SC1224

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO 115 OF 2010

BETWEEN

GIGMAE TAEMAE, BRIAN KAPAL, DEWE THOMAS AND BRUCE KOPUN
First Appellants

AND

MATHEW PORAMI TAMUTAI trading as TAMUTAI LAWYERS
Second Appellant

AND

MOTOR VEHICLES INSURANCE LIMITED
Respondent

Waigani: Salika DCJ, Manuhu & Makail, JJ
2013: 01st & 28th March

SUPREME COURT APPEAL – Appeal against refusal to extend time – Notice of intention to make a claim – Claim against Motor Vehicles Insurance Limited – Claim for personal injuries and death – Personal injuries and death arising from an alleged motor vehicle accident – Exercise of discretion – Onus on applicant to establish sufficient cause – Reasons for failure to give notice within time – Whether reasons satisfactory – Prejudice – No prejudice established – Arguable case – Discretion wrongly exercised – Appeal allowed – Decision refusing extension of time set aside – Extension of time granted – Motor Vehicles (Third Party Insurance) Act, Ch 295 – Section 54(6)(a)&(b) – Supreme Court Act – Section 16(d).

SUPREME COURT APPEAL – Appeal against order for costs – Costs arising from application to extend time – Discretionary – Costs awarded against lawyers for unsuccessful party who did not file proceedings – Negligence of lawyers – Lawyers not given opportunity to be heard on cost – Breach of natural justice – Whether discretion properly exercised – No proper basis for order for costs – Discretion wrongly exercised – Costs order set aside – Constitution – Section 59 – National Court Rules – Order 22, rule 65.

Facts

The appeal is against the primary judge's refusal to extend time to the first appellants to give notice to the Motor Vehicle Insurance Limited ("MVIL") pursuant to section 54(6)(b) of the Motor Vehicles (Third Party Insurance) Act, Ch 295 ("MVIT Act") and award of costs against the second appellant. The appellants submitted that they had shown sufficient cause and that no prejudice would be occasioned to the respondent if leave was granted as they were late by six days to give notice, that they had promptly written to the Insurance Commissioner seeking extension of time and were awaiting his response. The delay of over two years was occasioned by the Insurance Commissioner's failure to respond to their application. 

Held

1.	Section 54(6) of the Motor Vehicle (Third Party Insurance) Act, Ch 295 makes it mandatory for persons intending to make a claim against the Motor Vehicles Insurance Limited to give notice within six months of the date of accident. Where the claimant is out of time, he may apply to the Insurance Commissioner or the Court for extension of time to give notice. Graham Rundle -v- Motor Vehicles Insurance Trust (PNG) Limited (No1) [1988] PNGLR 20 referred to.

2.	A claimant making an application for extension of time in which to give notice of intention to make a claim pursuant to section 54(6) is not put to an election; he may apply once only to the Insurance Commissioner or to the Court; if an application to the Commissioner fails or is granted and not complied with, a further application may only be made to the Court; if an application to the Court is refused the only second chance is an appeal to the Supreme Court. Graham Rundle -v- Motor Vehicles Insurance Trust (PNG) Limited (No 1) [1988] PNGLR 20 re-affirmed and applied.

3.	The first appellants were late by six days to give notice within the time limit of six months but had shown sufficient cause. They had promptly written to the Insurance Commissioner seeking extension of time and were waiting for his response. The delay of over two years was occasioned by the Insurance Commissioner's failure to respond to the application. 

4.	The respondent will not be prejudiced if extension of time is granted because it had been provided with sufficient information in relation to two earlier claims arising from the same alleged accident, the delay is not inordinate and is satisfactorily explained.

5.	As to the appeal against order for costs against the second appellant, the overwhelming evidence is that the second appellant acted diligently in pursuing the claims by among other things, promptly applying to the Insurance Commissioner for extension of time. Secondly, the second appellant did not institute the proceeding and was not acting for the first appellants. An order for costs in the circumstances is in breach of the principles of natural justice in that the second appellant was not heard on cost. Accordingly, they should not be liable for costs and the order for costs is set aside: Section 59 of the Constitution and Order 22, rule 65(1) of the National Court Rules.

