CHAN CHU NGAN v. WONG WOON PUI AND ANOTHER

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J U D G M E N T

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Nazareth, J.A.:

1. This is the judgment of the Court.

2. On 11th November 1988, while the Appellant was working as a cargo handler at the Kong Ming Pier in Chai Wan, he sustained serious injuries when the cable of a crane broke and bales of material fell on him. He was at the time employed by the 1st Respondent, who had taken out an insurance policy for the purposes of the Employees' Compensation Ordinance (Cap 282) ("the ECO") with the 2nd Respondent.

3. Compensation was assessed by a medical board under the ECO, but the Applicant appealed to the District Court against that assessment. The matter came before His Honour Judge Wesley Wong in the District Court on 26th March 1992. On 22nd May 1992 he gave judgment for the Appellant against the 1st Respondent in the sum of $66,871.30 with interest at the rate of 5 per cent from the date of the accident together with costs "in respect of quantum". He also held that the 2nd Respondent was not liable to the Appellant and awarded it costs in respect of the matter of such liability.

4. On 20th June 1992, having obtained legal aid, the Appellant appealed to this Court by a notice of appeal seeking the setting aside of the award of compensation of $66,871.30 made by the judge and in lieu a larger award. That of course did not concern the 2nd Respondent directly. On 20th August 1992 the Appellant lodged a supplementary notice of appeal giving notice that he would rely upon additional grounds of appeal designed to show that the judge's decision that the 2nd Respondent was not liable to the Appellant was wrong. No application was made for leave to appeal out of time or to amend.

5. The appeal came up for hearing before this Court on 15th October 1992. The 2nd Respondent's skeleton argument put in by Mr Edward Chan, QC, which was served on 14th October, revealed to Mr Neville Sarony, QC, counsel for the Appellant, the failure to obtain leave that had occurred before he was associated with the matter, and the likelihood that the point would be taken by the Respondents, as indeed it was. Not surprisingly therefore, Mr Sarony began by applying for leave to appeal against that part of the judgment which absolved the 2nd Respondent from liability and for extension of time to make that application. He readily admitted that the Appellant was at fault and sought the Court's indulgence

6. In opposing the application, Mr Chan submitted it was first necessary to decide whether the claim against the 2nd Respondent was founded upon the ordinary civil jurisdiction of the District Court under the District Court Ordinance (Cap 336), in which case the right of appeal would be governed by s 63 of the District Court Ordinance, or, whether the order for dismissal of the claim against the 2nd Respondent is an "order of the Court" within the meaning of s 23 of the ECO, in which case, no leave to appeal would be required subject to this Court extending time.

7. Section 23 is in the following terms:

"(1)    Subject to the provisions of this section and of section 13, an appeal shall lie to the Court of Appeal from any order of the Court.

(2)    Except with the leave of the Court or of the Court of Appeal (which shall not be granted unless in the opinion of the Court of Appeal some substantial question of law is involved in the appeal) no appeal shall lie if the amount in dispute is less than $1,000.

(3)    No appeal shall lie in any case in which the parties have agreed to abide by the decision of the Court, or in which the order of the Court gives effect to an agreement come to by the parties.

(4)    No appeal shall lie after the expiration of 30 days from the date of the order of the Court:

    Provided that the Court of Appeal may, if it thinks fit, extend the time within which to appeal under this section notwithstanding that that time has elapsed."

8. Mr Chan submitted that a determination of any claim by an employee against the insurer of the employer is not an "order of the Court" within the meaning of s 23 because -

(a)     "Compensation" is defined in s 3 of the ECO as meaning compensation payable under ss 6, 7, 8, 9 and 10 of the ECO and certain other items listed. None of these include a claim by an employee against an employer's insurer, which would have to be made under s 43 or s 44; and

(b)    Section 18A of the ECO, which gives the District Court exclusive jurisdiction, only extends to claims for "compensation".

9. Having heard counsel's submission we granted the appellant the extension of time sought, and to the extent that was necessary, leave to appeal, indicating that we would deal with the necessity for the latter in our judgment thereby enabling the hearing of the appeal to proceed.

10. It was an essential step in Mr Chan's submission that any sum payable to an employee under s 43 or s 44 is not compensation. However, we are not able to accept that merely because the amount is payable by the insurer, it is not in fact compensation as defined. Under either section the sum payable by the insurer is that which liable to pay, i.e. in the particular circumstances of this case the compensation assessed in accordance with s 9 and in that sense payable under s 9, which makes provision for compensation in case of permanent partial incapacity, which is the class into which the appellant fits (King Tak-on v Lau Chun-yip [1987] HKLR 126,134) which, surprisingly, was not referred^-to at the hearing. That being so, it is not necessary to discuss the remaining elements of Mr Chan's submission. We mention only that we are not persuaded that the foregoing construction produces results that could not have been intended. It follows that leave to appeal to^-this Court was not necessary.

11. Turning then to the substantive appeal, Mr Sarony in pursuance of the leave granted filed an amended notice of appeal, abandoning the appeal against the quantum of the compensation of $66,871.30 against the 1st Respondent, and pursuing only the appeal against the 2nd Respondent, upon the four grounds originally notified to the Respondents in the supplementary notice of appeal.

12. The 1st ground turns upon the following provisions of s 43 of the ECO:

"(1)    Subject to this section, where in relation to an employee there is in force a policy of insurance 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.

