FONG YAU HEI v. GAMMON CONSTRUCTION LTD AND OTHERS

cacv 154/2006

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 154 of 2006

(on appeal from HCPI NO. 1222 of 2003)

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J U D G M E N T

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Hon Le Pichon JA:

1.  This is an appeal from the order of Recorder Benjamin Yu SC dated 17 January 2006 made in a personal injuries claim by the plaintiff, holding the 1^st, 2^nd and 3^rd defendants liable for injuries sustained by the plaintiff whilst working on a tugboat owned by the 2^nd defendant.  The 3^rd defendant was the Master of the tugboat and the 1^st defendant was the main contractor.

Background facts

2.  I have had the benefit of reading in draft the judgments of Cheung J and Reyes J where the background facts sufficiently appear and I gratefully adopt them.

3.  The only issue in this appeal is whether Recorder Yu was correct in holding that the 2^nd and 3^rd defendants are not entitled to invoke Articles 1 and 2(1)(a) of the Convention on Limitation of Liability for Maritime Claims 1976 (“the Convention”) to limit their liability. 

4.  At the appeal hearing, Mr Coleman SC who appeared for the 2^ndand 3^rd defendants raised an entirely new argument based on section 18(1)(b) of the Control of Exemption Clauses Ordinance, Cap. 71 (“CECO”) that had not been put before the judge below.  At the conclusion of the appeal hearing, Mr Simon H W Lam who (together with Mr Fong) appeared for the plaintiff and Mr Lim who appeared for the 1^st defendant were given seven days to make written submissions on the new point taken and Mr Coleman was to file a reply within three days thereafter.

5.  On 22 January 2007, after receipt of Mr Lim’s written submissions, the court received a copy of the letter sent by Mr Coleman to Mr Lam and Mr Lim giving notice that he would also be relying on section 18(1)(a) of the CECO.  This resulted in the court giving further directions for the filing of written submissions by the parties which they have done.

This appeal

6.  As a preliminary matter, I would observe that there was no merit in the appeal based on the original submissions filed for the purposes of the appeal hearing.  In this regard, I agree with paragraphs 43to 77 of the judgment of Reyes J.  The only issue in this appeal therefore is whether there is any merit in the new point taken based on section 18(1) of the CECO.  The narrow issue which arises is one of statutory construction.

7.  The Merchant Shipping (Limitation of Shipowners Liability) Ordinance, Cap. 434 (“the MSO”), was enacted on 1 October 1993.  Section 12 of the MSO provided as follows:

“12. Convention to have force of law

Subject to this Part, the provisions of the Convention on Limitation of Liability for Maritime Claims, 1976 set out in Schedule 2 (in this Part and in that Schedule referred to as “the Convention” (公約)) have the force of law in Hong Kong.”

The Convention itself was set out in Schedule 2.  Article 1 read:

“1.     Shipowners … may limit their liability in accordance with the rules of this Convention for claims set out in Article 2.

…

4.     If any claims set out in Article 2 are made against any person for whose act, neglect or default the shipowner or salvor is responsible, such person shall be entitled to avail himself of the limitation of liability provided for in this Convention.

…”

8.  Article 2 which dealt with claims subject to limitation, in pertinent part, provided as follows:

“1.     Subject to Articles 3 and 4 the following claims, whatever the basis of liability may be, shall be subject to limitation of liability-

(a)  claims in respect of loss of life or personal injury or loss of or damage to property (including damage to harbour works, basins and waterways and aids to navigation), occurring on board or in direct connection with the operation of the ship or with salvage operations, and consequential loss resulting therefrom;

…”

For present purposes, only paragraph (e) of Article 3 is relevant:

“The rules of this Convention shall not apply to-

…

(e)    claims by servants of the shipowner or salvor whose duties are connected with the ship or the salvage operations, including claims of their heirs, dependants or other persons entitled to make such claims, if under the law governing the contract of service between the shipowner or salvor and such servants the shipowner or salvor is not entitled to limit his liability in respect of such claims, or if he is by such law only permitted to limit his liability to an amount greater than that provided for in Article 6.”

