MTM Ship Management Pte Ltd v Devaswarupa [2022] SGHC 178 (“MTM Ship Management”) and the Workers’ Compensation Act (“WICA”)
What do you want to know
- While WICA is relevant to all employers in Singapore generally, this legal update is particularly relevant to marine and non-marine insurers, ship managers, crew agents and employers of manual workers.
- WICA’s statutory plan allows employees to make claims for work-related injuries or illnesses without having to file a civil suit.
- The purpose of the WICA scheme is to provide a lower cost and faster alternative to common law for the settlement of compensation claims.
- How does a private settlement between employer and employee affect a subsequent WICA claim? This issue was recently considered by the General Division of the High Court of Singapore in MTM Ship Management Pte Ltd.
decision
- In MTM Vessel Management, an employee died of injuries sustained while unloading cargo on board a vessel. In accordance with the employee’s employment contract, the employer entered into an amicable agreement with the next of kin of the employee and paid monetary compensation for the death of the employee.
- The employee’s next of kin subsequently filed a claim under the 2009 WICA.
- A new question arose: the commissioner of labor (the “Commissioner”) has the discretion to consider Private Settlement in deciding whether the subsequent 2009 WICA application should be allowed, and the amount thereof, if any.
- The Court concluded that the purpose of WICA 2009 is to provide employees with an alternative, quick and inexpensive way to receive compensation. As such, the Commissioner, when adjudicating WICA claims, has the discretion to consider settlements made in favor of the employee prior to the commencement of a WICA claim. The commissioner must then deduct the private settlement amount paid to the employee from any amount payable to the employee as assessed under the WICA plan.
- Accordingly, the Court reversed and set aside the Commissioner’s decision. The court took into account the private settlement paid by the employer which was of a value greater than the amount of compensation decided by WICA, thus extinguishing the employee’s WICA claim. A fuller discussion of the judgment is presented below.
Service of decision
- The objective and purpose of the WICA scheme was clearly stated by the Court in this decision: it is an alternative process for employees to receive workers’ compensation, and is not intended to supplement common law claims. The WICA scheme does not allow double recovery.
- Employees who are entitled under their contract of employment to some form of compensatory payment in the event of injury or death can expect to have any WICA claim reduced by that amount if they had already been compensated for that wound.
- Employers are now assured that any private settlement monies paid to injured employees will be used to reduce the compensation monies assessed as payable to the employee under the WICA plan.
- It remains open as to whether the 2019 WICA regime will mirror the 2009 WICA regime in this regard. Our view is that, based on the similar legislative intent and objective of the 2009 and 2019 WICA schemes, this will be the case.
Case summary
Facts
- In MTM Ship Management, the High Court of Singapore addressed the issue of whether, under WICA, discretion is given to the Commissioner to make his decision, how and when such discretion should be exercised.
- In a decision that will be welcomed by employers, the case provides some degree of certainty that any compensation paid outside of a 2009 WICA claim should, in most cases, offset any compensation eventually awarded.
- The case involved a sailor who perished on a ship following an unfortunate accident while the ship was moored in port. By virtue of a collective agreement incorporated into the seafarer’s employment contract (the “ABC“), the seafarer’s employer, MTM Ship Management Pte Ltd (the “Applicant”) paid the sum of US$144,000.00 (the “Settlement sum”) to the sailor’s heirs (the “Respondents”).
- The defendants subsequently filed a claim under the WICA 2009 seeking compensation for the seafarer’s death. The plaintiff raised no objections during the relevant period and a certificate of order (the “COE ») in favor of the respondents for less than the settlement amount. The COE has been certified under WICA 2019.
- The Claimant then pointed out that the CBA contained a clause stating that a seafarer who collects compensation under the WICA would only receive the difference between the amount ordered under the WICA and the settlement amount, whichever was greater. to the second. The plaintiff then appealed.
decision
- The Court determined that there were three relevant issues to be determined:[1]
- Does the applicant have the right to appeal the commissioner’s decision (“Number 1”);
- Is the applicable legislation WICA 2009 or WICA 2019 (“Number 2”); and
- Should the COE be canceled (“Number 3”).
