences separately.

8. Mr Westbrook says that given section 43(1), the insurance company must fall within the category of an interested person. He requires them to be joined and his clients do not much care how they address the proceedings, either by actively participating or declining to appear. It matters not to his clients provided they are a party before the court.

9. Mr Sakhrani for the insurance company submits that this application is made out of entirely misconceived motives and is due to the fact that the insurance company has repudiated the policy. He accepts the consequences of the Ordinance and he understands that his clients will, if an application is made against them to enforce any award, that they are amenable to and liable for the award (S.43(1). Nevertheless, they have no desire to be a party and I should not oblige them to be. Their presence in the proceedings will serve no purpose in resolving the issues between the applicants and the respondent in the application itself and that I should not indulge the respondent's misconceived approach to this matter.

10. I should also observe that the applicants themselves are neutral to this application.

11. Given the way the matter has been presented on behalf of the respondent, I am entirely satisfied that no purpose can possibly be served by such a joinder. Whilst the insurer can properly be described as a party interested, as contemplated by Rule 24(1), the motive for this application to join the insurance company has everything to do with the respondent's private contractual dispute with the insurance company, and absolutely nothing to do with the real and relevant issues in the application for compensation brought by the applicants.

12. The statutory obligations of the insurance company are clear vis-à-vis the applicants if they are successful. The applicants may seek to enforce the award against the respondent or the insurer. That must be a matter for them. The respondent and the insurance company, depending on who is asked to pay out under the award, will then be free to arbitrate or litigate, as the case may be, the rights and wrongs of the insurance company's purported repudiation of the policy which is quite separate from this application.

13. To exercise my discretion in favour of joinder would not be right. This summons therefore must stand dismissed with costs against the insurance company and certificate for counsel.

(Discussion re summons for directions)

14. No order on summons for directions. Certificate for counsel. Costs against the third party.

(Discussion re costs of this summons)

15. Applicant's own costs be costs in the cause. Legal Aid taxation of applicant's costs in the case 557/00.