9.  It is common ground that the relevant law governing the contract of service is Hong Kong law.  The question is therefore whether, at the date the Convention became part of the laws of Hong Kong, a shipowner was not entitled to limit his liability in respect of claims by servants of the shipowner in respect of loss of life or personal injuries under Hong Kong law.

10.  Prior to the adoption of the Convention as part of the local law, the relevant position was as follows.  The CECO was enacted on 1 December 1990.    Section 7(1) prohibits the exclusion or restriction of liability for death or personal injury resulting from negligence by contract or by notice.  Section 18 contains a savings provision:

“18. Saving for other relevant legislation

(1)   Nothing in this Ordinance removes or restricts the effect of, or prevents reliance upon, any contractual provision which-

(a)    is authorized or required by the express terms or necessary implication of an enactment; or

(b)   being made with a view to compliance with an international agreement which applies to Hong Kong, does not operate more restrictively than is contemplated by the agreement.

…”

11.  As I understand it, Mr Coleman’s argument is that the Convention is an “enactment” which authorises by express terms or necessary implication contractual provisions that limit a shipowner’s liability for personal injuries resulting from his negligence within section 18(1)(a).  That construction does not appear to me to be correct. 

12.  As noted in paragraph 9 above, for the purposes of Article 3(e) of the Convention, the critical date for ascertaining whether Hong Kong law permitted the limitation of liability for personal injuries claim is the date the Convention became part of the domestic law.  If such limitation was not permitted at that time, that is the end of the matter.  The CECO was enacted in 1990.  At that date, although the Convention was already in existence and in fact had been in existence since 1976, it was not part of the law of Hong Kong.  As noted above, the Convention became part of the law of Hong Kong some years later, in 1993.  At the time did the domestic law permit such limitation?  Despite there being a savings provision, at the critical date, there was no “enactment” then in existence upon which section 18 (1) could operate.  The law was as stated in section 7(1) of the CECO. 

13.  Mr Coleman’s construction is premised on the Convention already being part of the law of Hong Kong at the moment of its adoption.  Or put differently, if it is said that one has to ascertain what the governing law was at the date of the accident, the answer is no different.  I do not consider that, as a matter of statutory construction, it is permissible to take into consideration the provisions of the Convention itself.  To do so would be, as it were, to hoist the Convention with its own petard.  That cannot be right.  Had the Convention predated the CECO in the sense that had it been part of the law of Hong Kong prior to the enactment of the CECO in 1990, Mr Coleman might have a stronger case.

14.  I would add by way of footnote that the other parts of section 18(1) are even of less assistance to Mr Coleman.  The Convention certainly does not require a contractual provision limiting liability to be incorporated into the relevant contracts.  Paragraph 1 of Article 1 of the Convention is permissive rather than mandatory.

15.  The court’s attention was drawn to the fact that sections 7 and 18 of the CECO are provisions equivalent to and obviously based upon sections 2 and 29 of the Unfair Contract Terms Act 1977. In the United Kingdom, section 185(4) of the Merchant Shipping Act 1995 (“MSA”) expressly excludes the operation of the Convention.  It was suggested that had the limitation authorised by the Convention not been applicable, section 185(4) of the MSA would not have been necessary.  But the short answer is that the fact that the United Kingdom chose to enact the MSA cannot be determinative on the question of statutory construction.

16.  For these reasons, I would dismiss the appeal.  I would propose that there be an order nisi for costs in favour of the plaintiff and the 1^st defendant.

Hon Cheung JA:

The appeal

17.  This appeal is concerned with the sole issue of whether the amount of damages for personal injuries that an employee may recover from his employer arising from the employer’s negligence can be limited by the operation of the Convention on Limitation of Liability for Maritime Claims 1976 (‘the Convention’) as extended to Hong Kong in 1993 by the Merchant Shipping (Limitation of Shipowners Liability) Ordinance (‘MS(LOSL)O’) Cap. 434.