6.	Pursuant to section 16(d) of the Supreme Court Act, the appeal is upheld, the decision of the National Court quashed and time is extended by 14 days to the first appellants to give notice to the respondent with costs to be taxed if not agreed.

Cases cited

Graham Rundle -v- Motor Vehicles Insurance Trust (PNG) Limited (No 1) [1988] PNGLR 20
Michael Ivia -v- Motor Vehicles Insurance Trust (PNG) Limited [1995] PNGLR 183
Motor Vehicles Insurance (PNG) Trust Limited -v- Viel Kampu (1998) SC578 
Motor Vehicles Insurance (PNG) Trust Limited -v- Martha Kuma [2000] PNGLR 1 
Sakaire Ambo -v- Motor Vehicles Insurance (PNG) Trust Limited (2002) SC681 
Rawson Construction Limited -v- Department of Works & The State (2005) SC777 
Don Pomb Polye -v- Jimson Sauk Papaki & Electoral Commission [2000] PNGLR 166

Counsel

Mr P Kak for Appellants
Ms E Suelip for Respondent

28th March, 2013

JUDGMENT

1.	BY THE COURT: The appeal is against the primary judge's refusal to extend time to the first appellants to give notice to the Motor Vehicle Insurance Limited ("MVIL") pursuant to section 54(6) of the Motor Vehicles (Third Party Insurance) Act, Ch 295 ("MVIT Act") and award of costs against the second appellant. The decision was made on 06th August 2010. 

2.	 The appeal is against an exercise of discretion, that is whether it was wrongly exercised firstly in relation to the refusal to extend time and secondly, the award of cost against the second appellant. Section 54(6) states:

"(6)	No action to enforce any claim under this section lies against the successor company unless notice of intention to make a claim is given by the claimant to the successor company within a period of six months after the occurrence out of which the claim arose, or within such further period as -

(a)	the Commissioner; or
(b)	the court before which the action is instituted,

on sufficient cause being shown, allows."

3.	The principles of law in relation to the requirement to give notice and the exercise of discretion in a case where a claimant is out of time to give notice are well settled. First, section 54(6) of the MVIT Act, Ch 295 makes it mandatory for persons making a claim against the MVIL to give notice within six months of the date accident. Where the claimant is out of time, he may either apply to the Insurance Commissioner or the Court for extension of time to give notice: see Graham Rundle -v- Motor Vehicles Insurance Trust (PNG) Limited (No 1) [1988] PNGLR 20.

4.	Secondly, where an application for extension of time to the Insurance Commissioner is refused, the claimant may apply to the National Court. The claimant has the onus of establishing sufficient cause: see Graham Rundle (supra). Prejudice by delay to the respondent is a factor to be considered when deciding whether the claimant has established sufficient cause: Michael Ivia -v- Motor Vehicles Insurance (PNG) Trust Limited [1995] PNGLR 183. The claimant must also establish an arguable case.

Background Facts

5.	The chronology of events giving rise to this appeal is summarised below:

•	08th August 2007 - first appellants Gigame Taeme, Dewe Thomas, Bruce Kopun and wife of Brian Kapal namely Dire Brian Tolak were travelling in a PMV bus with four other passengers along the highway towards Madang. It ran off the road and crashed as it was attempting to avoid a head-on collision with an on-coming motor vehicle. They sustained injuries and Dire Brian Tolak died. They are ordinary villagers from Kubal village in Nondulg District, Jiwaka. They engaged one Gabriel Yali to pursue compensation claims against the respondent. 

•	07th February 2008 - Paulus Dowa Lawyers gave notice to the respondent on behalf of one of the injured passengers by the name of Auro Benz. They also submitted a police accident report medical report.

•	08th February 2008 - the time limit of six months expired after they did not give the requisite notice. 

•	14th February 2008 - the first appellants instructed the second appellant to pursue the claims against the respondent. 

•	15th February 2008 - the second appellant wrote to the Insurance Commissioner seeking extension of time. They were late by 6 days. 

