Can MVIL Be Stopped From Relying on a Missing Notice?

A claimant who has dealt with MVIL for months without anyone mentioning section 54(6) naturally feels that the insurer should not be allowed to raise it at the trial. The law is against that feeling, for a reason that is worth understanding.

The rule: no estoppel against a statute

In Kerowa v Motor Vehicles Insurance Ltd [2010] PGSC 52; SC1100 the appellant argued that MVIL, by its conduct, was estopped from relying on the absence of a notice. The Supreme Court dismissed the appeal in a short judgment: “an estoppel cannot be invoked in respect of a statutory condition precedent”. The Court approved the reasoning of Davani J in Kumba v Motor Vehicles Insurance (PNG) Trust [2001] PGNC 53; N2132, where the Trust had continued to liaise with the plaintiff after the six months expired, and the plaintiff argued estoppel by conduct. The equitable remedy, Davani J held, was not available.

The logic is this. Section 54(6) says that no action lies unless notice is given. That is a limit on the statutory right of action itself, not a procedural step MVIL can choose to insist on or forgo. MVIL becomes liable, as the Court put it in Kerowa, “only if a certain state of affairs” exists, and the parties cannot by their conduct create a liability the statute does not impose. The same idea underlies Laime v MVIT [1995] PGLawRp 686; [1995] PNGLR 224: “the right to proceed against the Trust is a right given by statute so the parameters of that right must be found within the legislation”.

Waiver is different from proof that notice was given

The Kerowa rule must be kept apart from a different question: whether the dealings between the parties show that notice was given. That is a question of fact, and here MVIL’s conduct is highly relevant. In Motor Vehicles Insurance Ltd v Pojari [2005] PGSC 25; SC799 the majority of the Supreme Court held that correspondence about a fatal accident together with MVIL’s payment of Basic Protection Compensation constituted notice under section 54(6). MVIL was not estopped; rather, the court found that it had in fact been informed, within time, of the claimant’s intention to claim. Likewise in Kusa v MVIT [2003] PGNC 138; N2328 the Trust’s own letter acknowledging the claimant’s notice was admitted to prove that a sufficient notice had been received.

Negotiations do not stop the clock either

The same principle applies to the limitation period. In Tamase v MVIT [1992] PGLawRp 597; [1992] PNGLR 244 the widow’s lawyers had negotiated with the Trust and reached a figure for quantum, but liability was never agreed and the writ was issued out of time. The court held that only an agreement making it clear that liability was accepted before the period expired would be enforceable; there was none, and the plaintiff had not acted to her detriment on any promise, so estoppel did not arise. Negotiation is no substitute for a notice within six months and a writ within the limitation period.

Where the claimant can challenge MVIL’s conduct

There are two places where the insurer’s behaviour is open to legal challenge. First, the Insurance Commissioner’s decision on an extension is a public law decision. MVIT v Popo [1992] PGNC 6; N1048 held that the Commissioner must act judicially, and in that case quashed an extension granted without hearing the Trust; the same reasoning would support a claimant seeking review of a refusal reached without hearing him. In MVIT v Insurance Commissioner [1998] PGNC 33; N1725 the Trust itself sought review of an extension. Second, once an action is on foot, MVIL is subject to the ordinary discipline of the National Court Rules: its defences can be struck out for failing to give discovery, as happened to the liquidator in Paki v MVIL [2010] PGSC 2; SC1015, and default judgment can be entered against it if it fails to file a defence in time.

What this means for claimants

Do not rely on MVIL’s co-operation as a substitute for compliance. An MVIL claims officer who accepts documents, asks for medical reports or makes an offer is not conceding that notice was given, and MVIL’s lawyers are entitled to plead want of notice in the defence, as the Trust did in Rundle itself after two years of dealings. The safe course is always the same: written notice within six months, or an extension obtained and used before the writ is issued. As the Supreme Court said in Kerowa, the appellant “shall pay the respondent’s costs” — the usual end of an estoppel argument in this field.