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In employees’ compensation or personal injuries claims, it is not uncommon for the employer or its insurers to directly settle a claim with the injured person before any legal proceedings are commenced. The recent case of Chan Kwok Man v New World First Bus Services Limited DCEC No.186 of 2013 highlights the importance of ensuring that the wording used in discharge forms is clear, unambiguous and consistent and that the discharge form is properly executed.
Background
In the Chan Kwok Man case, the claim arose out of personal injuries suffered by the Applicant in a road traffic accident which occurred in the course of his employment with the Respondent. The Applicant had been driving a public bus for the Respondent when it collided with a taxi (“the Accident”).
On 5 July 2012, the Applicant signed the Respondent’s standard Chinese Discharge Form, under which he was paid HK$29,471.20 by the Respondent and/or its insurers in full and final settlement of all his claims arising out of the Accident. In the Discharge Form, the Applicant agreed to abandon all his rights to bring any further legal proceedings against the Respondent and/or its insurers arising out of the Accident.
The Applicant subsequently commenced an employees’ compensation action against the Respondent. The Respondent sought to strike out the action on the basis that it had already fully settled all causes of action that the Applicant may have against it and/or its insurers by virtue of the Discharge Form.
The Respondent argued that even though the main body of the Discharge Form stated that the settlement was for ”full and final settlement of all losses and personal injuries suffered” by the Applicant arising from the Accident, this could only mean to include the Applicant’s employees’ compensation claim against the Respondent and/or it’s insurers because it was clearly stated under the document heading that the payment was for employees’ compensation only.
The Applicant argued that on a true construction of the wording of the Discharge Form, he was not debarred from bringing the employees’ compensation action. He also argued that the Discharge Form should be set aside because he was mistaken about its nature and legal consequences. He argued that he had been rushed through the signing of it by the Respondent who had not explained the legal consequences of it or reminded him of his right to seek independent legal advice. The Applicant said that he had been under the mistaken belief that he was merely acknowledging receipt of a cheque and not signing legally binding documents.
The Court’s Ruling
The Court refused to strike out the Applicant’s employees’ compensation action, holding as follows:-
Lessons to be learnt
To avoid a discharge form being ruled invalid, it is important to adhere to the following.
What should employers and insurers do?
It is advisable for employers and insurers to do the following:-
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