Motor Vehicles Insurance Ltd v Kuma [2000] PGSC 25; SC650 (9 August 2000)

SC650
PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE AT WAIGANI]

SCA 62 of 1999

BETWEEN:

MOTOR VEHICLES INSURANCE LIMITED

Appellant

AND:

MARTHA KUMA

Respondent

Waigani: Kapi DCJ.; Jalina J.; Sawong J

20th June, 9th August 2000

APPLICATION FOR EXTENSION OF TIME under s 54(6) of the Motor Vehicle (Third Party Insurance) Act (Cap 295) – admissibility of evidence given by lawyer to show "sufficient cause".

POWER OF THE SUPREME COURT to grant extension on appeal s 16(c) Supreme Court Act (Cap 37) – principles considered.

Counsel:
A. Kandakasi for the appellant
A. Kwimberi for the respondent

9th August 2000

BY THE COURT: On an application made by the respondent, the National Court granted an extension of time within which to give notice of claim to the appellant pursuant to s 54 (6) of the Motor Vehicles (Third Party Insurance) Act (Cap 295). The appellant filed an application for leave to appeal and a notice of appeal against this decision.

Application for Leave to Appeal

Counsel for the respondent did not contest the application for leave to appeal on the basis that he conceded that the trial judge erred in granting the extension on the wrong findings of fact. This will become apparent when we consider the notice of appeal. We would grant leave to appeal.

Notice of Appeal

We now proceed to deal with the merits of the appeal. The circumstances giving rise to the appeal are as follows. The respondent was injured in a motor vehicle accident on 8th August 1997. The respondent’s husband gave instructions to Dowa Lawyers to pursue a claim for damages on 15th August 1997. Apparently, the lawyer advised the respondent’s husband to obtain Road Accident Report and Medical Report as they were prerequisites to a claim against the Appellant. The lawyers acting on this wrong and mistaken view of the law, did not give notice of claim to the appellant immediately but waited for the respondent to provide the reports. When the respondent did not provide the reports for some months, the lawyers then gave notice of claim to the appellant in a letter dated 25th February 1998. This letter was received in the appellant’s office on 2nd March 1998. The notice was given well outside the 6 months period and therefore did not constitute notice. The appellant was therefore not obliged to act on the notice.

The respondent’s lawyers then wrote to the Insurance Commissioner for extension of time in which to give notice in letter dated 6th March 1998 pursuant to s 54 (6) of the Motor Vehicles (Third Party Insurance) Act (Cap 295). In this application, the lawyers explained the delay in the following terms:

"..our client was unable to give adequate notice to the Trust because she was of the believe that the police accident report was a pre-requisite to lodging a claim against the Trust as she understood from Traffic Police when approached. As explained in the Statutory Declaration the non-availability of the road accident report was due to the Police Officer-In-Charge who has failed in completing the said report in required time.

Our client and relatives kept on checking on Constable R. Koman regularly and the police kept on telling our clients that whenever Constable R Koman returns, he will write our client the accident report."

The Insurance Commissioner did not respond to the application quickly. Lawyers for the respondent wrote five reminder letters to the Commissioner for decision without success until 13th January 1999 when the Commissioner declined the application giving no reasons for decision. The lawyers for the respondent then filed application in the National Court seeking extension of time in which to give notice to the appellant. The Court granted the extension and the appellant has appealed against this decision.

The appellant has appealed on the following grounds:

"3. GROUNDS

(a) His Honour erred in accepting into the evidence and giving consideration to the sole Affidavit of Mr Zimike, in that its entire content, as to the material matters, were hearsay and inadmissible;

(b) His Honour erred in failing to find that the Affidavit of Mr Zimike was inadmissible, in that it was entirely hearsay.

(c) His Honour erred in failing to find that there was no competent, admissible and relevant evidence in support of the application.

