Own Sheung v. National Insurance Co Ltd

HCA002513/1974

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

ACTION NO. 2513 OF 1974

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CORAM: Trainor, J.

Date of Judgment: 19th April, 1977.

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JUDGMENT

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1. The plaintiff, with another, was the owner of an earth moving machine known as a traxcavator. This machine weighed about eleven tons and moved on caterpillar tracks. It was not licensed to travel on the highways and, therefore, it had to be transported from one work site to another by lorry. It was the plaintiff who operated the machine.

2. About the 21st June, 1971 operations having finished at one site the traxcavator was to be transferred to another, and the plaintiff contacted the Wing Tat Transportation Co. which usually, if not always, provided the transport. Leung Hung Tat was the owner of that transportation company and it transported the traxcavator sometimes as frequently as once in every three or four days. On the date to which I have just referred Leung Hung Tat sent a lorry with a driver and a foki to the work site and provided two planks which were used to form a ramp up which the traxcavator was driven to the platform of the lorry. It was the function of the foki to place the planks in position.

3. According to the plaintiff, and I accept his evidence on the matter, it requires particular skill and experience to use, drive and steer a traxcavator. It is not steered in the same way as a motor car; direction is changed by interfering with the speed of one or other of the caterpillar tracks. Because of that it was the plaintiff who always drove the traxcavator up the ramp to the platform of the lorry and down the ramp when the destination was reached. It was the function of the foki, having erected the ramp, to direct the driver as he ascended and descended. There was a further complication to loading and unloading in that the shovel or scoop had to be raised while the traxcavator was ascending the ramp and then lowered to the platform; the procedure being reversed as the traxcavator was being taken off the lorry. For those various reasons the plaintiff said it was essential that he be present to load and unload his machine. But, he said, he also had to travel in the lorry with it in case anything should happen to the lorry, as for example getting a puncture. It would be impossible, he told me, to change a wheel if the traxcavator were on the lorry as a jack capable of raising the lorry with its eleven ton load would be unavailable. It also occurred to me that even if it were possible to find such a jack the risk of the lorry toppling over because of its load must be considerable.

4. On the 21st June, 1971 the plaintiff was travelling with his traxcavator on a lorry provided by Leung Hung Tat when the lorry was involved in an accident. The plaintiff was injured and successfully maintained an undefended action for negligence against Leung Hung Tat and his driver, and was awarded $351,700 damages and costs.

5. The defendant was the insurer of, and had issued a certificate of insurance in respect of, the motor lorry in question, and the plaintiff, in pursuance of s.10(2)(a) of the Motor Vehicles Insurance (Third Party) Ordinance, had given notice of the action against Leung Hung Tat and his driver to the defendant on the same day as the writ was issued. The plaintiff duly called on the defendant to pay the damages awarded and the costs of the action but the defendant refused to pay, hence these proceedings.

6. It might be appropriate to quote here Section 10(1) and (2)(a) of the Ordinance.

There are two essential elements there: (1) that the liability in respect of which judgment was obtained is one which is required to be covered by a policy of insurance under section 6(1)(b); and (2) is a liability which is covered by the terms of the policy.

7. Section 6 of the Ordinance stipulates the requirements of a policy of insurance to cover third party risks to comply with the Ordinance. So far as it is relevant to this case the section is as follows:

"6.(1) In order to comply with the requirements of this Ordinance, a policy of insurance must be a policy which -

8. The policy issued by the defendant to Leung Hung Tat was in compliance with the Ordinance and its limitation as to liability to third parties was worded almost as in the proviso to section 6. The limitation is set out in Section II of the Policy, headed "Liability to Third Parties" and commences:

Before proceeding with Section II it might be of some interest to pause for a passing moment to consider the words "the use .... of the vehicle" because the use to which the vehicle may be put has been set out in the Schedule to the policy. It is as follows:

9. I paused there because that portion of the Schedule which I have quoted was referred to in the plaintiff's Statement of Claim. It was conceded at the hearing that at the time of the accident the lorry was being used in connection with the policy holder's business.