•	18th February 2008 - the respondent responded to Paulus Dowa Lawyers in relation to claim by Auro Benz. It advised them it was investigating the alleged accident and requested them to provide among other things, a final medical report.

•	17th March 2008 - the Insurance Commissioner responded and asked for further information in relation to a missing attachment to the police accident report which contained names of casualties. The other casualties were Lockyer Paul Tini, Auro Benz, Andrew Simbil and Seniya Steven.

•	30th April 2008 - the second appellant provided the missing attachment to Insurance Commissioner.

•	14th July 2008 - the second appellant sent a follow up letter.

•	11th September 2008 - the second appellant sent second follow up letter.

•	27th October 2008 - the second appellant sent third follow up letter.

•	01st December 2008 - fourth follow up letter by second appellant.

•	27th January 2009 - fifth follow up letter by second appellant.

•	09th April 2009 - sixth follow up letter by second appellant.

•	In October 2009 - the first appellants withdrew instructions from the second appellant and retained Paulus Dowa Lawyers. They also wrote to the Insurance Commissioner seeking extension of time.

•	On 26th February 2010 - the Insurance Commissioner responded. In his letter, he advised Paulus Dowa Lawyers that he had granted extension of time in his letter to the second appellant of 08th March 2008. 

•	 02nd March 2010 - respondent settled the claim by Auro Benz at K16,000.00 with Paulus Dowa Lawyers.

•	08th March 2010 - Paulus Dowa Lawyers wrote to second appellant seeking confirmation of approval for extension of time.

•	08th March 2010 - seventh follow up letter by second appellant to respondent.

•	09th March 2010 - second appellant informed Paulus Dowa Lawyers of no approval for extension of time.

•	05th April 2010 - eighth follow up letter by second appellant to respondent.

•	21st May 2010 - the first appellants filed proceedings.

•	20th July 2010 - respondent made a final offer of K6,500.00 to Paulus Dowa Lawyers to settle claim by Andrew Simbil.

Arguable case

6.	There is no issue in relation to the question of arguable case. The primary judge correctly found that there was one. The claims were for personal injuries arising from the negligent driving of the driver of the PMV bus of which the respondent as the insurer is liable by statute to pay damages to the passengers if liability is established. 

Reasons for delay

7.	The contentious issue is the reasons for the delay in giving the requisite notice. The delay is two-fold. First, the primary judge found that whilst the first appellants were uneducated villagers, they had engaged Gabriel Yali to pursue their claims. He did not give the requisite notice to the respondent within time. The time limit of six months expired on 08th February 2008 and they were late by six days. Secondly, the primary judge found that after the first appellants instructed the second appellant on 14th February 2008, and on 15th February 2008 the second respondent applied for extension of time to the Insurance Commissioner and did not receive a response, they failed to promptly apply to the Court for extension of time. This is the period from 15th February 2008 to 21st May 2010, the latter being the date they filed proceedings. The delay is two years, three months and six days.

8.	The appellants submitted that they are uneducated villagers and are not aware of the requirement to give notice to respondent within six months of the date of accident. They engaged Gabriel Yali to pursue the claims on their behalf including the giving of notice. The respondent's submission focused on the delay from 14th February 2008 onwards and submitted that after the second appellant wrote to the Insurance Commissioner for extension of time, they did nothing, except to wait for a response. As a result, they allowed time to pass and two years and ten months passed. Their explanation is unsatisfactory. It relied on Motor Vehicles Insurance (PNG) Trust Limited -v- Viel Kampu (1998) SC578 and Motor Vehicles Insurance (PNG) Trust Limited -v- Martha Kuma [2000] PNGLR 1. It further submitted that if the Insurance Commissioner's response was not forthcoming, they should have promptly applied to the Court for extension of time as time was running. For this submission, it relied on Sakaire Ambo -v- Motor Vehicles Insurance (PNG) Trust Limited (2002) SC681.