18.  Articles 1 and 2(1)(a) of the Convention impose a limitation of liability on a shipowner in case of claims for loss of life or personal injury that occurred on board or in direct connection with the operation of a ship. 

19.  The plaintiff was an employee of the 2^nd defendant working on board a tugboat in the Hong Kong harbour.  The 2^nd defendant was the owner of the tugboat.  The 3^rd defendant was the master of the tugboat.  An accident occurred because of the negligence of the 2^nd and 3^rd defendants causing him to suffer serious personal injuries.  The 1^st defendant was the principal contractor who subcontracted the work to the 2^nd defendant. 

20.  It is not necessary to go into the background of the accident because it is not relevant to this appeal.  Recorder Benjamin Yu S.C. found that the 1^st, 2^nd and 3^rd defendants were liable for the accident.  He gave judgment against them with damages to be assessed.  He held that the damages will not be limited by Articles 1 and 2(1)(a) of the Convention.  The 2^nd and 3^rd defendants now appeal against the decision on the limitation of liability.

The right of an employee

21.  The right of an employee to seek and recover damages for personal injury arising from the negligence of his employer is a well established right under Hong Kong law.  Prior to the introduction of the Convention there was no legislation which imposed a limitation on the amount of damages that the employee may lawfully recover from his employer in a negligence claim.  This right is regarded to be of such importance that the legislature introduced in 1990 the Control of Exemption Clauses Ordinance, Cap. 71 (‘the COECO’) which expressly prohibits the exclusion or restriction of a person’s liability for death or personal injury from negligence by way of a contract term or notice : section 7(1).  A limitation of liability is such a restriction.

Article 1(4) of the Convention

22.  Article 1(4) provides :

‘ If any claims set out in Article 2 are made against any person for whose act, neglect or default the shipowner or salvor is responsible, such person shall be entitled to avail himself of the limitation of liability provided for in this Convention.’

Article 2(1)(a)

23.  Article 2(1)(a) provides

‘Subject to Article 3 and 4 the following claims, whatever the basis of liability may be, shall be subject to limitation of liability –

(a) claims in respect of loss of life or personal injury or loss of or damage to property ... occurring on board or in direct connection with the operation of the ship or with salvage operations, and consequential loss resulting therefrom ...’

Article 3(e)

24.  Article 3(e) of the Convention expressly exempts from the limitation of liability in the following situation.  It provides : 

‘ The rules of this Convention shall not apply to -

e)    claims by servants of the shipowner .... whose duties are connected with the ship .... operations, including claims of their heirs, dependants or other persons entitled to make such claims, if under the law governing the contract of service between the shipowner .... and such servants the shipowner .... is not entitled to limit his liability in respect of such claims, or if he is by such law only permitted to limit his liability to an amount greater than that provided for in Article 6. ’  (emphasis added)

25.  As apparent from Article 3(e), the limitation on liability will not apply in two alternative situations.  First, if under the law governing the contract of service between the shipowner and the employee the shipowner is not entitled to limit his liability in respect of such claims brought by the employee.  Second, if under the law governing such a contract the employer is only permitted to limit his liability to an amount greater than that provided for in Article 6.

Section 7(1) of COECO

26.  I will deal with the first situation first.  The question raised is whether section 7(1) of the COECO is the law governing the contract of service of the parties which prohibits the employer from limiting his liability for such claims.  This is a matter of statutory construction.  On the fact of it section 7(1) is such a law.  The words used by section 7(1) fit into the requirement of Article 3(e) :

‘ A person cannot by reference to any contract term .... exclude or restrict his liability for death or personal injury resulting from negligence.’

If the employer imposes a term into the contract which limits the extent of his liability, such a contract term is simply of no effect by reason of section 7(1).

