Papua New Guinea Law Reports - 1988-89
[1988] PNGLR 236
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 - Personal injuries - Motor vehicle accident - Statutory limit on liability - Damages limited to K100,000 - Damages not including interest or costs - Motor Vehicles (Third Party) Insurance Act (Ch No 295), s 49(2) - Judicial Proceedings (Interest on Debts and Damages) Act (Ch No 52).
INTEREST - Award of on damages - Personal injuries - Motor vehicle accident - Statutory limit on liability - Damages limited to K100,000 - Damages not including interest or costs - Motor Vehicles (Third Party) Insurance Act (Ch No 295), s 49(2) - Judicial Proceedings (Interest on Debts and Damages) Act (Ch No 52).
PRECEDENTS - Supreme Court - Binding effect of own decisions - Departure in exceptional circumstances - Constitution, Section Sch 2.9(1).
Under the Motor Vehicles (Third Party) Insurance Act (Ch No 295), s 49(2), the damages recoverable for “all liability incurred by the owner of a motor vehicle” in respect of personal injuries is limited to K100,000. Under s 54(5) where an “award of damages” in excess of K100,000 is made, the Court may award the excess against another person.
Under the Judicial Proceedings (Interest on Debts and Damages) Act (Ch No 52) a plaintiff may be awarded interest on a damages award.
On appeal from a decision awarding interest on damages and costs exceeding K100,000,
Held
(1)      The statutory limitation of K100,000 for “liability incurred” under s 49(2) of the Motor Vehicles (Third Party) Insurance Act (Ch No 295) applies only in respect of “damages”: it does not affect orders for costs or interest on the damages awarded pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act (Ch No 52).
Kerr v Motor Vehicles Insurance (PNG) Trust [1979] PNGLR 251, followed.
Costello v Talair Pty Ltd [1985] PNGLR 61 at 65, approved.
Held Further
Whilst the Supreme Court is not bound by its previous decisions under Section Sch 2.9(1) of the Constitution, the Court will not depart from its previous decisions unless exceptional circumstances are shown to exist.
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 the National Court from a decision in a personal injuries action awarding interest on damages and costs against the Motor Vehicles Insurance (PNG) Trust in excess of the K100,000 order for damages limited by s 49(2) of the Motor Vehicles (Third Party Insurance) Act (Ch No 295).
Counsel
D Ryan, for the appellant Trust.
I Molloy, for the respondent.
Cur adv vult
2 December 1988
KIDU CJ AMET CORY JJ: In this appeal the appellant (hereon “the Trust”) challenges a National Court decision 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 there appears the following:
“The argument on the second appeal stems from the wording of s 42 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 42 must be looked at in the light of s 54(5) where the courts’ 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 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 subsection 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 have been 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 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, there have not been shown by the appellant 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 Crooke. 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
Lawyer for appellant: Young and Williams.
Lawyer for respondent: Blake Dawson Waldron.