- Issues 1 and 2 were quickly resolved. Regarding Question 1, under both Section 29(2A) of the WICA 2009 and Section 58(1) of the WICA 2019, an appeal may only be brought if it involves both a substantial question of law and if the amount in question is greater than SGD 1,000.00. The Court concluded that, as this case involved a novel issue of statutory interpretation as to whether the Commissioner had the authority under the WICA 2009 or the WICA 2019 to consider settlement payments when assessment of the amount of compensation payable, and that the COE was for a greater sum less than SGD 1,000.00, the claimant had a right of appeal.
- On issue 2, the Court found that under Article 84(2) of the WICA 2019, the death of the seafarer having occurred before the entry into force of the WICA 2019, the WICA 2009 applied.
- On issue 3, the Court noted that Section 9(1A)(1) of the WICA 2009 provided that payment or compensation to a worker whose injury resulted in death or incapacitation permanent was to be made in the form of a deposit directly with the Commissioner, and that any payment made directly to the worker or their dependent is deemed not to be a compensation payment for the purposes of the WICA 2009. However, under the section 9(1A)(1)(b), the Commissioner may take into account any amount paid otherwise than in accordance with section 9(1A)(1) if they deem it just and reasonable to do so .
- The question then was whether that provision should be read as conferring discretion to take into account past settlement payments. To answer this question, the Court undertook an exploration of the legislative history of the WICA regime and of the parliamentary debates on reading the various bills in order to determine, on the one hand, whether the Commissioner had the discretionary power to hold account of prior settlement payments and, secondly, when and how such discretion was to be exercised.
- The Court found that the WICA 2009 was drafted with the intention of compensating employees in two circumstances:[2]
- First, where the employee would otherwise have been able to obtain common law damages from their employer, the WICA regime offers an alternative and simpler route to obtaining compensation; and
- Second, where the employee could not have obtained common law damages from his employer (for example, because the employer was not at fault), the WICA regime nevertheless provides a measure of compensation for the employee.
- The Court further held that there was no suggestion that the 2009 WICA was designed to provide a more generous measure of compensation than would have been hypothetically awarded by a common law court had their claims been successful.[3] The principle of deductibility still applies and, as the Singapore Court of Appeal had previously observed in Pang Cheng Suan[4]object of the WICA scheme”is not to give workers the right to double recovery of compensation and damages for the same damage”.[5]
- For these reasons, the Court decided that the legislative intent of WICA 2009 could not be to allow employees who had already received a settlement payment from their employer to also obtain compensation for the same injury as of right and without exception.[6]
- The fact that Section 33 of the WICA 2009 also prevents compensation from being sought by an employee who has already sued for damages or recovered damages in respect of that injury in court supports this point of view.[7]
- With respect to the situation at issue, the Court found that since the amount of the settlement was greater than the allowable claim under the WICA 2009, the Respondents had been adequately compensated and therefore the Certificate of Order had been canceled and cancelled.
Do these results extend to WICA 2019?
- The Court, having concluded that the Commissioner had discretion as to the consideration of prior settlement payments under the 2009 WICA, did not have to determine whether the same applied under the WICA. 2019. Nevertheless, the Court made some general observations.[8]
- The first is that there was no provision in bet matter with that of Section 9(1A)(b) of the WICA 2009, or any provision which expressly authorizes the Commissioner to take settlement payments into account when determining the amount of compensation payable. However, there was also no mention in the parliamentary debates as to why Article 9(1A)(b) was absent from WICA 2019.
- The Court suggested that this may be because Section 51 of the WICA 2019 gives the Commissioner discretion to register the terms of a settlement under the WICA 2019, make an order to give effect to a settlement or to refuse to register the settlement. The Court also pointed out that Section 54 of the WICA 2019 gave the Commissioner the power to order the payment of compensation or to deny compensation as they deemed just.[9]
- The Court ultimately concluded that the issue remained open for future determination, although it expressed the hope that these provisions would continue to encompass the discretion to consider regulations or, failing that, that Parliament would consider make the appropriate legislative changes.[10]
- The second is that it remains an open question whether a settlement which serves as payment for the purposes of the Merchant Shipping (Maritime Labor Convention) Act 2014 (the “MLCA 2014”) is made, if such payment will reduce the WICA plan benefit in the event of death or permanent disability. Since WICA 2009 and WICA 2019 contained provisions stating that this is the case for medical expenses and/or payment for loss of earnings, the Court said this may be a gap in the law that needs to be filled, but that it was not for the Court in this case to answer those questions.[11]