27.  If section 7(1) comes within the ambit of Article 3(e), then it is sufficient by itself to remove the limitation of liability.  It is not necessary in my view to have some other law which likewise may restrict the imposition of liability because that is not what Article 3(e) requires.  So long as there is a law governing the contract which restricts the imposition of limitation it will satisfy the wording of Article 3(e).

Section 18(1) of COECO

28.  However, this is not the end of the matter because section 18(1) of COECO further provides that

‘(1)   Nothing in this Ordinance removes or restricts the effect of, or prevents reliance upon, any contractual provision which―

(a)    is authorised or required by the express terms of or by necessary implication of an enactment; or

(b)    being made with a view to compliance with an international agreement which applies to Hong Kong does not operate more restrictively than is contemplated by the agreement.’

29.  Mr. Coleman S.C., counsel for the 2^nd and 3^rd defendants, relied on section 18(1) in this appeal.  This section was not canvassed before the judge.  Mr. Coleman initially only relied on section 18(1)(b).  The effect of this section is that a party is entitled to impose a contract term which is ‘being made with a view to compliance with an international agreement’ so long as that term ‘does not operate more restrictively than is contemplated by the (international) agreement’.  In other words, despite the section 7(1) prohibition, section 18(1)(b) allows such a term to be included in a contract which effectively removes the prohibition in section 7(1).

30.  There is, of course, no provision in the Convention which requires a shipowner to incorporate it in a contract so as to comply with the Convention.  But if a shipowner chose to include a contract term which limits his liability for damages arising from personal injury of his employee as provided for by the Convention, can it not be said that the term was made ‘with a view to compliance with’ the Convention?  I think it can.  I do not regard the words ‘compliance with’ to be terms of art or somehow must be restrictively construed.  On any view, section 18(1)(b) must have contemplated a situation such as this.

31.  As a result, my view is that section 7(1) is not sufficient to come within the terms of Article 3(e). 

32.  After the hearing, Mr. Coleman informed the Court and the other parties that he would also rely upon section 18(1)(a).  Written submissions were exchanged on this issue.

33.  In my view, if a shipowner wishes to impose a contractual provision which limits its liability, he is authorised to do so by the MS(LOSL)O which extends the Convention to Hong Kong.  MS(LOSL)O is an enactment which imposes a limitation of liability.  It must be the legal basis upon which a contractual term with a similar effect can be imposed.  In other words this means the contractual term is ‘authorised’ by this enactment.  Based on the plain words of section 18(1)(a) such a term is an effective term.  As a result section 18(1)(a) will also prevent section 7(1) from coming within the meaning of Article 3(e).

Requirement of actual contractual provision

34.  I do not agree that an actual contractual provision must be in place before section 18(1) can be used to displace section 7(1).  If this is the case, the same argument can be applied to section 7(1) as well.  As it is, there is no requirement of an actual contractual term being in place before section 7(1) can be used to displace Article 3(e).  In my view the exercise is conducted by simply looking at the wording of each of the relevant statutory provisions to see whether there is an exemption from limitation of liability in this particular case.

Employees’ Compensation Ordinance

35.  Mr. Lam, counsel for the plaintiff, relied on section 40(1) of the Employees’ Compensation Ordinance (Cap. 282) (‘ECO’) to exclude the operation of the Convention.  Mr. Coleman did not deal with this issue in his reply.

36.  Under section 40(1), no employer shall employ any employee unless there is in force in relation to such employee a policy of insurance issued by an insurer for an amount not less than the specified amount in Schedule 4 in respect of the liability of the employer.  The specified amount is at least $100 million per event.  It is agreed by the parties that under Article 6 of the Convention the limit of liability is around $2 million in this case.

37.  This issue is in respect of the alternative situation provided by Article 3(e) of the Convention.  Mr. Lam’s point is that if any liability is to be limited, it cannot be less than $100 million as provided for by section 40 of the ECO.

