Fong Yau He v. Gammon Construction & Others (HKCFA)
DMC Category Rating: Developed
This note has been contributed by Ken Lee To-ching, LLB(Hons), PCLL (University of Hong Kong), BCL Student at Oxford University
Article 1(4) of the Convention provides that:
Article 2(1)(a) further provides that:
However, a claim that falls within Article 2(1)(a) of the Convention is subject to the several exceptions laid down in Article 3, and in particular Article 3(e), which is in issue in this case:
"The rules of this Convention shall not apply to:-
Section 7(1) of the Control of Exemption Clauses Ordinance ("the CECO") (Chapter 71 of the Laws of Hong Kong) provides that:
"A person cannot by reference to any contract term or to a notice given to persons generally or to particular persons exclude or restrict his liability for death or personal injury resulting from negligence."
Section 18(1) of the CECO further provides that:
"Nothing in this Ordinance removes or restricts the effect of, or prevents reliance upon, any contractual provision which-
The Court held that the second and third Defendants were prima facie entitled to limitation of liability under Article 2(1)(a) of the Convention, and the question was whether Article 3 (to which Article 2 is subject) applied.
The Defendants argued that there was no law in Hong Kong prohibiting employers from limiting their liability, and that the CECO is concerned only with control of contractual limitation of liability, and not with limitations of liability imposed by legislation (under the MSO).
The Court rejected this submission and held that the "law" governing the contract of service was Hong Kong law. It was further held that under Hong Kong law, and in particular section 7 of the CECO, an employer is not allowed to "restrict his liability for death or personal injury resulting from negligence." Therefore, the present claim did fall within the exception under Article 3(e) of the Convention and, accordingly, the Defendants were not entitled to limit their liability.
The Court was of the view that this accords with the rationale of Article 3(e) of the Convention, which recognises that a state party under the Convention could opt out of limitation of liability in case of employees’ claims. Such opting out does not have to be in the form of a specific legislative provision, such as that found in section 158(4) of the Merchant Shipping Act 1995 in England.
The second and third Defendants appealed to the Court of Appeal only on the issue of limitation under the MSO and the Convention.
Court of Appeal Judgment  2 HKLRD 24; http://www.hklii.org/hk/jud/eng/hkca/2007/CACV000154_2006-56037.html
In the Court of Appeal, the Defendants raised a new argument in support of limiting their liability in the present claim. They argued that a contractual clause allowing an employer to limit liability for personal injuries to an employee would either be authorised by the Convention (as enacted by the MSO) as an "enactment" under section 18(1)(a) of the CECO, or be made with a view to compliance with the Convention under section 18(1)(b) of the CECO. Therefore, section 18 of the CECO would preclude the operation of section 7 of the CECO.
The Court of Appeal (Le Pichon JA and Reyes J, Cheung JA dissenting) dismissed the appeal. All three judges held that section 7 of the CECO excluded limitation of liability for personal injuries. However, Le Pichon JA and Reyes J held against the Defendants with respect to their arguments on section 18 of the CECO.
The Defendants further appealed to the Court of Final Appeal on the issue of limitation of liability.
Court of Final Appeal Judgment
All five judges agreed that the appeal should be dismissed. The leading judgment was given by Gault NPJ, with whom all other judges agreed.
Gault NPJ held that section 7(1) of the CECO prohibits any person (including a shipowner) from restricting his liability for personal injury, and that such liability could only be limited by contract or notice. Therefore, under section 7(1), the employer could not impose on the Plaintiff a limitation of liability for personal injuries resulting from negligence. On its face, section 7(1) meets the terms of Article 3(e) of the Convention, and the limitation of liability under the Convention does not, therefore, apply.
Further, Gault NPJ held that while the Convention constitutes an "enactment" (as defined in section 18(3)) for the purpose of section 18(1)(a) of the CECO, it does not expressly or impliedly authorise any contractual provision limiting a shipowner’s liability. The Convention merely provides for limitation of liability while recognising that such contracts could be prohibited under domestic law. Similarly, section 18(1)(b) also does not apply as there is no "compliance" or requirement under the Convention for contracts limiting liability. Therefore, section 18 does not override section 7 in excluding the entitlement to limitation under the Convention.
Back to Top
These Case Notes have been prepared with care, but neither the Editor nor the International and other Contributors can guarantee that they are free from error, nor that they contain every pertinent point. Reliance should not therefore be placed upon them without independent verification. The Editor and the International and other Contributors disclaim all liability for any loss of whatsoever nature and howsoever arising as a result of others acting or refraining from acting in reliance on the contents of this website and the information to which it gives access. The Editor claims copyright in the content of the website.