What Is the Section 54 Notice and Why Does It Matter So Much?

If there is one thing an injured person or their family should be told in the first week after a road accident, it is this: write to MVIL. The reason is section 54(6).

The Rundle decision

The leading case is Rundle v Motor Vehicles Insurance (PNG) Trust (No 1) [1988] PGSC 28; [1988-89] PNGLR 20. Mr Rundle was injured on the Highlands Highway at Goroka in September 1981. No notice was given within six months. His lawyers obtained a 28-day extension from the Insurance Commissioner and let it lapse; issued a writ instead; obtained a second extension and let that lapse too. When the Trust pleaded want of notice, the case went to the Supreme Court, which held:

1. Notice of intention to make a claim is mandatory.
2. By majority, it is a condition precedent to commencing any action; section 54(6)(b) is to be read as “the court before which the action is to be instituted”.
3. Issuing and serving a writ is not a notice. A notice tells the insurer a claim is coming; a writ is the claim itself.
4. A claimant who is out of time may apply once to the Commissioner. If that fails, or an extension is granted and not used, the only further application is to the court; and if the court refuses, the only remedy is an appeal.
5. The court’s power to extend time is a discretion, exercised on proper principles taking account of all the circumstances.

Bredmeyer J explained the purpose: the Trust is sued for another person’s negligence, and it needs to know the driver, the owner and the insurance status while witnesses can still be found and records still exist. Six months is the time Parliament allowed for that.

What happens when there is no valid notice

The action is dismissed. In Motor Vehicles Insurance (PNG) Trust v Menda [1994] PGLawRp 614; [1994] PNGLR 268 the Supreme Court held that where the required notice has not been given “the correct procedure is to dismiss the action”; the trial court has no jurisdiction to extend time within that action, and a separate application must be made. A default judgment entered in an action without a notice is irregular and will be set aside: Konga v Motor Vehicles Insurance (PNG) Trust [1995] PGNC 27; N1349.

A notice given late is not a notice at all. In Dick v Motor Vehicles Insurance (PNG) Trust [1993] PGLawRp 550; [1993] PNGLR 443 the court held that a letter sent after six months and before any extension “is a nullity”, and that a later extension does not revive it: the notice must be given within the extended time. The Supreme Court agreed in Kawa v Motor Vehicles Insurance (PNG) Trust [1998] PGSC 24; SC588, where the lawyer, having obtained an extension, merely forwarded the Commissioner’s approval letter to the Trust instead of giving a fresh notice, and in Muniakali v Motor Vehicles Insurance Ltd [2004] PGSC 10; SC764, where an out-of-time notice was simply annexed to a later letter.

Who gives the notice

The subsection says notice is given “by the claimant”. In practice it is almost always given by a lawyer, and that is sufficient provided the lawyer is instructed. Kusa v Motor Vehicles Insurance (PNG) Trust [2003] PGNC 138; N2328 held that a notice sent by the claimant’s lawyers on her instructions “was given or deemed to have been given by the plaintiff”. The Supreme Court in Motor Vehicles Insurance (PNG) Trust v Viel Kampu [1998] PGSC 49; SC587 objected to lawyers acting without instructions from the claimant and to evidence not in admissible form, not to lawyers giving notice as such.

MVIL cannot waive it and cannot be estopped

Because the requirement is statutory, MVIL’s conduct cannot dispense with it. In Kerowa v Motor Vehicles Insurance Ltd [2010] PGSC 52; SC1100 the Supreme Court held that “an estoppel cannot be invoked in respect of a statutory condition precedent”, approving Kumba v Motor Vehicles Insurance (PNG) Trust [2001] PGNC 53; N2132, where the Trust had continued to correspond with the claimant for years. The point has its own article: can MVIL be stopped from relying on a missing notice.

Death claims too

The notice requirement applies to dependency claims after a death as much as to injury claims. In Motor Vehicles Insurance Ltd v Pojari [2005] PGSC 25; SC799 the Supreme Court, by majority, accepted that correspondence between the parties and the payment of Basic Protection Compensation could together amount to notice for a dependency claim, applying the liberal approach of Tendi. Where no notice of any kind is given, the dependency claim fails like any other.