38.  I do not agree that section 40 of ECO is of relevance here.  It deals with the minimum amount of insurance coverage that an employer must provide for an employee.  Whereas under Article 3(e) the subject matter deals with the damages that an employer is obliged to pay to the employee.  These are two distinct matters.  In my view the ECO does not bring the matter within the alternative situation provided for by Article 3(e) of the Convention.

Public policy

39.  As Meeson in Admiralty Jurisdiction and Practice (3^rd Ed) para. 8.1 observes :

‘ The concept of limitation of liability is simple.  It is that a shipowner or some other person is entitled to limit his liability in respect of certain maritime claims arising out of an occurrence to a particular amount, irrespective of the total amount of such claims.  The rationale for such a concept is the public policy in encouraging shipping and trade which overrides the competing public policy in compensating the victims of wrongdoing.  This was made clear by Lord Denning M.R. in The “Bramley Maore” where he said :

“The principle underlying limitation of liability is that the wrongdoer should be liable according to the value of his ship and no more.  A small tug has comparatively sma1l value and it should have a correspondingly low measure of liability, even though it is towing a great liner and does great damage.  I agree that there is not much room for justice in this rule; but limitation of liability is not a matter of justice.  It is a rule of public policy which has its origin in history and its justification in convenience. ” ’

UK Merchant Shipping Act 1995

40.  Mr. Coleman submitted that express legislation is required in order to enable the case to come within Article 3(e).  He referred to section 185(4) of the United Kingdom Merchant Shipping Act 1995 which excludes the operation of the Convention.  It reads

‘ The provisions having the force of law under this section shall not apply to any liability in respect of loss of life or personal injury caused to, or loss of or damage to any property of, a person who is on board the ship in question or employed in connection with that ship or with the salvage operations in question if―

(a)    he is so on board or employed under a contract of service governed by the law of any part of the United Kingdom; and

(b)    the liability arises from an occurrence which took place after the commencement of this Act.

In this subsection, “ship” and “salvage operations” have the same meaning as in the Convention.’

41.  In my view the proper approach is look first to section 7(1) of COECO (in the light of section 18(1)) to see if it satisfies Article 3(e).  The argument on section 185(4) of the UK legislation will not by itself be determinative of the issue.  I, however, do agree that the English legislation reinforces the argument that section 7(1) of COECO is not sufficient to exclude the limitation of liability.  It should also be pointed out that the UK Unfair Contract Terms Act 1977 contained provisions identical to our sections 7(1) and 18(1) of COECO.

Conclusion

42.  Accordingly I would allow the appeal.  I reach this conclusion with utmost reluctance.  I find it to be most regrettable that by a side wind, the fundamental right of an employee is so adversely affected when an international convention became part of our domestic law.  There is no suggestion that the plaintiff’s employment contract was not governed by Hong Kong law.  Legislation should immediately be introduced in Hong Kong to remedy the situation. 

Hon Reyes J:

I.  INTRODUCTION

43.  Fong was seriously injured by the recoil of a tow rope which snapped.  At first instance, Recorder Yu SC found that the rope snapped due to Cheng's negligence in the navigation of a tug. 

44.  The accident took place within a construction site for which Gammon was responsible as main contractor.  Gammon had sub-contracted work involving use of the tug to Tung Shun.

45.  Tung Shun owned the tug which Cheng was navigating.  Cheng (the master of the tug) and Fong (part of the tug's crew) were employed by Tung Shun.

46.  In addition to finding Cheng culpable, Recorder Yu held that Gammon as main contractor and Tung Shun as Cheng's employer were liable to Fong in negligence.  There has been no appeal against that conclusion.  Quantum remains to be assessed.

