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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REASONS FOR JUDGMENT

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Hon Le Pichon JA:

1.  This was an application by the second and third defendants for leave to appeal to the Court of Final Appeal.  At the conclusion of the hearing of this application, this court granted leave to appeal on the basis that the questions involved in the appeal ought to be submitted to the Court of Final Appeal for decision by reason of their great general public importance upon condition that security of costs in the sum of $400,000 for each of the respondents to the appeal be provided within 28 days.

2.  The proposed appeal is from the judgment of this court on the question whether the second and third defendants are 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 to the plaintiff who sustained personal injuries whilst working on a tugboat.  The second and third defendants are respectively the owner and the master of the tugboat.  By a majority, this court held that the second and third defendants were not so entitled.  In view of the fact that the decision of this court was not unanimous, inter alia, with differing views on the true construction of section 18(1) of the Control of Exemption Clauses Ordinance, Cap. 71 which had a direct bearing on the availability of the limitation of liability under the Convention, it is clearly a matter that should be considered by the Court of Final Appeal.

3.  The questions of great general or public importance for decision as set out in the notion of motion are the following:

“1. Whether by Hong Kong law a shipowner is not entitled to limit his liability under the Ordinance and Convention in respect of the claims mentioned in Article 3(e) of the Convention, that is whether there is any provision of the law of Hong [Kong] under which a shipowner is not entitled to limit his liability in respect of such claims within Article 3(e) of the Convention.

2. Whether section 7 of the Control of Exemption Clauses Ordinance Cap 71 (“ the CECO”) is concerned with the prohibition of contractual limitation of liability which, as the section envisages, is by way either of a contract term or a notice only, so that the statutory limitation under the Convention relied upon by the 2nd and 3rd Defendants is not an attempt to exclude or limit liability by reference to any contract term or notice given, and so is not caught by the section.

3. Whether the Ordinance and the Convention constitute an enactment within the meaning of section 18(3) of the CECO, so that by virtue of section 18(1) the CECO does not remove or restrict the effect of or reliance upon a contractual provision limiting damages recovered by an employee in a claim for personal injury resulting from negligence, because such a contractual provision is expressly authorized by an enactment, that is by the Ordinance or the Convention.

4. Whether there is a general principle enshrined in the common law of Hong Kong, so that irrespective of the CECO provisions the prohibition against limitation of an employer’s liability to his employee has become part of the law of Hong Kong.

5. Whether, for a shipowner to take the benefit of the limitation provided for under the Convention, he needs in fact in any case expressly to contract in to the Convention (for example, by including a term in the relevant contract of employment or by giving relevant notice), or whether the shipowner is entitled to the benefit of the Convention anyway, because its provisions have the force of law in Hong Kong.”

4.  I should mention that the application was also made on the basis that the second and third defendants were entitled to appeal as of right under section 22(1)(a). Although liability has been established, damages have yet to be assessed.  The claim for damages remains an unliquidated claim.  It was said that if the second and third defendants could avail themselves of the limitation of liability under the Convention, a limitation fund would be constituted and as calculated in accordance with the formula set out in the Convention would be in the order of $2 million.  It was therefore said that the appeal involves directly or indirectly some question was of civil right that exceeds $1 million.  For my part, I do not consider that the claim is other than an unliquidated claim and I am not prepared to agree that section 22(1)(a) applies.

Hon Cheung JA:

5.  I agree.

Hon Reyes J:

6.  I agree.