10. Section II of the policy, so far as it is relevant, continues:

11. The case of the plaintiff was based on and argued around the meaning of the words "Contract of employment."

12. The defence pleaded was simply and solely a denial that the plaintiff, although a passenger, "was a passenger carried by reason of or in pursuance of a contract of employment as alleged or at all" and Mr. Zimmern, who appeared with Mr. Chang for the defendant indicated that he would vigorously oppose any departure from the pleadings or any application to amend.

13. Mr. Ching, who appeared with Mr. Nguyen for the plaintiff in his opening dealt with the exceptions to the persons who must be covered by insurance, the exceptions set out in the proviso to section 6(1) of the Ordinance. The use of the word "employment" in the first exception he said was clearly intended to exclude those to whom the Workmen's Compensation Ordinance applies. I do not think it is necessary to develop his argument or cite the authority referred to by him on that point as clearly it is so. From that he argued that when the words "contract of employment" were used in Section 6(1)(ii) they had a much wider meaning than a relationship of master and servant between an insured and a person injured when travelling on the insured vehicle. He argued that where the injured person was travelling on the vehicle because of his employment with a third party he was also covered. As I accept that contention, and, indeed, as it was not opposed, I shall confine myself to naming the authorities he cited to support it. Izzard v. Universal Insurance Co. Ltd., 1937 A.C. 733; Baker v. Provident Accident and White Cross Insurance Co. Ltd. (1939) 2 A.E.R. 690; and Vandyke v. Fender (1970) 2 Q.B.D. 292.

14. Mr. Ching said that in this case there was in existence a contract to carry the traxcavator and the plaintiff and asked, rhetorically, was it a contract of employment. He said that all the authorities available concern cases of what I shall here call "an employee situation", but submitted they did not close the list to other possible cases; and that a passenger who was not an employee but was on the vehicle because he was entitled or bound to be on it by reason of a contract he has with the insured must be covered. He cited a passage from the opinion of Lord Wright in Izzard v. Universal Insurance Co. Ltd. at 782: "I cannot accept the respondents' contention that 'contract of employment' should be construed in the Act as subject to the implied limitation 'with the person insured by the policy'. Such a departure from the clear language used cannot, I think, be justified. I think the Act is dealing with persons who are on the insured vehicle for sufficient practical or business reasons, .....". Mr. Ching stopped there to say that in the Izzard case and the instant one the test is: was the injured person on the vehicle "for sufficient practical or business reasons". He continued the interrupted sentence "..... and has (sic) taken a contract of employment in pursuance of which they are on the vehicle as the adequate criterion of such reasons. He submitted, as I understood him, that a person on a vehicle for sufficient practical or business reasons, such as arises by reason of the employment the lorry, must be covered pursuant to the Ordinance, and in the instant case was in fact covered by the policy. There is no logical reason, he said, to distinguish between the employee of a third party and a person not employed by a third party but who is a passenger on the vehicle at the behest of and for the benefit of the third party when there is a contract between the vehicle owner and that third party. From that he would extend the point to include the case of the owner of goods rather than an employee necessarily travelling with them where there is a contract for the use of a vehicle between the owner of the vehicle and the owner of the goods.

