Fong Yau Mei v Gammon Construction & Others
Note: the decision at first instance in this case has been upheld by the Hong Kong Court of Appeal and by the Hong Kong Court of Final Appeal. To see the note on the judgment of the Court of Final Appeal, click here
In this, the first case in Hong Kong in which a defendant employer tried to limit his liability for the injury of his employee under the International Convention on Limitation of Liability for Maritime Claims, the court held that the case fell within the exception under Article 3(e) of the Convention and denied limitation accordingly. The employment contract was governed by Hong Kong law and the Control of Exemption Clauses Ordinance forbad an employer from contracting out of his liability in negligence for injury or death
DMC Category Rating: Developed
This case note is contributed byCrump & Co, the International Contributors to the website for Hong Kong
The second and third Defendants, as the shipowner and master of the tugboat, sought to rely on limitation of liability under Part II of the Merchant Shipping (Limitation of Shipowners’ Liability) Ordinance. Section 12 of the Ordinance makes the Convention on Limitation of Liability for Maritime Claims part of the Hong Kong Laws. If limitation of liability applied, the amount recoverable by the Plaintiff would have been limited by reference to the tonnage of the vessel, to an amount in the region of HK$2.2 million.
Article 2(1)(a) of the Convention reads as follows:
Article 1(4) further provides that:
"If any claims set out in Article 2 are made against any person for whose act, neglect or default the shipowner or salvor is responsible, such person shall be entitled to avail himself of the limitation of liability provided for in this Convention."
However, a claim that falls within Article 2(1)(a) of the
Convention is subject to the several exceptions laid down in Article 3:
(e) claims by servants of the shipowner or salvor whose duties are connected with the ship or the salvage operations, including claims of their heirs, dependants or other persons entitled to make such claims, if under the law governing the contract of service between the shipowner or salvor and such servants the shipowner or salvor is not entitled to limit his liability in respect of such claims, or if he is by such law only permitted to limit his liability to an amount greater than that provided for in Article 6."
The Plaintiff submitted that the limitation clause did not apply to the second Defendant in its capacity as the employer of the Plaintiff and also that, in reliance on Article 3(e), the Employees’ Compensation Ordinance was legislation governing the contract of service between the shipowner and the servant under which the shipowner was not entitled to limit its liability.
On the other hand, the judge’s interpretation of Article 3(e) was that, for the Article to apply, there had to be a law [emphasis added] governing the contract of service between the shipowner and the servant, under which the shipowner is not entitled to limit his liability. The questions to be asked, therefore, were (i) what was the "law" governing the contract of service between the shipowner and the servant and (ii) whether under that law, the shipowner was not entitled to limit its liability in respect of such claims.
The judge held that the "law" governing the contract of service was Hong Kong law and under the Laws of Hong Kong, in particular section 7 of the Control of Exemption Clauses Ordinance, Cap 71, an employer is not allowed to "restrict his liability for death or personal injury resulting from negligence." Therefore, he held that the present claim did fall within the exceptions under Article 3(e) of the Convention and the shipowner was, accordingly, not entitled to limit its liability.
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