Gigmai v Motor Vehicle Insurance (PNG) Ltd [2004] PGSC 26; SC750 (7 May 2004)

SC750

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE AT WAIGANI]

SCA NO. 46 OF 2001

Between:

PAUL GIGMAI
-Appellant-

And:

MOTOR VEHICLE INSURANCE (PNG) LIMITED
-First Respondent-

And:

KERAWARA LIMITED
-Second Respondent-

Waigani: Injia, DCJ, Gavara-Nanu & Davani, JJ.
2004: April 2
May 7

CIVIL – Practice and procedure – Pleadings – Liability of owner of motor vehicle to pay damages in excess of statutory limit – Owner not a party to proceedings – Action compromised out of Court for maximum statutory amount – Owner joined as a party for purpose of awarding excess amount – No pleading of cause of action and damages against owner – No judgement obtained on liability against owner - Whether Court should assess damages and award excess amount against owner - Motor Vehicles (Third Party) Insurance Act (Ch. No. 295), S.54(1) & (5); National Court Rules, O4 r2, O8 r37, O5 r2.

Cases cited:
Collin v MVIT [1990] PNGRL 580
MVIT v Pupune [1993] PNGLR 370
Steven Charles Pickthall v Lae Plumbing Pty Ltd [1994] PNGLR 363.
MVIT v Tubanto [1995] PNGLR 214.

Counsel:
J. Beattie for the Appellant
F. Griffin for the Second Respondent

7 May 2004

BY THE COURT: This is an appeal against the decision of Justice Sevua dated 18 May 2001, in which His Honour dismissed the appellant’s action for damages for personal injuries.

The short facts of the case are that on 3 March, 1998 the Appellant commenced proceedings against the First Respondent for damages for personal injury he sustained in a motor vehicle accident. The Appellant was rendered a paraplegic in that accident. The action was brought under provisions of Motor Vehicle (Third party) Insurance Act Ch. No. 295 (the "Act"). The action was brought against the First Respondent only and it was founded on the negligent driving of the motor vehicle by the driver. The Statement of Claim pleaded that the motor vehicle was owned by the Second Respondent. The Second Respondent was not a party in those proceedings and there were no pleadings in the Statement of Claim against it.

On 3 March 1998, the Appellant compromised his action by Deed of Settlement for K100,00.00, being the maximum damages allowed under the Act. The Court was not asked to sanction the compromise.

On 20 October 1999, the Court, upon application, joined the Second Respondent as the Second Defendant. The reason was that under S.4(5) of the Act the appellant sought damages in excess of the statutory limit of K100,000 fixed by S.49(2) of the Act, to be awarded against the Second Respondent. There was no application made to amend the Statement of Claim to plead a cause of action and the excess damages against the Second Respondent. Subsequently, the matter was fixed for assessment of damages without there being any determination on the question of liability of the Second Respondent. When the matter came on for assessment of damages, His Honour refused to assess damages because there was no amendment to the Statement of Claim pleading a cause of action against the Second Respondent.

There are three grounds of appeal which challenge His Honour’s decision as to lack of pleadings against the Second Respondent by amendment to the Statement of Claim. They also challenge His Honour’s finding that the compromise of K100,000 was not an "award" made by the Court under S.54(5) of the Act, pursuant to the decision of the Supreme Court in Steven Charles Pickthall v Lae Plumbing Pty Ltd [1994] PNGLR 363.

The Appellant contends that His Honour erred in refusing to assess damages when His Honour acknowledged that the matter came before him for assessment of damages. Instead His Honour proceeded to deal with the issue of liability.

The Appellant also contends that His Honour erred in applying the principles in Pickthall’s case. The Appellant’s counsel sought to distinguish the facts in Pickthall’s case from the facts of the present case by saying that in Pickthall’s case the proceedings against the First Respondent were discontinued after compromise of the action was reached out of court. Subsequently, the plaintiff made an application for leave to pursue a claim against the owner of the motor vehicle for the excess amount but the application was refused. In the present case, the proceedings against the Trust were still on foot and the owner of the motor vehicle was joined as a party by order of the Court. The principles in Pickthall’s case should be confirmed to its own facts.

In the alternative, the appellant adopted one of the options suggested by His Honour himself in Pickthall’s case by joining the Second Respondent as a party to the proceedings which were still on foot, yet His Honour did not assess damages.

The Second Respondent contends that when it was joined as a party, the plaintiff was required by the National Court Rules to plead the cause of action against it. As there was no cause of action pleaded against it in the original Statement of Claim, it should have been amended. The Appellant was also required by the National Court Rules to plead the different category of damages as in all personal injury cases: Collin v MVIT [1990] PNGRL 580, MVIT v Pupune [1993] PNGLR 370, MVIT v Tubanto [1995] PNGLR 214.

The Second Respondent also contends that the principle in Pickthall’s case is applicable to the present case. The principle established in that case is that an out-of-Court compromise of the action between the parties is not "an award" within the meaning of S.54(5) the Act and therefore, "an award" in excess of the amount cannot be made against the owner, in the same proceedings, unless the pleadings are amended and plead the excess.

In our view, the first argument raised by the appellant can be disposed of easily. His Honour’s reference to the matter coming before him for assessment of damages was nothing more than a mere description of how the matter before him.

It is a fundamental and trite rule of civil procedure that an assessment of damages is based on a judgement on liability in favour of the plaintiff. Damages cannot be assessed in a vacuum, so to speak. In turn, the judgment on liability must be founded on a proper pleading of a cause of action in law: see National Court Rules, Order 4 rule 2. In personal injury cases, plaintiffs are also required to plead particulars of damages: see order 8 rule 33 of the National Court Rules. In a case which involves multiple defendants, the wrongdoing against each and every defendant, either jointly or severally, must be clearly pleaded.