15. Mr. Ching further contended that the wording of sub-paragraph (c) of the proviso to Section II of the policy is ambiguous. He said that had it been the intention of the defendant to confine the exception in that sub-paragraph to an employee situation it could, without difficulty, have made the position clear. (I have used the words "employee situation" by reason of a reference with approval by Branson J. in the case of Burton v. Road Transport and General Insurance Co. Ltd., 63 L1.R. 253 at 257 to the case of Morgan v. Parr (1921) 2 K.B. 379 in which it was held that where a relationship between a man and a child was that of principal and agent to use the child as such constituted the offence of employing). He said that the word employment must be given its ordinary meaning. He quoted the 2nd Edn. Shorter Oxford Dictionary to support his contention that in the context of this case the word "use" was an ordinary meaning of the word "employment". He cited the case of Ballance v. Brown 1955 C.L.R. 384. In that case a scrap-metal dealer who frequently bought scrap metal from Brown allowed, or instructed Brown to take his car to Brown's home and to pick up the scrap-dealer on the following morning to go on a journey on the scrap dealer's business. He also told Brown to do any business he could. Instead of going straight home Brown first drove a lady friend to her home - a deviation of 2 1/2 miles. The car was insured by the scrap dealer for private use by a policy which provided that the insurers would "treat as though he were the insured any person in the insured's employ who is driving such a vehicle on the insured's order or with his permission for the purpose of the business of the insured". A charge against Brown of driving without insurance was dismissed and on appeal to the Q.B. Divisional Court (Lord Goddard C.J., Hilbery and Pearce JJ) the Court dismissing the appeal held that (1) if Brown was in the scrap-dealer's employ it could not be said he was on a frolic of his own; and (2) in construing the word "employ" in the policy it could be used in its widest sense. Mr. Ching maintained that within its widest sense the plaintiff had contracted for the "employment" of the lorry; by reason of that contract he was on board the lorry therefore he was a third party prescribed by the Ordinance to be covered by insurance; and he was, in fact, covered by the wording of the policy. As to the wording of the policy, if it were considered to be ambiguous it must be interpreted contra proferentem.

16. It was the contention of Mr. Zimmern that "contract of employment" as used in the Ordinance and the policy of insurance is susceptible of one meaning only, and that is one connoting a relationship of master and servant: a contract of service. He referred to 23rd Edition Chitty on Contracts, para. 631, and cited Weldrick v. Essex & Suffolk Equitable Insurance Society, Ltd. (1949) 83 Li. R. 775; and Baker v. Provident Accident and White Cross Insurance Co. Ltd. (1939) 2 A. E. R. 690. In none of the cases cited by him is the precise point before me considered. In all of them a clear master and servant situation existed, and in the various dicta it is quite clear that no other situation was considered; nor, indeed, could it have been in the circumstances. The result is that all the time the words which I have to interpret are themselves used in the interpretation of the legislation. In Baker v. Provident Accident at 695 E Cassels, J., having referred to the English Act and quoted from the proviso to section 36, which is similar to section 6 of our Ordinance:"( ii ) except in the case of a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment ......."; said " Then it sets out the liability which a policy shall not be required to give ( sic ). As I look at that exception, it means that, if a person is being carried upon a vehicle by reason of or in pursuance of a contract of employment, the policy is required to cover that person, and this policy, being in accordance with the law, does cover that person, , provided, of course, that the person is being carried by reason of or in pursuance of a contract of employment." He then went on to distinguish between "in pursuance of a contract of employment" and "by reason of a contract of employment". The former, he considered meant that a person is being carried pursuant to a contact of employment if it is a condition of his employment that he shall be on the vehicle and so carried. As to the latter he considered that a person in being carried "by reason of " his employment if he is on the vehicle because his master is in the position to order him to get on to the vehicle simply because he is the master. Cassels, J. considered the latter interpretation to be that which covered the Izzard v. Universal Insurance Co. Ltd. case as, indeed, it was. At 696 B/C he said "Be that as it may, in my view, in order to come within the terms of this policy, the passenger who is being carried upon the vehicle must be carried by reason of and in pursuance of a contract of employment. The liability which has occurred must arise during the period when that carriage of that passenger is by reason of or in pursuance of a contract of employment. The carriage of a passenger upon this laundry van from the laundry to Blackford Bridge would be the carriage of a passenger, assuming that passenger to be employed by the laundry, by reason of a contract of employment between the owners of the laundry and the passenger, the worker at the laundry."

17. In the passage I have just cited although Cassels, J. first said that a passenger to come within the terms of the policy must be carried "by reason of and in pursuance of" clearly he meant "by reason of or in pursuance of". However, having regard to the explanation he gave for the distinction between "by reason of" and "in pursuance of" it is obvious that he only envisaged "contract of employment" as meaning a contract between a master and servant or, as Mr. Zimmern would have it, a contract of service.

