Read the full judgment text of FACV 000029/2000 on BabelCite. This FACV judgment was delivered on 18 June 2001 before Chief Justice Li, Mr Justice Bokhary PJ, Mr Justice Chan PJ, Mr Justice Nazareth NPJ, Sir Anthony Mason NPJ.
Insurance law – Employees' Compensation Insurance policy – interpretation – composite policy insuring co-assureds severally – policy taken out by sub-contractor with Schedule describing insured as sub-contractor 'AND HIS CONTRACTORS' – whether indemnity extends to principal contractor's liability in negligence and reimbursement liability in respect of injury to sub-contractor's employee – MacGillivray on Insurance Law, 9th ed., First Supplement, para. 1-187A – Employees' Compensation Ordinance (Cap 282) s.24(1) and (2) – Employees' Compensation Ordinance (Cap 282) s.40(1) – Antaios Compania Naviera S.A. v. Salen Rederierna A.B. [1985] AC 191 – Investors Compensation Scheme Ltd v. West Bromwich Building Society [1998] 1 WLR 896. Pak Kee Transportation Company Limited took out an Employees' Compensation Insurance policy with Sun Alliance and London Insurance plc on 3 January 1994, nine months before Pak Kee was engaged as sub-contractor by the appellant (B + B Construction, formerly Franki Contractors) for H-pile driven works. The sub-contract required joint-named employees' compensation insurance, but no joint policy was effected. An employee of Pak Kee, Cheung Ping, was injured at the worksite by the negligence of an employee of the appellant; the appellant was held liable to Cheung Ping and to reimburse Pak Kee for employees' compensation paid. The appellant claimed indemnity under Pak Kee's policy. The sole issue was whether the policy's indemnity extended to that liability. Applying Condition 1 and the MacGillivray principle, the Court of Final Appeal held that the policy was a composite policy insuring Pak Kee and its contractors severally in respect of their own interests as employers, so that the appellant's indemnity was confined to liability to employees in its own immediate service and did not cover liability to employees of Pak Kee. The appellant's purposive construction argument, based on commercial reality, was rejected: the policy served a real commercial purpose by protecting Pak Kee against its statutory liability under s.24 of the Employees' Compensation Ordinance, double insurance is common in the construction industry, and Condition 1 precluded reading the word 'Insured' differently in the indemnity clause and the first Exception. Appeal unanimously dismissed with costs.
Legal issues: Scope of indemnity under Employees' Compensation Insurance policy covering principal contractors and sub-contractors
Outcome: Appeal unanimously dismissed with costs.