Who Is Insured Under a Third Party Cover?

In many countries a driver who takes a car without permission is uninsured, and the person he injures is left to a fund of last resort. Papua New Guinea took a different path in 1974. The cover attaches to the vehicle, and it protects whoever is driving it.

Who is the “owner”?

Section 1 gives “owner” a technical meaning that follows the paperwork rather than the money:

• where a trader’s plate is on the vehicle, the dealer to whom the plate was issued;
• where the vehicle is registered, the person registered as owner;
• where the registered owner has sold the vehicle and given the notice of disposal required by the traffic regulations, the purchaser;
• where the vehicle is not registered, the person entitled to immediate possession of it, alone or jointly.

The definition matters in three places: the duty to insure under section 48 falls on the owner; the post-accident duties in section 53 fall on the owner; and MVIL’s right to recover what it has paid under section 57 is exercised against the owner. It also settles a common dispute. A buyer who has paid for a vehicle but has not transferred the registration is not yet the “owner” unless the seller has lodged the notice of sale; the seller remains liable for the section 48 and 53 duties until then, although section 52 ensures the cover protects both.

Who is the “driver”?

“Driver” includes “the rider of a motor cycle and a person for the time being in charge of a motor vehicle”. A person in charge of a stationary vehicle is within it. In Motor Vehicles Insurance (PNG) Trust v Nunu [1998] PGSC 38; SC571 a driver reversed his parked vehicle into a ladder on which a painter was working beside a Rabaul street; the Trust was liable for the painter’s injuries. The Act does not require the driver to hold a licence. In Elewai v Motor Vehicles Insurance (PNG) Trust [1992] PGLawRp 615; [1992] PNGLR 34 the Trust was liable for the death caused by an unlicensed driver; his lack of a licence went to whether he fell below the standard of care, not to whether the cover responded.

Drivers without the owner’s permission

The words “with or without the authority of the owner” extend the cover to the thief, the joy-rider and the employee who takes the company vehicle at the weekend. The victim’s claim against MVIL is unaffected by the driver’s want of authority. What changes is the position between MVIL and the owner. Under section 57(2)(a) the owner has a complete defence to any recovery action by MVIL if he proves that “some other person was driving the motor vehicle without his authority”. The scheme therefore protects the victim first, and sorts out the owner’s innocence afterwards; see MVIL’s rights of recovery.

“Jointly and each of them severally”

The owner and driver are insured together and separately. If the claimant sues in respect of the driver’s negligence alone, the cover responds. If the owner is also at fault — for example by allowing a vehicle with no passenger seats to carry passengers, as in Wally v Motor Vehicles Insurance (PNG) Trust [1992] PGNC 3; N1029 — the cover responds to that liability too. The single K150,000 limit applies to the liability of both together in respect of any one injured person; it is not doubled because two insured persons were at fault.

Who is not an insured person

The cover insures the owner and driver against liability to others. It does not insure them for their own injuries. The point was decided in Kiak v Tora Enterprises Pty Ltd and Motor Vehicles Insurance (PNG) Trust [1986] PGLawRp 371; [1986] PNGLR 265: read in context, “liability” in section 49 means liability to another person, and an owner-driver cannot be indemnified for his own injuries. The owner as passenger is different. In Pupune v Motor Vehicles Insurance (PNG) Trust [1991] PGNC 75; [1991] PNGLR 353 an owner injured while someone else drove his insured vehicle could claim, because the driver’s indemnity extends to a claim by “any person”, and the owner is a person. A later article works through the combinations.

Passengers are third parties

A passenger is a third party like any other. This includes fare-paying passengers in PMVs, and section 62 makes void any term in a contract of carriage in a public motor vehicle that tries to exclude or limit liability for the death or injury of a passenger “while being carried in, entering or alighting from the vehicle”. A notice inside a bus saying passengers travel at their own risk has no legal effect against a claim under the Act.