18. I have given the most anxious consideration to this case because, among other reasons, I have the greatest sympathy for the plaintiff. He was in my opinion, although the point was not argued before nor do I have to find on it, a passenger carried on the lorry in connection with the insured's business, a use covered by the policy and a circumstance in which the insured was entitled to be indemnified by the defendant if he were held to be liable to the plaintiff for personal injury while such a passenger. It occurs to me that had the insured otherwise complied with the requirements of the policy he would have been entitled to be indemnified by the defendant for his liability to the plaintiff.

19. Are the words in the Ordinance, "contract of employment" capable of an interpretation other than such as to imply a relationship of master and servant, or even an employee situation? Could it be argued for example that the insured had to have some one to drive the traxcavator on and of the lorry and be present with it as the lorry ferried it from one place to another in case of a break down and there was an implied contract of employment of the owner by the insured. The consideration of such a contract resulting in the relationship of master and servant runs up against almost insurmountable difficulties; but even if successful the plaintiff's claim must founder on the rock of the injury arising out of and in the course of the plaintiff's employment. If there had been evidence to the effect that part of the agreement for the insured carrying the traxcavator was that the plaintiff would load and unload it then, possibly, and that is as far as I would so, there might be a contract by the insured to engage or employ the plaintiff for that purpose and "by reason" of that contract he was a passenger on the lorry. But I have no such evidence. May I say here that I am not prepared to go so far as Mr. Zimmern would have me go and say that a contract of employment is confined to a contract of service. I would not like to suggest such a limitation on the interpretation of the words as I think it is open to argument that a contract for service might be within the meaning. One might find some support for that in the cases of Bankes v. Road Transport and General Insurance Company, Ltd. (1939) 63 L1.R. 253 and Morgan v. Parr (1921) 2 K.B. 379, and also for the proposition that where a principal employs an agent there is a contract of employment between them. Indeed Brandon, J. says categorically "It is not necessary to imply those words (contract of service) nor is it necessary, in order to give business effect to this (policy of insurance), to restrict the meaning of "employment" to employment under a contract of service."

20. So far as the instant case is concerned there is no worthwhile assistance to be derived from the authorities cited save perhaps in that it never appeared to cross the mind of the learned judges that the words could have a meaning other than indicating an employee/employer situation; they seem to take such relationship for granted.

21. It was possible to present this case only by reason of section 10(1) of the Ordinance and that means that I am forced back to deciding what is the ordinary meaning of the words "contract of employment" in section 6(1). I have transposed the words and re-written paragraph (ii) of the proviso in every way that I could envisage with relation to the circumstances of this case and the only interpretation within the general usage of the words in the context of the section must in my opinion connote employment of an individual. In other words "contract of employment" cannot include a contract for the employment of a vehicle.

22. As I said earlier paragraph (i) deals with a Workmen's Compensation Ordinance situation, a master and servant situation. Paragraph (ii) uses the words "contract of employment", words for a long time used to connote a master and servant situation though now superseded by the words "contract of service". The whole tenor of the two paragraphs suggests the employment of an individual. The most that can be said in favour of Mr. Ching's contention that "contract of employment" could mean employment of the lorry is that there is an element of ambiguity. I do not subscribe to that contention. I consider that the Legislature intended the paragraph to cover the case where an individual is employed. Had it intended otherwise it could have dropped the highly suggestive words "of employment" after the word "contract".

23. I dismiss the plaintiff's claim with costs.

24. The plaintiff's costs to be taxed in accordance with the Legal Aid Ordinance and Regulations made thereunder.

Representation:

Mr. Charles Ching, Q.C. and Mr. P. Nguyen (Director of Legal Aid) for plaintiff

Mr. A. Zimmern, Q.C. and Mr. D. Cheng (H.A. Hoosenally & Co.) for defendant.