47.  This appeal involves a narrow issue of limitation. 

48.  The appellants (Tung Shun and Cheng) contend that, by the Merchant Shipping (Limitation of Shipowners Liability) Ordinance (Cap.434) (MSO), they are entitled to limit liability by reference to the tug's tonnage.  If that is right, they would be jointly and severally liable to Fong only up to some $2.2 million.  Fong now being unable to look after his own affairs, such amount would be significantly below Fong's likely actual damages.

49.  Recorder Yu held that the Ordinance did not apply to limit liability.  The sole question in this Court is whether he was right.

II.  DISCUSSION

A. The Ordinance and the Convention

50.  The Ordinance made the Convention on Limitation of Liability for Maritime Claims 1976 part of Hong Kong law.

51.  The Convention applies to claims for personal injury occurring on board a vessel (see Article 2).  Where such a claim is made against a person (here Cheng) for whom a shipowner (here Tung Shun) is vicariously responsible, then the former may limit liability as provided in the Convention (see Article 1(4)). 

52.  But the entitlement to limit liability under the Convention is subject to Article 3.  That provides:-

“The rule of this Convention shall not apply to:-

 ...

(e) claims by servants of the shipowner ... whose duties are connected with the ship..., including claims of their heirs, dependants or other persons entitled to make such claims, if under the law governing the contract of service between the shipowner ... and such servants the shipowner ... is not entitled to limit his liability in respect of such claims, or if he is by such law only permitted to limit his liability to an amount greater than that provided for in Article 6.”

53.  Note that, if Cheng can limit liability, so can Tung Shun. This is because Tung Shun is vicariously liable only to the extent of Cheng's liability.

B. Recorder Yu's analysis

54.  Recorder Yu concluded that Article 3(e) of the Convention was applicable.  This meant that, Fong being Tung Shun's servant performing duties on the relevant tug, neither Cheng nor Tung Shun could limit their liability to him for personal injury.

55.  The contract of service between Fong and Tung Shun was governed by Hong Kong law.  For the purposes of Article 3(e), it was consequently necessary to determine whether under Hong Kong law Tung Shun was not entitled to limit its liability to Fong for personal injury.

56.  Recorder Yu first referred to Control of Exemption Clauses Ordinance (Cap.71) (CECO) s.7(1). 

57.  That provides:-

“A person cannot by reference to any contract term or to a notice given to persons generally or to particular persons exclude or restrict his liability for death or personal injury resulting from negligence.”

58.  To this, CECO Schedule 1, para.4 adds:-

“Section 7(1) ... does not apply to a contract of employment except in favour of the employee.”

59.  Recorder Yu then reasoned as follows (at Judgment §68):-

“The question which I have to consider are (i) what is the 'law governing the contract of service' between the shipowner and the servant, and (ii) whether under that law, the shipowner is not entitled to limit his liability in respect of such claims.  On the evidence before me, the 'law' that governs the contract of service is Hong Kong law, being that body of law which the contract has the most substantial connection.  Under Hong Kong law and in particular section 7 of the Control of Exemption Clauses Ordinance, an employer is not allowed to 'restrict his liability for death or personal injury resulting from no negligence'.  It seems to me that this conclusion also accords with a purposive construction of the Convention.  The rationale for Article 3(e) is the recognition by the Convention that a party State or jurisdiction under the Convention should be allowed the freedom to opt out of limitation of liability in the case of employees' claims.  There is no reason why this must take the form of a specific legislation such as that found in the Merchant Shipping Act 1995.  If, as we have in Hong Kong, a general policy as enshrined in section 7(1) of the Control of Exemption Clauses Ordinance that an employee is not allowed to limit his liability to an employee for damages for personal injuries arising out of or in the course of employment, that would, in my view, suffice, for the purpose of manifesting the requisite intention of opting out, thereby excluding the operation of the Convention.”

60.  By his reference to the Merchant Shipping Act 1995 (MSA), Recorder Yu was alluding to the fact that in England there is an express provision (MSA s.185(4)) that the Convention does not apply to claims for personal injury by a person employed on board a ship.  Hong Kong has no equivalent to MSA s.185(4).  But here, given CECO s.7(1), such a provision (Recorder Yu held) was unnecessary.