9.	The primary judge accepted the first appellants' explanation that they were uneducated villagers but said that they had engaged Gabriel Yali to pursue their claims and he failed to give notice. Other than this, they had no explanation as to why Gabriel Yali failed to give notice within time. We agree with the primary judge's finding in relation to Gabriel Yali's failure to pursue the first appellants' claims which would include giving of notices within six months to the respondent. In our view, they have decided to engage Gabriel Yali to assist them and if he failed to give the requisite notice, it is not a satisfactory explanation for their failure to give notice within time. However, they were late by only six days, not months or years such that the primary judge should be too concern about the delay.

10.	The second aspect of the delay is from the date they instructed the second appellant to pursue their claims to the date of filing of proceedings. During that period, the second appellant wrote to the Insurance Commissioner. On 17th March 2008, the Insurance Commissioner responded and asked for further information in relation to the missing attachment to the police accident report which contained names of casualties. On 30th April 2008, the second appellant provided the missing attachment to the Insurance Commissioner. Then, nothing further was heard from the Insurance Commissioner despite eight follow up letters from the second appellant between 30th April 2008 and 05th April 2010. 

11.	We are satisfied that they had promptly written to the Insurance Commissioner seeking extension of time. But the real issue is whether their reason for waiting for the response from the Insurance Commissioner is satisfactory. The respondent relied on Sakaire Ambo's case (supra) to support its submission that notwithstanding a pending decision for extension of time before the Insurance Commissioner, it is also open to the first appellants to apply to the Court for extension of time. That case is of no relevance. It was decided on the question of application of appropriate statute (Wrongs Miscellaneous (Provisions) Act, Ch 297 or Frauds and Limitations Act, 1988) in relation to limitation of action for damages based on negligence against the MVIL. The case of Viel Kampu (supra) is also of no relevance. It can be distinguished from this case in that the claimant in that case had not taken steps to instruct the lawyer within six months and therefore the claimant had to explain the delay. In those circumstances, the lawyer could not give evidence on the question of delay by the claimant and his evidence was inadmissible. 

12.	Similarly, the case of Martha Kuma (supra) can be distinguished on its facts. That was a case where the Supreme Court upheld an appeal by the appellant and set aside the decision of the National Court to grant leave to the respondent to give notice out of time because it found that the National Court erred when it did not find that it was not a requirement under section 54(6) of the MVIT Act for the respondent to provide a police accident report and a medical report when giving notice to the appellant. The delay in giving notice to the appellant was because these two reports were not immediately available to the respondent and the lawyers for the respondent had advised her husband to obtain them first before they could submit them with the notice to the appellant. 

13.	The Supreme Court case of Rawson Construction Limited -v- Department of Works & The State (2005) SC777 which we found during our deliberations is also of no assistance. It is distinguishable on its facts. It was a case where Rawson Construction Limited applied to the National Court for extension of time to give notice to make a claim against the State under section 5 of the Claims By & Against the State Act, 1996. The National Court refused the application. One of the reasons was that there was no evidence to explain the delay of more than one year that it had engaged lawyers to negotiate settlement with the State, that it had subsequently terminated them and pursued settlement negotiation itself. It did not appeal this finding and the Supreme Court dismissed the appeal on other grounds. In this case, the first appellants did not negotiate an out of court settlement with the respondent. They were waiting for a response from the Insurance Commissioner on their application for extension of time. After a delay of over two years, they finally received the response and subsequently applied to the Court. 

14.	As a matter of law, they had to wait for the Insurance Commissioner's response before they could pursue their claims any further. This is the law as was held in Graham Rundle's case (supra). The Supreme Court held that a claimant making an application for extension of time in which to give notice of intention to make a claim pursuant to section 54(6) is not put to an election; he may apply once only to the Insurance Commissioner or to the Court; if an application to the Commissioner fails or is granted and not complied with, a further application may only be made to the Court; if an application to the Court is refused the only second chance is an appeal to the Supreme Court. (Emphasis added).

15.	Although not clearly expressed in submissions, the respondent seemed to suggest that this Court should not follow the decision in Graham Rundle's case (supra). It is trite law that the Supreme Court is not bound by its own decision: see Schedule 2.9 of the Constitution. But there must be good reasons not to follow it. In this case, the respondent has not given any reason why this Court should not follow it. We also do not find any good reason why we should depart from Graham Rundle's case (supra). We reaffirm the principles enunciated in Graham Rundle's case (supra) as good law and apply them in this case. 