In the present case, the basis of the liability of the Second Respondent as the owner of the vehicle, as forming a basis for the claim against the First Respondent under S.54(1) of the Act, was not pleaded in the Statement of Claim. The Statement of Claim only pleaded the driver’s negligence in the driving of the motor vehicle. There was also no pleading as to any relationship of principal and agency between the driver and the Second Respondent giving rise to the Second Respondent’s liability for the negligence of the driver on an indemnity basis. It is clear to us that there was no pleading as to a cause of action against the Second Respondent and damages for personal injuries as required by the rules of court. More importantly, there was no judgment on liability in favour of the appellant against the Second Respondent upon which damages or the excess damages could be assessed and awarded. Therefore, His Honour was correct in refusing to award damages. For these reasons, we reject this submission.

In relation to the second argument, the principles in Pickthall’s case enunciated by Sevua, J is of general application and it is applicable to the present case. Pickthall’s case states the principle quite clearly that out of Court settlement of an action is not an "award" within the meaning of the term "an award" in S.54(5) of the Act unless it is endorsed as an "award" of damages by the Court. The meaning of "award" in Subsection (5) was considered by Sevua J in Pichthall’s case but Subsection (5) should be read together with Subsection (1). They provide:

"54. Claims for damages.

(1) Subject to Subsection (2), any claim for damages in respect of the death or bodily injury to any person caused by, or arising out of the use of –

• (a) a motor vehicle insured under this Act; or
• (b) an uninsured motor vehicle in a public street; or
• (c) a motor vehicle on a public street where the identity of the motor vehicle cannot after due injury and search be established,
  

shall be made against the successor company and not against the owner or driver of the motor vehicle and, subject to Subsection (5), any proceedings to enforce any such claim for damages shall be taken against the successor company and not against the owner or driver of the motor vehicle ...

(5) Where an award of damages is made by a court in respect of a company specified in Section 49(2)(a), the court shall, at the time when it makes the award, determine against whom (if anyone) the excess shall be awarded, and an award under this subsection operates as a judgement against that person for all purposes.

The liability of the First Respondent under Subsection (1)(a) as it is in this case, is based on the negligence of the driver who may or may not be the owner. The First Respondent’s liability under Subsection (1)(b) and (c) is not necessarily dependent on the driver’s negligence. Liability under these Subsections may as well depend on some fault of the owner of the vehicle who may not be the driver.

Under Subsection (1)(a), the First Respondent is liable on indemnity basis, for the negligent driving of the driver. Under Subsection (5) the liability of the Second Respondent for the wrongful actions of the owner or driver does not exceed the amount specified in S.49(2)(a) which is K100,000.00. The driver or owner cannot be sued or be a party to any proceedings in respect of a claim and an award of damages which does not exceed K100,000.00.

Also under Subsection (5), the Court is required to determine the issue of the excess amount, but whether or not the Court makes the award against the driver or owner of the motor vehicle is in the discretion of the Court. In determining this issue, the Court should have regard to all relevant matters including whether the driver or owner is a party to the proceedings; whether there are pleadings in the Statement of Claim against the driver or owner establishing a cause of action in law and damages; and in respect of any excess amount, the person against whom the excess amount is to be awarded. Then there must be a proper determination on the issue of liability against the driver or owner followed by a proper assessment of damages and an award of the excess amount against the driver or owner. If the owner or driver has been joined as a defendant in the original proceedings alleging wrongdoing on the part of the driver or owner, and the issue of liability of the First Respondent has already been determined on those basis, then there is no need to make a fresh determination on the issue. The Court may then proceed to make an award for the excess against the driver or owner.

There are various options available under the National court Rules to a plaintiff who has compromised his claim out of Court against the First Respondent in the maximum amount under the Act. Some of those options are discussed by Sevua J in his judgment in Pickthall’s case. These are:

1. The Plaintiff may join the owner or driver in the same proceedings as defendants: see Order 5 rule 2.
   
2. The Plaintiff may only sue the First Respondent and compromise his action for the maximum amount (100,000.00) and then apply for the compromise to be sanctioned or endorsed by the Court as an "award". Whilst the proceedings are still on foot, the Plaintiff should then apply for the owner or driver to be joined as a party for purposes of the excess amount.
   
3. Discontinue the existing proceedings and institute fresh proceedings against the owner or driver.
   

Under all of the above options, the Plaintiff would have to plead the cause of action against the driver or owner. If this has not been done in the original statement of claim, the Plaintiff should apply for and obtain leave of the Court to amend the pleadings to plead the cause of action against the owner or driver and the excess damages. The Plaintiff should then obtain a judgment on liability against the owner or driver before the damages is assessed and awarded including excess damages if any and by whom the excess is to be paid. The principles of natural justice should be observed to afford the party against whom the award or excess amount is proposed to be, to be afforded an opportunity to be heard on the issue of liability and damages and excess damages through the pleadings and/or trial process: see S.59 of the Constitution.

In the present case, we are of the view that because the compromise (of K100,000.00) is not an award within the meaning of S.54(5) of the Act, that the trial judge was correct when he relied on the principle in Pickthall’s case to find that he could not assess damages.

For these reasons we dismiss the appeal with costs to the Second Respondent.
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Lawyer for the Applicants : Pacific Legal Group Lawyers
Lawyer for the Second Respondent : Maladina Lawyers