C. The appellants' initial critique of Recorder Yu's analysis

61.  Mr. Coleman SC (appearing for the appellants) submitted on appeal that Recorder Yu erred in relying on CECO s.7(1).  Mr. Coleman initially relied on similar arguments to those advanced by him at first instance.  I examine those arguments in this section. 

62.  CECO s.7(1) (Mr. Coleman says) merely prohibits the limitation of liability by contract.  It does not (Mr. Coleman argues) somehow "enshrine" a general policy that an employer may not limit his damages for personal injury to an employee.  There is (Mr. Coleman asserts) no such general policy.

63.  Mr. Coleman suggests that, by contrast, the Convention is unconcerned with contractual limitation.  Limitation under the Convention should be viewed (according to Mr. Coleman) as "extra-contractual" or "a limitation imposed irrespective of the existence of any particular contract ... or terms".

64.  I do not think that Mr. Coleman's submission refutes Recorder Yu's analysis.

65.  First, given CECO s.7(1), an employer (such as Tung Shun) simply cannot limit liability in personal injury to an employee (such as Fong).

66.  To say that CECO s.7(1) operates by prohibiting limitation of liability through contractual provisions does not take the analysis further.  How else (one asks rhetorically) is an employer able to limit his liability to an employer otherwise than through a term in a contract of employment?  Since CECO s.7(1) forbids precisely such a term, CECO s.7(1) is logically tantamount to a general regulation that an employer may not limit liability to an employee for personal injury.

67.  It follows that CECO s.7(1) is a statute forming part of Hong Kong law whereby a shipowner is not entitled to limit his liability for personal injury.  In other words, CECO s.7(1) must trigger the application of Article 3(e).

68.  Second, it is true that, unlike MSA s.185(4), CECO s.7(1) does not adopt the approach of expressly excluding the Convention from applying to claims for personal injury by certain employees. But nothing in Article 3(e) requires a relevant governing law to adopt the approach in MSA s.185(4) (and only that approach) before Article 3(e) is to become applicable.

69.  All that Article 3(e) requires is that the body of law (whether found in statute or common law) governing the contract of service prohibits a person's ability to limit liability for personal injury.  That is exactly what in effect CECO s.7(1) does.

70.  Third, Recorder Yu referred to a general principle enshrined in CECO s.7(1).  By that he meant that, even if he were wrong as to CECO s.7(1) being a prohibition imposed by statute against limitation of liability for personal injury, such a prohibition must now be regarded as forming part of the common law of Hong Kong.

71.  I respectfully agree. 

72.  Hong Kong law as the "the law governing the contract of service" is to be found in statute and common law.  The common law is itself constantly evolving.  It is affected by day-to-day decisions of judges and enacted legislation.

73.  Assume that somehow CECO s.7(1) as a statute were by itself insufficient to trigger Article 3(e). 

74.  Even then, a Hong Kong Court would have to recognise that, whatever might have been the historical position before, following enactment of CECO s.7(1), it cannot be maintained that at Hong Kong common law today an employer may limit his liability to an employee for personal injury.  For a Court to hold otherwise, would contradict the legislative intent manifested by CECO s.7(1).

75.  Fourth, Mr. Coleman claims the absence here of a provision such as MSA s.185(4) as a pointer in his favour.  I do not see why that should be the case.

76.  When the Ordinance was enacted in 1993, the legislature must have been aware of CECO s.7(1) then already in force.  Given the existence of CECO s.7(1), the legislature may well have thought it unnecessary to enact an express provision such as MSA s.185(4).

77.  Accordingly, I do not think that Mr. Coleman can draw any support from the absence of a provision such as MSA s.185(4).

D. New point raised by the appellants

78.  On the day of the appeal, Mr. Coleman raised for the first time a new point not previously signalled in the Notice of Appeal.  The point was later developed and argued among the parties in written submissions.

