Zhang Yiguang (suing by the committee and estate of his person, Tong Wen Li) v Intergraph Systems South East Asia Pte Ltd

Choo Han Teck J:

[3] Miss Chia, counsel for the plaintiff, argued that the plaintiff was entitled to the insurance money as a matter of “entitlement”, that is to say, as a matter of contract. She referred to cl 11 of the employment contract (dated 4 October 1999) and the defendant’s “Employee Handbook” dated June 2001 as constituting the applicable terms of the contract. Clause 11 reads as follows:

Clause 7.3 of the Employees’ Handbook reads as follows:

[4] The schedule of benefits provided by the insurance company was annexed to the handbook. A company handbook is usually a compendious document that sets out the entitlement and benefits of the employees, as well as the house rules by which they are expected to conduct themselves. Whether the content of the handbook or any part of it constitutes terms of the contract of employment depends on the individual case. Not uncommonly, the contract of employment will refer to the company handbook with a statement that the handbook is binding on the parties. In such a case, it obviously applies as if it were a part of the contract itself. In this case, the contract of employment made no reference to the handbook.

[5] In my view, the handbook in the present case was not a part of the contract document. The house rules were still relevant because they might determine whether an employee had been guilty of misconduct, but that is another matter. It is cl 11 of the employment contract that is presently relevant. The handbook merely provided the secondary details. Thus, it was not critical that the handbook was not in fact distributed to the employees. Mr Love, the defendant’s representative, testified that the handbook actually remained in the defendant’s computer, unpublished. I am of the view, however, that cl 11 sufficiently provided the plaintiff a right to claim such medical and hospitalisation benefits as the defendant company might have provided. The parties could then refer to the handbook to see what it was that the company did provide. Therefore, on the contract ground alone, the plaintiff would be entitled to his claim.

[6] In any event, I find that the plaintiff would have succeeded on the grounds of trust, even if he could not succeed in contract under the terms of the employment contract or the handbook. I am of the opinion that when the defendant had taken out policies on its employees, the defendant as their employer held all the benefits due under the insurance policies as trustee for its employees. In its crudest form, insurance is akin to gambling – the insured pitching his dare against the insurer. It is legitimate and prudent for an insured to take out a policy of insurance in many instances – these cases are marked out by the common factor of an insurable interest in the insurance. That interest belongs to the insured. No one else has any right to insure that interest. Thus a man who wishes to protect the assurance of income or standard of living for those whose welfare he is concerned about, will insure his life so that that standard would be maintained in the event that he is rendered personally incapable of discharging his obligations.

[7] What interest does the employer have in the life of his employee? Except for defined “key employees”, any other employee is deemed replaceable in the context of insurance. Hence, when an employer takes out insurance on the life and health of his employee, he must have done so with the employee’s benefit in mind and it should not be assumed that he intended to profit from the event of his employee’s death or misfortune. In this regard, although the company handbook, which the defendant’s counsel, Mr Kumar, submitted, was not even issued to the employees, it nonetheless indicated the nature and design of the policies. Thus cl 7.3 of the handbook had to be read as evincing the intention of the company to provide the benefit that that clause addressed. Numerous authorities have been cited to me, and although they have been helpful to me, it is not necessary for me to deal with each or any one of them for they concerned very different situations. An exercise to distinguish those authorities from the present one would, and I emphasise, in this case (as it is presented before me) be a vain display of erudition. I find, therefore, that whether in contract or in trust, the plaintiff was entitled to the insurance benefits taken out on him save the payment under the AIG policy.