(d) His Honour erred in finding that sufficient cause was established in that:

1. The sole Affidavit in support essentially contained hearsay material and was inadmissible.
   
2. Otherwise or alternatively, the plaintiff was aware of the requirement to give notice having obtained legal advice 7 days after the alleged accident, that she was not totally incapacitated or hindered by other difficulties in complying with the requirement to give notice, that the Police Road Accident Report, and Medical Report, and Clinical notes were not contemporaneous, that the driver and owner did not notify the defendant of the alleged accident, and that 2 years had passed since the alleged date of accident and the Defendant had lost the opportunity to verify the allegations as to the circumstances of the accident.
   

(d) His Honour erred in finding that the exhibition of the purported incorrect belief by the Plaintiff as to the requirement that a Police report and medical report must be supplied to the Appellant when an intention to make a claim is made, satisfactorily, constitutes sufficient cause in that the Plaintiff did not posses such a belief and nor could such a belief be mistaken or have a reasonable or justifiable foundation as she had sought legal advice only 7 days after the alleged accident.

(e) His Honour erred in finding that the exhibition of the purported incorrect belief by the applicant as to the requirement that a Police report and medical report must be supplied to the Appellant when an intention to make a claim is made, alone warranted the grant of an extension of time, which belief was without basis by reason of ground (d) herein."

The trial judge in granting the extension reasoned as follows:

"The said lawyers notified the Trust and the Insurance Commissioner on the 31st March, 1998. That is almost two months after receiving instructions from the plaintiffs. I gather that the reason for the latter delay of almost two months is because efforts were being made to obtain a Police Report and a Medical Report. There seems now to be some requirement that a Police Report and a Medical Report must be supplied when notifying the Trust of an intention to make a claim. This belief is causing enormous problems because quite often it is not possible to obtain a report in time and then a person becomes late in filing a notice of intention. Certainly the Mt. Hagen National Court sees it regularly.

I ask the question, where in the said Section 54(6) of the said Act does it require a person to provide a Police Accident Report and a Medical Report when giving notice under the said section? Quite simply, it doesn’t. All that Section 54(6) says is that a notice of intention to make a claim must be given by the claimant to the Trust within six months after the accident. I would have thought that that means that the claimant should provide as much information as possible but to make sure that the claim is lodged within the six months, then so be it. The claim must still be lodged. Relevant reports can be lodged later, immediately they come to hand.

I am also of the view that if a person is outside the six months period and wishes to make a claim then he should apply to the Insurance Commissioner first off. At that stage I am of the view that the Trust is not seized of the matter. In the event that the Insurance Commissioner grants leave, it is then that the person gives notice to the Trust. To my mind that is clear under the said Section 54(6).

I have not changed my mind and in this case, because of the incorrect belief that has arisen regarding Police Accident Reports and Medical Reports, I am satisfied that "sufficient cause" has been exhibited."

Counsel for the respondent conceded that there was no evidence to support the conclusion that the appellant required the police accident report and the medical report as a pre-requisite to giving notice of claim. In fact the evidence establishes that this was the view held by the lawyer acting for the respondent who advised the respondent’s husband to obtain these reports. The trial judge fell into error in this regard and therefore we would allow this ground of appeal.

The question then arises as to the appropriate order we should make. Counsel for the appellant submits that the Court should simply quash the decision with costs to the appellant with no other orders.

Counsel for the respondent on the other hand submits that even though the trial judge reached his conclusion on the wrong basis, this Court should nevertheless grant the extension of time to give notice of claim in the circumstances of this case. To this submission, counsel for the respondent replies that the affidavit of the lawyer in support of the application for extension of time in the National Court was hearsay and therefore inadmissible. He relied on the case of Motor Vehicles Insurance (PNG) Trust v Viel Kampu (Unreported judgment of the Supreme Court dated 29th October 1999, SC587).

On this point we would distinguish the case of Viel Kampu in that the claimant in that case had not taken steps to instruct the lawyer within six months and therefore the claimant had to give explanation for the delay. In those circumstances, the lawyer could not give evidence on the question of delay by the claimant.