16.	The first appellants' explanation as to why they waited is reasonable in light of Graham Rundle (supra) because it was not open to them to apply to the Court while their application was pending decision before the Insurance Commissioner. Further, when they waited, they did not sit back and did nothing as suggested by the respondent. The undisputed evidence is that during the waiting period, the second respondent sent numerous follow up letters to the Insurance Commissioner. Then they withdrew instructions from the second appellant and engaged Paulus Dowa Lawyers. Paulus Dowa Lawyers also wrote to the Insurance Commissioner seeking extension of time and on 26th February 2010, the Insurance Commissioner responded. He advised Paulus Dowa Lawyers that he had granted extension of time in his letter to the second appellant of 08th March 2008. Paulus Dowa Lawyers promptly sought confirmation from the second appellant and were advised that the Insurance Commissioner did not. 

17.	We have considered the letter of 08th March 2008. It makes no mention of any approval for extension of time by the Insurance Commissioner. It requested the first appellants to provide a list of casualties of the alleged accident. In the absence of clear evidence to the contrary, we conclude that no approval for extension of time was given to the first appellants and therefore, from 26th February 2010 onwards, it was open to them to apply to the Court for extension of time. They promptly did on 21st May 2010 after Paulus Dowa Lawyers confirmed with the second appellant on 09th March 2010 that no approval for extension of time was granted. We are satisfied that the first appellants have satisfactory explained their failure to promptly apply to the Court for extension of time and the primary judge erred when she found otherwise. 

Prejudice

18.	The other consideration is the prejudice caused to the respondent by the delay. It also influenced the primary judge's decision. She said that the respondent must have sufficient time to investigate the alleged accident and claims. She went on to find that the delay would adversely prejudice the respondent in its investigations of the alleged accident. The appellants submitted that they had provided all the necessary information to the respondent to assist it in its investigation which included the police accident report. It disclosed the name of the driver of the PMV bus as Kambiye Tolak. For this reason, the respondent will not be adversely prejudiced. Relying on the affidavit of Mr Robert Doko the Claims Manager of the respondent, the respondent submitted that the primary judge correctly held that the delay was inordinate and would adversely prejudice its investigations. 

19.	We have made specific references in the chronology of events to the settlement of Auro Benz's claim and the final offer to Paulus Dowa Lawyers to settle Andrew Simbil's claim because they are relevant to the question of prejudice. The unchallenged evidence is that except for Brian Kapal, the other appellants and four other passengers, namely Lockyer Paul Tini, Auro Benz, Andrew Simbil and Seniya Steven were injured in the alleged accident. Brian Kapal's wife Dire Bian Tolak died. Auro Benz's claim was settled at K16,000.00 and a final offer of K6,500.00 was made to Andrew Simbil. Both claimants were represented by Paulus Dowa Lawyers around the same time the first appellants were waiting for the response to their application from the Insurance Commissioner. In our view the information it relied on to negotiate settlement of these two claims would be the same and also used to investigate the first appellants' claims. 

20.	With respect, given the availability of sufficient information, it is wrong for the primary judge to find that the respondent will be prejudiced if extension of time is granted. Moreover, while it is appreciated that each claim must be considered on its own merits, it does not make sense when the respondent settled Auro Benz's claim and was about to conclude settlement of Andrew Simbil's claim and yet deny liability in relation to the first appellants' claims when they were all victims of the same alleged accident.

21.	It is obvious that the primary judge was influenced by Mr Doko's evidence. In his affidavit, Mr Doko did not say what steps the respondent took to locate the driver and witnesses. He asserted that the driver and witnesses may not be located and that the witnesses may suffer memory loss due to lapse of time. The details of the driver are available in the police accident report. The assertion that the witnesses may not be available or may have memory loss due to lapse of time is a generalised statement, unsupported by any evidence. It is also speculative. We find that the finding by the primary judge that the respondent will be prejudiced by the delay is unsupported by evidence. We also find that the delay is not inordinate and is satisfactorily explained.
22.	For the foregoing reasons, we are satisfied sufficient cause has been shown as to why leave should be granted and that the primary judge wrongly exercised her discretion when she refused it in the first instance. We uphold these grounds of appeal. 

