Motor Vehicles Insurance (PNG) Trust v Reading [1988-89] PNGLR 608 (2 December 1988)

Papua New Guinea Law Reports - 1988-89

[1988-89] PNGLR 608 - MVIT v Reading 

[1988-89] PNGLR 608

SC361

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

MOTOR VEHICLES INSURANCE (PNG) TRUST

V

READING

Waigani

Kidu CJ Amet Cory JJ

29 August 1988

2 December 1988

DAMAGES - Measure of - Personal injuries - Motor vehicle accident - Interest on award - Costs - Award exceeding limit of liability - Liability of Motor Vehicles Insurance (PNG) Trust for interest on whole of award and costs - Motor Vehicles (Third Party Insurance) Act (Ch No 295), s 49(2)(a).

INTEREST - Award of interest as damages - Damages for personal injuries - Motor vehicle accident - Limited liability of Motor Vehicles Insurance (PNG) Trust for damages - No limit on interest and costs - Motor Vehicles (Third Party Insurance) Act (Ch No 295), s 49(2)(a).

COSTS - Costs of action - Damages for personal injuries - Motor vehicle accident - Compulsory insurance - Statutory limit on liability - Damages exceeding limit - Costs not included in limit - Motor Vehicles (Third Party Insurance) Act (Ch No 295), s 49(2)(a).

Held

Section 49(2) of the Motor Vehicles (Third Party Insurance) Act (Ch No 295) which limits the “liability” of the Motor Vehicles Insurance (PNG) Trust for “bodily injury” to K100,000, is confined to the award of damages only; the prescribed limit does not include costs or interest on damages awarded under the Judicial Proceedings (Interest on Debts and Damages) Act (Ch No 52) which may be awarded on the full amount of the damages.

Kerr v Motor Vehicles Insurance (PNG) Trust [1979] PNGLR 251, followed.

Costello v Talair Pty Ltd [1985] PNGLR 61 at 65, approved and applied.

Decision of Woods J in Reading v Motor Vehicles Insurance (PNG) Trust [1988] PNGLR 266, affirmed.

Cases Cited

Costello v Talair Pty Ltd [1985] PNGLR 61.

Derbyshire v Tongia [1984] PNGLR 148.

Kerr v Motor Vehicles Insurance (PNG) Trust [1979] PNGLR 251.

Appeal

This was an appeal from an award of damages for personal injuries which included interest and costs in excess of K100,000: see Reading v Motor Vehicles Insurance (PNG) Trust [1988] PNGLR 266.

Counsel

D Ryan, for the appellant.

I R Molloy, for the respondent.

Cur adv vult

2 December 1988

KIDU CJ AMET CORY JJ: In this appeal, the appellant (hereinafter called “the Trust”) challenges the National Court decision [see Reading v Motor Vehicles Insurance (PNG) Trust [1988] PNGLR 266] awarding interest on damages and costs in excess of the amount of K100,000 fixed by s 49(2) of the Motor Vehicles (Third Party Insurance) Act (Ch No 295) (the Act) which provides as follows:

“(2)    A third-party insurance cover issued under Subsection (1):

(a)      where it is issued in relation to a particular motor vehicle, insures the owner of the motor vehicle and any other person who at any time drives the motor vehicle, whether with or without the authority of the owner, jointly and each of them severally against all liability incurred by the owner and the other person jointly or by either of them severally in respect of the death of or bodily injury to a person caused by, or arising out of the use of, the motor vehicle to an amount not exceeding:

(i)       K100,000.00 in respect of the death of or bodily injury to any one person in any one case; and

(ii)      K500,000.00 in the case of any one accident or series of accidents arising out of the one event; ...”

The damages assessed were K209,095.89 (plus $A12,634.15). As s 49(2) only allows a maximum liability of K100,000, the National Court ordered the Trust to pay this amount to the respondent with interest and costs.

There are two grounds of appeal:

1.       The learned trial judge erred in holding that on the wording of s 49(2)(a) of the Act the limit of the liability of the appellant did not cover interest assessed by the Court on the liability assessed.

2.       The learned trial judge erred in holding that the appellant was liable for the costs of the action over and above the limit of the appellant’s liability as set out in s 49 of the Act.

This Court dealt with the second ground of appeal in Kerr v Motor Vehicles Insurance (PNG) Trust [1979] PNGLR 251 at 289-293.

At 292 the following appears:

“The argument on the second appeal stems from the wording of s 49(2) where the maximum limits are laid down in respect of ‘all liability ... in respect of the death etc.’ The Trust says that if it incurs a liability for costs where the costs, added to the award of damages, exceed the statutory maximum, that excess should be awarded against the owner. We do not agree. Section 49(2) must be looked at in the light of s 54(5) where the court’s power to determine against whom an excess is to be awarded is limited to cases where the award of damages exceeds the maximum liability of the Trust. As his Honour the trial judge suggests, some strange situations indeed could develop with judgments just under or just over the maximum limit, if costs were to be related to the limit itself.

Mr Crooke also relies on the wording of s 58(1)(b) as indicating the concept that costs are to be the owner’s responsibility where the award is over the maximum limit. This, with respect, is not so. That sub-section is the common indemnity provision which entitles the insured owner to be indemnified for his own costs, so long as in doing so, when added to the award, the statutory maximum limit is not exceeded.

In other words in the conduct of legal proceedings against it under the Act, the Trust is in the same position as any other litigant. It must make its decisions in relation to the proceedings as best it can. It can pay into court, and in a case like the present one, it could have paid in the maximum of K100,000 and taken no further part in the proceedings, leaving the Company to fight on if it so wished. In those circumstances it is inconceivable that costs would be awarded against it. The Trust however, chose to fight the action. The owner certainly could not prevent it doing so, and in those circumstances, we repeat, the order of the trial judge for costs was quite proper and both these appeals must be dismissed.”

Mr Ryan, for the Trust, invites us to disregard Kerr’s case as he contends that it was wrongly decided. The gist of his submission is that s 49(2) provides that the indemnity insurance covers all liability up to K100,000 including interest on the assessed damages and costs. Although this Court is not bound by its previous decisions (see section sch 2.9(1) of the Constitution), it will not depart from them unless exceptional circumstances exist: see Derbyshire v Tongia [1984] PNGLR 148. And, as pointed out by counsel for the respondent, Mr Molloy, these have not been shown by the appellant to be such circumstances.

In any case, we do not think that Kerr was incorrectly decided. Mr Ryan’s submission is the same as that put to the Court in Kerr’s case by Mr McAlary. It did not succeed. We see no reason to reconsider Kerr’s case.

On the question of interest, Mr Ryan’s submission must fail. Interest is not damages. No authority is required to support that. It is common sense. In any case, there is statutory power given to the court to award interest on damages under the Judicial Proceedings (Interest on Debts and Damages) Act (Ch No 52). As is submitted by Mr Molloy, interest is an incident of litigation and quite distinct from the liability for damages. We agree, with respect, with what Bredmeyer J said in Costello v Talair Pty Ltd [1985] PNGLR 61 about the nature of interest. At 65, his Honour said:

“... An award of interest under the Judicial Proceedings (Interest on Debts and Damages) Act (Ch No 52) is not a loss or injury suffered by reason of the plaintiff’s personal injury but rather compensation for being kept out of his money for some time. Interest is not an incident of the plaintiff’s cause of action. It is something given to him under the statute mentioned above because his damages ... are paid late.”

We dismiss this appeal with costs.

Appeal dismissed

Lawyers for the appellant: Young & Williams.

Lawyers for the respondent: Dawson Waldron.