In the present case, there is no question that the respondent had instructed the lawyer six days after the accident and it was up to the lawyer to take the necessary steps to notify the appellant. In the application before the National Court, the onus was on the lawyer to give a reasonable explanation for allowing the six months to expire. In the circumstances, the lawyer was competent to give evidence to show cause for the extension of time. We find that the affidavit of the lawyer was admissible and we would dismiss this ground of appeal.

The question is whether, this Court should grant the order for extension of time based on the evidence before the National Court (see s 16 (c) of the Supreme Court Act (Cap 37)? The onus is on the respondent to show "sufficient cause".

In exercising this discretion, it is important for the Court to take into account the scheme and intention of the legislation. The Parliament intended that the Trust should not be liable under the Act unless notice of intention of claim is given within six months of the accident. If the notice is not given within the prescribed period, the Trust cannot be liable for any claim for damages arising out of a motor vehicle accident. Whatever the Court may feel about the requirement and the prescribed period for notice, there can be no doubt that the Parliament intended to protect the Trust against any claim that may be brought after six months.

However, where a claimant fails to give notice within the prescribed period, the Act gives the Insurance Commissioner or the National Court discretion to extend time to enable a claimant to give the required notice. A claimant must show "sufficient cause", namely, (a) a reasonable explanation why the six months period has been allowed to lapse and (b) that an extension in the circumstances will not prejudice the interests of the Trust (Viel Kampu’s Case (supra)).

So far as the explanation for the lapse of six months is concerned, the claimant was prompt in instructing the lawyers to act in the matter within one week of the accident. It is the conduct of the lawyer that is relevant. It was the professional responsibility of the lawyer to take the necessary steps. The affidavit by the lawyer explains the reason in his affidavit in paragraphs 6 and 7:

"6. The Plaintiff’s husband approached us on 15th August 1997 which was six days after the accident without the Road Accident Report and the Medical Report.

7. We instructed the Plaintiff’s husband, Mr Kuma Wakia to obtain the Road Accident Report and the Medical Report as these were pre-requisites to a claim."

This evidence clearly establishes that the lawyer instructed the respondent to get the reports to enable him to notify the appellant of the claim. Counsel for the respondent conceded that this was a mistaken understanding of the law on the part of the lawyer and cannot be attributed to the appellant. The negligence of a lawyer cannot be a reasonable explanation for allowing the six months to expire (see Rundle v. Motor Vehicles Insurance (PNG) Trust [1988] PNGLR 44 at 49; Rundle v. Motor Vehicle Insurance (PNG) Trust [1988] PNGLR 20 at 32 per Amet J). The Courts have consistently refused to allow negligence of lawyers as a good basis for exercising discretion (Application to set aside judgment – see Leo Duque v. Avia Andrew Paru (Unreported judgment of the Supreme Court dated 18 October 1996, SC510; ABCO Transport Pty Ltd v. Timothy Sukaip (Unreported judgment of the National Court dated 30th May 1999 N1577. Failure to file appeal within time - see Donigi v. Base Resources Ltd [1992] PNGLR 110; New Zealand Insurance Company v. Chief Collector of Taxes [1988] PNGLR 522; State v. Colbert [1988] PNGLR 138).

In considering the question of prejudice, the appellant was not advised of the details of the driver, the owner of the vehicle, the details of the vehicle and names of any witnesses to the accident. The first time the appellant had any of the details was when the application to extend time was filed in the National Court in February 1999 and subsequently served. At that point in time the appellant was not obliged to investigate the details as the claim was out of time. It is now approximately three years since the accident. This delay cannot be attributed to the appellant. The point is that as time runs, it goes to prejudice the interests of the appellant. We cannot be satisfied in the whole of the circumstances that an extension of time would not prejudice the interests of the appellant.

The respondent has failed to satisfy us that there is sufficient cause for extending time.

So far as the failure of the lawyer to give notice of intention to claim within time is concerned, this is a different matter and the respondent has remedies against the lawyers under the law and it is up to her to pursue them.

We would allow the appeal and set aside the decision of the National Court with costs to the appellant.
___________________________________________________________________
Lawyers for the Appellant : YOUNG & WILLIAMS

Lawyers for the Respondent : PAULUS DOWA