Costs

23.	The primary judge's decision to order the second appellant to pay costs of the proceedings was based on the finding that the second appellant as lawyers for the first appellants did not promptly apply to the Court for extension of time. Based on this finding, her Honour further found that their failure amounted to professional negligence and ordered them to pay costs. 

24.	It was submitted that there was no evidence to support the finding of improper conduct or negligence against the second appellant. On the other hand, the available evidence established that the second respondent acted diligently in pursuing the claims. They promptly gave notice to the Insurance Commissioner and were waiting for the response. When he eventually responded, it was unclear whether he granted extension of time and they promptly applied to the Court for extension of time. For these reasons, costs were properly incurred. The second argument put forward is that the decision to order costs against the second appellant was made in breach of the principles of natural justice. They relied on section 59(2) of the Constitution and submitted that the minimum requirement of this principle is not only to act fairly but to be seen to act fairly. The least the primary judge could have done was to accord the second appellant the opportunity to be heard, especially when the Court was contemplating a cost order against the second appellant. That opportunity was not given. 

25.	The respondent defended the primary judge's decision and submitted that her Honour reached that decision after careful consideration of the circumstances surrounding the late notice and application for extension of time. She found that the second appellant failed to promptly apply to the Court after the response from the Insurance Commissioner was not forthcoming. They were negligent and caused it to incur costs unnecessarily. Order 22, rule 65 of the National Court Rules gives the Court discretion to award costs. The general rule is that costs are awarded to the successful party. Where costs are incurred improperly or without cause, or wasted by undue delay or by any other misconduct or default, and it appears that the lawyer is responsible, the Court may order the lawyer to pay costs. See also Don Pomb Polye -v- Jimson Sauk Papaki & Electoral Commission [2000] PNGLR 166. 

26.	We note although it is not clearly expressed in the primary judge's decision, it is clear that the order for cost against the lawyers was punitive. It was to punish them for their failure to promptly apply to the Court for extension of time. However, the overwhelming evidence is that the second respondent among other things, promptly applied for extension of time to the Insurance Commissioner. The Insurance Commissioner did not respond until a little over two years. In our view, the blame falls squarely on the Insurance Commissioner because he failed to quickly respond to the application. The second appellant sent numerous follow up letters to him and if he had been diligent enough, he would have sighted them and responded. 

27.	In our view, the lawyers acted diligently in pursuing the claims. We are also of the view that they did not act improperly nor were they negligent and to suggest that they should have promptly applied to the Court for extension of time if the response from the Insurance Commissioner was not forthcoming would amount to an abuse of process in light of the clear legal position in Graham Rundle's case (supra). We also note that the second appellant did not institute the proceeding for extension of time and was not acting for the first appellants. We accept the appellants' submission that an order for costs in the circumstances is in breach of the principles of natural justice in that the second appellant was not heard on cost. See also Order 22, rule 65(1) of the National Court Rules. We are satisfied they have been unfairly penalised by a wrong exercise of discretion and the order for costs ought to be set aside. These grounds are also upheld.

Conclusion

28.	The first appellants have established why the discretion to grant extension of time to give notice was wrongly exercised. Pursuant to section 16(d) of the Supreme Court Act, this Court has discretion to allow the appeal, set aside the decision of the National Court and extend time. In the exercise of this discretion, we allow the appeal, set aside the decision of the National Court and extend time by 14 days to the first appellants to give notice to the respondent. We order the respondent to pay costs of the appeal and National Court proceedings. If parties are unable to agree, they shall have the costs taxed.
Order

29.	The orders are:

29.1.	The appeal is allowed and the decision of the National Court is set aside.
29.2.	Leave is granted to the first appellants to give notice to the respondent within 14 days of the date of this order.
29.3.	The respondent shall pay the costs of the appeal and the National Court proceedings to be taxed if not agreed.

_________________________________________
Paulus Dowa Lawyers: Lawyers for Appellants
Mirupasi Lawyers: Lawyers for Respondent