N11097
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 54 OF 2022

BETWEEN:
MANO RATUE
Plaintiff

AND:
WESTERN PACIFIC INSURANCE LTD
Defendant

Mt. Hagen: Kangwia J.
2024: 14th & 16th October

CIVIL JURISDICTION – Insurance claim over damage to stolen vehicle – vehicle unregistered at the time of accident - exclusionary clause in Contract of Insurance relied on – Exclusionary Clause subject to Cover Policy – Cover Policy covers only for registered vehicles – exclusion clause does not apply in the circumstances of the claim.  

Cases Cited: 

Pacific MMI Insurance Ltd v Elema [2020] N4032

Counsel:

Y. Otmar, for the Plaintiff
R. Mulina, for the Defendant

16th October 2024

1.      KANGWIA J:  The Plaintiff claims damages in the sum of K109, 844, general damages, interest and costs for alleged breach of an insurance contract with the Defendant. The Defendant denies liability. 

2.       The background giving rise to the claim is that the Plaintiff has an insurance cover with the Defendant over a vehicle described as a 26-seater bus. On 23 July 2021 the said vehicle was involved in an accident and sustained damages after it was stolen from the Plaintiff. The Plaintiff lodged a claim with the Defendant for the repair costs, but the Defendant declined the claim on grounds that the vehicle was driven or used in an unsafe or unroadworthy condition which are not covered under clause 2.10.2 of the insurance policy, the claim was fraudulent and for contributory negligence.  

3.     The law on insurance contract is that the insured and the insurer are governed by the terms of the insurance contract. In the case of Pacific MMI Insurance Ltd v Elema [2020] N4032 the court said, ‘Unless expressly provided for in a statute, the relationship between an insurer and insured is governed by private law of contract, the terms and conditions of which are spelt out in the contract of insurance or insurance policy...” 

4.     In the present case the issue that arises from the background leading to this proceeding is whether the circumstances under which the damages sustained by the vehicle are covered under the insurance policy? 

5.    On behalf of the Plaintiff Mr. Otmar while relying on the affidavit of the Plaintiff and 6 other affidavits tendered into evidence by consent submits that the attention of the Court must not be drawn away from the terms of the insurance contract between the Plaintiff and the Defendant to decide on the claim. 

6.     It is submitted that in the present case the damage caused to the vehicle in an accident after being stolen falls within the contingencies insured under clause 1 of the policy. The evidence in the affidavits of witnesses reveal the circumstances under which the vehicle was stolen, driven away and got involved in an accident. The thief was caught and charged with damage to property and unlawful use of a vehicle. 

7.     The exclusion clause 2.10.2 under section 1 was misconstrued and misapplied by the Defendant to refuse the claim.  The Court must look at the literal meaning and intent of clause 2.10.2 to give a proper interpretation. 

8.     It is submitted that the terms “caused or arising as a result of the motor vehicle being used in an unsafe and un-roadworthy condition” literally refers to physical and mechanical condition and not whether the vehicle was registered under the Motor Traffic Act or insured under the Motor Vehicle Insurance Act. Registration under the Motor Traffic Act and MVIL insurance are for owners to comply and do not apply in private contracts with insurance companies. Therefore clause 2.10.2 is applicable to accidents caused to the vehicle by physical condition of the vehicle and does not apply in the present case which was damage caused in an act of stealing. 

9.     On the ground alleging fraud against the Plaintiff, it is submitted that fraud has not been established apart from the allegation that the Registration was done after the accident. There is no evidence of how the Plaintiff relied on the renewal of Registration and MVIL insurance to make the claim and this ground has no basis for refusing the claim. The Plaintiff made the claim from a proven accident.
  
10.     On the ground of contributory negligence, it is submitted that contributory negligence is in actions founded on tort and was wrongly pleaded when the Plaintiff alleged breach of contract.  Even then the Plaintiff did not contribute to the accident nor was the accident caused by the negligence of the Plaintiff.

11.     For the Defendant Mr Mulina submits that the issue is on the interpretation of clause 2.10.2 of the policy, whether the circumstances of the accident subject to the exclusion clause because the accident occurred during the currency of the policy. 

12.     It is submitted that the Defendant’s reason to refuse the claim is based on clause 210.1 & 2 in circumstances where:

1.	The vehicle was left unattended
2.	The vehicle was unregistered and should not have been used on a public road in the first place. 

13.     It is also submitted that the policy is clear. The vehicle was unroadworthy without certificate of roadworthiness and registration in breach s 22 of the Motor Traffic Act and s 13 of the Motor Traffic Regulations hence private contract cannot validate a breach of a statute. The vehicle must be registered first before it is put on the road. At the time of the accident the vehicle was unregistered and without a certificate of road worthiness. Registration was only renewed after the accident. 

14.     As to contributory negligence it is submitted that the Plaintiff demonstrated it by failing to park properly and turn off the ignition. 

15.     It is further submitted that the Plaintiff had a previous claim which was approved but did not fix the damage and the same damage was included in the present claim. 

16.      On those bases it is submitted that when the exclusion clause is given effect the Plaintiff has not satisfied the requirements, and the claim should be dismissed. 

17.     This is a case which requires interpretation of exclusionary clauses 2.10.2 of the insurance policy to ascertain whether it covers the damage done to the Plaintiffs vehicle. It is undisputed that the policy was current when the vehicle was involved in an accident. 

18.      On a perusal of the documents tendered into evidence by consent it appears that the exclusionary clause 2.10.2 can only be given proper effect if the clause is considered in the context of the policy specified in the Schedule of Insurance covering the Plaintiffs vehicle. Even though this aspect of the policy has not been argued or brought to the attention of the Court the policy specified in the Schedule of Insurance cannot be overlooked by giving prominence to a specific clause because the policy prevails over clauses which only give effect to the policy. 

19.      In the Schedule of Insurance covering the Plaintiffs vehicle which is annexed as annexure B to the affidavit of Jeffery Kepoli states, “You will only be entitled to insurance cover under section or sections which you have selected and for which you have paid the required premium”.  

20.     Under section titled ‘Covering” it states - “Sudden and unforeseen accidental loss or damage to all registered vehicles declared on the schedule unless the loss is not covered under this insurance policy”. 

21.     This section of the policy in no uncertain terms states that the policy covers for sudden and unforeseeable damage to all registered vehicles. This policy requires that a vehicle must be registered to be eligible for cover under the insurance contract. Because of the requirement for the vehicle to be registered in order for the vehicle to be covered under the insurance policy it follows that the contract of insurance becomes unenforceable when the Registration of a vehicle expires. This policy in my view effectively renders the Plaintiffs claim unenforceable. 

22.     The Plaintiff’s vehicle at the time of the sudden and unforeseeable damage caused by theft was unregistered and falls outside the cover provided under the Schedule of Insurance. Because the policy prevails over the exclusion clauses, it serves no utility to consider whether exclusion clause 2.10.2 applies in the circumstances of the Plaintiff’s claim. The Plaintiff has no cause of action, and the proceeding shall be dismissed in its entirety with costs to be agreed if not taxed.  

Formal Orders

1.	The proceeding is dismissed in its entirety.
2.	The Defendant shall meet the costs to be agreed if not taxed.

________________________________________________________________
Don Wapu Lawyers: Lawyers for the Plaintiff
Hill & Hill Lawyers: Lawyers for the Defendant