Lau Lan Ying v. Top Hill Company and Yick Hing Construction Company Limited | Third Party: Asia Insurance Co. Ltd.

At a glance

Parties

Lau Lan Ying (plaintiff) v. Top Hill Company (1st defendant) and Yick Hing Construction Company Limited (2nd defendant); Asia Insurance Co Ltd (third party)

Case no.

HCPI 6/2020; [2021] HKCFI 290

Court

Court of First Instance, High Court of the Hong Kong Special Administrative Region (Hon Marlene Ng J in Chambers)

Forum and rules

Application to stay under section 20(1) of the Arbitration Ordinance (Cap 609), which gives effect to Article 8 of the UNCITRAL Model Law; New York Convention Articles II and III cited

Treaty

Arbitration clause (General Condition (g)) in employees' compensation insurance policy no AMK/ECC/15-0804491

Sector

Construction; employees' compensation insurance

Outcome

Third party proceedings by the 2nd defendant against its insurer stayed and the two referred to arbitration (4 February 2021).

Amount

No amounts decided. Costs order nisi: the 2nd defendant pays the insurer's costs of the third party proceedings, including the Stay Summons, on the party and party basis, to be taxed if not agreed.

The dispute

Lau Lan Ying said she was a casual worker employed by the subcontractor Top Hill Company (D1). She was injured on 22 November 2017 when she slipped on a slope at Ta Kwu Ling during government slope works, for which Yick Hing Construction (D2) was the principal contractor. She sued both defendants in the High Court for common law damages. D2's employees' compensation insurer, Asia Insurance (TP), had repudiated liability under the policy on 30 April 2019. It did so on the ground that D2 had breached a claims condition by failing to supply information it had requested. D2 issued a third party notice against TP for indemnity or contribution. TP applied to stay the third party proceedings under the policy's arbitration clause, which covered "all differences arising out of this Policy". D2 argued, first, that no "difference" could arise until its liability to the plaintiff and the amount of that liability had been established. Second, it argued that public policy under the Employees' Compensation Ordinance (ECO) prevented a stay.

Key holdings

1. The clause is an arbitration agreement under sections 2 and 19 of the Arbitration Ordinance. It is also a Scott v Avery clause, because obtaining an award is a condition precedent to any action on the policy. Under the doctrine of separability, the clause survived TP's repudiation of liability under the policy. ¶¶ 20–23
2. There was a present arbitrable "difference arising out of this Policy". TP had disclaimed liability under the policy, while D2 disputed that disclaimer and claimed indemnity or contribution as TP's insured. Liability and quantum towards the plaintiff do not need to be established first. William McIlroy v Quinn Insurance and Post Office v Norwich Union were distinguished because they turned on narrower clause wording. ¶¶ 47–48, 71–77
3. On D2's own argument that no cause of action had yet accrued, the third party proceedings would be liable to be struck out, not just stayed. ¶ 75
4. No public policy bar. D2's claim against TP is a claim under the policy, not a statutory claim. It falls outside the District Court's exclusive jurisdiction over employees' compensation claims under section 18A of the ECO, as applied in Paquito Lima Buton. Claims under section 25(1)(b) of the ECO are arbitrable in any event. The ECO protects injured employees, not insured parties in their disputes with insurers, and TP remains liable to the plaintiff under sections 42–44 of the ECO whatever the arbitration decides. ¶¶ 119, 129, 132–134
5. A stay under section 20 is mandatory. It is no ground to refuse a stay that the main action will continue in court while the difference between D2 and TP goes to arbitration. ¶ 135
6. Whether D2's claim is barred by the clause's 12-month time limit after a disclaimer is for the arbitrator to decide. A time bar is a defence to the claim and does not make the difference non-arbitrable. ¶¶ 138–139
7. Costs follow the event. D2 pays TP's costs of the third party proceedings, including the Stay Summons, on the usual party and party basis; the request for indemnity costs was refused. ¶¶ 140–142

Procedural history

1. 22 November 2017The plaintiff is injured on the slope works site.
2. 30 April 2019Through its loss adjuster Integrity Adjusters Limited, TP repudiates liability under the policy.
3. 13 September 2019The plaintiff files an employees' compensation claim in the District Court (DCEC2203/2019).
4. 2 January 2020The plaintiff starts the High Court personal injuries action.
5. 2 July 2020Master Grace Chan gives D2 leave to issue a third party notice against TP; D2 files the notice on 7 July 2020.
6. 8 July 2020TP files the Stay Summons under section 20(1) of the Arbitration Ordinance.
7. 8 December 2020Hearing of the Stay Summons.
8. 4 February 2021Decision: the third party proceedings are stayed and referred to arbitration, with costs against D2.

Tribunal, counsel and experts

Decided by

• Marlene Ng Judge, Court of First Instance, High Court of the Hong Kong SAR

For the respondent

Tam Pun & Yipp

For other participants

Paul CK Tang & Chiu

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Keywords

• stay for arbitration
• section 20 Arbitration Ordinance
• Article 8 Model Law
• New York Convention Article II
• employees' compensation insurance
• Employees' Compensation Ordinance
• third party proceedings
• insurance arbitration clause
• all differences arising out of this Policy
• Scott v Avery clause
• Centrocon time bar
• repudiation of policy liability
• separability
• arbitrability of statutory claims
• public policy
• Fiona Trust
• Paquito Lima Buton
• personal injuries

Summary generated with AI from the published documents — refer to the award for the authoritative text.