Bowen (G) v R

• Jurisdiction: Cayman Islands
• Judge: (Chadwick, P., Forte and Conteh, JJ.A.)
• Judgment Date: 08 April 2009
• Court: Court of Appeal (Cayman Islands)
• Date: 08 April 2009

Court of Appeal

(Chadwick, P., Forte and Conteh, JJ.A.)

G. BOWEN and AIR TECH CORPORATION LIMITED

and

R.

C.H. Allen for the appellant;

T.N. Ward, Senior Crown Counsel, for the Crown.

Cases cited:

(1) Brend v. WoodUNK(1946), 62 T.L.R. 462, referred to.

(2) Gammon (Hong Kong) Ltd. v. Att.-Gen. (Hong Kong), [1985] A.C. 1; [1984] 3 W.L.R. 437; [1984] 2 All E.R. 503, followed.

(3) Huckerby v. Elliott, [1970] 1 All E.R. 189, referred to.

(4) Lim Chin Aik v. R., [1963] A.C. 160; [1963] 2 W.L.R. 42; [1963] 1 All E.R. 223; (1962), 106 Sol. Jo. 1028, followed.

(5) Sherras v. De Rutzen, [1895] 1 Q.B. 918, referred to.

(6) Sweet v. Parsley, [1970] A.C. 132; [1969] 2 W.L.R. 470; [1969] 1 All E.R. 347; (1969), 53 Cr. App. R. 221; 113 Sol. Jo. 86, followed.

(7) Tesco Supermarkets Ltd. v. Nattrass, [1972] A.C. 153; [1971] 2 W.L.R. 1166; [1971] 2 All E.R. 127, referred to.

Legislation construed:

Health Insurance Law 1997, s.2: The relevant terms of this section are set out at paras. 2 and 5.

s.3(1): The relevant terms of this sub-section are set out at para. 3.

s.3(2): The relevant terms of this sub-section are set out at para. 3.

s.3(7): ‘Subsection (1) shall not require more than one health insurance contract to be effected in respect of any person and, accordingly, if a person is employed by more than one employer, insurance must be effected on his behalf and on behalf of his unemployed spouse and children by his principal employer.’

s.3(13): The relevant terms of this sub-section are set out at para. 3.

s.7: ‘An employer who deducts from the salary, wage or other remuneration of an employee more than the amount which he is entitled to deduct in respect of any person under sections 5 or 6 commits an offence, and is liable on summary conviction to a fine not exceeding $2,000 or on conviction on indictment to a fine not exceeding $5,000.’

s.10(1): The relevant terms of this sub-section are set out at para. 7.

s.10(3): The relevant terms of this sub-section are set out at para. 7.

s.14(1): The relevant terms of this sub-section are set out at para. 5.

Criminal Law-strict liability-presumption against strict liability-presumption displaced by clear words or necessary implication, if statute deals with issue of social concern (e.g. requirement to provide employees with health insurance) and strict liability appropriate to assist in enforcement-only reasonable if able to affect promotion of compliance and inappropriate if accused unaware of his liability

Employment-duties of employer-provision of health insurance-under Health Insurance Law 1997, ss. 3(2) and 7, employer strictly liable if fails to provide health insurance for employees or makes improper deductions of insurance premiums from salary

The appellants, a company and its general manager, were charged in the Grand Court with failing to maintain a standard health insurance contract in respect of an employee, as required by s.3(2) of the Health Insurance Law 1997. The company was also charged with unlawfully deducting contributions from the employee”s salary when no health insurance cover was in existence, contrary to s.7 of the Law.

The complainant, an employee of the company, discovered that, between 2002 and 2005, deductions had been made from his salary for health insurance cover, even though no such cover was in place. He notified the Health Insurance Commission, and the company and its general manager, who was directly responsible for dealing with matters of health insurance cover for employees, including the complainant, were charged on indictment with offences contrary to ss. 3(2) and 7 of the Law. The general manager maintained that although health insurance cover had originally been effected for employees, he was unaware that it had been terminated for non-payment of premiums at the time in question.