(2)    No sum shall be payable by an insurer under this section -

(a)    unless, in the case of compensation agreed upon between the employer and an employee, such insurer has consented to pay the sum agreed upon as compensation to the employee; -

(b)    unless, in the case of compensation or damages determined or adjudged by a court or tribunal to be payable to the employee or any other person, the insurer had sufficient notice of the institution in the court or tribunal of proceedings for compensation or damages, as the case may be, to enable such insurer to be added as a party to the proceedings;

(c)    in respect of any judgment to pay compensation or damages, while execution thereon is stayed by the court or pending appeal; or

(d)    if before the happening of the accident which was the cause of the injury giving rise to the liability, the policy of insurance was cancelled by mutual consent or by virtue of any provision contained therein.

(3). . .

(4)    Where any sum is paid by the insurer which would, were it not for the provisions of this section, not be payable under the policy of insurance, such sum shall be recoverable by the insurer from the employer."    

13. The judge at page 3 of his judgment stated:

"It was agreed that at the time of the accident the Applicant was receiving cargo from a vessel at the dockside of Kong Ming Pier. On a simple construction of the policy, it does not cover the insured's liability to any employee injured while receiving or delivering cargo or while working on the quayside. Since it was agreed that the Applicant was injured while working on the quayside according to the construction of the policy, the policy did not cover the present claim."

14. The judge was referring to endorsement W71 of the policy which states:

"This Policy does not indemnify the Insured in respect of any claim arising in connection with:

(a)    employees receiving from or delivering to vessels or craft of any description, or employees on dock quayside or wharf;

(b)    stevedores or lightermen."

15. There was an express endorsement attached to the Policy that made it clear that "deliverer" was subject to endorsement W71. It is common ground that as the Appellant was actually delivering goods to a vessel, he fell within the scope of the endorsement.

16. Returning to the judgment the judge then referred to s 42, pointing out that it provides that any condition in the policy which gives the insurer a right to avoid the policy "in the event of some specified thing being done or omitted to be done after the happening of the accident?shall be of no effect upon a claim under s 44 (which entitles employees to proceed against insurers). He continued:

"In the present case it was not a case where the policy was avoided by reason of the insured having done something or omitted to do something after the happening of the accident. In my judgment section 42 has no application to the present situation. On the simple construction of the policy I find that policy did not cover the present claim."

17. Mr Sarony submitted that the question of whether the Policy was "a policy of insurance for the purposes of [Part IV]" of the Ordinance is not to be determined in that way, and that on the contrary the evidence is overwhelmingly that it was such a policy. He points to the circumstances which clearly show that the Policy was taken out for the purposes of the ECO, to the numerous references to expressions like "Employees?Compensation Policy? "Employees?Compensation Insurance Policy?and "Employees?Compensation Insurance Endorsement? and particularly to the policy being designed with reference to particular "Legislation" which in the particular policy has been specified as the "Employees' Compensation Ordinance".

18. Mr Edward Chan on the other hand submitted, with reference to ss 43 and 44 of the ECO that whether a policy is "a policy of insurance for the purposes of this Part" is to be determined by the question of whether there is in force at the particular time such a policy. He contended that at the time of the accident the Appellant was delivering goods at a pier and was therefore expressly excluded from the scope of the Policy. Upon that basis he submitted there was not at the time a policy of insurance in force. We reject that submission. Clearly at all times other than when the Appellant was delivering goods to vessels, he was covered by the Policy of insurance. That, in our view, not only reflects the plain meaning of s 43(l), but also the reality of the situation. In addition the contended for by Mr Chan would clearly militate is plainly the object of the legislation.

19. Mr Chan also submitted that since s 42 in effect prohibited any condition in a policy of insurance issued for the purposes of Part IV providing that liability would not arise in the event of some specified thing happening after the accident, such a condition could be provided by reference to things happening before the accident. We doubt whether such a conclusion follows, but it would in any event be beside the point, since upon the conditions in s 43(1) being met, the compensation provided for by the Ordinance "shall forthwith become due and payable by the. insurer" (see the text of s 43(1) reproduced earlier in this judgment). We are also not able to see any merit in Mr Chan's subordinate arguments that the existence of a policy was in the nature of a condition precedent on the analogy of a Scott v Avery clause,, that unless a policy met every single requirement of the ECO it could not be "a policy of insurance for the purposes of [Part IV]" and that the policy should not receive different interpretations in the context of the employer/insurer relationship as opposed to being in force at the time of the accident.

20. In our judgment the Policy is, in terms of s 43(1), plainly "a policy of insurance for the purposes of [Part IV]" of the Ordinance which was in force in relation to the Appellant. The employer i.e. the 1st Respondent having become liable to pay the sum under the Ordinance ordered by the judge, in respect of the injury to the Appellant arising out of and in the course of his employment (which is not in dispute), and there being no suggestion of avoidance of such liability under s 43(2), the sum awarded by the judge became forthwith due and payable by the insurer. The effect of s 43(1) is therefore to impose an absolute liability upon the 2nd Respondent to pay to the Appellant the sum awarded, interest and costs (King Tak-on v Lau Chun-yip at p. 132G). Upon that basis the appeal must clearly succeed and we do not find it necessary to address the Appellant's remaining grounds and Mr Sarony's other submissions. We accordingly allow the appeal and order that judgment be entered against the 2nd Respondent.

21. As to costs, prima facie we can see no reason why the Appellant's costs against the 2nd Respondent should not follow the event. Accordingly we order nisi that the Appellant is to have his costs of the appeal, as well as the costs below with a certificate for counsel, against the 2nd Respondent, and that the Appellant's own costs be taxed in accordance with the Legal Aid Regulations.