79.  For his new point, Mr. Coleman referred to CECO s.18(1) which provides:-

“(1)     Nothing in this Ordinance removes or restricts the effect of, or prevents reliance upon, any contractual provision which:-

(a)     is authorized or required by the express terms or necessary implication of an enactment; or

(b)     being made with a view to compliance with an international agreement which applies to Hong Kong, does not operate more restrictively than is contemplated by the agreement.”

80.  Mr. Coleman suggests, on the basis of either limb (a) or (b) of s.18(1), that CECO s.7(1) would not prohibit a contractual clause allowing an employer (in Tung Shun’s position) to limit liability for personal injury to an employee (in Fong’s position).  This is because (Mr. Coleman says) such a clause would either be authorised by the Convention (as enacted by the MSO) or be made with a view to compliance with that Convention.  Given the possibility of such a contractual clause, it follows (Mr. Coleman asserts) that CECO s.7(1) is not a provision triggering Article 3(e).

81.  I am unable to accept Mr. Coleman’s reasoning.

82.  First, consider limb (a) of CECO s.18(1).  The Convention (or the MSO) cannot be an “enactment” within the terms stipulated by limb (a).  This is because the Convention does not by itself expressly or impliedly authorise contractual provisions limiting an employer’s liability for personal injury to an employee.  On the contrary, all the Convention says is that such contractual provisions are permissible if and only if allowed by the relevant domestic law governing the contract of employment.

83.  Here Hong Kong law as the proper law of the employment contract forbids (through CECO s.7(1) or the common law) the exclusion of liability for personal injury.  Consequently, as far as Hong Kong domestic law is concerned, the Convention cannot be treated as authorising a contractual provision of the nature postulated by Mr. Coleman.

84.  Second, consider limb (b) of CECO s.18(1).  The Convention, although an international agreement, does not require the inclusion into a Hong Kong contract of a provision limiting liability to an employee for personal injury.  It is therefore hard to see how limb (b) is relevant to the issue before the Court. 

85.  On its wording, limb (b) only comes into play where compliance with an international agreement requires inclusion into a contract of some particular clause.  Where such situation arises, the requisite clause will be valid to the limited extent allowed by the international agreement, even though the clause may otherwise offend against sections of the CECO.  But such situation is not that here, since the Convention imposes no requirement of the sort envisaged by limb (b).

86.  Third, assume that Mr. Coleman is right that a contractual provision of the nature alleged by him would somehow fall within the terms of CECO s.18(1) (either limb) and thus escape the stricture in CECO s.7(1). 

87.  I do not see how it follows from this that here Tung Shun can limit its liability to Fong.

88.  This is because the actual contract here contains no provision of the nature posited by Mr. Coleman.  Accordingly, I do not understand why the contract here should escape the clear prohibition in CECO s.7(1).

89.  In summary, in my view, neither limb of CECO s.18(1) is relevant here.  Further, even if Mr. Coleman could establish his premise of an express contractual provision excluding liability for personal injury coming within the wording of either limb of CECO s.18(1), I do not see how his case is thereby advanced.  The premise sought to be established does not reflect the actual facts of this case. 

III.  CONCLUSION

90.  For the reasons given, I agree with Recorder Yu’s analysis and decision.  I would dismiss the appeal.  I would in consequence also make an order nisi that the appellants (Tung Shun and Cheng) bear the costs of the respondents (Fong and Gammon). 

91.  Mr. Simon Lam (appearing for Fong) sought, by way of fallback, to rely on inferences from Employees Compensation Ordinance (Cap.282) s.40 in support of his case that Article 3(e) applied.   At first instance, Recorder Yu (rightly in my view) rejected such argument.  In light of the conclusion here, it is unnecessary for me to deal further with Mr. Lam's fallback position.

Hon Le Pichon JA:

92.  Accordingly, there will be an order in terms of paragraph 16 above.