The Grand Court (Sanderson, Ag. J.) ruled (in proceedings reported at 2007 CILR 390) that these were offences of strict or absolute liability, not requiring mens rea. It recognized that although there was a presumption of mens rea in the definition of a criminal offence, it could be overridden in relation to matters of great social concern which had potentially serious consequences-and when imposing strict liability would encourage the observance of the relevant regulations. The compulsory provision of health insurance fell into this category. The jury was therefore directed

that it was not necessary for the Crown to prove that the appellants intended to not effect or continue the insurance, but simply had to demonstrate that the alleged events had occurred and a lack of knowledge of the failure to maintain the insurance was no defence. The appellants were found guilty on all counts and fined.

The appellants submitted that the legislature could not have intended (a) that an employer was strictly liable under s.3(2) since that sub-section created liability not only for non-coverage of an employee but also for the employee”s children or unemployed spouse, of whom the employer might well be unaware; (b) that an employee would himself be strictly liable under s.3(1) if he incorrectly believed that he was covered by insurance taken out by his employer; or (c) that an employer would be strictly liable under s.3(2) for failure to insure because its employee had failed to notify it of a material change of circumstances as required by s.8(1). They submitted that these illustrations made it clear that the requirement of knowledge was a necessary ingredient in all offences of failure to insure within s.3(1) and 3(2).

Held, dismissing the appeal:

(1) The Grand Court had been correct to rule that the legislature had intended to impose strict liability for the failure to insure an employee and for unlawful deductions by an employer under ss. 3(2) and 7 of the Health Insurance Law 1997. The court had correctly recognized that there was a presumption of law that the Crown had to establish mens rea before an accused person could be convicted but that presumption could be displaced by clear statutory language or necessary implication where the issue was one of great social concern. Moreover, strict liability would only be imposed if it would be appropriate in assisting in the enforcement of the provisions by encouraging greater vigilance and thus it could only be intended if it would impact on those able directly or indirectly to promote compliance. The lower court had correctly applied the relevant principles in deciding that the presumption had been displaced here, since the imposition of strict liability would help promote the statutory aim of ensuring that employees were protected by health insurance and, further, it would be practical and reasonable to do so since the legislature must have assumed that an employer would know of his liability to insure his spouse, children and employees. It was irrelevant that it was inappropriate to impose strict liability for other offences within the section-for instance it was clear that the legislature did not intend to impose strict liability for the failure of an accused person when he did not know or could not reasonably be expected to have known of the existence or facts creating a liability to effect health insurance. Further, the contrast between the wording of s.3(2) and that providing for the liability of officers of corporate bodies under s.14(1)-which required the explicit ingredient of consent, connivance or neglect-also indicated that the legislature intended there to be strict liability under this section. It was therefore permissible for the Grand Court to have held that the company was strictly

liable for failing to insure his employee (pursuant to para. (c) of s.3(2)) and making unlawful deductions (under s.7) (para. 26; paras. 40–48).

(2) The general manager was not able to escape liability by claiming that only the company was the principal employer for the purposes of s.3(7). The definition of ‘employer’ in s.2 indicated that the term included a ‘manager’ and he was therefore liable as a part of the ‘employer’ for the purposes of s.3(2). Section 3(7) would only have application where there existed more than one contractual employer (para. 36).

1 CHADWICK, P.: On October 12th, 2007, following a trial on indictment before Sanderson, Ag. J. and a jury, these two appellants were each convicted of an offence under s.3(2) of the Health Insurance Law 1997, and the second appellant, Air Tech Corp. Ltd., was convicted of a further offence under s.7 of that Law.

2 The Health Insurance Law was enacted in order to provide that those resident or employed in the Cayman Islands were protected by health insurance. It does so by imposing duties on residents and employers to effect standard health insurance contracts for themselves, their unemployed spouses, their employees and the unemployed spouses and children of their employees. The expression ‘standard health insurance contract’ is defined, by s.2, to mean ‘a contract issued by an approved provider to provide insurance cover’ in respect of minimum health care benefits, prescribed by regulations made under s.19, and which provides those benefits on terms and conditions similarly prescribed. Those duties are backed by criminal sanctions.

3 The principal duties are imposed by s.3(1) and (2) of the Law. Section 3(1) requires that-

‘every person resident in the Cayman Islands shall unless-

(a) he is covered by a contract of insurance effected by an employer under subsection (2);

(b) he is covered by a contract of insurance effected by Government under subsection (3), or where Government does not effect such a contract, medical services are provided to him by Government in accordance with Chapter 18 of the General Orders of the Government; or

(c) he is an uninsurable person,

effect a standard health insurance contract in respect of himself, his unemployed spouse and children.’

Section 3(2) requires that-

...