How Do I Enforce a Judgment Against MVIL?

Winning is not the end. The reported cases on enforcing judgments against MVIL are few, but they establish a point that surprises many judgment creditors.

MVIL is “the State” for enforcement purposes

In Gabriel v Motor Vehicle Insurance Ltd [2017] PGNC 122; N6777 a judgment creditor applied for leave to serve a garnishee notice on MVIL’s bank. The National Court reviewed the history of the company — its creation as the State-owned successor to the Trust, its statutory monopoly, the public purpose described in Hansard when the scheme was introduced — and held that “the defendant or judgement debtor is ‘the State’” for the purposes of the Claims By and Against the State Act 1996. Leave was refused. In Timot v Motor Vehicles Insurance Ltd [2019] PGNC 408; N8088 a judgment creditor with a K3,000 default judgment, unpaid interest and taxed costs of K21,565.05 obtained garnishee orders against Bank South Pacific. Applying a two-tier test — is the body charged with providing an essential public service, and is it funded or owned by the government — the court held that “MVIL is a State entity for all intended purposes under sections 2, 5, 13 and 15 of the CBASA and therefore, is exempted from garnishee proceedings”, and dismissed them.

The point has not been decided by the Supreme Court in an enforcement case, and the Supreme Court in MVIL v Nominees Niugini Ltd [2014] PGSC 70; SC1338 noted, in a commercial dispute, that a creditor had taken out garnishee proceedings against MVIL before the appeal was stayed. But at National Court level Gabriel and Timot are the authorities, and a claimant should expect MVIL to rely on them.

Related consequences

• Interest. The Judicial Proceedings (Interest on Debts and Damages) Act 2015 caps interest against the State at 2 per cent, and some courts have applied that cap to MVIL: Vali v MVIL [2022] PGNC 220; N9661; MVIL v Tambo [2024] PGSC 73; SC2604. See interest.
• Notice under section 5. The Claims By and Against the State Act requires notice of a claim against the State within six months. No reported case has held that section 5 notice is required in addition to the section 54(6) notice, and the two serve the same function; but a cautious claimant gives both.
• Security for costs. MVIL, as a well-resourced litigant, has obtained orders for security for costs of K25,000 against appellants of limited means: Lapet v MVIL [2024] PGSC 160; SC2744.

MVIL’s capacity to pay

The Act itself is the creditor’s reassurance. Section 42 requires MVIL to keep at least K4,000,000 in cash with a licensed bank “to meet its obligation to pay claims”, and a Bank of Papua New Guinea deposit which is “security for the discharge firstly” of claim payment obligations. The ICCC may take over MVIL’s operations if it breaches its licence (section 27B). And the judgments record MVIL paying: in Westcott v MVIL [2008] PGNC 207; N3565 the K125,449.18 awarded against MVIL “has already been paid” by the date of judgment; in Wallace v MVIT the K100,000 settlement was paid years before the dispute over interest. The practical problem is delay rather than default.

Practical steps

1. Enter the judgment and have it settled by the Registrar; obtain a sealed copy.
2. Serve it on MVIL with a written demand for payment within a stated time, and on MVIL’s lawyers.
3. Obtain a certificate of judgment and follow the payment procedure for judgments against the State under section 14 of the Claims By and Against the State Act, if MVIL takes the Gabriel position.
4. Tax the costs promptly; interest and costs are recoverable in addition to capped damages.
5. Consider a charging order where money is already in court or owed to MVIL by the judgment creditor: Waip v MVIT [1996] PGLawRp 744; [1996] PNGLR 374 shows the court charging a judgment sum with costs orders under Order 13.
6. Do not issue garnishee notices or writs of execution against MVIL’s bank without first obtaining a ruling that Gabriel and Timot do not apply; the costs of a dismissed application will be yours.